scholarly journals The Sovereign-Bank Nexus in the Face of the COVID-19 Pandemic Outbreak—Evidence from EU Member States

Risks ◽  
2021 ◽  
Vol 9 (5) ◽  
pp. 98
Author(s):  
Iustina Alina Boitan ◽  
Kamilla Marchewka-Bartkowiak
Keyword(s):  
Sovereign Debt ◽  
Learning Algorithm ◽  
Government Debt ◽  
Real Economy ◽  
Balance Sheets ◽  
Eu Member States ◽  
The Face ◽  
Debt Market ◽  
The Government ◽  
Fiscal Pressure

The major focus of this paper is on the sovereign–banks relationship following the COVID-19 pandemic crisis outbreak, with a view to gaining an insight into banks’ exposure to the sovereign. We rely on a series of complementary research approaches, such as desk research, comparative statistical analysis, exploratory learning algorithm, and a deterministic panel regression framework. The analysis reveals that most EU countries were not prepared for the pandemic crisis as they lacked a financial security buffer. The growing fiscal pressure and lockdown restrictions additionally resulted in an increase in banks’ exposure to the government debt market and higher government debt securities exposure on their balance sheets. One of the novelties of the research is the adoption of the gap method in order to measure the changes between banking assets major items (government securities vs. loans) and uncovering the preference for holding a specific type of asset. Additional insight is brought by the clustering solution, which shows increased cross-country heterogeneity in terms of the sovereign–banks relationship. Empirical research shows that banks’ involvement in the sovereign debt market is sensitive mainly to negative information related to pandemic occurrence and, to a lower extent, to positive information reflected by government’s reactions and economic stimulus measures. In addition, our results reveal there is no crowding-out effect triggered by the pandemic, in terms of lending to the sovereign against lending to the real economy. In the pandemic onset banks did not proceed to a sharp portfolio rebalancing in favor of the sovereign.

scholarly journals The Role of Macroeconomic Variables in Sovereign Risk

2020 ◽  
Vol 6 (1) ◽  
pp. 1
Author(s):  
George Zairis ◽  
Antonios Zairis
Keyword(s):  
Sovereign Debt ◽  
Government Bond ◽  
Financial Indicators ◽  
Sovereign Risk ◽  
Cross Sectional ◽  
Bond Yield ◽  
Debt Market ◽  
The Government ◽  
Macroeconomic Determinants ◽  
Stochastic Properties

The sovereign debt market has gathered a lot of attention post the global financial recession therefore it is very important to study how the countries of the eurozone countries can be shielded from all internal and external risks. This can be achieved by examining the macroeconomic determinants of the sovereign risk. Based on the results of the panel regression, it becomes evident which financial indicators are contributing to the sovereign risk. In terms of the stochastic properties, when homogeneity is assumed among the cross-sectional units, all the variables appeared to be level stationary except for the total government bond yield. However, when heterogeneity is assumed among the countries, variables such total government bond yield, GDS as a percentage of GDP, total credit to private sector, employment as a ratio to total GDP, and bank credit are level none stationary. Consequently, these findings will help identify the variables that can be used to approximate the movement of the government bond yield.

scholarly journals Conceptual approaches to economic growth: the need to transform national financial policy imperatives

2020 ◽  
Vol 18 (4) ◽  
pp. 1-10
Author(s):  
Нanna Telnova
Keyword(s):  
Economic Growth ◽  
Developed Countries ◽  
Government Support ◽  
Financial Policy ◽  
Real Economy ◽  
Financial Policies ◽  
Financial Architecture ◽  
The Face ◽  
The Government

Turbulent global processes, driven by the slowdown in the economy growing, including developed countries, require further understanding of the role of financial factors, the heterogeneous impact of which is conditioned by the globalization of financial markets. The analysis of existing conceptual approaches to economic growth allows identifying bottlenecks of the national financial architecture and specifying positive aspects of successful development. The study proved the need to generalize the provisions of the Keynesian and neo-liberal theory (avoiding unipolar compositions financial architecture), supplementing them with recommendations for implementing financial dirigisme in the face of economic shocks. Given the need to transform national financial policies, the focus is on creating conditions for development of the real economy, as a main source of economic growth, through the government support.

scholarly journals PUBLIC DEBT MARKET AND BUDGET DEFICIT FINANCING TOOLS

2020 ◽  
Vol 1 (19(47)) ◽  
pp. 80-85
Author(s):  
Mykhailo Hantsiak
Keyword(s):  
Financial Market ◽  
Public Debt ◽  
Budget Deficit ◽  
Credit Market ◽  
Government Debt ◽  
Securities Market ◽  
Financial Resources ◽  
The Public ◽  
Debt Market ◽  
The Government

The purpose of the study is to substantiate the need to determine the essence and place of the public debt market in the financial market. Achievement is ensured by the implementation of tasks: systematization of views of domestic and foreign scientists on the essence of the place of public debt in the classification system of financial market segments; study of the structure of the financial market in terms of segments that ensure the implementation of debt financing of public debts; development of a theoretical approach to the structure of the public debt market. The article considers and systematizes the views of scientists concerning the place of the state morgue market in the financial market. The article substantiates the need to supplement the classification features for financial market segmentation in terms of complementing the target of market participants and identifying segments: the market for attracting financial resources to cover the state budget deficit (public debt market); the market for attracting financial resources to increase private capital. The concept of the public debt market is defined and its structure is proposed in general and detailed form. In general, the structure of the public debt market covers the debt securities market and the external credit market. The government debt securities market is a segment of the securities market, which in turn can also be classified. The same can be said about the external segment of the credit market. However, if the government debt securities market is fully owned by the public debt market, then the external segment of the credit market is only partially owned. The detailed structure of the public debt market is also presented. Conclusions are drawn and the directions of further scientific research in this direction are indicated.

Left-wing populism in Spain

2021 ◽  
Vol 13 (2) ◽  
pp. 62-86
Author(s):  
I. L. Prokhorenko
Keyword(s):  
Sovereign Debt ◽  
Party System ◽  
Debt Crisis ◽  
Essential Element ◽  
The European Union ◽  
Left Wing ◽  
Eu Member States ◽  
Electoral Defeat ◽  
The Face ◽  
Imminent Threat

The paper examines formation, evolution and political perspectives of the Spanish radical left-wing populist party ‘We Can!’ (Podemos) in the face of growing support for populism in the the Southern European countries as well as in the European Union in general. The author identifies the origins and country-specific characteristics of the left-wing populism in Spain and provides the general overview of trends in the country’s party system since the middle of the 2000s, including the growing axiological, generational, political and ideological cleavages in the Spanish divided society. Special attention is paid to the political portrait of the Podemos leader Pablo Iglesias and the prospects for development of political situation in the country after his resignation and subsequent electoral defeat in the Autonomous Community of Madrid in May 2021. As such, this case study can provide some useful insights on the nature of populism in the EU member-states in general. In particular, the paper shows that the fragmentation of traditional political systems and the impacts of the sovereign debt crisis per se do not provide a sufficient explanation for the growing demand for populist rhetoric and charismatic leaders, but rather they have exposed certain structural economic and social imbalances. It is exactly these imbalances which traditional political parties are unable to address that create a breeding ground for various left- and right-wing parties and movements. As a result, the author concludes that populism will remain an essential element of political landscape in Spain despite all scandals that accompany populist politicians as the case of Pablo Iglesias has clearly demonstrated. At the same time the author emphasizes that it is this clear and imminent threat posed by the populist movements that may eventually serve as an impetus for a renewal of traditional parties and of the country’s political system in general.

Review of factors constraining the development of Indian corporate bond markets

2015 ◽  
Vol 7 (4) ◽  
pp. 429-444 ◽  
Author(s):  
Shagun Thukral ◽  
Sharada Sridhar ◽  
Medha Shriram Joshi
Keyword(s):  
Central Bank ◽  
Sovereign Debt ◽  
Action Plan ◽  
Corporate Bond ◽  
Corporate Debt ◽  
Expert Committee ◽  
Bond Markets ◽  
Content Type ◽  
Debt Market ◽  
The Government

Purpose – The paper aims to understand the factors that have limited the development of this market in India. With a conservative bank-based economy in the backdrop and with the Central Bank pulling the strings, the sovereign debt market occupies the most space in the bonds universe of India. The latter and almost minuscule portion of this market is occupied by the corporate and industrial houses that have forayed into the market to raise finances. This has led to a cycle where lack of participation leads to lack of liquidity and underdeveloped rating mechanisms which further pressurizes the development of this market in India. Design/methodology/approach – The paper is designed as a literature review which has attempted to identify the commonly agreed upon factors that have constrained the development of Corporate Bond markets in India especially and some other emerging economies who are successful or unsuccessful in their attempt to establish a corporate bond markets. These factors have then been categorized into broader heads and commented upon as a part of the analysis. Findings – Corporate bond markets in India, although steadily progressing, is still impeded by the nature of the market itself. While the necessary steps have been taken to implement some of the recommendations by the Expert Committee, the response solicited has not quite been as expected. The poor liquidity, weak rating-mechanisms, absence of standardization and disclosure nomenclatures and illiquidity in the government bond market itself need to be addressed objectively. Research limitations/implications – The research adopted attempts to validate prior research and the attempts by regulators to implement an action plan. However, further progress on the changing scenarios is encouraged to be tested through a quantitative analysis. Originality/value – The government and the Central Bank have constantly emphasized the importance of developing the Corporate debt market. Several studies have attempted to analyze the factors that have crippled the growth and steps taken by the Central Bank and Securities and Exchange Board of India by appointing an Expert Committee. This paper has attempted to visit all these factors and analyze the attempts to overcome by the Expert Committee including the backdrop of other nations who have a vibrant corporate debt market today. It sets the tone for further quantitative or statistical analysis.

scholarly journals Limitations of the government budget constraint: Users vs. issuers of the currency

2011 ◽  
Vol 58 (1) ◽  
pp. 57-66 ◽  
Author(s):  
Stephanie Kelton
Keyword(s):  
Sovereign Debt ◽  
Full Employment ◽  
Debt Crisis ◽  
Balance Sheets ◽  
Fiscal Adjustment ◽  
Advanced Economies ◽  
Fiscal Support ◽  
Bona Fide ◽  
The Government ◽  
Run Up

The financial crisis and ensuing economic meltdown has led to sharp increases in the deficits and debt levels of many advanced economies. The run-up in public sector indebtedness helped to restore private sector balance sheets, laying the foundation for economic recovery in these regions. But the so-called ?sovereign? debt crisis in the Eurozone has undermined the fiscal resolve that has, thus far, kept truly sovereign governments from slipping into a bona fide depression. Fearful of becoming the next Greece, governments that could allow an unlimited fiscal adjustment to restore full employment, are methodically weakening their fiscal support mechanisms and setting themselves on a path to becoming the next Japan.

scholarly journals Global Financial Crisis – Policy Response

2014 ◽  
Vol 3 (1) ◽  
pp. 9-26 ◽  
Author(s):  
Milojica Dakić
Keyword(s):  
Financial Crisis ◽  
Financial Stability ◽  
Sovereign Debt ◽  
Global Financial Crisis ◽  
Strong Support ◽  
Theoretical Concept ◽  
The European Union ◽  
Eu Member States ◽  
The Usa ◽  
The Government

Abstract Six years after the outbreak of the financial crisis that had shaken the global financial system, experts and analysts all over the world continue discussing the effectiveness, scope and adequacy of mechanisms and measures implemented in the meantime, as well as the adequacy of the underlying theoretical concept. A global consent has been reached on ensuring financial stability through the interaction of monetary, fiscal and prudential policy to ensure the necessary macroprudential dimension of regulatory and supervisory frameworks. The USA crisis spilled over to Europe. Strong support of governments to bail out banks quickly resulted in sovereign debt crises in some peripheral EU Member States. Fiscal insolvency of these countries strongly shook the EU and increased doubts in the monetary union survival. The European Union stood united to defend the euro and responded strongly with a new complex and comprehensive financial stability framework. This supranational framework is a counterpart to the global financial stability framework created by the G20 member countries. Starting from the specific features of the monetary policy whose capacities are determined by euroisation, available instruments and resources for preventive supervisory activities, as well as the role of the government in crisis management, Montenegro created a framework for maintaining financial stability and prescribed fostering and maintaining financial stability as the main objective of the Central Bank of Montenegro.

scholarly journals THE IMPACT OF STOCK-FLOW ADJUSTMENTS ON CHANGES IN CROATIAN GENERAL GOVERNMENT DEBT LEVEL

2018 ◽  
pp. 214-227
Keyword(s):  
National Policy ◽  
Government Debt ◽  
Member States ◽  
Debt Level ◽  
Eu Member States ◽  
Government Deficits ◽  
Government Deficit ◽  
The Government ◽  
Stock Flow ◽  
The Impact

Surveillance of government deficit and debt data is a very important issue from the point of view of national policy makers, as well as international financial and statistical organizations. Deficit and debt developments in EU member states has been regularly (twice a year) monitored by Eurostat, which collects and publishes so called excessive deficit procedure (EDP) statistics on government deficit and debt. The European Commission uses the EDP statistics to assess whether EU Member States' government deficits and debt levels comply with the relevant EU legislation (according to the Maastricht Treaty criteria, government deficit should be less or equal to 3% and government debt less or equal to 60%) of GDP. Deficit and debt data are published mostly in relative terms, i.e. compared with the nominal GDP and compiled according to the ESA2010 methodology. In simplified theory, annual government deficit/surplus should be equal to change in the level of government debt at the end of the actual year and at the end of the previous year. In reality, this is not true due to the impact of the stock-flow adjustments (SFA), which explains the difference between the change in government debt and the government deficit/surplus for a given year. Main aim of this paper is to identify the main factors contributing the changes in government debt other than deficit/surplus (SFA) in Croatia during the period 2010-2017. Those factors are divided into three main categories: net acquisition of financial assets (further broken down by financial instruments), adjustments (for coverage, valuation and exchange rate changes) and statistical discrepancies (reflects differences arising from the use of various data sources). Second, not less important aim of paper is to identify size and impact of the particular SFA factors on changes in debt level during the observed period in Croatia, and based on results obtained, short recommendations for Croatian policymakers will be outlined.

scholarly journals Risk Assessment of Government Debt Based on Machine Learning Algorithm

Complexity ◽  
2021 ◽  
Vol 2021 ◽  
pp. 1-12
Author(s):  
Dan Chen
Keyword(s):  
Machine Learning ◽  
Risk Assessment ◽  
Local Government ◽  
Learning Algorithm ◽  
Government Debt ◽  
Entropy Method ◽  
Assessment System ◽  
Machine Learning Algorithm ◽  
Fiscal Revenue ◽  
The Government

Government debt risk is an important factor affecting macroeconomic stability and public expectation. The key to its prevention and control lies in early warning and early prevention. This paper builds an effective government debt risk assessment system based on machine learning algorithm. According to forming the performance of local government debt risk and its internal and external influencing factors, this study applies the analytic hierarchy process, entropy method, and BP neural network method to construct the local government risk assessment index system, which includes the primary and secondary indexes including the explicit debt risk, the contingent implicit debt risk, and the financial and economic operation risk. Using this system, this study carries on the government debt risk comprehensive weight assignment, the fiscal revenue forecast, the default probability calculation, the safety scale forecast, and finally the government debt risk assessment of the validity analysis. The system can provide signal guidance and policy reference for finance to cope with risks in advance, arrange the priority order of debt repayment, optimize the structure of fiscal revenue and expenditure, etc.

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