New Economics Papers
on Banking
Issue of 2008‒10‒28
six papers chosen by
Roberto J. Santillán–Salgado, EGADE-ITESM

  1. Systemic Banking Crises: A New Database By Luc Laeven; Fabian Valencia
  2. Are Weak Banks Leading Credit Booms? Evidence from Emerging Europe By Deniz Igan; Natalia T. Tamirisa
  3. Geographic and Demographic Bank Outreach: Evidence from Germany’s Three-Pillar Banking System By Alexander Conrad; Doris Neuberger; Maria Schneider-Reißig
  4. An Anatomy of Credit Booms: Evidence From Macro Aggregates and Micro Data By Marco Terrones; Enrique G. Mendoza
  5. Banks and Labor as Stakeholders: Impact on Economic Performance By Stijn Claessens; Kenichi Ueda
  6. Economic performance, creditor protection and labor inflexibility By Ronald Fischer

  1. By: Luc Laeven; Fabian Valencia
    Abstract: This paper presents a new database on the timing of systemic banking crises and policy responses to resolve them. The database covers the universe of systemic banking crises for the period 1970-2007, with detailed data on crisis containment and resolution policies for 42 crisis episodes, and also includes data on the timing of currency crises and sovereign debt crises. The database extends and builds on the Caprio, Klingebiel, Laeven, and Noguera (2005) banking crisis database, and is the most complete and detailed database on banking crises to date.
    Keywords: Financial crisis , Banking sector , Banking crisis , Sovereign debt , Databases , Currencies , Spillovers , Economic recovery , Fiscal sustainability , Working Paper ,
    Date: 2008–09–19
  2. By: Deniz Igan; Natalia T. Tamirisa
    Abstract: This paper examines the behavior of bank soundness indicators during episodes of brisk loan growth, using bank-level data for central and eastern Europe and controlling for the feedback effect of credit growth on bank soundness. No evidence is found that rapid loan expansion has weakened banks during the last decade, but over time weaker banks seem to have started to expand at least as fast as, and in some markets faster than, stronger banks. These findings suggest that during credit booms supervisors need to carefully monitor the soundness of rapidly expanding banks and stand ready to take action to limit the expansion of weak banks.
    Keywords: Banking sector , Bank soundness , Credit expansion , Europe , Emerging markets , Bank credit , Risk management , Working Paper ,
    Date: 2008–09–15
  3. By: Alexander Conrad (University of Rostock); Doris Neuberger (University of Rostock); Maria Schneider-Reißig (University of Rostock)
    Abstract: This paper investigates the performance of Germany’s three-pillar banking system in providing financial services nationwide, regarding different outreach indicators. At the federal state level, bank outreach shows South-North and West-East gaps. Combining regional and bank data at the district level for 2005, we examine the determinants of geographic and demographic branch penetration of the regional savings and cooperative banks. Both banking groups provide a larger branch penetration in more wealthy regions, but maintain a larger number of branches per inhabitant in less densely populated regions, easing access to retail banking services. With their comparatively large branch penetration in less wealthy regions, public savings banks help to reduce regional economic disparities. The branch penetration of both banking groups increases with the share of elder people and bank size in a region. Because of their public mission to serve all regions, public savings banks foster competition. <P> Geographische und demographische Reichweite von Banken: Empirische Evidenz für Deutschlands Dreisäulen-Bankensystem. Der Beitrag untersucht die flächendeckende Bereitstellung von Finanzdienstleistungen durch das deutschen Dreisäulen-Bankensystem, wobei unterschiedliche Indikatoren der Reichweite betrachtet werden. Auf der Ebene der Bundesländer zeigen sich Süd-Nord und West-Ost-Gefälle. Durch Verknüpfung von Regional- und Bankdaten auf Kreisebene für das Jahr 2005 werden die Determinanten der geographischen und demographischen Bank- stellenpenetration der regional tätigen Sparkassen und Genossenschaftsbanken untersucht. Beide Bankengruppen zeigen eine höhere Bankstellenversorgung in wirtschaftsstärkeren Regionen, unterhalten aber mehr Bankstellen pro Einwohner in dünner besiedelten Regio- nen, womit sie den Zugang zu Finanzdienstleistungen erleichtern. Mit ihrer relativ großen Bankstellenpenetration in wirtschaftsschwächeren Regionen tragen die Sparkassen zur Überwindung regionaler ökonomischer Disparitäten bei. Die Bankstellenversorgung bei- der Regionalbankgruppen steigt mit dem Anteil älterer Menschen und der Bankgröße in einer Region. Durch ihren öffentlichen Auftrag, alle Regionen zu versorgen, tragen die Sparkassen zur Sicherung des Wettbewerbs bei.
    Keywords: Banks; Market Structure, Firm Strategy, and Market Performance; Firm Objectives, Organization, and Behavior
    JEL: G21 L1 L2
    Date: 2008
  4. By: Marco Terrones; Enrique G. Mendoza
    Abstract: We study the characteristics of credit booms in emerging and industrial economies. Macro data show a systematic relationship between credit booms and economic expansions, rising asset prices, real appreciations and widening external deficits. Micro data show a strong association between credit booms and leverage ratios, firm values, and banking fragility. We also find that credit booms are larger in emerging economies, particularly in the nontradables sector; most emerging markets crises are associated with credit booms; and credit booms in emerging economies are often preceded by large capital inflows but not by financial reforms or productivity gains.
    Keywords: Credit expansion , Business cycles , Emerging markets , Asset prices , Current account deficits , Productivity ,
    Date: 2008–09–30
  5. By: Stijn Claessens; Kenichi Ueda
    Abstract: Traditionally, the impacts of the rights of financial institutions and workers on corporate performance have been analyzed independently. Yet, theory clearly indicates that the combination of relative powers of different stakeholders affects a firm overall performance. Using U.S. state level and state-industry level data, we investigate how output growth is affected by bank branch deregulation and employment protection occurring over 1972-1993. We find that financial liberalization positively impact overall state growth but greater workers' rights affects it ambiguously. At the industry level, however, employment protection promotes those industries that are more knowledge intensive, while the effect of financial liberalization does not differ across industries that vary in external financing dependency. The results hold controlling for changes in shareholders' rights, which itself is not significant. The findings suggest that financial liberalization operates mostly through an efficiency channel, better reallocating resources across sectors, while employment protection creates higher incentives and encourages more sector-specific, human capital investments. Overall, the results show that the strength of stakeholders' protection affects performance through efficiency channels and provide support for a stakeholders' view of corporate governance.
    Keywords: Banks , Labor , Corporate governance , Employment policy , Industrial investment , Industrial production , Economic models , Working Paper ,
    Date: 2008–09–30
  6. By: Ronald Fischer
    Abstract: We present a static general equilibrium model of an economy with agents with heterogeneous wealth and endogenous credit constraints created by partial loan recovery rates. Higher loan recovery rates and better bankruptcy protection increase output and credit penetration, while the former raises the average interest rate spread and the latter decreases it. We also study the interaction of credit constraint with differences in wealth distribution across countries. In a closed economy, higher loan recovery rates and better bankruptcy legislation raise the prime interest rate, as well as the interest rate spread. We incorporate a labor market in order to analyze the interaction between increased labor protection and credit restrictions. We find that stronger labor protection leads to lower wages and output. Nevertheless they will be supported by workers in firms with strong balance sheets and opposed by workers and employers in firms with weak balance sheets. JEL Class.: G38, E44, D53.
    Date: 2008

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