scholarly journals Financial stability and liquidity risks in the banking sector across the CEMAC region

2021 ◽  
Vol 9 (1) ◽  
pp. 343-354
Author(s):  
Henri Kouam
Keyword(s):  
Commercial Banks ◽  
Financial Stability ◽  
Banking Sector ◽  
Central Government ◽  
Financial Sector ◽  
Real Economy ◽  
Capital Assets ◽  
Long Run ◽  
Domestic Credit ◽  
The Impact

How does credit from the financial sector and claims on the central government affect banking sector liquidity and financial stability risks? This paper constructs an algorithm, which investigates the impact of domestic credit from the financial sector, bank to capital assets ratio, claims on the central government on banking sector liquidity – a proxy for financial stability. The results show a positive and statistically significant impact of the capital assets ratio on the bank's liquidity of 3.1%. It equally finds that domestic credit and claims on central government hurt bank liquidity, notably of -0.15% and -2.5%, respectively. The study recommends that commercial banks invest in higher-value domestic projects to improve their profitability over the long-run, thereby boosting financial stability. Furthermore, the central bank should make additional liquidity for banks contingent on the amount of credit they provide to the real economy.

scholarly journals IFRS 9 Transition Effect on Financial Stability of Kosovo Commercial Banks

2021 ◽  
Vol 5 (1) ◽  
pp. 1-10
Author(s):  
Besmir ÇOLLAKU ◽  
Skender AHMETI ◽  
Muhamet ALIU
Keyword(s):  
Commercial Banks ◽  
Financial Stability ◽  
Statistical Technique ◽  
Loan Portfolio ◽  
Transition Effect ◽  
Long Run ◽  
Before And After ◽  
Ifrs 9 ◽  
Capital Regulations ◽  
The Impact

From January 1, 2018, most of the commercial banks in Kosovo adopted IFRS 9. The new standard introduces the expected credit loss model to allow for timely recognition of credit losses, estimated not only on the actual credit loss but also on forward-looking information regarding the current loan portfolio. Although, transition phases may lead to increasing impairments and a decrease in banks’ equity, which directly influences the financial stability of banks. This paper examines the day-one transition effect of IFRS 9 on the level of assets balance, allowance for loan losses, and capital regulatory class II of banks in Kosovo. To test our hypothesis, we have performed a comparative analysis for the six biggest commercial banks in Kosovo to identify correlation and causality between studied variables. As a statistical technique, we have employed a “paired sample t-test” where we compare financial indicators before and after adopting IFRS 9 to examine the impact on financial stability for commercial banks in Kosovo. Our results are in line with the results of recent studies in the IFRS 9 field and conclude that the transition phase has a significant influence on the recognition of additional loan impairment but assets and capital regulations are not affected significantly. Results demonstrate the transition to IFRS 9 causes instability and re-consolidation of capital, but in the long-run reduce the possibility for large and sudden losses. Commercial banks in Kosovo should follow a balanced growth approach without compromising the quality of the loan portfolio.

scholarly journals Does the target market affect bank performance? Evidence from the geographic diversification of city commercial banks in China

2021 ◽  
Vol 15 (1) ◽  
Author(s):  
Xiaonan Li ◽  
Chang Song
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Capital Adequacy ◽  
Bank Performance ◽  
Chinese Government ◽  
Target Market ◽  
Geographic Diversification ◽  
Cross Sectional ◽  
The Impact ◽  
Geographical Diversification

AbstractAfter the opening up of the banking sector to domestic and foreign capitals which is approved by the Chinese government, the China Banking Regulatory Commission (CBRC) has permitted city commercial banks to diversify geographically. Since this deregulation in 2006, city commercial banks began to geographically diversify to occupy the market and acquire more financial resources. To examine the causal relationship between geographical diversification and bank performance, we construct an exogenous geographical diversification instrument using the gravity-deregulation model and a policy shock. We find that bank geographical diversification negatively affects bank performance. Moreover, we conduct some mechanism tests in the Chinese context. We find that the target market with several large- and medium-sized banks and a high level of local protectionism in the target market decreases the performance of city commercial banks. Finally, cross-sectional analyses show that the impact of geographical diversification on banks’ performance is more notable among city commercial banks that are younger, and have a lower capital adequacy ratio and a higher non-performing loan ratio.

Modelling the UK Banking Sector

2010 ◽  
Vol 214 ◽  
pp. F67-F72
Author(s):  
Ray Barrell ◽  
Simon Kirby ◽  
E. Philip Davis
Keyword(s):  
Banking Sector ◽  
National Income ◽  
Financial System ◽  
Financial Sector ◽  
Equation Model ◽  
Dsge Models ◽  
Real Economy ◽  
Equilibrium Models ◽  
Return To Equilibrium ◽  
Dynamic Stochastic

The financial crisis that emerged during 2007 and overwhelmed the financial system in late 2008 also brought to the fore some of the obvious failings of the style of modelling that had been fashionable in central banks in the previous decade. The shift to Dynamic Stochastic General Equilibrium models (DSGE) of whatever sort left no real scope for money and financial markets to have an impact on the real economy. This was in part because equilibrium models based on theory are unlikely to be designed to cope with a period of disequilibrium, which is when the financial system becomes important in macroeconomics. DSGE models come in various guises, and it was common to operate with a three-equation model with demand, supply and the interest rate as the equations. It is hard to see how the financial sector could fit into this, or what use it would be even if it were included. Larger DSGE models that respect the national income identity are easier to augment with a financial sector; but even that developed by the US Federal Reserve (see Edge, Kiley and Laforte, 2010) tends to return to equilibrium rather more rapidly than seems reasonable.

Central bank digital currency: the future of institutional changes in the banking sector

2021 ◽  
Vol 2021 (2) ◽  
pp. 26-48
Author(s):  
Volodymyr MISHCHENKO ◽  
◽  
Svitlana NAUMENKOVA ◽  
Svitlana MISHCHENKO ◽  
◽  
...  
Keyword(s):  
Central Bank ◽  
Financial Stability ◽  
Banking Sector ◽  
Central Banks ◽  
Credit System ◽  
Bank Supervision ◽  
Bank Of China ◽  
Digital Currency ◽  
Financial Monitoring ◽  
The Impact

The purpose of the article is to reveal the essence and features of the introduction of digital currency of central banks and their impact on the conditions of monetary policy, financial stability, as well as institutional transformations in the development of national banking systems. The study is based on an analysis of projects of issuance and use of digital currencies of the ECB and central banks of leading countries, as well as the results of pilot projects of the National Bank of China on the use of the digital yuan and NBU on the e-hryvnia circulation. It is proved that digital currency of the central bank should be considered as a new dematerialized form of national currency in addition to cash and non-cash forms. Particular attention is paid to the study of the impact of the use of digital currency by central banks on the main parameters of economic policy. The main directions of potential influence of digital currency use on transformation of mechanisms of realization of monetary, budgetary and tax, macroprudential policy, maintenance of financial stability, activization of action of channels of the monetary transmission mechanism, and also on reforming of system of the state financial monitoring and bank supervision are substantiated. It is determined that one of the consequences of the use of digital currency will be the ability to ensure full control over all monetary transactions, which will help reduce the shadow economy and corruption. Structural and logical schemes of centralized and decentralized models of issuance and circulation of digital currency of central bank have been developed, directions of changes in the structure and functions of commercial and central banks, as well as in the structure of the financial and credit system in general have been substantiated.

أثر التكنولوجيا المالية على القطاع المصرفي في العراق (فرصة ام تهديد؟)

2021 ◽  
Vol 2021 (71) ◽  
pp. 183-199
Author(s):  
شهد ماجد عبد ◽  
أ.م.د عبدالرسول علي حسين
Keyword(s):  
Banking Sector ◽  
Financial Sector ◽  
The World ◽  
The Impact ◽  
Financial Technology

This research talks about the financial technology that has recently begun to appear in the financial sector around the world, and which promises that it will either be the most important competitor to this sector, or the best available way for it to develop. This research talks about the impact of that technology on the Iraqi banking sector in terms of being an opportunity or a threat to it. The problem that this research addresses is: Is the adoption of financial technology, despite its risks, by the Iraqi banking sector will benefit it? Or will those risks be predominant in the end? It stems from the premise that financial technology is one of the most important opportunities available to the Iraqi banking sector. The research reached several conclusions, the most important of which is that financial technology is indeed an opportunity that is not a threat to the Iraqi banking sector (at least for now), but rather it is one of the most important opportunities available to it, so it must follow an offensive remedial strategy by the banking sector using its strengths that Including high levels of security and confidence, which creates the appropriate environment to exploit its opportunities.

The impact of credit risk on the financial stability of commercial banks in Vietnam

2021 ◽  
Vol 11 (2) ◽  
pp. 67-80
Author(s):  
Nguyen Quoc Anh ◽  
Duong Nguyen Thanh Phuong
Keyword(s):  
Credit Risk ◽  
Commercial Banks ◽  
Financial Stability ◽  
Dynamic Panel Data ◽  
Z Score ◽  
Return On Equity ◽  
Score Analysis ◽  
Negative Effect ◽  
The Difference ◽  
The Impact

This study investigates the impact of credit risk on the financial stability of Vietnamese commercial banks. The paper uses the Z-score to proxy the financial stability of banks. We use the data of 27 Vietnamese commercial banks on BankScope, during 2010 - 2019. The paper applied a dynamic panel data approach; the selected method is the difference GMM (DGMM). The key question discussed is which factor impacts on Z-score. Analysis results show the negative effect of non-performing loans on the financial stability of banks. When commercial banks have higher non-performing loans, the lower the financial stability is. Additionally, bank-specific variables such as equity on asset ratio, the return on equity, the size of the bank and set of macroeconomic variables affect the bank’s financial stability. Based on the analysis results, we imply relevant policies for the State Bank of Vietnam and commercial banks.

scholarly journals Examining banking productivity drivers in MENA banks after financial liberalisation in 1990s

2019 ◽  
Vol 8 (1) ◽  
pp. 59-74
Author(s):  
Hatem Elfeituri
Keyword(s):  
Commercial Banks ◽  
Technological Progress ◽  
Banking Sector ◽  
State Ownership ◽  
Scale Efficiency ◽  
Efficiency Change ◽  
Mena Countries ◽  
Financial Liberalisation ◽  
The Impact ◽  
Banking Productivity

The paper investigates whether deregulation and economic reforms have transformed the MENA banking sector into a more productive and efficient sector. This is the first study to cover a large sample of 11 MENA countries for an extended and recent period (1999-2012). Initially, this paper estimates the productivity and efficiency of MENA commercial banks using Malmquist DEA to estimate productivity (TFP), technological and technical efficiency, and scale efficiency change in order to investigate to what extent banking productivity in MENA economies has improved during the study period. Then, Tobit model is employed to examine the impact of bank and macroeconomic variables on the total factor productivity of MENA commercial banks. The obtained MPI results suggest that commercial banks operating in the Gulf countries have exhibited productivity progress mostly due to the technological progress rather than efficiency change. Results also suggest that expenses preference behaviour would help banks to enhance their productivity in the examined period and MENA countries. Whilst banking productivity is improved by financial reforms and technological progress, such findings overall do not indicate that foreign participation or state ownership lead to enhance productivity of banks, whilst suggesting that a number of sound policies should be implemented taking into account the characteristics of banking sector in MENA countries.

scholarly journals EVALUATION OF FUNCTIONAL PERFORMANCE OF THE BANKING SYSTEM OF UKRAINE IN CONDITIONS FINANCIAL INSTABILITY

2021 ◽  
Author(s):  
Nataliia Danik ◽  
Kateryna Novak ◽  
Anastasiia Yakovenko
Keyword(s):  
Economic Crisis ◽  
Financial Stability ◽  
Structural Changes ◽  
Banking Sector ◽  
Synergistic Effects ◽  
Banking System ◽  
Scientific Article ◽  
Financial Instability ◽  
Industrial Complex ◽  
The Impact

The article covers the problems of the functioning of the banking sector of Ukraine during 2018-2021, as one of the main sectors of the financial market and the national economy as a whole. When analyzing the state of the banking sector, regularities and general trends in the functioning of the banking sector of Ukraine have been established, and appropriate calculations have been made. The impact of global financial crises on the activities of banking structures, which must operate in conditions of constant financial instability, is described. Today, the whole world, including Ukraine, is on the verge of a global financial and economic crisis. This raises the question of whether Ukrainian banks have the necessary margin of resilience to vulnerabilities to the financial and economic crisis. In recent years, the functioning and development of the banking system has been characterized by increased financial stability, the level of bank capitalization, liquidity, some improvement in asset quality, reducing risks in banking, as well as the presence of positive structural changes. Today, Ukraine's banking system operates in a complex socio-economic and legal environment, most of which - macroeconomic instability, irrational structure of the industrial complex, the crisis of science and technology, imperfect fiscal and monetary policy, low level of effective demand - complicate sustainable development banking sector and increase competitiveness. In conditions of instability, intensification of turbulent processes, the development of the banking system requires new innovative approaches to determining the mechanisms of effective functioning and stable development based on a system-synergetic approach, which led to the choice and relevance of the chosen topic of this scientific article. Efficiency of banks is a multicomponent, multifaceted, multidimensional system characteristic that depends on many factors and is an effective indicator of performance of functions and achievement of goals and objectives of banks development provided financial stability based on financial stability and dynamic balance, achievement of multiplicative and synergistic effects.

scholarly journals Fiscal-Monetary-Financial Stability Interactions in a Data-Rich Environment

2018 ◽  
Vol 18 (3) ◽  
pp. 195-224 ◽  
Author(s):  
Martin Hodula ◽  
Lukáš Pfeifer
Keyword(s):  
Monetary Policy ◽  
Systemic Risk ◽  
Financial Stability ◽  
House Prices ◽  
Empirical Support ◽  
Financial Sector ◽  
Economic Policies ◽  
Real Economy ◽  
Monetary Policies ◽  
Fiscal And Monetary Policy

Abstract In this paper, we shed some light on the mutual interplay of economic policy and the financial stability objective. We contribute to the intense discussion regarding the influence of fiscal and monetary policy measures on the real economy and the financial sector. We apply a factor-augmented vector autoregression model to Czech macroeconomic data and model the policy interactions in a data-rich environment. Our findings can be summarized in three main points: First, loose economic policies (especially monetary policy) may translate into a more stable financial sector, albeit only in the short term. In the medium term, an expansion-focused mix of monetary and fiscal policy may contribute to systemic risk accumulation, by substantially increasing credit dynamics and house prices. Second, we find that fiscal and monetary policy impact the financial sector in differential magnitudes and time horizons. And third, we confirm that systemic risk materialization might cause significant output losses and deterioration of public finances, trigger deflationary pressures, and increase the debt service ratio. Overall, our findings provide some empirical support for countercyclical fiscal and monetary policies.

scholarly journals The Effect of Credit Derivatives on Financial Stability

2016 ◽  
Vol 1 (1) ◽  
pp. 22 ◽  
Author(s):  
Richard Van Ofwegen ◽  
Willem F.C. Verschoor ◽  
Remco C.J. Zwinkels
Keyword(s):  
Financial Stability ◽  
Credit Derivatives ◽  
Financial Sector ◽  
Financial Products ◽  
The Stability ◽  
The Impact

Due to the recent financial turmoil, questions have been raised about the impact ofcomplex financial products, like credit derivatives, on financial stability. The academicliterature however does not provide a clear answer to this question. This paper empiricallylinks the stability of the financial sector to the use of credit derivatives for the main constituentsof the European financial sector. We find that the use of credit derivatives increases theprobability of default and thus reduces the overall financial sector stability. In addition,we find evidence that this relationship is progressive and economically meaningful.

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