nep-pke 2006-01-29 papers

on Post Keynesian Economics

Issue of 2006‒01‒29
two papers chosen by
Karl Petrick
Leeds Metropolitan University

Extracting Leading Indicators of Bank Fragility from Market Prices – Estonia Focus By Yu-Fu Chen; Michael Funke; Kadri Männasoo
Social Capital, Creative Destruction and Economic Development By Bezemer, Dirk; Dulleck, Uwe; Frijters, Paul

Extracting Leading Indicators of Bank Fragility from Market Prices – Estonia Focus

By:	Yu-Fu Chen; Michael Funke; Kadri Männasoo
Abstract:	Banking reform has proved to be one of the most problematic elements of economic transition in central and Eastern Europe. Therefore the paper considers the development of the Estonian banking sector and derives individual banks´ fragility scores during transition. To this end we use option-based tools and equity prices to estimate distance-to-default measures of banks´ distress probabilities. Overall, the results suggest that market indicators are moderately useful for anticipating future financial distress and rating changes in transition economies. The implication for an effective supervisory framework is to use a plurality of risk scores when assessing bank vulnerability.
Keywords:	banking, financial stability, bank fragility, options, Estonia
JEL:	E44 E58 G21
Date:	2006
URL:	http://d.repec.org/n?u=RePEc:ces:ceswps:_1647&r=pke

Social Capital, Creative Destruction and Economic Development

By:	Bezemer, Dirk; Dulleck, Uwe; Frijters, Paul (Groningen University)
Abstract:	This paper develops a conceptual framework for the role of social capital in the political economy of innovation, growth and reform, with illustrations from developing and transition countries. It identifies separate but related roles for the individual and communal interpretations of social capital. It argues that economic growth via innovation requires the creative destruction of individual social capital linkages and discusses the roles of communal social capital and formal market institutions in the process. A negative externality associated with creative destruction implies the possibility of growth accelerations as well as growth traps.
Date:	2005
URL:	http://d.repec.org/n?u=RePEc:dgr:rugsom:05c09&r=pke

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