PurposeThe study examines the relationship between the consequential social cost of market power (i.e. welfare performance of banks) and cost efficiency using data covering the period 2009 to 2017 from the Ghanaian banking industry.Design/methodology/approachThe study adopts the ordinary least squares (OLS), fixed effect (FE) panel regression and the quantile regression (QR) approaches to control for heterogeneity and provide increased room for policy relevance. The two-stage least squares instrumental variables (2SLS-IV) regression is used to ensure the robustness of the findings against the problem of possible reverse causality.FindingsThe results indicate a positive relationship between banks' welfare performance and cost efficiency, which suggests that greater cost efficiency hedges welfare losses. In other words, welfare gains and cost-efficient banks are not mutually exclusive. Also, the results show evidence that the sensitivity of welfare gain to cost efficiency depends on the knowledge of local market dynamics. Further, the findings from the QR estimation suggest that, but for welfare loss at low (Q.25) to the median (Q.50) quantiles, cost efficiency is a necessary and sufficient condition to hedge the welfare losses.Practical implicationsThe results demonstrate that financial consumer protection cannot be achieved without cost efficiency in the presence of both foreign banks and high market knowledge. Therefore, our paper suggests an integrated cost efficiency policy approach that has the complementary effect of a robust information sharing mechanism and incentives to hedge against welfare losses in the banking sector of emerging economies. Moreover, if welfare gain is synonymous with cost-efficient banks, then the presence of a quiet life is typical of financial consumer protection.Originality/valueThis study provides insight into the importance of cost efficiency to the public policy of financial consumer protection in an era of foreign banks' dominance. From the review of prior literature, this paper is the first to apply the QR estimation technique to examine the effect of cost efficiency throughout the conditional distribution of bank welfare performance rather than just the conditional mean effect of cost efficiency.
{"title":"Cost Efficiency and Welfare Performance of Banks: Evidence From an Emerging Economy","authors":"David Adeabah, Charles Andoh","doi":"10.2139/ssrn.3233639","DOIUrl":"https://doi.org/10.2139/ssrn.3233639","url":null,"abstract":"PurposeThe study examines the relationship between the consequential social cost of market power (i.e. welfare performance of banks) and cost efficiency using data covering the period 2009 to 2017 from the Ghanaian banking industry.Design/methodology/approachThe study adopts the ordinary least squares (OLS), fixed effect (FE) panel regression and the quantile regression (QR) approaches to control for heterogeneity and provide increased room for policy relevance. The two-stage least squares instrumental variables (2SLS-IV) regression is used to ensure the robustness of the findings against the problem of possible reverse causality.FindingsThe results indicate a positive relationship between banks' welfare performance and cost efficiency, which suggests that greater cost efficiency hedges welfare losses. In other words, welfare gains and cost-efficient banks are not mutually exclusive. Also, the results show evidence that the sensitivity of welfare gain to cost efficiency depends on the knowledge of local market dynamics. Further, the findings from the QR estimation suggest that, but for welfare loss at low (Q.25) to the median (Q.50) quantiles, cost efficiency is a necessary and sufficient condition to hedge the welfare losses.Practical implicationsThe results demonstrate that financial consumer protection cannot be achieved without cost efficiency in the presence of both foreign banks and high market knowledge. Therefore, our paper suggests an integrated cost efficiency policy approach that has the complementary effect of a robust information sharing mechanism and incentives to hedge against welfare losses in the banking sector of emerging economies. Moreover, if welfare gain is synonymous with cost-efficient banks, then the presence of a quiet life is typical of financial consumer protection.Originality/valueThis study provides insight into the importance of cost efficiency to the public policy of financial consumer protection in an era of foreign banks' dominance. From the review of prior literature, this paper is the first to apply the QR estimation technique to examine the effect of cost efficiency throughout the conditional distribution of bank welfare performance rather than just the conditional mean effect of cost efficiency.","PeriodicalId":405783,"journal":{"name":"PSN: Financial Institutions (Topic)","volume":"72 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129409714","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}
Environmental hostility is posited to halt firms’ development and growth. This leads to the expectations that foreign firms that developed their capabilities in more munificent environments and are able to draw on resources via their global network to compensate for local scarcity would emerge as the predominant competitors in hostile environments. The dominance of local banks of Nigeria’s banking industry conflicts this theoretical expectation. An exploratory study points at differences between foreign and local firms in their perception of Nigeria’s environmental conditions and their subsequent responses to environmental hostility. We use this insight to advance a typology of environmental hostility distinguished by the effectiveness of response mechanisms employed by local and foreign firms to confront it, and employ it to explain variations in the competitive outcomes between foreign and local firms across environments with different types of hostility.
{"title":"Is Environmental Hostility in the Eyes of the Beholder? Foreignness, Environmental Perception and Response Mechanisms in Nigeria’s Banking Industry","authors":"Lilach Nachum, C. Ogbechie","doi":"10.2139/ssrn.3479978","DOIUrl":"https://doi.org/10.2139/ssrn.3479978","url":null,"abstract":"Environmental hostility is posited to halt firms’ development and growth. This leads to the expectations that foreign firms that developed their capabilities in more munificent environments and are able to draw on resources via their global network to compensate for local scarcity would emerge as the predominant competitors in hostile environments. The dominance of local banks of Nigeria’s banking industry conflicts this theoretical expectation. An exploratory study points at differences between foreign and local firms in their perception of Nigeria’s environmental conditions and their subsequent responses to environmental hostility. We use this insight to advance a typology of environmental hostility distinguished by the effectiveness of response mechanisms employed by local and foreign firms to confront it, and employ it to explain variations in the competitive outcomes between foreign and local firms across environments with different types of hostility.","PeriodicalId":405783,"journal":{"name":"PSN: Financial Institutions (Topic)","volume":"64 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-11-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114406585","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}
A robust bank-based financial industry is a major player in the stability of an economy. This is demonstrated by the importance most countries place on macroeconomic decisions involving the banking sector. In 2017, the Ghana bank industry underwent a clean-up exercise to rehabilitate the industry's impaired operating environment due to the uncontrollably high rate of nonperforming loans and a deficient tier one capital base. To evaluate the soundness of the affected institutions, this study analysed the financial performance of UT Bank Ltd prior to the 2017 bank industry health check using financial ratios and the Z-score. A ten-year (2007-2016) annual financials were used for analyses. It was discovered that UT Bank's debt management policies were poor. This reflected in the leverage and risk management variable ratios, which were both unimpressive. Considering the results, it was apparent that UT Bank had problems honouring its debt obligation to creditors. The debt-to-equity and debt-to-asset ratios of 7.6 and 0.90, respectively, indicated a distressed condition. Credit management policies of UT Bank and other banks that were caught within similar difficulties in the industry must be immediately improved to protect customer deposits. As a policy recommendation, the bank industry's regulator (the Bank of Ghana) should strengthen its supervisory and monitoring roles to aid early detection of non-performing institutions. Additionally, this paper recommends that banks' statutory lending limitations be maintained at a 10% threshold for unsecured loans and a 25% level for secured loans of banks' net owned funds.
{"title":"Financial Performance Analysis of Distressed Banks in Ghana: Exploration of the Z-score","authors":"Juabin Matey","doi":"10.2139/ssrn.3735662","DOIUrl":"https://doi.org/10.2139/ssrn.3735662","url":null,"abstract":"A robust bank-based financial industry is a major player in the stability of an economy. This is demonstrated by the importance most countries place on macroeconomic decisions involving the banking sector. In 2017, the Ghana bank industry underwent a clean-up exercise to rehabilitate the industry's impaired operating environment due to the uncontrollably high rate of nonperforming loans and a deficient tier one capital base. To evaluate the soundness of the affected institutions, this study analysed the financial performance of UT Bank Ltd prior to the 2017 bank industry health check using financial ratios and the Z-score. A ten-year (2007-2016) annual financials were used for analyses. It was discovered that UT Bank's debt management policies were poor. This reflected in the leverage and risk management variable ratios, which were both unimpressive. Considering the results, it was apparent that UT Bank had problems honouring its debt obligation to creditors. The debt-to-equity and debt-to-asset ratios of 7.6 and 0.90, respectively, indicated a distressed condition. Credit management policies of UT Bank and other banks that were caught within similar difficulties in the industry must be immediately improved to protect customer deposits. As a policy recommendation, the bank industry's regulator (the Bank of Ghana) should strengthen its supervisory and monitoring roles to aid early detection of non-performing institutions. Additionally, this paper recommends that banks' statutory lending limitations be maintained at a 10% threshold for unsecured loans and a 25% level for secured loans of banks' net owned funds.","PeriodicalId":405783,"journal":{"name":"PSN: Financial Institutions (Topic)","volume":"6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-10-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116677938","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 investigates the systemic risk of China’s banking sector via network analysis and differential DebtRank from 2007 to 2016. The interbank network of each year is constructed by means of the yearly interbank assets and liabilities of twenty-eight Chinese banks. The results show that the twenty-eight banks in China are closely connected through interbank networks. We compute the risk contribution of each bank and the expected systemic losses by using the differential DebtRank method. We find that the interconnectedness of a bank is highly significant to its systemic risk: banks with high eigenvector centrality contribute more systemic risk. Banks with high returns on assets and low liquidity also contribute more systemic risk. The overall systemic risk changes over time and reaches high levels in 2007, 2008, 2011 and 2012. In high-risk years, the risk contribution of small-scale banks significantly increases. Our results offer novel insights with reference to macroprudential supervision.
{"title":"Measuring the Systemic Risk of China’s Banking Sector: An Application of Differential Debtrank","authors":"Wenjie Yin, F. Jin, Meiyu Tian, Fenghua Wen","doi":"10.21314/jor.2019.419","DOIUrl":"https://doi.org/10.21314/jor.2019.419","url":null,"abstract":"This paper investigates the systemic risk of China’s banking sector via network analysis and differential DebtRank from 2007 to 2016. The interbank network of each year is constructed by means of the yearly interbank assets and liabilities of twenty-eight Chinese banks. The results show that the twenty-eight banks in China are closely connected through interbank networks. We compute the risk contribution of each bank and the expected systemic losses by using the differential DebtRank method. We find that the interconnectedness of a bank is highly significant to its systemic risk: banks with high eigenvector centrality contribute more systemic risk. Banks with high returns on assets and low liquidity also contribute more systemic risk. The overall systemic risk changes over time and reaches high levels in 2007, 2008, 2011 and 2012. In high-risk years, the risk contribution of small-scale banks significantly increases. Our results offer novel insights with reference to macroprudential supervision.","PeriodicalId":405783,"journal":{"name":"PSN: Financial Institutions (Topic)","volume":"65 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-10-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133155006","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}
Studies on financial participation show positive effects across several “performance” outcomes, yet given the potential to realign employee interests, distribute rewards, and improve commitment little is known about the ability of financial participation to reduce collective conflicts. Using French establishments, we explore the impact of profit sharing and employee share ownership schemes on various measures of conflict. Across various specifications, estimators, and time periods, financial participation reveals an ability to reduce some but not all forms of conflict. Employee share ownership seems especially effective in reducing a range of conflicts including the most extensive and costly forms.
{"title":"Financial Participation and Collective Conflicts: Evidence from French Firms","authors":"Fathi Fakhfakh, A. Robinson, Aguibou Tall","doi":"10.1111/irel.12244","DOIUrl":"https://doi.org/10.1111/irel.12244","url":null,"abstract":"Studies on financial participation show positive effects across several “performance” outcomes, yet given the potential to realign employee interests, distribute rewards, and improve commitment little is known about the ability of financial participation to reduce collective conflicts. Using French establishments, we explore the impact of profit sharing and employee share ownership schemes on various measures of conflict. Across various specifications, estimators, and time periods, financial participation reveals an ability to reduce some but not all forms of conflict. Employee share ownership seems especially effective in reducing a range of conflicts including the most extensive and costly forms.","PeriodicalId":405783,"journal":{"name":"PSN: Financial Institutions (Topic)","volume":"13 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130066501","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}
Marketplace lending and investing have been recently attracting increasing regulatory attention. However, regulatory responses to such phenomenon have been extremely varied, even in Europe, characterized by maximum harmonization in the field of financial regulation, continuous efforts in creating a single market and in centralizing supervision. Such fragmented framework poses the risk of different levels of investor protection in Europe, regulatory arbitrage, competition distortions, obstacles to cross-border activity and to existing EU passports. The European Commission, after an initial “wait-and-see” approach, adopted in March 2018 a proposal for a Regulation on European Crowdfunding Service Providers (ECSPs) for businesses. Such proposal, nonetheless, has undergone a number of significant revisions during the trilateral negotiations among the European Commission, the European Parliament and the Council of the European Union, underlying the ambiguous nature of crowdfunding and the complexity in reaching a common view on the same. The three European Institutions seem in fact to have divergent views of crowdfunding and different ideas on how to regulate it, this delaying the approval of the proposed Regulation. Will crowdfunding eventually escape such Bermuda Triangle receiving adequate regulation or is it destined to die in the process? The present paper, after briefly describing crowdfunding main features and regulatory trends in Member States, will critically analyze the ECSPs Regulation Proposal, with respect to all the three different versions, inferring from each text a different vision (and consequent envisioned regulation) of crowdfunding and of financial regulation in general, underlying their pros and cons and proposing adjustments to reach a functional, tiered and proportional regulation. Finally, after mentioning certain recent revisions in national crowdfunding laws (e.g. in Italy, Belgium, UK and Germany), the paper will conclude trying to forecast the future direction of the ongoing trilateral negotiations and the possible impact of the European Regulation on national crowdfunding laws and the sector.
{"title":"‘What to Expect When You Are Expecting’ a European Crowdfunding Regulation: The Current ‘Bermuda Triangle’ and Future Scenarios for Marketplace Lending and Investing in Europe","authors":"E. Macchiavello","doi":"10.2139/ssrn.3493688","DOIUrl":"https://doi.org/10.2139/ssrn.3493688","url":null,"abstract":"Marketplace lending and investing have been recently attracting increasing regulatory attention. However, regulatory responses to such phenomenon have been extremely varied, even in Europe, characterized by maximum harmonization in the field of financial regulation, continuous efforts in creating a single market and in centralizing supervision. Such fragmented framework poses the risk of different levels of investor protection in Europe, regulatory arbitrage, competition distortions, obstacles to cross-border activity and to existing EU passports. The European Commission, after an initial “wait-and-see” approach, adopted in March 2018 a proposal for a Regulation on European Crowdfunding Service Providers (ECSPs) for businesses. Such proposal, nonetheless, has undergone a number of significant revisions during the trilateral negotiations among the European Commission, the European Parliament and the Council of the European Union, underlying the ambiguous nature of crowdfunding and the complexity in reaching a common view on the same. The three European Institutions seem in fact to have divergent views of crowdfunding and different ideas on how to regulate it, this delaying the approval of the proposed Regulation. Will crowdfunding eventually escape such Bermuda Triangle receiving adequate regulation or is it destined to die in the process? The present paper, after briefly describing crowdfunding main features and regulatory trends in Member States, will critically analyze the ECSPs Regulation Proposal, with respect to all the three different versions, inferring from each text a different vision (and consequent envisioned regulation) of crowdfunding and of financial regulation in general, underlying their pros and cons and proposing adjustments to reach a functional, tiered and proportional regulation. Finally, after mentioning certain recent revisions in national crowdfunding laws (e.g. in Italy, Belgium, UK and Germany), the paper will conclude trying to forecast the future direction of the ongoing trilateral negotiations and the possible impact of the European Regulation on national crowdfunding laws and the sector.","PeriodicalId":405783,"journal":{"name":"PSN: Financial Institutions (Topic)","volume":"88 8 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-08-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116779881","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}
Pub Date : 2019-08-01DOI: 10.5089/9781513511030.001
William Kerry
This paper measures the performance of different metrics in assessing banking system vulnerabilities. It finds that metrics based on equity market valuations of bank capital are better than regulatory capital ratios, and other metrics, in spotting banks that failed (bad apples). This paper proposes that these market-based ratios could be used as a surveillance tool to assess vulnerabilities in the banking sector. While the measures may provide a somewhat fuzzy signal, it is better to have a strategy for identifying bad apples, even if sometimes the apples turn out to be fine, than not being able to spot any bad apples before the barrel has been spoiled.
{"title":"Finding the Bad Apples in the Barrel: Using the Market Value of Equity to Signal Banking Sector Vulnerabilities","authors":"William Kerry","doi":"10.5089/9781513511030.001","DOIUrl":"https://doi.org/10.5089/9781513511030.001","url":null,"abstract":"This paper measures the performance of different metrics in assessing banking system vulnerabilities. It finds that metrics based on equity market valuations of bank capital are better than regulatory capital ratios, and other metrics, in spotting banks that failed (bad apples). This paper proposes that these market-based ratios could be used as a surveillance tool to assess vulnerabilities in the banking sector. While the measures may provide a somewhat fuzzy signal, it is better to have a strategy for identifying bad apples, even if sometimes the apples turn out to be fine, than not being able to spot any bad apples before the barrel has been spoiled.","PeriodicalId":405783,"journal":{"name":"PSN: Financial Institutions (Topic)","volume":"2 3 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116675916","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 rising of the sharia cooperative performance as the objective of sharia cooperative management that required for the improvement of financing productive distribution and empowerment of small business trade sector. The fundamental problems faced by the small business trade sector in Indonesia are the lack of access to capital sources and the weak the role of financial institutions services. Microfinance institutions which be expected tend to more dominant in consumptive financing rather than productive financing. While sharia microfinance institutions do not act optimally. Not yet know how the contribution of the sharia cooperative management in development sharia cooperative performance and its effect in increasing productive financing distribution to empower small business trade sector in Cirebon City and Regency. This study used the explanatory method to explain the causal relationships in the model of empowerment of small business trade sector through hypothesis testing. Data compiled in the form of cross-sectional between a unit of analysis in Cirebon City and Regency. The research model is formulated as a recursive model an analyzed using path analysis. The finding of the study was: (1) the good management governance of funding, membership and financing had significant in increasing sharia cooperative performance. And management of membership proven ineffective and very means in enacting excellence sharia cooperative performance. (2) the sharia cooperative performance has dramatized the increase means, but not yet effective on sharia cooperative performance in financing distribution of Murabaha. (3) the financing distribution of Musyarakah by sharia cooperative performance had a significant effect. (4) the existence sharia cooperative performance very helpful for small business trade sector, mainly in productive financing distribution (Murabahah and Musyarakah).
{"title":"The Effect of BMT Management on Performance to Distribute Productive Financing in Small Business Sectors in Cirebon","authors":"Abdul Aziz","doi":"10.2139/ssrn.3434909","DOIUrl":"https://doi.org/10.2139/ssrn.3434909","url":null,"abstract":"The rising of the sharia cooperative performance as the objective of sharia cooperative management that required for the improvement of financing productive distribution and empowerment of small business trade sector. The fundamental problems faced by the small business trade sector in Indonesia are the lack of access to capital sources and the weak the role of financial institutions services. Microfinance institutions which be expected tend to more dominant in consumptive financing rather than productive financing. While sharia microfinance institutions do not act optimally. Not yet know how the contribution of the sharia cooperative management in development sharia cooperative performance and its effect in increasing productive financing distribution to empower small business trade sector in Cirebon City and Regency. This study used the explanatory method to explain the causal relationships in the model of empowerment of small business trade sector through hypothesis testing. Data compiled in the form of cross-sectional between a unit of analysis in Cirebon City and Regency. The research model is formulated as a recursive model an analyzed using path analysis. The finding of the study was: (1) the good management governance of funding, membership and financing had significant in increasing sharia cooperative performance. And management of membership proven ineffective and very means in enacting excellence sharia cooperative performance. (2) the sharia cooperative performance has dramatized the increase means, but not yet effective on sharia cooperative performance in financing distribution of Murabaha. (3) the financing distribution of Musyarakah by sharia cooperative performance had a significant effect. (4) the existence sharia cooperative performance very helpful for small business trade sector, mainly in productive financing distribution (Murabahah and Musyarakah).","PeriodicalId":405783,"journal":{"name":"PSN: Financial Institutions (Topic)","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-06-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123673113","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}
Prior to the financial crisis, prudential regulation in the EU was implemented non-uniformly across countries, as options and discretions allowed national authorities to apply a more favorable regulatory treatment. We exploit the national implementation of the CRD and derive a country measure of regulatory flexibility (for all banks in a country) and of supervisory discretion (on a case-by-case basis). Overall, we find that banks established in countries with a less stringent prudential framework were more likely to require public support during the crisis. We instrument some characteristics of bank balance sheets with these prudential indicators to investigate how they affect bank resilience. The share of non-interest income explained by the prudential environment is always associated with an increase in the likelihood of financial distress during the crisis. Prudential frameworks also explain banks’ liquidity buffers even in absence of a specific liquidity regulation, which points to possible spillovers across regulatory instruments. JEL Classification: G01, G21, G28
{"title":"Rules and Discretion(s) in Prudential Regulation and Supervision: Evidence from EU Banks in the Run-Up to the Crisis","authors":"A. Maddaloni, Alessandro Scopelliti","doi":"10.2139/ssrn.3392813","DOIUrl":"https://doi.org/10.2139/ssrn.3392813","url":null,"abstract":"Prior to the financial crisis, prudential regulation in the EU was implemented non-uniformly across countries, as options and discretions allowed national authorities to apply a more favorable regulatory treatment. We exploit the national implementation of the CRD and derive a country measure of regulatory flexibility (for all banks in a country) and of supervisory discretion (on a case-by-case basis). Overall, we find that banks established in countries with a less stringent prudential framework were more likely to require public support during the crisis. We instrument some characteristics of bank balance sheets with these prudential indicators to investigate how they affect bank resilience. The share of non-interest income explained by the prudential environment is always associated with an increase in the likelihood of financial distress during the crisis. Prudential frameworks also explain banks’ liquidity buffers even in absence of a specific liquidity regulation, which points to possible spillovers across regulatory instruments. JEL Classification: G01, G21, G28","PeriodicalId":405783,"journal":{"name":"PSN: Financial Institutions (Topic)","volume":"40 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-05-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133910731","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}
Russian Abstract: Работа посвящена принципам разработки сценариев долгосрочного прогноза финансового сектора Российской Федерации. Основу для прогноза финансового сектора представляют сценарные условия социально-экономического развития Российской Федерации, подготавливаемые Министерством экономического развития и Правительством Российской Федерации. Далее, авторы предлагают в рамках правительственных сценариев и набор собственных сценариев, описывающих возможные развилки в развитии финансовой системы Российской Федерации, варианты мер денежно-кредитной политики и функционирования финансовых организаций.
English Abstract: The work is devoted to the principles of developing scenarios for the long-term forecast of the financial sector of the Russian Federation. The basis for the forecast of the financial sector is represented by the scenario conditions of the socio-economic development of the Russian Federation, prepared by the Ministry of Economic Development and the Government of the Russian Federation. Further, the authors offer, within the framework of government scenarios, a set of own scenarios describing possible fork in the development of the financial system of the Russian Federation, options for measures of monetary policy and the functioning of financial organizations.
{"title":"Разработка системы сценариев среднесрочного развития российского финансового сектора (Development of a System of Scenarios for the Medium-Term Development of the Russian Financial Sector)","authors":"Alexey Vedev, Michael Khromov","doi":"10.2139/ssrn.3392413","DOIUrl":"https://doi.org/10.2139/ssrn.3392413","url":null,"abstract":"<b>Russian Abstract:</b> Работа посвящена принципам разработки сценариев долгосрочного прогноза финансового сектора Российской Федерации. Основу для прогноза финансового сектора представляют сценарные условия социально-экономического развития Российской Федерации, подготавливаемые Министерством экономического развития и Правительством Российской Федерации. Далее, авторы предлагают в рамках правительственных сценариев и набор собственных сценариев, описывающих возможные развилки в развитии финансовой системы Российской Федерации, варианты мер денежно-кредитной политики и функционирования финансовых организаций.<br><br><b>English Abstract:</b> The work is devoted to the principles of developing scenarios for the long-term forecast of the financial sector of the Russian Federation. The basis for the forecast of the financial sector is represented by the scenario conditions of the socio-economic development of the Russian Federation, prepared by the Ministry of Economic Development and the Government of the Russian Federation. Further, the authors offer, within the framework of government scenarios, a set of own scenarios describing possible fork in the development of the financial system of the Russian Federation, options for measures of monetary policy and the functioning of financial organizations.","PeriodicalId":405783,"journal":{"name":"PSN: Financial Institutions (Topic)","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-05-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132102490","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}
京公网安备 11010802042870号
京ICP备2023020795号-1
扫码关注我们
求助内容：
应助结果提醒方式：