IMPROVING MANAGING THE CREDIT RISK IN CONDITIONS SLOWING ECONOMIC GROWTH

2015 ◽  
Vol 1 (1) ◽  
pp. 17-29
Author(s):  
Dariusz Prokopowicz
Keyword(s):  
Economic Growth ◽  
Financial Crisis ◽  
Credit Risk ◽  
Economic Downturn ◽  
Financial Systems ◽  
Financial Products ◽  
Increased Risk ◽  
Business Entities ◽  
Recent Financial Crisis ◽  
Lending Institutions

The recent financial crisis in 2008 has made a significant contribution to the growing importance of the analysis of processes of credit risk management and forced to take measures to improve the process. Sources of the financial crisis is now largely associated with the activities of mainly US investment banks that sold derivatives on the basis of income from high-risk mortgages. Increased risk recorded in the banking business, as a rule, also a derivative of the economic downturn in the sectors of bank customers, including non-financial business entities. In such a situation, banks are limited to provide customers with a more risky loan pro-active financial products. Given the global nature of financial markets and the importance of investment banking in the financial systems and the necessary actions to improve the tools for identifying, quantifying and managing banking risks, especially credit and lending institutions to protect themselves from potential sources of risk. The present analysis showed that the anti-crisis measures are mainly focused on the introduction of additional restrictions in the provision of financial products that may not be enough and may even be harmful, helping to reduce the economic growth of individual countries. Measures are also needed to strengthen supervisory agencies in the financial systems, including transnational supervision.

scholarly journals Diversification and Community Bank Performance during a Financial Crisis

2016 ◽  
Vol 3 (4) ◽  
pp. 1 ◽  
Author(s):  
Kathy Estes
Keyword(s):  
Financial Crisis ◽  
Economies Of Scale ◽  
Economic Downturn ◽  
Community Banks ◽  
Community Bank ◽  
Diversification Strategies ◽  
Multiple Regression Models ◽  
Recent Financial Crisis ◽  
The Impact ◽  
The Relationship

<p><em>Many U.S. banks failed or performed poorly during the recent financial crisis.  Although the costliest failures were large institutions, the majority of failures were community banks (less than $1 billion in total assets).  Community banks, which are considered instrumental in small business lending and employment growth, face different risks and challenges than their larger counterparts, including a lack of economies of scale and scope and exclusion from “too-big-to-fail” status.  These challenges, coupled with the recent failures, motivate research into potential strategies managers can use to improve performance.  This study examined the relationship between three potential diversification strategies and community bank risk-adjusted performance from 2007 to 2011.  Understanding these relationships could improve management’s decision-making, allowing them to choose risk-mitigating strategies during a severe economic downturn.  Herfindahl-Hirschman Indexes (HHIs) were calculated as proxies for geographic, activity, and asset diversification.  Multiple regression models for each of the five years were used to calculate the impact of diversification variables on risk-adjusted ROA.  The results show that diversification in all areas is directly related to performance; however, only the asset diversification relationship is significant.  To the extent possible for community banks, diversification may improve risk-adjusted performance.</em></p>

scholarly journals CONVENTIONAL AND UNCONVENTIONAL MONETARY POLICY. THE CASE OF ROMANIA

2016 ◽  
Author(s):  
Ioana Plescau
Keyword(s):  
Monetary Policy ◽  
Financial Crisis ◽  
Credit Risk ◽  
Interest Rates ◽  
Banking System ◽  
Central Banks ◽  
Unconventional Monetary Policy ◽  
National Bank ◽  
Recent Financial Crisis ◽  
The Relationship

The aim of our paper is to analyze the conventional and unconventional monetary policy in Romania, in the context of the recent financial crisis. We study the relationship between interest rates and credit risk, but also the non-standard monetary measures that were adopted by the National Bank of Romania and their impact on the banking system. Our results point to a decrease of interest rates in the years after the crisis, which is in line with the majority of central banks that have reduced monetary rates in order to sustain the economy and the credit activity.

scholarly journals A comparative analysis of models selected as a response to the world financial crisis

2009 ◽  
Vol 61 (3) ◽  
pp. 244-273
Author(s):  
Hasiba Hrustic
Keyword(s):  
Financial Crisis ◽  
Financial Stability ◽  
World Economy ◽  
Central Banks ◽  
Economic Recovery ◽  
Economic Downturn ◽  
Financial Systems ◽  
Comprehensive Plan ◽  
The World ◽  
Entire World

The financial crisis has hit the entire world economy. Many governments have been forced to rescue the financial systems, having as their priority to ensure economic recovery. A number of important measures have been taken to promote financial stability, including injection of capital into financial organizations, a substantial expansion of guarantees for bank liabilities by central banks, the recapitalization and the various liquidity programmes. However, the recovery has required a comprehensive plan to stabilize the financial system and restore normal flows of credit. The ultimate goal of the governments' activities has been to avoid a protracted economic downturn and restore the conditions for economic growth. .

scholarly journals Modelling Credit Risk: Evidence for EMV Methodology on Portuguese Mortgage Data

2021 ◽  
Vol 39 (8) ◽  
Author(s):  
Maria Rosa Borges ◽  
Raquel Machado
Keyword(s):  
Financial Crisis ◽  
Credit Risk ◽  
Adverse Selection ◽  
Stress Testing ◽  
Selection Effects ◽  
Risk Models ◽  
Explanatory Variables ◽  
Testing Procedures ◽  
Default Rates ◽  
Recent Financial Crisis

ABSTRACTTraditional credit risk models failed during the recent financial crisis and revealed weaknesses in forecasting and stress testing procedures. One of the reasons for this failure was the fact that they did not include lifecycle and macroeconomic adverse selection effects. In this article, we assess the applicability of the Exogenous-Maturity-Vintage (EMV) models to study the determinants of default rates. We obtain and examine the exogenous, maturity and vintage curves from a dataset of Portuguese mortgage data. We show that the exogenous, maturity and vintage curves follow the expected behavior, and, we identify and discuss a set of explanatory variables.

The coming of East and South-East Asian welfare states

2000 ◽  
Vol 10 (2) ◽  
pp. 162-184 ◽  
Author(s):  
Sven Olsson Hort ◽  
Stein Kuhnle
Keyword(s):  
Economic Growth ◽  
Financial Crisis ◽  
Social Insurance ◽  
Social Protection ◽  
East Asian ◽  
Welfare States ◽  
Asian Countries ◽  
Rapid Economic Growth ◽  
State Welfare ◽  
Recent Financial Crisis

It has long been assumed among Western commentators that rapid economic growth in East and South-east Asia has been achieved without the development of social policies. It has often been inferred that growth without social welfare is not only possible, but beneficial to further strong economic growth. The article questions these perceptions and beliefs. First, to what extent did East and South-east Asian countries delay the introduction of social insurance schemes compared to European pioneering countries, in the sense of introducing them only at a much higher level of 'modernization'? Second, to what extent was the economic miracle achieved by some of these countries based on (or accompanied by) attempts to forestall or retrench welfare state schemes? Third, to what extent has the recent financial crisis led to attempts at lowering or changing standards of social protection? The study shows that the Asian countries generally introduced social security programmes at a lower level of 'modernization' than Western European countries; that rapid and strong economic growth in the decade 1985–95 has in general been accompanied by welfare expansion; and that even after the financial crisis of 1997, expansion of state welfare responsibility is more evident than efforts to reduce or dismantle state welfare responsibility]

Financial Crisis and Tourism Activity

2020 ◽  
pp. 784-801
Author(s):  
Nikolaos Pappas ◽  
Alexandros Apostolakis
Keyword(s):  
Financial Crisis ◽  
Financial Economic ◽  
European Countries ◽  
Economic Downturn ◽  
Future Expectations ◽  
Expenditure Patterns ◽  
Interesting Insight ◽  
Tourism Activity ◽  
Tourism Expenditure ◽  
Recent Financial Crisis

The current recession has hit hard the European countries, and also affected tourism activity throughout the continent. Considering that several European countries (especially the Mediterranean ones) are heavily dependent upon tourism activity, the recent financial crisis has considerably affected their economy. This effect is strengthened with the parallel adoption of austerity measures aiming at economic recovery and exit from the recession. Despite the substantial magnitude and severity of this crisis, little is known about tourists' reactions in coping in with the recessionary effects. Contrary to the established practice of adopting a macroeconomic perspective in the examination of the impact of financial crises on tourism activity, this book chapter follows recent recommendations in the literature such as Brooner and de Hoog (2012) Kaytaz and Gul (2014) to examine the particular adverse effects of the current financial/economic crisis on individual behaviour and demand patterns. Thus, the research utilises a survey questionnaire to British tourists examining the effect of the current recession on travel and consumption patterns. Socio-demographically, the results reveal that the current recession appears to have a significant effect on gender, since male tourism expenditure is affected more than female one. Moreover, the uncertainty associated with income and employment levels during recession has a particularly strong effect on tourism expenditure. More specifically, uncertainty associated with both income and employment levels during the financial crisis has a negative and statistically significant effect on tourism expenditure. On the other hand, younger and middle aged tourists seem to be fairly unaffected by the financial crisis, as compared to more mature and senior tourists. In addition, the findings indicate that future expectations regarding income levels have no influence on current tourism expenditure patterns. Overall, those respondents that were unsure about the effect of the financial crisis on their current tourism expenditure patterns were also more likely to exhibit ambivalence about the future. The findings provide an interesting insight to tourism decision makers since they illustrate evidence regarding the turning points of demand, especially during periods of economic downturn.

scholarly journals Diversification and Community Bank Performance during a Financial Crisis

2014 ◽  
Vol 3 (4) ◽  
pp. 01-40
Author(s):  
Kathy Estes
Keyword(s):  
Financial Crisis ◽  
Economies Of Scale ◽  
Economic Downturn ◽  
Community Banks ◽  
Community Bank ◽  
Diversification Strategies ◽  
Multiple Regression Models ◽  
Recent Financial Crisis ◽  
The Impact ◽  
The Relationship

Many U.S. banks failed or performed poorly during the recent financial crisis.  Although the costliest failures were large institutions, the majority of failures were community banks (less than $1 billion in total assets).  Community banks, which are considered instrumental in small business lending and employment growth, face different risks and challenges than their larger counterparts, including a lack of economies of scale and scope and exclusion from “too-big-to-fail” status.  These challenges, coupled with the recent failures, motivate research into potential strategies managers can use to improve performance.  This study examined the relationship between three potential diversification strategies and community bank risk-adjusted performance from 2007 to 2011.  Understanding these relationships could improve management’s decision-making, allowing them to choose risk-mitigating strategies during a severe economic downturn.  Herfindahl-Hirschman Indexes (HHIs) were calculated as proxies for geographic, activity, and asset diversification.  Multiple regression models for each of the five years were used to calculate the impact of diversification variables on risk-adjusted ROA.  The results show that diversification in all areas is directly related to performance; however, only the asset diversification relationship is significant.  To the extent possible for community banks, diversification may improve risk-adjusted performance.

scholarly journals CRISE FINANCEIRA E REESTRUTURACIÓN DAS CAIXAS DE AFORRO EN ESPAÑA,2003-2013

2017 ◽  
Vol 26 (1) ◽  
pp. 5-16
Author(s):  
Antonio Antonio CALVO BERNARDINO ◽  
Irene MARTÍN DE VIDALES CARRASCO
Keyword(s):  
Financial Crisis ◽  
National Level ◽  
Structural Level ◽  
Financial Systems ◽  
Recent Financial Crisis

A crise financeira recente provocou unha importante transformación dossistemas financeiros nacionais, en especial, no que se refire ao protagonismo dalgúnsgrupos institucionais tradicionalmente importantes. É o caso do sector das caixas deaforros en España, o cal viuse afectado de forma moi significativa, e por enriba doacontecido noutros grupos institucionais, polas tempestades financeiras dos últimos anos.Coñecer os cambios que se produciron neste importante sector do noso país, tanto a nivelestrutural como de operativa e de presenza no territorio nacional, e tratar de buscar o seuparalelismo cos doutros países nos que estas entidades teñen unha maior relevancia sonos obxectivos perseguidos por este traballo.The recent financial crisis has caused an important transformation of thenational financial systems and especially in those that refer to the prominence of sometraditionally important institutional groups. This is the case of the saving banks sector inSpain which has been affected in a very significant way and because of what has occurredin other institutional groups by the financial storms in the last few years. This essay isaimed at understanding the changes that have been produced in this important sector ofour country, both in a structural level and an operational one, and at the national level,and trying to draw a parallel between those in other countries in which these entities havea major relevance.

scholarly journals The Relationship Between Corporate Tax Rate and Economic Growth During the Global Financial Crisis: Evidence from a Panel VAR

2019 ◽  
Vol 8 (2) ◽  
pp. 189-202
Author(s):  
Gamze Öz Yalaman
Keyword(s):  
Economic Growth ◽  
Financial Crisis ◽  
Global Financial Crisis ◽  
Panel Var ◽  
Corporate Tax ◽  
Causality Test ◽  
Tax Rate ◽  
Crisis Period ◽  
Dynamic Relationship ◽  
Recent Financial Crisis

This paper compares dynamic relationship between economic growth and corporate tax rate during the recent financial crisis and the non–crisis period using a panel VAR for 29 OECD countries over the period 1998-2016. The results show that corporate tax rate has a significantly negative effect on economic growth. Moreover, the recent financial crisis has had a significant effect on the endogenous interaction between corporate tax rate and economic growth. According to Granger causality test, there is only one-way causality from corporate tax rate to economic growth during the non-crisis period. Interestingly, there are not any causal relationships between corporate tax rate and economic growth during the crisis period. The results show that the recent crisis has had a significant effect on the endogenous interaction between corporate tax rate and economic growth.

scholarly journals Challenges for Policy mix in the Context of the Financial Crisis – the Case of Poland

2014 ◽  
Vol 1 (4) ◽  
pp. 137-150
Author(s):  
Joanna Stawska ◽  
Lena Grzesiak
Keyword(s):  
Economic Growth ◽  
Financial Crisis ◽  
Policy Mix ◽  
Recent Financial Crisis

The aim of this article is to present the essence of policy mix and the extraordinary actions undertaken by the monetary and fiscal authorities in Poland in response to the recent financial crisis. In the article, the hypothesis has been put forward that the challenges faced by monetary and fiscal authorities have contributed to carrying out coordinated actions, especially in support of economic growth during the recent financial crisis. As a result, in Poland during the last financial crisis, it seemed to observe greater cooperation between monetary and fiscal authorities.

Sign in / Sign up

Export Citation Format

Share Document