scholarly journals International Spillovers and Local Credit Cycles

2021 ◽  
Author(s):  
Julian di Giovanni ◽  
Şebnem Kalemli-Özcan ◽  
Mehmet Fatih Ulu ◽  
Yusuf Soner Baskaya
Keyword(s):  
Foreign Currency ◽  
Emerging Market ◽  
Interest Rate Parity ◽  
Balance Sheets ◽  
Borrowing Costs ◽  
Collateral Constraints ◽  
Credit Cycles ◽  
Domestic Credit ◽  
Bank Balance Sheets ◽  
Domestic Banks

Abstract This paper studies the transmission of the Global Financial Cycle (GFC) to domestic credit market conditions in a large emerging market, Turkey, over 2003–13. We use administrative data covering the universe of corporate credit transactions matched to bank balance sheets to document four facts: (1) an easing in global financial conditions leads to lower borrowing costs and an increase in local lending; (2) domestic banks more exposed to international capital markets transmit the GFC locally; (3) the fall in local currency borrowing costs is larger than foreign currency borrowing costs due to the comovement of the uncovered interest rate parity (UIP) premium with the GFC over time; (4) data on posted collateral for new loan issuances show that collateral constraints do not relax during the boom phase of the GFC.

Unconventional Monetary Policies - Recent Experiences and Prospects - Background Paper

Policy Papers ◽  
2013 ◽  
Vol 2013 (29) ◽  
Author(s):  
Keyword(s):  
Central Bank ◽  
Emerging Market ◽  
Spillover Effects ◽  
The United States ◽  
Background Information ◽  
Bond Yields ◽  
Monetary Policies ◽  
Balance Sheets ◽  
One Step ◽  
Bank Balance Sheets

This paper provides background information to the main Board paper, “The Role and Limits of Unconventional Monetary Policy.” This paper is divided in five distinct sections, each focused on a different topic covered in the main paper, though most relate to bond purchase programs. As a result, this paper centers on the experience of the United States Federal Reserve (Fed), the Bank of England (BOE) and the Bank of Japan (BOJ), mostly leaving the European Central Bank (ECB) aside given its focus on restoring the functioning of financial markets and intermediation. Section A explores whether bond purchase programs were effective at decreasing bond yields and, if so, through which channels. Section B goes one step further in evaluating whether bond purchase programs had—or can be expected to have—significant effects on real growth and inflation. Section C studies the spillover effects of bond purchases on both advanced and emerging market economies, using very similar methods as introduced in the first section. Section D breaks from the immediate focus on bond purchases to discuss how inflation might decrease the debt burden in advanced economies, in light of possible pressures that could fall (or be perceived to fall) on central banks. Finally, Section E discusses the possible risks of exiting given the very large central bank balance sheets.

scholarly journals Bank Balance Sheets and External Shocks in Asia

2021 ◽  
Vol 21 (10) ◽  
Author(s):  
Zefeng Chen ◽  
Sanaa Nadeem ◽  
Shanaka Peiris
Keyword(s):  
Exchange Rate ◽  
Banking Sector ◽  
Foreign Currency ◽  
Balance Sheets ◽  
Foreign Exchange Intervention ◽  
Net Worth ◽  
Asian Economies ◽  
The Exchange Rate ◽  
Bank Balance Sheets ◽  
Panel Vector Autoregression

In emerging Asia, banks constitute the dominant source of financing consumption and investment, and bank balance sheets comprise large gross FX assets and liabilities. This paper extends the DSGE model of Gertler and Karadi (2011) to incorporate these key features and estimates a panel vector autoregression on ten Asian economies to understand the role of the banking sector in transmitting spillovers from the global financial cycle to small open economies. It also evaluates the effectiveness of foreign exchange intervention (FXI) and other macroeconomic policies in responding to external financing shocks. External financial shocks affect net external liabilities of banks and the exchange rate, leading to changes in credit supply by banks and investment. For example, a capital outflow shock leads to a deprecation that reduces the net worth and intermediation capacity of banks exposed to foreign currency liabilities. In such cases, the exchange rate acts as shock amplifier and sterilized FXI, often deployed by Asian economies, can help cushion the economy. By contrast, with real shocks, the exchange rate serves as a shock absorber, and any FXI that weakens that function can be costly. We also explore the effectiveness of the monetary policy interest rate, macroprudential policies (MPMs) and capital flow management measures (CFMs).

scholarly journals International Monetary Frameworks

2021 ◽  
pp. 101-121
Author(s):  
Ulrich Bindseil ◽  
Alessio Fotia
Keyword(s):  
Exchange Rate ◽  
Central Bank ◽  
Foreign Currency ◽  
Balance Sheet ◽  
Lender Of Last Resort ◽  
Balance Sheets ◽  
Fixed Exchange Rate ◽  
International Monetary Arrangements ◽  
Recent Developments ◽  
Bank Balance Sheets

AbstractIn this chapter we turn to representing flows of funds in alternative international monetary frameworks, and what global liquidity these different frameworks provide. We first recall some arguments in favour of and against fixed exchange rate systems. We then introduce two international monetary arrangements of the past which imply fixed exchange rates, namely the gold standard and the Bretton Woods system, and recall why both eventually failed. We then turn to three international monetary frameworks in the context of the current paper standard, i.e. fixed exchange rate systems, flexible exchange rate systems, and the European monetary union. We explain the role of an international lender of last resort and related solutions, and how these allow for more leeway in running fixed exchange rate systems. We also show how banks and central bank balance sheets are affected by international flows of funds and the balance of payments. Finally, we briefly review recent developments of foreign currency reserves, being the key central bank balance sheet position in this context.

scholarly journals Exchange Rate Fluctuations and Firm Leverage

2020 ◽  
Vol 20 (283) ◽  
Author(s):  
Ilhyock Shim ◽  
Sebnem Kalemli-Ozcan ◽  
Xiaoxi Liu
Keyword(s):  
Exchange Rate ◽  
Foreign Currency ◽  
Emerging Market ◽  
Firm Level ◽  
Balance Sheets ◽  
Net Worth ◽  
Exchange Rate Fluctuations ◽  
Level Data ◽  
Firm Leverage ◽  
Foreign Currency Debt

We quantify the effect of exchange rate fluctuations on firm leverage. When home currency appreciates, firms who hold foreign currency debt and local currency assets observe higher net worth as appreciation lowers the value of their foreign currency debt. These firms can borrow more as a result and increase their leverage. When home currency depreciates, the reverse happens as firms have to de-lever with a negative shock to their balance sheets. Using firm-level data for leverage from 10 emerging market economies during the period from 2002 to 2015, we show that firms operating in countries whose non-financial sectors hold more of the debt in foreign currency, increase (decrease) their leverage relatively more after home currency appreciations (depreciations). Combining the leverage data with firm-level FX debt data for 4 emerging market countries, we further show that our results hold at the most granular level. Our quantitative results are asymmetric: the effects of depre-ciations, that are generally associated with sudden stops, are quantitatively larger than those of appreciations, which take place at a slower pace over time during capital inflow episodes. As our exercise compares depreciations and appreciations of similar size, these results are suggestive of financial frictions being more binding during depreciations than a possible relaxation of such frictions during appreciations.

Money Statistics of New England, 1785–1837

1984 ◽  
Vol 44 (2) ◽  
pp. 441-453 ◽  
Author(s):  
J. Van Fenstermaker ◽  
John E. Filer ◽  
Robert Stanley Herren
Keyword(s):  
New England ◽  
Commercial Bank ◽  
Capital Stock ◽  
Time Trend ◽  
Balance Sheets ◽  
City Population ◽  
Bank Balance Sheets ◽  
Missing Items ◽  
Authorized Capital ◽  
Bank Notes

This paper brings together the existing commercial bank balance sheets for New England for the period 1785–1837. Approximately 79 percent of all balance sheets issued have been found, and data from these are presented in aggregated form. Data compiled from available statements were then used to estimate the balance sheets of missing banks and the missing items on individual balance sheets. The variables used in estimating included authorized capital stock, a time trend, age of bank, city population, paid-in capital, deposits, loans and discounts, bank notes in circulation, and reserves. The actual and estimated balance sheets are then combined and presented.

scholarly journals Bank Consolidation, Efficiency, and Profitability in Italy

2017 ◽  
Vol 17 (175) ◽  
Author(s):  
Anke Weber
Keyword(s):  
Banking Sector ◽  
Banking System ◽  
Operational Efficiency ◽  
Policy Options ◽  
Efficiency Gains ◽  
Consolidation Process ◽  
Comprehensive Strategy ◽  
Balance Sheets ◽  
Cross Country ◽  
Bank Balance Sheets

This paper examines the case for efficiency-driven banking sector consolidation in Italy, evaluates its potential effects on profitability, and discusses policy options to facilitate a consolidation process that is as effective as possible. A bottom-up analysis of 386 Italian banks suggests that while profitability is expected to improve as the economy gradually recovers, operational efficiency gains are nonetheless needed to restore large parts of the banking system to healthy profitability. Banking system consolidation can play a role in facilitating such efficiency gains, but its effectiveness is likely to be most as part of a comprehensive strategy that includes complementary reforms to clean up bank balance sheets. Cross-country experience indicates that efficiency gains are more likely to follow consolidations where careful viability analyses are conducted of the synergies and operational improvements that can be achieved.

scholarly journals CORPORATE DEBT RESTRUCTURING IN SCHEDULED COMMERCIAL BANKS IN INDIA: AN ANALYSIS

2017 ◽  
Vol 5 (2) ◽  
pp. 92-112
Author(s):  
Gopal Prasad Agrawal ◽  
Anil Kumar Swain ◽  
Aswini Kumar Bhuyan
Keyword(s):  
Commercial Banks ◽  
Emerging Countries ◽  
Corporate Debt ◽  
Debt Restructuring ◽  
Balance Sheets ◽  
Review Mechanism ◽  
Bank Balance Sheets ◽  
Asian Pacific ◽  
Debt Recovery

need to see that the level of NPAs is kept down. In spite of many fold developments, adverse development of accumulation of NPAs to place over the period, several tools / methods of managing NPAs were tried such as Lok Adalats, Debt Recovery Tribunals, SARFAESI Act, Corporate Debt Restructuring and many more. Cleaning up of the Bank Balance Sheets is essential and urgent to boost growth in coming years, independent loan review mechanism and sale of unproductive assets are some of the ways to arrest the rising NPAs. Since the quality of advances in India particularly the corporate stressed advances are quite poor and huge in comparison to other Asian Pacific emerging countries, if the NPAs are not managed properly there is every chance that the capital and reserves of Banks shall not to able to meet the losses arising on account of write off of Bad Loans.

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