nep-ban New Economics Papers
on Banking
Issue of 2022‒08‒22
27 papers chosen by
Sergio Castellanos-Gamboa, , Pontificia Universidad Javeriana

  1. Macroprudential Regulation and Sector-Specific Default Risk By Sami Ben Naceur; Bertrand Candelon; Mohamed Belkhir; Jean-Charles Wijnandts
  2. Targeted monetary policy, dual rates and bank risk taking By Barbiero, Francesca; Burlon, Lorenzo; Dimou, Maria; Toczynski, Jan
  3. The consequences of the bank levy in Poland By Mariusz Kapuściński
  4. "Future Banking In Digital Transformation (DX) Dimension: A Literature Review " By Yessie Fransiska Lydiana
  5. "The Effect of Ownership Structure on the Nonperforming Loans in Iraqi Banks " By Abdullah Mohammed Sadaa
  6. Young Borrowers' Usage of Cosigned Credit Cards and Long Run Outcomes By Hannah Case
  7. Growth and Firm Dynamics in a Banking System Favoring Big Firms By Nurlan Jahangirli
  8. Circular economy and central bank digital currency By Ozili, Peterson K
  9. How do firms cope with losses from extreme weather events? By Benincasa, Emanuela; Betz, Frank; Gattini, Luca
  10. A global monetary policy factor in sovereign bond yields By Dimitris Malliaropulos; Petros Migiakis
  11. Dynastic Home Equity By Benetton, Matteo; Kudlyak, Marianna; Mondragon, John
  12. Monetary policy & anchored expectations: an endogenous gain learning model By Gáti, Laura
  13. México | ¿Los SMS nudges promueven la salud financiera? By Guillermo Jr. Cárdenas Salgado; Juan José Li Ng; Héctor Ortega Rosas; Susana Ramos Villaseñor; Carlos Serrano; Elmer Solano Flores
  14. Financial fire sales as continuous-state complex contagion By Tomokatsu Onaga; Fabio Caccioli; Teruyoshi Kobayashi
  15. Monetary policy normalization, central bank profits, and seigniorage By Zbigniew Polański; Mikołaj Szadkowski
  16. The evolution of macroprudential policy use in Chile, Latin America and the OECD By Carlos Madeira
  17. "The Interconnection between Level of Income and Tendency of Malaysian Community towards Adoption of Islamic Digital Banking " By Muhammad Ridhwan Ab. Aziz
  18. An Analysis of the Interest Rate Risk of the Federal Reserve’s Balance Sheet, Part 1: Background and Historical Perspective By Alyssa G. Anderson; Dave Na; Bernd Schlusche; Zeynep Senyuz
  19. The effects of Monetary Policy on Capital Flows A Meta-Analysis By Mauricio Villamizar-Villegas; Lucía Arango-Lozano; Geraldine Castelblanco; Nicolás Fajardo-Baquero; Maria A. Ruiz-Sanchez
  20. Job polarisation and household borrowing By Cantarella, Michele; Kavonius, Ilja Kristian
  21. Till debt do us part: strategic divorces and a test of moral hazard By Yeorim Kim; Mauro Mastrogiacomo; Stefan Hochguertel; Hans Bloemen
  22. Women in Fintech: As Leaders and Users By Ms. Sumiko Ogawa; Purva Khera; Mahima Vasishth; Ms. Ratna Sahay
  23. Two Illustrations of the Quantity Theory of Money Reloaded By Han Gao; Mariano Kulish; Juan Pablo Nicolini
  24. Determinants of Earnings Management Actions in Indonesian Banking Companies By Arna Suryani
  25. The impact on the Polish economy of the Structural Open Market Operations programme conducted by NBP By Katarzyna Hertel; Marcin Humanicki; Marcin Kitala; Tomasz Kleszcz; Kamila Kuziemska-Pawlak; Jakub Mućk; Bartosz Rybaczyk; Maciej Stefański
  26. Climate change versus price stability: How "green" central bankers and members of the European parliament became pragmatic (yet precarious) bedfellows By Massoc, Elsa C.
  27. Toward Understanding Financial Diplomacy: The Case of Morocco By Fadoua Joudar; Brahim Dinar

  1. By: Sami Ben Naceur; Bertrand Candelon; Mohamed Belkhir; Jean-Charles Wijnandts
    Abstract: This paper studies the transmission of macroprudential policies across both financial and non financial sectors of the economy. It first documents that tighter macroprudential regulations implemented in Europe over the period 2008–2017 lowered default risk not only in the financial, but also in non-financial sectors. Second, the paper analyzes the impact of two reforms in the macroprudential framework. Higher capital requirements improve the long-run resilience of the financial sector but at the cost of raising long-term default risk in non-financial sectors. Strengthening the resolution framework for failing banks has beneficial long-run effects on the default risks of the financial and non-financial sectors. Our results concur with the literature documenting how banks adjust their balance sheet composition and credit supply in reaction to changes in their regulatory environment.
    Keywords: Macroprudential regulation; Default risk; Capital requirements; Bank bail-in
    Date: 2022–07–15
  2. By: Barbiero, Francesca; Burlon, Lorenzo; Dimou, Maria; Toczynski, Jan
    Abstract: We assess whether central bank credit operations influence the size and composition of bank credit in a negative interest rate environment. We exploit confidential information from the newly established European credit registry to capture bank lending conditions and bank risk taking. For identification, we use high-frequency reactions of bank bonds around the announcement of the April 2020 recalibration of the ECB’s Targeted Longer-Term Refinancing Operations (TLTROs). We find that the credit easing measures had a strong positive effect on bank credit, even when controlling for possible confounding factors. The increase in lending was not accompanied by excessive risk-taking, especially for banks with low intermediation margin, that is, those that were poised to benefit the most from TLTROs’ borrowing rates below the interest rates on central bank reserves. JEL Classification: E51, E52, G01, G21
    Keywords: bank lending, dual rates, risk taking, unconventional monetary policy
    Date: 2022–07
  3. By: Mariusz Kapuściński (National Bank of Poland)
    Abstract: In this study I analyse the effects of a bank levy, as introduced in Poland, on areas which appear to be relevant from the perspective of a central bank. I apply the difference-in-differences method, using bank level panel data. I find that the introduction of the bank levy has affected the use of some monetary policy instruments, money market rates and volumes, and deposit and loan rates. However, I find little evidence of its impact on loan volumes, bank profitability, capital and risk-taking. This means that the bank levy has had important implications for monetary policy implementation, interest rate benchmark reform and monetary conditions, but (as yet) less so for financial stability. As an extension of the study, I document its effects on assets and Treasury bond holdings (including their changes at the end of the month), and estimate the impact of bank balance sheet adjustments on government revenues.
    Keywords: bank levy, difference-in-differences, panel data, monetary policy instruments, money market, financial stability
    JEL: C23 E43 E51 E52 G18 H26 H39
    Date: 2022
  4. By: Yessie Fransiska Lydiana (School of Business and Management ITB, Indonesia Author-2-Name: Aurik Gustomo Author-2-Workplace-Name: School of Business and Management ITB, Indonesia Author-3-Name: Yuni Ros Bangun Author-3-Workplace-Name: School of Business and Management ITB, Indonesia Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: " Objective - Customer changes in behaviour during the COVID-19 pandemic prompted banks to swiftly adopt digital transformation systems. Banks work towards a digitalisation of the industry by employing information technology in the financial sector. Methodology – The digital transformation brings opportunities as well as challenges. This study aims to enrich the study of DX, specifically in banking, by profiling future banking from the viewpoint of digital transformation. This study used the review method by consulting 21 articles that were complied with inclusion criteria. Findings – The findings showed that digital transformation has affected banking in some aspects, including the development of facility and equipment, application design, services and products, security and privacy protection, big data, policy and regulations, innovations, consumer satisfaction, as well as stock returns. Novelty – Based on this literature research, a future agenda can be prepared, including the drivers for future banking, the workforce profile for future banking, as well as the organization design for future banking. Type of Paper - Review"
    Keywords: Future Banking; Digital Transformation; Open Banking; Banking Transformation
    JEL: F65 G15 G21
    Date: 2022–07–30
  5. By: Abdullah Mohammed Sadaa (PhD Student at Graduate School of Business, Universiti Sains Malaysia, Malaysia Author-2-Name: Yuvaraj Ganesan Author-2-Workplace-Name: Senior Lecturer at Graduate School of Business, Universiti Sains Malaysia, Malaysia Author-3-Name: Chu Ei Yet Author-3-Workplace-Name: Senior Lecturer at Graduate School of Business, Universiti Sains Malaysia, Malaysia Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: "Objective - The aim of the study is to examine the relationship between ownership structure (state ownership, foreign ownership, institutional ownership, and management ownership) and nonperforming loans in the Iraqi banking industry. Methodology – Based on quantitative research, the study adopted an archival research strategy using documents (annual reports) as a source of data. In addition, 31 banks working in Iraq were selected based on panel data with a time frame specified for 2011-2020, with 310 observations. Findings – The study found that three types of ownership foreign, institutional, and managerial, are associated with NPLs negatively, but government ownership is linked to NPLs positively because government-owned banks might have a hard time resisting government interference, which leads to higher risk-taking. Novelty – research conducted on the relationship between ownership structure and non-performing loans mainly has focused on developed nations, and there has been little research on the subject in developing countries. There is a need for research centering on developing nations since studies on this topic in developed economies do not adequately explain the relationship between ownership structure and non-performing loans in these countries. As a result, the present research focuses primarily on Iraq, where a significant credit risk characterizes the banking system compared to other Middle Eastern developing nations. Furthermore, the material on ownership structure is not found in Iraq. Type of Paper - Review"
    Keywords: Corporate governance, Ownership structure, Non-performing loans, Iraqi banking industry
    JEL: C21 G32 H81 Z33
    Date: 2022–07–30
  6. By: Hannah Case
    Abstract: In the United States, access to credit is an important channel for smoothing consumption and building wealth. However, establishing and building a credit history can take time. Parents may be able to help their children build credit early and ensure good credit behavior, such as paying on time, by being a cosigner on a credit card.
    Date: 2022–07–14
  7. By: Nurlan Jahangirli (Monash)
    Abstract: Banks favor big firms by offering small firms different menu choices, which leads to disproportionate borrowing costs. I study big firm favorism in credit markets as a source of cross-country divergence and lower business dynamism. First, I provide some new evidence on the nature of this relationship across low-, middle-, and high-income countries. The disproportionate cost of borrowing drastically declines as we move from low-income to high-income countries. Then, I integrate these stylized empirical facts into a Schumpeterian growth model with heterogeneous firm dynamics. Counterfactual policy interventions to alleviate disproportionate borrowing costs suggest a 10% to 21% increase in the economic growth rate in the US.
    Keywords: firm dynamics, cross-country convergence, borrowing costs, economic growth, pricing of corporate loans
    JEL: O16 O40
    Date: 2022–08
  8. By: Ozili, Peterson K
    Abstract: The emergence of central bank digital currency (CBDC) provides an opportunity for central banks to make an important contribution to the transition to a circular economy. This paper examines the role of a central bank digital currency in the circular economy. Central banks can contribute to the transition to a circular economy in two ways: first, by making central bank digital currency accessible to circular businesses and other players in the circular economy sector; and second, by looking into how the design features of CBDC can support circular economy goals. On the role of CBDC in the circular economy, I argue that a central bank digital currency offers a better payment option for circular economy financial transactions; central bank digital currency can lead to greater financial inclusion for ‘unbanked’ informal workers in the circular economy; CBDC can create a gateway that allows a central bank to offer financial assistance to distressed circular businesses; using a central bank digital currency can reduce illicit activities in the circular economy; a central bank digital currency can be used to provide stimulus funding to support circular businesses during crises; and, a central bank digital currency can offer low transaction cost for circular economy financial transactions. The paper also shows the link between CBDC and the circular economy. It also offers a critical perspective on the link between CBDC and the circular economy.
    Keywords: circular economy, central bank digital currency, circular finance, linear economy, resources, sustainability, central bank, CBDC design, blockchain, sustainable development, payment system, innovation.
    JEL: E42 Q2 Q54 Q56
    Date: 2022
  9. By: Benincasa, Emanuela; Betz, Frank; Gattini, Luca
    Abstract: We document the investment and financing decisions of firms that experience monetary losses due to extreme weather events. Our sample covers firms operating in 41 economies, mainly emerging and developing markets. Consistent with the need to either replenish damaged capital or to adapt to climate change, firms hit by extreme weather are more likely to invest in long-term assets. In addition, they are more likely to integrate climate-friendly measures in their production processes. Although these firms have higher needs for bank credit, they are not more likely to be credit constrained than the average firm. Nonetheless, they face higher loan rejection rates and they are more leveraged than otherwise comparable firms. This suggests that climate change has the potential to erode the quality of firm balance sheets over time.
    Keywords: Physical climate risk,Extreme weather,Access to credit,Corporate investment
    JEL: D22 G21 G32 L20 Q54
    Date: 2022
  10. By: Dimitris Malliaropulos (Bank of Greece); Petros Migiakis
    Abstract: We document the existence of a global monetary policy factor in sovereign bond yields, related to the size of the aggregate balance sheet of nine major central banks of developed economies that have implemented programs of large-scale asset purchases. Balance sheet policies of these central banks reduced the net supply of safe assets in the global economy, triggering a decline in global yields as investors rebalanced their portfolios towards more risky assets. We find that central banks’ large-scale asset purchases have contributed to significant and permanent declines in long-term yields globally, ranging from around 330 bps for AAA-rated sovereigns to 800 bps for non-investment grade sovereigns. The stronger decline in yields of high-risk sovereigns can be partly attributed to the decline in the foreign exchange risk premium as their currencies appreciated. Global central bank asset purchases during the Covid-19 crisis have more than counterbalanced the effects of expanding fiscal deficits on global bond yields, driving them to even lower levels. Our findings have important policy implications: normalizing monetary policy by scaling down central bank balance sheets to pre-crisis levels may lead to sharp increases in sovereign bond yields globally, widening spreads and currency depreciations of vulnerable sovereigns with severe consequences for financial stability and the global economy.
    Keywords: quantitative easing; central bank balance sheet policies; sovereign risk; interest rates; panel cointegration.
    JEL: E42 E43 G12 G15
    Date: 2022–07
  11. By: Benetton, Matteo (UC Berkeley); Kudlyak, Marianna (Federal Reserve Bank of San Francisco); Mondragon, John (University of California, Berkeley)
    Abstract: Using a nationally representative panel of consumer credit records for the US from 1999 to 2021, we document a positive correlation between child and parent homeownership. We propose a new causal mechanism behind this relationship based on parents extracting home equity to help finance their child's home purchase and quantify this mechanism in several ways. First, controlling for cohort, zip code, age, and the credit-worthiness of parents and children, we find that children whose parents extract equity are 60% more likely to become a homeowner than children whose homeowner-parents do not extract equity. Second, using an event study approach, we find that the increase in child homeownership occurs almost entirely in the year when parents extract equity. Third, using variation in equity extraction induced by households near leverage constraints, we find parental equity extraction increases the child's probability of becoming a homeowner by about five times. Our results highlight the importance of familial wealth for household wealth accumulation and housing wealth in particular. A back-of-the-envelope calculation suggests that dynastic home equity increases housing wealth inequality among young adults by 20%.
    Keywords: home equity, intergenerational wealth, inequality, mortgages, housing, household finance
    JEL: G51 D64 E24
    Date: 2022–07
  12. By: Gáti, Laura
    Abstract: This paper analyzes monetary policy in a model with a potential unanchoring of inflation expectations. The degree of unanchoring is given by how sensitively the public’s long-run inflation expectations respond to inflation surprises. I find that optimal policy moves the interest rate aggressively when expectations unanchor, allowing the central bank to accommodate inflation fluctuations when expectations are well-anchored. Furthermore, I estimate the model-implied relationship that determines the extent of unanchoring. The data suggest that the expectations process is nonlinear and asymmetric: expectations respond more sensitively to large or downside surprises than to smaller or upside ones. JEL Classification: E52, E71, D84
    Keywords: anchored expectations, behavioral macro, optimal monetary policy
    Date: 2022–07
  13. By: Guillermo Jr. Cárdenas Salgado; Juan José Li Ng; Héctor Ortega Rosas; Susana Ramos Villaseñor; Carlos Serrano; Elmer Solano Flores
    Abstract: We presented the results of a Randomized Control Test (RCT) to people who received nudges through SMS in order to promote financial health variables. The target population was about 95,000 people in two age groups: 27 to 38 and 39 to 56 years old. We presented the results of a Randomized Control Test (RCT) to people who received nudges through SMS in order to promote financial health variables. The target population was about 95,000 people in two age groups: 27 to 38 and 39 to 56 years old.
    Keywords: Nudges, Empujones del comportamiento, Behavioral economics, Economía del comportamiento, savings, ahorro, Digital banking, Banca digital, Financial health, Salud financiera, Mexico, México, Banks, Banca, Digital Trends, Tendencias Digitales, Financial Inclusion, Inclusión Financiera, Digital Economy, Economía Digital, Sustainable Development, Desarrollo Sostenible, Working Papers, Documento de Trabajo
    JEL: D14 D91 G21 O16
    Date: 2022–08
  14. By: Tomokatsu Onaga; Fabio Caccioli; Teruyoshi Kobayashi
    Abstract: Trading activities in financial systems create various channels through which systemic risk can propagate. An important contagion channel is financial fire sales, where a bank failure causes asset prices to fall due to asset liquidation, which in turn drives further bank defaults, triggering the next rounds of liquidation. This process can be considered as complex contagion, yet it cannot be modeled using the conventional binary-state contagion models because there is a continuum of states representing asset prices. Here, we develop a threshold model of continuous-state cascades in which the states of each node are represented by real values. We show that the solution of a multi-state contagion model, for which the continuous states are discretized, accurately replicates the simulated continuous state distribution as long as the number of states is moderately large. This discretization approach allows us to exploit the power of approximate master equations (AME) to trace the trajectory of the fraction of defaulted banks and obtain the distribution of asset prices that characterize the dynamics of fire sales on asset-bank bipartite networks. We examine the accuracy of the proposed method using real data on asset-holding relationships in exchange-traded funds (ETFs).
    Date: 2022–07
  15. By: Zbigniew Polański (SGH Warsaw School of Economics and National Bank of Poland); Mikołaj Szadkowski (SGH Warsaw School of Economics and National Bank of Poland)
    Abstract: This paper advances a simple framework explaining how monetary policy normalization (“exit policies”) may impact central bank profits and seigniorage formation with further implications for central bank transfers to the government. The cases of seven central banks of major and smaller economies serve as an illustration. The notion of the break-even point is applied to study the financial situation of these institutions for the period of 2014-2020. During the normalization process, interest rate increases may adversely affect profit changes, and through transfers may have an impact on the fiscal space available to the governments, creating political economy concerns. Possible remedies are discussed together with accompanying policy dilemmas.
    Keywords: central bank profit, seigniorage, break-even point, monetary policy normalization, exit policies
    JEL: E52 E58 E59
    Date: 2022
  16. By: Carlos Madeira
    Abstract: This study compares the use of macroprudential policies and capital flow management in Chile versus other countries. I find that Chile made a lower net tightening of its macroprudential policies relative to 1990 than the other country groups, whether in terms of its overall index or any of its subcategories. This is explained in part because Chile had already adopted tight macroprudential policies after the Banking Law of 1986; therefore, it started the 1990s with a more conservative level of financial regulation than most countries. However, Chile still presents a restrictive Loan to Value regulation, close to the OECD average. In terms of Financial Openness and Capital Controls, Chile was very closed until the Asian crisis. Chile is more open with respect to capital inflows relative to all the country groups, although it is still more closed than the OECD and Advanced Economies for outflows.
    Date: 2022–07
  17. By: Muhammad Ridhwan Ab. Aziz (Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia (USIM), Malaysia Author-2-Name: Muhammad Zakirol Izat Mustafar Author-2-Workplace-Name: Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia (USIM), Malaysia Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: " Objective - This study is aimed to investigate the interconnection between the average income level and the tendency of the Malaysian community toward the adoption of Islamic digital banking. Methodology – This study used a quantitative survey questionnaire with 100 valid respondents. The data were collected within 3 months and the SPSS software was applied in this study to analyse the data using descriptive analysis. Cronbach's alpha tests were used to determine the reliability of multiple questions based on the Likert scale questionnaires in this study. Findings – The general finding of this study shows that the group with lower income levels is more responsive to the adoption of Islamic digital banking compared to the higher income group. It indicates that this group believed that Islamic digital banking can be beneficial to the community socially and economically in terms of perceived usefulness, perceived ease of use, and transaction cost. Novelty – The emergence of this study is to contribute the literature and reference related to Islamic digital banking for the interest of researchers, practitioners, and consumers in developing further research and the adoption of this platform in the future. Type of Paper - Empirical"
    Keywords: Digital Banking, Islamic Digital Banking, Income, Interconnection.
    JEL: G21 G24
    Date: 2022–07–30
  18. By: Alyssa G. Anderson; Dave Na; Bernd Schlusche; Zeynep Senyuz
    Abstract: As part of its implementation of monetary policy, the Federal Reserve (Fed) holds Treasury securities and agency mortgage-backed securities (MBS) in the System Open Market Account (SOMA). The market value of these securities and the Fed's income fluctuate with changes in interest rates. As such, the ongoing increases in policy rates to address inflationary pressures are expected to put downward pressure on the Fed's net income.
    Date: 2022–07–15
  19. By: Mauricio Villamizar-Villegas; Lucía Arango-Lozano; Geraldine Castelblanco; Nicolás Fajardo-Baquero; Maria A. Ruiz-Sanchez
    Abstract: We investigate whether central banks are able to attract or redirect capital flows, by bringing together the entire empirical literature into the first quantitative meta-analysis on the subject. We dissect policy effects by the type of flow and by the origin of the monetary shock. Further, we assess whether policy effects depend on factors that drive investors to either search for yields or fly to safety. Our findings indicate a mean effect size of inflows in the amount of 0.09% of quarterly GDP in response to either a 100 basis point (bp) increase in the domestic policy rate or a 100bp reduction in the external rate. However, the effect size under a random effect specification is much lower (0.01%). Factors that significantly attract inflows include foreign exchange reserves, output growth, and financial openness, while factors that deter flows include foreign debt, capital controls, and departures from the uncovered interest rate parity. Also, both local and global risks matter (global risks exerting a larger pressure). Finally, we shed light on differences across the different types of flows: banking flows being the most responsive to monetary policy, while foreign direct investment being the least responsive. **** RESUMEN: Este trabajo representa el primer metanálisis cuantitativo sobre si los bancos centrales son capaces de atraer o redirigir los flujos de capital. Se analizan los efectos por tipo de flujo y por el origen del choque monetario. Además, se evalúa si los efectos de las políticas dependen de factores que impulsan a que inversionistas extranjeros busquen rendimientos o, por el contrario, busquen refugio. Nuestros hallazgos indican que, en promedio, el tamaño de las entradas de capital es de 0,09% del PIB trimestral en respuesta a un choque de 100 puntos básicos, ya sea en aumentos de la tasa de política doméstica o en reducciones de la tasa de política externa. Sin embargo, bajo una especificación de efectos aleatorios el tamaño del efecto es mucho menor (0,01%). Los factores que atraen significativamente flujos de capital incluyen el nivel de reservas internacionales, el crecimiento de la producción y el grado de apertura financiera, mientras que los factores que disuaden los flujos incluyen la deuda fiscal, controles de capital y desviaciones de la paridad descubierta de la tasa de interés. También, tanto los riesgos locales como los globales importan (aunque los riesgos globales ejercen una mayor presión). Finalmente, brindamos luces sobre las diferencias entre los tipos de flujos: los flujos bancarios siendo los más reactivos a la política monetaria, y los de inversión extranjera directa los menos reactivos.
    Keywords: Meta-Analysis, Capital Flows, Monetary Policy, Meta-Análisis, Flujos de Capital, Política Monetaria
    JEL: C83 E58 F21 F31 F32
    Date: 2022–08
  20. By: Cantarella, Michele; Kavonius, Ilja Kristian
    Abstract: The last few decades have been accompanied by disruptive changes to the structure ofemployment which have led to deterioration in demand for middle-skill occupations, a processknown as job polarisation. As the demand for middle-skill workers shrinks, expectationsabout households’ income through their lifetime horizon are adjusted. It is unclear whetherthese expectations can loop back into the credit system, and affect the lending behaviour ofcredit institutions, or whether this process impacts on the households’ self-assessment of theiropportunities to borrow money. In this paper, we study how the process of job polarisationaffects credit demand and supply, studying its relationship with credit constraint and creditquality. JEL Classification: G51, J24, D84, O15
    Keywords: employment expectations, household credit, job polarisation, job security
    Date: 2022–07
  21. By: Yeorim Kim (Vrije Univerteit Amsterdam, De Nederlandse Bank); Mauro Mastrogiacomo (Vrije Univerteit Amsterdam, De Nederlandse Bank); Stefan Hochguertel (Vrije Univerteit Amsterdam); Hans Bloemen (Vrije Univerteit Amsterdam)
    Abstract: We test whether households that face prospective home equity losses during a house price downturn use divorce to shed debt. We study the Dutch context, where qualifying homeowners can buy into a mortgage guarantee scheme that insures the lender against borrower default and transfers the risk to the public. Divorce is one of the major events that obliges the guarantor to repay outstanding residual debt after (foreclosure) sale. We argue in this paper that divorce is endogenous to holding underwater mortgages, and hence constitutes a choice that can be used for strategic use of the insurance. Using administrative data, we find a significant, 44% increase in the probability to divorce for households with an underwater mortgage. This effect is causal to being insured. The identification relies on a regression discontinuity design, that exploits the fact that the insurance is only available for properties with values below a legislated qualification threshold. The house price crisis (2008-2013) provides an unexpected shock to house values, leaving about 40% of owners with an underwater mortgage. Their home equity averages to about €-50.000. Couples with similar characteristics just above the qualification threshold experienced significantly less often a divorce than couples just below the threshold. We interpret this behavioral response as moral hazard, also because the induced divorcees reunite at a higher rate than other divorcees.
    Keywords: Moral hazard, mortgage insurance, divorce
    JEL: D10 G21 J12
    Date: 2022–07–28
  22. By: Ms. Sumiko Ogawa; Purva Khera; Mahima Vasishth; Ms. Ratna Sahay
    Abstract: While digital financial services have made access to finance easier, faster, and less costly, helping to broaden digital financial inclusion, its impact on gender gaps varies across countries. Moreover, women leaders in the fintech industry, although growing, remain scarce. This paper explores the interaction between ‘women’ and ‘fintech’ by examining: (i) the role of women leaders on firm-level performance in the fintech industry; and (ii) the determinants of gender gaps in the usage of digital services to better understand the cross-country differences. Results indicate that greater gender diversity in the executive board is associated with better performance of fintech firms.With regard to determinants of the gender gaps in the usage of digital financial services, we find that higher financial and digital literacy of women is associated with lower gender gaps in digital financial inclusion, and that socio-cultural factors also play a key role.
    Keywords: Firm Performance;Women Leaders; Digital Financial Inclusion; Financial Literacy; Digital Literacy
    Date: 2022–07–15
  23. By: Han Gao (University of Minnesota); Mariano Kulish (University of Sydney); Juan Pablo Nicolini (Federal Reserve Bank of Minneapolis/Universidad Di Tella)
    Abstract: In this paper, we review the relationship between inflation rates, nominal interest rates, and rates of growth of monetary aggregates for a large group of OECD countries. If persistent changes in the monetary policy regime are accounted for, the behavior of these series maintains the close relationship predicted by standard quantity theory models. With an estimated model, we show those relationships to be relatively invariant to alternative frictions that can deliver quite different high-frequency dynamics. We also show that the low-frequency component of the data derived from statistical filters does reasonably well in capturing these regime changes.We conclude that the quantity theory relationships are alive and well, and thus they are useful for policy design aimed at controlling inflation.
    Keywords: Money Demand, Monetary Aggregates, Monetary Policy
    JEL: E41 E51 E52
    Date: 2022–07
  24. By: Arna Suryani (Faculty of Economics, Batanghari University, Jambi, 36122, Indonesia Author-2-Name: Ariayani Author-2-Workplace-Name: Faculty of Economics, Batanghari University, Jambi, 36122, Indonesia Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: "Objective - This study aims to examine the influence of Investment Opportunity Set and Corporate Social Responsibility Disclosure through Profitability on Earnings Management. The companies examined are banking companies listed on the LQ45 Index of the Indonesia Stock Exchange (IDX). Methodology – This study used data sourced from annual financial reports of banking companies on the LQ45 Index of the Indonesia Stock Exchange for the 2016-2020 periods. This study used descriptive and verification analysis methods with path analysis and hypothesis testing. Investment Opportunity Set is measured by Market Value to Book Value of Assets, Corporate Social Responsibility Disclosure is measured by Global Reporting Initiative G4 indicators, Profitability is measured by Return on Assets, and Earnings Management is measured by Discretionary Accruals. Findings – The results indicate that Investment Opportunity Set and Corporate Social Responsibility Disclosure and Profitability have no effect on Earnings Management. This implies that Earnings Management actions in companies are more likely to be influenced by other variables which closely related to agency theory and hard to predict the determinants by using only several variables. Novelty – Based on the results of this study, Profitability as an intervening variable does not mediate the effect of Investment Opportunity Set and Corporate Social Responsibility on Earnings Management. This might happens because profitability is quite common for investors and users of financial statements in assessing the company's financial performance so that it is easier for users of financial statements to know the Earnings Management actions done by the company. Type of Paper - Empirical"
    Keywords: Bank; Investment Opportunity Set; Corporate Social Responsibility; Profitability; Earnings Management.
    JEL: G11 G20
    Date: 2022–07–30
  25. By: Katarzyna Hertel (National Bank of Poland); Marcin Humanicki (National Bank of Poland); Marcin Kitala (National Bank of Poland); Tomasz Kleszcz (National Bank of Poland); Kamila Kuziemska-Pawlak (National Bank of Poland); Jakub Mućk (National Bank of Poland); Bartosz Rybaczyk (National Bank of Poland); Maciej Stefański (National Bank of Poland)
    Abstract: The paper presents estimates of the macroeconomic effects of the Structural Open Market Operations (SOMO) programme implemented by NBP in 2020 in response to the COVID-19 pandemic shock. In order to assess the ex-ante impact of bond purchases by the central bank on the real economy and prices in Poland, (i) the impact of unconventional monetary policy on financing conditions, identified indirectly using the shadow policy rate concept, and (ii) the impact of the SOMO on the exchange rate of the Polish zloty against the euro were estimated. The results of the NECMOD model simulations indicate that the unconventional monetary policy conducted by NBP reduced the extent of the decline in GDP growth and inflation by 0.1 and 0.2 percentage points in 2020 and 0.5 percentage points each in 2021. At the same time, the macroeconomic impact of the SOMO was similar to the effect of the interest rate cuts in the first half of 2020.
    Keywords: monetary policy, open market operations, COVID-19
    JEL: E31 E52 E5
    Date: 2022
  26. By: Massoc, Elsa C.
    Abstract: The European Central Bank (ECB) recently proclaimed a more active role for itself in the fight against climate change. Did the European Parliament (EP) play a part in this regard, and if so what was it? To answer this question, this paper builds on a multi-method text analysis of original datasets compiling communications between the ECB and the EP across three accountability forums between 2014 and 2021. The paper shows that there has been discursive convergence between central bankers and parliamentarians concerning the role of the ECB in combatting climate change. It argues that this convergence has resulted from a pragmatic (yet precarious) adoption of a common repertoire1 between 'green' central bankers and parliamentarians who have favored a more active role for the ECB in the fight against climate change. The adoption of a common repertoire is pragmatic, in that it results from the strategic use of specific discursive elements that are ambitious enough to address their respective opponents and trigger political change, yet vague enough to allow both sets of actors to converge on them momentarily. It is also precarious in the sense that it involves discarding fundamental political tensions, which is hardly tenable in the long term. The paper shows that both organizational and politicization dynamics have been at work in the emergence of this pragmatic yet precarious bedfellowship between 'green' central bankers and parliamentarians.
    Keywords: accountability,politicization,European Central Bank,European Parliament,climate,price stability
    Date: 2022
  27. By: Fadoua Joudar (Université Hassan 1er [Settat]); Brahim Dinar (Université Hassan 1er [Settat])
    Abstract: Due to an economic context characterized by globalization, marked by fierce competition and by the opening of markets at the international level, several opportunities and large-scale challenges arise because of this new international context. This set of circumstances has drawn increasing attention to the role of financial diplomacy in promoting savings. Generally confused with economic diplomacy, financial diplomacy represents a particular aspect of diplomacy, however it remains very little treated in research works. Aware of the importance of financial diplomacy in the insertion of its financial system at the level of international finance, Morocco has deployed remarkable efforts in this direction. Indeed, the interest given to financial diplomacy by Morocco is not new, it dates back to its independence. The structural adjustment program initiated in Morocco in 1983; was the beginning of strengthening the assistance and support relations of the IMF and the World Bank. These relations explain Morocco's interest in its financial diplomacy. Due to the lack of research work dealing with this issue, this article attempts to answer the following question: What are the illustrations and actors of financial diplomacy in Morocco to ensure its insertion in the international economy? To answer this question, this article examines the importance of Morocco's financial diplomacy in international financial relations, through an identification of diplomatic actors as well as its contribution to Morocco's debt situation.
    Keywords: Financial Diplomacy,International Monetary Fund,World Bank
    Date: 2022

This nep-ban issue is ©2022 by Sergio Castellanos-Gamboa. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.