scholarly journals EU Debt Crisis and Contagious Effect via Transmission Mechanisms: Possible Effects on Turkey

2013 ◽  
Author(s):  
Mustafa Kemal Topcu ◽  
Poyraz Gürson ◽  
Halil İbrahim Ülker ◽  
Turan Erman Erkan
Keyword(s):  
Debt Crisis ◽  
Foreign Debt ◽  
Financial Policies ◽  
Growth Trend ◽  
Balance Sheets ◽  
Transmission Mechanisms ◽  
The Us ◽  
European Banks ◽  
Trade Partner ◽  
Maastricht Criteria

The common features of the crises, which are resulted from global crisis rooted from the US and emerged in Euro Zone sequentially, are the rate of public debt and budget deficit of GNP far from reflecting Maastricht criteria. Beginning in Greece in 2009, it has been seen in Ireland, Italy, Portugal, and Spain in a recent time. Although money union is established, leaving financial policies to country’s own initiative resulted in unsolved problems. Seeking solutions with IMF led to some sustainability programs. However, expectations show that debts will not be overcome for a long period. Towards this end, it is possible for Turkey to be affected since European Union is her biggest trade partner. There is a general consensus on that trade and credit channel of transmission mechanisms would affect Turkey. Export preserves its level at 55%. Likewise, a large part of foreign debt of Turkey is to European banks. Furthermore, sustainment of the recent growth trend of Turkey requires new funds. In case European banks strengthen their capital by means of downsizing their balance sheets as a restructuring, Turkey may be in a challenging position.

7. The global financial crisis and the Eurozone sovereign debt crisis

2016 ◽  
pp. 101-118
Author(s):  
John Goddard ◽  
John O. S. Wilson
Keyword(s):  
Financial Crisis ◽  
Sovereign Debt ◽  
Global Financial Crisis ◽  
Debt Crisis ◽  
Investment Banks ◽  
Sovereign Debt Crisis ◽  
Mortgage Backed Securities ◽  
The Us ◽  
European Banks ◽  
The Global Financial Crisis

‘The global financial crisis and the Eurozone sovereign debt crisis’ describes the chain of events in the US financial crisis that then triggered the Eurozone banking collapse. It outlines the problems in US mortgage-backed securities, the collapse of three of the ‘big five’ investment banks (Bear Stearns, Lehman Brothers, and Merrill Lynch), and the actions of the US Federal Reserve and the Treasury. Several major European banks also foundered at the height of the financial crisis as a consequence of the US crisis and, by the end of 2014, five Eurozone member countries—Ireland, Greece, Spain, Portugal, and Cyprus—had received bailout loans from the EU and International Monetary Fund, conditional on the implementation of tough austerity measures.

Russian Banking System under Conditions of Global Crisis

2009 ◽  
pp. 4-14 ◽  
Author(s):  
G. Gref ◽  
K. Yudaeva
Keyword(s):  
Banking System ◽  
Commodity Prices ◽  
Financial Sector ◽  
Banking Crises ◽  
Economic Recovery ◽  
Balance Sheets ◽  
Current Economic Crisis ◽  
Risk Appetite ◽  
The Us ◽  
The Face

Problems in the financial sector were at the core of the current economic crisis. Therefore, economic recovery will only become sustainable after taking care of the major weaknesses in the financial sector. This conclusion is relevant both for the US and UK - the two countries where crisis has started, and for other economies which financial institutions turned out to be fragile in the face of the swings in the risk appetite. Russia is one of the countries where the crisis has revealed serious deficiency in the financial sector. Our study of 11 banking crises during the last 25-30 years shows that sustainable economic recovery and decrease in the dependence on commodity prices will be virtually impossible without cleaning of balance sheets and capitalization of the financial sector.

Same Story, Different Place?

2018 ◽  
Author(s):  
Viral V. Acharya ◽  
Tim Eisert ◽  
Christian Eufinger ◽  
Christian Hirsch
Keyword(s):  
Banking Sector ◽  
Debt Crisis ◽  
Banking System ◽  
Policy Implications ◽  
Balance Sheets ◽  
System P ◽  
Loan Supply ◽  
European Banking ◽  
European Debt Crisis

This chapter compares the recapitalizations of the Japanese banking sector in the 1990s with those in the ongoing European debt crisis. The analysis points to four main policy implications. First, recapitalizing banks by insuring or purchasing troubled assets alone is not likely to solve the problem of banks’ weak capitalization, as this measure is not able to adjust the extent of the recapitalization to the banks’ specific needs. Second, the amount of the recapitalization should be based on actual capital shortages and not risk-weighted assets to avoid banks decreasing their loan supply. Third, banks should face restrictions regarding the amount of dividends they are allowed to pay out. Finally, banks must be induced to clean up their balance sheets and reduce the amount of bad (non-performing) loans to rebuild confidence in the European banking system.

Reforming the Regulatory Treatment of Sovereign Exposures in Banking Regulation

2020 ◽  
Vol 53 (1) ◽  
pp. 81-122
Author(s):  
André Sterzel
Keyword(s):  
Financial Stability ◽  
Sovereign Debt ◽  
Debt Crisis ◽  
Banking Regulation ◽  
Jel Classification ◽  
Bank Capital ◽  
Exposure Limits ◽  
Government Bonds ◽  
Balance Sheets ◽  
Bank Balance Sheets

Abstract The European sovereign debt crisis has shown the tight linkage between sovereign and bank balance sheets. In the aftermath of the crisis, several reforms have been discussed in order to mitigate the sovereign-bank nexus. These reforms include the abolishment of preferential government bond treatment in banking regulation. This paper gives a detailed overview of literature and data which are closely related to the existing preferential sovereign bond treatment in bank regulation and highlights the need for reforms especially in the euro area. Against this background, the following three regulatory reforms are described and discussed: (i) positive risk weights for government bonds in bank capital regulation, (ii) sovereign exposure limits, and (iii) haircuts for government bonds in bank liquidity regulation. The discussion focusses on the effects of these reforms for bank behaviour and financial stability. JEL Classification: H63, H12, G11, G18

scholarly journals Household Debt Revaluation and the Real Economy: Evidence from a Foreign Currency Debt Crisis

2020 ◽  
Vol 110 (9) ◽  
pp. 2667-2702 ◽  
Author(s):  
Emil Verner ◽  
Győző Gyöngyösi
Keyword(s):  
Foreign Currency ◽  
Debt Crisis ◽  
Spillover Effects ◽  
Household Debt ◽  
Sudden Increase ◽  
Real Economy ◽  
Balance Sheets ◽  
Default Rates ◽  
Foreign Currency Debt ◽  
The Impact

We examine the consequences of a sudden increase in household debt burdens by exploiting variation in exposure to household foreign currency debt during Hungary’s late-2008 currency crisis. The revaluation of debt burdens causes higher default rates and a collapse in spending. These responses lead to a worse local recession, driven by a decline in local demand, and negative spillover effects on nearby borrowers without foreign currency debt. The estimates translate into an output multiplier on higher debt service of 1.67. The impact of debt revaluation is particularly severe when foreign currency debt is concentrated on household, rather than firm, balance sheets. (JEL E21, E32, F34, G51)

Prophesying upon the Bones: J. Reuben Clark and the Foreign Debt Crisis, 1933-39.

1994 ◽  
Vol 99 (1) ◽  
pp. 323
Author(s):  
Robert F. Himmelberg ◽  
Gene A. Sessions
Keyword(s):  
Debt Crisis ◽  
Foreign Debt

Beyond Transitions to Democracy in Latin America

1992 ◽  
Vol 24 (3) ◽  
pp. 665-684 ◽  
Author(s):  
Marcelo Cavarozzi
Keyword(s):  
Political Violence ◽  
Latin American ◽  
Debt Crisis ◽  
Foreign Debt ◽  
The United States ◽  
South American ◽  
Capital Investments ◽  
American Military ◽  
Transitions To Democracy ◽  
Industrialised Countries

Transitions into democracy: convergence and distinct pathsIn mid-1982 Mexico's Minister of Finance, Jesús Silva Herzog, arrived in the United States and announced that his country was not going to continue paying its foreign debt. Silva Herzog's declaration was soon followed by debt defaults in many other Latin American countries, marking the beginning of the region's most serious economic crisis in this century. This crisis involved the partial breakdown of Latin America's financial and trade linkages to the world economy; the cessation of new credit money paralleled an interruption in the flow of capital investments, amounting to a total reversal of the financial patterns of previous decades. (The level of foreign investment, especially in manufacturing and mining, had been relatively high since the mid-1950s, albeit with significant differences from country to country).The debt crisis coincided, not incidentally, with a convergence of the political trajectories of five of the region's more industrialised countries: Mexico, Brazil, and the three Southern Cone nations of Argentina, Chile, and Uruguay. All five governments – the South American military dictatorships and Mexico's stable authoritarian PRI regime – experienced periods of political turbulence closely related both to the severe economic disruptions and to other domestic and international influences.One of the remarkable aspects of this 1982 political convergence was that it came after the ‘long decade’ of the 1970s, during which the governmental routes of the five countries had been extremely divergent. In Argentina, for example, instability, militarism and political violence had intensified, starting in 1969; these phenomena then spread to its traditionally more democratic neighbours, Chile and Uruguay.

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