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on Banking |
| By: | Mitja Stefancic |
| Abstract: | This paper provides an outline of both the competitive advantages and challenges currently faced by Italian cooperative credit banks. These banks play an important role for the stability of the financial system at the level of regions. They provide credit to individuals and households, as well as capital to SMEs. Italian cooperative credit banks are integrated into a distinct sui generis network, which grants them an adequate level of competitiveness in the; and Visiting PhD student market. By effectively implementing democratic principles of governance and by focusing on retail banking, these banks foster responsible behaviour, which is crucial in times of crisis. This paper suggests that a better understanding of their specifics highlights their contribution to sound cooperation in economics. Finally, the paper provides policy recommendations for a qualitative supervision of cooperative credit banks to further increase the stability of the cooperative credit network and, thus, of the Italian financial system. |
| Keywords: | Italian cooperative credit network, competitive advantages; governance, challenges |
| JEL: | G21 G28 P13 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpeu:1116&r=ban |
| By: | Rebeca Anguren Martín (Banco de España) |
| Abstract: | We propose an econometric analysis of the evolution of bank credit to the private sector in order to describe credit cycles and identify phases of particularly low (or negative) credit growth such as those that typically accompany financial or banking crises. We use a sample of twelve developed countries, which improves the reliability of our estimation results and provides a global view of the situation of credit for developed countries. In our preferred specification, the credit cycle is characterized as a three-state Markov-switching model that identifies episodes of credit expansion, intermediate credit growth and subpar growth or credit crisis. This specification identifies six of the countries as having experienced period of credit adjustment after the beginning of the financial crisis in 2007 (Canada, Germany, Netherlands, Spain, Switzerland and US). By the end of the sample period, credit growth was still impaired in three of these countries (Germany and Spain in 2010:I; and United States in 2009:IV). The analysis also uncovers a systematic cyclical pattern in the bank lending sector of the group of advanced countries considered in our sample, which have experienced five episodes of synchronous restrictions in bank lending: 1974-75, 1980-82, 1991-93, 2001-02 and from 2008 to the end of the sample. |
| Keywords: | credit cycle, banking crisis, fi nancial crisis, Markov, business cycle |
| JEL: | E44 E51 G21 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:1113&r=ban |
| By: | Caiazza, Stefano; Pozzolo, Alberto Franco; Trovato, Giovanni |
| Abstract: | Are the drivers of domestic and cross-border M&As in the banking sector different? Despite the intense research on bank M&As in the last decade, the attention paid to this issue is surprisingly limited. We fill this gap studying the ex-ante determinants of national and international acquisitions in the banking sector in an unbalanced panel of nearly 1,000 banks from 50 world countries, from 1992 to 2007. Our results show that size and profitability have a stronger impact on the probability that a bank is a bidder in a cross-border deal than in a domestic deal. Consistent with the findings of the literature on the determinants of the internationalization of manufacturing firms, international expansion in the banking sector is therefore easier for countries with a number of large “national championsâ€, that are more capable to overcome the fixed costs of internationalization and have a stronger incentive to diversify the idiosyncratic risks of their domestic activities. |
| Keywords: | M&As, bank internationalization |
| JEL: | G15 G34 G34 |
| Date: | 2011–05–19 |
| URL: | http://d.repec.org/n?u=RePEc:mol:ecsdps:esdp11061&r=ban |
| By: | Benjamin M. Tabak; Dimas M. Fazio; Daniel O. Cajueiro |
| Abstract: | Using a sample of 495 Latin American banks over the period 2001-2008, this paper investigates how bank concentration influences cost and profit efficiency. We calculate scale efficiency to assess whether these banks are close to their optimal size. We find that banks are more inefficient in profits than in costs; concentration impairs cost efficiency; larger banks have higher performance, but this advantage decreases in concentrated markets; private and foreign banks are the most efficient; most banks are operating under increasing returns of scale, which contributes to the discussion on Basel III. |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:bcb:wpaper:244&r=ban |
| By: | Jansen, Eilev S.; Krogh, Tord S. H. |
| Abstract: | The interaction between financial markets and the macroeconomy can be strongly affected by changes in credit market regulations. In order to take account of these effects the authors control explicitly for regime shifts in a system of debt equations for Norway using a common, flexible trend. The estimated shape of the trend matches the qualitative development in the regulations, and the authors argue that it can be viewed as a measure of relative credit availability, or credit conditions, for the period 1975-2008 - a credit conditions index (CCI). This entails years of strict credit market regulations in the 1970s, its gradual deregulation in the 1980s, followed by a full-blown banking crisis in the years around 1990 and the development thereafter up to the advent of the current financial crisis. Our study is inspired by Fernandez-Corugedo and Muellbauer (2006), which introduced the methodology and provided estimates of a CCI for the UK. The trend conditions on a priori knowledge about changes in the Norwegian regulatory system, as documented in Krogh (2010b), and it shows robustness when estimated recursively. -- |
| Keywords: | credit conditions,flexible trend,financial deregulation,household loans |
| JEL: | E44 G21 G28 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201112&r=ban |
| By: | Sinha, Pankaj; Dutta, Dipanwita |
| Abstract: | This paper identifies the key determinants of profitability of Indian banks. It integrates the macroeconomic environment and industry level variables of India for predicting profitability of Indian banks. A simultaneous equation system has been formulated to derive the estimates of net interest income (NII) and Credit for the banking system as a whole. Net interest income as well as efficiency ratio have significant role in determining profitability in Indian banking scenario. The Net interest income reacts inversely to bond yields and positively to credit. This stems from the inverse relationship of credit demand to bond yields and positive relationship of GDP with credit creation. Further, Deposit mix (higher share of low cost deposit in the total deposits) has favourable impact on NII%. |
| Keywords: | Profitability; Net Interest Income; GDP; Interest Rate; Efficiency Ratio |
| JEL: | G2 C3 G21 |
| Date: | 2011–05–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:31156&r=ban |
| By: | Kazuki Onji; David Vera; Jenny Corbett |
| Abstract: | A case study of the Japanese bank recapitalization by Hoshi and Kashyap (2005) identified a bank that overstated the progress of required personnel downsizing by shifting employees to subsidiaries. Th is paper asks if the recapitalization program had a systematic fl aw in design. We focus on regional banks with a unique panel dataset of 82 banking groups that allows us to observe the employment levels of subsidiaries, in addition to those of parent banks, over fi scal 1994–2006. We estimate a labor-demand equation with sluggish adjustment to compare the employment patterns of public capital recipients and other banks. We found 4 banks increased subsidiary employment after receiving capital injection, but only temporarily. Th is temporary eff ect suggests that the personnel shift-ing was essentially layoff s. Our fi nding indicates that, despite the limited transparency of personnel sizes on the consolidated basis, rules on capital injection provided incentives for most recipients to pursue downsizing. |
| JEL: | L72 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:csg:ajrcau:390&r=ban |
| By: | Claudio Borio; Piti Disyatat |
| Abstract: | Global current account imbalances have been at the forefront of policy debates over the past few years. Many observers have recently singled them out as a key factor contributing to the global financial crisis. Current account surpluses in several emerging market economies are said to have helped fuel the credit booms and risk-taking in the major advanced deficit countries at the core of the crisis, by putting significant downward pressure on world interest rates and/or by simply financing the booms in those countries (the "excess saving" view). We argue that this perspective on global imbalances bears reconsideration. We highlight two conceptual problems: (i) drawing inferences about a country's cross-border financing activity based on observations of net capital flows; and (ii) explaining market interest rates through the saving-investment framework. We trace the shortcomings of this perspective to a failure to consider the distinguishing characteristics of a monetary economy. We conjecture that the main contributing factor to the financial crisis was not "excess saving" but the "excess elasticity" of the international monetary and financial system: the monetary and financial regimes in place failed to restrain the build-up of unsustainable credit and asset price booms ("financial imbalances"). Credit creation, a defining feature of a monetary economy, plays a key role in this story. |
| Keywords: | global imbalances, saving glut, money, credit, capital flows, current account, interest rates, financial crisis |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:346&r=ban |
| By: | Claessens, Stijn; Kose, Ayhan; Terrones, Marco E |
| Abstract: | This paper provides a comprehensive analysis of financial cycles using a large database covering 21 advanced countries over the period 1960:1-2007:4. Specifically, we analyze cycles in credit, house prices, and equity prices. We report three main results. First, financial cycles tend to be long and severe, especially those in housing and equity markets. Second, they are highly synchronized within countries, particularly credit and house price cycles. The extent of synchronization of financial cycles across countries is high as well, mainly for credit and equity cycles, and has been increasing over time. Third financial cycles accentuate each other and become magnified, especially during coincident downturns in credit and housing markets. Moreover, globally synchronized downturns tend to be associated with more prolonged and costly episodes, especially for credit and equity cycles. We discuss how these findings can guide future research on various aspects of financial market developments. |
| Keywords: | asset busts; credit booms; credit cycles; crunches; equity prices; house prices |
| JEL: | E32 F42 G12 G15 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:8379&r=ban |
| By: | Li Zhao |
| Abstract: | This paper aims to fill one knowledge gap on understanding the issue of capital formation in new co-operatives in developing countries. By doing so, it presents the main findings of capital formation and investment in a small sample of horticulture shareholding co-operatives in rural China, because shareholding co-operatives, as one best example of new multi-stakeholder co-operatives in China, have become a vehicle to mobilize additional resources. To better understand shareholder co-operatives’ stakeholder heterogeneity, two main groups of stakeholders are identified, namely, member stakeholders (investor-members and patron-members) and non-member stakeholders (non-member investors and non-member donors/grant-givers). Following a brief theoretical overview concerning co-operative multi-stakeholdership and capital acquisition and constraints, I then analyze both the rules-in-form and rules-in-use with respect to the co-operative stakeholders’ capital involvement in China. Cases observed indicate a hybridization feature of the co-operative capital base, including member contributions, public subsidies, income from the market sale, institutional capital and social capital. There exist at least four ways to raise equity capital from co-operative members. External capital comes mostly from direct government support in the form of grants and project funding, and indirect financial support through preferential treatment and policies. Different from the situation in the West, debt capital does not appear to be a widely-used traditional financing source. New co-operatives in China have difficulty even in borrowing short-term debt, not to mention receiving long-term loans. Also specialized/non-traditional external capital sources such as those provided by co-operative banks do not suffice. Co-operative banks are not always ready to provide micro-credit to co-operatives. Only when the government plays an active role, this lending process is facilitated. Many innovative financial systems are also observed in the field, which facilitate the mobilization of more external capital for co-operatives. |
| Keywords: | Capital Formation, Co-operative, Multi-stakeholder, China |
| JEL: | H44 K29 O13 P13 P26 Q13 Q18 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpeu:1115&r=ban |
| By: | Iva Cecchin |
| Abstract: | This paper investigates the speed and completeness of the pass-through from market rates to mortgage rates in Switzerland. The pass-through dynamics are studied under a marginal funding cost perspective. By choosing the appropriate benchmark rates, this study takes into account banks' forecasts of the evolution of their funding costs. It is found that the passthrough of rates of adjustable-rate mortgages is incomplete and sluggish compared to the rates of mortgages with a fixed maturity. For the latter, changes in market rates appear to be transmitted quickly and completely, particularly when benchmark rates are falling. This finding suggests that a low-interest-rate environment stimulates competition among financial institutions. Evidence for a structural change is found for all interest rates. The structural change occurred around the beginning of 2007 for fixed-rate mortgages and in mid-2005 for floating-rate mortgages. For all mortgage rates, asymmetries are detected in the pre-break period. More specifically, the adjustment of fixed-rate-mortgage rates is characterized by downward rigidity, which supports the existence of some form of imperfect competition. By contrast, the rates of adjustable-rate mortgages exhibit upward price stickiness. This result suggests that competition was stronger in this specific mortgage-lending market. In the post-break period, no clear evidence is found in favor of asymmetries with respect to the adjustment coefficient. |
| Keywords: | Interest Rate Pass-Through, Monetary Policy, Mortgages, Cointegration analysis, Panel Data |
| JEL: | E43 E52 G21 C23 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:snb:snbwpa:2011-08&r=ban |