scholarly journals THE CAPITAL PRICE INFLUENCING FACTORS IN THE REPUBLIC OF SRPSKA

2014 ◽  
Vol 1 (8) ◽  
pp. 83
Author(s):  
Tajana Serdar ◽  
Dijana Sredić
Keyword(s):  
Growth Rate ◽  
Interest Rate ◽  
Financial Crisis ◽  
Interest Rates ◽  
Influencing Factors ◽  
Market Share ◽  
Price Structure ◽  
Before And After ◽  
The Republic

Focus of the paper is on the capital price in the Republic of Srpska, which is composed of the price of shareholder capital and the price of debt. The purpose of the research is to compare the capital price before and after beginning of the financial crisis, that corresponds to the comparison of the interest rates levels before and after the establishment of development funds. The two hypotheses are going to be proven. The first one is that market share of developing funds has a tendency of increasing as the growth rate of the country is decreasing. The second hypothesis is that with introducing the development funds the average interest rate decreases and furthermore the lowest interest rate boundary in the economy is moved down. In conclusion, we are going to display the results of proving hypothesis and give the overview of loans conditions and capital price structure in the country.

scholarly journals FOREIGN DIRECT INVESTMENT AND EXPORT PERFORMANCE OF THE PAKISTAN COINTEGRATION AND CAUSALITY APPORACH

2015 ◽  
Vol 11 (1) ◽  
Author(s):  
Abdur Rahman Aleemi ◽  
Keyword(s):  
Growth Rate ◽  
Foreign Direct Investment ◽  
Interest Rate ◽  
Interest Rates ◽  
Direct Investment ◽  
Export Performance ◽  
Gdp Growth ◽  
Local Market ◽  
Long Run ◽  
Gdp Growth Rate

FDI is a bridge between the world markets and local market and works as a way to increase the capabilities of the host country through investments that help in transfer of technology and creation of employment opportunities. The aim of this paper was to investigate the nexus of Foreign Direct Investment and the Export performance in the economic settings of Pakistan along in the presence of explanatory variables, based on well-established economic theory and long standing relationships. Supplementing the variables into a linear regression model, tested under the OLS and checked for the assumptions of normally and identically distributed errors, it was found that exports are positively affected by FDI and CPI whereas negatively affected by the interest rates in the case of Pakistan. Furthermore the long run relationship between the variables has been tested under the Johensen Cointegration test, which suggest that a long run relationship exist between the variables. Finally the direction of causality has been investigated with the help of Granger Causality test, indicating a bidirectional causality between CPI and interest rate, exports and interest rate, unidirectional causality from exports to CPI, CPI to GDP growth rate, interest rate to GDP growth rate, exports to FDI and exports to GDP growth rate.

scholarly journals Effects of the financial crisis and low interest rate environment on interest rate pass-through in Czech Republic, Hungary and Romania

2021 ◽  
Vol 71 (4) ◽  
pp. 551-567
Keyword(s):  
Czech Republic ◽  
Interest Rate ◽  
Financial Crisis ◽  
Interest Rates ◽  
Weighted Average ◽  
Real Economy ◽  
Cointegration Tests ◽  
Rate Environment ◽  
Prime Rate ◽  
Pass Through

Abstract In order for monetary policy’s interest rate channel to operate smoothly and effectively, the relevant retail interest rates of the real economy should react quickly and follow the movements of the prime rate. It has been observed that this connection has weakened since the financial crisis and it was suggested that the so called Weighted Average Cost of Liabilities (WACL) might be a better proxy for the banks’ marginal costs than the prime rate or interbank rate. In this study the WACL for Czech Republic, Hungary and Romania is calculated by applying cointegration tests and ARDL models. I examined whether their long-run relationships with the retail loan rates are more stable. Results: 1. Using the WACL instead of the interbank rate yields slightly more stable long-term relationships with the retail loan rates, and the WACL has been proved to be somewhat more stable than the interbank rate. 2. The interest rate pass-through has been efficient for the household loan rates in all three countries, but only in Romania for the corporate loan rates. 3. The results suggest that the central banks can effectively influence the commercial banks’ financing costs even in a low interest rate environment, although this cost represents only one component of the loan rates, and the movements of other components can offset the changes of the prime rate.

scholarly journals Monetary Policy Before and After the Financial Crisis and Its Economic and Legislative Impacts – Case of The Czech Republic

2019 ◽  
Author(s):  
Liběna Černohorská ◽  
Jana Janderová ◽  
Veronika Procházková
Keyword(s):  
Monetary Policy ◽  
Czech Republic ◽  
Financial Crisis ◽  
Interest Rates ◽  
Foreign Exchange ◽  
Inflation Targeting ◽  
Constitutional Court ◽  
The Czech Republic ◽  
Before And After ◽  
National Economies

The article analyses monetary policy response to the world financial crisis and focuses more closely on the monetary policy of the Czech National Bank (CNB) at this time. Until 2007, the implementation of monetary policy in OECD countries was perceived very positively. However, the financial crisis has clearly shown that the world’s financial markets are highly interconnected, and this can have a major impact on individual national economies. Therefore, the monetary policy strategy has changed from a policy based on the so-called flexible inflation targeting. Ensuring price stability is emphasised as part of the monetary policy role of the CNB in the provisions of Article 98 of the Constitution, in the Czech Republic. CNB is perceived as one of the most independent central banks, the contituional dimension of its independence being confirmed by case law of the Czech Constitutional Court. In response to the financial crisis, CNB was forced to pursue unconventional monetary policy in the form of foreign exchange interventions between 2013 and 2017. However, during the time period of these interventions, CNB policy did not lead to achievement of the inflation target. Following the completion of foreign exchange interventions, CNB returned to conventional monetary policy through interest rates.

Small- and medium-sized enterprises (SME) growth and financing sources: Before and after the financial crisis

2018 ◽  
pp. 1-16 ◽  
Author(s):  
Zélia Serrasqueiro ◽  
João Leitão ◽  
David Smallbone
Keyword(s):  
Interest Rate ◽  
Financial Crisis ◽  
Gross Domestic Product ◽  
Empirical Evidence ◽  
Cash Flow ◽  
Firm Size ◽  
Domestic Product ◽  
Before And After ◽  
Negative Effect ◽  
The Interest Rate

AbstractIn this study, the empirical evidence regarding small- and medium-sized enterprises’ (SMEs) growth determinants allows us to conclude that: (1) stimulating factors are cash flow and gross domestic product; (2) restrictive factors are: debt, firm size, age of the firm and the interest rate; and (3) in the period after 2008, the financial crisis and implementation of austerity measures, in the Portuguese context, produced a negative effect on SME growth. In the period 2008–2012, that is, after the beginning of the financial crisis, cash flow had less importance, while debt was found to have a stronger negative effect on SME growth, compared with the pre-crisis period.

scholarly journals Banks' Stability: The effect of Monetary Policies in the light of Global Financial Crisis

2016 ◽  
Vol 3 (2) ◽  
pp. 60
Author(s):  
Wael Bakhit ◽  
Salma Bakhit
Keyword(s):  
Interest Rate ◽  
Financial Crisis ◽  
Interest Rates ◽  
Structural Breaks ◽  
Global Financial Crisis ◽  
Monetary Policies ◽  
The Past ◽  
Potential Break ◽  
The Interest Rate ◽  
The Empirical Analysis

<p><em>This paper employs a quarterly time series to determine the timing of structural breaks for interest rates in USA over the last 60 years. <strong>The Chow test</strong> is used for investigating the non-stationary, where the date of the potential break is assumed to be known. Moreover, we empirically examined the deviation from an assumed interest rate as given in a standard Taylor rule and consequences on financial sectors. The empirical analysis is strengthened by analysing the rule from a historical perspective and look at the effect of setting the interest rate by the central bank on financial imbalances. The empirical evidence indicates that deviation in monetary policy has a potential causal factor in the build up of financial imbalances and the subsequent crisis where macro prudential intervention could have beneficial effect. Thus, our findings tend to support the view, which states that the probable existence of central banks has been one source of global financial crisis since the past decade.</em></p>

scholarly journals Steadiness of expectation theory measured by swaption curve

2021 ◽  
Vol 3 (2.1) ◽  
pp. 6-26
Author(s):  
Antonio Ruben Santillan Pashma
Keyword(s):  
Interest Rate ◽  
Financial Crisis ◽  
Interest Rates ◽  
Banking Sector ◽  
Fixed Income ◽  
Short Term ◽  
High Volatility ◽  
Expectation Theory ◽  
One Year ◽  
Premium Risk

The financial crisis that broke out in mid-2007 has spread in the existing financial system with great instability favoring the devaluation of currencies with the fall in market interest rates. This has caused potential investors to become more risk-averse and therefore, look for financial products, although lower profitability, also poses less risk. Following this line, it is the Fixed Income assets that have acquired greater prominence in these times of crisis.  This article highlights the strength of the expectation theory in different tranches, using EURIBOR rate to determine implicit forwards, and estimate the price of a one-year swap contract with 3 months of maturity,  and comparing in every moment with the real prices of swap as a benchmark. SWAP is the bigger derivative inside of the group of Fixed Income Assets.  After the quantitative analyst, it has been observed how the theory prevails of sceneries of low volatility but falls on sceneries when the volatility starts to increase. Introduction.  One of the basic assumptions about financial theory is talking about the expectations theory. Since the middle of the eighties, this theory has been used as the unbiased estimator to calculate the swap interest rate in the base of the spot bank interest rate. Aim. Quantitativa analyst of the steadiness of expectations theory in differents economical cycles, using the European Central bank as the source to get hold of the EURIBOR spot rates for 3 months, 6 months, 9 months, and 12months from 2004 to 2016. Results. During the periods before the crisis 2007, the prices of the IRSWAP are almost adjusted between the market and what the financial theory says. The situation starts to change after the financial crisis when the volatility of the market starts to increase due to the instability of the banking sector and traders started with speculations strategies forgetting the aim of hedging, operating, new positions the majority in the short term. Conclusion. Whether for speculative reason or interventions actions of the monetary authority, the theory e “EXPECTATIONS THEORY”, it is not an efficient predictor with out using a premium risk, during the periods of high volatility.

scholarly journals It is Only Natural

2020 ◽  
Vol 20 (116) ◽  
Author(s):  
Marco Arena ◽  
Gabriel Di Bella ◽  
Alfredo Cuevas ◽  
Borja Gracia ◽  
Vina Nguyen ◽  
...  
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Financial Crisis ◽  
Interest Rates ◽  
Euro Area ◽  
Debt Crisis ◽  
European Countries ◽  
Macroeconomic Policies ◽  
Future Path ◽  
Country Specific

Estimates of the natural interest rate are often useful in the analysis of monetary and other macroeconomic policies. The topic gathered much attention following the great financial crisis and the Euro Area debt crisis due to the uncertainty regarding the timing of monetary policy normalization and the future path of interest rates. Using a sample of European countries (including several members of the Euro Area), this paper provides estimates of country-specific natural interest rates and some of their drivers between 2000 and 2019. In line with the literature, our findings suggest that natural interest rates declined during this period, and despite a rebound in the last few years of it, they have not recovered to their pre-crisis levels. The paper also discusses the implications of the decline in natural interest rates for monetary conditions and debt sustainability.

scholarly journals The Dependence of China’s Monetary Policy Rules on Interest Rate Regimes: Empirical Analysis Based on a Pseudo Output Gap

2019 ◽  
Vol 11 (9) ◽  
pp. 2557
Author(s):  
Xiaoyu Zhang ◽  
Fanghui Pan
Keyword(s):  
Growth Rate ◽  
Monetary Policy ◽  
Interest Rate ◽  
Central Bank ◽  
Interest Rates ◽  
Policy Preferences ◽  
Output Gap ◽  
Policy Rules ◽  
Monetary Policy Rules ◽  
Nominal Interest Rates

Although a large number of scholars have studied the policy preferences and monetary policy rules of China’s central bank, most have found no evidence that China’s central bank has adjusted the nominal interest rates against the output gap. By constructing the pseudo output gap defined by the deviation of the real output growth rate and the target growth rate, this paper finds that China’s central bank prefers to adjust the nominal interest rates against the pseudo output gap. The monetary policy preferences and rules of China’s central bank in different interest rate regimes are investigated based on the threshold Taylor rule model. It is found that, in the high-interest-rate regime, the central bank adjusts the nominal interest against the inflation gap and the pseudo output gap, while in the low-interest-rate regime, there is no evidence that the central bank adjusts the nominal interest rates against the pseudo output gap. The lower bound of interest rate reduction and the weakening of interest rate policy effects caused by the liquidity trap of the interest rate are the possible reasons for China’s central bank not to adjust the nominal interest rates against the pseudo output gap.

Borrower platform choice: The influencing factors on herding

2020 ◽  
Vol 07 (01) ◽  
pp. 2050002
Author(s):  
Yingxiu Zhao ◽  
Wei Zhang ◽  
Pengfei Wang ◽  
Dehua Shen
Keyword(s):  
Interest Rate ◽  
Influencing Factors ◽  
Market Share ◽  
Herding Behavior ◽  
Negative Effects ◽  
Unique Data ◽  
Practical Implications ◽  
Loan Amount

Based on the unique data from a popular P2P website in China, this paper investigates the borrowers’ herding behavior and its influencing factors, e.g., platform attribute and moderating events. We mainly find that: (i) there exists herding behavior at the platform level and that the loan amount, loan interest rate and loan duration are positively related to the magnitude of herding; (2) the borrowers’ herding behavior is increased by a platform’s market share and the number of participants; (3) regulatory events have negative effects on the herding behavior. Our findings have practical implications for P2P participants, platforms, and policymakers.

scholarly journals An analysis of the Hungarian unsecured interbank market before and after the COVID-19 pandemic

2021 ◽  
Vol 8 (2) ◽  
pp. 193-209
Author(s):  
Ákos Zsolt Bodnár
Keyword(s):  
Interest Rate ◽  
Central Bank ◽  
Interest Rates ◽  
Structural Features ◽  
Interbank Market ◽  
Lehman Brothers ◽  
Before And After ◽  
Shock Resistance ◽  
Basic Network

In this article, I examine the structure of the Hungarian unsecured interbank forint market and the change of its network in time between 2019 and 2020, the years before and after the pandemic. I introduce the general characteristics of the market, such as turnover and interest rate, as well as the basic network and structural features. It can be established that, following the COVID-19 pandemic, the unsecured interbank turnover has increased by nearly 30%, which is partly attributable to the liquidity-providing measures taken by the central bank. In March, there was a spike in the interest weighed according to daily turnover, and it had higher level and volatility for the rest of the year 2020 than in 2019. Compared with the period following the bankruptcy of Lehman Brothers, the shock resistance of the unsecured interbank market was much more favourable than in 2020. As far as borrowers are concerned, there was some increase in concentration due to the events, but it was far less significant than during the previous crisis. At the same time, the polarisation of the market became stronger, as there were more participants who provided liquidity than those who absorbed a considerable amount of liquidity. Despite increased liquidity, the aforementioned strong polarisation may have been related to the higher level and the volatility of interest rates in 2020.

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