nep-ban New Economics Papers
on Banking
Issue of 2018‒03‒19
25 papers chosen by
Christian Calmès, Université du Québec en Outaouais

  1. Mapping shadow banking in China: structure and dynamics By Torsten Ehlers; Steven Kong; Feng Zhu
  2. Gilded Bubbles By David Perez-Reyna; Xavier Freixas
  3. Bank credit supply and firm innovation By Giebel, Marek; Kraft, Kornelius
  4. Credit risk of foreign bank branches and subsidiaries in Argentina and Uruguay By Michael Brei; Carlos Winograd
  5. Stress Tests and Small Business Lending By Cortes, Kristle Romero; Demyanyk, Yuliya; Li, Lei; Loutskina, Elena; Strahan, Philip E.
  6. Credit Risk Analysis using Machine and Deep Learning models By Peter Addo; Dominique Guegan; Bertrand Hassani
  7. The determinants of interest rates in microfinance: age, scale and organisational charter By Jacinta C. Nwachukwu; Aqsa Aziz; Uchenna Tony-Okeke; Simplice A. Asongu
  8. Bank Loan Loss Provisions, Investor Protection and the Macroeconomy By Ozili, Peterson K
  9. Does CDS trading affect risk-taking incentives in managerial compensation? By Jie Chen; Woon Sau Leung; Wei Song; Davide Avino
  10. The Role of Ratio Profits as The Improvement of Realization of KPR BTN Credit on PT. BTN (Persero) Tbk By Fauzi, Achmad
  11. Financial Globalization and Bank Lending: The Limits of Domestic Monetary Policy? By Jin Cao; Valeriya Dinger
  12. Political connection and bank in(efficiency) By Omneya Abdelsalam; Sabur Mollah; Emili Tortosa-Ausina
  13. The banking systems of Germany, the UK and Spain form a spatial perspective: Lessons learned and what is to be done? By Flögel, Franz; Gärtner, Stefan
  14. The MacroFinancial Risk Assessment Framework (MFRAF), Version 2.0 By Jose Fique
  16. Leverage Ratio as a Macroprudential Policy Instrument By Nijolë Valinskytë; Erika Ivanauskaitë; Darius Kulikauskas; Simonas Krëpðta
  17. Structural changes in the interbank market across the financial crisis from multiple core-periphery analysis By Sadamori Kojaku; Giulio Cimini; Guido Caldarelli; Naoki Masuda
  18. The Bank of Canada 2015 Retailer Survey on the Cost of Payment Methods: Estimation of the Total Private Cost for Large Businesses By Valéry Dongmo Jiongo
  19. Financial Stability and Fractional Reserve Banking By Shengxing Zhang; Cyril Monet; Stephan Imhof
  20. The Position Of The Bank Indonesia As The Lender Of Last Resort After The Enactment Of Law No. 9 Of 2016 On Prevention And Mitigation Of Financial System Crisis By Theresia Anita Christiani
  21. Access to finance for firms in Malta: Estimating the impact of reduced credit By Sandra Zerafa
  22. ATM time series, 1967-2017 By Bátiz-Lazo, Bernardo
  23. Are banks opaque? Evidence from insider trading By Fabrizio Spargoli; Christian Upper
  24. Measuring the Equilibrium Impacts of Credit: Evidence from the Indian Microfinance Crisis By Emily Breza; Cynthia Kinnan
  25. The Prediction of Bankruptcy Using Altman Z-Score Model (Case Study In BRI Bank, BNI Bank, Mandiri Bank, BTN Bank) By Herlin, .

  1. By: Torsten Ehlers; Steven Kong; Feng Zhu
    Abstract: We develop a stylised shadow banking map for China with the aim of providing a coherent picture of its structure and the associated financial system interlinkages. Five key characteristics emerge. One defining feature of the shadow banking system in China is the dominant role of commercial banks, true to the adage that shadow banking in China is the "shadow of the banks". Moreover, it differs from shadow banking in the United States in that securitisation and market-based instruments play only a limited role. With a series of maps we show that the size and dynamics of shadow banking in China have been changing rapidly. This reveals a marked shift in the relative importance of different shadow banking activities. New and more complex "structured" shadow credit intermediation has emerged and quickly reached a large scale, while the bond market has become highly dependent on funding channelled through wealth management products. As a result, the structure of shadow banking in China is growing more complex.
    Keywords: shadow banking, wealth management products (WMPs), investment receivables, entrusted loans, trust loans
    JEL: G2
    Date: 2018–02
  2. By: David Perez-Reyna (Universidad de los Andes); Xavier Freixas (Universitat Pompeu Fabra)
    Abstract: Excessive credit growth and high asset prices increase the probability of a crisis. Because these two variables are determined in equilibrium, the analysis of systemic risk and the cost-benefit analysis of macroprudential regulation requires a specific framework consistent with the empirical observation. We argue that an overlapping generation model of rational bubbles can explain some of the main features of banking crises and, therefore, provide a microfounded framework for the rigorous analysis of macroprudential policy. We find that credit financed bubbles may have a role as a buffer in reducing excessive investiment at the firms' level and, thus, increasing efficiency. Still, when banks have a risk of going bankrupt a trade-off appears between financial stability and efficiency. When this is the case, macroprudential policy has a key role in improving efficiency while preserving financial stability.
    Date: 2017
  3. By: Giebel, Marek; Kraft, Kornelius
    Abstract: We analyze the causal effect of the credit supply shock to banks induced by interbank market disruptions in the recent financial crisis 2008/2009 on their business customers' innovation activity. Using a matched bank-firm data set for Germany, we find that having relations with a more severely affected bank seriously hampers firms' current innovation activities due to funding shortages. Furthermore, we find that firms with a relationship to a less severely affected bank are more likely to initiate new product and process innovations and to reallocate human resources to innovation during the financial crisis.
    Keywords: financing of innovations,credit supply,financial crisis,innovative activities
    JEL: G01 G21 G30 O16 O30 O31
    Date: 2018
  4. By: Michael Brei; Carlos Winograd
    Abstract: The paper presents both theoretical and empirical analysis to explain the differences in credit risks between branches and subsidiaries of foreign banks. Using a model with costly monitoring and asymmetric information (from the perspective of host country regulators and parent banks), we show theoretical evidence that the optimal amount of monitoring increases with the size of foreign affiliates (relative to their parent banks), regardless of whether their legal form is of a branch or subsidiary. In the case of small affiliates, we argue that there is a conflict of interest between parent banks and regulators, the former of which prefer to operate with riskier and ring-fenced subsidiaries, and the latter of which prefer better-monitored and co-insured branches. Using bank-level data on Argentina and Uruguay prior to their financial crises of 2001-02, we find that (i) larger foreign branches have lower ratios of non-performing loans than foreign subsidiaries and smaller branches and (ii) branches headquartered in more developed economies had fewer non-performing loans.
    Keywords: Bank risks, branches, subsidiaries
    JEL: G21 G15 F36 E44
    Date: 2018
  5. By: Cortes, Kristle Romero (University of New South Wales); Demyanyk, Yuliya (Federal Reserve Bank of Cleveland); Li, Lei (University of Kansas); Loutskina, Elena (University of Virginia); Strahan, Philip E. (National Bureau of Economic Research)
    Abstract: Post-crisis stress tests have altered banks’ credit supply to small business. Banks affected by stress tests reduce credit supply and raise interest rates on small business loans. Banks price the implied increase in capital requirements from stress tests where they have local knowledge, and exit markets where they do not, as quantities fall most in markets where stress-tested banks do not own branches near borrowers, and prices rise mainly where they do. These reductions in supply are concentrated among risky borrowers. Stress tests do not, however, reduce aggregate credit. Small banks increase their share in geographies formerly reliant on stress-tested lenders.
    Keywords: small business lending; stress test; credit supply; large banks;
    JEL: G2
    Date: 2018–03–01
  6. By: Peter Addo (Lead Data Scientist - SNCF Mobilité); Dominique Guegan (UP1 - Université Panthéon-Sorbonne, Labex ReFi - UP1 - Université Panthéon-Sorbonne, University of Ca’ Foscari [Venice, Italy], CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, IPAG - IPAG Business School - Ipag); Bertrand Hassani (Labex ReFi - UP1 - Université Panthéon-Sorbonne, Capgemini Consulting [Paris])
    Abstract: Due to the hyper technology associated to Big Data, data availability and computing power, most banks or lending financial institutions are renewing their business models. Credit risk predictions, monitoring, model reliability and effective loan processing are key to decision making and transparency. In this work, we build binary classifiers based on machine and deep learning models on real data in predicting loan default probability. The top 10 important features from these models are selected and then used in the modelling process to test the stability of binary classifiers by comparing performance on separate data. We observe that tree-based models are more stable than models based on multilayer artificial neural networks. This opens several questions relative to the intensive used of deep learning systems in the enterprises.
    Keywords: Credit risk,Financial regulation,Data Science,Bigdata,Deep learning
    Date: 2018–02
  7. By: Jacinta C. Nwachukwu (Coventry University, UK.); Aqsa Aziz (Coventry University, UK.); Uchenna Tony-Okeke (Coventry University, UK.); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: This study compares the responsiveness of microcredit interest rates to age, scale of lending and organisational charter. It uses an unbalanced panel of 300 MFIs from 107 developing countries from 2005 to 2015. Three key trends emerge from the results of a 2SLS regression. First, the adoption of formal microbanking practices raises interest rates compared with other forms of microlending. Second, large scale lending lowers interest rates only for those MFIs that already hold legal banking status. Third, age of operation in excess of eight years exerts a negative impact on interest rates, regardless of scale and charter type of MFI. Collectively, our results indicate that policies which incentivise mature MFIs to share their knowledge will be more effective in helping the nascent institutions to overcome their cost disadvantages compared with reforms to transform them into licensed banks. For MFIs which already hold permits to operate as banks, initiatives to increase loan sizes are key strategic pricing decisions, irrespective of the institution’s age. This study is original in its differentiation of the impact on interest rates of regulations which promote formal banking principles, credit market extension vis-à-vis knowledge sharing between mature and nascent MFIs.
    Keywords: Microfinance; microbanks; non-bank financial institutions
    JEL: G21 G23 G28 E43 N20
    Date: 2018–01
  8. By: Ozili, Peterson K
    Abstract: This study investigates the non-discretionary determinants of bank loan loss provisions in Africa after controlling for macroeconomic fluctuation, financial development and investor protection. We find that non-performing loans, loan-to-asset ratio and loan growth are significant non-discretionary drivers of bank provisions in the African region. We observe that bank provision is a positive function of non-performing loans up to a threshold beyond which bank provisions will no longer increase as non-performing loans increases. Also, bank loan-to-asset ratio is a significant driver of bank provisions when African banks have higher loan-to-asset ratios. Also, larger banks in financially developed African countries have fewer loan loss provisions while increase in bank lending leads to fewer bank provisions in countries with strong investor protection. Finally, higher bank lending is associated with higher bank provisions during economic boom. The findings have implications.
    Keywords: Loan Loss Provisions, Africa, Income Smoothing, Procyclicality, Economic Cycle, Investor Protection, Banks, Macroeconomy, Credit Risk, Financial Development
    JEL: A1 A11 C5 C58 F3 M1 M21 M41
    Date: 2018–06
  9. By: Jie Chen (Cardiff Business School, Cardiff University); Woon Sau Leung (Cardiff Business School, Cardiff University); Wei Song (School of Management, Swansea University); Davide Avino (Cardiff Business School, Cardiff University)
    Abstract: We find that managers receive more risk-taking incentives in their compensation packages once their firms are referenced by credit default swap (CDS) trading, particularly in firms with bank debt, greater institutional holdings, and in financial distress. These findings suggest that boards offer pay packages that encourage greater managerial risk taking to take advantage of the reduced creditor monitoring after CDS trade initiation. Further, we find that the onset of CDS trading attenuates the effect of vega on leverage, consistent with the view that the threat of exacting creditors restrains managerial risk appetite.
    Keywords: Credit default swaps, Executive compensation, Risk taking, Leverage
    JEL: G32 G34
    Date: 2018–02–24
  10. By: Fauzi, Achmad
    Abstract: Mortgages are used as credit services provided by banks to customers who want a special loan to meet the needs in the construction of houses or home renovations that must be in accordance with the procedures that have been specified as a condition of completeness of KPR. Data collection methods in the preparation of this research is a qualitative research method with one case study in calculating the profit generated by Bank BTN (Bank Tabungan Negara) can be calculated by using the ratio. One of the ratios used is the profitability ratio. In the ratio of profitability, there are ratios such as: ROA (Return On Asset), ROE (Return On Equity), NIM (Net Interest Margin), and BOPO (Operational Cost). To find out the ROA (Return On Asset) ratio, net income after tax and income is required. As for calculating ROE (Return On Equity) ratio required net income after interest and taxes and capital. And for NIM (Net Interest Margin) ratio required total net profit after tax and income, while BOPO (Operational Cost) required operational and operational income. Analysis of financial statements is very important to do because at this stage the financial statements that have been calculated on the ratio already described, the ratio results obtained by PT. Bank BTN (Bank Tabungan Negara) may be decided to comply with the provisions of the BI standard provisions.
    Keywords: Credit Realization, KPR, Rentability Ratio
    JEL: G11 G21 G24
    Date: 2018–01–30
  11. By: Jin Cao (Norges Bank (Central Bank of Norway)); Valeriya Dinger (Universität Osnabrück)
    Abstract: We empirically analyze how bank lending reacts to monetary policy in the presence of global financial flows. Employing a unique and novel dataset of the funding modes and currency composition of the full population of Norwegian banks in structurally identified regressions, we show that the efficiency of the bank lending channel is affected when banks can shift to international funding and thus insulate their costs of funding from domestic monetary policy. We isolate the effect of global factors from domestic monetary policy by focusing on the deviation of exchange rates from the prediction of (uncovered and covered) interest rate parity. The Norwegian banking sector represents an ideal laboratory since the exogenous exchange rate dynamics allows for a convincing identification of the relation between lending and global factors.
    Keywords: monetary policy, foreign funding channel, bank lending channel, exchange rate dynamics
    JEL: E52 F36 G21
    Date: 2018–02–23
  12. By: Omneya Abdelsalam (Durham University); Sabur Mollah (School of Management, Swansea University); Emili Tortosa-Ausina (Universitat Jaume I and Ivie)
    Abstract: Does political connection affect bank efficiency during both financial and political crises? This study addresses this question by adopting a two-stage approach that uses a quantile regression analysis of a unique dataset of listed banks in the Middle East and North Africa region. Our results show that political connection is a driving force behind bank inefficiency in the region. We find that the least efficient banks have the most significant association with political connections, thus supporting the bailout theory. We also find that political connections influenced the efficiency of banks during the 2008-9 global financial crisis but not during the 2011-13 regional political crisis. Our results provide new evidence on the applicability of established political connection theories in developing countries during political regime turmoil. We therefore recommend that global banking regulators and market participants scrutinize the political connections of banks more thoroughly.
    Keywords: Banks, Efficiency, MENA countries, Political connections, Data Envelopment Analysis, Quantile regression.
    JEL: D24 G21 G28 O16
    Date: 2018–02–24
  13. By: Flögel, Franz; Gärtner, Stefan
    Abstract: This paper re-visits the state of decentralised banking in Germany, Spain and the UK. The cross-country comparison we conducted has identified Germany as having the most decentralised banking system, followed by Spain and the UK, as expected. The development of regional and double-purpose banks, i.e. savings and cooperative banks, mainly account for the differences in the degree of centralisation. Whereas no such bank exists in the UK any longer and real savings banks in Spain have almost disappeared, two decentralised banking groups with more than 1,400 savings and cooperative banks dominate business finance in Germany. Our comparison has identified three factors of success contributing to the persistence of decentralised banking: I. Short operational and (especially) functional distance and embeddedness in supportive regional bank associations. Short distances allow banks to capitalise on soft information advantages in lending, whilst banking associations also secure access to advanced banking knowledge for banks headquartered in peripheral regions. II. The development of "real" decentralised universal banking. Here, the time when regional savings and cooperative banks received the right to lend is crucial. Because it took them so long to get permission to offer loans, savings banks in Spain and the UK were latecomers to (business) lending, whereas lending had always been the business of German savings banks. Therefore, savings banks in the UK and Spain were not able to capitalise on soft and local information advantages in short distance lending. III. The interplay of the regional principle (regional market segregation), regional embeddedness and a national system that balances regional disparities. Together, these three factors help to make regional banks sufficiently successful, even in weak regions, and hinder competition between banks, thereby supporting meaningful cooperation in banking associations and relationship lending. Savings banks have never been as important in business lending in the UK and Spain as they are in Germany. Though large commercial banks dominate business lending in both countries, some (partly newly established) banks tend to specialise in lending to small enterprises at shorter distances there. To support short-distance lending, this paper suggests a compensation scheme for screening and monitoring costs. Such a scheme may stimulate banks to shift, or preserve, their lending decision processes to the regional level and reduce the need for standardisation, centralisation and bank mergers in times when interest rates are low.
    Keywords: comparing banking systems,SME finance in the UK,Spain and Germany,decentralised banking
    JEL: D43 E21 G01 G21 G38 R12
    Date: 2018
  14. By: Jose Fique
    Abstract: This report provides a detailed technical description of the updated MacroFinancial Risk Assessment Framework (MFRAF), which replaces the version described in Gauthier, Souissi and Liu (2014) as the Bank of Canada’s stress-testing model for banks with a focus on domestic systemically important banks (D-SIBs). This new version incorporates the characteristics of the previous model and also includes fire-sale effects resulting from the regulatory leverage constraints faced by banks, as well as an enhanced treatment of feedback-loop effects between solvency and liquidity risks through both the pricing and costly asset-liquidation channels. These new features improve the model’s ability to capture the non-linear effects of risk scenarios on D-SIBs’ capital positions and shed light on the importance of additional channels of stress propagation. The model is also subject to a comprehensive sensitivity analysis.
    Keywords: Financial stability, Financial system regulation and policies
    JEL: G01 G21 G28 C72 E58
    Date: 2017
  15. By: Joseph Hughes (Rutgers University); Julapa Jagtiani (Federal Reserve Bank of Philadelphia); Loretta Mester (Federal Reserve Bank of Cleveland, Wharton School, University of Pennsylvania); Choon-Geol Moon (Hanyang University)
    Abstract: We consider how size matters for banks in three size groups: banks with assets of less than $1 billion (small community banks), banks with assets between $1 billion and $10 billion (large community banks), and banks with assets between $10 billion and $50 billion (midsize banks). Community banks have potential advantages in relationship lending compared with large banks. However, increases in regulatory compliance and technological burdens may have disproportionately increased community banks’ costs, raising concerns about small businesses’ access to credit. Our evidence suggests that: (1) the average costs related to regulatory compliance and technology decrease with size; (2) while small community banks exhibit relatively more valuable investment opportunities, larger community banks and midsize banks exploit theirs more efficiently and achieve better financial performance; (3) unlike small community banks, large community banks have financial incentives to increase lending to small businesses; and (4) for business lending and commercial real estate lending, large community banks and midsize banks assume higher inherent credit risk and exhibit more efficient lending. Thus, concern that small business lending would be adversely affected if small community banks find it beneficial to increase their scale is not supported by our results.
    Keywords: community banking, scale, financial performance, small business lending
    JEL: G21 L25
    Date: 2018–03–08
  16. By: Nijolë Valinskytë (Bank of Lithuania); Erika Ivanauskaitë (Bank of Lithuania); Darius Kulikauskas (Bank of Lithuania); Simonas Krëpðta (Bank of Lithuania)
    Abstract: This paper aims to explain the relationship between risk-based and LR requirements and the motivation for the macroprudential use of LR requirements. The rest of the paper is structured as follows. First, we define the LR and the microprudential requirement that is based on it (Chapter 1) and discuss the merits and drawbacks of risk-weighted and nonrisk-weighted capital requirements, assessing how LR requirements can improve the current capital regulation framework (Chapter 2). Then, we turn to the stylized quantitative relationship between the two kinds of requirements and illustrate the rationale for macroprudential LR add-ons (Chapter 3). Further on, we consider legal issues, with a focus on the EU (Chapter 4) and review the country experience with LR requirements (Chapter 5). Finally, we take a look at the LR situation in the Lithuanian banking sector (Chapter 6) and conclude.
    Date: 2018–03–07
  17. By: Sadamori Kojaku; Giulio Cimini; Guido Caldarelli; Naoki Masuda
    Abstract: Interbank markets are often characterised in terms of a core-periphery network structure, with a highly interconnected core of banks holding the market together, and a periphery of banks connected mostly to the core but not internally. This paradigm has recently been challenged for short time scales, where interbank markets seem better characterised by a bipartite structure with more core-periphery connections than inside the core. Using a novel core-periphery detection method on the eMID interbank market, we enrich this picture by showing that the network is actually characterised by multiple core-periphery pairs. Moreover, a transition from core-periphery to bipartite structures occurs by shortening the temporal scale of data aggregation. We further show how the global financial crisis transformed the market, in terms of composition, multiplicity and internal organisation of core-periphery pairs. By unveiling such a fine-grained organisation and transformation of the interbank market, our method can find important applications in the understanding of how distress can propagate over financial networks.
    Date: 2018–02
  18. By: Valéry Dongmo Jiongo
    Abstract: The Bank of Canada 2015 Retailer Survey on the Cost of Payment Methods faced low response rates and outliers in sample data for two of its retailer strata: chains and large independent businesses. This technical report investigates whether it is appropriate to combine these two strata to produce more accurate estimates of the total private cost to large businesses of the main payment methods. It uses two approaches to compute the total cost. First, a sample-based approach assumes consistency of some sample ratios and calibrates the sample to the known population totals of auxiliary variables. Second, a model-based approach uses outlier-robust estimation methods. The results show that, unlike for payments by cash and debit cards, there is relatively little difference between the approaches in determining the cost of payment by credit card. The model-based approach is recommended because it does not allocate the retailer’s total costs in advance between fixed and variable costs, and it uses outlier-robust estimation methods.
    Keywords: Econometric and statistical methods
    JEL: C12 C83
    Date: 2017
  19. By: Shengxing Zhang (London School of Economics); Cyril Monet; Stephan Imhof (Swiss National Bank)
    Abstract: We analyze the optimal risk-return trade-off when banks can issue inside money. Optimally the quantity of inside money is restricted by some reserve requirements. Increasing the reserve requirements or decreasing the rate of return on central bank money makes loans to the private sector more expensive. This induces borrowers to take more risk. However, leverage also decline, which induces borrowers to take safer decision. The optimal combination of reserve requirement and inflation trades-off both effects. The Friedman rule or zero reserve requirement is not necessarily optimal, as it would induce too much leverage. In spite of being the safest system, fully backed inside money is not optimal as it reduces leverage too much.
    Date: 2017
  20. By: Theresia Anita Christiani (Universitas Atma Jaya Yogyakarta, Jalan Babarsari 44, 55281, Yogyakarta, Indonesia.)
    Abstract: Objective – This paper explores the role of the Indonesian Central Bank as the Lender of the Last Resort. Methodology/Technique – This research uses normative juridical research and secondary data. Findings – The results indicate that the Bank of Indonesian, in coordination with the Financial Services Authority, still has the authority to grant short-term loans for banks with liquidity issues. Nevertheless, the Bank of Indonesia does not have authority to provide emergency finance facilities where the funding is granted at the government's expense. Novelty – This paper uses normative juridical research and qualitative data analysis.
    Keywords: Authority, Bank, Crises, Position, Prevention, Indonesia.
    JEL: K10 K20
    Date: 2017–12–11
  21. By: Sandra Zerafa
    Abstract: This note looks at changes in the access to finance of firms over time. From a demand side, results from the Survey on the Access to Finance of Enterprises (SAFE) indicate that bank financing still remains the most used source. From a supply-side point of view, the Bank Lending Survey (BLS) indicates that Maltese banks have resorted to stricter credit conditions rather than quantity restrictions. The relationship between credit to NFCs and GDP growth appears to have weakened since the crisis, such that an increased level of credit has a smaller impact on real output. This may reflect structural changes in the Maltese economy that have taken place over the last decade.
    JEL: E51 C5 G00
  22. By: Bátiz-Lazo, Bernardo
    Abstract: This short note is a description of the dataset compiled during the drafting of Cash and Dash: How ATMs and Computers Changed Banking (Oxford University Press, 2018). The full dataset is deposited with the European Association for Banking and Financial History, and is available for download from the association's website.
    Keywords: banking and technology,datasets
    JEL: G21 N20 N22 N24
    Date: 2018
  23. By: Fabrizio Spargoli; Christian Upper
    Abstract: We use trades by US corporate insiders to investigate bank opacity, both in absolute terms and relative to other firms. On average, bank insider sales do not earn an abnormal return and do not predict stock returns. By contrast, bank insider purchases do, even though less than other firms. Our within-banking sector and over-time analyses also fail to provide evidence of greater opacity of banks vis-à-vis other firms. These results challenge conventional wisdom and suggest that, to assess bank opacity, the type of benchmark (transparency vs. other firms) and transaction/information (purchase/positive vs. sale/negative) are crucial.
    Keywords: bank opacity, insider trading, financial stability
    JEL: G14 G20 G21
    Date: 2018–02
  24. By: Emily Breza; Cynthia Kinnan
    Abstract: In October 2010, the state government of Andhra Pradesh, India issued an emergency ordinance, bringing microfinance activities in the state to a complete halt and causing a nation-wide shock to the liquidity of lenders, especially those with loans in the affected state. We use this massive dislocation in the microfinance market to identify the causal impacts of a reduction in credit supply on consumption, earnings, and employment in general equilibrium. Using a proprietary, hand-collected district-level data set from 25 separate, for-profit microlenders matched with household data from the National Sample Survey, we find that district-level reductions in credit supply are associated with significant decreases in casual daily wages, household wage earnings and consumption. We also find that wages in the non-tradable sector fall more than in the tradable sector (agriculture), suggesting that one important impact of the microfinance contraction was transmitted through its effect on aggregate demand. We present a simple two period, two-sector model of the rural economy illustrating this channel and show that our wage results are consistent with a simple calibration of the model.
    JEL: D50 G21 O16
    Date: 2018–02
  25. By: Herlin, .
    Abstract: Based on the calculation of the Altman model in predicting bankrupt at PT. Bank Rakyat Indonesia (Persero) Tbk in 2014, 2015, 2016, PT. Bank Mandiri (Persero) Tbk in 2014 and 2015 and is PT.Bank Tabungan Negara (Persero) Tbk in 2014 with a score of Z-score above 2.99 indicates that included in the company healthy or not potential to go bankrupt. Companies included in the category of unhealthy or potential companies to go bankrupt with a Z-score of less than 1.81 ie PT. Bank Tabungan Negara (Persero) Tbk in 2014 with a Z-score of 1.405 (
    Keywords: Altman Model, Financial Distress
    JEL: G21
    Date: 2018–01–30

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