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on Banking |
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Issue of 2022‒05‒02
35 papers chosen by Sergio Castellanos-Gamboa, , Pontificia Universidad Javeriana |
| By: | Scott W. Hegerty |
| Abstract: | A lack of financial access, which is often an issue in many central-city U.S. neighborhoods, can be linked to higher interest rates as well as negative health and psychological outcomes. A number of analyses of "banking deserts" have also found these areas to be poorer and less White than other parts of the city. While previous research has examined specific cities, or has classified areas by population densities, no study to date has examined a large set of individual cities. This study looks at 319 U.S. cities with populations greater than 100,000 and isolates areas with fewer than 0.318 banks per square mile based on distances from block-group centroids. The relative shares of these "deserts" appears to be independent of city population across the sample, and there is little relationship between these shares and socioeconomic variables such as the poverty rate or the percentage of Black residents. One plausible explanation is that only a subset of many cities' poorest, least White block groups can be classified as banking deserts; nearby block groups with similar socioeconomic characteristics are therefore non-deserts. Outside of the Northeast, non-desert areas tend to be poorer than deserts, suggesting that income- and bank-poor neighborhoods might not be as prevalent as is commonly assumed. |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2203.03069&r= |
| By: | Federico Forte; Pedro Elosegui; Gabriel Montes-Rojas |
| Abstract: | This paper studies the network structure and fragmentation of the Argentinean interbank market. Both the unsecured (CALL) and the secured (REPO) markets are examined, applying complex network analysis. Results indicate that, although the secured market has less participants, its nodes are more densely connected than in the unsecured market. The interrelationships in the unsecured market are less stable, making its structure more volatile and vulnerable to negative shocks. The analysis identifies two 'hidden' underlying sub-networks within the REPO market: one based on the transactions collateralized by Treasury bonds (REPO-T) and other based on the operations collateralized by Central Bank (CB) securities (REPO-CB). The changes in monetary policy stance and monetary conditions seem to have a substantially smaller impact in the former than in the latter 'sub-market'. The connectivity levels within the REPO-T market and its structure remain relatively unaffected by the (in some period pronounced) swings in the other segment of the market. Hence, the REPO market shows signs of fragmentation in its inner structure, according to the type of collateral asset involved in the transactions, so the average REPO interest rate reflects the interplay between these two partially fragmented sub-markets. This mixed structure of the REPO market entails one of the main sources of differentiation with respect to the CALL market. |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2203.14488&r= |
| By: | Aulya, Winda |
| Abstract: | Saat ini di Indonesia lembaga keuangan syariah mulai berkembang, berbagai produk keuangan berbasis syariah kini telah menjadi fenomena kontemporer yang telah memberikan warna dalam perekonomian. Perkembangan sistem keuangan syariah ini ditandai dengan didirikannya berbagai lembaga keuangan syariah dan diterbitkannya instrumen keuangan berbasis syariah. Berawal dari berdirinya Bank Muamalat Indonesia pada tahun 1992, kemudian diikuti lembaga keuangan syariah lainnya, seperti Asuransi Syariah, Pegadaian Syariah, Pasar Modal Syariah, Reksadana Syariah, Koperasi Syariah, dan lain-lain. |
| Date: | 2022–03–12 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:r4p6z&r= |
| By: | Elisa Luciano; Clas Wihlborg |
| Abstract: | We introduce a new type of complexity, arising from the rescue arrangements among members of a banking group. Rescue is different between parent-subsidiary, branch and ring-fenced organizations, and we argue that the complexity it generates is highest in the first, mild in the second and null in the third. Banks have incentives to choose a particular, more or less complex, organizational structure and to lever it up consistently. We measure the risk associated to each form of rescue complexity with the expected discounted loss it generates, since this form of complexity affects default risk. We calibrate to US BHCs. We show that the parent-subsidiary has the highest complexity risk, as soon as we recognize the heterogeneity in leverage of BHCs. Regulatory interventions that aim at ring fencing do reduce complexity and its risk, but are likely to reduce value to stakeholders. |
| Keywords: | Bank Risk, Complexity, Bank rescue, Leverage, Default Costs, Bailouts, Bank Holding Companies, Ring fncing, Capital constraints |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wpaper:671&r= |
| By: | Klüh, Ulrich; Urban, Janina |
| Abstract: | What should be the role of the ECB in tackling the socio-ecological challenges related to planetary boundaries, such as climate change and loss of biodiversity? A clear answer to this question is still lacking, in spite of the strategy review of 2021. Regretfully, this review has not received the scrutiny it deserves, as the pandemic and the war in Ukraine have taken center stage. Taking these recent developments into account, we provide a critique of the new strategy. We argue that it lacks transformativity, as it subsumes climate change under the policy objective of price stability, assumes that transformations can be mastered within the structures of the past, and refrains from questioning the current institutional set up. In its main part, the paper discusses the historical relevance of what we believe is the main reason for these deficits: The fear that taking up the real issues (such as independence and accountability) would make the ECB a political football in times of rising inflation. Taking these fears seriously, we show that the institutionalization of central banking has always reflected the transformative dynamics of their time. Consequently, if planetary boundaries represent a transformative challenge, they will radically change the ECB, too. Moreover, we provide evidence that central banks' historical transformations have always reflected their peculiar position as mediators between the financial and the political realm. We argue that, at the current juncture, transforming central banking implies moving away from finance and towards politics. This involves risks. However, we argue that the historical experience offers few reasons to fear a closer integration of central banking into the public sphere, as long as the latter is dominated by democratic politics. Consequently, if one comes to the conclusion that the ECB's current corset is too narrow, it can and should be augmented. While we do not offer a blueprint for such augmentation, we conclude our analysis by sketching elements of a sustainable strategy for a transformative ECB. |
| Keywords: | Monetary Policy,Sustainability,Green Deal,Climate Policy,Central Bank Independence,Central Bank Accountability |
| JEL: | B15 B25 B26 B52 E02 E58 N2 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:znwudp:9&r= |
| By: | Manish Gupta (Nottingham University Business School); Steven Ongena (University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)) |
| Abstract: | What is the impact of Small Business Administration Preferred Lenders Program (PLP) on the distance between banks and small businesses and the pricing of the loans granted? We test predictions from a stylized transportation cost model on 7(a) loan data from 2008 to 2019. We find that non-PLP banks (the SBA) grant loans to borrowers closer-by and at a loan rate higher than PLP banks. A drop in SBA fees (in 2014) increases the distance to borrowers of both, but more so for PLP banks, and it reduces the loan rate charged by both, but less so for PLP banks. |
| Keywords: | banking sector, competition, SBA, distance, loan rate |
| JEL: | G21 L11 L14 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp2231&r= |
| By: | Wendong Zhang (Center for Agricultural and Rural Development (CARD) at Iowa State University); Abulena Basha |
| Abstract: | Zhang and Basha examine the Iowa and Midwest farmland markets, which have seen tremendous momentum over the past 18 months. Both the Iowa Land Value Survey and the Chicago Federal Reserve Bank's AgLetter show that average farmland values in Iowa rose 30% last year to the highest nominal values since the 1940s. However, in late March, the Federal Reserve Bank is expected to impose the first interest rate hike in three years, which will likely be the start of six-to-seven interest rate hikes over the next two years. |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:ias:cpaper:apr-winter-2022-5&r= |
| By: | Jonung, Lars (Department of Economics, Lund University) |
| Abstract: | The theoretical foundation of inflation targeting was laid out by the Swedish economist Knut Wicksell (1851-1926) in his groundbreaking treatise, Interest and Prices, published originally in German in 1898. Here he proposed price stability as the rule for monetary policy. Today, inflation targeting is considered the best-practice approach to monetary policy across the world. It has contributed to stable and low consumer price inflation since the 1990s in many countries. However, inflation targeting has recently been the subject of several objections. Most prominently, the focus on consumer price stability has fostered financial instability, as reflected in the global financial crisis of 2008-09. In addition, the sharp rise in asset prices has led to growing wealth inequality. <p> Why have these problems emerged? This paper provides an answer by comparing Wicksell’s theory of price level determination in a pure credit economy, the “cumulative process”, to the neo-Wicksellian world of today, characterized by inconvertible fiat money, floating exchange rates, advanced financial systems, unregulated interest rates and well-developed asset markets. In this way, it becomes apparent that the neglect of asset markets and asset prices is the source of the flaws of the present Wicksellian regime of unlimited finance. The shortcomings of the neo-Wicksellian approach can be remedied while remaining within a Wicksellian framework. The key is to combine the nominal anchor of price stability with a reformed financial system that maintains credit stability. The paper uses empirical evidence from Sweden and the United States. |
| Keywords: | Inflation targeting; price level targeting; natural rate; Knut Wicksell; Milton Friedman; financial crises; credit; asset inflation; central banking |
| JEL: | B10 B22 E10 E31 E40 E50 G01 G20 |
| Date: | 2022–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2022_008&r= |
| By: | Cecilia Parlatore; Thomas Philippon |
| Abstract: | We develop a tractable framework to study the optimal design of stress scenarios. A principal wants to manage the unknown risk exposures of a set of agents. She asks the agents to report their losses under hypothetical scenarios before mandating actions to mitigate the exposures. We show how to apply a Kalman filter to solve the learning problem and we characterize the scenario design as a function of the risk environment, the principal’s preferences, and the available remedial actions. We apply our results to banking stress tests. We show how the principal learns from estimated losses under different scenarios and across different banks. Optimal capital requirements are set to cover losses under an adverse scenario while targeted interventions depend on the covariance between residual exposure uncertainty and physical risks. |
| JEL: | D8 G2 H12 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29901&r= |
| By: | Nigel Adams; Adriano Augusto; Michael Davern; Marcello La Rosa |
| Abstract: | Banks play an intrinsic role in any modern economy, recycling capital from savers to borrowers. They are heavily regulated and there have been a significant number of well publicized compliance failings in recent years. This is despite Business Process Compliance (BPC) being both a well researched domain in academia and one where significant progress has been made. This study seeks to determine why Australian banks find BPC so challenging. We interviewed 22 senior managers from a range of functions within the four major Australian banks to identify the key challenges. Not every process in every bank is facing the same issues, but in processes where a bank is particularly challenged to meet its compliance requirements, the same themes emerge. The compliance requirement load they bear is excessive, dynamic and complex. Fulfilling these requirements relies on impenetrable spaghetti processes, and the case for sustainable change remains elusive, locking banks into a fail-fix cycle that increases the underlying complexity. This paper proposes a conceptual framework that identifies and aggregates the challenges, and a circuit-breaker approach as an "off ramp" to the fail-fix cycle. |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2203.14904&r= |
| By: | David P. Glancy; Robert J. Kurtzman; Lara Loewenstein |
| Abstract: | Banks modify more CRE loans than CMBS, contributing to better loan performance when property incomes decline. However, banks have higher delinquency rates for less-stressed loans, consistent with modification policies encouraging strategic default. Motivated by these facts, we develop a tradeoff theory model in which lenders vary in their modification technologies. Modification frictions discourage strategic renegotiation, enabling CMBS to offer higher LTV loans and attract borrowers seeking higher leverage. The model produces cross-lender differences in LTVs and spreads consistent with the data. Reducing modification frictions at CMBS decreases welfare by restricting debt capacity for the borrowers that value it most. |
| Keywords: | commercial real estate; modifications; LTV |
| JEL: | G21 G22 G23 R33 |
| Date: | 2022–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwq:93947&r= |
| By: | Ha, Jongrim; Kose, Ayhan M.; Ohnsorge, Franziska |
| Abstract: | Recent energy and food price surges, in the wake of Russia’s invasion of Ukraine, have exacerbated inflation pressures that are unusually high by the standards of the past two decades. High and rising inflation has prompted many emerging market and developing economy (EMDE) central banks and some advanced-economy central banks to increase interest rates. Inflation is expected to ease back towards targets over the medium-term as recent shocks unwind, but the 1970s experience is a reminder of the material risks to this outlook. As inflation remains elevated, the risk is growing that, to bring inflation back to target, advanced economies need to undertake a much more forceful monetary policy response than currently anticipated. If this risk materializes, it would imply additional increases in borrowing costs for EMDEs, which are already struggling to cope with elevated inflation at home before the recovery from the pandemic is complete. EMDEs need to focus on calibrating their policies with macroeconomic stability in mind, communicating their plans clearly, and preserving and building their credibility. |
| Keywords: | Global Inflation; Commodity Price; War in Ukraine; Global Recession; Great Inflation; Monetary Policy Tightening |
| JEL: | E31 E32 E37 Q43 |
| Date: | 2022–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:112596&r= |
| By: | Silano, Filippo |
| Abstract: | Compiling a unique dataset describing the career trajectories of 634 former and in office public officials at debt management units (DMUs) across 26 OECD countries, this article assesses the revolving door phenomenon in government debt management. The analysis' purpose is twofold: (i) to estimate the professional link between bureaucrats and financial institutions developing the market for government securities (i.e. dealers), and (ii) to describe the potential causes and effects of the phenomenon. To this end, the study relies on sequence analysis to empirically examine the sample's career trajectories, and on case studies, surveys, and interviews to qualitatively assess the revolving door. The main finding is that 53% of in office public servants worked at the dealers, whereas 46% of former bureaucrats moved to the dealers after their office. In particular, the general management, other senior positions and traders are the roles mostly affected by the phenomenon. Apart from being expertise enhancing and fostering financial market's trust, the study shows that the revolving door's side effect could entail the risk of capture. Causes are the dominance of the industry's mindset over public finance, the DMU-dealer institutionalised quid pro quo relationship, and the presence of a 'black-box' in the DMU's governance. The paper shall trigger studies pondering regulatory interventions curbing the revolving door's downsides. Further, the dataset paves the way to research estimating the impact of employees' background on agency performance. |
| Keywords: | revolving doors,public finance,government debt management,dealers,capture,financialisation |
| JEL: | H63 H74 H10 P16 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ilewps:61&r= |
| By: | Zinn, Jesse Aaron (Clayton State University) |
| Abstract: | This paper develops and discusses several ratios designed to assess financial intermediation overall, as well as the two steps necessary for financial intermediation: attracting funds and lending them. We find that the money multiplier is, in typical cases, positively related to all of these ratios, suggesting that it also can be interpreted as a measure of how well a financial sector is performing in its role as intermediary between savers and borrowers. |
| Date: | 2022–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:zusqa&r= |
| By: | Pietrovito, Filomena; Pozzolo, Alberto Franco |
| Abstract: | At the beginning of the decade, many banks in euro-area periphery countries shifted their portfolios from corporate lending towards sovereign debt holdings. According to some scholars, this was the result of the moral suasion exerted by domestic authorities; others suggest instead that it was the outcome of a free choice of weak banks that bet-for-resurrection increasing the holdings of risky, high yielding government bonds. Our analysis shows that a contemporaneous increase in banks’ total assets and a portfolio readjustment from loans to government bonds is consistent with a surge in the risk-premium required by banks on corporate lending. After briefly describing our hypothesis within a simple model of a bank’s portfolio choice, we test its empirical implications on a large sample of individual loan data granted by over 100 Italian small banks during the post sovereign debt crisis period (2012-2014). Our results provide convincing evidence in support of our hypothesis. |
| Keywords: | Credit Supply, Government bond purchases, Sovereign debt crisis, Small banks, Bank-firm relationship |
| JEL: | E51 G21 |
| Date: | 2022–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:mol:ecsdps:esdp22083&r= |
| By: | Ricardo J. Caballero; Alp Simsek |
| Abstract: | We analyze optimal monetary policy and its implications for asset prices, when aggregate demand has inertia and responds to asset prices with a lag. If there is a negative output gap, the central bank optimally overshoots aggregate asset prices (asset prices are initially pushed above their steady-state levels consistent with current potential output). Overshooting leads to a temporary disconnect between the performance of financial markets and the real economy, but it accelerates the recovery. When there is a lower-bound constraint on the discount rate, overshooting becomes a concave and non-monotonic function of the output gap: the asset price boost is low for a deeply negative initial output gap, grows as the output gap improves over a range, and shrinks toward zero as the output gap improves further. This pattern also implies that good macroeconomic news is better news for asset prices when the output gap is more negative. Finally, we document that during the Covid-19 recovery, the policy-induced overshooting was large−sufficient to explain the high levels of stock and house prices in 2021. |
| Keywords: | monetary policy, aggregate demand inertia, lags, output gap, recovery, asset prices, overshooting, Wall/Main Street disconnect, Covid-19, interest rate lower bound, macroeconomic news, market bond portfolio, QE/LSAPs |
| JEL: | E21 E32 E43 E44 E52 G12 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9632&r= |
| By: | Kensuke Ito; Kyohei Shibano; Gento Mogi |
| Abstract: | Our study empirically predicts the bubble of Non-Fungible Tokens (NFTs): transferrable and unique digital assets on public blockchains. This subject is important because, despite their strong market growth in 2021, NFTs have not been studied in terms of bubble prediction. To achieve the purpose, we applied Logarithmic Periodic Power Law (LPPL) model to the time-series price data of major NFT projects, retrieved from nonfungible.com. Results implied that, as of December 20, 2021, (i) NFTs in general are in a small bubble (predicting price decline), (ii) Decentraland project is in a medium bubble (predicting price decline), and (iii) Ethereum Name Service and ArtBlocks projects are in a small negative bubble (predicting price increase). Future works are to refine the prediction by considering heterogeneity of NFTs, comparing other methods, and using more enriched data. |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2203.12587&r= |
| By: | Taisuke Nakata (Associate Professor, Faculty of Economics, University of Tokyo (E-mail: taisuke.nakata@e.u-tokyo.ac.jp)); Takeki Sunakawa (Associate Professor, Faculty of Economics, Hitotsubashi University (E-mail: t.sunakawa@r.hit-u.ac.jp)) |
| Abstract: | How can the central bank credibly implement a "lower-for- longer" strategy? To answer this question, we analyze a series of optimal sustainable policy problems-indexed by the duration of reputational loss- in a sticky-price model with an effective lower bound (ELB) constraint on nominal interest rates. We find that, even without an explicit commitment technology, the central bank can still credibly keep the policy rate at the ELB for an extended period-though not as extended as under the optimal commitment policy-and meaningfully mitigate the adverse effects of the ELB constraint on economic activity. |
| Keywords: | Average Inflation Targeting, Effective Lower Bound, Forward Guidance, Sustainable Plan, Time-Consistency |
| JEL: | E32 E52 E61 E62 E63 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:ime:imedps:22-e-06&r= |
| By: | Haya, Nur Anni |
| Abstract: | Perkembangan ekonomi di Indonesia dimulai dari masa penjajahan Belanda sampai Jepang. Banyak sekali kesulitan dan penderitaan rakyat pada saat itu,belum lagi mereka harus menuruti kemauan para penjajah. Disini perkembangan ekonomi sangat sulit,karena mereka menguasai semua yang ada. Sampai akhirnya masyarakat mendirikan koperasi kredit dengan tujuan membantu rakyatnya yang terjerat hutang dengan rentenir. Dengan demikian, masyarakat mengenal koperasi serta fungsinya dari koperasi tersebut. Cita-cita Koperasi memang sesuai dengan susunan kehidupan rakyat Indonesia. Meski selalu mendapat rintangan, namun Koperasi tetap berkembang. Seiring dengan perkembangan masyarakat, berkembang pula perundang- undangan yang digunakan. Perkembangan dan perubahan perundang-undangan tersebut dimaksudkan agar dapat selalu mengikuti perkembangan jaman. Perkembangan koperasi masih menghadapi masalah-masalah baik di bidang kelembagaan maupun di bidang usaha koperasi itu sendiri. Masalah-masalah tersebut dapat bersumber dari dalam koperasi sendiri maupun dari luar. Masalah kelembagaan koperasi juga dapat dikelompokkan dalam masalah intern maupun masalah ekstern. Masalah intern mencakup masalah keanggotaan, kepengurusan, pengawas, manajer, dan karyawan koperasi. Sedangkan masalah ekstern mencakup hubungan koperasi dengan bank, dengan usaha-usaha lain, dan juga dengan instansi pemerintah. |
| Date: | 2022–03–11 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:xrjmf&r= |
| By: | Natoli, Filippo |
| Abstract: | Using daily county-level data since 1970, we construct a series of temperature shocks for the United States that capture the average surprise effect of heat and cold events experienced in each season, net of climate trends and adaptation. Temperature surprise shocks in the global warming era have been a balanced mix of heat and cold surprises and reduced in size in recent times, in contrast to common belief. Estimates made with local projections show a negative impact on the US economy at business cycle frequency via both consumption and investment, while the effect on prices is more muted and varies over time. The central bank does react to the shocks by adjusting its economic projections and cutting interest rates, with effects spreading out through the yield curve. |
| Keywords: | climate change; temperatures; surprise shocks; business cycle; monetary policy |
| JEL: | C32 E32 E52 Q54 |
| Date: | 2022–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:112568&r= |
| By: | Albert Queraltó |
| Abstract: | Empirical evidence suggests that recessions have long-run effects on the economy's productive capacity. Recent literature embeds endogenous growth mechanisms within business cycle models to account for these "scarring" effects. The optimal conduct of monetary policy in these settings, however, remains largely unexplored. This paper augments the standard sticky-price New Keynesian (NK) to allow for endogenous dynamics in aggregate productivity. The model has a representation similar to the two-equation NK model, with an additional condition linking productivity growth to current and expected future output gaps. Absent state contingency in the subsidies that correct the externalities associated with productivity growth, optimal monetary policy sets inflation above target whenever the subsidies fall short of the externalities. In the recovery from a spell at the ZLB, the optimal discretionary policy sets inflation temporarily above target, helping mitigate the long-run damage. Following a cost-push shock that creates inflationary pressure, the central bank tolerates a larger rise in inflation than in a model with exogenous productivity. The gains from commitment include the central bank's ability to make credible promises about future output gaps in a way that allows it to manipulate current productivity growth. |
| Keywords: | Business cycles; Growth; Optimal monetary policy; Hysteresis; Scarring |
| JEL: | E32 E43 E52 E58 O31 O42 |
| Date: | 2022–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:1340&r= |
| By: | Marco Cipriani; James A. Clouse; Lorie Logan; Antoine Martin; Will Riordan |
| Abstract: | In a Liberty Street Economics post that appeared yesterday, we described the mechanics of the Federal Reserve’s balance sheet “runoff” when newly issued Treasury securities are purchased by banks and money market funds (MMFs). The same mechanics would largely hold true when mortgage-backed securities (MBS) are purchased by banks. In this post, we show what happens when newly issued Treasury securities are purchased by levered nonbank financial institutions (NBFIs)—such as hedge funds or nonbank dealers—and by households. |
| Keywords: | balance sheet runoff; Federal Reserve; money market funds (MMFs); nonbank financial institutions (NBFIs); treasuries |
| JEL: | E5 G51 |
| Date: | 2022–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednls:93945&r= |
| By: | Franklin Allen; Xian Gu; Julapa Jagtiani |
| Abstract: | Fintech and decentralized finance have penetrated all areas of the financial system and have improved financial inclusion in the last decade. In this paper, we review the recent literature on fintech, cryptocurrencies, stablecoins, and central bank digital currencies (CBDCs). There are important implications from the rise of fintech and the introduction of stablecoins and CBDCs in recent years. We provide an overview of China’s experience in fintech, focusing on payments, digital banking, fintech lending, and the recent progress on its CBDC pilots (e-CNY). We also discuss important considerations in designing effective cryptocurrency regulations. Cryptocurrency regulations could promote growth of innovations through enhanced public confidence in this market. The e-CNY could become mainstream in the global market through effective regulations, which provide incentives and protection to market participants. A key factor to success for digital currencies has been their widespread adoption. If the Chinese e-CNY were to become a mainstream currency, the introduction of CBDC could potentially offer solutions to existing problems inherent in traditional financial systems. |
| Keywords: | fintech; cryptocurrency regulations; stablecoins; CBDCs; e-CNY; China |
| JEL: | G21 G28 G18 L21 |
| Date: | 2022–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:93944&r= |
| By: | Nurrahma, Ayuni |
| Abstract: | Bank Syariah merupakan suatu lembaga keuangan yang berlandaskan sistem Ekonomi Islam, dan dalam melakukan transaksi perbankan tersebut, mengacu pada prinsip profit loss sharing. Di Indonesia sendiri, bank syariah sudah mulai berkembang pesat, apalagi saat Bank Syariah terbukti tidak terpengaruh dampak dari krisis ekonomi. Selain itu, mayoritas penduduk di Indonesia yang menganut agama Islam juga menjadi salah satu faktor pendorong, karena memang beberapa dari mereka pun sudah enggan menggunakan fasilitas kredit bank konvensional yang berlandaskan sistem bunga. Perkembangan bank syariah ini diawali dengan terbitnya Undang-undang Perbankan No.10 tahun 1998, yang isinya tentang terbaginya industri perbankan di Indonesia menjadi dua. Yaitu bank yang berlandaskan sistem bunga atau bank konvensional, dan yang kedua adalah bank dengan berlandaskan sistem bagi hasil atau bank syariah. Selain itu, perkembangan bank syariah tersebut juga tampak dari adanya beberapa bank yang melakukan konversi dari sistem konvensional menjadi sistem syariah. Ada pula bank konvensional yang mendirikan cabang Bank Perkreditan Rakyat Syariah. |
| Date: | 2022–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:khtpa&r= |
| By: | Haya, Nur Anni |
| Abstract: | Bank Syariah pada awalnya dikembangkan sebagai suatu respon dari kelompok ekonomi dan praktisi perbankan muslim yang berupaya mengakomodasi desakan dari berbagai pihak yang menginginkan agar tersedia jasa transaksi keuagnan yang dilaksanakan sejalan dengan nilai moral dan prinsip-prinsip syariah Islam. Umat Islam diharapkan dapat memahami perkembangan bank syariah dan mengembangkannya apabila dalam posisi sebagai pengelola bank syariah yang perlu secara cermat mengenali dan mengidentifikasi semua mitra kerja yang sudah ada maupun yang potensial untuk pengembangan bank syariah. Bank Syariah pada dasarnya memiliki potensi dan peluang yang luar biasa besar. Pertumbuhan dari segi aset pun sudah membuktikan bahwa Bank Syariah merupakan model bank yang sangat ideal untuk mendorong kemajuan perekonomian Negara. Namun dari segi kualitas pelayanan Bank Syariah harus mengejar ketinggalannya dari Bank Konvensional yang telah lebih awal berdiri |
| Date: | 2022–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:s7gzd&r= |
| By: | Boris Chafwehé (Joint Research Centre, European Commission); Charles de Beauffort (National Bank of Belgium); Rigas Oikonomou (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)) |
| Abstract: | In the fiscal theory of the price level, inflation and debt dynamics are determined jointly. We derive optimal monetary policy rules that can approximate the Ramsey outcome in this environment. When the government issues a portfolio of bonds of different maturities and buys it back every period the optimal interest rate response to inflation is a simple, transparent function of the average debt maturity. This policy exploits the maturity structure to minimize the intertemporal variability of inflation in response to fiscal shocks. We then turn to the more realistic scenario of a government that does not repurchase and reissue debt in every period. In the case where debt is only long term, the optimal policy equilibrium features oscillations in inflation and simple interest rate rules may lead to explosive inflation dynamics. Issuing both short and long bonds rules out oscillations and implies that simple inflation targeting rules can approximate the Ramsey outcome. Under no repurchases a flat maturity structure of debt is optimal to reduce inflation variability. |
| Keywords: | Fiscal Theory, Optimal Interest Rates, Government Debt Maturity, Ramsey policy |
| JEL: | E31 E52 E58 E62 C11 |
| Date: | 2022–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2022007&r= |
| By: | Halim, Ismail |
| Abstract: | Bank Syariah merupakan suatu lembaga keuangan yang berlandaskan sistem Ekonomi Islam, dan dalam melakukan transaksi perbankan tersebut, mengacu pada prinsip profit loss sharing. Di Indonesia sendiri, bank syariah sudah mulai berkembang pesat, apalagi saat Bank Syariah terbukti tidak terpengaruh dampak dari krisis ekonomi. Selain itu, mayoritas penduduk di Indonesia yang menganut agama Islam juga menjadi salah satu faktor pendorong, karena memang beberapa dari mereka pun sudah enggan menggunakan fasilitas kredit bank konvensional yang berlandaskan sistem bunga. Perkembangan bank syariah ini diawali dengan terbitnya Undang-undang Perbankan No.10 tahun 1998, yang isinya tentang terbaginya industri perbankan di Indonesia menjadi dua. Yaitu bank yang berlandaskan sistem bunga atau bank konvensional, dan yang kedua adalah bank dengan berlandaskan sistem bagi hasil atau bank syariah. Selain itu, perkembangan bank syariah tersebut juga tampak dari adanya beberapa bank yang melakukan konversi dari sistem konvensional menjadi sistem syariah. Ada pula bank konvensional yang mendirikan cabang Bank Perkreditan Rakyat Syariah. Perbankan mempunyai peranan yang penting dalam lembaga ekonomi. Kegiatan utama dari perbankan adalah menyerap dana dari masyarakat untuk kemudian disalurkan kembali kepada masyarakat. Dengan demikian, dunia perbankan dapat menjembatani antara pihak yang kekurangan dana dengan pihak yang klebihan dana.Bank Syariah merupakan suatu lembaga keuangan yang berlandaskan Sistem Ekonomi Islam, dan dalam melakukan transaksi perbankan tersebut mengacu pada prinsip profit loss sharing. Di Indonesia sendiri, bank syariah Sudah mulai berkembang pesat, apalagi saat Bank Syariah terbukti tidak terpengaruh dampak dari krisis ekonomi. |
| Date: | 2022–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:hqstc&r= |
| By: | Martin Vesel\'y |
| Abstract: | The main purpose of this article is to evaluate possible applications of quantum computers in foreign exchange reserves management. The capabilities of quantum computers are demonstrated by means of risk measurement using the quantum Monte Carlo method and portfolio optimization using a linear equations system solver (the Harrow-Hassidim-Lloyd algorithm) and quadratic unconstrained binary optimization (the quantum approximate optimization algorithm). All demonstrations are carried out on the cloud-based IBM Quantum(TM) platform. Despite the fact that real-world applications are impossible under the current state of development of quantum computers, it is proven that in principle it will be possible to apply such computers in FX reserves management in the future. In addition, the article serves as an introduction to quantum computing for the staff of central banks and financial market supervisory authorities. |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2203.15716&r= |
| By: | Kuikeu, Oscar |
| Abstract: | While the recent resurgence of inflation all around the world not coming from monetary policies actions and that following the some analysts this increasing trend in prices with no longer reach the mong term nevertheless he becomes of interest to assess the place of central banks facing to this prices increases. For this purpose we have relies on Taylor rule with the main advantage that he gives this ability to model san policymaker as playing only on inflation and product. Globally speaking, with the obtained results he appears that the methods of correcting for autocorrelations between the right hand side and the error term is suitable to understand this kind of subject. With the obtained results we have well assess on the behavior on monetary policy in face of increasing trend in inflation in the sense that the data covers the period just following the cfa franc devaluation of January 1994. |
| Keywords: | inflation, Taylor Rule, monetary policy |
| JEL: | C22 E52 |
| Date: | 2022–04–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:112675&r= |
| By: | Arief, A. Anggie Zabrina |
| Abstract: | The first Islamic bank appeared in Indonesia in 1992 with the establishment of Bank Muamalat Indonesia, in response to the public's request for the presence of a financial transaction service that was carried out in line with the moral values and principles of Islamic Sharia. The rapid development of Islamic banks has only been felt since the Government and Bank Indonesia made a major commitment and took various policies to develop Islamic banks seriously, especially since the amendment of the banking law with Law no. 10 of 1998. These various policies are not only concerned with expanding the number of offices and operations of Islamic banks to improve the supply side, but also developing public understanding and awareness to increase the demand side. The rapid development has been especially recorded since the issuance of a Bank Indonesia regulation that gave permission to conventional banks to establish a sharia business unit (UUS). Keywords: Islamic Bank, development of Islamic Banking |
| Date: | 2022–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:594pz&r= |
| By: | Ramadani, Ainun |
| Abstract: | Keberadaan koperasi dekat dengan masyarakat Indonesia sejak sebelum kemerdekaan. Sejarah berdirinya koperasi di Indonesia berawal pada akhir abad ke-19. Koperasi awalnya berkembang di Eropa ada awal abad ke-19. Saat itu, pria berkebangsaan Skotlandia Robert Owen menggagas konsep koperasi. Owen membuat konsep koperasi atas dasar kerja sama pada awal Revolusi Industri. Robert Owen kini dikenal sebagai Bapak Koperasi Dunia. Dari Eropa, koperasi sampai ke Indonesia. Cikal bakal koperasi di Indonesia berawal pada 1986. Saat itu, konsep koperasi diperkenalkan oleh Patih R Aria Wiria Atmaja. Kala itu, Patih Aria melihat banyak masalah sosial dari para pegawai negeri atau priayi. Mereka terjerat utang karena bunga yang tinggi dari rentenir. Patih Aria lalu mendirikan bank pegawai negeri di Purwokerto. Dia ingin menerapkan pola koperasi kredit ala Jerman agar pegawai negeri tak perlu lagi berurusan dengan rentenir. Konsep ini dikembangkan oleh seorang residen Belanda bernama De Wolffvan Westeroode yang memberikan perhatian khusus kepada para petani saat musim paceklik dengan memberikan pinjaman. De Wolffvan juga menjadikan lumbung padi menjadi Koperasi Kredit Padi. Namun, usaha De Wolffvan terhambat pemerintah Belanda. Akhirnya, pada zaman Belanda bentuk koperasi belum dapat terlaksana dengan baik karena belum ada instansi yang memberikan penyuluhan tentang konsep koperasi dan belum ada peraturan mengenai koperasi. Barulah pada 1908, Budi Utomo yang baru didirikan Dr Sutomo menginisiasi gerakan koperasi. Koperasi semakin meluas seiring berkembangnya Serikat Dagang Islam pada 1927. Perkembangan koperasi juga didukung oleh Partai Nasional Indonesia pada 1929. Nilai-nilai koperasi yang sejalan dengan sifat masyarakat Indonesia yakni gotong royong semakin membuat koperasi menyebar luas. Dan sejak saat itu, keberadaan koperasi terus berkembang di Indonesia. Koperasi berperan dalam mengembangkan ekonomi anggota dan masyarakat Indonesia. Berdasarkan uraian diatas, maka penulis tertarik untuk membahas mengenai koperasi di Indonesia dengan judul “Peran Koperasi Dalam Perekonomian Indonesia”. |
| Date: | 2022–03–12 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:c46sy&r= |
| By: | Maria Teresa Medeiros Garcia; Ana Jin Ye |
| Abstract: | The aim of this paper is to study the relation between banks’ ownership structure and their risk-taking behavior. Additionally, we examine the impact of banking regulation on banks’ approach to taking risk. The empirical analysis considers a sample of listed banks from EU countries over the period of 2011 to 2016. We found that the structure of the board of directors can influence bank risk behavior but not the ownership concentration. No significant relation was found between the influence of the regulatory environment and bank risk, i.e., stricter regulation has no effect on risk taking by banks. |
| Keywords: | Banks; Risk; Corporate governance; Regulation; EU countries. |
| JEL: | G21 G32 G34 G38 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:ise:remwps:wp02252022&r= |
| By: | Daniela Balutel; Marie-Hélène Felt; Gradon Nicholls; Marcel Voia |
| Abstract: | Since 2016, the Bank of Canada has conducted annual surveys to monitor awareness, adoption and usage of Bitcoin and other cryptocurrencies (Henry et al. 2018, 2019a, 2019b). This report incorporates results from the 2019 Bitcoin Omnibus Survey and the November 2020 Cash Alternative Survey. We find that between 2018 and 2020, the level of Bitcoin awareness and ownership among Canadians remained stable: nearly 90% of the population were aware of Bitcoin, while only 5% owned it. We find that about half of Bitcoin owners stated they usually obtained their bitcoins through mobile or web exchanges, while one-fifth used mining. Bitcoin owners were susceptible to certain risks, as evidenced by the fact that about half of current and past owners stated they had been affected by events such as price crashes, losing access to funds, scams or data breaches. The most commonly cited reasons for owning Bitcoin were related to its use for investment or based on interest in the technology. Bitcoin owners displayed greater knowledge about the Bitcoin network than non-owners, yet they scored lower on questions testing financial literacy. |
| Keywords: | Bank notes; Digital currencies and fintech; Econometric and statistical methods |
| JEL: | E4 C12 O51 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocadp:22-10&r= |
| By: | António Afonso; Francisco Gomes Pereira |
| Abstract: | Using a difference-in-differences identification strategy on a micro panel at the bank and firm level, we study the transmission effectiveness of ECB’s large-scale asset purchasing programs programs (i.e. APP and PEPP) in the Euro area. Our findings show: first, balance sheet composition of banks is an important determinant of monetary policy transmission. We tested this hypothesis by showing that banks more exposed to government debt securities had higher loan growth than less exposed banks after the APP announcement. By extension, this could lead to heterogeneous economic impacts depending on the geographical location of exposed banks. For the PEPP, contrary to the APP, we did not find a portfolio-rebalancing channel for banks that were more exposed to government debt securities. Second, using balance sheet data on corporates, we verify that firms that borrowed more increased employment and fixed capital investment, albeit to a lesser degree than before the APP announcement. Furthermore, our sample shows that corporations in countries with banks more exposed to government debt securities had higher borrowing growth and fixed capital growth versus countries with less exposed banks. |
| Keywords: | unconventional monetary policy, difference-in-differences, euro area, employment, investment |
| JEL: | C23 D22 E52 E58 G11 G20 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9610&r= |
| By: | Paolo Emilio Mistrulli (Banca d'Italia); Tommaso Oliviero (University of Naples Federico II and CSEF); Zeno Rotondi (UniCredit, CERBE and MoFiR); Alberto Zazzaro (Department of Economics and Statistics, University of Naples Federico II) |
| Abstract: | In this paper we combine administrative data from the Italian National Institute for Social Security and proprietary data from a major Italian commercial bank to analyse the impact of job protection legislation on mortgage conditions. An exogenous change in the degree of job protection against individual dismissals of workers with open-ended contracts is identified by exploiting the 2015 Labor market reform, the so-called Jobs Act, which reduced employment protection of newly hired employees in medium and large private firms. We find that the weaker job security induced by the 2015 legislation change leads to a lower mortgage amount and a lower leveraging capacity, as measured by the loan-to-value ratio. Furthermore, the effect of job insecurity is mitigated by the presence of co-mortgagors while it is amplified for young and low-income mortgagors. |
| Keywords: | Employment protection law; job stability; mortgage market |
| JEL: | C21 G21 G51 J41 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wmofir:173&r= |