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on Banking |
| By: | Altavilla, Carlo; Burlon, Lorenzo; Hünnekes, Franziska; Begenau, Juliane |
| Abstract: | We construct a novel measure of bank performance, investigate its determinants, and show that it affects bank resilience, lending behaviour and real outcomes. Using confidential and granular data, we measure performance against a market-based benchmark portfolio that mimics individual banks’ interest rate and credit risk exposure. From 2015 to mid-2022, euro area banks underperformed market benchmarks by around e160 billion per year, amid substantial heterogeneity. Structural factors, such as cost inefficiencies, rather than monetary or regulatory measures, were the main driver of bank underperformance. We also show that higher edge banks are less reliant on government support measures and less likely to experience the materialisation of interest rate or credit risk when hit by shocks. Using the euro area credit register and the pandemic shock for identification, we find that higher edge banks originate more credit, direct it towards more productive firms, and support more firm investment. JEL Classification: E52, G12, G21, G28 |
| Keywords: | banking, credit supply, maturity transformation, replicating portfolio |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20242937&r= |
| By: | Porcellacchia, Davide; Sheedy, Kevin D. |
| Abstract: | In financial crises, the premium on liquid assets such as US Treasuries increases alongside credit spreads. This paper explains the link between the liquidity premium and spreads. We present a theory of endogenous bank fragility arising from a coordination friction among bank creditors. The theory’s implications reduce to a single constraint on banks, which is embedded in a quantitative macroeconomic model to investigate the transmission of shocks to spreads and economic activity. Shocks that reduce bank net worth exacerbate the coordination friction. In response, banks lend less and demand more liquid assets. This drives up both credit spreads and the liquidity premium. By mitigating the coordination friction, expansions of public liquidity reduce spreads and boost the economy. Empirically, we identify high-frequency exogenous variation in liquidity by exploiting the time lag between auction and issuance of US Treasuries. We find a causal effect on spreads in line with the calibrated model. JEL Classification: E41, E44, E51, G01, G21 |
| Keywords: | bank-lending channel, bank runs, liquid assets |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20242939&r= |
| By: | Kristian S. Blickle; Evan Perry; João A. C. Santos |
| Abstract: | Using unique nationwide property-level mortgage, flood risk, and flood map data, we analyze whether lenders respond to flood risk that is not captured in FEMA flood maps. We find that lenders are less willing to originate mortgages and charge higher rates for lower LTV loans that face “un-mapped” flood risk. This effect is weaker for high income applicants, as well as non-banks and small local banks. However, we find evidence that non-banks and local banks are more likely to securitize/sell mortgages to borrowers prone to flood risk. Taken together, our results are indicative that mortgage lenders are aware of flood risk outside FEMA’s identified flood zones. |
| Keywords: | flood risk; flood maps; bank lending; climate change; natural disasters; Home Mortgage Disclosure Act (HMDA) data; FEMA; credit constraints |
| JEL: | G20 G23 Q54 |
| Date: | 2024–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:98187&r= |
| By: | Dmytro Holod; Joe Peek; Gökhan Torna |
| Abstract: | This study provides direct evidence of the value to banks arising from relationship lending by estimating the market premium placed on banking organizations’ small business loan portfolios. Using data from the small business loan survey contained in the June bank Call Reports, we find that small commercial and industrial (C&I) loans add value to community banks both in absolute terms and relative to the value contributed by larger C&I loans. The value‐enhancing effect of small business loans is observed primarily at small community banks, and it was present during the Great Recession as well as during periods of more normal economic conditions. Furthermore, the value creation emanates primarily from the smallest relationship‐based C&I loans, those with original values of $100, 000 or less, and at the smallest community banks. By contrast, small commercial real estate (CRE) loans, being relatively more transactional than C&I loans, do not contribute additional value to community banking organizations. The evidence is consistent with a positive role played by small banks making relationship‐based loans to small firms. |
| Keywords: | small business lending; relationship lending; community banks; bank value; commercial and industrial (C&I) lending; commercial real estate (CRE) loans |
| JEL: | G21 G28 G31 |
| Date: | 2024–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:98190&r= |
| By: | Paduano, Stephen |
| Abstract: | Eurozone countries are financially and politically pivotal to the Special Drawing Rights (SDRs) rechannelling agenda.1 Collectively, they hold $200bn in SDRs (just over 20% of all SDRs), and the Eurozone countries which are G-20 members hold $120bn in SDRs (just under 20% of the G-20’s SDRs). These countries are also the most ambitious and proactive members of the SDR system, with France being the first advocate of SDR rechanneling and Spain being the first to rechannel (to the IMF Resilience and Sustainability Trust - RST). However, the Eurozone’s capacity to lead on and participate in SDR rechanneling has been complicated by the European Central Bank (ECB). President Lagarde has expressed that SDR rechanneling to Multilateral Development Banks (MDBs) may not preserve the reserve asset characteristic of the SDR and may violate the prohibition on monetary financing. Building on Paduano and Maret (2023), this paper demonstrates that certain forms of SDR rechanneling can clearly satisfy the ECB’s concerns — and, more importantly, that the rechanneling of reserve assets to multilateral development banks already occurs. |
| Keywords: | European Central Bank, eurosystem, national central banks, Special Drawing Rights, International Monetary Fund, World Bank, global development, international financial architecture |
| Date: | 2023–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpm:notfdl:2305&r= |
| By: | Shuochen Bi; Wenqing Bao |
| Abstract: | With the rapid growth of technology, especially the widespread application of artificial intelligence (AI) technology, the risk management level of commercial banks is constantly reaching new heights. In the current wave of digitalization, AI has become a key driving force for the strategic transformation of financial institutions, especially the banking industry. For commercial banks, the stability and safety of asset quality are crucial, which directly relates to the long-term stable growth of the bank. Among them, credit risk management is particularly core because it involves the flow of a large amount of funds and the accuracy of credit decisions. Therefore, establishing a scientific and effective credit risk decision-making mechanism is of great strategic significance for commercial banks. In this context, the innovative application of AI technology has brought revolutionary changes to bank credit risk management. Through deep learning and big data analysis, AI can accurately evaluate the credit status of borrowers, timely identify potential risks, and provide banks with more accurate and comprehensive credit decision support. At the same time, AI can also achieve realtime monitoring and early warning, helping banks intervene before risks occur and reduce losses. |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2404.18183&r= |
| By: | Breckenfelder, Johannes; De Falco, Veronica |
| Abstract: | Large-Scale Asset Purchases can impact the price of securities directly, when securities are targeted by the central bank, or indirectly through portfolio re-balancing of private investors. We quantify both the direct and the portfolio re-balancing impact, emphasizing the role of investor heterogeneity. We use proprietary security-level data on asset holdings of different investors. We measure the direct impact on security level, finding that it is smaller for securities predominantly held by more price-elastic investors, funds and banks. Comparing a security at the 90th percentile of the investor elasticity distribution to a security at the 10th percentile, the price impact is only two-thirds as large. To assess the portfolio re-balancing effects, we construct a novel shift-share instrument to measure investors’ quasi-exogenous exposure to central bank purchases, based on investors’ holdings of eligible securities before the QE program was announced. We show that funds and banks sell eligible securities to the central bank and re-balance their portfolios towards ineligible securities, with investors ex-ante more exposed to central bank purchases re-balancing more. Using detailed holdings data of mutual funds, we estimate that for each euro sold to the central bank, the average fund allocates 88 cents to ineligible assets and 12 cents to other eligible assets that the central bank does not buy in that time period. The price of ineligible securities held by more exposed funds increases compared to those held by less exposed funds, underscoring the portfolio re-balancing channel at work. JEL Classification: E52, E58, G11, G12, G23 |
| Keywords: | asset pricing, central bank, financial intermediaries, mutual funds |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20242938&r= |
| By: | Budnik, Katarzyna; Ponte Marques, Aurea; Giglio, Carla; Grassi, Alberto; Durrani, Agha; Figueres, Juan Manuel; Konietschke, Paul; Le Grand, Catherine; Metzler, Julian; Población García, Francisco Javier; Shaw, Frances; Groß, Johannes; Sydow, Matthias; Franch, Fabio; Georgescu, Oana-Maria; Ortl, Aljosa; Trachana, Zoe; Chalf, Yasmine |
| Abstract: | This paper provides an overview of stress-testing methodologies in Europe, with a focus on the advancements made by the European Central Bank’s Financial Stability Committee Working Group on Stress Testing (WGST). Over a four-year period, the WGST played a pivotal role in refining stress-testing practices, promoting collaboration among central banks and supervisory authorities and addressing challenges in the evolving financial landscape. The paper discusses the development and application of various stress-testing models, including top-down models, macro-micro models and system-wide models. It highlights the integration of new datasets and model validation efforts as well as the expanded use of stress-testing methodologies in risk and policy evaluation and in communication. The collaborative efforts of the WGST have demystified stress-testing methodologies and fostered trust among stakeholders. The paper concludes by outlining the future agenda for continued improvements in stress-testing practices. JEL Classification: G21, G28, C58, G01, G18 |
| Keywords: | Basel III, communication, COVID-19 mitigation, economic activity, financial system model, impact assessment, lending, macro-financial scenarios, prudential policies, stress testing, uncertainty, Working Group on Stress Testing |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:2024348&r= |
| By: | Marta Cota; Ante Sterc |
| Abstract: | Are households with low financial skills disadvantaged in the mortgage market? Using stochastic record linking, we construct a unique U.S. dataset encompassing a rich set of mortgage details and borrowers’ characteristics, including their objective financial literacy measure. We find that households with low financial literacy are up to 4% more likely to search less and lock in at 15-20 b.p. higher rates. Upon origination, unskilled borrowers face a 35-45% higher mortgage delinquency and end up with a 30% lower likelihood of refinancing. Overall, for a $100, 000 loan, the potential losses from low financial literacy are more than $9, 329 over the mortgage duration. To understand how financial education, more accessible mortgages, or mortgage rate changes affect households with low financial literacy, we formulate and calibrate a mortgage search model with heterogeneous search frictions and endogenous financial skills. Our model estimates show that search intensity and financial skill variations contribute to 55% and 10% of mortgage rate variations, respectively. We find that i) more accessible mortgages lead to a higher delinquency risk among low-skilled households, ii) financial education mitigates the adverse effects of increased accessibility, and iii) low mortgage rates favor high-skilled homeowners and, by reinforcing refinancing activity, deepen consumption differences across different financial skill levels. |
| Keywords: | mortgage refinancing, mortgage search, financial skills, financial education, consumption inequality |
| JEL: | E21 G51 G53 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp780&r= |
| By: | Marco Bardoscia (Bank of England.); Adrian Carro (Banco de España.); Marc Hinterschweiger (Bank of England.); Mauro Napoletano (Université Côte D’Azur, CNRS, GREDEG.); Lilit Popoyan (Queen Mary University of London.); Andrea Roventini (Scuola Superiore Sant’Anna.); Arzu Uluc (Bank of England) |
| Abstract: | We develop a macroeconomic agent-based model to study the joint impact of borrower- and lender-based prudential policies on the housing and credit markets and the economy more widely. We perform three experiments: (i) an increase of total capital requirements; (ii) an introduction of a loan-to-income (LTI) cap on mortgages to owner-occupiers; and (iii) a joint introduction of both experiments at the same time. Our results suggest that tightening capital requirements leads to a sharp decrease in commercial and mortgage lending, and housing transactions. When the LTI cap is in place, house prices fall sharply relative to income, and the homeownership rate decreases. When both policy instruments are combined, we find that housing transactions and prices drop. Both policies have a positive impact on real GDP and unemployment, while there is no material impact on inflation and the real interest rate. |
| Keywords: | Prudential policies; Housing market; Macroeconomy; Agent-based models. |
| JEL: | C63 D1 D31 E58 G21 G28 R2 R21 R31 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:cgs:wpaper:118&r= |
| By: | Christopher Erceg (Monetary and Capital Markets Department, IMF); Marcin Kolasa (Monetary and Capital Markets Department, IMF); Jesper Lindé (Monetary and Capital Markets Department, IMF); Haroon Mumtaz (School of Economics & Finance, Queen Mary University London); Pawel Zabczyk (Monetary and Capital Markets Department, IMF) |
| Abstract: | We study alternative approaches to the withdrawal of prolonged unconventional monetary stimulus (“exit strategies”) by central banks in large, advanced economies. We first show empirically that large-scale asset purchases affect the exchange rate and domestic and foreign term premiums more strongly than conventional short-term policy rate changes when normalizing by the effects on domestic GDP. We then build a two-country New Keynesian model that features segmented bond markets, cognitive discounting and strategic complementarities in price setting that is consistent with these findings. The model implies that quantitative easing (QE) is the onlyeffective way to provide monetary stimulus when policy rates are persistently constrained by the effective lower bound, and that QE is likely to have larger domestic output effects than quantitative tightening (QT). We demonstrate that “exit strategies” by large advanced economies that rely heavily on QT can trigger sizeable inflation-output tradeoffs in foreign recipient economies through the exchange rate and term premium channels. We also show that these tradeoffs are likely to be stronger in emerging market economies, especially those with fixed exchange rates. |
| Keywords: | Monetary Policy, Quantitative Easing, International Spillovers |
| JEL: | C54 E52 E58 F41 |
| Date: | 2024–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:978&r= |
| By: | Joerg Mayer |
| Abstract: | Traditional trust-related de-dollarization motives have gained additional impetus from the declining share of the United States in global output, recent upheaval in dollar bond markets, geopolitical tensions, and a “weaponization†of the dollar. Several institutional innovations by China and the BRICS demonstrate the demand for de-dollarization but do not offer credible alternatives to the dollar’s value characteristics. By contrast, new financial technology, including distributed ledger technology (DLT), and related changes in cross-border payment infrastructure could reduce the network effects that have sustained dollar dominance. By allowing for leaner cross-border payment infrastructures and an easier, cheaper, and more transparent use of non-dollar currencies in cross-border payment and settlement, DLT-based wholesale central bank digital currency (wCBDC) platforms with a foreign-exchange conversion layer may indicate a direction of travel. Pilots of multicurrency wCBDC-platforms indicate how to enable interoperability and reduce exposure to foreign-exchange risk. Regarding institutional (legal, regulatory, and supervisory) frameworks required to fully benefit from infrastructural changes, interlinking common multicurrency wCBDC-platforms among limited numbers of like-minded central banks to form an interoperable hub-and-spoke global wCBDC-system could minimize fragmentation risks while accommodating diverging governance preferences, e.g., concerning data protection and developmental aspirations. By augmenting macroeconomic autonomy and reducing the need for costly dollar reserves, de-dollarization promises greater benefits for countries with non-dominant currencies. These countries should sit at the table when outstanding questions on interoperability and related economic, technical, legal and governance questions regarding multicurrency wCBDCs platforms are answered. |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:imk:fmmpap:102-2024&r= |
| By: | Olivier Armantier; Charles Holt |
| Abstract: | A core responsibility of a central bank is to ensure financial stability by acting as the “lender of last resort” through its Discount Window. The Discount Window, however, has not been effective because its usage is stigmatized. In this paper, we study experimentally how such stigma can be cured. We find that, once a Discount Window facility is stigmatized, removing stigma is difficult. This result is consistent with the Federal Reserve’s experiences which have been unsuccessful at removing the stigma associated with its Discount Window. |
| Keywords: | lender-of-last-resort (LOLR); Lender of last resort; discount window; stigma; laboratory experiments |
| JEL: | E58 G01 C92 |
| Date: | 2024–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:98224&r= |
| By: | Sean Lewis-Faupel; Nicholas Tenev |
| Abstract: | This paper investigates gaps in access to and the cost of housing credit by race and ethnicity using the near universe of U.S. mortgage applications. Our data contain borrower creditworthiness variables that have historically been absent from industry-wide application data and that are likely to affect application approval and loan pricing. We find large unconditional disparities in approval and pricing between racial and ethnic groups. After conditioning on key elements of observable borrower creditworthiness, these disparities are smaller but remain economically meaningful. Sensitivity analysis indicates that omitted factors as predictive of approval/pricing and race/ethnicity as credit score can explain some of the pricing disparities but cannot explain the approval disparities. Taken together, our results suggest that credit score, income, and down payment requirements significantly contribute to disparities in mortgage access and affordability but that other systemic barriers are also responsible for a large share of disparate outcomes in the mortgage market. |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2405.00895&r= |
| By: | Pablo D. Azar; Adrian Casillas; Maryam Farboodi |
| Abstract: | The decentralized nature of blockchain markets has given rise to a complex and highly heterogeneous market structure, gaining increasing importance as traditional and decentralized (DeFi) finance become more interconnected. This paper introduces the DeFi intermediation chain and provides theoretical and empirical evidence for private information as a key determinant of intermediation rents. We propose a repeated bargaining model that predicts that profit share of Ethereum market participants is positively correlated with their private information, and employ a novel instrumental variable approach to show that a 1 percent increase in the value of intermediaries’ private information leads to a 1.4 percent increase in their profit share. |
| Keywords: | financial intermediation; oligopoly; blockchain; decentralized finance; cybersecurity |
| JEL: | G23 D82 L14 L22 G14 D43 |
| Date: | 2024–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:98219&r= |
| By: | Ozili, Peterson K |
| Abstract: | Economic growth is reflected in SDG8 of the sustainable development goals. Financial stability has been identified as a factor promoting economic growth. However, there is little evidence on the effect of financial stability on economic growth in Nigeria. This study empirically examines the effect of financial stability on economic growth in Nigeria from 1993 to 2017. The results show a positive relationship between financial stability and economic growth in Nigeria. Specifically, the result shows that a high ZSCORE, which reflects low insolvency risk, has a positive effect on economic growth. Similarly, fewer nonperforming loans improve economic growth in Nigeria. In contrast, capital adequacy was found to have a negative effect on economic growth in Nigeria. |
| Keywords: | financial stability, ZSCORE, economic growth, Nigeria |
| JEL: | G20 G21 G23 G28 G29 O43 O47 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120776&r= |
| By: | Daniel A. Dias; Joao B. Duarte |
| Abstract: | Being a homeowner is one of the tenets of the American dream. In general, relative to renting, people see homeownership as a path to wealth through the usual appreciation of the house prices and the forced savings through mortgage payments but also a path to financial stability through more stable and predictable housing costs (Young et al., 2023). |
| Date: | 2024–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfn:2024-05-03-2&r= |
| By: | Boris Chafwehé; Andrea Colciago; Romanos Priftis |
| Abstract: | This paper proposes a New Keynesian multi-sector industry model incorporating firm heterogeneity, entry, and exit dynamics, while considering energy production from both fossil fuels and renewables. We examine the impacts of a sustained fossil fuel price hike on sectoral size, labor productivity, and inflation. Final good sectors are ex-ante heterogeneous in terms of energy intensity in production. For this reason, a higher relative price of fossil resources affects their profitability asymmetrically. Further, it entails a substitution effect that leads to a greener mix of resources in the production of energy. As production costs rise, less efficient firms leave the market, while new entrants must display higher idiosyncratic productivity. While this process enhances average labor productivity, it also results in a lasting decrease in the entry of new firms. A central bank with a strong anti-inflationary stance can circumvent the energy price increase and mitigate its inflationary effects by curbing rising production costs while promoting sectoral reallocation. While this entails a higher impact cost in terms of output and lower average productivity, it leads to a faster recovery in business dynamism in the medium-term. |
| Keywords: | Energy, productivity, firm entry and exit, monetary policy. |
| JEL: | E62 L16 O33 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:mib:wpaper:534&r= |
| By: | Alice Albonico; Guido Ascari; Qazi Haque |
| Abstract: | We estimate a medium-scale DSGE model for the Euro Area allowing and testing for indeterminacy since the introduction of the euro until mid-2023. Our estimates suggest that monetary policy in the euro area was passive, leading to indeterminacy and self-fulfilling dynamics. Indeterminacy dramatically alters the transmission of fundamental shocks, particularly for inflation whose responses are inconsistent with standard economic theory. Inflation increases following a positive supply or a negative demand shock. Consequently, demand shocks look like supply shocks and vice versa, making the dynamics of the model under indeterminacy challenging to interpret. However, this finding is not robust across different assumptions on the way the sunspot shock is specified in the estimation. Both under determinacy and indeterminacy, the model estimates a natural rate of interest that turned positive after the recent inflation episode. |
| Keywords: | monetary policy, indeterminacy, euro area, business cycle fluctuations, inflation |
| JEL: | E32 E52 C11 C13 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:mib:wpaper:535&r= |
| By: | Kozo UEDA; Hinata Sasaki |
| Abstract: | This study examines whether cashless spending stimulates spending through subdued salience. We use bank transaction data and leverage events related to Quick Response (QR) code campaign as an instrumental variable. Our estimation offers supporting evidence for subdued salience, demonstrating that an increase in QR code payments prompted by campaigns leads to an approximately samesized increase in other spending. However, this e ect is transitory. Nevertheless, the e ect of QR code campaigns on QR usage exerts a lasting impact over time, increasing the fraction of QR code users by a minimum of 1%. |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:cnn:wpaper:24-008e&r= |
| By: | Tingguo Zheng; Hongyin Zhang; Shiqi Ye |
| Abstract: | This paper introduces a novel multi-moment connectedness network approach for analyzing the interconnectedness of green financial market. Focusing on the impact of monetary policy shocks, our study reveals that connectedness within the green bond and equity markets varies with different moments (returns, volatility, skewness, and kurtosis) and changes significantly around Federal Open Market Committee (FOMC) events. Static analysis shows a decrease in connectedness with higher moments, while dynamic analysis highlights increased sensitivity to event-driven shocks. We find that both tight and loose monetary policy shocks initially elevate connectedness within the first six months. However, the effects of tight shocks gradually fade, whereas loose shocks may reduce connectedness after one year. These results offer insight to policymakers in regulating sustainable economies and investment managers in strategizing asset allocation and risk management, especially in environmentally focused markets. Our study contributes to understanding the complex dynamics of the green financial market in response to monetary policies, helping in decision-making for sustainable economic development and financial stability. |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2405.02575&r= |
| By: | José Cristi; Ṣebnem Kalemli-Özcan; Mariana Sans; Filiz D. Unsal |
| Abstract: | We study the international transmission of U.S. monetary policy (FED hikes) and a strong U.S. dollar. Both of these variables are endogenous and thus we follow the recent developments in the literature to measure the exogenous components of each from the perspective of the rest of the world (ROW). We show that while U.S. monetary policy shocks act as financial shocks increasing risk premia in emerging markets, a shock to U.S. dollar does not generate the same effect. |
| JEL: | F30 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32330&r= |
| By: | Mitu Gulati (University of Virginia (Law)); Kim Oosterlinck (University of Bruxelles & CEPR); Ugo Panizza (Geneva Graduate Institute & CEPR); Mark C. Weidemaier (University of North Carolina at Chapel Hill (Law)) |
| Abstract: | This paper describes George Washington's administration response to a plea for emergency war financing from French colonists who were trying to quash a slave rebellion in Haiti (then Saint Domingue). Washington bypassed Congress and authorized assistance to the French planters, hoping that France would recognize and repay the resulting debt to the United States. The exploration of this episode offers insights on how legal constraints can be overlooked in times of crisis due to political imperatives. On the international law front, it reveals that legal norms perceived as firmly established today were more malleable in the late 18th century. To place the story of U.S. loans and foreign interference in Haiti in historical context, we provide a brief overview of Haiti's independence debt to France and the U.S. loans that led to the American occupation of 1915-1934. Our exploration, primarily sourced from secondary materials, raises more questions than answers. Nonetheless, we hope that by outlining the bare bones of the story and posing pertinent questions, we can inspire further research that digs deeper into this fascinating historical record. |
| Keywords: | Sovereign Debt, Haiti; Emergency War Financing; U.S. Foreign Policy |
| JEL: | N41 F34 K33 H56 |
| Date: | 2024–05–16 |
| URL: | http://d.repec.org/n?u=RePEc:gii:giihei:heidwp07-2024&r= |
| By: | Ariane Reyns |
| Abstract: | This dissertation explores the potential alternative currencies have as flexible tools to generate resilience. Their flexible nature, because complementary to conventional ones, makes them particularly useful to economic agents as it empowers them to utilize these when needed. Therefore, this thesis asserts that their strength lies significantly in a transitional power, offering a capacity to adapt amid uncertainties and thus creating resilience. This relationship between resilience and alternative currencies is investigated using robust empirical methods. Given vast differences in design and purpose, the study distinguishes between Complementary Currencies (CCs), considered to benefit local sustainability and economic development, and cryptocurrencies. This differentiation is crucial in understanding their varied impacts at different levels of the economic system: CCs influence organizational and potentially regional resilience, impacting local economic dynamics. In contrast, cryptocurrencies, studied for portfolio diversification, may affect overall portfolio resilience at a broader economic level. Key contributions in the initial chapters unveil deliberate and strategic business engagement with CCs, recognizing a distinct economic rationale. Findings suggest this economic rationale manifests as an "insurance" function when CCs actively mitigate the detrimental effects of economic crises. Notably, such dynamics prove most effective for the more vulnerable enterprises. These results further validate our conceptualization of the transitional power of CCs, emphasizing their ability to foster resilience in the face of economic challenges. The last chapter explores parallel dynamics for cryptocurrencies, highlighting Bitcoin's potential in wartime portfolio diversification, serving as an alternative asset. Overall, this research contributes to our understanding of alternative currencies' effectiveness in enhancing resilience, providing timely insights for reshaping economic systems amid contemporary global challenges. |
| Keywords: | Alternative currencies; Complementary currencies; Mutual Credit Systems; Cryptocurrencies; Financial resilience; Regional resilience; Small firms |
| Date: | 2024–05–02 |
| URL: | http://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/373465&r= |