Thoughts on the Dilemma of When to Introduce the Euro in Hungary

In its EU accession treaty, Hungary committed to introducing the euro without a legally binding deadline. The question is therefore not whether the country will introduce the common currency, but when it will do so, and what factors play a role in the decision. Developments in recent years have confirmed that the euro system is able to weather a crisis, but also highlight that the euro does not in itself guarantee sustainable convergence. In addition to accession, members’ rights and obligations have also changed considerably, and these changes have not been completed. There are examples for successful economic policies without the euro and also for frustrated growth with the euro. Only one area has been identified where the advantages of membership are indisputable: yield spreads. In today’s international environment, this is much less important than in the past, but it is impossible to know how long this situation will last. Accordingly, the Hungarian strategy should target sustainable convergence, rather than the introduction of the euro. If the country can substantially reverse the increase in the government deficit and debt and keep them low, it would be worth waiting until the development paths related to the euro are outlined more clearly, while continuing with convergence. If this is not possible, the option to join the euro area as soon as possible should be preferred, which offers greater security but less room for autonomous manoeuvre.

Issues Relating to the Creation of a Central Database to Support Statistical Property Valuations

The valuation of real estate collateral is a long-established area of the lending process that is currently undergoing increasingly dynamic development and in which the use of statistical valuation methods is becoming more and more common instead of on-site valuations. The legal conditions for this have been created by amendments to European and national legislation in the past year, but for the method to be truly widely used and operational and to ensure the accuracy of the resulting valuations, access to detailed, accurate, up-to-date and regularly checked data on real estate must be also created. As the databases currently available for Hungarian real estate are very fragmented, in our study, we propose to create a central database that would provide a uniform, up-to-date set of data, by harmonising the existing separate databases. Such a database would help create a level playing field in the market and automate data transfer in a cost-effective, fast and reliable manner. This would greatly facilitate the uptake of statistical valuation methods, supporting the further spread of digitalisation, increasing banking competition, speeding up administration and reducing the cost of lending for all parties.

The Growing Importance of the Economic Role of the Corporate Bond Market

The role of corporate bonds has expanded globally in the past decade, as they are an ideal financial instrument both for diversifying the liability structure of issuing companies and managing investors’ portfolios. An adequately developed, liquid corporate bond market has a beneficial effect on the functioning and transparency of the market mechanisms of the economy and can also strengthen the crisis resilience of the financial system. Several studies have shown that – in addition to the normal functioning of companies – the issue of corporate financing is also important in crisis management, as uncertainty during a crisis has a negative impact on the liquidity of bank lending, limiting companies’ funding options. In such a situation, it is therefore vital that companies can also rely on other forms of financing. Recognising this in the aftermath of the 2008–2009 economic crisis, central banks in a number of countries launched bond purchase programmes in order to start supporting the expansion of the corporate bond market. Thanks to the Bond Funding for Growth Scheme (BFGS) of the Magyar Nemzeti Bank (the Central Bank of Hungary, MNB), the Hungarian corporate bond market now offers a realistic financing alternative to bank loans for a wide range of companies.

Centripetal and Centrifugal Forces in the European Union

The economic crises of the 21st century have challenged the unity of the European Union. The initially strong centripetal forces started to be weakened by new, unexpected centrifugal forces. What does the future hold for the European Union, and how can it face the unforeseen challenges? Currently the most important divisive, centrifugal forces within the EU include the management of mass migration, the debates surrounding the EU budget, the lack of a common foreign policy and the issue of sovereignty versus federalism. The essay addresses these topics one by one, because a strong, influential and unified Europe cannot exist without a solution to the migration crisis which is accepted by all Member States, a more coordinated fiscal and foreign policy and an explicit, uniformly accepted interpretation of the sovereignty of nation states. These areas are likely to remain divisive, centrifugal forces hampering the progress of European integration for years to come, but they should be discussed to identify the most important things to do.

A Snapshot of the Ownership Network of the Budapest Stock Exchange

In this study, I use the toolkit of network research to explore the network of ownership relations of entities present on the Budapest Stock Exchange as issuers in 2020, applying static methods and exponential random graph modelling (ERGM) analysis. In the snapshot typology and simulation-based capture of the network, not only the network of relations between issuers present on the stock market is analysed, but also the ownership relations of companies connected to the network but not listed on the stock market; thus, the study addresses the ownership network associated with the stock exchange as a whole. The research results provide us with an accurate answer about the morphological characteristics of the network, the network factors determining centrality, the hierarchy of the network, and the evolution of the network with the help of simulations. The study may allow us to obtain a clearer picture of the interlinkages and clusters of companies listed on the stock market, which can be used as a basis for subsequent longitudinal analyses.

Investors’ Reactions to Extreme Events in the Hungarian Stock Market

This paper examines investors’ reactions to extreme events in the Hungarian stock market. We seek to answer the research question whether following extreme events any overreaction of investors can be observed on the Budapest Stock Exchange. With a view to answering the research question, we identify extreme events based on extreme returns on the market portfolio and then – using an event study – we examine abnormal returns on winner and loser equities. After examining investors’ reactions, we inspect the performance of the contrarian strategy in the created event windows. The main result of our research is the presentation that – based on the analysis of the differences between the average cumulative abnormal returns after extreme events – investor overreactions can be observed in the Hungarian stock market. The loser portfolios relating to extreme events significantly outperform winner portfolios connected to the event. The excess return of the contrarian strategy cannot be attributed to differences in the market risk of winner and loser portfolios. The excess return of the strategy can be shown only under tighter extreme value thresholds. The clustering of the event windows with short-term reversal, high market volatility and extreme events is beneficial to the performance of the contrarian strategy. In addition, our research also shows that the purchase of loser portfolios or the development of a contrarian strategy after extreme events may generate profit for investors, since after extreme events the loser portfolios usually beat the market on a horizon of 21 days.