The Systemic Effects of Prudential Regulation Toughening:The Results of a Stress-test for Russian Banks

2012 ◽  
pp. 4-31 ◽  
Author(s):  
M. Mamonov ◽  
A. Pestova ◽  
O. Solntsev
Keyword(s):  
Financial Services ◽  
Banking Sector ◽  
Stress Test ◽  
Credit Market ◽  
Capital Adequacy ◽  
Government Support ◽  
Government Ownership ◽  
Prudential Regulation ◽  
The Government ◽  
The Stability

The stability of Russian banking sector is threatened by three negative tendencies - overheating of the credit market, significant decrease of banks capital adequacy ratios, and growing problems associated with banks lending to affiliated non-financial corporations. The co-existence of these processes reflects the crisis of the model of private investments in Russian banking sector, which was observed during the last 20 years. This paper analyzes the measures of the Bank of Russia undertaken to maintain the stability of the banking sector using the methodology of credit risk stress-testing. Based on this methodology we conclude that the Bank of Russias actions can prevent the overheating of the credit market, but they can also lead to undesirable effects: further expansion of the government ownership in Russian banking sector and substitution of domestic credit supply by cross-border corporate borrowings. The later weakens the competitive positions of Russian banks. We propose a set of measures to harmonize the prudential regulation of banks. Our suggestions rely on design and further implementation of the programs aimed at developing new markets for financial services provided by Russian banks to their corporate and retail customers. The estimated effects of proposed policy measures are both the increase in profitability and capitalization of Russian banks and the decrease of banks demand for government support.

The Systemic Effects of Prudential Regulation Toughening:The Results of a Stress-test for Russian Banks

2012 ◽  
pp. 4-31 ◽  
Author(s):  
M. Mamonov ◽  
A. Pestova ◽  
O. Solntsev
Keyword(s):  
Financial Services ◽  
Banking Sector ◽  
Stress Test ◽  
Credit Market ◽  
Capital Adequacy ◽  
Government Support ◽  
Government Ownership ◽  
Prudential Regulation ◽  
The Government ◽  
The Stability

The stability of Russian banking sector is threatened by three negative tendencies - overheating of the credit market, significant decrease of banks capital adequacy ratios, and growing problems associated with banks lending to affiliated non-financial corporations. The co-existence of these processes reflects the crisis of the model of private investments in Russian banking sector, which was observed during the last 20 years. This paper analyzes the measures of the Bank of Russia undertaken to maintain the stability of the banking sector using the methodology of credit risk stress-testing. Based on this methodology we conclude that the Bank of Russias actions can prevent the overheating of the credit market, but they can also lead to undesirable effects: further expansion of the government ownership in Russian banking sector and substitution of domestic credit supply by cross-border corporate borrowings. The later weakens the competitive positions of Russian banks. We propose a set of measures to harmonize the prudential regulation of banks. Our suggestions rely on design and further implementation of the programs aimed at developing new markets for financial services provided by Russian banks to their corporate and retail customers. The estimated effects of proposed policy measures are both the increase in profitability and capitalization of Russian banks and the decrease of banks demand for government support.

scholarly journals The Influence of Inflation, Exchange Rates, Car And NPF to Stability of Islamic Banks in Indonesia Period 2015-2019

2020 ◽  
Vol 9 (1) ◽  
pp. 29
Author(s):  
Gumilang Budi Laksa pratama ◽  
Kusnendi Kusnendi ◽  
Suci Aprilliani Utami
Keyword(s):  
Banking Sector ◽  
Negative Relationship ◽  
Capital Adequacy ◽  
Internal Variables ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Vector Error Correction ◽  
Banking Stability ◽  
The Government ◽  
The Stability

This study aims to see the extent of the influence of the level of Inflation (CPI), Exchange Rate (kurs), Capital Adequacy Ratio (CAR) and Non Performing Financing (NPF) on the Stability of Islamic Banks in Indonesia Period 2015-2019. To support research, we use the Vector Error Correction Model (VECM) methodology. VECM test results show that in the short term the significant effect on the level of stability are Kurs and CAR, with the direction of a negative relationship (reducing the level of stability). Meanwhile, in the long term the significant effect on the level of stability are inflation and Kurs with the direction of a negative relationship (reducing the level of stability). From the results of this study it can be concluded that the macroeconomic variables significantly affect the stability of Islamic banking, therefore the government has an important role in controlling macroeconomic turmoil to maintain Islamic banking stability. Besides that, the internal variables of the banking sector are considered to have no significant effect partially, therefore it is necessary to conduct further research with a variety of internal factors in the banking industry to prove their effects on the stability of Islamic banking

scholarly journals Testy warunków skrajnych jako element oceny bezpieczeństwa sektora bankowego

2015 ◽  
Vol 1 (3) ◽  
pp. 181-194
Author(s):  
Marcin Mikołajczyk
Keyword(s):  
Stress Testing ◽  
Banking Sector ◽  
Stress Test ◽  
Good Condition ◽  
Capital Adequacy ◽  
The European Union ◽  
Stress Tests ◽  
Test Methodology ◽  
The Stability

The article presents the latest approach to stress tests applied by the EuropeanBanking Authority and national supervisory authorities, including methodology,scenarios, key assumptions and results of a study. The results of stress testsindicate that the banking sector in Poland is in good condition as banks showedhigher level of capital adequacy than most of the banks from the European Union,reflecting the stability of the banking sector. Stress test methodology used by theEuropean Central Bank is also contained in the paper. The role of stress tests asan instrument for enhancing the stability of financial institutions and the needfor further work on stress testing are also discussed.

Analysis of Financial Performance of Public Sector Banks in India: CAMEL

2020 ◽  
pp. 097674792096686
Author(s):  
Yudhvir Singh ◽  
Ram Milan
Keyword(s):  
Public Sector ◽  
Banking Sector ◽  
Positive Impact ◽  
Secondary Data ◽  
Capital Adequacy ◽  
Factors Affecting ◽  
Public Sector Banks ◽  
The Government ◽  
And Performance ◽  
Asset Quality

Public sector banks have been merged by the government in the last few years. This is the rationale behind conducting this study. The purpose of this article is to determine the factors affecting the performance of public sector banks in India and the interrelationship between bank-specific determinants and performance of public sector banks. In this article, we shall analyse the financial data of all the public sector commercial banks for a period spread across 11 years (2009–2019); Capital adequacy, Assets quality, Management efficiency, Earning, and Liquidity (CAMEL) has been used as a performance determinant; system generalised method of moments (GMM) analysis has been used to find the effect of determinants on the performance measurement of public sector banks; and CCA (canonical correlation analysis) has been used to find the interrelationship between the bank-specific determinants and the performance of public sector banks. The finding has important implications in terms of performance in the banking sector. Certain limitations of this study are: It is based on secondary data. The study only covers the financial aspects and not the non-financial aspects. It is found that the asset quality is negatively related with performance of public sector banks. Liquidity and inflation are inversely related to performance of public sector banks in India. Capital adequacy is positively related with banks’ performance, but inversely related with banks’ interest margin. GDP growth has a significant positive impact on banks’ performance, but inversely related with banks’ interest income. Inflation rate is inversely related with banks’ performance. Banking sector reforms are insignificantly related with banks’ performance.

scholarly journals Demonetisation Impact over Banking Loans & Advances: A Case Study

2019 ◽  
Vol 7 (4) ◽  
pp. 51-64
Author(s):  
Narsaiah Neralla
Keyword(s):  
Financial Services ◽  
Banking Sector ◽  
Study Data ◽  
Ecosystem Dynamics ◽  
Banking Services ◽  
Legal Tender ◽  
The Status ◽  
The Government ◽  
Case Study Data

The demonetisation footstep by the Government of India twisted complicated influences in the economy. Complete sectors of the economy had faced and produced mixed sensation results over the decision of demonetisation. India’s financial services struggled with demonetisation; on the other hand demonetisation affects utmost over the banking sector because it is substantial influenced services to transform money circulation in an Indian economy. Eradicating components of currency notes from circulation in an economy is demonetisation. It is as the processes of components of money are denied the status of legal tender. Consequently, ceased currency notes will not be account as valid currency in an economy. The term ‘demonetization’ is an instrument to shrink Inflation, Black Money, Corruption and terror funding, this step discourages a cash dependent economy in India. Government of India drive towards demonetisation has given a strong push to the popularity of digital banking and made helps with the alternative arrangements of e-banking and e –wallet to trade and commerce. Exploring the demonetisation emergence in an economy and impact on banking services ecosystem dynamics, this study take an abductive approach anchored in over 4 years of case study data regarding. The present study foremost intention is to be analysing the demonetisation impact over banking loans and advances. In this regard the present study is to be examining the pre demonetisation and post demonetisation period.

scholarly journals Determinants of Credit Risk in the Banking Sector of Ghana: A Panel Co-integration Approach

2020 ◽  
Vol 5 (4) ◽  
Author(s):  
Thomas Appiah ◽  
Frank Bisiw
Keyword(s):  
Credit Risk ◽  
Least Squares ◽  
Banking Sector ◽  
Ordinary Least Squares ◽  
Capital Adequacy ◽  
High Rate ◽  
Long Run ◽  
Integration Techniques ◽  
The Government ◽  
The Impact

The economic development of any nation hinges on the health of its financial system. In recent years, the health of the Ghanaian Banking sector has been affected severely as a result of high levels of non-performing loans (NPLs), which has been identified as a major threat to the overall profitability and survival of banks. To minimize the impact of NPLs on the financial sector, key stakeholders such as the government, bank officials and regulators are working hard in that regard. However, any policy response aimed at dealing with the high rate of non-performing loans first requires the understanding of the underlying determinants of NPLs. Against this backdrop, this paper apply panel co-integration techniques to investigate the determinants of credit risk (NPLs) in the banking sector of Ghana.  We use NPL as a proxy to measure credit risk and assess how it is influenced by macroeconomic and bank-specific factors. A balanced panel data of 16 universal banks in Ghana from 2010 to 2016 has been analyzed using Panel co-integration techniques such as Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS). Our result shows that growth in the economy, measured by Gross Domestic Product (GDP) has significant influence on the NPLs of banks in the long-run. The results further revealed that capital adequacy, profitability and liquidity of banks are significant predictors of NPLs. However, our results suggest that bank size, inflation and interest rate have statistically insignificant influence on the NPLs of Ghanaian banks. The study recommend, among others, that whereas it is important for government and policymakers to work to improve macroeconomic outcomes, banks should also improve their capital adequacy, profitability, and efficiency position as these bank-specific interventions could significantly improve credit quality and minimize NPLs.

scholarly journals BANKING SECTOR ORIENTED FINANCIAL INCLUSION IN INDIA: A LONG TERM PERSPECTIVE

2020 ◽  
pp. 42-59
Author(s):  
Sana Pathan ◽  
Archana Fulwari
Keyword(s):  
Financial Services ◽  
Banking Sector ◽  
Financial Inclusion ◽  
Inclusive Growth ◽  
Long Run ◽  
Reserve Bank ◽  
The Government ◽  
Improve Access ◽  
Reserve Bank Of India

Financial Inclusion is an emerging concept. The objective of the government behind 100 percent Financial Inclusion is to have inclusive growth in India. Several initiatives have been taken by the Government of India and the Reserve Bank of India to improve access to financial services. To measure the effectiveness of these initiatives there is need to measure the extent of Financial Inclusion. Financial Inclusion can be measured by gauging the progress in access to and usage of a range of products and services of financial institutions over time. The present study sought to propose an index to measure the extent of banking sector oriented Financial Inclusion in India over a period of time rather than a cross-section study which has been the focus of many a studies. The study used more specific indicators of banks-centric financial inclusion dimensions to gauge the long run trend in Financial Inclusion in India. The results indicate that there is much improvement in Financial Inclusion in India since the implementation of financial sector reforms.

THE CURRENT STATE OF THE BANKING SYSTEM OF SAUDI ARABIA

2017 ◽  
Author(s):  
Maryna Korol ◽  
◽  
Olha Shumnegra ◽  
Keyword(s):  
Saudi Arabia ◽  
Financial Services ◽  
Banking Sector ◽  
Banking System ◽  
Scientific Publication ◽  
Islamic Banking ◽  
Historical Aspect ◽  
Current State ◽  
The Government ◽  
And Control

This scientific publication analyzes the current state of the banking system of the Kingdom of Saudi Arabia. The peculiarities of the functioning of the Islamic banking system, the main types of financial products provided by banks and the laws under which financial services are provided to Muslims are identified. The basic principles of Islamic banking, which are prescribed in the Sharia, are described, such as, for example, the exclusion of interest on all financial transactions. There is also a list of major Saudi banks and foreign affiliates operating in the country. The historical aspect of the formation of the banking sector is studied. The main financial indicators are analyzed: the dynamics of assets, liabilities, the number of loans to private and corporate clients, the share of Saudi assets in global Islamic finance. Attention is also paid to the prospects and success of the stock market. The issue of management and control over the activities of banks and its role are studied. a list of specialized credit institutions established by the government to provide highly specialized loans to citizens of the kingdom. The positive dynamics of all indicators even in the conditions of global crises, thanks to the well-laid foundation and the further strategy concerning functioning in the conditions of the world pandemic are allocated. The list of the main internal problems which can suspend growth in the future is considered. The issue of the country's dependence on oil prices, with further impact on financial diversification, is considered separately. The prospects of the banking system of Saudi Arabia in the near future, and the role of the Kingdom as a partner in financial relations for the domestic economy are determined. Conclusions are made on the basis of the conducted research and prospects of further strategic development in this direction.

Trends in the Innovative Development of the Credit Market and Its Role in Promoting the National Economic Growth

2019 ◽  
Vol 12 (3) ◽  
pp. 59-67
Author(s):  
N. E. Brovkina
Keyword(s):  
National Economy ◽  
Innovation Process ◽  
Credit Market ◽  
Government Support ◽  
Customer Relationship ◽  
Innovative Development ◽  
Digital Environment ◽  
Active Involvement ◽  
The Government ◽  
Credit Institutions

The subject of the research is the credit market as a significant but currently underestimated and underused institution of the innovative development of the national economy.The purpose of the research was a system study of the trends in the innovative development of the credit market contributing to accelerating the innovative development of the country and creating the potential for entering the top five economies in the world.Results of the research: three trends in the innovative development of the national credit market have been revealed. The first trend concerns the formation of a digital environment for the credit market players. The second trend is creating conditions ensuring a more active participation of credit institutions in financing and crediting projects that ensure the modernization and innovative development of the national economy. The third trend is the innovative development of credit institutions themselves.Conclusions based on the research findings: to establish the digital environment for credit market players, it is necessary to create a credit market ecosystem based on the Bank of Russia’s platform integrated with the ecosystems of major credit institutions, medium and small bank platforms and credit market infrastructure organizations. In terms of creating conditions for more active involvement of credit institutions in innovative project financing and crediting, measures should be taken to form the flow of demand for innovations, create the innovation infrastructure, seek the government support for the integration of the credit market in the innovation process. The innovative development of credit institutions themselves is suggested to be viewed as a continuous renovation process aimed at meeting and anticipating financial and non-financial needs of customers through the use of digital technologies and the customer relationship management experience.

Post-East Asian Financial Crisis: Challenges and Opportunities for the Banking and Financial Services Sector in Singapore

2001 ◽  
Vol 04 (04) ◽  
pp. 495-521 ◽  
Author(s):  
Siew Tong Fock ◽  
Ann Chai Wong
Keyword(s):  
Financial Crisis ◽  
Financial Services ◽  
Banking Sector ◽  
East Asian ◽  
Asian Financial Crisis ◽  
Services Sector ◽  
Financial Services Sector ◽  
Challenges And Opportunities ◽  
The Stability ◽  
International Financial Center

The East Asian financial crisis revealed the structural weaknesses of the banking systems in Asia. Post crisis, there were signs of limited recovery of the region in sight, but the region-wide reforms would take some time to complete. This paper identifies the main challenges and opportunities that are posed to the financial sector in Singapore in a post East Asian financial crisis scenario. Preserving the stability of the banking sector whilst engendering a more efficient use of capital remains a central issue in this paper. The paper also evaluates the liberalization measures adopted by the Monetary Authority of Singapore to enhance the development of Singapore as a leading international financial center.

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