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on Banking |
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Issue of 2022‒03‒07
27 papers chosen by Sergio Castellanos-Gamboa, , Pontificia Universidad Javeriana |
| By: | Andrea Fabiani; Martha López Piñeros; José-Luis Peydró; Paul E. Soto |
| Abstract: | We study how capital controls and domestic macroprudential policy tame credit supply booms, respectively targeting foreign and domestic bank debt. For identification, we exploit the simultaneous introduction of capital controls on foreign exchange (FX) debt inflows and an increase of reserve requirements on domestic bank deposits in Colombia during a strong credit boom, as well as credit registry and bank balance sheet data. Our results suggest that first, an increase in the local monetary policy rate, raising the interest rate spread with the United States, allows more FX-indebted banks to carry trade cheap FX funds with more expensive peso lending, especially toward riskier, opaque firms. Capital controls tax FX debt and break the carry trade. Second, the increase in reserve requirements on domestic deposits directly reduces credit supply, and more so for riskier, opaque firms, rather than enhances the transmission of monetary rates on credit supply. Importantly, different banks finance credit in the boom with either domestic or foreign (FX) financing. Hence, capital controls and domestic macroprudential policy complementarily mitigate the boom and the associated risk-taking through two distinct channels. |
| Keywords: | Capital controls; macroprudential and monetary policy; carry trade; credit supply; risk-taking |
| JEL: | E52 E58 F34 F38 G21 G28 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1816&r= |
| By: | Gee Hee Hong; Deniz Igan; Do Lee |
| Abstract: | How does unconventional monetary policy affect corporate capital structure and investment decisions? We study the transmission channel of quantitative easing and its potential diminishing returns on investment from a corporate finance perspective. Using a rich bankfirm matched data of Japanese firms with information on corporate debt and investment, we study how firms adjust their capital structure in response to the changes in term premia. Investment responds positively to a reduction in the term premium on average. However, there is a significant degree of cross-sectional variation in firm response: healthier firms increase capital spending and cash holdings, while financially vulnerable firms take advantage of lower long-term yields to refinance without increasing investment. |
| Keywords: | transmission of unconventional monetary policy, quantitative easing, reversal rate, zombie firms, corporate balance sheet, term premium, corporate investment |
| JEL: | E2 E5 G3 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:987&r= |
| By: | Maxime MERLI (LaRGE Research Center, Université de Strasbourg); Antoine PARENT (OFCE, Université Paris 8, LED & CAC-IXXI, ENS Lyon) |
| Abstract: | In this article we unearth the first real portfolios of French individual investors of the Belle Époque by reinvestigating the study of Des Essars and the comments of his contemporaries (Coste, Neymarck, and Leroy Beaulieu). The results are striking: we find strong elements of behavioral finance during the first era of financial globalization. Both the actual portfolios and the comments and advice of the financial analysts of the time reveal traces of behavioral finance and, more specifically, echo very clearly behavioral portfolio theory a century before its modeling. This discovery is important not only from the point of view of the historical depth of behavioral finance, but also for the persistence and legitimacy of the questions that behavioral finance has always addressed to standard finance. |
| Keywords: | Financial History, Individual Investors, Behavioral Finance, Behavioral Portfolio Theory. |
| JEL: | G11 G14 G15 N20 N23 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:lar:wpaper:2022-01&r= |
| By: | Daniel Levy (Department of Economics, Bar-Ilan University, Israel; Department of Economics, Emory University, US; ICEA, Wilfrid Laurier University, Canada; Rimini Centre for Economic Analysis; ISET, TSU, Georgia); Tamir Mayer (Graduate School of Business Administration, Bar-Ilan University, Israel); Alon Raviv (Graduate School of Business Administration, Bar-Ilan University, Israel) |
| Abstract: | We study the economics and finance scholars' reaction to the 2008 financial crisis using machine learning language analyses methods of Latent Dirichlet Allocation and dynamic topic modelling algorithms, to analyze the texts of 14,270 NBER working papers covering the 1999–2016 period. We find that academic scholars as a group were insufficiently engaged in crises' studies before 2008. As the crisis unraveled, however, they switched their focus to studying the crisis, its causes, and consequences. Thus, the scholars were “slow-to-see,” but they were “fast-to-act.” Their initial response to the ongoing Covid-19 crisis is consistent with these conclusions. |
| Keywords: | Financial crisis, Economic Crisis, Great recession, NBER working papers, LDA textual analysis, Topic modeling, Dynamic Topic Modeling, Machine learning |
| JEL: | E32 E44 E50 F30 G01 G20 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:22-04&r= |
| By: | Nittai Bergman; David A. Matsa; Michael Weber |
| Abstract: | This paper analyzes the heterogeneous effects of monetary policy on workers with differing levels of labor force attachment. Exploiting variation in labor market tightness across metropolitan areas, we show that the employment of populations with lower labor force attachment—Blacks, high school dropouts, and women—is more responsive to expansionary monetary policy in tighter labor markets. The effect builds up over time and is long lasting. We develop a New Keynesian model with heterogeneous workers that rationalizes these results. The model shows that expansionary monetary shocks lead to larger increases in the employment of less attached workers when the central bank follows an average inflation targeting rule and when the Phillips curve is flatter. These findings suggest that, by tightening labor markets, the Federal Reserve's recent move from a strict to an average inflation targeting framework especially benefits workers with lower labor force attachment. |
| JEL: | E12 E24 E31 E43 E52 E58 J24 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29651&r= |
| By: | Nandrasa Tiava (Université de Toliara) |
| Abstract: | Climate change brings changes in financial behavior. Households that are the most impacted by climate disruption adopt a strategy of financial behavior change to improve their resilience. Tontine, access to MFIs and VOAMAMI are the preferred ways for vulnerable households to cope. This paper first outlines the resilience capacity of households and provides an analysis of household behavior change to mitigate the effect of climate change. |
| Abstract: | Le changement climatique apporte de changement de comportement au niveau de la finance. Les ménages qui sont les plus impactés par le dérèglement climatique adopte une stratégie de changement de comportement financier pour améliorer leur capacité de résilience. La Tontine, l'accès au IMF et le VOAMAMI sont les pistes privilégiées par les ménages vulnérables pour y faire face. Cet article expose d'abord la capacité de résilience des ménages et apporte une analyse sur le changement de comportement des ménages pour atténuer e l'effet du changement climatique. |
| Keywords: | VOAMAMI,Tontine,Behavior,Climate change,Comportement,Changement climatique |
| Date: | 2022–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03547925&r= |
| By: | Amanda Liu; Jing Liu; Ilhyock Shim |
| Abstract: | This paper examines how Chinese banks used on-balance sheet shadow loans for regulatory arbitrage and whether the financial market priced in the banks' use of shadow loans and the resulting vulnerabilities in 2016–2020. It finds that banks chose to window-dress their regulatory capital ratio by using shadow loans. It also shows that banks with a higher shadow loan ratio or a lower break-even non-performing loan ratio obtained from reverse stress testing faced higher wholesale funding costs. Finally, after the announcement of a rare bank failure event, more vulnerable banks witnessed lower cumulative stock and bond returns. |
| Keywords: | bank capital regulation, Chinese economy, regulatory arbitrage, shadow banking, reverse stress test. |
| JEL: | G12 G14 G21 G28 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:999&r= |
| By: | Anastasia Cozarenco; Valentina Hartarska; Ariane Szafarz |
| Abstract: | The costs and benefits of subsidized microfinance are still controversial. We utilize a cost-function estimation approach that accounts for the double bottom line (social and financial) of microfinance institutions (MFIs) to evaluate how subsidies affect both cost efficiency and risk of mission drift. We control for endogenous self-selection into the business models of credit-only versus credit-plus-deposit. Our results suggest that MFIs that both supply loans and collect deposits need no subsidies to be cost-efficient. In addition, subsidies to these MFIs are associated with an increase in deposit size, which might hurt the most disadvantaged depositors. In sum, combining subsidized funds from donors with deposits increases the risk of mission drift, and can therefore be socially undesirable. |
| Keywords: | Finance; Microfinance; Cost Efficiency; Scale Economies; Subsidies |
| JEL: | O14 D24 G21 O16 F35 |
| Date: | 2022–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:2013/340133&r= |
| By: | Fiorella De Fiore; Marie Hoerova; Harald Uhlig |
| Abstract: | Interbank money markets have been subject to substantial impairments in the recent decade, such as a decline in unsecured lending and substantial increases in haircuts on posted collateral. This paper seeks to understand the implications of these developments for the broader economy and monetary policy. To that end, we develop a novel general equilibrium model featuring heterogeneous banks, interbank markets for both secured and unsecured credit, and a central bank. The model features a number of occasionally binding constraints. The interactions between these constraints - in particular leverage and liquidity constraints - are key in determining macroeconomic outcomes. We find that both secured and unsecured money market frictions force banks to either divert resources into unproductive but liquid assets or to de-lever, which leads to less lending and output. If the liquidity constraint is very tight, the leverage constraint may turn slack. In this case, there are large declines in lending and output. We show how central bank policies which increase the size of the central bank balance sheet can attenuate this decline. |
| Keywords: | money markets, collateral, monetary policy, balance sheet policies. |
| JEL: | E44 E52 E58 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:997&r= |
| By: | Anton J. Heckens; Thomas Guhr |
| Abstract: | Complex systems are usually non-stationary and their dynamics is often dominated by collective effects. Collectivity, defined as coherent motion of the whole system or of some of its parts, manifests itself in the time-dependent structures of covariance and correlation matrices. The largest eigenvalue corresponds to the collective motion of the system as a whole, while the other large, isolated, eigenvalues indicate collectivity in parts of the system. In the case of finance, these are industrial sectors. By removing the collective motion of the system as a whole, the latter effects are much better revealed. We measure a remaining collectivity to which we refer as average sector collectivity. We identify collective signals around the Lehman Brothers crash and after the dot-com bubble burst. For the Lehman Brother crash, we find a potential precursor. We analyze 213 US stocks over a period of more than 30 years from 1990 to 2021. We plot the average sector collectivity versus the collectivity corresponding to the largest eigenvalue to study the whole market trajectory in a two dimensional space spanned by both collectivities. Therefore, we capture the average sector collectivity in a much more precise way. Additionally, we observe that larger values in the average sector collectivity are often accompanied by trend shifts in the mean covariances and mean correlations. As of 2015/2016 the collectivity in the US stock markets changed fundamentally. |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2202.00297&r= |
| By: | Anne Duquerroy; Clément Mazet-Sonilhac; Jean-Stéphane Mésonnier; Daniel Paravisini |
| Abstract: | Using micro-data on bank-SME relationships in France, we show that banks specialize locally by industry and that this specialization shapes the equilibrium amount of lending. We use the reallocation of firms’ accounts from closed branches to nearby branches of the same bank, as a source of quasi-random variation in the match between a firm’s industry and the industry of specialization of its bank. Reallocation is associated with a significant and persistent drop in credit, the magnitude of which doubles for firms transferred to a branch less specialized in their industry. |
| Keywords: | Bank Specialization, SMEs, Relationship Banking, Branch Closures |
| JEL: | G21 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:865&r= |
| By: | Martin T. Bohl; Dimitrios Kanelis; Pierre L. Siklos |
| Abstract: | In this paper, we analyze the relevance of central bank mandates on the content and tone of communication via speeches. Comparing this communication channel for mandate-related objectives between the Federal Reserve and the European Central Bank reveals similarities before the Great Financial Crisis, while notable differences emerge afterward. Furthermore, we propose a study design to examine how hawkish the tone of speeches becomes in light of current versus expected macroeconomic developments. We find that, since the GFC, expectations of unemployment drive the tone of FED speeches while inflation expectations influence the tone of ECB speeches. |
| Keywords: | ECB, Expectations, FED, Inflation, Central Bank Mandates, Speeches, Structural Topic Model, Unemployment |
| JEL: | E50 E52 E58 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:cqe:wpaper:9622&r= |
| By: | Link, Sebastian (Ifo Institute for Economic Research); Peichl, Andreas (Ludwig-Maximilians-Universität München); Roth, Christopher (University of Cologne); Wohlfart, Johannes (European Central Bank) |
| Abstract: | We survey samples of German firms and households to document novel stylized facts about the extent of information frictions among the two groups. First, firms' expectations about macroeconomic variables are closer to expert forecasts and less dispersed than households', consistent with higher information frictions among households. Second, the degree of dispersion and the distance from expert forecasts varies more across groups of households than across groups of firms. Third, firms update their policy rate expectations less than households when provided with an expert forecast, consistent with holding stronger priors. Our results have implications for modeling choices, macroeconomic dynamics, and policies. |
| Keywords: | information frictions, expectation formation, firms, households, interest rates |
| JEL: | D83 D84 E71 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15090&r= |
| By: | Sergio Mayordomo; Mar\'ia Rodriguez-Moreno; Juan Ignacio Pe\~na |
| Abstract: | This paper studies the investment decision of the Spanish households using a unique data set, the Spanish Survey of Household Finance (EFF). We propose a theoretical model in which households, given a fixed investment in housing, allocate their net wealth across bank time deposits, stocks, and mortgage. Besides considering housing as an indivisible and illiquid asset that restricts the portfolio choice decision, we take into account the financial constraints that households face when they apply for external funding. For every representative household in the EFF we solve this theoretical problem and obtain the theoretically optimal portfolio that is compared with households' actual choices. We find that households significantly underinvest in stocks and deposits while the optimal and actual mortgage investments are alike. Considering the three types of financial assets at once, we find that the households headed by highly financially sophisticated, older, retired, richer, and unconstrained persons are the ones investing more efficiently. |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2202.02280&r= |
| By: | Andrea Ajello; Nina Boyarchenko; François Gourio; Andrea Tambalotti |
| Abstract: | This paper reviews the theoretical literature at the intersection of macroeconomics and finance to draw lessons on the connection between vulnerabilities in the financial system and the macroeconomy, and on how monetary policy affects that connection. This literature finds that financial vulnerabilities are inherent to financial systems and tend to be procyclical. Moreover, financial vulnerabilities amplify the effects of adverse shocks to the economy, so that even a small shock to fundamentals or a small revision of beliefs can create a self-reinforcing feedback loop that impairs credit provision, lowers asset prices, and depresses economic activity and inflation. Finally, monetary policy may affect the buildup of vulnerabilities, but the sign of the impact along some of its transmission channels is theoretically ambiguous and may vary with the state of the economy. |
| Keywords: | Monetary policy; Asset prices; Financial stability; Financial crises; Credit; Leverage; Liquidity |
| JEL: | E44 E52 E58 G20 |
| Date: | 2022–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2022-05&r= |
| By: | Yichen Feng; Jean-Pierre Fouque; Ruimeng Hu; Tomoyuki Ichiba |
| Abstract: | We analyze the systemic risk for disjoint and overlapping groups (e.g., central clearing counterparties (CCP)) by proposing new models with realistic game features. Specifically, we generalize the systemic risk measure proposed in [F. Biagini, J.-P. Fouque, M. Frittelli, and T. Meyer-Brandis, Finance and Stochastics, 24(2020), 513--564] by allowing individual banks to choose their preferred groups instead of being assigned to certain groups. We introduce the concept of Nash equilibrium for these new models, and analyze the optimal solution under Gaussian distribution of the risk factor. We also provide an explicit solution for the risk allocation of the individual banks, and study the existence and uniqueness of Nash equilibrium both theoretically and numerically. The developed numerical algorithm can simulate scenarios of equilibrium, and we apply it to study the bank-CCP structure with real data and show the validity of the proposed model. |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2202.00662&r= |
| By: | Ali, Annisya Wahdania; Hasanah, Uswatun |
| Abstract: | Untuk menjalankan kegiatan operasional perusahaan, kebutuhan akan dana mutlak harus tersedia karena tanpa ketersediaan dana, tidak akan mungkin kegiatan perusahaan akan berjalan lancar. Dalam praktiknya dana yang dibutuhkan perusahaan ada dua macam, yaitu untuk keperluan modal kerja dan investasi. Apabila kebutuhan dana besar, sementara dana yang dibutuhkan tidak tersedia, jalan keluar untuk pemenuhan dana tersebut adalah melalui dana pinjaman (modal asing) dari lembaga keuangan seperti bank. Pemenuhan dana melalui pinjaman relative lebih mudah dan cepat dibandingkan dari modal sendiri, selama memenuhi persyaratan yang dipersyaratkan oleh bank. Hanya saja yang perlu diperhitungkan adalah bahwa pinjaman dana dari pihak perbankan memiliki ongkos (biaya) yang harus ditanggung, yaitu beban bunga. Besarnya beban bunga ini tergantung dari perusahaan yang membiayai, jangka waktu pinjaman, jaminan dan faktor lainnya. Setiap pengajuan kredit yang disetujui akan dinilai melalui semua persyaratan. Bagi bank hal ini penting agar dana yang dikucurkan tidak mengalami kerugian atau macet. Di lain sisi, bank juga tidak ingin pinjaman yang diberikan justru menjadi beban bagi perusahaan yang pada akhirnya dapat mengancam kelangsungan hidup perusahaan itu sendiri. Oleh karena itu, sebelum pinjaman atau kredit dikucurkan, bank terlebih dulu menganalisis kelayakan usahanya yang salah satunya adalah dengan menganalisis laporan keuangan perusahaan untuk beberapa priode tertentu. Hasil analisis ini akan dijadikan pedoman disetujui atau tidaknya usaha tersebut untuk dibiayai, serta besar pinjaman yang akan diberikan, serta persyaratan lainnya. |
| Date: | 2022–01–12 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:7dafs&r= |
| By: | Palit, Biswajit; Mukherjee, Sakya |
| Abstract: | The growing debate and discussions about legalizing digital currency- raises a significant question does the market have the withstanding power to include people from all segments of society for its usage. In such a nexus, India, when compared to its Asian counterparts is endowed with a booming crypto industry. However, due to many macro-economic and regulatory reasons which come parallel with the crypto trade, the Government of India is taking cognizance of regulating and rationing cryptocurrency trade. Cryptocurrency not only has prospects but at the very moment is enveloped with lots of apprehensions. Countries around the world are using blockchain technology to manoeuvre their development, coupled with swift payment modus operandi, low transaction fees absence of a mediator during transactions make the brighter side of this rapid digital currency. At the same time, unlike other currencies, cryptos are famously detached from any central banks or financial institutions and thereby received a completely decentralized status. On one side, this can free the investors from being beholden by the institution but on the flip side, there arise legal complications. Exposure to too much volatility and severe cases of fraudulent activities are prone to make investors apprehensive of this practice. We find, having a robust financial inclusion system, backed by proper monetary and fiscal policies is one of the necessary conditions to ensure that cryptocurrency taps the Indian market. By dissecting market phases into Accumulation, Pure Buy, Distribution and Pure Sell, we employ Robust Regression to test our proposition. Therefore, for crypto to finely blend in the Indian market and cause endogenous growth, the financial backbone of the economy needs to have a tremendous withstanding potential which comes when the country has vigorous financial inclusions and institutions. |
| Keywords: | Cryptocurrency, Regulatory Measures, Financial Inclusion. |
| JEL: | E2 E4 G1 |
| Date: | 2022–02–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:111850&r= |
| By: | Glenn Boyle (University of Canterbury); Roger Stover; Amrit Tiwana; Oleksandr Zhylyevskyy |
| Abstract: | We use a conjoint analysis of 551 subjects to compare the reaction of finance professionals to news of a banking crisis with the reactions of non-finance professionals and graduate students. All three groups make greater deposit withdrawals if deposit insurance protection involves a haircut, but the response of finance professionals is more nuanced: compared to non-finance professionals and students, they seem to care about haircuts mainly when bank capitalization is low and less so when capitalization is high. Both finance and nonfinance professionals are more concerned about the pre-funding of deposit insurance than are students. Overall though, the greater banking sector knowledge and experience presumably possessed by finance professionals does not seem to automatically translate into significantly different crisis-response behavior. |
| Keywords: | Banking crisis, Finance professionals, Deposit withdrawals |
| JEL: | G21 G28 |
| Date: | 2022–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:cbt:econwp:22/03&r= |
| By: | Maarten van Oordt (Vrije Universiteit Amsterdam) |
| Abstract: | Lawmakers have called for better stablecoin regulation, but authorities tend to have little control over the global operators of distributed ledgers that process stablecoin transactions. This chapter illustrates how peg deviations may occur when the issuer of a fiat-backed stablecoin loses its access to the traditional payment system of the jurisdiction that issues the relevant fiat currency. The need for reliable access to the traditional payment system in order to maintain a stable peg provides an important foothold for regulators to exercise control over fiat-backed stablecoins. Conditional upon regulators having little control over the operators of some distributed ledgers, an autonomy–stability choice may emerge where users of stablecoins ultimately face a choice between regulated stablecoins with a stable value but little autonomy and alternative stablecoin arrangements with more autonomy but a less stable value. |
| Keywords: | Stablecoins, Cryptocurrency, Exchange rate, Distributed ledgers, Regulation |
| JEL: | E42 G23 G28 |
| Date: | 2022–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20220015&r= |
| By: | Toni Ahnert; Sebastian Doerr; Nicola Pierri; Yannick Timmer |
| Abstract: | This paper analyzes the importance of information technology (IT) in banking for entrepreneurship. To guide our analysis, we build a parsimonious model of bank screening and lending that predicts that IT in banking can spur entrepreneurship by making it easier for startups to borrow against collateral. We then empirical show that job creation by young firms is stronger in US counties that are more exposed to IT-intensive banks. Consistent with a strengthened collateral lending channel, entrepreneurship increases by more in IT-exposed counties when house prices rise. In line with the model's implications, higher startup activity does not diminish startup quality. Instrumental variable regressions at the bank level further show that IT makes banks' credit supply more responsive to changes in local house prices, and weakens the importance of geographical distance between borrowers and lenders. These results suggest that banks' IT adoption can increase dynamism by improving startups' access to finance. |
| Keywords: | technology in banking, entrepreneurship, information technology, collateral, screening. |
| JEL: | G21 G14 E44 D82 D83 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:998&r= |
| By: | Martin Guth |
| Abstract: | Since the Great Financial Crisis (GFC), the use of stress tests as a tool for assessing the resilience of financial institutions to adverse financial and economic developments has increased significantly. One key part in such exercises is the translation of macroeconomic variables into default probabilities for credit risk by using macrofinancial linkage models. A key requirement for such models is that they should be able to properly detect signals from a wide array of macroeconomic variables in combination with a mostly short data sample. The aim of this paper is to compare a great number of different regression models to find the best performing credit risk model. We set up an estimation framework that allows us to systematically estimate and evaluate a large set of models within the same environment. Our results indicate that there are indeed better performing models than the current state-of-the-art model. Moreover, our comparison sheds light on other potential credit risk models, specifically highlighting the advantages of machine learning models and forecast combinations. |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2202.03110&r= |
| By: | Tröger, Tobias; Kotovskaia, Anastasia |
| Abstract: | We investigate whether the bank crisis management framework of the European banking union can effectively bar the detrimental influence of national interests in cross-border bank failures. We find that both the internal governance structure and decision making procedure of the Single Resolution Board (SRB) and the interplay between the SRB and national resolution authorities in the implementation of supranationally devised resolution schemes provide inroads that allow opposing national interests to obstruct supranational resolution. We also show that the Single Resolution Fund (SRG), even after the ratification of the reform of the European Stability Mechanism (ESM) and the introduction of the SRF backstop facility, is inapt to overcome these frictions. We propose a full supranationalization of resolution decision making. This would allow European authorities in charge of bank crisis management to operate autonomously and achieve socially optimal outcomes beyond national borders. |
| Keywords: | SRB,SRF,bank resolution,banking union,bail-in,ESM,national interest,political economy,bureaucrats' incentives |
| JEL: | G01 G18 G21 G28 K22 K23 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewp:340&r= |
| By: | Muysken, Joan (UNU-MERIT, SBE Maastricht University, and CofFEE-Europe); Meijers, Huub (UNU-MERIT, SBE Maastricht University) |
| Abstract: | The Dutch economy is a small open economy. Due to its persistent large current account surplus, the Dutch net foreign assets have been increasing over time. The financial sector is dominated by special purpose vehicles created for tax reasons. The financial assets and liabilities of these vehicles are issued or held abroad, amounting to around 500 per cent of GDP. The remaining part of the financial sector has almost doubled in size relative to GDP over the past 25 years. While the growth of the banking sector stagnated since the financial crisis, the financial sector continued to grow because of the presence of a funded pension system. We analyse these developments using insights from stock flow consistent models for the Dutch economy that we have developed earlier. This analysis also enables us to highlight the role monetary policy played in facilitating and stimulating the growth of financialisation. |
| Keywords: | globalisation, financialisation, quantitative easing, stock-flow consistent modelling |
| JEL: | E44 B5 E6 F45 G21 G32 |
| Date: | 2022–02–17 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2022006&r= |
| By: | Viviana Alfonso C; Steven Kamin; Fabrizio Zampolli |
| Abstract: | The pros and cons of CBDCs have been examined in numerous writings. However, much less research has focused on the benefits, costs and implementation issues of CBDCs in specific economies or regions. This paper attempts to fill that gap for the Latin American and Caribbean (LAC) economies. It first examines the views of central banks in the region toward CBDCs, drawing on their responses to a survey conducted by the BIS in late 2020 and early 2021. Second, it examines whether the engagement of LAC central banks with CBDCs can be explained by the structural characteristics of their economies. Third, it reviews the long list of potential benefits, costs and risks of CBDCs, focusing on their relevance to the LAC economies. Finally, the paper reviews the design choices that central banks face and the actual choices made by a number of central banks in the region. |
| Keywords: | central bank digital currency, CBDC, payment systems, central banking, digital currency |
| JEL: | E42 E51 F31 G21 G28 O32 O38 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:989&r= |
| By: | Joel Wagner; Tudor Schlanger; Yang Zhang |
| Abstract: | We introduce bounded rationality, along the lines of Gabaix (2020), in a canonical New Keynesian model calibrated to match Canadian macroeconomic data since Canada’s adoption of inflation targeting. We use the model to provide a quantitative assessment of the macroeconomic impact of flexible inflation targeting and some alternative m2netary policy regimes. These alternative monetary policy regimes are average-inflation targeting, price-level targeting and nominal gross domestic product level targeting. We consider these regimes’ performance with and without an effective lower bound constraint. Our results suggest that the performance of history-dependent frameworks is sensitive to departures from rational expectations. The benefits of adopting history-dependent frameworks over flexible inflation targeting gradually diminish with a greater degree of bounded rationality. This finding is in line with laboratory experiments that show flexible inflation targeting remains a robust framework to stabilize macroeconomic fluctuations. |
| Keywords: | Central bank research; Economic models; Monetary policy framework; Monetary policy transmission |
| JEL: | E E27 E3 E4 E58 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocadp:22-4&r= |
| By: | , Pallawangi |
| Abstract: | Dalam kehidupan sehari-hari setiap individu atau masyarakat tidak dapat terlepas dari masalah. Masalah merupakan kesenjangan antara harapan dan kenyataan. Untuk menggapai harapan tersebut, setiap individu atau masyarakat harus mencari jalan keluarnya atau mencari pemecahan sebagaimana semetinya. Seorang agen perubahan seharusnya bisa berperan dalam mencari jalan keluar atau pemecah masalah yang dihadapi oleh masyarakat. Agen perubahan ada(Mustanir et al., 2020). Sehingga adanya pengaruh kualitas layanan internet banking terhadap kepuasan nasabah pada PT. BRI Unit Bila – Fakultas Ilmu Sosial Ilmu Politik. Penelitian ini bertujuan untuk mengetahui pengaruh kualitas layanan internet banking terhadap kepuasan nasabah pada PT. BRI Unit BIla, penelitian ini bersifat campuran (kualitatif-kuantitatif) (ANNISA, 2015). Populasi dalam penelitian ini yaitu seluruh nasabah e-banking yang terdaftar pada PT. BRI Unit Bila dari bulan Desember 2021 sampai akhir bulan Januari 2022 yaitu 150 orang. |
| Date: | 2022–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:7ygf5&r= |