This paper examines Islamic banking and non-interest banking generally in Nigeria and the relevant controversy, law, practice and recent reforms, with a view to elucidating its legality or otherwise and reforms. The doctrinal method adopted in the paper makes use of both primary and secondary materials. The paper finds out that Islamic banking or non-interest banking is neither unconstitutional nor unlawful in the country. The study is significant on both religious and economic grounds. In other words, it seeks to douse the flame of the tension or suspicion that might still exist along religious divides in the country because of the licensing of Islamic banking while emphasizing the socio-economic benefits thereof. Having exhibited the many benefits accruable from this non-conventional banking, it is recommended that there is the need to sustain and strengthen it. The need for a robust supervision and periodic training for the supervisors and the relevant judges is also advocated.
{"title":"Islamic Banking Licensing Controversy, Legality Question and Recent Reforms in Nigeria","authors":"Anthony Aladekomo","doi":"10.2139/ssrn.3639511","DOIUrl":"https://doi.org/10.2139/ssrn.3639511","url":null,"abstract":"This paper examines Islamic banking and non-interest banking generally in Nigeria and the relevant controversy, law, practice and recent reforms, with a view to elucidating its legality or otherwise and reforms. The doctrinal method adopted in the paper makes use of both primary and secondary materials. The paper finds out that Islamic banking or non-interest banking is neither unconstitutional nor unlawful in the country. The study is significant on both religious and economic grounds. In other words, it seeks to douse the flame of the tension or suspicion that might still exist along religious divides in the country because of the licensing of Islamic banking while emphasizing the socio-economic benefits thereof. Having exhibited the many benefits accruable from this non-conventional banking, it is recommended that there is the need to sustain and strengthen it. The need for a robust supervision and periodic training for the supervisors and the relevant judges is also advocated.","PeriodicalId":405783,"journal":{"name":"PSN: Financial Institutions (Topic)","volume":"44 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-06-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121270376","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}
Korean Abstract:예보의 금융회사 대주주, 임직원과 감사에 대한 책임과 역할에 대한 교육 등의 실시에도 불구하고, 금융회사 부실책임 관련한 지속적인 법적 분쟁은 잦아들고 있지 않다. 예보는 지금까지 수행한 손해배상 청구소송 노하우를 활용하여 부실책임조사 단계부터 철저한 증거 수집 및 소송 진행 과정에서 법률 전문가 등으로 구성된 현장 소송 지원반을 상시 운영하고, 손해배상 청구소송 수임 변호사 워크샵을 통하여 다양한 사례에 대한 학습과 쟁점 공유 등 다양한 방식으로 승소율 제고에 노력해 왔다. 하지만 부실책임 관련 소송은 줄어들지 않고 있는 실정이다. 금번 연구 작업은 부실금융회사, 특히 저축은행 부실책임 관련 손해배상 청구소송 판결을 심층 분석하고 부실책임 사안에 따른 시사점 제시에 초점을 두고 있다. 본 연구는 우선, 부실책임 관련 판례를 ‘부당대출 취급’, ‘법률위반’, ‘비여신위법행위’ 및 ‘기타 부실대출’의 네 가지 유형으로 분류한다. 유형화된 판결로부터 업무집행기관의 이사, 감독기관인 감사(감사위원), 업무집행관여자, 대주주 등으로 쟁점을 정하고 분석 작업을 수행한다. 심층적인 분석 작업 후 시사점과 개선방안을 제시하고자 한다.
English Abstract:Despite the implementation of the Corporation’s training on the accountabilities and roles of financial institution’s major shareholders, employees and auditors, the ongoing legal disputes regarding the financial institution’s insolvency accountability are not decreasing. Using the know-how of litigation for damages that have been carried out so far, the Corporation has been operating on-site litigation support team consisting of legal experts and others for thorough collection of evidence and litigation from the stage of insolvent accountability investigation. Further, the Corporation has been working to improve the winning rate in various ways, including learning about various cases and sharing the issues through the workshop of the lawyers who were in charge for handling the litigation for damages. However, the litigation related to insolvency accountability is not decreasing. This study focuses on in-depth analysis of litigation for damages related to insolvency accountability against the insolvent financial institutions, especially the savings banks, and presents the implications for the insolvency accountability issues. First of all, this study categorizes cases related to insolvency accountability into four types: ‘treatment of unfair loans’, ‘violation of law’, ‘illegal acts of non-loan’, and ‘other non-performing loans’. Based on the formalized judgments, the directors of administrative body, the auditors of supervisory authority, the shadow directors, the major shareholders are used to determine the issues and conduct analysis. After the in-depth analysis, this study presents the implications and suggestions for improvement.
Korean Abstract:虽然储蓄保险公社对金融公司大股东、职员和监查进行了责任和作用教育等，但有关金融公司亏损责任的法律纠纷仍未平息。天气预报,到目前为止,执行的损害赔偿请求诉讼技巧运用亏损责任阶段开始彻底的调查取证及诉讼进行过程中,法律专家等组成的现场支援班定期运营,并赔偿诉讼律师讲习班通过多样的案例学习和对焦点共享等多种方式提高胜诉率一直在努力。但是有关亏损责任的诉讼并没有减少。此次研究工作的重点是，深入分析亏损金融公司，特别是储蓄银行亏损责任相关的损害赔偿请求诉讼判决，并对亏损责任事件提出启示。本研究首先将亏损责任相关判例分为“不当贷款处理”、“违反法律”、“非信贷违法行为”和“其他不良贷款”四种类型。从有形的判决开始，将焦点定为业务执行机关的理事、监督机关的监查(监查委员)、业务执行参与人、大股东等，并进行分析工作。在进行深层分析工作后，将提出启示和改善方案。英语Abstract:Despite the implementation of the Corporation ' s training on the accountabilities and roles of financial institution ' s major shareholders, employees and auditors;the ongoing legal disputes regarding the financial institution ' s insolvency accountability are not decreasing。Using the know-how of litigation for damages that have been carried out so farthe Corporation has been operating on-site litigation support team consisting of legal experts and others for thorough collection of evidence and litigation from the stage of insolvent accountabilityinvestigation。Further, the Corporation has been working to improve the winning rate in various ways，包括learning about various cases and sharing the issues through the lawyers who were in charge for handling the litigation for damages。However, the litigation related to insolvency accountability is not decreasing。This study focuses on in-depth analysis of litigation for damages related to insolvency accountability against the insolvent financial institutions, especially the savings banksand presents the implications for the insolvency accountability issues。First of all, this study categorizes cases related to insolvency accountability into four types“treatment of unfair loans”，“violation of law”，“illegal acts of non-loan”，and‘other non-performing loans’。Based on the formalized judgments, the directors of administrative body, the auditors of supervisory authority, the shadow directors，the major shareholders are used to determine the issues and conduct analysis。After the in-depth analysis, this study presents the implications and suggestions for improvement。
{"title":"금융회사 부실책임 관련 판결 분석과 시사점 - 저축은행권 부실책임을 중심으로 - Analysis and Implications of Judgments related to Financial Institution’s Insolvency Accountability - Focusing on Insolvency Accountability of the Savings Banks -","authors":"Ju-seon Yoo, HyukJin Chung","doi":"10.2139/ssrn.3638874","DOIUrl":"https://doi.org/10.2139/ssrn.3638874","url":null,"abstract":"<b>Korean Abstract:</b>예보의 금융회사 대주주, 임직원과 감사에 대한 책임과 역할에 대한 교육 등의 실시에도 불구하고, 금융회사 부실책임 관련한 지속적인 법적 분쟁은 잦아들고 있지 않다. 예보는 지금까지 수행한 손해배상 청구소송 노하우를 활용하여 부실책임조사 단계부터 철저한 증거 수집 및 소송 진행 과정에서 법률 전문가 등으로 구성된 현장 소송 지원반을 상시 운영하고, 손해배상 청구소송 수임 변호사 워크샵을 통하여 다양한 사례에 대한 학습과 쟁점 공유 등 다양한 방식으로 승소율 제고에 노력해 왔다. 하지만 부실책임 관련 소송은 줄어들지 않고 있는 실정이다.<br>금번 연구 작업은 부실금융회사, 특히 저축은행 부실책임 관련 손해배상 청구소송 판결을 심층 분석하고 부실책임 사안에 따른 시사점 제시에 초점을 두고 있다. 본 연구는 우선, 부실책임 관련 판례를 ‘부당대출 취급’, ‘법률위반’, ‘비여신위법행위’ 및 ‘기타 부실대출’의 네 가지 유형으로 분류한다. 유형화된 판결로부터 업무집행기관의 이사, 감독기관인 감사(감사위원), 업무집행관여자, 대주주 등으로 쟁점을 정하고 분석 작업을 수행한다. 심층적인 분석 작업 후 시사점과 개선방안을 제시하고자 한다.<br><br><b>English Abstract:</b>Despite the implementation of the Corporation’s training on the accountabilities and roles of financial institution’s major shareholders, employees and auditors, the ongoing legal disputes regarding the financial institution’s insolvency accountability are not decreasing. Using the know-how of litigation for damages that have been carried out so far, the Corporation has been operating on-site litigation support team consisting of legal experts and others for thorough collection of evidence and litigation from the stage of insolvent accountability investigation. Further, the Corporation has been working to improve the winning rate in various ways, including learning about various cases and sharing the issues through the workshop of the lawyers who were in charge for handling the litigation for damages. However, the litigation related to insolvency accountability is not decreasing.<br>This study focuses on in-depth analysis of litigation for damages related to insolvency accountability against the insolvent financial institutions, especially the savings banks, and presents the implications for the insolvency accountability issues. First of all, this study categorizes cases related to insolvency accountability into four types: ‘treatment of unfair loans’, ‘violation of law’, ‘illegal acts of non-loan’, and ‘other non-performing loans’. Based on the formalized judgments, the directors of administrative body, the auditors of supervisory authority, the shadow directors, the major shareholders are used to determine the issues and conduct analysis. After the in-depth analysis, this study presents the implications and suggestions for improvement.","PeriodicalId":405783,"journal":{"name":"PSN: Financial Institutions (Topic)","volume":"36 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-06-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126766587","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}
John S. Earle, Solomiya Shpak, Anton Shirikov, Scott Gehlbach
We examine the use of proxies, shell companies, and offshore firms to defend property against seizure by private and state actors. Our theoretical framework emphasizes the role of political connections in defensive ownership. Linking information from investigative journalists on the key holdings of numerous Ukrainian oligarchs with firm-level administrative data on formal ownership ties, we observe some form of defensive ownership among more than two-thirds of oligarch-controlled firms, but such conduct is much less common for those connected to the incumbent regime. Further exploiting the abrupt shock to political connections that accompanied the Orange Revolution, we find a sharp rise in defensive ownership among previously connected oligarchs.
{"title":"The Oligarch Vanishes: Defensive Ownership, Property Rights, and Political Connections","authors":"John S. Earle, Solomiya Shpak, Anton Shirikov, Scott Gehlbach","doi":"10.2139/ssrn.3683924","DOIUrl":"https://doi.org/10.2139/ssrn.3683924","url":null,"abstract":"We examine the use of proxies, shell companies, and offshore firms to defend property against seizure by private and state actors. Our theoretical framework emphasizes the role of political connections in defensive ownership. Linking information from investigative journalists on the key holdings of numerous Ukrainian oligarchs with firm-level administrative data on formal ownership ties, we observe some form of defensive ownership among more than two-thirds of oligarch-controlled firms, but such conduct is much less common for those connected to the incumbent regime. Further exploiting the abrupt shock to political connections that accompanied the Orange Revolution, we find a sharp rise in defensive ownership among previously connected oligarchs.","PeriodicalId":405783,"journal":{"name":"PSN: Financial Institutions (Topic)","volume":"345 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-06-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124311959","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}
Shaun S. Wang, Jing Rong Goh, D. Sornette, He Wang, E. Yang
PurposeMany governments are taking measures in support of small and medium-sized enterprises (SMEs) to mitigate the economic impact of the COVID-19 outbreak. This paper presents a theoretical model for evaluating various government measures, including insurance for bank loans, interest rate subsidy, bridge loans and relief of tax burdens.Design/methodology/approachThis paper distinguishes a firm's intrinsic value and book value, where a firm can lose its intrinsic value when it encounters cash-flow crunch. Wang transform is applied to (1) calculating the appropriate level of interest rate subsidy payable to incentivize banks to issue more loans to SMEs and to extend the loan maturity of current debt to the SMEs, (2) describing the frailty distribution for SMEs and (3) defining banks' underwriting capability and overlap index in risk selection.FindingsGovernment support for SMEs can be in the form of an appropriate level of interest rate subsidy payable to incentivize banks to issue more loans to SMEs and to extend the loan maturity of current debt to the SMEs.Research limitations/implicationsMore available data on bank loans would have helped strengthen the empirical studies.Practical implicationsThis paper makes policy recommendations of establishing policy-oriented banks or investment funds dedicated to supporting SMEs, developing risk indices for SMEs to facilitate refined risk underwriting, providing SMEs with long-term tax relief and early-stage equity-type investments.Social implicationsThe model highlights the importance of providing bridge loans to SMEs during the COVID-19 disruption to prevent massive business closures.Originality/valueThis paper provides an analytical framework using Wang transform for analyzing the most effective form of government support for SMEs.
{"title":"Government Support for SMEs in Response to COVID-19: Theoretical Model Using Wang Transform","authors":"Shaun S. Wang, Jing Rong Goh, D. Sornette, He Wang, E. Yang","doi":"10.2139/ssrn.3608646","DOIUrl":"https://doi.org/10.2139/ssrn.3608646","url":null,"abstract":"PurposeMany governments are taking measures in support of small and medium-sized enterprises (SMEs) to mitigate the economic impact of the COVID-19 outbreak. This paper presents a theoretical model for evaluating various government measures, including insurance for bank loans, interest rate subsidy, bridge loans and relief of tax burdens.Design/methodology/approachThis paper distinguishes a firm's intrinsic value and book value, where a firm can lose its intrinsic value when it encounters cash-flow crunch. Wang transform is applied to (1) calculating the appropriate level of interest rate subsidy payable to incentivize banks to issue more loans to SMEs and to extend the loan maturity of current debt to the SMEs, (2) describing the frailty distribution for SMEs and (3) defining banks' underwriting capability and overlap index in risk selection.FindingsGovernment support for SMEs can be in the form of an appropriate level of interest rate subsidy payable to incentivize banks to issue more loans to SMEs and to extend the loan maturity of current debt to the SMEs.Research limitations/implicationsMore available data on bank loans would have helped strengthen the empirical studies.Practical implicationsThis paper makes policy recommendations of establishing policy-oriented banks or investment funds dedicated to supporting SMEs, developing risk indices for SMEs to facilitate refined risk underwriting, providing SMEs with long-term tax relief and early-stage equity-type investments.Social implicationsThe model highlights the importance of providing bridge loans to SMEs during the COVID-19 disruption to prevent massive business closures.Originality/valueThis paper provides an analytical framework using Wang transform for analyzing the most effective form of government support for SMEs.","PeriodicalId":405783,"journal":{"name":"PSN: Financial Institutions (Topic)","volume":"37 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-06-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126786791","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}
China’s shadow banking has been rising rapidly in the last decade, mainly driven by regulations for banks, the Fiscal Stimulus Plan in 2008, and credit constraints in restrictive industries. This sector has continued growing although the regulators repeatedly attempted to impose new regulations on banks and non-banks. The existence of shadow banking fulfills the high demand for funding. The standard view is that it poses risks to financial stability. However, in China this is not necessarily the case. Entrusted loans, implicit guarantees from non-banks, banks or government may provide a second-best arrangement in funding risky projects and improving welfare.
{"title":"Shadow Banking in China Compared to Other Countries","authors":"Franklin Allen, Xian Gu","doi":"10.2139/ssrn.3604341","DOIUrl":"https://doi.org/10.2139/ssrn.3604341","url":null,"abstract":"China’s shadow banking has been rising rapidly in the last decade, mainly driven by regulations for banks, the Fiscal Stimulus Plan in 2008, and credit constraints in restrictive industries. This sector has continued growing although the regulators repeatedly attempted to impose new regulations on banks and non-banks. The existence of shadow banking fulfills the high demand for funding. The standard view is that it poses risks to financial stability. However, in China this is not necessarily the case. Entrusted loans, implicit guarantees from non-banks, banks or government may provide a second-best arrangement in funding risky projects and improving welfare.","PeriodicalId":405783,"journal":{"name":"PSN: Financial Institutions (Topic)","volume":"66 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-05-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126978406","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}
In this research, researchers try to find the concentration of credit in commercial bank. However, this study shows that there is a significant relationship between bank performance (in terms of profitability) and credit risk management (in terms of loan performance). Loans and advances and non-performing loans are major variables in determining asset quality of a bank. These risk items are important in determining the profitability of banks in Indonesia.
{"title":"The Credit's Concentration in Commercial Banks","authors":"Badruldeen Mohd Ali","doi":"10.2139/ssrn.3655854","DOIUrl":"https://doi.org/10.2139/ssrn.3655854","url":null,"abstract":"In this research, researchers try to find the concentration of credit in commercial bank. However, this study shows that there is a significant relationship between bank performance (in terms of profitability) and credit risk management (in terms of loan performance). Loans and advances and non-performing loans are major variables in determining asset quality of a bank. These risk items are important in determining the profitability of banks in Indonesia.","PeriodicalId":405783,"journal":{"name":"PSN: Financial Institutions (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-05-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129387681","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 examine how banks respond to large natural disasters when corporate borrowers are located in the neighborhood of the disaster area. We find robust evidence that banks charge significantly higher loan spreads for firms located in the neighborhood of the disaster area than for remote firms. The results are not driven by regional spillovers, limited credit supply, lender rent extraction motive, or rational learning. We also find that banks’ reaction is transitory, and is less pronounced for experienced banks. Overall, our empirical findings indicate that banks are subject to salience bias when assessing their clients’ natural disaster risk.
{"title":"Do Banks Overreact to Disaster Risk?","authors":"Qianqian Huang, Feng Jiang, Yuhai Xuan, Tao Yuan","doi":"10.2139/ssrn.3871505","DOIUrl":"https://doi.org/10.2139/ssrn.3871505","url":null,"abstract":"We examine how banks respond to large natural disasters when corporate borrowers are located in the neighborhood of the disaster area. We find robust evidence that banks charge significantly higher loan spreads for firms located in the neighborhood of the disaster area than for remote firms. The results are not driven by regional spillovers, limited credit supply, lender rent extraction motive, or rational learning. We also find that banks’ reaction is transitory, and is less pronounced for experienced banks. Overall, our empirical findings indicate that banks are subject to salience bias when assessing their clients’ natural disaster risk.","PeriodicalId":405783,"journal":{"name":"PSN: Financial Institutions (Topic)","volume":"7 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-05-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132359953","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}
During financial crises, investors demand large amounts of government-backed assets. What constitutes an orderly flight-to-liquidity? Studying how suppliers of government-backed safe assets respond to heightened demand during a crisis is challenging due to a multitude of confounding factors. In contrast, the 2014 money fund reform prompted a flight-to-liquidity in otherwise calm market conditions, with $1 trillion flowing from prime to government funds. Using this regulatory change together with fund-level and security-level data, we show the vital role of a flexible provider of safe assets. The Federal Home Loan Banks (FHLBs) supplied government funds with large quantities of safe assets when the supply of Treasuries was sluggish to respond. Moreover, the flexible mix of FHLBs’ supply of safe assets was crucial for government funds’ risk management. FHLB debt was not only a substitute for Treasuries but also a complement.
{"title":"Providing Safety in a Rush: How Did Shadow Banks Respond to a $1 Trillion Shock","authors":"Stefan Gissler, M. Macchiavelli, B. Narajabad","doi":"10.2139/ssrn.3595417","DOIUrl":"https://doi.org/10.2139/ssrn.3595417","url":null,"abstract":"During financial crises, investors demand large amounts of government-backed assets. What constitutes an orderly flight-to-liquidity? Studying how suppliers of government-backed safe assets respond to heightened demand during a crisis is challenging due to a multitude of confounding factors. In contrast, the 2014 money fund reform prompted a flight-to-liquidity in otherwise calm market conditions, with $1 trillion flowing from prime to government funds. Using this regulatory change together with fund-level and security-level data, we show the vital role of a flexible provider of safe assets. The Federal Home Loan Banks (FHLBs) supplied government funds with large quantities of safe assets when the supply of Treasuries was sluggish to respond. Moreover, the flexible mix of FHLBs’ supply of safe assets was crucial for government funds’ risk management. FHLB debt was not only a substitute for Treasuries but also a complement.","PeriodicalId":405783,"journal":{"name":"PSN: Financial Institutions (Topic)","volume":"69 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-05-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127770555","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}
While the first two pillars of the European Banking Union have been implemented, a European deposit insurance scheme (EDIS) is still not in place. To facilitate its introduction, recent proposals argue in favor of a reinsurance scheme. In this paper, we use a regime-switching open-economy DSGE model with bank default and bank-government linkages to assess the relative efficiency of such a scheme. We find that reinsurance by both a national fiscal backstop and EDIS is efficient in stabilizing the macro economy, even though welfare gains are slightly larger with EDIS and debt-to-GDP ratios rise under the fiscal reinsurance. We demonstrate that risk-weighted contributions to EDIS are welfare-beneficial for depositors and discuss trade-offs policy makers face during the implementation of EDIS. In a counterfactual exercise, we find that EDIS would have stabilized economic activity in Germany and the rest of the euro area just as well as a fiscal backing of insured deposits during the financial crisis. However, the debt-to-GDP ratio would have been lower with EDIS.
{"title":"The Macroeconomic Effects of a European Deposit (Re-) Insurance Scheme","authors":"M. Clemens, Stefan Gebauer, Tobias König","doi":"10.2139/ssrn.3610604","DOIUrl":"https://doi.org/10.2139/ssrn.3610604","url":null,"abstract":"While the first two pillars of the European Banking Union have been implemented, a European deposit insurance scheme (EDIS) is still not in place. To facilitate its introduction, recent proposals argue in favor of a reinsurance scheme. In this paper, we use a regime-switching open-economy DSGE model with bank default and bank-government linkages to assess the relative efficiency of such a scheme. We find that reinsurance by both a national fiscal backstop and EDIS is efficient in stabilizing the macro economy, even though welfare gains are slightly larger with EDIS and debt-to-GDP ratios rise under the fiscal reinsurance. We demonstrate that risk-weighted contributions to EDIS are welfare-beneficial for depositors and discuss trade-offs policy makers face during the implementation of EDIS. In a counterfactual exercise, we find that EDIS would have stabilized economic activity in Germany and the rest of the euro area just as well as a fiscal backing of insured deposits during the financial crisis. However, the debt-to-GDP ratio would have been lower with EDIS.","PeriodicalId":405783,"journal":{"name":"PSN: Financial Institutions (Topic)","volume":"75 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133463917","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 study is discovering the impact of idiosyncratic and systematic shocks of COVID-19 pandemic on financial markets. Under a condition when the application of a conventional event-study is limited due to a high frequency of negative news – we suggest brute-force search to identify those announcements which appear to be virtually impactful. Having chosen 22 countries with predominantly different initial conditions and anti-pandemic policies adopted we would expect high diversity of market reactions. However, our findings say that systematic shocks are consistently harmful. Idiosyncratic shocks are more important for the beginning of the deteriorating of the epidemiological situation in a particular country.
{"title":"Idiosyncratic and Systematic Shocks of COVID-19 Pandemic on Financial Markets","authors":"I. Naidenova, Petr Parshakov, E. Shakina","doi":"10.2139/ssrn.3574774","DOIUrl":"https://doi.org/10.2139/ssrn.3574774","url":null,"abstract":"This study is discovering the impact of idiosyncratic and systematic shocks of COVID-19 pandemic on financial markets. Under a condition when the application of a conventional event-study is limited due to a high frequency of negative news – we suggest brute-force search to identify those announcements which appear to be virtually impactful. Having chosen 22 countries with predominantly different initial conditions and anti-pandemic policies adopted we would expect high diversity of market reactions. However, our findings say that systematic shocks are consistently harmful. Idiosyncratic shocks are more important for the beginning of the deteriorating of the epidemiological situation in a particular country.","PeriodicalId":405783,"journal":{"name":"PSN: Financial Institutions (Topic)","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-04-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130949166","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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