nep-cfn New Economics Papers
on Corporate Finance
Issue of 2011‒08‒29
two papers chosen by
Zelia Serrasqueiro
University of the Beira Interior

  1. Bank risk taking and liquidity creation following regulatory interventions and capital support By Berger, A.N.; Bouwman, C.H.S.; Kick, T.; Schaeck, K.
  2. Banking flows and financial crisis -- financial interconnectedness and basel III effects By Ghosh, , Swati R.; Sugawara, Naotaka; Zalduendo, Juan

  1. By: Berger, A.N.; Bouwman, C.H.S.; Kick, T.; Schaeck, K. (Tilburg University, Center for Economic Research)
    Abstract: During times of bank distress, authorities often engage in regulatory interventions and provide capital support to reduce bank risk taking. An unintended effect of such actions may be a reduction in bank liquidity creation, with possible adverse consequences for the economy as a whole. This paper tests hypotheses regarding the effects of regulatory interventions and capital support on bank risk taking and liquidity creation using a unique dataset over the period 1999-2009. We find that both types of actions are generally associated with statistically significant reductions in risk taking and liquidity creation in the short run and long run. While the effects of regulatory interventions are also economically significant, the effects of capital support are only economically significant in the long run. Thus, both types of actions have important intended and unintended consequences with implications for policymakers.
    Keywords: risk taking;liquidity creation;bank distress;regulatory interventions;capital support.
    JEL: G21 G28
    Date: 2011
  2. By: Ghosh, , Swati R.; Sugawara, Naotaka; Zalduendo, Juan
    Abstract: This paper examines the factors that determine banking flows from advanced economies to emerging markets. In addition to the usual determinants of capital flows in terms of global push and local pull factors, it examines the role of bilateral factors, such as growth differentials and economic size, as well as contagion factors and measures of the depth in financial interconnectedness between lenders and borrowers. The analysis finds profound differences across regions. In particular, in spite of the severe impact of the global financial crisis, banking flows in emerging Europe stand out as a more stable region than is the case in other developing regions. Assuming that the determinants of banking flows remain unchanged in the presence of structural changes, the authors use these results to explore the short-term implications of Basel III capital regulations on banking flows to emerging markets.
    Keywords: Debt Markets,Banks&Banking Reform,Emerging Markets,Access to Finance,Economic Theory&Research
    Date: 2011–08–01

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