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on Banking |
| By: | Claessens, Stijn; van Horen, Neeltje |
| Abstract: | When do foreign banks have an advantage operating abroad and when not? Studying the performance of foreign banks in a large number of countries between 1999 and 2006, we find that this crucially depends on a number of factors. Specifically, foreign banks tend to perform better compared to domestic banks when coming from a high income country, but worse when coming from a developing country. Foreign banks tend to outperform domestic banks when competitiveness in the host country is limited. And foreign banks from source countries geographical or cultural close to the host country perform better than distant foreign banks. These findings show that it is important to control for heterogeneity among foreign banks when studying their performance and help reconcile some contradictory results found in the literature. |
| Keywords: | foreign direct investment; international banking; performance; distance |
| JEL: | F23 F21 G21 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13467&r=ban |
| By: | Olli Castrén (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main.); Trevor Fitzpatrick (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main.); Matthias Sydow (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | In terms of regulatory and economic capital, credit risk is the most significant risk faced by banks. We implement a credit risk model - based on publicly available information - with the aim of developing a tool to monitor credit risk in a sample of large and complex banking groups (LCBGs) in the EU. The results indicate varying credit risk profiles across these LCBGs and over time. Furthermore, the results show that large negative shocks to real GDP have the largest impact on the credit risk profiles of banks in the sample. Notwithstanding some caveats, the results demonstrate the potential value of this approach for monitoring financial stability. JEL Classification: C02, C19, C52, C61, E32. |
| Keywords: | Portfolio credit risk measurement, stress testing, macroeconomic shock measurement. |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:200901002&r=ban |
| By: | Maximilian J. B. Hall (Dept of Economics, Loughborough University) |
| Abstract: | On 19 January 2009, the UK Government unveiled a second comprehensive bank bailout plan. This followed the failure of its October bailout package to stimulate domestic lending, as intended. The various components of the new "rescue package" are duly explained and analysed in this article, which also addresses the likely future course of policy should the Government fail in its latest ambitions to stimulate lending and thereby revive the flagging economy. |
| Keywords: | UK banks; banking regulation and supervision; central banking; failure resolution. |
| JEL: | E53 E58 G21 G28 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:lbo:lbowps:2009_01&r=ban |
| By: | Panicos Demetriades; David Fielding |
| Abstract: | Using a new panel dataset for banks in eight West African countries, we explore the factors that exacerbate or alleviate excess liquidity, and the factors that promote or retard the rate of growth of banks’ assets. Loan default rates in the region are high, and variations in the rate impact on liquidity and asset growth. However, the size of this effect is very sensitive to bank age. Some types of improvement in the quality of governance reduce excess liquidity and promote asset growth. However, the impact of other types of improvement, particularly with regard to corruption, is ambiguous. We uncover evidence that provides an explanation for this ambiguity. |
| Keywords: | Africa; Banking; Default; Institutions; Liquidity |
| JEL: | G21 O16 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:lec:leecon:09/4&r=ban |
| By: | Maximilian J. B. Hall (Dept of Economics, Loughborough University) |
| Abstract: | On 14 September 2007, after failing to find a 'White Knight' to take over its business, Northern Rock bank turned to the Bank of England ('the Bank') for a liquidity lifeline. This was duly provided but failed to quell the financial panic, which manifested itself in the first fully-blown nationwide deposit run on a UK bank for 140 years. Subsequent provision of a blanket deposit guarantee duly led to the (eventual) disappearance of the depositor queues from outside the bank's branches but only served to heighten the sense of panic in policymaking circles. Following the Government's failed attempt to find an appropriate private sector buyer, the bank was then nationalised in February 2008. Inevitably, post mortems ensued, the most transparent of which was that conducted by the all-party House of Commons' Treasury Select Committee. And a variety of reform proposals are currently being deliberated at fora around the globe with a view to patching up the global financial system to prevent a recurrence of the events which precipitated the bank's illiquidity and the wider financial instability which set in towards the end of 2008. This article briefly explains the background to these extraordinary events before setting out, in some detail, the tensions and flaws in UK arrangements which allowed the Northern Rock spectacle to occur. None of the interested parties – the Bank, the Financial Services Authority (FSA) and the Treasury – emerges with their reputation intact, and the policy areas requiring immediate attention, at both the domestic and international level, are highlighted. A review and assessment of both the House of Commons Treasury Committee's Report on Northern Rock and the Tripartite Authorities' proposals for reform are also provided before analysis of the subsequent measures taken to stabilise the UK financial sector – involving further nationalisation of banks, the brokering of takeover rescues of banks and building societies, a £400 billion bailout of the deposit-taking sector and a subsequent bank bailout scheme – is undertaken. Accordingly, this paper represents an update, covering developments until end-January 2009, of my earlier paper on the Northern Rock affair (Working Paper No. WP 2008-09), which was published in September 2008. Specifically, it covers the latest domestic (i.e. UK) developments on a number of fronts. The text, for example, provides updates on the reform proposals of the Tripartite Authorities, amendments to deposit protection arrangements, and the emergency funding initiatives adopted by the Bank of England. Table 2 (where, along with Table 1, most of the new material is located), meanwhile, provides updates and analysis of the following: the latest developments in the UK housing market; the latest developments in the real economy; the latest financial statements of the major banks; the latest nationalisation moves;* the latest inflation figures and interest rate decisions of the MPC; the latest government bailout plans for deposit-takers; the latest official support packages introduced for the housing market, mortgage borrowers and small businesses; the latest fiscal stimulus plans (e.g. as contained in the Pre-Budget Report of November 2008); and the latest domestic financial and regulatory developments. Meanwhile, Table 1 provides up-to-date information on: emergency funding initiatives undertaken by the Fed, the ECB and other major central banks; financial institution takeovers/bailouts in the US and Europe; interest rate developments in the major economies; financial and regulatory developments in the US and Europe; developments in the real economies of the US and Europe; the financial statements of banks in the USA and Europe; the evolution of official bailout plans in the US ('TARP') and Europe; deposit protection developments in the US and Europe; fiscal stimulus packages adopted in the US, Europe and the wider international community; G7/EU plans to tackle the worsening financial crisis; IMF 'bailouts' of beleaguered countries; and the Basel Committee's proposals for revamping Basel II in the light of the crisis. *A more detailed discussion of these developments is provided in Hall (2008). |
| Keywords: | Sub-prime crisis; credit crunch; banking regulation and supervision; failure resolution; central banking; deposit protection. |
| JEL: | E53 E58 G21 G28 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:lbo:lbowps:2009_03&r=ban |
| By: | Taisuke Uchino |
| JEL: | E51 E52 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:hst:ghsdps:gd08-027&r=ban |
| By: | Aki Koponen (Institute for Competition Policy Studies, Turku School of Economics) |
| Abstract: | Structural changes in retail banking markets and development of remote access technologies have reduced the number of bank branches in many developed countries. That makes close-downs of bank branches and service accessibility in rural/peripheral regions interesting topics of public discussion. This paper uses an empirical entry approach in order to analyze whether the peripheral regions have suffered from the development branch networks in general, or are some specific regions faced more closedowns that one can expect? The analysis shows that there are some differences between the regions in accessibility of the services measured both by the number of bank groups and number of branches located in the municipality. Commutation directed to the municipality increased the accessibility as well as the increase in average taxable income. These characteristics are typically related to the local centers but also the administrative city-status had additional positive effect. When it comes to the development of accessibility, the analysis shows no differences between the regions. |
| Keywords: | banking, accessibility, regional differences, technological development, concentration |
| JEL: | G21 R12 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:tkk:dpaper:dp42&r=ban |