With its new Regulation on the Recovery and Resolution of Central Counterparties, European Capital Markets Law has filled an important void in the regulatory framework for the operation of central counterparties, which has been established with the EU Markets Infrastructures Regulation (EMIR) as early as 2012. With a comprehensive set of preventive and reactive provisions for the restructuring of central counterparties, the new instrument clearly takes a bold step. The provisions build on existing international standards, but are far more granular than these. The present paper assesses the underlying policy and the technical content of the Regulation in the light of the post-financial crisis literature on the systemic relevance of financial market infrastructures.
{"title":"Central Counterparties’ Insolvency and Resolution – The New EU Regulation on CCP Recovery and Resolution","authors":"Jens-Hinrich Binder","doi":"10.2139/ssrn.3778649","DOIUrl":"https://doi.org/10.2139/ssrn.3778649","url":null,"abstract":"With its new Regulation on the Recovery and Resolution of Central Counterparties, European Capital Markets Law has filled an important void in the regulatory framework for the operation of central counterparties, which has been established with the EU Markets Infrastructures Regulation (EMIR) as early as 2012. With a comprehensive set of preventive and reactive provisions for the restructuring of central counterparties, the new instrument clearly takes a bold step. The provisions build on existing international standards, but are far more granular than these. The present paper assesses the underlying policy and the technical content of the Regulation in the light of the post-financial crisis literature on the systemic relevance of financial market infrastructures.","PeriodicalId":344099,"journal":{"name":"ERN: Banking & Monetary Policy (Topic)","volume":"49 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-02-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124764505","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The ECB stands by their monetary policy strategy of extremely low interest rates and large asset purchase programs in order to achieve their target inflation. However, using existing research, this paper demonstrates the decoupling of the relationship between monetary policy and inflation. There are two complementary theories which explain this. First, the negative interest rates drive people to save (or invest) rather than spend the money created through the asset purchase programs. The second theory links inflation with trends like globalization and demographics – a larger supply in labour (as we have seen in the last three decades) drives wages and hence inflation down. The lack of clear scientific and practical evidence for using a loose monetary policy to reach a specific inflation target raises the question of whether there is another motive behind the ECB’s current, ongoing strategy.
{"title":"The Assumption that the Relationship between Monetary Easing and Inflation is Positive is Spurious","authors":"Emily M. Allen, Harry J. Geels","doi":"10.2139/ssrn.3763499","DOIUrl":"https://doi.org/10.2139/ssrn.3763499","url":null,"abstract":"The ECB stands by their monetary policy strategy of extremely low interest rates and large asset purchase programs in order to achieve their target inflation. However, using existing research, this paper demonstrates the decoupling of the relationship between monetary policy and inflation. There are two complementary theories which explain this. First, the negative interest rates drive people to save (or invest) rather than spend the money created through the asset purchase programs. The second theory links inflation with trends like globalization and demographics – a larger supply in labour (as we have seen in the last three decades) drives wages and hence inflation down. The lack of clear scientific and practical evidence for using a loose monetary policy to reach a specific inflation target raises the question of whether there is another motive behind the ECB’s current, ongoing strategy.","PeriodicalId":344099,"journal":{"name":"ERN: Banking & Monetary Policy (Topic)","volume":"27 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-01-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121023534","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We analyze auctions of unsecured money market deposits of firms to banks via a FinTech platform. In each auction, only the firm observes the banks and their interest rate bids and decides where to deposit its funds. We observe that deposit interest rate bids increase monotonically with bank risk and that firms in general prefer higher deposit interest rates. However, our results show that firms’ selection of banks in which to deposit is concave in the bid interest rate in line with the general notion of credit rationing. We find this confirmed on the intensive as well as on the extensive margin. Risky banks eventually exit the market, and re-enter when their risk decreases again. Risky banks exit when the bid-interest rate increases above central bank policy rates suggesting that central bank funding crowds out deposits thereby reducing monitoring by short-term creditors. This has important implications for banks’ access to unsecured corporate funding, financial stability and the understanding of deposit markets more broadly.
{"title":"Are Risky Banks Rationed by Corporate Depositors?","authors":"Björn Imbierowicz, A. Saunders, Sascha Steffen","doi":"10.2139/ssrn.3760743","DOIUrl":"https://doi.org/10.2139/ssrn.3760743","url":null,"abstract":"We analyze auctions of unsecured money market deposits of firms to banks via a FinTech platform. In each auction, only the firm observes the banks and their interest rate bids and decides where to deposit its funds. We observe that deposit interest rate bids increase monotonically with bank risk and that firms in general prefer higher deposit interest rates. However, our results show that firms’ selection of banks in which to deposit is concave in the bid interest rate in line with the general notion of credit rationing. We find this confirmed on the intensive as well as on the extensive margin. Risky banks eventually exit the market, and re-enter when their risk decreases again. Risky banks exit when the bid-interest rate increases above central bank policy rates suggesting that central bank funding crowds out deposits thereby reducing monitoring by short-term creditors. This has important implications for banks’ access to unsecured corporate funding, financial stability and the understanding of deposit markets more broadly.","PeriodicalId":344099,"journal":{"name":"ERN: Banking & Monetary Policy (Topic)","volume":"54 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-01-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134466949","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Laure Lalouette, Alejandro Zamora-Pérez, Codruta Rusu, Nikolaus Bartzsch, Emmanuelle Politronacci, Martial Delmas, A. Rúa, Marco Brandi, Martti Naksi
In order to understand why there is a continuous increase in euro banknote circulation even though the use of cash for transactions is decreasing in the euro area – a phenomenon known as the paradox of banknotes – the members of the Overseas workstream of the Eurosystem Research Network on Cash (EURECA) 1 have conducted a study on the foreign demand for euro banknotes. The results of this study are based on desk research using data collected in the Eurosystem and from other organisations, and using both proven and innovative techniques. The objectives of this study are to identify the drivers of foreign demand and to estimate the share of euro banknotes circulating outside the euro area. The results provide an insight into the reasons for the increase in banknote circulation. They also show how significant the international demand for euro banknotes is, providing us with a clue to understanding the paradox of banknotes. The study shows that there are a multitude of factors behind the demand for euro banknotes, for both store-of-value and transaction purposes. In particular, euro cash flows are mainly driven by local-specific determinants, i.e. factors affecting a country’s demand for euro (local inflation, economic activity and foreign tourism) rather than external factors (global uncertainty or short-term interest rates in the euro area). On the back of this research, the share of euro banknotes in circulation estimated to be outside the euro area is between 30% and 50% of the total value of euro banknote circulation.
{"title":"Foreign Demand for Euro Banknotes","authors":"Laure Lalouette, Alejandro Zamora-Pérez, Codruta Rusu, Nikolaus Bartzsch, Emmanuelle Politronacci, Martial Delmas, A. Rúa, Marco Brandi, Martti Naksi","doi":"10.2139/ssrn.3797124","DOIUrl":"https://doi.org/10.2139/ssrn.3797124","url":null,"abstract":"In order to understand why there is a continuous increase in euro banknote circulation even though the use of cash for transactions is decreasing in the euro area – a phenomenon known as the paradox of banknotes – the members of the Overseas workstream of the Eurosystem Research Network on Cash (EURECA) 1 have conducted a study on the foreign demand for euro banknotes. The results of this study are based on desk research using data collected in the Eurosystem and from other organisations, and using both proven and innovative techniques. The objectives of this study are to identify the drivers of foreign demand and to estimate the share of euro banknotes circulating outside the euro area. The results provide an insight into the reasons for the increase in banknote circulation. They also show how significant the international demand for euro banknotes is, providing us with a clue to understanding the paradox of banknotes. The study shows that there are a multitude of factors behind the demand for euro banknotes, for both store-of-value and transaction purposes. In particular, euro cash flows are mainly driven by local-specific determinants, i.e. factors affecting a country’s demand for euro (local inflation, economic activity and foreign tourism) rather than external factors (global uncertainty or short-term interest rates in the euro area). On the back of this research, the share of euro banknotes in circulation estimated to be outside the euro area is between 30% and 50% of the total value of euro banknote circulation.","PeriodicalId":344099,"journal":{"name":"ERN: Banking & Monetary Policy (Topic)","volume":"25 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130549129","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper evaluates the impact of rare disasters on the natural interest rate and macroeconomic conditions by simulating a nonlinear New-Keynesian model. The model is calibrated using data on natural disasters in OECD countries. From an ex-ante perspective, disaster risk behaves as a negative demand shock and lowers the natural rate and inflation, even if disasters hit only the supply side of the economy. These effects become larger and nonlinear if extreme natural disasters become more frequent, a scenario compatible with climate change projections. From an ex-post perspective, a disaster realization leads to temporarily higher natural rate and inflation if supply-side effects prevail. If agents' risk aversion increases temporarily, disasters may generate larger demand effects and lead to a lower natural rate and inflation. If supply-side effects dominate, the central bank could mitigate output losses at the cost of temporarily higher inflation in the short run. Conversely, under strict inflation targeting, inflation is stabilized at the cost of larger output losses.
{"title":"Rare Disasters, the Natural Interest Rate and Monetary Policy","authors":"A. Cantelmo","doi":"10.2139/ssrn.3826379","DOIUrl":"https://doi.org/10.2139/ssrn.3826379","url":null,"abstract":"This paper evaluates the impact of rare disasters on the natural interest rate and macroeconomic conditions by simulating a nonlinear New-Keynesian model. The model is calibrated using data on natural disasters in OECD countries. From an ex-ante perspective, disaster risk behaves as a negative demand shock and lowers the natural rate and inflation, even if disasters hit only the supply side of the economy. These effects become larger and nonlinear if extreme natural disasters become more frequent, a scenario compatible with climate change projections. From an ex-post perspective, a disaster realization leads to temporarily higher natural rate and inflation if supply-side effects prevail. If agents' risk aversion increases temporarily, disasters may generate larger demand effects and lead to a lower natural rate and inflation. If supply-side effects dominate, the central bank could mitigate output losses at the cost of temporarily higher inflation in the short run. Conversely, under strict inflation targeting, inflation is stabilized at the cost of larger output losses.","PeriodicalId":344099,"journal":{"name":"ERN: Banking & Monetary Policy (Topic)","volume":"36 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-12-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132673822","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Banks play a pivotal role in economic development globally and so the systemic risk posed by bank failures (for example, the 2008 global financial crisis) necessitates the creation of a special regime for the insolvency and restructuring of distressed banks. This special insolvency regime for banks helps to fortify the stability of the financial system and to maintain public confidence in the banking system in order to foster economic growth and development. In this regard, Nigeria passed the Banks and other Financial Institutions Act 2020 (BOFIA 2020) into law on 13 November 2020, repealing the erstwhile Banks and other Financial Institutions Act 1991 (BOFIA 1991). The new Act (BOFIA 2020) makes provisions for a more modern, more conducive and more business-friendly legal framework for the insolvency and restructuring of banks and other financial institutions (OFIs) in Nigeria. This paper highlights and explores the significance of some of these specific provisions in that context.
{"title":"BOFIA 2020 and the New Regime for Banks’ Insolvency and Restructuring in Nigeria","authors":"A. Folarin","doi":"10.2139/ssrn.3789563","DOIUrl":"https://doi.org/10.2139/ssrn.3789563","url":null,"abstract":"Banks play a pivotal role in economic development globally and so the systemic risk posed by bank failures (for example, the 2008 global financial crisis) necessitates the creation of a special regime for the insolvency and restructuring of distressed banks. This special insolvency regime for banks helps to fortify the stability of the financial system and to maintain public confidence in the banking system in order to foster economic growth and development. In this regard, Nigeria passed the Banks and other Financial Institutions Act 2020 (BOFIA 2020) into law on 13 November 2020, repealing the erstwhile Banks and other Financial Institutions Act 1991 (BOFIA 1991). The new Act (BOFIA 2020) makes provisions for a more modern, more conducive and more business-friendly legal framework for the insolvency and restructuring of banks and other financial institutions (OFIs) in Nigeria. This paper highlights and explores the significance of some of these specific provisions in that context.","PeriodicalId":344099,"journal":{"name":"ERN: Banking & Monetary Policy (Topic)","volume":"42 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-12-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131215043","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The ambition to expand participation in the European Banking Union was to allow the ‘outs’ to enter in to close cooperation, however, it did not include the simultaneous joining of ERM II. Focusing on the cases of Bulgaria and Croatia, this paper attempts to respond to a number of questions: What is the rationale behind the double requirement of having to simultaneously apply to become a member of the ERM II and to prepare to become a member of the Banking Union via rule based “close cooperation” mechanism of coordination between the EU non-euro area NCAs and the ECB? Does the integration of close cooperation countries' banking systems with the euro area banking systems support the decision to join ERM II and ¨opting-in¨ to the SSM? Do the existing “close cooperation” arrangements guarantee greater coordination of resource-allocating decisions on prudential supervision and improved internalization of financial stability decisions? What are the advantages of the preparation to become a full member of the euro area and the SSM (e.g. coordination of macro and micro-prudential regulation; coordination of micro-prudential supervision and bank resolution)? It is evident from the research undertaken in this paper that there are clear benefits from close cooperation for the respective Member States whose domestic currencies are already linked to the euro in view of the dominant position eurozone banks have in their respective domestic markets.
{"title":"Incentive Compatible Relationship between Ermii and Close-Cooperation in the Banking Union: The Case of Bulgaria and Croatia","authors":"M. Nieto, Dalvinder Singh","doi":"10.2139/ssrn.3749876","DOIUrl":"https://doi.org/10.2139/ssrn.3749876","url":null,"abstract":"The ambition to expand participation in the European Banking Union was to allow the ‘outs’ to enter in to close cooperation, however, it did not include the simultaneous joining of ERM II. Focusing on the cases of Bulgaria and Croatia, this paper attempts to respond to a number of questions: What is the rationale behind the double requirement of having to simultaneously apply to become a member of the ERM II and to prepare to become a member of the Banking Union via rule based “close cooperation” mechanism of coordination between the EU non-euro area NCAs and the ECB? Does the integration of close cooperation countries' banking systems with the euro area banking systems support the decision to join ERM II and ¨opting-in¨ to the SSM? Do the existing “close cooperation” arrangements guarantee greater coordination of resource-allocating decisions on prudential supervision and improved internalization of financial stability decisions? What are the advantages of the preparation to become a full member of the euro area and the SSM (e.g. coordination of macro and micro-prudential regulation; coordination of micro-prudential supervision and bank resolution)? It is evident from the research undertaken in this paper that there are clear benefits from close cooperation for the respective Member States whose domestic currencies are already linked to the euro in view of the dominant position eurozone banks have in their respective domestic markets.","PeriodicalId":344099,"journal":{"name":"ERN: Banking & Monetary Policy (Topic)","volume":"47 2","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-12-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132605440","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
To date, the resolution of the Banco Popular Espanol, being the first and only resolution case in the euro area, has had the “benefit” of bringing to light several shortfalls of this crisis management system. Back then, thanks to the sale of business, the need of the use of the Single Resolution Fund (SRF) has been avoided, prompting criticism on whether the fund had sufficient means to overcome a major widespread crisis. During the period elapsed from the last financial crisis, the euro area banking sector has built capital and liquidity buffers, which were aimed at protecting them for future shocks. Although it is now widely accepted that crises are of a cyclical nature, new risks and the high interconnectivity of today’s economic activities brought an unexpected crisis due to the current pandemic. The consequences of this unprecedented event in modern history had severe effects to the worldwide economy, mostly for the boundless block of labour activities, which caused severe losses for households, enterprises and governments that consequently affected the financial intermediation function of the banks. Concerning the European Stability Mechanism (ESM), the current pandemic has had the effect to put temporary on hold the discussion on the revision of the ESM Treaty, including its role as a Backstop to the SRF, so that the Mechanism could experience a new role through the ESM Pandemic Crisis Support. In such a framework, this paper aims to bring back the attention to the unfinished path in the establishment of the Common Backstop by addressing an important element of risk, namely its decision-making process. The main aim is to explore possible governance issues, which could hamper a timely and effective use of the Common Backstop, in the case that the SRF would be depleted and no alternative funding sources would be available.
迄今为止，西班牙人民银行(Banco Popular Espanol)的解决方案是欧元区第一个也是唯一一个解决方案，它的“好处”在于暴露了这一危机管理体系的几个缺陷。当时，由于出售业务，没有必要使用单一解决基金(SRF)，因此有人提出了是否有足够的资金来应对大规模危机的批评。在上一次金融危机过后的一段时间里，欧元区银行业建立了资本和流动性缓冲，旨在保护自己免受未来冲击的影响。虽然现在人们普遍认为危机具有周期性，但由于当前的大流行，新的风险和当今经济活动的高度相互关联性带来了意想不到的危机。这一现代历史上前所未有的事件的后果对世界经济产生了严重影响，主要是劳动力活动的无限阻碍，这给家庭、企业和政府造成了严重损失，从而影响了银行的金融中介功能。关于欧洲稳定机制(ESM)，目前的大流行病的影响是，暂时搁置了关于修订《ESM条约》的讨论，包括其作为SRF后盾的作用，以便该机制能够通过ESM大流行病危机支持发挥新的作用。在这样一个框架中，本文旨在通过解决风险的一个重要因素，即决策过程，将人们的注意力带回建立共同保障的未完成之路。其主要目的是探讨在SRF耗尽而没有其他供资来源的情况下，可能妨碍及时和有效利用共同支持的可能的治理问题。
{"title":"Exploring Governance Issues between the SRB and the ESM in the Use of the Common Backstop","authors":"Pier Mario Lupinu","doi":"10.2139/ssrn.3746884","DOIUrl":"https://doi.org/10.2139/ssrn.3746884","url":null,"abstract":"To date, the resolution of the Banco Popular Espanol, being the first and only resolution case in the euro area, has had the “benefit” of bringing to light several shortfalls of this crisis management system. Back then, thanks to the sale of business, the need of the use of the Single Resolution Fund (SRF) has been avoided, prompting criticism on whether the fund had sufficient means to overcome a major widespread crisis. \u0000 \u0000During the period elapsed from the last financial crisis, the euro area banking sector has built capital and liquidity buffers, which were aimed at protecting them for future shocks. Although it is now widely accepted that crises are of a cyclical nature, new risks and the high interconnectivity of today’s economic activities brought an unexpected crisis due to the current pandemic. The consequences of this unprecedented event in modern history had severe effects to the worldwide economy, mostly for the boundless block of labour activities, which caused severe losses for households, enterprises and governments that consequently affected the financial intermediation function of the banks. \u0000 \u0000Concerning the European Stability Mechanism (ESM), the current pandemic has had the effect to put temporary on hold the discussion on the revision of the ESM Treaty, including its role as a Backstop to the SRF, so that the Mechanism could experience a new role through the ESM Pandemic Crisis Support. \u0000 \u0000In such a framework, this paper aims to bring back the attention to the unfinished path in the establishment of the Common Backstop by addressing an important element of risk, namely its decision-making process. The main aim is to explore possible governance issues, which could hamper a timely and effective use of the Common Backstop, in the case that the SRF would be depleted and no alternative funding sources would be available.","PeriodicalId":344099,"journal":{"name":"ERN: Banking & Monetary Policy (Topic)","volume":"43 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-12-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114329740","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study the effect of the banking supervision in institutional settings of foreign-bank dominated financial systems of Central, Eastern and South-Eastern Europe in post-crisis period 2012-2018. For a dataset of 450 banks from 20 economies of the region, we use a mediation-moderation analysis framework to establish a relationship between regulatory scrutiny, supervisory activities and a bank risk-adjusted economic performance. We find that a higher intensity of supervision monitoring activities, especially by the centralized form of supervision, contributes to the decline of the bank's riskiness in case of larger size banks while not affecting their economic performance. The regulatory power and capital regulation stringency indicate a positive effect on the risk-adjusted performance for capital constrained banks, but moderately decrease the economic benefit for larger banks. In light of the ongoing debate on the architecture of supervision in the region, the findings highlight the potential area of attention for regulators and policymakers and thus, contribute to the designing of effective supervision mechanism.
{"title":"Banking Supervision and Risk-Adjusted Performance in the Host Country Environment","authors":"K. Janda, Oleg Kravtsov","doi":"10.2139/ssrn.3781526","DOIUrl":"https://doi.org/10.2139/ssrn.3781526","url":null,"abstract":"We study the effect of the banking supervision in institutional settings of foreign-bank dominated financial systems of Central, Eastern and South-Eastern Europe in post-crisis period 2012-2018. For a dataset of 450 banks from 20 economies of the region, we use a mediation-moderation analysis framework to establish a relationship between regulatory scrutiny, supervisory activities and a bank risk-adjusted economic performance. We find that a higher intensity of supervision monitoring activities, especially by the centralized form of supervision, contributes to the decline of the bank's riskiness in case of larger size banks while not affecting their economic performance. The regulatory power and capital regulation stringency indicate a positive effect on the risk-adjusted performance for capital constrained banks, but moderately decrease the economic benefit for larger banks. In light of the ongoing debate on the architecture of supervision in the region, the findings highlight the potential area of attention for regulators and policymakers and thus, contribute to the designing of effective supervision mechanism.","PeriodicalId":344099,"journal":{"name":"ERN: Banking & Monetary Policy (Topic)","volume":"59 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-11-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131807369","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Taneli Mäkinen, Andrea Mercatanti, A. Silvestrini, Fan Li
The causal effect of the European Central Bank's corporate bond purchase program on bond spreads in the primary market is evaluated, making use of a novel regression discontinuity design. The results indicate that the program did not, on average, permanently alter the yield spreads of eligible bonds relative to those of noneligible. Combined with evidence from previous studies, this finding suggests the effects of central bank asset purchase programs are in no way limited to the prices of the specific assets acquired.
{"title":"Effects of Eligibility for Central Bank Purchases on Corporate Bond Spreads","authors":"Taneli Mäkinen, Andrea Mercatanti, A. Silvestrini, Fan Li","doi":"10.2139/ssrn.3742875","DOIUrl":"https://doi.org/10.2139/ssrn.3742875","url":null,"abstract":"The causal effect of the European Central Bank's corporate bond purchase program on bond spreads in the primary market is evaluated, making use of a novel regression discontinuity design. The results indicate that the program did not, on average, permanently alter the yield spreads of eligible bonds relative to those of noneligible. Combined with evidence from previous studies, this finding suggests the effects of central bank asset purchase programs are in no way limited to the prices of the specific assets acquired.","PeriodicalId":344099,"journal":{"name":"ERN: Banking & Monetary Policy (Topic)","volume":"39 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-10-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132446910","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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