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on Banking |
| By: | Stephanie Schmitt-Grohé; Martín Uribe |
| Abstract: | The neo-Fisher effect and the central bank information (CBI) effect produce similar outcomes: under both, a monetary tightening triggers an increase in inflation and an expansion in real activity. Separate estimates of these effects run the risk of confounding one with the other. To disentangle these two channels, we introduce into a new-Keynesian model a permanent monetary shock that generates neo-Fisher effects and an aggregate demand shock to which the central bank responds that creates CBI effects. We estimate the model on U.S. data. We find that the neo-Fisherian shock is an important driver of inflation, while the CBI shock explains a significant fraction of movements in the nominal interest rate. The CBI shock explains little of inflation and output, but, through counterfactual exercises, we establish that this reflects the central bank's success in isolating the economy from aggregate demand disturbances. These results are shown to hold under full and imperfect information. |
| JEL: | E3 E5 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33136 |
| By: | Christopher Gerling; Stefan Lessmann |
| Abstract: | This paper explores the growing impact of AI and NLP in bank marketing, highlighting their evolving roles in enhancing marketing strategies, improving customer engagement, and creating value within this sector. While AI and NLP have been widely studied in general marketing, there is a notable gap in understanding their specific applications and potential within the banking sector. This research addresses this specific gap by providing a systematic review and strategic analysis of AI and NLP applications in bank marketing, focusing on their integration across the customer journey and operational excellence. Employing the PRISMA methodology, this study systematically reviews existing literature to assess the current landscape of AI and NLP in bank marketing. Additionally, it incorporates semantic mapping using Sentence Transformers and UMAP for strategic gap analysis to identify underexplored areas and opportunities for future research. The systematic review reveals limited research specifically focused on NLP applications in bank marketing. The strategic gap analysis identifies key areas where NLP can further enhance marketing strategies, including customer-centric applications like acquisition, retention, and personalized engagement, offering valuable insights for both academic research and practical implementation. This research contributes to the field of bank marketing by mapping the current state of AI and NLP applications and identifying strategic gaps. The findings provide actionable insights for developing NLP-driven growth and innovation frameworks and highlight the role of NLP in improving operational efficiency and regulatory compliance. This work has broader implications for enhancing customer experience, profitability, and innovation in the banking industry. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2411.14463 |
| By: | Toncheva, Rossitsa |
| Abstract: | Money, as the quantitative representative of almost everything, decently occupies the central position in the distribution mechanism and as an instrument for imposing order. At the stage where global solutions are sought to adapt the orthodox monetary system to the current productive forces, many opportunities are being opened for testing new forms of social models, as one could also call that of "private non-bank money". The term "private non-bank money" is a conceptual successor to the term of "barter money" . Both are formal, synthetic words created as a tool to get better sense of the pretty wide variety of monetary experiments with complementary currency systems (ССS), not only as practical cases but also as theoretical interpretations. The use of new term partly solves not only the above limitation, but also the confusion resulting from the fact that "money" and "currency" are often perceived as synonymous. "Money" is defined and perceived with too wide a scope, which can even give rise to a cognitive fallacy. Regardless of the predominantly social characteristics of ССS, all of them, except for the time banks, have a powerful financial feature, and it is the monetary instrument that places them also in the field of monetary theory. The search for a common distinguishing property of the CCS has led to the need to include a new concept, by which the difficulty is largely removed. The concept of "private non-bank money" is instrumental, and as such it represents a relatively more limited notion of money - as a specific form of it, suitable for understanding the meaning, content and significance of the relations that have been created in the various models of CCS. |
| Keywords: | Private Non-bank Money, Distribution, Money, complementary currency |
| JEL: | E40 E50 G2 P40 |
| Date: | 2024–11–08 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122689 |
| By: | Albrecher, Hansjörg; Dacorogna, Michel M |
| Abstract: | Assessing time-related risks in long-tailed insurance is challenging. Regulatory capital allocation rules may underestimate credit deterioration risk by not requiring insurers to hold solvency capital early, while actuarial practices often allocate capital sooner than mandated. We propose a framework to quantify these time-associated risks and evaluate capital allocation strategies based on time to ultimate, aiming to manage long-tail business effectively. By modeling the impact of exogenous credit migration risk, we evaluate six strategies, including costs associated with potential company bankruptcy until long-term claims are settled. Using a numerical example of a future heavy-tailed insurance risk, we estimate a Markov chain credit migration model with insurance market data and analyze liability values from various capital management strategies. Our findings show that early capital raising is costly, even with penalties for avoided credit risk, unless the company's initial credit rating is poor. In such cases, purchasing protection through a credit derivative may be more efficient, if available. |
| Keywords: | Insurance, solvency capital requirement, credit risk, bankruptcy, regulation |
| JEL: | G22 G28 G32 |
| Date: | 2024–10–02 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122323 |
| By: | Kekaye, Tsholofelo; Bonga-Bonga, Lumengo |
| Abstract: | This study expands on the existing literature by investigating the impact of Inflation Targeting (IT) policies on the duration of High Inflation Episodes (HIEs) in both developed and emerging economies. Utilizing Survival Analysis, the study evaluated HIEs' lengths before and after IT policy implementation across 26 countries from 2003 to 2023. The findings reveal that IT policies significantly reduce the duration of HIEs. Kaplan-Meier estimates indicate a clear decline in ongoing HIE probability over time, with a more pronounced reduction in emerging economies. Statistical tests like the Log-Rank and Wilcoxon tests provide robust evidence supporting the effectiveness of IT policies, showing significant differences in HIE durations pre- and post-IT implementation. This study also addresses the literature gap by distinguishing the differential effects of IT policies based on the developmental status of countries, demonstrating their efficacy in enhancing price stability across diverse economic contexts. |
| Keywords: | monetary policy; inflation targeting; survival analysis |
| JEL: | C5 E52 E58 |
| Date: | 2024–11–22 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122745 |
| By: | Jongrim Ha; Dohan Kim; M. Ayhan Kose; Eswar S. Prasad |
| Abstract: | Conventional empirical models of monetary policy transmission in emerging market economies produce puzzling results: monetary tightening often leads to an increase in prices (the price puzzle) and depreciation of the currency (the FX puzzle). We show that incorporating forward-looking expectations into standard open economy structural VAR models resolves these puzzles. Specifically, we augment the models with novel survey-based measures of expectations based on consumer, business, and professional forecasts. We find that the rise in prices following monetary tightening is related to currency depreciation, so eliminating the FX puzzle helps solve the price puzzle. |
| JEL: | E31 E32 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33133 |
| By: | Xuning Ding; Zhengyang Jiang |
| Abstract: | Monetary and fiscal policies require coordination to achieve desired macroeconomic outcomes. The literature since Leeper (1991) has focused on two regimes: monetary dominance and fiscal dominance. In both cases, one policy is active while the other is passive and accommodates the former. We study this coordination problem in an international economy, and find a third regime—hegemon dominance. In this case, one country (the hegemon)'s monetary and fiscal authorities can pursue separate policy goals, while the other country's monetary and fiscal policies are both accommodative. For example, the hegemon can pursue a monetary policy unbacked by its fiscal policy. When this happens, the foreign monetary authority has to take the same stance as the hegemon, the foreign fiscal authority has to provide fiscal backing for the monetary stance undertaken by both countries, and the exchange rate adjusts to equilibrate the economy. Our result suggests that the U.S. fiscal policy's independence from its own monetary policy can be made possible by accommodative foreign policies, and that the Fed's effort to fight inflation can succeed despite the high level of public debt which would have required enormous fiscal backing in a closed economy. |
| JEL: | E52 E63 F33 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33123 |