scholarly journals Tackling Private Over-Indebtedness in Asia

2020 ◽  
Vol 20 (172) ◽  
Author(s):  
José Garrido ◽  
Sanaa Nadeem ◽  
Nagwa Riad ◽  
Anjum Rosha ◽  
Chanda DeLong ◽  
...  

One consequence of interest rates remaining “too low for too long” since the Global Financial Crisis is the buildup in private leverage in emerging economies. These vulnerabilities have been laid bare by the COVID-19 shock. This paper employs the growth at risk framework (Adrian, Boyarchenko, and Giannone, 2019) to examine how different types of private leverage present risks to future GDP growth in Asian economies. We find evidence that private leverage can boost GDP growth in the near term, but can increase the risks of low growth over the medium term. For our sample, we also find that household debt poses a larger drag on future GDP growth than corporate debt. In the second part of the paper, we provide an overview of a strategy for prevention and resolution of over-indebtedness, with a focus on legal tools, and with considerations to account for the consequences of the COVID-19 pandemic. Using a novel cross-country survey, we examine the role of legal techniques to prevent and treat corporate and household over-indebtedness, benchmarking those in ASEAN-5, China, India, Japan and Korea against international best practice. The analysis can inform a country-specific prioritized approach to strengthening legal frameworks.

SERIEs ◽  
2020 ◽  
Vol 11 (4) ◽  
pp. 501-529
Author(s):  
Mar Delgado-Téllez ◽  
Enrique Moral-Benito ◽  
Francesca Viani

AbstractThis paper investigates how much of the current account adjustment after the global financial crisis in Spain can be explained by cyclical factors. For this purpose, we extend the IMF’s external balance assessment methodology to allow for country-specific slopes and intercepts. The good fit of these cross-country regressions implies negligible residuals for most countries, and, as a result, the positive analysis of current account decompositions provides a more informative assessment of the external balance drivers. According to our findings, around 60% of the 11 pp. adjustment of the Spanish external imbalance over the years 2008–2015 can be explained by transitory factors such as the output gap, the oil balance, and the financial cycle—a share that diminished down to 50% during the more recent recovery period. The remaining adjustment of the Spanish external balance is explained by factors such as the cyclically adjusted fiscal consolidation, population ageing, lower growth expectations, or competitiveness gains, which can all be considered as more permanent phenomena.


Author(s):  
Hasanul Banna ◽  
Md Rabiul Alam

This paper aims to estimate the efficiency scores of 153 Islamic banks of 32 countries during the period 2011 to 2017 by deploying data envelopment analysis and Simar–Wilson double bootstrapping regression techniques to determine how financial inclusion and its interaction effect with GDP growth impact on Islamic bankingefficiency to promote inclusive sustainable growth. The findings show that the efficiency trends of Islamic banks in most countries have been inconsistent in the aftermath of the global financial crisis; this indicates that the banking industry is still bearing the consequences of that recession. However, Islamic banks in Bangladesh,Malaysia, Mauritia, Qatar, Tunisia, and Sudan are performing efficiently and, in spite of being war-affected countries, Islamic banks in Iraq and Palestine, more interestingly, have also seen an ascending trend in terms of improving their efficiency levels. The results foreground that to improve Islamic banks’ efficiency, financial inclusion (FI) must play a key role. Moreover, the effect of the interaction between FI and GDP growth suggests that FI plays a significant role in sustainable development, which creates a positive relationship between inclusive sustainable growth and the efficiency of Islamic banks. Since research on FI is an ongoing process, this paper contributes to the existing literature and methodology pertinent to the subject by analysing bothnon-bias and bias-corrected efficiency through the utilisation of more recent data from Islamic banks.


2020 ◽  
Vol 44 (4) ◽  
pp. 723-747 ◽  
Author(s):  
Emmanuel Carré ◽  
Laurent Le Maux

Abstract Although the literature has studied the role of the Federal Reserve as the global lender of last resort in 2007–09, many aspects of the Dollar Swap Lines to the European Central Bank need further exploration. Accordingly, we provide original evidence about the auction operations, allotted amounts and interest rates with regard to the Federal Reserve’s dollar swaps and the European Central Bank’s dollar provision. More specifically, we examine the demand side of the Dollar Swap Lines (whereas the existing literature mentions the supply side only) and we scrutinise the interest rate (whereas the literature concentrates on volumes) set by the Federal Reserve, and also the rate set by the European Central Bank. Our findings cast light on the nature of the relationship between the Federal Reserve and the European Central Bank. Finally, we contribute to the literature on the global lender of last resort by coining the notion of the financial dilemma, under the dollar system within a framework of globalised financial markets.


Author(s):  
Irene Spagna

This chapter analyzes the growth of OTC derivatives before the global financial crisis of 2008 and the role of credit default swaps, in particular, in the near collapse of the global economy. It begins by exploring the basic characteristics of derivatives used as risk management instruments by investors to hedge against or exploit the volatility of asset prices. The analysis further reveals that the pre-crisis period was characterized by a broad-based consensus favoring deregulated markets and globally designed private rules. While not always unanimously supported, permissive public regulatory choices were often encouraged by interest group lobbying, the market-friendly views of many domestic authorities, and concerns about regulatory uncertainty and international competitiveness.


Author(s):  
Yilmaz Akyüz

The preceding chapters have examined the deepened integration of emerging and developing economies (EDEs) into the international financial system in the new millennium and their changing vulnerabilities to external financial shocks. They have discussed the role that policies in advanced economies played in this process, including those that culminated in the global financial crisis and the unconventional monetary policy of zero-bound interest rates and quantitative easing adopted in response to the crisis, as well as policies in EDEs themselves....


2011 ◽  
Vol 216 ◽  
pp. R1-R15 ◽  
Author(s):  
Erland W. Nier

There is increasing recognition that prior to the global financial crisis financial regulation had lacked a macroprudential perspective. There has since been a strong effort to make a new macroprudential orientation operational, including through the establishment of new macroprudential authorities or ‘committees’ in a number of jurisdictions. These developments raise — and this paper explores — the following three questions. First, what distinguishes macroprudential policy from microprudential policy and what are its key tasks? Second, what powers should be given to macroprudential authorities and what should be their mandate? Third, how can governance arrangements ensure that macroprudential policies are pursued effectively? While arrangements for macroprudential policy will to some extent be country-specific, we identify three basic challenges in setting up an effective macroprudential policy framework and discuss options to address them.


2021 ◽  
Author(s):  
Наталия Александровна Иванова

Актуальность исследования для экономики усиливается такими явлениями, как влияние мирового финансового кризиса, усложнение отраслевой и территориальной структуры производства, усиление интеграции всех сфер общественной жизни, возрастание значения экологических, социальных и политических факторов развития общества, повышение трансакционных издержек принятия решений в сфере управления. Изучение литературы о территориях дает основание определить понятие региональной системы России как элемент, подсистему некоторой иерархической системы, в роли которой выступает национальная экономика. Процессы глобализации коренным образом изменяют роль регионов в национальной экономике. Регион постепенно становится не только отдельным экономическим агентом, но также вступает в мировые конкурентные процессы. Положение территориально-организованных систем оказывается зависимым не только от макроэкономических условий или возможностей самих регионов, но также от расстановки конкурентных сил, механизмов взаимодействия регионов с другими субъектами. В этой связи возникает необходимость системных исследований с целью выработки комплекса мер, которые будут способствовать повышению конкурентоспособности экономики в целом, ее регионов в частности. Существующий инструментарий региональной экономики является уже недостаточным для анализа такого рода проблем, а традиционный конкурентный анализ не рассматривает регионы в качестве субъектов конкуренции. Требуется расширение и применение новых теоретических подходов к анализу региональных экономических систем и эффективности их развития, формированию целостной концепции развития территориальной организации хозяйства, что обусловило актуальность данного исследования. The relevance of the study for the economy is enhanced by such phenomena as the impact of the global financial crisis, the complication of the sectoral and territorial structure of production, the strengthening of integration of all spheres of public life, the increasing importance of environmental, social and political factors in the development of society, the increase in transaction costs of decision-making in the field of management. The study of the literature on territories gives grounds to define the concept of the regional system of Russia as an element, a subsystem of some hierarchical system, in the role of which the national economy acts. The processes of globalization are fundamentally changing the role of regions in the national economy. The region is gradually becoming not only a separate economic agent, but also enters into global competitive processes. The position of geographically organized systems turns out to depend not only on the macroeconomic conditions or the capabilities of the regions themselves, but also on the alignment of competitive forces, the mechanisms of interaction of regions with other entities. In this regard, there is a need for systematic research in order to develop a set of measures that will contribute to improving the competitiveness of the economy as a whole, its regions in particular. The existing tools of the regional economy are no longer sufficient to analyze such problems, and traditional competitive analysis does not consider regions as subjects of competition. It requires the expansion and application of new theoretical approaches to the analysis of regional economic systems and the effectiveness of their development, the formation of an integral concept of the development of the territorial organization of the economy, which determined the relevance of this study.


Author(s):  
Pedro Raffy Vartanian ◽  
Sérgio Gozzi Citro ◽  
Paulo Rogério Scarano

Over the last 25 years, Brazil has been among the countries with the highest interest rates globally. High interest rates have been necessary during several recent times, such as in the period from 1997 to 1999, due to the repeated international financial crises that have plagued the country. From 1999, a sustained path of interest rate reduction begun. With the outbreak of the 2008 international financial crisis, the Brazilian monetary authorities promoted a new round of falling domestic interest rates in response to the recessive effects and the threat of a systemic crisis that could hang over the national financial system. In 2012, a set of interventionist nature policies led to a decrease in the Selic rate. Thus, looking at the last 25 years, it appears that many factors have started to influence the trajectory of Brazilian interest rates. In this context, the present work aims to identify, based on empirical research, the determinants of spot and future interest rates. As a methodology, the research uses a multivariate econometric vector autoregressive model (VAR) with error correction (VEC). The analysis covers the years 2017 to 2019, corresponding to the period in the aftermath of the global financial crisis of 2008. The results evidence that both the spot rate and the DI future can be determined by the fluctuations in the level of inflation and by the level of activity and the real exchange rate, in addition to the effects of the lagged variables themselves.


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