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on Banking |
| By: | Besancenot, Damien (CEPN and University Paris 13); Vranceanu, Radu (ESSEC Business School) |
| Abstract: | This short paper analyzes banks' communication policies in crisis times and the role of imperfect information in enhancing banks' distress. If banks differ in their exposure to risky assets, fragile banks may claim to be solid only in order to manipulate investors' expectations. Then solid banks must pay a larger interest rate than in a perfect information set-up. A stronger sanction for false information would improve the situation of the low-risk banks but deteriorate the situation of the high-risk banks. The total effect on defaulting credit institutions is ambiguous. It is shown that, in some cases, the optimal sanction is lower than the sanction that rules out any manipulatory behaviour. |
| Keywords: | Banks; Disclosure; Financial Crisis; Transparency |
| JEL: | D82 E44 G21 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:essewp:dr-08018&r=ban |
| By: | Kendall, Jake |
| Abstract: | Using a unique sample of net domestic product data for districts in India, I investigate the connection between banking sector development, human capital, and economic growth at the sub-national level. Using disaggregate data avoids many of the omitted variable problems that plague cross-country studies of the finance-growth connection and facilitates an instrumentation strategy. The findings show that the growth of many districts in India is financially constrained due to lack of banking sector development, and that the relationship between finance and growth may be non-linear. For the districts in the sample, moving from the 75th percentile of credit/net domestic product to the 25th percentile implies an average loss of 4 percent in growth over the 1990s. This indicates that the gains from increased banking sector outreach may be large. The analysis shows that human capital deepening can reduce the effect of the financial constraint and help decouple growth from financial development. In a district at the 25th literacy percentile, the implied growth loss due to a constrained banking sector is twice as large as in a district at the 75th literacy percentile. Thus, higher levels of human capital may activate alternative growth and production channels that are less finance intensive. |
| Keywords: | Banks&Banking Reform,Access to Finance,,Economic Theory&Research,Debt Markets |
| Date: | 2009–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4838&r=ban |
| By: | de la Torre, Augusto; Ize, Alain |
| Abstract: | The Subprime crisis largely resulted from failures to internalize systemic risk evenly across financial intermediaries and recognize the implications of Knightian uncertainty and mood swings. A successful reform of prudential regulation will need to integrate more harmoniously the three paradigms of moral hazard, externalities, and uncertainty. This is a tall order because each paradigm leads to different and often inconsistent regulatory implications. Moreover, efforts to address the central problem under one paradigm can make the problems under the others worse. To avoid regulatory arbitrage and ensure that externalities are uniformly internalized, all prudentially regulated intermediaries should be subjected to the same capital adequacy requirements, and unregulated intermediaries should be financed only by regulated intermediaries. Reflecting the importance of uncertainty, the new regulatory architecture will also need to rely less on markets and more on"holistic"supervision, and incorporate countercyclical norms that can be adjusted in light of changing circumstances. |
| Keywords: | Debt Markets,Banks&Banking Reform,Emerging Markets,Labor Policies,Financial Intermediation |
| Date: | 2009–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4842&r=ban |
| By: | Ojo, Marianne |
| Abstract: | This paper considers the need for a more pro active approach which facilitates greater on site work being carried out by supervisors – as highlighted in the Legal and General Case. It also considers the recommendations made to the UK’s regulator - the FSA, and in particular to the FSA Board, following the Legal and General Case. The recommendations are compared to the Basel Committee’s Core Principles for Effective Banking Supervision. In drawing a comparison, the importance of independent verification of work carried out by external auditors, be it through on-site examinations or the use of external experts, is once again emphasised. The involvement of external auditors or other experts in the supervisory process should not relieve a regulator from on site supervisory responsibilities. As vital as an external auditor’s work is, it is also important to verify such work. |
| Keywords: | pro active;monitoring;on-site;supervision;inspections |
| JEL: | K2 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13688&r=ban |
| By: | Roman Horváth (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic; Czech National Bank) |
| Abstract: | We examine the determinants of interest rate margins of Czech banks employing bank-level dataset at the quarterly frequency in 2000-2006. Our main results are as follows. We find that more efficient banks exhibit lower margins and there is no evidence that the banks with lower margins would compensate themselves with higher fees. Price stability contributes to lower margins. There are some economies of scale, as larger banks tend to charge lower margins. Higher capital adequacy is associated with lower margins contributing to the banking stability. Overall, the results indicate that the determinants of interest rate margins of Czech banks are largely similar to those reported in other studies for developed countries. |
| Keywords: | commercial banks, interest rate margins, bank efficiency |
| JEL: | G21 D40 P27 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2009_11&r=ban |
| By: | Duvvuri Subbarao |
| Abstract: | The impact of economic crisis on India has been analysed in the speech. [Speech delivered at the Symposium on 'The Global Economic Crisis and Challenges for the Asian Economy in a Changing World']. |
| Keywords: | money market, credit, forex, India, economic crisis, Indian banking system, growth, domestic consumption, investment, GDP, financial integration, markets, banks |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:1870&r=ban |
| By: | Mara Nogueira (Cedeplar-UFMG); Ana Tereza Lanna Figueiredo (Cedeplar-UFMG e PUC-MG); Marco Crocco (Cedeplar-UFMG) |
| Abstract: | The aim of this paper is to investigate in what extent there is a differentiated regional bank strategy. Based on the post-Keynesian theory of regional liquidity preference (DOW, 1993), the article analyses the consolidate balance sheet of bank’s branches in 27 Brazilian states. Through the analyses of some of the indicators that has been built using the balance sheet, the paper concludes that there are evidences that supports the statement that the state’s Bank System works in a different way over the space. This behavior reinforces the uneven regional patterns of development in its economy. |
| Keywords: | Bank’s Strategy, Regional Economy, Banks |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:cdp:texdis:td344&r=ban |
| By: | Mara Nogueira (Cedeplar-UFMG); Marco Crocco (Cedeplar-UFMG); Ana Tereza Lanna Figueiredo (Cedeplar-UFMG e PUC-MG) |
| Abstract: | The aim of this paper is to investigate in what extent there is a differentiated regional bank strategy in the economy of Minas Gerais. Based on the post-Keynesian theory of regional liquidity preference (DOW, 1993), the article analyses the consolidate balance sheet of bank’s branches in 351 cities of Minas Gerais divided in five different groups. Through the analyses of some of the indicators that has been built using the balance sheet, the paper concludes that there are evidences that supports the statement that the state’s Bank System works in a different way over the space. This behavior reinforces the uneven regional patterns of development in its economy. |
| Keywords: | Bank’s Strategy, Regional Economy, Banks |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:cdp:texdis:td345&r=ban |