Russian financial policies may mitigate sanctions

2018 ◽  
Keyword(s):  
Sovereign Debt ◽  
Foreign Currency ◽  
Critical Role ◽  
Banking System ◽  
Financial Policies ◽  
Content Type ◽  
Reserve Requirements ◽  
The Face ◽  
Card System ◽  
Budget Execution

Significance Russian policymakers are capitalising on underlying strengths such as high reserves, low sovereign debt and oil exports as they shape measures to mitigate existing and potential new Western sanctions. The central bank has played a critical role in maintaining macroeconomic stability in the face of sanctions; recent actions include adjusting international reserves to reduce exposure to sanctions risks, liquidating US-based assets and building up gold reserves. Impacts Possible shortfalls in new bond issuances will not have a major impact on budget execution. Banking system 'de-dollarisation' will grow following July's higher reserve requirements for foreign-currency-denominated assets. The National Payment Card System, used for all domestic electronic payment instructions, will be integrated with systems in China and Iran.

Russian banks will need tight control and pruning

2016 ◽  
Keyword(s):  
Banking Sector ◽  
Foreign Currency ◽  
Banking System ◽  
Tight Control ◽  
Content Type ◽  
Perceptions Of Risk ◽  
Banking Sector Development ◽  
Foreign Loans ◽  
The Cost ◽  
Systemically Important Banks

Subject Measures to keep Russia's banking system sustainable. Significance In 2015, the majority of Russian banks recorded operating losses, with the exception of Sberbank. Banks had to repay foreign currency-denominated loans whose cost rose as the ruble fell in value. Access to further foreign loans was severely constrained by Western sanctions, the cost of domestic borrowing was high and consumers' real incomes declined. The Central Bank of Russia (CBR) continues to support the sector by offering refinancing facilities and capital support for systemically important banks while shutting down banks engaged in high-risk activity. Impacts Western sanctions continuing into 2017 will worsen investor perceptions of risk. CBR intervention will avoid a collapse in depositor confidence. Geopolitical isolation will limit banking sector development.

US rates may rise but economic risks are rising faster

2017 ◽  
Keyword(s):  
Interest Rates ◽  
Euro Area ◽  
Sovereign Debt ◽  
Emerging Market ◽  
Content Type ◽  
Political Risks ◽  
Bond Yield ◽  
Treasury Bond ◽  
The Face ◽  
Equity Index

Subject Global equity market trends. Significance The four main US stock market indices began March at record highs, including the benchmark S&P 500 index at 2,400. Driven by expectations of stimulative and pro-business policies under the new US administration, equity markets are flying in the face of signals from the Federal Reserve (Fed) that interest rates will rise three times this year. The probability of a hike at the Fed’s March 14-15 meeting has risen above 80% on growing price pressures and stronger economic data, buoyed by hawkish comments from several Fed governors, including those who were previously dovish. Impacts Despite the post-election US bond market sell-off, around one-third of the stock of euro-area sovereign debt remains negative yielding. The gap between the two-year US Treasury bond yield and its German equivalent has widened to a record, a sign of rising monetary divergence. The euro lost 2% against the dollar in February as political risks escalated in the euro-area, centred around the French election. The emerging market MSCI equity index is 8.6% up this year, after losing 4.5% from November 9 to end-2016, a sign of higher confidence.

The effects of eliminating Riba in foreign currency transactions by introducing global FinTech network

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mohammad Selim
Keyword(s):  
International Trade ◽  
Foreign Exchange ◽  
Foreign Currency ◽  
Banking System ◽  
Global Network ◽  
Content Type ◽  
Positive Effects ◽  
Cross Border ◽  
Financial Transactions ◽  
Number Of Customers

Purpose This paper aims to investigate the effects of eliminating Riba in foreign currency transactions. Riba or interest arises when foreign currencies are bought and sold at different rates. From the Islamic perspective, the difference between the buying and selling rates of foreign exchange will constitute Riba. Also, this paper examines the effects of eliminating such Riba on major macroeconomic variables. Design/methodology/approach This study is based on the hadith which imply that if buying and selling rates of currencies or foreign exchanges are same, i.e. if one sells BD1 = Dh10 and Dh10 = BD1 on spot, there will be no Riba. This can be guaranteed if the Islamic banking system introduces the technology, often known as FinTech interest-free foreign exchange bank machines (IFfexBM), which will automatically dispense BD10 for Dh100 and vice-versa, both locally and globally, and it will have tremendous positive effects in the economy. Furthermore, the effects of introducing FinTech for eliminating Riba will be analyzed on economic and international trade activities by using aggregate expenditure (AE) and aggregate output model within the tenets of Islamic principles. Findings If Islamic banks (IBs) can introduce FinTech global network system where any client can buy or sell foreign currency at the same rate without any markup, it will increase the market share for IBs by increasing the number of customers and number of branches, and it will increase the inflow of funds and volumes of transactions, especially in international trade, global financial transactions and cross-border shopping. Such an increase in transactions will increase AE and AE will continuously shift up. Such an upward shift will have positive effects on equilibrium output, employment and prosperity. Originality/value This is, perhaps, one of the latest attempts to eliminate Riba from foreign exchange transactions by introducing FinTech IFfexBM in each and every locality. Such elimination of Riba will not only reduce the cost of cross-border transactions but it will also reduce cost in international trade and financial transactions among nations, and therefore, it will have expansionary effects on equilibrium output, employment and global prosperity.

Egypt's social policies will depend on deeper change

2018 ◽  
Keyword(s):  
Social Protection ◽  
Foreign Currency ◽  
Cash Transfers ◽  
Living Standards ◽  
Social Policies ◽  
Content Type ◽  
The Face ◽  
Fixed Prices ◽  
The Government ◽  
Protein Rich

Subject Egypt's social protection programmes. Significance A sizeable proportion of the population has been hit by the November 2016 currency devaluation, intended to quell distortions in the foreign currency market, in which the Egyptian pound lost more than half of its value. Living standards were hit hard, both by the effects of the 50% devaluation and by successive hikes in fixed prices for subsidised fuel and electricity. Inflation averaged 30% during 2017 and has only come down marginally to about 18% on average in the first eight months of 2018. The government has expanded its social protection system in the face of these pressures. Impacts The demand for protein-rich food will increase as cash transfers boost income. The cash provision is likely to lead to more overcrowding in schools in poor areas. The government will seek a political dividend from new social programmes as it tries to bolster its legitimacy.

Why non-Muslims subscribe to Islamic banking?

2019 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Buerhan Saiti ◽  
Abubakar Aliyu Ardo ◽  
Ibrahim Guran Yumusak
Keyword(s):  
Banking System ◽  
Islamic Banking ◽  
Content Type ◽  
Scientific Methods ◽  
Customer Base ◽  
Slowing Down ◽  
Factors Influencing ◽  
The Face ◽  
Banking Institutions ◽  
Potential Benefits

Purpose Islamic finance has exhibited immense potential to transform the global financial landscape in the recent years. In reaction to the trend, Nigeria introduced Islamic banking system to cater to the need of the teeming population and promote financial inclusion, among other potential benefits. Unfortunately, the notable growth recorded by the banks since the inception of the Islamic banking system is slowing down because of religiously induced sentiments and criticisms championed by certain non-Muslim segments of the society. Interestingly, even with the impish hype and publicity, non-Muslims make a significant customer base of the Islamic banks. Therefore, the current paper aims to investigate the factors influencing the choice of Islamic banking among non-Muslim customers, using the theory of planned behaviour as a conceptual framework. Design/methodology/approach This research adopts a positivist approach and relies on facts and quantitative data in an objective manner. Positivism emphasizes on using scientific methods to derive factual and quantifiable results. Findings Based on the regression analysis, subjective norm was found to be the most significant factor influencing the choice of Islamic banking followed by perceived behavioural control and attitude. As a result, it is important for Islamic banking institutions and relevant regulatory agencies to take preemptive measures that may protect and enhance these factors in a bid to promote patronage and eventual success of Islamic banking in Nigeria, especially in the face of growing scepticism. Originality/value The existing literature focuses on the choices of either Muslims without due emphasis on the determinant of choice in the case of non-Muslim customers. The growing support of Islamic banking products, cutting across religious divides, compels research on the factors that influence the choice of Islamic banking among non-Muslim customers. Hence, this research seeks to bridge the gap in the existing literature by embarking on an investigation into the factors influencing the choice of Islamic banking among non-Muslim customers in the context of Nigeria.

Rating sovereign debt in a monetary union – original sin by transnational governance

2015 ◽  
Vol 16 (3) ◽  
pp. 253-283 ◽  
Author(s):  
Finn Marten Körner ◽  
Hans-Michael Trautwein
Keyword(s):  
Monetary Union ◽  
Public Debt ◽  
Sovereign Debt ◽  
Foreign Currency ◽  
Debt Crisis ◽  
Emerging Market ◽  
Original Sin ◽  
Risk Assessments ◽  
Content Type ◽  
Local Currency

Purpose – The purpose of this paper is to test the hypothesis that major credit rating agencies (CRAs) have been inconsistent in assessing the implications of monetary union membership for sovereign risks. It is frequently argued that CRAs have acted procyclically in their rating of sovereign debt in the European Monetary Union (EMU), underestimating sovereign risk in the early years and over-rating the lack of national monetary sovereignty since the onset of the Eurozone debt crisis. Yet, there is little direct evidence for this so far. While CRAs are quite explicit about their risk assessments concerning public debt that is denominated in foreign currency, the same cannot be said about their treatment of sovereign debt issued in the currency of a monetary union. Design/methodology/approach – While CRAs are quite explicit about their risk assessments concerning public debt that is denominated in foreign currency, the same cannot be said about their treatment of sovereign debt issued in the currency of a monetary union. This paper examines the major CRAs’ methodologies for rating sovereign debt and test their sovereign credit ratings for a monetary union bonus in good times and a malus, akin to the “original sin” problem of emerging market countries, in bad times. Findings – Using a newly compiled dataset of quarterly sovereign bond ratings from 1990 until 2012, the panel regression estimation results find strong evidence that EMU countries received a rating bonus on euro-denominated debt before the European debt crisis and a large penalty after 2010. Practical implications – The crisis has brought to light that EMU countries’ euro-denominated debt may not be considered as local currency debt from a rating perspective after all. Originality/value – In addition to quantifying the local currency bonus and malus, this paper shows the fundamental problem of rating sovereign debt of monetary union members and provide approaches to estimating it over time.

Fixing Azerbaijani bank may dent sovereign's image

2017 ◽  
Keyword(s):  
Economic Growth ◽  
Sovereign Debt ◽  
Banking Sector ◽  
Banking System ◽  
The State ◽  
Content Type ◽  
The Government

Significance If two-thirds of creditors agree to the scheme by a July 13 meeting, the government will exchange IBA debt for sovereign loans but it has made it clear it does not bear responsibility for the state-owned bank's liabilities. Impacts Banking sector instability has negative implications for confidence and economic growth. The potential increases in sovereign debt appear manageable. Reducing the size of IBA will bring more competition to the banking system.

Human and organizational responses to extreme threats: a comparative developmental approach

2020 ◽  
Vol 58 (10) ◽  
pp. 2077-2097
Author(s):  
Murad A. Mithani ◽  
Ipek Kocoglu
Keyword(s):  
Theoretical Model ◽  
Effective Means ◽  
Critical Role ◽  
Organizational Crisis ◽  
Organizational Responses ◽  
Developmental Approach ◽  
Content Type ◽  
The Face ◽  
Life Threatening ◽  
Underlying Mechanisms

PurposeThe proposed theoretical model offers a systematic approach to synthesize the fragmented research on organizational crisis, disasters and extreme events.Design/methodology/approachThis paper offers a theoretical model of organizational responses to extreme threats.FindingsThe paper explains that organizations choose between hypervigilance (freeze), exit (flight), growth (fight) and dormancy (fright) when faced with extreme threats. The authors explain how the choice between these responses are informed by the interplay between slack and routines.Research limitations/implicationsThe study’s theoretical model contributes by explaining the nature of organizational responses to extreme threats and how the two underlying mechanisms, slack and routines, determine heterogeneity between organizations.Practical implicationsThe authors advance four key managerial considerations: the need to distinguish between discrete and chronic threats, the critical role of hypervigilance in the face of extreme threats, the distinction between resources and routines during threat mitigation, and the recognition that organizational exit may sometimes be the most effective means for survival.Originality/valueThe novelty of this paper pertains to the authors’ use of the comparative developmental approach to incorporate insights from the study of individual responses to life-threatening events to explain organizational responses to extreme threats.

Greek fiscal crisis and measures to safeguard financial stability

2015 ◽  
Vol 23 (4) ◽  
pp. 415-430 ◽  
Author(s):  
Spyridon Repousis
Keyword(s):  
Financial Stability ◽  
Banking Sector ◽  
Debt Crisis ◽  
Banking System ◽  
Regulatory Framework ◽  
Fiscal Crisis ◽  
Stress Tests ◽  
Content Type ◽  
The Face ◽  
Of Greece

Purpose – The purpose of this paper is to present measures and policies followed during the Greek fiscal crisis to safeguard financial stability. Design/methodology/approach – Greece since 2009 was subjected to the Excessive Deficit Procedure and a government debt crisis due to the arrival of the global economic crisis leading to a major economic and banking crisis. Two huge bailout loans and programs helped Greece avoid default. However the second bailout loan and participation of banks in the Private Sector Involvement caused losses to the banking system that amounted to €37.7 billion. To deal with the prospect of potential bank failure Bank of Greece the central bank in cooperation with national and international authorities developed many strategies to safeguard financial stability such as cash management and liquidity operations establishment and operation of Greek Financial Stability Fund (GFSF) institutional framework for recapitalization and resolution of credit institutions. Findings – The first step was to support bank liquidity pressures. In the face of these pressures the Eurosystem’s monetary policy operations provided lending to euro that ended 2010 and accounted to €97.6 billion. The second step was to establish a legal and regulatory framework for bank resolution and assess funds needed to recapitalize banks through stress tests and diagnostic assessments. Results showed that during 2012–2014 the Greek banking sector would require approximately €40.5 billion for strengthening its capital base of which €27.5 billion corresponded to the four “core banks”. Bank of Greece and GFSF managed to complete a €48.2 billion bank recapitalization in June 2013 of which the first €24.4 billion was injected into the four biggest Greek banks. In return Bank of Greece received a number of shares in those banks which it can now sell again during the upcoming years. The third step of policies was to implement resolution and restructuring measures. From October 2011 to March 2014 12 banks resolved through the new legal and regulatory framework under either a transfer order (order to transfer assets and liabilities to a transferee credit institution) or establishment of a bridge bank. All policies succeeded to safeguard Greek financial stability and restore bank losses that resulted from Greek public debt “haircut”. Originality/value – To the best of the author’s knowledge this is the first paper examining this issue.

The determinants of currency derivatives usage among Indian non-financial firms

2017 ◽  
Vol 34 (3) ◽  
pp. 363-382 ◽  
Author(s):  
Praveen Bhagawan M. ◽  
Jijo Lukose P.J.
Keyword(s):  
Financial Distress ◽  
Foreign Currency ◽  
Annual Reports ◽  
Currency Risk ◽  
Probit Regression ◽  
Tobit Regression ◽  
Financial Policies ◽  
Content Type ◽  
Higher Derivative ◽  
Currency Derivatives

Purpose Theoretical studies suggest that hedging helps firms to reduce their financial distress costs and underinvestment problem especially if the markets are imperfect. Hence hedging, through the use of currency derivatives, is one of the important financial policies for firms. The purpose of this paper is to empirically examine the determinants of derivatives usage by Indian firms using financial disclosures on currency derivatives by non-financial constituents of S&P CNX 500 for 2009. Design/methodology/approach We manually collect the data on foreign currency derivatives from firms’ annual reports for 2009 and then follow Haushalter’s (2000) approach to examine the determinants of firms’ decision to hedge. A firm can make its hedging decision at once, deciding whether to hedge and how much to hedge. Given the nature of dependent variable that is censored, it is appropriate to use Tobit regression. A firm can also decide its hedging decision in two steps by deciding first on whether to hedge and later how much to hedge. The former is modelled by probit regression and later by conditional regression. Findings Our empirical evidence suggests that forwards are the main instruments for managing currency risk followed by options and swaps. The objectives, in the order of priority, are reduction in exposure associated with foreign currency receivables, foreign currency long-term loans and foreign currency payables. Firm’s decision to hedge is positively related to size, foreign exchange exposure and leverage, while negatively related to liquidity and investment opportunities. We find evidence of higher derivative usage by firms with both higher currency risk and higher financial distress costs. Practical implications The findings of this paper will help corporates, researchers and regulators to understand firms’ motives behind hedging. Originality/value This is the first empirical study that examines the determinants of firm’s decision to hedge and the extent of hedging in the context of emerging economies like India.

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