Pub Date : 2014-12-30DOI: 10.1080/1406099X.2014.991140
Viljar Veebel, Liina Kulu
During the global financial crisis in 2008–10 Estonia symbolized a pathway of fiscal consolidation and austerity. Moreover, despite opting for austerity and all the social and political consequences of achieving fiscal consolidation, the governing coalition in Estonia succeeded also in avoiding a negative political reaction from the voters and remained in power. The current article analyses the variables that made the austerity reforms in Estonia in 2008–11 electorally successful. The economic success of Estonia has otherwise been attributed to a combination of political, institutional, and economic factors: timing; a fiscal policy that was not pro-cyclical; the availability of reserves in Estonia; and the ownership structure of the banks. The present study asks more specifically about the variables that saw the economic success in the implementation of the austerity measures accompanied by a positive electoral outcome. As it will be argued, these factors include the communication strategy chosen intentionally or otherwise by the government, the design of the austerity measures, the peculiarity of the electoral cycle, lack of political alternatives, and the performance of neighbouring countries in implementing austerity measures.
{"title":"Against the political expectations and theoretical models: how to implement austerity and not to lose political power","authors":"Viljar Veebel, Liina Kulu","doi":"10.1080/1406099X.2014.991140","DOIUrl":"https://doi.org/10.1080/1406099X.2014.991140","url":null,"abstract":"During the global financial crisis in 2008–10 Estonia symbolized a pathway of fiscal consolidation and austerity. Moreover, despite opting for austerity and all the social and political consequences of achieving fiscal consolidation, the governing coalition in Estonia succeeded also in avoiding a negative political reaction from the voters and remained in power. The current article analyses the variables that made the austerity reforms in Estonia in 2008–11 electorally successful. The economic success of Estonia has otherwise been attributed to a combination of political, institutional, and economic factors: timing; a fiscal policy that was not pro-cyclical; the availability of reserves in Estonia; and the ownership structure of the banks. The present study asks more specifically about the variables that saw the economic success in the implementation of the austerity measures accompanied by a positive electoral outcome. As it will be argued, these factors include the communication strategy chosen intentionally or otherwise by the government, the design of the austerity measures, the peculiarity of the electoral cycle, lack of political alternatives, and the performance of neighbouring countries in implementing austerity measures.","PeriodicalId":43756,"journal":{"name":"Baltic Journal of Economics","volume":"14 1","pages":"16 - 2"},"PeriodicalIF":1.1,"publicationDate":"2014-12-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/1406099X.2014.991140","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"60297787","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2014-12-30DOI: 10.1080/1406099X.2014.999481
Peeter Maripuu, Kadri Männasoo
This paper attempts to explain the link between corporate investments in different phases of the economic cycle and company financial distress. The data were derived from the Estonian Centre of Registers and Information Systems and contained the population of Estonian businesses from four economic activity areas – manufacturing; wholesale and retail trade; transportation and storage; and construction and real estate – and covered the period from 1995 to 2010. A firm was defined as distressed if it breached the minimum capital requirements set by law. The results demonstrate that all the investment-related factors matter for financial distress, with timing, intensity, sector, and type of investment all playing a role. Furthermore, the data seem to suggest that investment in tangibles is more cycle-sensitive for the transport and construction and real estate sectors and investment in working capital is more cycle-sensitive for manufacturing and merchandise, which stresses the importance of getting the timing right for different investment types in different industries.
{"title":"Financial distress and cycle-sensitive corporate investments","authors":"Peeter Maripuu, Kadri Männasoo","doi":"10.1080/1406099X.2014.999481","DOIUrl":"https://doi.org/10.1080/1406099X.2014.999481","url":null,"abstract":"This paper attempts to explain the link between corporate investments in different phases of the economic cycle and company financial distress. The data were derived from the Estonian Centre of Registers and Information Systems and contained the population of Estonian businesses from four economic activity areas – manufacturing; wholesale and retail trade; transportation and storage; and construction and real estate – and covered the period from 1995 to 2010. A firm was defined as distressed if it breached the minimum capital requirements set by law. The results demonstrate that all the investment-related factors matter for financial distress, with timing, intensity, sector, and type of investment all playing a role. Furthermore, the data seem to suggest that investment in tangibles is more cycle-sensitive for the transport and construction and real estate sectors and investment in working capital is more cycle-sensitive for manufacturing and merchandise, which stresses the importance of getting the timing right for different investment types in different industries.","PeriodicalId":43756,"journal":{"name":"Baltic Journal of Economics","volume":"14 1","pages":"181 - 193"},"PeriodicalIF":1.1,"publicationDate":"2014-12-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/1406099X.2014.999481","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"60298486","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2014-12-30DOI: 10.1080/1406099X.2014.993831
D. Živkov, Jovan Njegić, Marko Peċanac
This paper explores bidirectional linkage between inflation and its uncertainty by observing monthly data of 11 Eastern European countries. The methodological approach comprises two steps. First, inflation uncertainty series have been created by choosing an optimal Generalized Autoregressive Conditional Heteroskedasticity- (GARCH) type model. Subsequently, inflation and inflation uncertainty have been observed together by two models examining whether Friedman's and Cukierman–Meltzer's hypotheses hold for selected Eastern Europe Countries (EEC). Due to the heterogeneous behaviour of some series of inflation and inflation uncertainty, the unconditional quantile regression estimation technique has been applied because of its robustness to the particular non-normal characteristics and outliers’ presence in the empirical data. According to the findings, both Friedman's and Cukierman–Meltzer's hypotheses have been confirmed primarily for the largest EEC with flexible exchange rate. In contrast, these theories are refuted in smaller, open economies with firm exchange rate regime.
{"title":"Bidirectional linkage between inflation and inflation uncertainty – the case of Eastern European countries","authors":"D. Živkov, Jovan Njegić, Marko Peċanac","doi":"10.1080/1406099X.2014.993831","DOIUrl":"https://doi.org/10.1080/1406099X.2014.993831","url":null,"abstract":"This paper explores bidirectional linkage between inflation and its uncertainty by observing monthly data of 11 Eastern European countries. The methodological approach comprises two steps. First, inflation uncertainty series have been created by choosing an optimal Generalized Autoregressive Conditional Heteroskedasticity- (GARCH) type model. Subsequently, inflation and inflation uncertainty have been observed together by two models examining whether Friedman's and Cukierman–Meltzer's hypotheses hold for selected Eastern Europe Countries (EEC). Due to the heterogeneous behaviour of some series of inflation and inflation uncertainty, the unconditional quantile regression estimation technique has been applied because of its robustness to the particular non-normal characteristics and outliers’ presence in the empirical data. According to the findings, both Friedman's and Cukierman–Meltzer's hypotheses have been confirmed primarily for the largest EEC with flexible exchange rate. In contrast, these theories are refuted in smaller, open economies with firm exchange rate regime.","PeriodicalId":43756,"journal":{"name":"Baltic Journal of Economics","volume":"14 1","pages":"124 - 139"},"PeriodicalIF":1.1,"publicationDate":"2014-12-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/1406099X.2014.993831","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"60298494","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2014-12-30DOI: 10.1080/1406099X.2014.997093
M. Próchniak, B. Witkowski
The paper aims to assess the impact of regulations (measured by the Fraser Institute index of economic freedom) on economic growth in the world as well as in EU and post-socialist countries. The method of the analysis is based on growth regressions where economic freedom is included in the set of explanatory variables, along with some other control factors. The dependent variable is gross domestic product per capita growth rate. In order to be robust to the selection of explanatory variables, the paper uses Bayesian model pooling applied to Blundell and Bond's generalized method of moments system estimator. Other contributions are: the use of ‘overlapping’ panel data in which subsequent observations cover observations from partly overlapping periods and the inclusion of nonlinearities. The results show that the level of and the change in economic freedom both reveal a positive and nonlinear relationship with economic growth. The same applies to most of the component indicators.
{"title":"The application of Bayesian model averaging in assessing the impact of the regulatory framework on economic growth","authors":"M. Próchniak, B. Witkowski","doi":"10.1080/1406099X.2014.997093","DOIUrl":"https://doi.org/10.1080/1406099X.2014.997093","url":null,"abstract":"The paper aims to assess the impact of regulations (measured by the Fraser Institute index of economic freedom) on economic growth in the world as well as in EU and post-socialist countries. The method of the analysis is based on growth regressions where economic freedom is included in the set of explanatory variables, along with some other control factors. The dependent variable is gross domestic product per capita growth rate. In order to be robust to the selection of explanatory variables, the paper uses Bayesian model pooling applied to Blundell and Bond's generalized method of moments system estimator. Other contributions are: the use of ‘overlapping’ panel data in which subsequent observations cover observations from partly overlapping periods and the inclusion of nonlinearities. The results show that the level of and the change in economic freedom both reveal a positive and nonlinear relationship with economic growth. The same applies to most of the component indicators.","PeriodicalId":43756,"journal":{"name":"Baltic Journal of Economics","volume":"14 1","pages":"159 - 180"},"PeriodicalIF":1.1,"publicationDate":"2014-12-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/1406099X.2014.997093","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"60298258","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2014-12-30DOI: 10.1080/1406099X.2014.993853
Viktors Ajevskis, Ramune Rimgailaite, Uldis Rutkaste, Oļegs Tkačevs
This paper studies various approaches to the equilibrium real effective exchange rate estimation, including structural and direct estimation approaches. It shows their strengths and weaknesses with application to the case of Latvia. Despite the approaches differing considerably in terms of their theoretical background and data used they all indicate that the real exchange rate of Latvia after appreciation during the boom years and subsequent adjustment afterwards remained close to its equilibrium level at the end of the sample period, namely at the end of 2010.
{"title":"The equilibrium real exchange rate: pros and cons of different approaches with application to Latvia","authors":"Viktors Ajevskis, Ramune Rimgailaite, Uldis Rutkaste, Oļegs Tkačevs","doi":"10.1080/1406099X.2014.993853","DOIUrl":"https://doi.org/10.1080/1406099X.2014.993853","url":null,"abstract":"This paper studies various approaches to the equilibrium real effective exchange rate estimation, including structural and direct estimation approaches. It shows their strengths and weaknesses with application to the case of Latvia. Despite the approaches differing considerably in terms of their theoretical background and data used they all indicate that the real exchange rate of Latvia after appreciation during the boom years and subsequent adjustment afterwards remained close to its equilibrium level at the end of the sample period, namely at the end of 2010.","PeriodicalId":43756,"journal":{"name":"Baltic Journal of Economics","volume":"14 1","pages":"101 - 123"},"PeriodicalIF":1.1,"publicationDate":"2014-12-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/1406099X.2014.993853","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"60298521","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2014-12-30DOI: 10.1080/1406099X.2014.995421
A. Sauka
This study makes an empirical contribution by exploring factors that contribute to the competitiveness of Latvian companies. The paper draws on a survey of owner-managers to determine the availability and use of resources and strategies found to be important drivers for firms’ competitiveness. Overall, we identify a number of firm-level factors, including involvement in risk-taking behaviour, more extensive use of networking channels, and efficient use of various business strategies as potential sources to increase the competitiveness of Latvian companies. Company owner-managers, however, tend to be more productive in using available human resources, and are satisfied with the availability of physical resources in addition to having a strong export orientation. The study also indicates various shortcomings in the external environment which, as perceived by respondents, are a burden for competitive entrepreneurship activities in the Latvian market. In this light, albeit of an exploratory nature, this study can be used as a source for evidence-based entrepreneurship policies in Latvia and other countries of Central and Eastern Europe.
{"title":"Measuring the competitiveness of Latvian companies","authors":"A. Sauka","doi":"10.1080/1406099X.2014.995421","DOIUrl":"https://doi.org/10.1080/1406099X.2014.995421","url":null,"abstract":"This study makes an empirical contribution by exploring factors that contribute to the competitiveness of Latvian companies. The paper draws on a survey of owner-managers to determine the availability and use of resources and strategies found to be important drivers for firms’ competitiveness. Overall, we identify a number of firm-level factors, including involvement in risk-taking behaviour, more extensive use of networking channels, and efficient use of various business strategies as potential sources to increase the competitiveness of Latvian companies. Company owner-managers, however, tend to be more productive in using available human resources, and are satisfied with the availability of physical resources in addition to having a strong export orientation. The study also indicates various shortcomings in the external environment which, as perceived by respondents, are a burden for competitive entrepreneurship activities in the Latvian market. In this light, albeit of an exploratory nature, this study can be used as a source for evidence-based entrepreneurship policies in Latvia and other countries of Central and Eastern Europe.","PeriodicalId":43756,"journal":{"name":"Baltic Journal of Economics","volume":"14 1","pages":"140 - 158"},"PeriodicalIF":1.1,"publicationDate":"2014-12-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/1406099X.2014.995421","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"60298611","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2014-12-16DOI: 10.1080/1406099X.2014.980113
Gertrud Errit, Lenno Uusküla
This paper studies the effect of a monetary policy shock in the euro area on the main Estonian economic and financial variables between 2000 and 2012. Using a standard structural vector autoregression (SVAR) model we find strong and persistent effects on Estonian GDP, private consumption, corporate investment, and imports. A monetary policy shock also has strong and sluggish effects on the housing loan and consumer credit interest rates. The estimated reaction of Estonian GDP and the GDP deflator-based inflation rate is about four times stronger than the reaction of euro area-wide aggregates. The strength of the impact depends on the inclusion of the data from the years of the recent financial and economic crisis.
{"title":"Euro area monetary policy transmission in Estonia","authors":"Gertrud Errit, Lenno Uusküla","doi":"10.1080/1406099X.2014.980113","DOIUrl":"https://doi.org/10.1080/1406099X.2014.980113","url":null,"abstract":"This paper studies the effect of a monetary policy shock in the euro area on the main Estonian economic and financial variables between 2000 and 2012. Using a standard structural vector autoregression (SVAR) model we find strong and persistent effects on Estonian GDP, private consumption, corporate investment, and imports. A monetary policy shock also has strong and sluggish effects on the housing loan and consumer credit interest rates. The estimated reaction of Estonian GDP and the GDP deflator-based inflation rate is about four times stronger than the reaction of euro area-wide aggregates. The strength of the impact depends on the inclusion of the data from the years of the recent financial and economic crisis.","PeriodicalId":43756,"journal":{"name":"Baltic Journal of Economics","volume":"14 1","pages":"55 - 77"},"PeriodicalIF":1.1,"publicationDate":"2014-12-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/1406099X.2014.980113","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"60298098","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2014-11-24DOI: 10.1080/1406099X.2014.981105
Margo Liik, J. Masso, K. Ukrainski
While research and development expenditures are considered a key to productivity growth and development, the question remains whether their contribution could depend on the particular countries’ and industries’ actual development levels and positions in global value chains. In this paper we analyse the relative contribution of R&D to the efficiency (productivity) on the industry and sector level in OECD countries using industry-level panel data and the stochastic frontier production function approach. The results indicate that R&D capital productivity enhancing effect increases with the level of technology; physical capital shows the opposite effect. The distribution of efficiency across industries shows remarkably different variances, reflecting different degrees of competition and the structure of value chains. Among different external factors, the share of labour with tertiary education at the national level showed a strong positive correlation with efficiency, while for other external factors the effect varied across the industries. The findings imply that in the design of R&D policy measures the structure of the industries needs to be considered.
{"title":"The contribution of R&D to production efficiency in OECD countries: econometric analysis of industry-level panel data","authors":"Margo Liik, J. Masso, K. Ukrainski","doi":"10.1080/1406099X.2014.981105","DOIUrl":"https://doi.org/10.1080/1406099X.2014.981105","url":null,"abstract":"While research and development expenditures are considered a key to productivity growth and development, the question remains whether their contribution could depend on the particular countries’ and industries’ actual development levels and positions in global value chains. In this paper we analyse the relative contribution of R&D to the efficiency (productivity) on the industry and sector level in OECD countries using industry-level panel data and the stochastic frontier production function approach. The results indicate that R&D capital productivity enhancing effect increases with the level of technology; physical capital shows the opposite effect. The distribution of efficiency across industries shows remarkably different variances, reflecting different degrees of competition and the structure of value chains. Among different external factors, the share of labour with tertiary education at the national level showed a strong positive correlation with efficiency, while for other external factors the effect varied across the industries. The findings imply that in the design of R&D policy measures the structure of the industries needs to be considered.","PeriodicalId":43756,"journal":{"name":"Baltic Journal of Economics","volume":"14 1","pages":"100 - 78"},"PeriodicalIF":1.1,"publicationDate":"2014-11-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/1406099X.2014.981105","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"60298121","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2014-09-05DOI: 10.1080/1406099X.2014.949603
Ivo Karilaid, Tõnn Talpsepp, Tarvo Vaarmets
This paper provides a more thorough empirical examination of the development and determinants of the liquidity position in the financial sector during the last financial crisis in the Baltic-Nordic region, which takes into consideration the whole economic cycle. The current study serves as an extension to an ex-ante study which was made in 2010. We look at fiscal and monetary policy implications of the liquidity problems arising in the crisis and stabilization process after that. The results show that the changes (and the speed of changes) of interest rates, GDP and money supply have occurred relatively fast, meaning that the rising area of the LM curve has been shorter than theory would predict. Market reactions took place quickly and simultaneously – there was no time for the slow restructuring, thus liquidity needs were higher than generally.
{"title":"Implications of the liquidity crisis in the Baltic-Nordic region","authors":"Ivo Karilaid, Tõnn Talpsepp, Tarvo Vaarmets","doi":"10.1080/1406099X.2014.949603","DOIUrl":"https://doi.org/10.1080/1406099X.2014.949603","url":null,"abstract":"This paper provides a more thorough empirical examination of the development and determinants of the liquidity position in the financial sector during the last financial crisis in the Baltic-Nordic region, which takes into consideration the whole economic cycle. The current study serves as an extension to an ex-ante study which was made in 2010. We look at fiscal and monetary policy implications of the liquidity problems arising in the crisis and stabilization process after that. The results show that the changes (and the speed of changes) of interest rates, GDP and money supply have occurred relatively fast, meaning that the rising area of the LM curve has been shorter than theory would predict. Market reactions took place quickly and simultaneously – there was no time for the slow restructuring, thus liquidity needs were higher than generally.","PeriodicalId":43756,"journal":{"name":"Baltic Journal of Economics","volume":"14 1","pages":"35 - 54"},"PeriodicalIF":1.1,"publicationDate":"2014-09-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/1406099X.2014.949603","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"60298049","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2014-08-20DOI: 10.1080/1406099X.2014.942541
Laivi Laidroo, Kadri Männasoo
We investigate the association between banks' credit expansion and loan loss reserves on a panel of banks from 11 new EU member countries from Central and Eastern Europe during 2004–2010. Unused committed credit lines capture the decline in banks' risk aversion being associated with a supply shift. As the existence of loan commitments may lead to overlending, we expect that banks with a higher share of unused committed credit lines are more prone to subsequent increase in loan loss reserves. The system and difference GMM estimations as well as pooled OLS and panel fixed effects estimations confirm that an excessive credit supply, reflected in overextension of committed credit lines, predicts increase in bank loan loss reserves two years ahead while controlling for bank asset returns, real growth in loan portfolio, country GDP, inflation and EBRD banking sector reform index. This stresses the importance of credit lines monitoring by regulatory and supervisory authorities for timely recognition of credit overextension episodes. The negative association between loan loss reserves and real GDP growth was affirmed.
{"title":"Perils of excessive credit growth: evidence from 11 new EU member states","authors":"Laivi Laidroo, Kadri Männasoo","doi":"10.1080/1406099X.2014.942541","DOIUrl":"https://doi.org/10.1080/1406099X.2014.942541","url":null,"abstract":"We investigate the association between banks' credit expansion and loan loss reserves on a panel of banks from 11 new EU member countries from Central and Eastern Europe during 2004–2010. Unused committed credit lines capture the decline in banks' risk aversion being associated with a supply shift. As the existence of loan commitments may lead to overlending, we expect that banks with a higher share of unused committed credit lines are more prone to subsequent increase in loan loss reserves. The system and difference GMM estimations as well as pooled OLS and panel fixed effects estimations confirm that an excessive credit supply, reflected in overextension of committed credit lines, predicts increase in bank loan loss reserves two years ahead while controlling for bank asset returns, real growth in loan portfolio, country GDP, inflation and EBRD banking sector reform index. This stresses the importance of credit lines monitoring by regulatory and supervisory authorities for timely recognition of credit overextension episodes. The negative association between loan loss reserves and real GDP growth was affirmed.","PeriodicalId":43756,"journal":{"name":"Baltic Journal of Economics","volume":"14 1","pages":"17 - 34"},"PeriodicalIF":1.1,"publicationDate":"2014-08-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/1406099X.2014.942541","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"60297925","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","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：