Evaluation of post-GFC policy response of New Zealand

2015 ◽  
Vol 23 (4) ◽  
pp. 403-414
Author(s):  
Syrus M. Islam ◽  
Noel Yahanpath
Keyword(s):  
New Zealand ◽  
Financial Crisis ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Study Data ◽  
Global Perspective ◽  
Policy Response ◽  
Content Type ◽  
Credit Cycle ◽  
The Government

Purpose – The paper aims to evaluate the role played by a recent banking and macro-prudential regime in addressing the financial crisis in New Zealand (NZ). Design/methodology/approach – The basic methodology used in this paper is the “documentary research method”. For this study data have been collected from various published sources. Findings – We find that the NZ government is one of the first few countries to implement Basel III to ensure the robustness of its banking sector while calibrating it to the unique needs of the economy and is in the process of phasing in several macro-prudential instruments (e.g. countercyclical capital buffer ore funding ratio sectoral capital requirement and loan-to-value ratio) to smooth the credit cycle of the economy. However implementing different requirements of a new policy has some challenges. Research limitations/implications – Further research may be carried out to investigate the policy responses of the government from corporate governance and other regulatory perspectives. Practical implications – This study identifies the effectiveness as well as some challenges faced when implementing different requirements of the new policy that may facilitate the policy makers to take appropriate action as required. Originality/value – This study provides a unique insight into the post-GFC scenario with regard to the government policy response in the banking sector and macro-prudential system that may provide the world with a financial-system warrant of fitness. It is one of the very few studies that showcase a global perspective and to our knowledge it is the first of its kind in NZ in the post-global financial crisis period.

Evaluation of post-GFC policy response of New Zealand: non-banking perspective

2014 ◽  
Vol 22 (4) ◽  
pp. 328-338
Author(s):  
Noel Yahanpath ◽  
Mahbubul Islam
Keyword(s):  
New Zealand ◽  
Financial Crisis ◽  
Financial Stability ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Study Data ◽  
Policy Response ◽  
Total System ◽  
Content Type ◽  
Policy Responses

Purpose – The purpose of this study is to explore whether the present measures being taken by the New Zealand (NZ) government are strengthening its non-banking sector effectively to address the recent financial crisis and ensure better financial stability to the economy. Design/methodology/approach – The basic methodology used in this paper is the “documentary research method”. For this study, data has been collected from various published sources; e.g. The Bulletin, the Financial Stability Report and other publications of the Reserve Bank of NZ, publications by Statistics NZ and a number of NZ government Ministries, and some newspapers and magazines, etc. Findings – We find that the NZ government is revamping the non-banking sector by introducing a prudential regime. However, we also find some gaps in the existing regulatory systems that need to be addressed to ensure soundness in the total system. Research limitations/implications – The basic limitation of documentary research will be applicable to this study. Further research may be carried out to investigate the policy responses of government from banking, corporate governance and other regulatory perspectives. Practical implications – Our study identifies some gaps in current policy responses along with some suggestions for the future that may be taken into consideration by the respective policy-makers to further strengthen the support provided by policy responses to financial crises. Originality/value – Our study provides a unique insight into the evaluation of post-GFC policy response and its effectiveness with regard to non-banking sector and, to our knowledge, the first of its kind in NZ in the post-global financial crisis period.

Shadow prices of non-performing loans and the global financial crisis

2019 ◽  
Vol 20 (5) ◽  
pp. 411-434
Author(s):  
Ameni Tarchouna ◽  
Bilel Jarraya ◽  
Abdelfettah Bouri
Keyword(s):  
Financial Crisis ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Shadow Price ◽  
Market Price ◽  
Shadow Prices ◽  
Content Type ◽  
Managerial Implications ◽  
Bad Loans ◽  
The Global Financial Crisis

Purpose This paper aims to determine the opportunity cost borne by US commercial banks to reduce non-performing loans (NPLs) by one unit within the global financial crisis framework. Design/methodology/approach To achieve this aim, the authors use the directional output distance function to estimate the technical efficiency while considering NPLs as undesirable output. Then, they estimate the shadow prices of NPLs by using the envelope theorem and solving the revenue function. Findings The results indicate that medium-sized banks are the most efficient, while small banks are the most inefficient ones. Moreover, the shadow prices of NPLs of large banks are higher than those of small and medium-sized banks. This implies a more elevated cost when lessening bad loans in large banks. This is more prominent during the crisis given that the shadow prices of NPLs of large banks have risen sharply over that period. Practical implications Shadow prices have important managerial implications given that they display the amounts of required reduced revenues to lessen NPLs. Accordingly, banks’ managers are called to reduce these loans by paying more attention when choosing their customers. Originality/value With the absence of an observable market price for bad loans in financial literature, the shadow price notion offers an adequate measure to evaluate them. To the best of authors’ knowledge, this is the first study that provides an estimation of the shadow price of NPLs in the US banking sector.

Departure of New Zealand’s Key may open 2017 election

2016 ◽  
Keyword(s):  
New Zealand ◽  
Financial Crisis ◽  
Interest Rates ◽  
Prime Minister ◽  
Global Financial Crisis ◽  
Content Type ◽  
Minority Government ◽  
The Pacific ◽  
President Elect ◽  
National Coalition

Significance The unexpected departure of a popular prime minister opens up more space for opposition parties in the next election due by early November 2017. On Key’s watch, New Zealand weathered the 2007-09 global financial crisis, rebuilt from the 2011 Christchurch earthquake, strengthened public finances and kicked off negotiations for the now moribund Trans-Pacific Partnership (TPP) trade deal to tie its export-driven economy to growing markets on the Pacific Rim. Impacts A re-elected National coalition or minority government reliant on New Zealand First would lead to greater policy instability. The next prime minister could inherit the problem of rising interest rates hitting leveraged homeowners. US President-elect Donald Trump’s positions on security, trade and climate policy could see Wellington focus more on ties with Asia.

Determinants of corporate social responsibility disclosures of UAE national banks: a multi-perspective approach

2019 ◽  
Vol 16 (5) ◽  
pp. 631-654
Author(s):  
Elie Menassa ◽  
Nancy Dagher
Keyword(s):  
Financial Crisis ◽  
Financial Performance ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Arab World ◽  
Annual Reports ◽  
Content Type ◽  
Explanatory Factors ◽  
The World ◽  
Corporate Social

PurposeThis paper aims to examine the determinants and extent of corporate social disclosure (CSD) by UAE national banks and to investigate the changes in CSD before, during and after the latest financial crisis.Design/methodology/approachDeductive in nature, this paper uses content analysis of annual reports of 16 UAE banks over a period of six years (2006-2011) to test eight hypotheses related to size, financial performance and other variables as potential explanatory variables of the CSD extent over different periods.FindingsThe findings show that human resources and community disclosures exhibited the highest extent of CSD over the six years. Moreover, the size and financial performance variables appear to be significant explanatory factors for the extent of CSD. The findings also indicate a strong variation in disclosure between banks with international presence and those with no such presence, while there is no significant disclosure variation between Islamic and conventional banks or during the different periods under investigation (pre, during and post recent financial crisis).Research limitations/implicationsStudies allowing a greater understanding of how banks with extensive governmental ownership define and disclose CSR in this particular region of the world are scarce and exploratory in nature. Consequently, the structure of national UAE banks provides a unique opportunity to understand the CSR mechanisms and disclosure of similar institutions in the world (particularly in the Arab world). This presents an interesting direction for further research.Practical implicationsThese findings could assist UAE bankers and policymakers in integrating CSD in their corporate strategies and help the local and international business communities in understanding the characteristics of CSD in the UAE.Originality/valueComprehensive in scope, this paper provides a complete assessment of the potential explanatory proxies of CSD by UAE local banks before, during and after the recent global financial crisis. Comparable studies of the UAE banking sector have mainly focused on particular bank types (i.e. Islamic or conventional) and did not consider the effect of the recent adverse financial climate.

Global Financial Crisis: Exploring the Special Role of U.S. Banks and Regulations

2016 ◽  
Vol 4 (1) ◽  
Author(s):  
Nabila Nisha
Keyword(s):  
Financial Crisis ◽  
Financial Markets ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Special Role ◽  
Subprime Lending ◽  
International Banking ◽  
The Government ◽  
The Global Financial Crisis

Financial markets have suffered the greatest dislocation following the truly seismic significance of the global financial crisis. Regulators argue that the banking sector played a particularly special role in triggering the causes of the subprime debacle, thereby leading to the occurrence of the global financial crisis. Banks previously functioned as only a financial intermediary, but certain developments in the international banking sector like deregulation, technological progress, consolidation and competition, securitisation and financial innovation, resulted in banks being involved in subprime lending activities and hence, a reason behind the financial turmoil. The aim of this paper is to scrutinise the special role of banks in the global financial crisis and to stress on the need for increased regulation and their implications on the banking sector. The current study will thus contribute to the examination of the salient features of the global financial crisis and provide regulatory suggestions for the banking sector and the government as a whole.

Effect of the global financial crisis on the financial performance of public listed construction companies in Malaysia

2014 ◽  
Vol 19 (3) ◽  
pp. 246-263 ◽  
Author(s):  
Hui Ying Lai ◽  
Abdul Rashid Abdul Aziz ◽  
Toong Khuan Chan
Keyword(s):  
Financial Crisis ◽  
Financial Performance ◽  
Financial Management ◽  
Capital Investment ◽  
Global Financial Crisis ◽  
Financial Analysis ◽  
Content Type ◽  
Construction Companies ◽  
The Government ◽  
The Impact

Purpose – The aim of this case study is to characterize the impact of the 2008 global financial crisis on the financial performance of public listed construction companies. Design/methodology/approach – Financial analysis was conducted on 32 public listed construction companies in Malaysia. Twelve financial ratios were examined to determine the profitability, liquidity, activity, leverage and solvency of these companies over the period between 2005 and 2010. This was complemented by a distress analysis using Altman’s Z-index. The study also used a content analysis of the Chairman’s or Managing Director’s statement to shareholders to uncover the responses and strategic initiatives undertaken by the management in response to the financial crisis. Findings – The only direct impact of the financial crisis was a reduction in profitability. Total revenues and total assets of these companies continue to grow due to increased demand for construction from year 2007 following two large capital investment programs initiated by the Malaysian Government to mitigate the potential effects of the financial crisis. Net profits rebounded back to 5 per cent by year 2010. These companies immediately responded to the crisis with more prudent financial management; curtailing expenses, cutting dividends, reducing bank borrowings, increasing equity; and to the extent of disposing of assets to mitigate losses. Research limitations/implications – The sample of only 32 public listed companies out of a total of more than 60,000 construction companies may be considered small, but these 32 companies represent nearly 20 per cent of the total construction volume for 2010. Practical implications – The study documents the effects of increased capital spending by the government to mitigate the loss of investor confidence followed by a slowdown in economic growth during a period of global financial distress. Key findings will inform on prudent financial management to withstand future financial crises. Originality/value – The responses and strategies adopted by the management to mitigate the effects and to enhance future performance of these companies have been uncovered. These are important considerations in managing construction companies; the analysis and observations will be invaluable to researchers intending to study how the construction industry responds to a future slump in demand.

Comparing the competition of Malaysia Islamic and conventional banks

2017 ◽  
Vol 8 (1) ◽  
pp. 23-40 ◽  
Author(s):  
Muhamad Azhari Wahid
Keyword(s):  
Financial Crisis ◽  
Banking Sector ◽  
Robust Regression ◽  
Global Financial Crisis ◽  
Positive Impact ◽  
Ordinary Least Squares ◽  
Islamic Banks ◽  
Content Type ◽  
Conventional Banks ◽  
The Impact

Purpose This study aims to analyse three main questions within the Malaysian banking system: Are Islamic banks more competitive than conventional banks? What are the levels of competition for Islamic and conventional banking sectors pre, during and post the 2007-2009 global financial crisis? Does penetration of Islamic banks affect the competitive structure of conventional banks? Design/methodology/approach In measuring a bank competition, the author estimates the Panzar–Rosse H-statistic (PRH) method on 17 Islamic and 21 conventional banks in Malaysia over the period of 2004-2013. This is then followed by ordinary least squares (OLS) robust regression analysis to control Islamic banks’ penetration, bank-specific and macroeconomic factors. Findings Results from the PRH method (total revenue) suggest that Malaysian Islamic banks are relatively more competitive than their conventional counterparts. Furthermore, the author observes that the level of competition for both Malaysian Islamic and conventional banks increased tremendously during the 2007-2009 global financial crisis. This suggests the impact of the crisis on the level of competition for both banking systems. Finally, the OLS robust regression suggests that Islamic banks’ penetration has a significantly positive impact on the level of competition for conventional banks. The PRH estimation using total interest income indicates similar results, suggesting the robustness of these results. Practical implications This study reveals whether Islamic banks’ penetration is able to increase the level of competition within the conventional banking sector. Knowledge on this is important to the policymaker. Originality/value To the best of the author’s knowledge, this is the first study using the PRH method in comparing the level of competition for Malaysian Islamic and conventional banks. Furthermore, this is the first study analysing the impact of Malaysian Islamic banks’ penetration on the level of competition for conventional banks.

scholarly journals The mechanisms linking the finance-growth relationship in view of the financial crisis: an empirical investigation of the EU countries

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Dimitrios Asteriou ◽  
Konstantinos Spanos
Keyword(s):  
Economic Growth ◽  
Financial Crisis ◽  
Stock Market ◽  
Financial Development ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Equity Market ◽  
Private Debt ◽  
Content Type ◽  
The Global Financial Crisis

PurposeThe paper aims to explore the mechanisms linking the impact of financial development on economic growth and focuses on the long-term post-global financial crisis.Design/methodology/approachThe study employs panel data for twenty-five European Union countries over the period 1995–2017. Principal Component Analysis is employed to produce two aggregate indices, namely financial banking sector development and stock market sector development. The empirical analysis is based on estimates through the autoregressive distributed lag (ARDL) method.FindingsThe results suggest that the outbreak of the crisis has led to a disruption of the positive finance-growth relationship, and the banking sector dominates in this adverse effect. The foreknowledge of the current study is that the linking mechanisms of the negative impact of financial development on economic growth, ten years after the global financial crisis, are household debt, private debt, and non-performing loans for the banking sector, while for the equity market this is the case through savings. Interestingly, the results reveal that unemployment increase excessively the borrowers' debt level and then the non-performing loans.Research limitations/implicationsAn implication is that the increase of credit supply and any monetary expansion along with lack of regulatory control and monitoring can lead banks to a higher risk exposure through household and private debt as well as non-performing loans. Besides, the higher levels of unemployment rates call attention for the trade-off between prudential regulation on the supply of loans and economic activity, since higher unemployment affect the non-performing loans and, as a consequence discourage the demand, increase precautionary savings, and cancel or postpone investment decisions, thus, affecting the equity market.Originality/valueThe paper provides useful insights to economists and policymakers who are interested in understanding the weakness of banking and stock market sectors to promote economic growth for a long time after the global financial crisis.

scholarly journals THE ROLE OF INTEGRATED ISLAMIC COMMERCIAL AND SOCIAL FINANCE FOR CURBING CREDIT CYCLES AND ACHIEVING MACROPRUDENTIAL OBJECTIVE

2018 ◽  
Vol 3 (2) ◽  
pp. 139-180
Author(s):  
Arif Widodo
Keyword(s):  
Financial Crisis ◽  
Financial Stability ◽  
Risk Sharing ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Markov Switching ◽  
Banking System ◽  
Islamic Finance ◽  
Credit Cycles ◽  
Credit Cycle

It is widely believed that Islamic finance is inherently stable since the principle of risk-sharing and linking the financial to real counterpart in particular through its social finance are applied, hence the financial stability may successfully be attained. If mimicking the conventional finance, Islamic model will probably be facing instability, following the financial cycle. There has been a growing literature discussing credit cycle in mainstream perspective since 2008 global financial crash. However, it is quite rare to find study, in macro context, on credit cycles and the effectiveness of integrated Islamic commercial and social finance in achieving macroprudential objective: curtailing excessive credit. This study is designed to empirically examine the characteristics of cycles stemming from conventional and Islamic credit whether both have similar trend and also to investigate how the integrated Islamic commercial and social finance may be effective to hamper such cycles. By employing Hodrick-Presscot Filter, Markov Switching and Vector Error Correction Model, this study demonstrates that, in terms of cycle, Islamic model cycle has certain similarities with conventional counterpart since it functions under similar financial environment despite the fact that Islamic has less amplitude compared with conventional credit. Both credit and financing cycles tend to grow rapidly (excessive) several months before global financial crisis happened in 2008. This means that, in a dual banking system, credit and financing boom may precede financial crisis. Moreover, it is apparent also that the integrated Islamic finance is proven to be effective in curbing credit growth due to the effectiveness of both macroprudential instrument applied in banking sector and social finance in safeguarding financial stability. Keywords:  Credit cycle, Macroprudential policy, Markov Switching, HP filter JEL Classification: E32, E51, G29

Regulatory change in Australia and New Zealand following the global financial crisis

2015 ◽  
Vol 7 (1) ◽  
pp. 8-28 ◽  
Author(s):  
Christine Ann Brown ◽  
Kevin Davis ◽  
David Mayes
Keyword(s):  
New Zealand ◽  
Financial Crisis ◽  
Financial Regulation ◽  
Global Financial Crisis ◽  
Regulatory Change ◽  
Content Type ◽  
Regulatory Changes ◽  
Global Standards ◽  
The Global Financial Crisis ◽  
Practical Implications

Purpose – The purpose of this study is to explain rationale for regulatory change in Australia and New Zealand after the global financial crisis. Design/methodology/approach – Outline regulatory changes and relate to crisis experience and regulatory shortcomings exposed. Findings – Regulatory change was driven primarily by need, as capital importing nations, to comply with emerging global standards, and the different approaches in both nations are also related to domestic political considerations. Research limitations/implications – The process of regulatory change in response to the crisis is ongoing. Practical implications – A number of areas for further improvement in financial regulation are identified. Social implications – Costs of poor regulation and financial crises are identified. Originality/value – A comparison of regulatory approaches in two countries dominated by the same four large banks helps understand the challenges of cross-border financial regulation cooperation.

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