scholarly journals Foreign Currency Loans and Stability of the Banking System in Poland

2018 ◽  
Vol 25 (3) ◽  
pp. 67-82 ◽  
Author(s):  
Grażyna A. Olszewska
Keyword(s):  
Exchange Rate ◽  
Banking Sector ◽  
Foreign Currency ◽  
Market Competition ◽  
Banking System ◽  
Mortgage Lending ◽  
Mortgage Loan ◽  
Swiss Franc ◽  
Mortgage Loans ◽  
The Stability

The aim of the study was to answer the question whether and to what extent foreign currency loans may pose a threat to the stability of the banking system in Poland. The reason for exploring this problem is the situation in which Swiss franc mortgage loan parties found themselves. The problem concerned not only Poland, but also appeared in Hungary, Spain and Ukraine. The aforementioned countries have adopted various strategies in order to solve this issue. Currently, there is a discussion in Poland over the form of solution to the situation in which the Swiss franc debtors have found themselves. This article presents the following hypotheses: (1) The credit policy of banks, which includes mortgage lending in Swiss francs, was a typical action in terms of risk management which in this case was two-way in nature. In addition, banks did not have the opportunity to significantly impose its policies on customers, as evidenced by the degree of market development and market competition. (2) Conversion of mortgage loans according to the CHF historic exchange rate can affect the stability of the banking system. The article presents the main types and sources of bank risks with particular emphasis on credit risk and foreign exchange risk. In addition, the paper shows the importance of this kind of risk in the context of the systemic stability of the banking sector in a situation of exchange rate stability disturbances. Verification of the research hypothesis was based on literature studies and analysis of statistical data.

scholarly journals Skutki przewalutowania kredytów denominowanych we franku szwajcarskim na Węgrzech

Ekonomia ◽  
2018 ◽  
Vol 24 (1) ◽  
pp. 137-149
Author(s):  
Beata Sieńko-Kowalska
Keyword(s):  
Exchange Rate ◽  
Interest Rates ◽  
Foreign Currency ◽  
Swiss Franc ◽  
Domestic Currency ◽  
Mortgage Loans ◽  
The Subject ◽  
The Exchange Rate ◽  
Currency Conversion

The effects of currency conversion in Swiss francs in HungarySubsequent legislative actions were taken in Hungary in 2010–2015 in order to successively eliminate denominated in foreign currency loans from the market and thus gradually contribute to a reduction in the indebtedness of Hungarians resulting from the mortgage loans in Swiss francs and other currencies drawn in masses during the recent years. The Hungarian legislators gradually, through prohibiting the banks to employ practices unfavorable for the customers currency spreads, unilateral increase in interest rates on loans arrived at the automatic conversion of denominated foreign currency loans to the domestic currency, i.e. the forint. The mechanism implemented in Hungary, consisting in automatic loan conversion at the current rate, was a compromise, as it encumbered not only the banks, but also the borrowers. The latter were held responsible for the increase in the exchange rate of the currency the Swiss franc, but they received compensation in the form of reimbursement of the amounts overpaid due to the unfavorable practices employed by the banks. Thus, the solution implemented in Hungary was to preserve the symmetry between the customers and the banks, since the mechanism of automatic conversion at the current rate as such resulted in the customers have been owning more forints after the conversion than on the date of entering into the loan agreement with the bank. As a result, the first effects of the conversion were fairly neutralized, however the subject has certainly not been exhausted.

scholarly journals Political risk and banking sector performance in Nigeria

2021 ◽  
Vol 16 (3) ◽  
pp. 1-12
Author(s):  
Adefemi A. Obalade ◽  
Babatunde Lawrence ◽  
Joseph Olorunfemi Akande
Keyword(s):  
Credit Risk ◽  
Stock Price ◽  
Banking Sector ◽  
Generalized Method Of Moments ◽  
Banking System ◽  
Political Risk ◽  
Political Systems ◽  
Business Outcomes ◽  
Stage System ◽  
The Stability

Political risk is prevalent in Nigeria and tends to influence business outcomes and the stability of the banking system. As a result of this study, it was determined whether political risk matters to the performance of the banking sector in Nigeria. The effect of political risk on different banks’ performance measures, such as return on assets, return on invested capital, credit risk and stock price, were examined in a panel of 12 selected commercial banks for the period 2006–2018. Data was analyzed using a two-stage system of generalized method of moments. The results provided evidence that the effect of political risk on bank performance depends on the performance proxies. Specifically, political risk was found to be negatively related to banks’ returns on invested capital and positively related to deteriorating credit risk. Hence, it can be concluded that political risk induces poor banking system performance in Nigeria. The study provides a critical insight into the management of a country’s political systems in terms of their potential to create unfavorable conditions for banking systems to thrive.

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.

scholarly journals Rozliczenie kredytu mieszkaniowego z niedozwolonymi walutowymi klauzulami indeksacyjnymi

Studia BAS ◽  
2021 ◽  
Vol 2 (66) ◽  
pp. 173-193
Author(s):  
Marcin Liberadzki
Keyword(s):  
Exchange Rate ◽  
Final Section ◽  
Foreign Currency ◽  
The Other ◽  
Mortgage Loan ◽  
Currency Exchange ◽  
Currency Exchange Rate ◽  
Better Than

This paper deals with how to settle a foreign currency exchange rate indexed mortgage loan between a bank and a consumer if the court declares that the loan agreement has an abusive clause. At present, many consumers in Poland strive to void their contracts on the grounds that they contain an abusive indexation clause, mainly referred to the CHF/PLN exchange rate. The calculations are based on a CHF indexed 30 years mortgage with decreasing monthly installments, starting in 2008. The settlement amount is calculated for two most probable scenarios: 1) the contract is declared void; 2) the contract continues but without the abusive indexation clause. One cannot determine which scenario is definitely better than the other for any party. In the final section of the article the implications for Polish banks are presented.

scholarly journals Mortgage as an Available Source of Credit Resources for Investment Financing in 2019

2019 ◽  
Vol 12 (1) ◽  
pp. 86-97
Author(s):  
S. V. Shchurina
Keyword(s):  
Low Income ◽  
Banking Sector ◽  
Mortgage Lending ◽  
Mortgage Market ◽  
Easy Access ◽  
Russian Government ◽  
Mortgage Loans ◽  
Loan Default ◽  
Mortgage Rates ◽  
The Government

The subject of the researchis the availability of mortgage as a credit resource for investment funding. The relevance of the problem is due to the development of the mortgage credit lending in the country. The policy of the Central Bank of Russia (CBR) and the Russian Government aimed at combating inflation and planned reduction of the key rate created favorable conditions for establishing acceptable bank rates on mortgage loans, which significantly raised the mortgage demand over the past few years. The research shows that Russian commercial banks have reduced mortgage rates and are offering refunding of previously issued mortgage loans, which demonstrates the confidence of the banking sector in the government and economic stability at the macro level. At the same time, the easy access to home mortgage lending can lead to a “financial bubble” problem on the Russian banking market and, moreover, to deterioration of the borrowers’ solvency, and, therefore, loan default.The purpose of the researchwas to examine the current affordability of mortgage as a source of credit resources for investment funding and develop recommendations for improving this process. The paperconcludesthat the government policy of economic and financial stabilization through inflation combating measures and maintaining the key rate by the CBR at the level acceptable for economic growth should be continued. At the same time, the transition from the participation finance to the project-tied system of housing construction financing can possibly increase the loan interest burden on developers and affect the price per square meter for the final buyer. The main factors contributing to the reduction of mortgage rates are the planned reduction of the key rate by the CBR and low inflation rates, the program of the Government subsidies to the mortgage market as well as the increased supply of low-income housing by developers.

scholarly journals Optimality of Morocco’s Currency Basket

2019 ◽  
Vol 2 (2) ◽  
pp. 97
Author(s):  
AZZOUZI Asmae ◽  
BOUSSELHAMI Ahmed
Keyword(s):  
Exchange Rate ◽  
Trade Balance ◽  
Foreign Currency ◽  
Financing Constraints ◽  
External Financing ◽  
Local Currency ◽  
Optimal Weights ◽  
Monetary Authorities ◽  
The Stability ◽  
The Impact

<p><em>The objective of this article is to analyze the behavior of the monetary authorities of Morocco in the readjustment of the official weights of anchor currencies in Dirham basket on April 13, 2015. To do this, we are taking into account the objective of the external financing constraints for comparing, with different scenarios, the optimal weights with the implicit weights of the currencies. Such a comparison proves that the authorities take more into consideration the structure of the commercial exchanges than that of the debt for the choice of the optimal weight of the anchor currency. In the final part of the paper, we have delved deeper into this issue by proposing a detailed sectoral study to examine the impact of the exchange rate on the trade balance for each activity sector. Our intention is to find out which foreign currency seems more volatile against the local currency in order to lead the economy to manage the stability of dirham by increasing its weight in the basket. As a result, the higher price elasticity of the Dollar against the dirham encourages Moroccan monetary authorities to increase its weight in the basket. </em></p>

scholarly journals PROBLEMS OF ENSURING THE FINANCIAL SUSTAINABILITY OF THE BANKING SYSTEM

2021 ◽  
Author(s):  
Olena Tarasova
Keyword(s):  
Financial Stability ◽  
Banking Sector ◽  
Banking System ◽  
Bank Lending ◽  
Financial Sustainability ◽  
Loan Portfolio ◽  
Bank Deposits ◽  
High Inflation ◽  
The Stability ◽  
Banking Institution

The article explores the problems of ensuring the financial sustainability of the banking sector, which plays a very important role in the functioning of the financial system of the state. The role of the stability of the banking system in ensuring conditions of economic growth is justified. It is noted that it is the financial stability of each banking institution that is a prerequisite for the stable functioning of the entire banking system. It is emphasized that since the financial stability of the banking system is influenced by a large number of internal and external factors, for the effective functioning of the banking system of the country must be ready for any challenges to the macro and microenvironment. The main problems of the banking system in modern conditions should be considered the reduction of deposits of the population, deterioration of the quality of the loan portfolio, significant devaluation of the hryvnia, high inflation rates, loss-making of a significant number of banking institutions. It was concluded that the banking system of Ukraine feels a significant dependence on the funds of depositors - individuals, and therefore on factors that affect their behavior in the financial market. Trends of formation of deposit base of commercial banks of Ukraine and imbalances in the sphere of attraction of banking resources were analyzed. The growth of bank deposits of the population is slow, negative changes in their structure are observed. The share of deposits of individuals after the 2014 crisis has become significantly more volatile and risky in terms of financial stability. The increase in lending is complicated by the presence of large portfolios of problem loans, as a result of which there are a number of tasks to increase the efficiency of the loan portfolio, which should ensure a compromise of profitability, liquidity and credit risk acceptable to the bank. The priorities of monetary policy and the main tasks are formulated, the solution of which will allow to intensify lending to the real sector of the economy. Theoretical and practical recommendations have been developed to improve bank lending, increase the profitability of the banking system and capitalize Ukrainian banks.

scholarly journals INTERREGIONAL ANALYSIS OF THE STATE AND DYNAMICS OF MORTGAGE LENDING

2021 ◽  
Vol 2 (53) ◽  
pp. 174-181
Author(s):  
 E. V. Sitnikova ◽  
◽  
 D. E. Maksakov ◽  
Keyword(s):  
Housing Market ◽  
Banking Sector ◽  
Calculated Data ◽  
Weighted Average ◽  
Mortgage Lending ◽  
The State ◽  
Regional Level ◽  
Mortgage Loans ◽  
Financial Flows ◽  
Business Entities

Subject. Organizational and economic relations developing during the functioning of the housing market and mortgage lending. Topic. Interregional analysis of the state and dynamics of mortgage lending. Purpose. The purpose of the work is to develop directions for increasing the efficiency of mortgage lending as the most important tool for the development of the housing market. Methodology. The study was carried out using abstract-logical, comparative, economic and statistical approaches, a graphical technique for visualizing statistical and calculated data. Results. To analyze the state of mortgage lending at the regional level, the volume of issued mortgage loans in a territorial context was considered, the structure and dynamics of issued mortgage loans for individuals was studied, the debt on mortgage loans was revealed, the dynamics of the weighted average interest rate in each federal district was analyzed. The analytical review carried out in the study made it possible to draw conclusions about the state of development of mortgage lending in the regions, as well as to offer recommendations for its improvement. Application area. The results of the study, the main provisions, conclusions, recommendations are focused on widespread use by business entities in the process of assessing and analyzing their mortgage lending. Conclusions. The significance of this study is due to the need to identify the degree of development of mortgage lending, which is especially important at the regional level. The purchase of own housing, which will be available not only for certain categories of citizens, but also for the majority of the population of the Russian Federation, is ensured through the development of the mortgage lending market. This form of lending contributes to the satisfaction of not only the interests of the bank and citizens, but also allows to ensure financial flows to the development of the real sector of the economy. Keywords: mortgage, mortgage lending, credit organizations, banking sector, housing construction, debt, regional banking system.

scholarly journals Risks and stability of the banking system of the Republic of Moldova

2021 ◽  
Author(s):  
Grigore Duhlicher ◽  
Keyword(s):  
Financial Markets ◽  
Financial Crises ◽  
Banking Sector ◽  
Banking System ◽  
Republic Of Moldova ◽  
Banking Systems ◽  
The Republic ◽  
And Performance ◽  
The Stability ◽  
Financial Balance

The banking sector is constantly affected by a multitude of risks, which jeopardize its stability and performance. The multiplication, diversification and continuous intensification of banking risks emphasizes the need to define, identify, analyze and manage these phenomena, this process having a major impact on the stability of national banking systems and global financial balance. Efforts to this end must maintain the stability of financial-banking systems, characterized by a lack of major imbalances, which could lead to systemic financial crises, the inability of financial institutions to conduct financial operations, or the collapse of financial markets.

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).

Sign in / Sign up

Export Citation Format

Share Document