New Economics Papers
on Banking
Issue of 2012‒02‒08
six papers chosen by
Christian Calmès, Université du Québec en Outaouais

  1. Accept or Reject: Do Immigrants Have Less Access to Bank Credit? Evidence from Swedish Pawnshop Customers By Bos, Marieke
  2. Impact of Liberalization and Globalization on Productivity in Indian Banking: A Comparative Analysis of Public Sector, Private, and Foreign Banks By Subhash Ray
  3. Derivatives at Agricultural Banks By Shen, Xuan; Hartarska, Valentina
  4. Financing Constraints and Access to Credit in Post Crisis Environment: Evidence from New Farmers in Alabama By Hartarska, Valentina; Nadolnyak, Denis
  5. The ECB and the Interbank Market By Domenico Giannone; Michèle Lenza; Huw Pill; Lucrezia Reichlin
  6. Agricultural Banking and Early Warning Models for the Bank Failures of the Late 2000s Great Recession By Li, Xiaofei; Escalante, Cesar L.; Epperson, James E.; Gunter, Lewell F.

  1. By: Bos, Marieke (Stockholm University Linnaeus Center for Integration Studies - SULCIS)
    Abstract: This paper studies to what extent immigrants have less access to main- stream credit than their native counterparts. For this purpose I use a large, unique data set with a panel of Swedish pawnshop customers. The data al- low me to investigate to what extent pawnshop customers actively apply for mainstream bank credit and how successful they are by comparing credit ap- plications from immigrants and natives and the corresponding bank decisions. I do not …nd that immigrants have a di¤erent propensity to apply for main- stream bank credit. However, I do …nd that banks have a lower propensity to grant loans to immigrants from African descent compared to their Nordic-born counterparts. Robustness tests based on data from recent immigrants only suggest that the demand for credit varies with the duration of residence while di¤erences in loan-granting rates are enduring.
    Keywords: Consumer credit; lending policy; alternative credit; pawn credit; immigrants
    JEL: C34 C35 D63 D81 G21
    Date: 2012–01–24
  2. By: Subhash Ray (University of Connecticut)
    Abstract: Although dominated by public sector banks, India already had a significant presence of private domestic banks and foreign banks. What the banking reforms have done is to create a more level playing field where banks of different ownership types compete within a new set of broad (and far more relaxed) regulations. Data on the performance of the three different categories of banks over the past two decades offer an opportunity to assess to what extent the regulatory changes have improved the productive efficiency of the banking sector in India. Apart from analyzing the standard descriptive measures of performance, this paper uses the nonparametric approach of Data Envelopment Analysis to measure total factor productivity growth and its components to assess the impact of liberalization on different ownership categories of banks in India. The broad conclusion is that it is possible to promote financial soundness by introducing proper prudential norms and to improve operational efficiency without wholesale privatization by allowing competition between public, private and foreign banks. This can be a valuable lesson for other developing countries. JEL Classification: G21, C61 Key words: Banking Reforms, Data Envelopment Analysis, Efficiency Analysis
    Date: 2011–11
  3. By: Shen, Xuan; Hartarska, Valentina
    Abstract: Using data between 1995 and 2010, we find that agricultural banks are benefiting from the derivatives activities by reducing total risk without hurting their profit. In nonagricultural banks, both profitability and total risk are adversely affected, possibly due to speculative derivatives positions.
    Keywords: Agricultural Banks, Financial Derivatives, Profitability, Risk Management, Agricultural Finance, Risk and Uncertainty,
    Date: 2012
  4. By: Hartarska, Valentina; Nadolnyak, Denis
    Abstract: We use survey data to study the level of financing constrains faced by new farmers in Alabama post 2008, and identify who got loans. We find that new farmers are financially constrained but not impacted by the crisis. Lending was collateral driven, although lenders also considered profitability and cash flows.
    Keywords: financing constraints, access to agricultural credit, new farmers, Agricultural Finance, Financial Economics, Risk and Uncertainty, G31, Q12, Q14,
    Date: 2012
  5. By: Domenico Giannone; Michèle Lenza; Huw Pill; Lucrezia Reichlin
    Abstract: This paper analyses the impact on the macroeconomy of the ECB’s non-standard monetary policy implemented in the aftermath of the collapse of Lehman Brothers in the Fall of 2008. We study in particular the effect of the expansion of the intermediation of transactions across central bank balance sheets as dysfunctional financial markets seize up, which we regard as a key channel of transmission for non-standard monetary policy measures. Our approach is similar to Lenza et al. 2009 but we introduce the important innovation of distinguishing between private intermediation of interbank transactions in the money market and central bank intermediation of bank-to-bank transactions across the Eurosystem balance sheet. We do this by exploiting data drawn from the aggregate Monetary and Financial Institutions (MFI) balance sheet which allows us to construct a new measure of the ‘policy shock’ represented by the ECB’s increasing role as a financial intermediary. We find that bank loans to households and, in particular, to non-financial corporations are higher than would have been the case without the ECB’s intervention. In turn, the ECB’s support has a significant impact on economic activity: two and a half years after the failure of Lehman Brothers, the level of industrial production is estimated to be 2% higher, and the unemployment rate 0.6 percentage points lower, than would have been the case in the absence of the ECB’s non-standard monetary policy measures.
    Keywords: non-standard monetary policy measures; interbank market
    JEL: E50 E58
    Date: 2012–01
  6. By: Li, Xiaofei; Escalante, Cesar L.; Epperson, James E.; Gunter, Lewell F.
    Abstract: This paper is designed to validate if the agricultural sector can once again be labeled as an instigator of the late-2000s Great Recession using the early warning models technique. The empirical results indicate that exposure to agribusiness operations does not necessarily enhance a banksâ tendency to fail.
    Keywords: Agricultural Banking, Early warning signals, In-sample accuracy, Out-of-sample forecasting, Agricultural Finance, Research Methods/ Statistical Methods, G21, G32, G33, C01,
    Date: 2012

This issue is ©2012 by Christian Calmès. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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