Journal of Financial Stability最新文献

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Institutional ownership and bank failure

IF 6.1 2区经济学 Q1 BUSINESS, FINANCE

Journal of Financial Stability

Pub Date : 2025-02-01 DOI: 10.1016/j.jfs.2024.101366

Elyas Elyasiani , Jingyi Jia

We study the relationship between bank failure and dedicated institutional ownership (hereafter IO) employing a logit model. We focus on dedicated institutional investors (hereafter IIs) as defined by Bushee (2001) and Bushee and NOE (2000) because they are stable shareholders and have large investments in the investee companies. Four results are obtained. First, based on the instrumental variable approach, a greater proportion of dedicated IO is associated with reduced probability of bank failure. This result is robust to the propensity score matching technique. The rationale is that dedicated IIs collect information on the investee banks by holding stable and concentrated positions in these banks, monitor them, and reduce their ownership in cases of trouble earlier than other IIs do. This effect has a larger magnitude in banks with greater organizational complexity and larger size. Second, after controlling for the sell herding effect of other IIs, we find that the dedicated IO proportion still has a negative and significant coefficient, indicating that dedicated IIs trade on fundamental information rather than herding with other IIs. Third, three potential channels of collecting information, (i) placing representatives on the board as directors, (ii) greater capacity in analyzing financial statements through cross-ownership in other banks, and (iii) higher monitoring incentive due to more stable and concentrated ownership, are investigated. We find evidence in favor of the effect of cross-ownership in the banking industry, ownership stability and concentration. Fourth, the ownership of dedicated IIs is significantly larger in banks acquired by other banks than those filing for Chapter 7 liquidation, ascribing a constructive role for dedicated IIs.

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引用次数: 0

Financial subsidies, female employment, and plant performance — Evidence from a quasi-experiment

IF 6.1 2区经济学 Q1 BUSINESS, FINANCE

Journal of Financial Stability

Pub Date : 2025-02-01 DOI: 10.1016/j.jfs.2024.101341

Raffi E. García , Ricardo A. López Rago

This paper exploits changes in financial subsidy programs to investigate their effect on female employment and firm performance. The identification strategy uses a quasi-experiment from a government policy change that eliminated financial support for exporting plants in the Chilean manufacturing industry. The difference-in-differences methodology shows that the policy change increased the share of total female employment by 3.3%, driven mainly by an increase of female workers in blue-collar occupations. In comparison, male labor experienced a drop of 4.4% in white-collar occupations in the treated plants relative to those in the control group. Plant total factor productivity (TFP) decreased due to the policy change, but both total gross output and sales rose approximately 7% on average. The paper explores two possible mechanisms to explain these findings: the technology adoption channel and changes in the gender composition of labor in the presence of a gender pay gap. The findings are consistent with the international trade and corporate finance literature on firm behavior under high market fixed and sunk costs.

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引用次数: 0

Banking supervisory architecture and sovereign risk

IF 6.1 2区经济学 Q1 BUSINESS, FINANCE

Journal of Financial Stability

Pub Date : 2025-02-01 DOI: 10.1016/j.jfs.2024.101365

Pedro J. Cuadros-Solas , Carlos Salvador , Nuria Suárez

This paper investigates whether the design of the banking supervisory architecture impacts sovereign risk. Exploiting the implementation of the Single Supervisory Mechanism (SSM) in Europe, we provide evidence that sovereign risk – measured by sovereign ratings – is lower after the largest banks shift from national to supranational supervision. The impact of SSM implementation is shaped by the characteristics of the banking sector and the country’s institutional setting. Using specific bank-level data, we also find that increased bank resilience (banking stability) and reduced volatility of bank credit (credit stability) in the economy underlie the relationship between banking supervision and sovereign risk. The results hold when considering CDS spreads as an alternative measure of sovereign risk and after conducting several robustness tests.

引用次数: 0

Regulatory uncertainty and TARP

IF 6.1 2区经济学 Q1 BUSINESS, FINANCE

Journal of Financial Stability

Pub Date : 2025-02-01 DOI: 10.1016/j.jfs.2024.101367

Yupeng Lin , Xin Liu , Anand Srinivasan

Using the Troubled Asset Relief Program (TARP) as a laboratory, this paper examines the impacts of bank bailouts on bank-dependent clients. We find that large TARP recipient banks reduce credit supply to dependent borrowers in the post-TARP period. A large fraction of credit supply reduction is due to regulatory uncertainty on account of an increased likelihood of fines. Liquidity hoarding by TARP banks also drives part of the reduction in credit supply. Relationship borrowers experience a valuation loss around the announcements of their main banks’ TARP approvals consistent with a credit supply reduction.

引用次数: 0

Does FinTech Increase Bank Risk-taking?

IF 6.1 2区经济学 Q1 BUSINESS, FINANCE

Journal of Financial Stability

Pub Date : 2025-02-01 DOI: 10.1016/j.jfs.2024.101360

Selim Elekdag , Drilona Emrullahu , Sami Ben Naceur

Motivated by its rapid growth, this paper investigates how FinTech activities influence risk-taking by financial intermediaries (FIs). In this context, the paper revisits an ongoing debate on the impact of competition on financial stability: on one side, it is argued that greater competition encourages greater risk-taking (competition-fragility hypothesis), while the other side asserts that more competition can increase financial stability (competition-stability hypothesis). Using a curated database covering over 10,000 FIs and global FinTech activities, we find a robust relationship whereby greater FinTech presence is associated with heightened risk-taking by FIs, offering support for the competition-fragility hypothesis. However, the inclusion of bank-, industry, and country-specific characteristics can alter this relationship. Importantly, there is suggestive evidence indicating that in certain cases, greater FinTech presence may be associated with less FI risk-taking amid stronger domestic institutions. Notwithstanding the relevance for policy, this paper presents a novel framework that may help reconcile some of the conflicting results in the literature, which have found supportive evidence for each of the two competing hypotheses.

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引用次数: 0

Do portfolio companies learn from their peers? Evidence from venture capital funding

IF 6.1 2区经济学 Q1 BUSINESS, FINANCE

Journal of Financial Stability

Pub Date : 2025-02-01 DOI: 10.1016/j.jfs.2025.101373

Salim Chahine , Mai Daher

We investigate the impact of “learning from peers” on the fundraising abilities of startup companies. Employing data on the financing rounds of privately owned portfolio companies, we find that companies observe the round amounts of their most successful peers and learn to negotiate higher round amounts with venture capital investors. We further show that the number of common directors or venture capital firms between portfolio companies and their most successful peers has a positive impact on the round amounts of these portfolio companies, which supports the existence of conversational learning. Moreover, observational learning from peers is higher in hot markets, where investors rely on less costly information on peers. Our findings confirm that both observational and conversational learning allow portfolio companies to be in a better negotiating position, thus enhancing their ability to secure funding and invest in their growth.

引用次数: 0

Bubbles, banking and monetary policy

IF 6.1 2区经济学 Q1 BUSINESS, FINANCE

Journal of Financial Stability

Pub Date : 2025-02-01 DOI: 10.1016/j.jfs.2024.101362

Jae Hun Shim

This paper lays out a quantitative macroeconomic model with rational risk-adjusted asset bubbles and banks. The model features an imperfect financial market structure and allows bubble assets within banks. We shed light on the channels by which a sudden burst of asset bubbles leads to a recession through the banking system and evaluate “leaning against the wind” monetary policy associated with bubble volatility and welfare. Our main findings call for monetary policy rules to preemptively stabilize intermediate asset prices rather than the bubbles.

引用次数: 0

Analyzing and forecasting China's financial resilience: Measurement techniques and identification of key influencing factors

IF 6.1 2区经济学 Q1 BUSINESS, FINANCE

Journal of Financial Stability

Pub Date : 2025-02-01 DOI: 10.1016/j.jfs.2025.101372

Yilin Chen , Chentong Sun , Xu Zhang

This paper measures China's financial resilience from the perspective of external risk shocks and analyzes its influencing factors for forecasting. First, we introduce an innovative financial resilience model comprising three submodels: the dynamic factor model, the TVP-VAR model, and a resilience characteristic measurement model that captures resistance and recoverability through absorption intensity and absorption duration. The results show a clear inverse relationship between absorption intensity and absorption duration, with resilience fluctuations exhibiting distinct phase characteristics. Notably, intervals of low resilience often correspond to specific risk events. Second, we apply the Lasso-logistic model for recursive estimation and forecasting financial resilience, while comparing its performance to that of the Logistic regression model. The results indicate that the Lasso-logistic model achieves, on average, a 10 % higher forecasting accuracy than the Logistic model does. Among the most important features identified by the model are macroeconomic and public expectation variables. The analysis shows that the stability of economic fundamentals and market participants' confidence in the future play pivotal roles in strengthening financial resilience and ensuring the stability of the financial system.

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引用次数: 0

The impact of policy uncertainty on shareholder wealth: Evidence from bank M&A

IF 6.1 2区经济学 Q1 BUSINESS, FINANCE

Journal of Financial Stability

Pub Date : 2025-02-01 DOI: 10.1016/j.jfs.2024.101361

Nikolaos Kiosses , Stergios Leventis , Demetres Subeniotis , Ioannis Tampakoudis

We investigate the impact of policy uncertainty (PU) on the economic impact of bank mergers and acquisitions (M&A). Using a sample of 3142 deals announced by US banks between 1986 and 2020, we find a significant positive effect of PU on acquirer short- and long-term market value. PU also positively affects acquirer post-merger accounting performance and increases the incentives for synergy-driven bank M&A. Amid PU, acquirers avoid stock-only financed deals, delay deal completion, and pay higher bid premiums. Our results are robust to model specifications that control for different proxies of PU, endogeneity, asset pricing models, and event windows surrounding deal announcements.

引用次数: 0

Asset class liquidity risk indicators. Timing the risk in the European and US equity and bond markets

IF 6.1 2区经济学 Q1 BUSINESS, FINANCE

Journal of Financial Stability

Pub Date : 2025-02-01 DOI: 10.1016/j.jfs.2024.101369

Anna Coppola , Giovanni Urga , Alessandro Varaldo

In this paper, we propose asset class liquidity risk indicators constructed by aggregating financial, monetary and credit variables. We measure the presence of liquidity in six highly representative markets such as the Equity Europe, Long Term Italian Government Bond, Short Term Euro Government Bond, Equity US, Bond Corporate Investment Grade USD, Short Term US Government Bond markets over the period January 2007–January 2023. Our approach allows for a time-varying measure of the relative contribution of the raw drivers to the asset class indicators. We use endogenous Markov-switching models to identify episodes of financial distress which have characterized the behaviour of assets over the last two decades. Finally, we map the Markov-switching regimes with bubble episodes identified via recursive testing procedures.

引用次数: 0

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