To Remember or Forget?

2021 ◽  
pp. 105-130
Author(s):  
Mats Larsson ◽  
Kristina Lilja
Keyword(s):  
Twentieth Century ◽  
Risk Management ◽  
Financial Crisis ◽  
Central Bank ◽  
Financial Crises ◽  
Commercial Banks ◽  
Financial System ◽  
Business Strategies ◽  
Financial Problems ◽  
Governmental Control

Since the early twentieth century, the Swedish financial system has experienced five major financial crises—both domestic and internationally generated. With three crises within 25 years, the use of memories from previous financial problems seems a little far-fetched. But so far this has not explicitly been analysed. However, with sources from official investigations, material from the Swedish central bank (the Riksbank) as well as memos from the Bank Inspection Board and larger commercial banks, it would be possible to reconstruct how experiences from earlier financial crises influenced banks risk management and business strategies. During the financial crisis of the 1990s the lack of memories from the 1920s and 1930s was noticed. It was said that knowledge of risk management had been reduced during 60 years of governmental control. This chapter explores this loss of memory using archives and interviews.

scholarly journals Japan's Financial Crisis and Economic Stagnation

2004 ◽  
Vol 18 (1) ◽  
pp. 3-26 ◽  
Author(s):  
Takeo Hoshi ◽  
Anil K Kashyap
Keyword(s):  
Financial Crisis ◽  
Life Insurance ◽  
Commercial Banks ◽  
Banking System ◽  
Financial System ◽  
Financial Sector ◽  
Insurance Companies ◽  
Financial Problems ◽  
Economic Stagnation ◽  
Loan Program

We survey the macroeconomic stagnation and financial problems in Japan. The financial sector assessment includes separate analyses of the commercial banks, the life insurance companies and the government's fiscal investment and loan program (FILP). We estimate that the Japanese taxpayer will have to pay at least another ¥100 trillion (20% of GDP) to cover financial system losses. We explain how the current dysfunctional Japanese banking system misallocates funds by keeping many insolvent firms in business. These inefficient firms crowd out potentially profitable ones and worsen macroeconomic stagnation. A sustained macroeconomic recovery requires serious restructuring aimed at stopping this cycle.

Lässt sich die Geldschöpfung der Geschäftsbanken noch kontrollieren? – Geldpolitik seit der jüngsten Finanzkrise 2007/2008

2018 ◽  
Vol 87 (3) ◽  
pp. 47-63
Author(s):  
Mathias Binswanger
Keyword(s):  
Monetary Policy ◽  
Financial Crisis ◽  
Interest Rates ◽  
Financial Crises ◽  
Commercial Banks ◽  
Central Banks ◽  
The Past ◽  
Monetary Authorities ◽  
Money Creation ◽  
Recent Financial Crisis

Zusammenfassung: Als Folge der jüngsten Finanzkrise ist der Einfluss der Zentralbanken auf die Geldschöpfung weitgehend verloren gegangen. Denn die Kontrolle über Reserven funktioniert nur solange, wie diese knapp sind und deren Bezug an bestimmte Bedingungen geknüpft werden kann. Seither halten die Geschäftsbanken in den ökonomisch wichtigsten Ländern de facto dermaßen viele Reserven, dass sie nicht mehr auf die jeweilige Zentralbank angewiesen sind. Diese Entwicklung lässt sich sowohl für die FED als auch für die EZB aufzeigen. Dies führt zu geldpolitisch neuen Herausforderungen, die bisher kaum beachtet wurden. Die Einflussmöglichkeit der Zentralbanken auf den Geldschöpfungsprozess der Geschäftsbanken wurde noch nie in so großem Stil ausgehebelt. Deshalb müssen Zentralbanken in Zukunft ihr Repertoire an geldpolitischen Massnahmen erweitern. Nur mit dem Drehen an der Zinsschraube wird man den Geldschöpfungsprozess in Zukunft kaum mehr in gewünschter Weise beeinflussen können. Summary: As a result of the recent financial crisis, the influence of central banks on money creation has largely disappeared. Controlling this process only works as long as money creation of commercial banks also leads to a need for additional reserves from the central bank. However, the large asset purchase programs of monetary authorities after the financial crises resulted in an enormous increase in reserves at commercial banks. Therefore, commercial banks have enough reserves to create additional money at large amounts and do not depend on central banks any more. This development is indicative for both the FED and the ECB. Therefore central banks face the challenge how they can restore their influence on the process of money creation. Just lowering or increasing interest rates, which was the major way of conducting monetary policy in the past, will not work anymore in the future.

Managing Political Risk in Global Business: Beiersdorf 1914–1990

2012 ◽  
Vol 13 (1) ◽  
pp. 85-119 ◽  
Author(s):  
Geoffrey Jones ◽  
Christina Lubinski
Keyword(s):  
Twentieth Century ◽  
Risk Management ◽  
World War I ◽  
Host Country ◽  
Political Risk ◽  
Business Strategies ◽  
World War ◽  
Nazi Regime ◽  
Global Business ◽  
Care Company

This article is concerned with business strategies of political risk management during the twentieth century. It focuses especially on Beiersdorf, a pharmaceutical and skin care company in Germany. During World War I, the expropriation of its brands and trademarks revealed its vulnerability to political risk. Following the advent of the Nazi regime in 1933, the largely Jewish owned and managed company faced a uniquely challenging combination of home and host country political risk. This article reviews the company's responses to these adverse circumstances, challenging the prevailing literature that interprets so-called “cloaking” activities as one element of businesses' cooperation with the Nazis. We also depart from the previous literature in assessing the outcomes of the company's strategies after 1945 and examine the challenges and costs faced by the company in recovering the ownership of its brands. While the management of distance became much easier over the course of the twentieth century because of communications improvements, this article shows that the management of governments and political risk grew sharply.

Indonesia's new financial crisis law carries risks

2016 ◽  
Keyword(s):  
Financial Crisis ◽  
Crisis Management ◽  
Financial Crises ◽  
Deposit Insurance ◽  
Financial System ◽  
Legal Basis ◽  
Content Type ◽  
Regulatory Authorities ◽  
Crisis Prevention ◽  
First Time

Subject The new financial crisis management law. Significance On March 17, parliament approved the long-awaited 'Financial System Crisis Prevention and Mitigation' bill. For the first time, Indonesia has a law on financial crisis management that will provide the legal basis for regulatory authorities to respond better to future financial crises. Impacts Government preparedness to manage a financial crisis will rise, albeit gradually. Political stalemate during a crisis, especially in parliament, would prevent effective and timely action by the president. The Deposit Insurance Corporation has limited capitalisation and may not be strong enough to manage more than two large troubled banks.

scholarly journals Are Cooperative Banks Better Equipped to Weather Financial Crisis than their Commercial Counterparts? Evidence from the Italian Banking Sector before and during the Credit Crisis

Organizacija ◽  
2016 ◽  
Vol 49 (2) ◽  
pp. 108-126
Author(s):  
Mitja Stefancic
Keyword(s):  
Financial Crisis ◽  
Cost Efficiency ◽  
Commercial Banks ◽  
Fixed Effects ◽  
Banking Sector ◽  
Policy Implications ◽  
Business Strategies ◽  
Economic Downturn ◽  
Credit Crisis ◽  
Cooperative Banks

Abstract Background and Purpose: The aim of this paper is to empirically investigate the performance of different types of Italian banks before and during the recent credit crisis with an emphasis on the behaviour of cooperative banks. It is well established in theory that cooperative banks follow more conservative business strategies and care more for stakeholders in comparison to commercial banks. On this background, the paper tries to show the empirical effects of those characteristics on the cooperative bank’s performance during financial distress compared to commercial banks. In fact, the paper can prove that Italian cooperative banks were less exposed to the shocks of the crisis and showed a better performance. Methodology: In order to assess whether cooperative banks performed differently at all from commercial banks during the 2005-2012 period, return on average assets (ROAA), cost efficiency and loan quality have been investigated by means of a sample of 594 Italian banks, pooled OLS and (when possible) a fixed effects estimator. Results: Overall, Italian cooperative banks performed better than other Italian banks during the financial crisis. The quality of loans deteriorated less in these banks than in others, while no significant differences have been observed in terms of ROAA and cost efficiency between these and other banks. Conclusion: My paper provides empirical evidence for a well established theoretically derived hypothesis: Italian cooperative banks operate differently than standard commercial banks which is especially noticeable during times of crisis. The fact empirically demonstrated that different banking models have shown different reactions to the financial crisis and economic downturn has important policy implications. Due to both characteristics of cooperative banks and severe limitations in the financial policies by the Italian government during the credit crisis an ironical pattern has emerged: While Italian cooperative banks were less exposed to the shocks of the crisis, they would have been less able to adjust to them since the financial rescue program was designed primarily for commercial banks.

scholarly journals Asset securitization problems and prospects

2008 ◽  
Vol 5 (4) ◽  
pp. 403-412
Author(s):  
Arumugam Seetharaman ◽  
John Rudolph Raj ◽  
A.S. Saravanan
Keyword(s):  
Financial Crisis ◽  
Economic Crisis ◽  
Emerging Economies ◽  
Commercial Banks ◽  
Balance Sheet ◽  
Financial System ◽  
Asset Securitization ◽  
Contributory Factors ◽  
Functional Capabilities ◽  
Financing Mechanism

Applying off balance sheet financing mechanism is largely driven by its practicality, flexibility, and the most importantly it provides a platform for cheaper capital and solves many accounting related issues. Off balance sheet financing, particularly asset securitization, will continue to become the most dominant financing alternatives in view of its multi-functional capabilities in solving financing requirement and hedging needs. Asset securitization has been widely applied by the emerging economies in helping them during the economic crisis. Securitization has also been a lifesaver for banks in helping them recapitalizing during financial crisis. Securitization to a certain extent has contributed to the disintermediation of commercial banks being a major provider of capital. Despite the significant benefits and impacts, asset securitization has also its flaws or weaknesses. A flaw in structuring the deal could be one of the contributory factors of a failed deal. It could also attract excessive abuse, which consequently will be catastrophic to the financial system. Thus, proper control and regulation of off-balance sheet financing is inevitable

Impact of Financial Crisis on Credit Risk: Pre- and Post-financial Crises 
in an Emerging Economy

2020 ◽  
Vol 9 (2) ◽  
pp. 118-132
Author(s):  
Syed Moudud-Ul-Huq ◽  
Rabaka Akter ◽  
Tanmay Biswas
Keyword(s):  
Risk Management ◽  
Financial Crisis ◽  
Credit Risk ◽  
Commercial Banks ◽  
Global Financial Crisis ◽  
Banking System ◽  
Commercial Banking ◽  
Real Economy ◽  
Credit Risk Management ◽  
The Global Financial Crisis

This aim of the article is to establish a model to discuss the reasons for changing the level of credit risk among the commercial banks of Bangladesh during the global financial crisis (GFC). Credit risk has been remaining as the essential and core risk in commercial banking activities. Multiple regression analysis is used to test the relationship among the level of credit risk as a dependent variable and financial crisis, other bank-level variables and macroeconomic variables. The causes of the GFC revealed not only systematic or structural imbalances but also the necessity to keep and strengthen the principles of credit risk management. We analyse the leading causes of the recent GFC. Moreover, the lessons that must be learnt from the weaknesses of credit risk management systems. Credit risk was found to respond to macroeconomic conditions, which indicate strong feedback effects from the banking system to the real economy. This article represents the analysis of the influence of the financial crisis on credit risk management in commercial banks and summarizes the challenges faced by banks for credit risk improvement. We hope that this reality creates new opportunities for managing credit risk in the future to increase this importance in the banks and the overall economy of Bangladesh.

Philosophy of Financial Market

2012 ◽  
pp. 3-13
Author(s):  
V. Milovidov
Keyword(s):  
Financial Crisis ◽  
Financial Market ◽  
Financial Crises ◽  
Financial System ◽  
The State ◽  
Philosophical Approach

The existing financial theories fail to explain the causes of the contemporary financial crisis, in particular, of the 2008 crisis. The author claims that in order to understand what affects the current financial system we have, perhaps, to apply a philosophical approach. Such an approach seems to be supportive for comprehending the actual roles of the state and the market in this area. This will, at least partially, help to answer the question of why there are financial crises.

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