This document summarizes a study on determinants of credit constrained firms in Central and Eastern Europe. It outlines the motivation, literature review, data sources, and empirical results. The study aims to isolate firm-level credit demand from supply, examine how banking competition and credit information sharing impact access to finance, and analyze heterogeneity across countries and years. Key findings include that loan needed firms and credit constrained firms decreased from 2008-2009 to 2012-2014 in most countries, and the impact of banking competition on access to finance depends on whether the market power or information hypothesis dominates.
Overview:
- Higher education is crucial to improving the skill level of American workers, especially in the face of a rising income and employment gap across workers with varying education levels.
- Due to increasing enrollment and the rising cost of higher education, student loans play an increasingly important role in financing higher education.
- However, the rapidly increasing burden of student debt, approaching $1 trillion now, including both federal and private student loans with very different characteristics.
- We present new analysis on the historical and current situation of student debt and discuss its implication on the borrowers and the economy.
Keskpanga ökonomist Natalja Viilmann tutvustab Eesti majanduse konkurentsivõime ülevaadet.
Ülevaates analüüsitakse Eesti ekspordivõimet, suhtelise tootlikkuse kasvu ja vaadeldakse rahvusvahelistel turgudel hakkamasaamist iseloomustavaid näitajaid, mis põhinevad siinsete hindade ja palkade dünaamika võrdlusel Eesti peamiste kaubanduspartneritega. Analüüs Eesti majanduse konkurentsivõime kohta valmib kord aastas.
Agenda for Europe: which of Estonia’s success factors can be useful for other...Eesti Pank
Ardo Hansson, Eesti Pank 5 April 2014
A financial forum organised by The European House – Ambrosetti in Italy http://www.ambrosetti.eu/en/news/2014/financial-markets-workshop
Ardo Hansson. Economic Adjustment in the Baltic countriesEesti Pank
The document compares economic adjustment in the Baltic countries to other countries during previous recessions and to other small euro-area countries during the 2007-2009 crisis. It finds that while the Baltic countries' adjustment was similar to patterns in emerging markets, the degree of volatility and changes in domestic demand and external vulnerabilities were unusually high compared to past recessions. However, fiscal and competitiveness indicators did not exhibit high volatility. Compared to Greece, Ireland and Portugal, the Baltic countries experienced larger declines in GDP during the crisis but have seen a faster recovery, though unemployment remains higher than in the other countries.
Overview:
- Higher education is crucial to improving the skill level of American workers, especially in the face of a rising income and employment gap across workers with varying education levels.
- Due to increasing enrollment and the rising cost of higher education, student loans play an increasingly important role in financing higher education.
- However, the rapidly increasing burden of student debt, approaching $1 trillion now, including both federal and private student loans with very different characteristics.
- We present new analysis on the historical and current situation of student debt and discuss its implication on the borrowers and the economy.
Keskpanga ökonomist Natalja Viilmann tutvustab Eesti majanduse konkurentsivõime ülevaadet.
Ülevaates analüüsitakse Eesti ekspordivõimet, suhtelise tootlikkuse kasvu ja vaadeldakse rahvusvahelistel turgudel hakkamasaamist iseloomustavaid näitajaid, mis põhinevad siinsete hindade ja palkade dünaamika võrdlusel Eesti peamiste kaubanduspartneritega. Analüüs Eesti majanduse konkurentsivõime kohta valmib kord aastas.
Agenda for Europe: which of Estonia’s success factors can be useful for other...Eesti Pank
Ardo Hansson, Eesti Pank 5 April 2014
A financial forum organised by The European House – Ambrosetti in Italy http://www.ambrosetti.eu/en/news/2014/financial-markets-workshop
Ardo Hansson. Economic Adjustment in the Baltic countriesEesti Pank
The document compares economic adjustment in the Baltic countries to other countries during previous recessions and to other small euro-area countries during the 2007-2009 crisis. It finds that while the Baltic countries' adjustment was similar to patterns in emerging markets, the degree of volatility and changes in domestic demand and external vulnerabilities were unusually high compared to past recessions. However, fiscal and competitiveness indicators did not exhibit high volatility. Compared to Greece, Ireland and Portugal, the Baltic countries experienced larger declines in GDP during the crisis but have seen a faster recovery, though unemployment remains higher than in the other countries.
Sarah Brown. Portfolio Allocation, Background Risk and Households’ Flight to ...Eesti Pank
This document describes a fractional ordered probit (DFOP) model to analyze how background risks affect households' allocation of financial assets into risky and safe asset classes. The model accounts for the fact that background risks like labor income volatility should cause households to "deflate" or reduce their holdings of risky assets. It models the expected share of a household's portfolio allocated to high, medium, and low risk asset classes based on observed characteristics and two background risk equations representing the propensity to move away from high and medium risk assets. The model is estimated on US Survey of Consumer Finances data from 1998-2013 to investigate how different types of uncertainty influence household portfolio composition.
Eesti Panga avalik loeng. Palkade ja tootlikkuse areng Eestis 15.05.2013Eesti Pank
Eesti Panga avatud loeng 15.05.2013
Eesti Panga majandusuuringute allosakonna juhataja Tairi Rõõm ja vanemökonomist Jaanika Meriküll tutvustavad uuringut "Palkade ja tootlikkuse areng Eestis".
Rainer Olt. Ühtne euromaksete piirkond SEPAEesti Pank
Eesti Panga makse- ja arveldussüsteemide osakonna juhtivspetsialist Rainer Olt esines ettekandega Eesti maksekeskkonnast Eesti Kaupmeeste Liidu korraldatud maksekeskkonna muudatusi käsitleval seminaril 23.04.2013
Madis Müller. Estonian financial sector – recent developments and the changin...Eesti Pank
The document summarizes recent developments in Estonia's financial sector and the changing role of Eesti Pank (the central bank of Estonia). It notes that Estonia's banking sector is dominated by Nordic banks and that credit growth is slowing while the real estate market is recovering. It discusses Eesti Pank taking on new responsibilities for macroprudential supervision and the implications of the new Single Supervisory Mechanism for oversight of Nordic bank subsidiaries in Estonia. Close cooperation will be needed between Nordic and Baltic authorities and the European Central Bank as financial supervision responsibilities are merged.
This document summarizes the key points from the Financial Stability Review. It notes that while economic activity has reduced uncertainty in international markets, recovery has been slower in some eurozone countries due to high debt and weak banking sectors. A high household debt burden and rapidly rising real estate prices pose major risks to stability in Sweden and Norway. Estonian companies have not been affected by the economic slowdown, but risks remain from a weak eurozone economy and potential fall in Nordic real estate prices. Maintaining a 10% minimum capital requirement is important for the resilience of Estonia's banking sector.
Karsten Staehr. The Euro Plus Pact: Competitiveness and External Capital Flow...Eesti Pank
The document summarizes a presentation on the relationship between competitiveness and external capital flows in EU countries. It discusses the Euro Plus Pact, which assumes that weak competitiveness, as measured by increasing unit labor costs, leads to current account deficits. However, the presentation finds that empirical evidence does not support this relationship. Granger causality tests and VAR models instead indicate that increased capital inflows lead to a short-term real exchange rate appreciation and deterioration of competitiveness. The findings suggest the Euro Plus Pact has the causal relationship backwards and that relative wages are highly dependent on credit availability.
Rainer Olt. Ühtne euromaksete piirkond (SEPA) ja muutused Eesti maksekeskkonnasEesti Pank
Eesti Panga makse- ja arveldussüsteemide osakonna juhtivspetsialisti Rainer Olti ettekanne Eesti maksekeskkonnast Äripäeva portaali raamatupidaja.ee korraldataval seminaril, mis käsitles maksekeskkonna muudatusi 2014. aastal. 11.06.2013
Eesti Pank Economic Statement 12 December 2013Eesti Pank
The document provides an economic statement from Eesti Pank (the central bank of Estonia) summarizing the Estonian economy and forecast for coming years. Key points include:
- The Estonian economy grew more slowly than forecast in 2013 due to weaker external demand, especially from Finland.
- Rapid wage growth and high domestic demand have caused some imbalances as productivity growth was negative.
- Growth is forecast to pick up in 2014 and 2015 as external demand and investments increase, but risks include continued wage pressures and uncertainty in export markets.
- Inflation will remain moderate while unemployment falls and the budget deficit remains small.
David Seim. Tax Rates, Tax Evasion and Cognitive SkillsEesti Pank
This document summarizes a study examining the relationship between tax rates, tax evasion, and cognitive skills. The study uses a structural model to estimate the tax elasticity of evasion between 1-3.5. It finds that individuals with higher cognitive abilities, as measured by military enlistment data, are more likely to evade taxes. The study contributes new empirical estimates of tax evasion and shows that the ability to respond to taxes through evasion differs across cognitive skill levels.
Avalik loeng. Eesti Panga majandusprognoosi tutvustus 13. juunil 2013Eesti Pank
Majanduspoliitika ja -prognoosi allosakonna juhataja Rasmus Kattai tutvustas Eesti Panga vastvalminud majandusprognoosi ja andis ülevaate Eesti majanduse viimase aja arengust.
Eesti Pank koostab Eesti majanduse prognoosi kaks korda aastas. Prognoos valmib koostöös EKPga ning on ühtlasi ka sisendiks euroala majandusprognoosile. Ettekanne põhineb 12. juunil avaldataval väljaandel Rahapoliitika ja Majandus. Prognoos hõlmab ettevaadet kuni 2015. aastani.
The document discusses the state of the Chinese economy and banking system. It provides an overview of China's economy, noting that GDP growth is expected to further slow as the country transitions to a more consumption-driven model with tighter credit. It also summarizes China's national debt levels and financial markets, highlighting concerns about the large shadow banking sector and potential defaults. The document concludes with studies on several major Chinese banks and observations about credit quality risks.
This document discusses investments in equities and stocks markets. It covers:
1) The current situation of Mongolia's equities and stock market, which has grown in the last decade but its value is still relatively small compared to other countries at around 12-19% of GDP.
2) The risks and challenges facing Mongolia's market, including its sensitivity to economic cycles and lack of diversification.
3) Several issues that need to be addressed for the further development of Mongolia's equities and stock market, such as increasing market size, liquidity and participation of both domestic and foreign investors.
Sarah Brown. Portfolio Allocation, Background Risk and Households’ Flight to ...Eesti Pank
This document describes a fractional ordered probit (DFOP) model to analyze how background risks affect households' allocation of financial assets into risky and safe asset classes. The model accounts for the fact that background risks like labor income volatility should cause households to "deflate" or reduce their holdings of risky assets. It models the expected share of a household's portfolio allocated to high, medium, and low risk asset classes based on observed characteristics and two background risk equations representing the propensity to move away from high and medium risk assets. The model is estimated on US Survey of Consumer Finances data from 1998-2013 to investigate how different types of uncertainty influence household portfolio composition.
Eesti Panga avalik loeng. Palkade ja tootlikkuse areng Eestis 15.05.2013Eesti Pank
Eesti Panga avatud loeng 15.05.2013
Eesti Panga majandusuuringute allosakonna juhataja Tairi Rõõm ja vanemökonomist Jaanika Meriküll tutvustavad uuringut "Palkade ja tootlikkuse areng Eestis".
Rainer Olt. Ühtne euromaksete piirkond SEPAEesti Pank
Eesti Panga makse- ja arveldussüsteemide osakonna juhtivspetsialist Rainer Olt esines ettekandega Eesti maksekeskkonnast Eesti Kaupmeeste Liidu korraldatud maksekeskkonna muudatusi käsitleval seminaril 23.04.2013
Madis Müller. Estonian financial sector – recent developments and the changin...Eesti Pank
The document summarizes recent developments in Estonia's financial sector and the changing role of Eesti Pank (the central bank of Estonia). It notes that Estonia's banking sector is dominated by Nordic banks and that credit growth is slowing while the real estate market is recovering. It discusses Eesti Pank taking on new responsibilities for macroprudential supervision and the implications of the new Single Supervisory Mechanism for oversight of Nordic bank subsidiaries in Estonia. Close cooperation will be needed between Nordic and Baltic authorities and the European Central Bank as financial supervision responsibilities are merged.
This document summarizes the key points from the Financial Stability Review. It notes that while economic activity has reduced uncertainty in international markets, recovery has been slower in some eurozone countries due to high debt and weak banking sectors. A high household debt burden and rapidly rising real estate prices pose major risks to stability in Sweden and Norway. Estonian companies have not been affected by the economic slowdown, but risks remain from a weak eurozone economy and potential fall in Nordic real estate prices. Maintaining a 10% minimum capital requirement is important for the resilience of Estonia's banking sector.
Karsten Staehr. The Euro Plus Pact: Competitiveness and External Capital Flow...Eesti Pank
The document summarizes a presentation on the relationship between competitiveness and external capital flows in EU countries. It discusses the Euro Plus Pact, which assumes that weak competitiveness, as measured by increasing unit labor costs, leads to current account deficits. However, the presentation finds that empirical evidence does not support this relationship. Granger causality tests and VAR models instead indicate that increased capital inflows lead to a short-term real exchange rate appreciation and deterioration of competitiveness. The findings suggest the Euro Plus Pact has the causal relationship backwards and that relative wages are highly dependent on credit availability.
Rainer Olt. Ühtne euromaksete piirkond (SEPA) ja muutused Eesti maksekeskkonnasEesti Pank
Eesti Panga makse- ja arveldussüsteemide osakonna juhtivspetsialisti Rainer Olti ettekanne Eesti maksekeskkonnast Äripäeva portaali raamatupidaja.ee korraldataval seminaril, mis käsitles maksekeskkonna muudatusi 2014. aastal. 11.06.2013
Eesti Pank Economic Statement 12 December 2013Eesti Pank
The document provides an economic statement from Eesti Pank (the central bank of Estonia) summarizing the Estonian economy and forecast for coming years. Key points include:
- The Estonian economy grew more slowly than forecast in 2013 due to weaker external demand, especially from Finland.
- Rapid wage growth and high domestic demand have caused some imbalances as productivity growth was negative.
- Growth is forecast to pick up in 2014 and 2015 as external demand and investments increase, but risks include continued wage pressures and uncertainty in export markets.
- Inflation will remain moderate while unemployment falls and the budget deficit remains small.
David Seim. Tax Rates, Tax Evasion and Cognitive SkillsEesti Pank
This document summarizes a study examining the relationship between tax rates, tax evasion, and cognitive skills. The study uses a structural model to estimate the tax elasticity of evasion between 1-3.5. It finds that individuals with higher cognitive abilities, as measured by military enlistment data, are more likely to evade taxes. The study contributes new empirical estimates of tax evasion and shows that the ability to respond to taxes through evasion differs across cognitive skill levels.
Avalik loeng. Eesti Panga majandusprognoosi tutvustus 13. juunil 2013Eesti Pank
Majanduspoliitika ja -prognoosi allosakonna juhataja Rasmus Kattai tutvustas Eesti Panga vastvalminud majandusprognoosi ja andis ülevaate Eesti majanduse viimase aja arengust.
Eesti Pank koostab Eesti majanduse prognoosi kaks korda aastas. Prognoos valmib koostöös EKPga ning on ühtlasi ka sisendiks euroala majandusprognoosile. Ettekanne põhineb 12. juunil avaldataval väljaandel Rahapoliitika ja Majandus. Prognoos hõlmab ettevaadet kuni 2015. aastani.
The document discusses the state of the Chinese economy and banking system. It provides an overview of China's economy, noting that GDP growth is expected to further slow as the country transitions to a more consumption-driven model with tighter credit. It also summarizes China's national debt levels and financial markets, highlighting concerns about the large shadow banking sector and potential defaults. The document concludes with studies on several major Chinese banks and observations about credit quality risks.
This document discusses investments in equities and stocks markets. It covers:
1) The current situation of Mongolia's equities and stock market, which has grown in the last decade but its value is still relatively small compared to other countries at around 12-19% of GDP.
2) The risks and challenges facing Mongolia's market, including its sensitivity to economic cycles and lack of diversification.
3) Several issues that need to be addressed for the further development of Mongolia's equities and stock market, such as increasing market size, liquidity and participation of both domestic and foreign investors.
The aim of this paper is to examine the impact of bank minimum capital requirement on credit supply in Ivory Coast, over the period from 1982 to 2016. To this end, the ARDL method was used to study the nature of the relationship between our explanatory variables and bank credit supply in Ivory Coast. The study indicates some major results. The results showed that in the short term, real GDP per capita and bank size influence credit supply in Ivory Coast. Real GDP per capita acts negatively on credit supply in the short run while bank size has a positive influence on banks’ capacity to finance the economy. In the long run, the Cooke ratio and the openness rate have an impact on bank credit supply in Ivory Coast. The recovery of bank minimum capital requirements positively influences bank credit supply while the openness of the economy negatively impacts banks’ ability to offer bank credit. In terms of economic policies implications, monetary authorities must enforce and respect the policy of increasing bank minimum capital requirements. They must encourage banks to increase their banking assets.
Student Debt Overview: Postsecondary National Policy Institute (PNPI) The New York Fed
Higher Education and Student Debt Overview:
Higher education is crucial to improving the skill level of American workers, especially given rising income and employment gaps between high school and college graduates.
With growing enrollment and rising tuition, student loans play an increasingly important role in financing higher education.
Rapid growth in the prevalence of student borrowing, and aggregate student debt balances approaching $1 trillion, have attracted attention from policymakers, the media, and the public.
We describe the historical and current situation of student debt and discuss its implications for borrowers and the economy.
This thesis examines the impact of monetary policy on commercial bank balance sheet variables in sub-Saharan Africa. The study employs a dynamic panel data methodology to investigate the effects of monetary policy, as captured by real interest rates, on bank credit, liquid assets, and deposits using data from 31 sub-Saharan African countries from 2000 to 2014. Diagnostic tests show that the models are valid. The results indicate that monetary policy, bank capitalization levels, and their interaction have significant impacts on balance sheet variables both at the regional level and across sub-Saharan Africa as a whole.
Madis Müller. Finance Estonia Forum 2014Eesti Pank
The document discusses recent developments in the European financial system. It notes that government bond yields have declined due to accommodative monetary policy. However, interest rates on loans to corporations still vary substantially between countries. While the European Central Bank has implemented new supervisory mechanisms, banks continue struggling with bad loans and weak profitability. The document also examines the Estonian banking sector, which has strong capitalization and profitability compared to other countries. It notes early promising signs of growth in alternative funding sources for Estonian businesses like private equity funds, but the capital markets remain underdeveloped.
This document is a dissertation that investigates the role of bank lending in causing the 2007-2008 global financial crisis. It examines debt levels, the subprime mortgage market, and bank lending before and after the crisis. The study aims to determine if rising debt, particularly from subprime mortgages and banks, was the underlying driver of the crisis. It will analyze debt and lending data from major economies to identify trends and assess arguments that excessive credit and risky lending practices overwhelmed the financial system. The dissertation also considers the impact of reduced bank lending after the crisis in prolonging the economic downturn.
The document discusses trust in banks across different countries, with a focus on Ukraine and Belarus. It finds that trust in banks varies significantly between countries, with Ukraine having particularly low levels of trust compared to other nations. Low trust can cause people to save money at home rather than depositing it in banks, which has implications for economic growth as it keeps deposits out of the banking system. The document examines some factors that can influence trust in banks, such as institutional quality, historical experiences, economic conditions, and regulation.
This document summarizes a dissertation that examines the extent to which government bailouts during the 2008 financial crisis distorted competition in the European banking sector. It begins with an introduction that provides background on the crisis and vast state aid provided to banks. It then outlines the methodology, literature review, theoretical framework, and analysis that will be used to assess if bailed out banks gained competitive advantages through lower funding costs. The dissertation aims to determine if bailouts undermined competition by benefiting some banks over others.
This document summarizes research on problems with bank lending in Bulgaria. The researchers conducted interviews with bankers in Bulgaria and Hungary to understand how banks ensure "good" loans and get repayment on "bad" loans. They found significant difficulties for Bulgarian banks in both areas. Banks struggled to obtain complete information to evaluate borrowers and projects. They also had problems encouraging repayment, seizing collateral, and pursuing legal action on defaults. While some problems are universal, others seemed specific to transition economies like weaknesses in sharing borrower information. The researchers identify ways Bulgarian banks could improve their lending practices and make policy recommendations to address issues like a lack of credit reporting and over-reliance on collateral.
Internationalization of Islamic Finance: Bridging EconomiesSDGsPlus
The document discusses the global financial crisis and opportunities for Islamic finance. It notes that pre-crisis leverage built up vulnerability, and deleveraging during the crisis triggered fire sales and exacerbated problems. While Islamic finance principles call for greater stability, currently it only represents a small share of the global market. However, there may be positive ideas from Islamic finance that could inform Western policies to enhance stability.
Ivo Pezzuto - Miraculous Financial Engineering or Toxic Finance? The Genesis ...Dr. Ivo Pezzuto
SMC University Working Paper Issue 12: 2008
Pezzuto, Ivo, Miraculous Financial Engineering or Toxic Finance? The Genesis of the U.S. Subprime Mortgage Loans Crisis and its Consequences on the Global Financial Markets and Real Economy (October 7, 2008). Available at SSRN: http://ssrn.com/abstract=1332784 or http://dx.doi.org/10.2139/ssrn.1332784
Mercer Capital's BankWatch | October 2013 | Loan Growth Resumes, Remains SlowMercer Capital
Brought to you by the Financial Institutions Team of Mercer Capital, these monthly newsletters are focused on bank activity across the United States. Each edition of Bank Watch highlights various banking metrics, including public market indicators, M&A market indicators, and key indices of the top financial institutions, providing insight into financial institution valuation issues.
The document summarizes the key points from the Financial Stability Review published on April 23, 2014. It identifies the main risks to Estonian financial stability as a worsening of risk assessments for Nordic economies and banks increasing funding and liquidity risks, and a deterioration in the external environment weakening economic growth in Estonia and worsening bank loan quality. Rapid growth in real estate prices is also highlighted as a risk that could affect household and business finances and build up risks in the financial system.
Effect of Credit Information Bureau and Appraisal Methods on performance of C...AI Publications
This study intended to identify the effect of credit information bureau and appraisal methods on performance of commercial banks in Mwanza Region. Specifically, the study intended to assess the effect of Credit Reference Bureaus’ information sharing on the credit performance of commercial banks, to assess the effect of the credit scoring appraisal method employed on the performance of commercial banks and to assess the effect of non-performing loans on the performances of Commercial Banks in the Mwanza Region. The study was guided by three theories; the theory of asymmetric information, moral hazard theory and multiple - bank lending model. The study adopted a descriptive research design, sampling 105 respondents randomly and purposefully and collected data through questionnaires. The aim is to establish the effect of credit information bureau and appraisal credit scoring methods on the performance of commercial banks in the Mwanza Region. Results revealed that credit information bureau had a positive, strong effect on the credit performance of commercial banks, and this effect is significant in Mwanza region. Non-performing loans had a positive, weak effect on the credit performance of commercial bank and it was not significant. Finally the credit scoring appraisal approach has a negative, weak effect on commercial bank credit performance. The study concluded that credit information bureau has a significant influence on credit performance of commercial banks and therefore should be used to reduce non-performing loans. The study recommended that banks should continue to use the credit reference bureau’s information-sharing services as it enhances their profitability through the reduction of non-performing loans.
Macroeconomics and financial imbalancesADEMU_Project
All of this is highly political. Therefore, Political Union is not at the end the work to be done, but must be placed at the beginning of the road map.
Ademu Research outlined as presented at the Kick-Off Conference
Econometric analysis of Internet Banking Development in the New EU CountriesŽygimantas Matijošaitis
This thesis examines the diffusion of internet banking in 12 new EU member states that joined between 2004-2007 using panel data analysis and generalized Bass diffusion models. The document provides background on internet banking benefits and growth trends in the sample countries. It then outlines the dataset used, which covers the period of 2005-2014 annually, and introduces the diffusion of innovation theory and Bass diffusion model that will be applied. The methodology section describes the different panel data models tested - pooled LS, fixed individual effects, and fixed time period effects - with variations including restricted and unrestricted coefficients. Model selection is based on tests like redundant fixed effects, robustness, and autocorrelation. The conclusion will determine the most appropriate model to explain internet banking development in these
This document summarizes the key findings from a financial stability review conducted by Eesti Pank. It finds that while risks to Estonian financial stability are generally low, the main risks are a deterioration in the external economic environment due to the conflict between Russia and Ukraine, and a reassessment of risks to Nordic economies increasing financing risks for Estonian banks. It also notes rising real estate prices driven by low interest rates as a risk. The review recommends new requirements for housing loans in Estonia to limit loan-to-value, debt-to-income, and maturity lengths to prevent a future lending boom.
Similar to Apostolos Thomadakis. Determinants of Credit Constrained Firms: Evidence from Central Eastern and Europe Region (20)
Eesti Panga president Madis Müller ja finantsstabiilsuse osakonna juhataja Jaak Tõrs tutvustasid kõigile majandushuvilistele äsja valminud Eesti finantssektori ülevaadet.
Karsten Staehr. Macroeconomic News and Sovereign Interest Rate Spreads before...Eesti Pank
1. The document analyzes how the effect of macroeconomic news on Italian sovereign interest rate spreads changed before and during the ECB's quantitative easing program from 2014-2022.
2. It finds that macroeconomic news had a significant effect on spreads before QE, with a coefficient of around -4, whereas the effect during QE was near zero, with the difference being statistically significant.
3. The results were robust to different specifications and definitions of news shocks. This suggests that QE helped insulate sovereign bond spreads from the impact of macroeconomic news by removing tail risks and "killing normal market reactions to news."
Majanduse Rahastamise Ülevaade. Veebruar 2023Eesti Pank
22.02.2023 Eesti Panga ökonomistid Taavi Raudsaar ja Mari Tamm tutvustasid äsja valminud Majanduse Rahastamise Ülevaadet ehk millised on Eesti majapidamiste ja ettevõtete rahastamisvõimalused.
The Sufficiency of Debt Relief as a Panacea to Sovereign Debt Crisis in Sub-S...Eesti Pank
The thesis analyzes the efficacy of debt relief as a solution to sovereign debt crises in Sub-Saharan Africa, using Ghana, Nigeria, and Zambia as case studies. It conducts debt sustainability analyses under various scenarios of partial or full debt reduction, cancellation, and standstills. Structural impulse response analyses show how macroeconomic factors like growth, interest rates, and exchange rates impact debt levels over time. The results suggest that debt relief can reduce debt burdens but economic reforms are also needed for long-term sustainability. Limitations include low frequency data and lower assumed interest rates.
Luck and skill in the performance of global equity funds in Central and Easte...Eesti Pank
The document summarizes a study examining the performance of actively managed global equity funds in Central and Eastern Europe between 2005-2019. The study uses a bootstrap methodology to separate fund manager skill from luck. Key findings include:
- Approximately 5% of funds showed skill in outperforming their benchmarks gross of fees, with one fund in particular outperforming factor returns net and gross of fees.
- Most funds that underperformed did so due to lack of skill rather than bad luck.
- Fees were too high relative to the abnormal performance added by many mutual funds.
- While some fund managers possessed skill, it was generally not enough to cover their fees, suggesting fees may be too high or competition
The document summarizes a study examining how Lithuanian food manufacturing firms adjusted to trade sanctions imposed by Russia in 2014 that banned many agricultural imports from the EU.
The main adjustments included:
- Reducing part-time employment as the most flexible margin of adjustment. Larger reductions occurred for firms more exposed to the Russian market.
- Increasing exports to other countries to compensate for lost Russian exports. More exposed firms increased other exports more.
- Decreasing investment and full-time employment for more exposed firms, though full-time employment adjustments took longer.
A conceptual framework is presented predicting this sequence of adjustments, with part-time labor adjusting first due to lower costs, followed by exports, investment,
The document provides an economic forecast for Estonia from 2022-2025. It finds that high inflation and energy prices are hurting the global and European economies. Inflation in Estonia is projected to remain high in 2023 before slowly falling in 2024-2025. Interest rates are also expected to continue rising to curb inflation. Fiscal policy measures risk exacerbating inflation. Overall the Estonian economy is forecast to recover by late 2023 but high costs and uncertainty will continue weighing on growth.
Fabio Canovaand Evi Pappa. Costly disasters, energy consumption, and the role...Eesti Pank
Neljapäeval, 20. oktoobril 2022 toimus Eesti Panga avatud seminar, kus rahvusvaheliselt tunnustatud majandusteadlane Fabio Canova tutvustas koos Evi Pappaga valminud uurimustööd „Kulukad looduskatastroofid, energiatarbimine ning eelarvepoliitika“ (Costly disasters, energy consumption, and the role of fiscal policy).
Romain Duval. IMF Regional Economic Outlook for EuropeEesti Pank
31. oktoobril 2022 toimus Eesti Panga avatud seminar, kus Rahvusvahelise Valuutafondi esindaja Romain A. Duval tutvustas IMFi Euroopa osakonnas vastvalminud regionaalset majandusväljavaadet.
Pressikonverents Eesti Pangas, kus keskpanga president Madis Müller ja finantsstabiilsuse osakonna juhataja Jaak Tõrs tutvustavad ülevaadet, mis analüüsib suuremaid riske Eesti finantssektoris.
Pressikonverentsil saab teada:
kuidas majanduse jahenemine, kiire hinnakasv ja intresside tõus mõjutavad inimeste ja ettevõtete võimet laene tagasi maksta
milline mõju saab majanduse jahenemisel olema uute laenude andmisel ettevõtetele ja inimestele
kuidas mõjutavad võlakirjaturgudel toimuvad muutused Eesti pangandussektori rahastamist
milliseid samme tuleb keskpanga hinnangul astuda finantssektori tugevuse kindlustamiseks.
PFMS, India's Public Financial Management System, revolutionizes fund tracking and distribution, ensuring transparency and efficiency. It enables real-time monitoring, direct benefit transfers, and comprehensive reporting, significantly improving financial management and reducing fraud across government schemes.
Budgeting as a Control Tool in Government Accounting in Nigeria
Being a Paper Presented at the Nigerian Maritime Administration and Safety Agency (NIMASA) Budget Office Staff at Sojourner Hotel, GRA, Ikeja Lagos on Saturday 8th June, 2024.
Poonawalla Fincorp’s Strategy to Achieve Industry-Leading NPA Metricsshruti1menon2
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Bitcoin was conceived as a peer-to-peer electronic cash system, aimed at providing an alternative to the traditional banking system plagued by inefficiencies, high fees, and lack of transparency. The underlying blockchain technology, a distributed ledger maintained by a network of nodes, ensures that every transaction is recorded and cannot be altered, thus providing a secure and transparent financial system.
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Apostolos Thomadakis. Determinants of Credit Constrained Firms: Evidence from Central Eastern and Europe Region
1. Determinants of Credit Constrained Firms: Evidence
from Central Eastern and Europe Region
Apostolos Thomadakis
University of Warwick
21st of July 2016
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 1 / 44
3. Motivation
13.4
11.8
10.1 10.7
24.9
0510152025
Firms Biggest Obstacle
Access to finance Inadequately educated workforce
Political instability Practices of competitors
Tax rates
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 3 / 44
4. Motivation
Is the bank credit problem due to supply credit constraints or due to
low credit demand?
Supply-side problems ) reduced lending due to sharp decline in global
risk appetite and capital ‡ows (Puri et al., 2011; Jimenez et al., 2012).
Overly indebted borrowers ) declined credit demand (Holton et al.,
2012; Everaert et al., 2015).
Which are the speci…c …rm characteristics that a¤ect …rm’s ability to
access …nance?
Are small …rms more likely to be credit constrained than large …rms?
(Beck et al., 2005; Beck et al., 2006).
What about foreign-owned, publicly listed, exporting, audited,
innovative …rms?
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 4 / 44
5. Motivation
Which are the banking sector environment characteristics that a¤ect
…rm’s ability to access …nance?
In which way does banking sector competition within a country a¤ects
credit constrained …rms (Carbo-Valverde et al., 2009; Ryan et al.,
2014)?
What about concentration or capital-to-asset ratio? Are
undercapitalized banks more likely to reduce their lending?
Which are the institutional and regulatory environment determinants
that make …rms more or less constrained?
Does the quality of legal system complements credit access (Safavian
and Sharma, 2007)?
Are …rms with reported credit history more favorable to get a loan
(Qian and Straham, 2007; Bae and Goyal, 2009)?
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 5 / 44
6. Contribution
Isolate …rm-level credit demand from credit supply.
We don’t equate competition and concentration.
Add to the discussion on the e¤ect of information sharing on bank
credit.
Negative impact of credit information sharing on access to …nance,
which can be mitigated by more contestable (competitive) banking
market (Pagano and Jappelli).
Negative impact of foreign banks on access to …nance, which can be
mitigated by higher availability of credit information history.
Heterogeneity across years: 2 separate rounds of BEEPS (2008-2009
and 2012-2014), but also pooling them together.
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 6 / 44
8. The Baltics: From stem to stern”
In 2005-2007 Baltics had the highest growth rates in the EU.
GDP in Latvia increased by an average of 10.5% year on year, while
in Estonia and Lithuania by 9.3%.
Extreme form of neoliberalism applied by the government.
Cheap foreign credit ! real estate bubble ! rising living standards.
In 2009 growth in Estonia and Lithuania slumped to a low of almost
-15%.
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 8 / 44
10. Hungary: “The basket case”
In 2005-2006 the budget de…cit was 10%.
Austerity packages: increase tax, reduce bene…ts and subsidies
However, when the 2008 crisis hit Hungary was doubly exposed.
First, credit had been taken in foreign currencies by the government,
…rms and households.
Second, highly dependent on the demand from Western Europe
economies for goods, which fell sharply.
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 10 / 44
11. Hungary: “The basket case”
4.3 4.0
0.5 0.9
-6.6
0.8
1.8
-1.5
1.5
3.6
-6-4-2024
Percent
Hungary
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 11 / 44
12. Poland and Czech Republic: “The velvet crisis”
Di¤erentiate themselves from the catastrophes in the rest of CEE.
GDP in Czech Republic fell just below the EU average.
Do not have huge property bubbles fed by foreign banks.
Much lower exposure to foreign currencies (8% in Czech Republic and
30% in Poland).
Floating exchange rate in Poland fell against the euro by 30%
between 2008-2009.
However, this “success”is masked and should be treated with caution.
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 12 / 44
14. Credit constrained …rms
K16: Referring to the last …scal year, did this establishment apply for
any loans or lines of credit?
Yes ) …rm labeled applied
No ) (go to question K17)
K17: What was the main reason for not applying?
1 No need for a loan (su¢ cient capital) ) …rm labeled unconstrained
(no need a loan)
2 Application procedures were complex
3 Interest rates were not favorable
4 Collateral requirements were too high
5 Size of loan and maturity were insu¢ cient ) …rm labeled discouraged
6 It is necessary to make informal payments
7 Did not think it would be approved
8 Other reason
K20: What was the outcome of the most recent application?
Application was approved ) …rm labeled approved
Application was rejected ) …rm labeled rejected
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 14 / 44
15. Credit constrained …rms
These questions allow us to di¤erenciate between …rms that did not
apply for a loan because they did not need one and those that did not
apply because they were discouraged (but actually needed a loan).
De…nitions (Loan needed …rms)
Loan needed …rms are those that either applied for a bank loan or were
discouraged from applying.
De…nition (Credit constrained …rms)
Credit constrained …rms are those that need a bank loan, but they do not
have one, either because they applied and were rejected, or because they
were discouraged from applying.
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 15 / 44
18. Impact of competition on access to …nance
Competition is a measure of market conduct (behaviour of …rms in
various dimensions such as pricing, R&D, advertising, etc.).
Two theories:
Market power hypothesis: less competition in the banking market
results in a lower supply at a higher cost, thus reducing access to
…nance.
Information hypothesis: more competition in the banking market will
weaken relationship building by preventing banks of the incentive to
invest in soft information.
Therefore, less competitive markets may be associated with more credit
availability.
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 18 / 44
19. Measures of competition
Three approaches have been proposed for measuring competition:
1 The …rst considers factors such as …nancial system concentration, the
number of banks, the market share of the top 3 or 5, or the
Her…ndahl index.
they rely on Structure-Conduct-Performance paradigm and do not
directly assess banks’behavior.
2 The second considers regulatory indicators (entry requirements, formal
and informal barriers etc.) to gauge the degree of contestability.
it also considers changes over time in …nancial instruments, innovations,
etc. as these can lead to changes in the competitive landscape.
3 The third uses formal competition measures (such as the Lerner
index, Boone index, H-statistic of Pazar-Rosse, etc.) that proxy the
e¤ect of output on input prices.
theoretically well-motivated and have often been used in other
industries.
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 19 / 44
20. Concentration and competition
Concentration is a measure of market structure.
In which way concentration a¤ects competition?
Structure-Conduct-Performance (SCP) paradigm:
1 Structure in‡uences conduct ! lower concentration leads to more
competitive behaviour.
2 Conduct in‡uences performance ! more competitive behaviour leads
to less market power, less pro…ts.
3 Therefore, structure in‡uences performance ! lower concentration
leads to less pro…ts (lower pro…tability).
So, competition can be approximated by the degree of concentration.
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 20 / 44
21. Concentration and competition
Criticism of SCP on the assumption that structure determines
performance (one-way causality).
Structure is not necessarily exogenous (market structure itself is
a¤ected by conduct and performance).
Contestability theory (Baumol, 1982): there can be competition in
concentrated markets, if there is credible threat of entry and exit.
Market structure indicators measure the actual market shares without
allowing inferences on the competitive behaviour of banks. They are
indirect proxies.
Therefore, competitiveness cannot be measured by market structure
indicators (Berger et al., 2004; Claessens and Laeven, 2004;
Claessens, 2009; Carbo-Verde et al., 2009).
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 21 / 44
22. Lerner index
We need a non-structural measure who do not access the competitive
conduct of banks through the analysis of market structure but rather
it measures banks’conduct directly.
A measure to obtain estimates of market power from the observed
behaviour of banks.
The Lerner index measures the markup banks charge their customers
by calculating the disparity between price and marginal cost:
Lerner index =
P MC
P
It shows the ability of an individual bank to charge a price above
marginal cost.
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 22 / 44
23. Lerner index
Follwoing Fernandez de Guevara et al. (2005); Berger et al. (2008);
Love and Peria (2014); Anginer et al. (2014), we estimate the cost
function:
log (Cit ) = a0i + β1 log(Qit ) + β2 [log(Qit )]2
+ β3 log(W1,it ) + β4 log(W2,it ) +
+β5 log(W3,it ) + β6 log(Qit ) log(W1,it ) + β7 log(Qit ) log(W2,it ) +
+β8 log(Qit ) log(W3,it ) + β9 [log(W1,it )]2
+ β10 [log(W2,it )]2
+
+β11 [log(W3,it )]2
+ β12 log(W1,it ) log(W2,it ) +
+β13 log(W1,it ) log(W3,it ) + β14 log(W2,it ) log(W3,it ) + Yt + it
Using the estimated coe¢ cients we calculate the marginal cost:
MCit =
∂Cit
∂Qit
=
Cit
Qit
[β1 + β2 log(Qit ) + β6 log(W1,it ) + β7 log(W2,it ) + β8 log(W3,it )]
The index ranges between 0 (perfect competition) and 1 (monopoly).
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 23 / 44
24. Her…ndahl-Hirschman index
We measure concentration using the Her…ndahl-Hirschman index
(HHI):
HHI =
n
∑
i=1
s2
i
where si is the market share of bank i.
The HHI index stresses the importance of larger banks by assigning
them a greater weight than smaller banks and incorporates each bank
individually.
In addition, opposite to other concentration measures, such as the
concentration of the top three or top …ve banks, HHI does not imply
arbitrary cut-o¤s and insensitivity to the share distribution.
Higher values of HHI indicate higher market concentration.
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 24 / 44
25. Bank capital
Despite extensive research there is still much debate on the impact of
banks’capital on the supply of credit.
Tighter capital requirements ) increase loan growth (Bernanke and
Lown, 1991; Woo, 2003; Albetrazzi and Marchetti, 2010; Busch and
Prieto, 2014).
e.g. 1 percentage point increase in bank capital increases bank loans by
0.23% (Busch and Pietro, 2014).
Tighter capital requirements ) decreases loan supply (Fur…ne, 2000;
Puri et al., 2011; Francis and Osborne, 2012; Aiyar et al., 2014;
Bridges et al., 2014).
e.g. 1 percentage point increase in banks capital to assets ratio causes
a decline of 1.2% in the supply of credit (Francis and Osborne, 2012).
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 25 / 44
26. Foreign banks and impaired loans
Controversy about the e¤ect of foreign banks on access to credit.
Foreign banks can either:
improve access to …nance (Giannetti and Ongena, 2009; Dell-Ariccia
and Marquez, 2004)
or worsen it (Detragiache et al., 2008; Maurer, 2008; Gormley, 2010;
Claessens and van Horen, 2014).
On the other hand,the e¤ect of impaired loans is more clear.
the probability of a …rms being credit constrained is positively
correlated with NPLs (EIB, 2014).
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 26 / 44
27. Data
10 Central Eastern European countries
Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland,
Romania, Slovakia, Slovenia
BEEPS: Business Environment and Enterprise Performance Survey
2 rounds: 2008-2009 (3,194 …rms; 78% interviewed in 2008) and
2012-2014 (3,235 …rms; 92% interviewed in 2013)
Firm-level: Capital, City, Age, Small, Medium, Publicly listed, Sole
proprietorship, Privatized, Foreign owned, Government owned,
Exporter, Audited; Innovation.
Bank-level: Lerner index, Her…ndahl-Hirschman index (HHI), bank
capital to assets ratio, loan loss reserves to total gross loans, share of
foreign banks.
Country-level: in‡ation, legal rights index, credit registry coverage,
government e¤ectiveness, regulatory quality.
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 27 / 44
31. Summary statistics
Table 6. Correlation Matrix for Bank Level Variables
2008-2009
Constrained Lerner HHI Capital to Loan loss Foreign
index assets reserves banks
Constrained 1
Lerner index -0.0210 1
HHI -0.0783*** -0.0245 1
Capital to assets 0.0767*** 0.0153 0.2259*** 1
Loan loss reserves -0.0460* -0.0561*** -0.1049*** -0.23032*** 1
Foreign banks 0.0720*** 0.0423** 0.2816*** 0.2040*** -0.3520*** 1
2012-2014
Constrained 1
Lerner index -0.0349 1
HHI -0.0823*** 0.1297*** 1
Capital to assets 0.1090*** 0.0100 0.2567*** 1
Loan loss reserves 0.1155*** -0.0144 -0.2010*** -0.1887*** 1
Foreign banks 0.0619** 0.0176 0.2872*** 0.1409*** -0.2808*** 1
Pooled sample
Constrained 1
Lerner index -0.0145 1
HHI -0.0944*** 0.0137 1
Capital to assets 0.0852*** 0.0167 0.2468*** 1
Loan loss reserves 0.1276*** 0.0351*** -0.2113*** -0.0569*** 1
Foreign banks 0.0651*** 0.0290** 0.1217*** 0.2425*** -0.2042*** 1
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 31 / 44
32. Summary statistics
Table 7. Correlation Matrix for Country Level Variables
2008-2009
Constrained In‡ation Legal Credit Government Regulatory
rights information e¤ect. quality
Constrained 1
In‡ation 0.0382 1
Legal rights 0.1777*** 0.3083*** 1
Credit information 0.1077*** 0.1753*** 0.2225*** 1
Government e¤ect. -0.0925*** -0.4757*** -0.3134*** -0.2265*** 1
Regulatory quality -0.0381 -0.2235*** -0.2610*** -0.2599*** 0.5028*** 1
2012-2014
Constrained 1
In‡ation 0.0740*** 1
Legal rights 0.1089*** 0.3124*** 1
Credit information 0.2030*** 0.1349*** 0.2156*** 1
Government e¤ect. -0.0748*** -0.4110*** -0.3122*** -0.1634*** 1
Regulatory quality -0.0452* -0.2129*** -0.1881*** -0.2425*** 0.4322*** 1
Pooled sample
Constrained 1
In‡ation -0.0267 1
Legal rights 0.1530*** 0.3053*** 1
Credit information 0.1836*** -0.1132*** 0.2436*** 1
Government e¤ect. -0.0883*** -0.2246*** -0.3080*** -0.1878*** 1
Regulatory quality -0.0593*** -0.1948*** -0.2265*** -0.2704*** 0.4568*** 1
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 32 / 44
33. Model
Pr(…rm being credit constrained) = F(explanatory variables)
Since in our sample a credit constrained …rm is only observed if it
expresses the need for a loan, we use a probit model with sample
selection based on Heckman (1979).
Thus we control for potential selection bias by estimating a bivariate
selection model that takes into account interdependencies between
the selection and the outcome equation:
Loan neededijt = a1Xijt +a2Competition +a3Subsidized +a4Cj +a5Ij +u1,ijt
Credit constraintijt = β1Xijt + β2Cj + β3Ij + β4λijt + u2,ijt
The identi…cation of the selection equation requires at least one
variable that determines credit demand, but is irrelevant in the
outcome equation.
Following Popov and Udell, 2012; Hainz and Nabokin, 2013; Beck et
al., 2015, we rely on Competition and Subsidized.
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 33 / 44
34. Table 8. Coe¢ cient Estimates of Credit Demand Determinants
2008-2009 2012-2014 Pooled sample
Capital -0.071 -0.082 -0.071
(0.061) (0.089) (0.044)
City -0.074 0.132* 0.018
(0.079) (0.077) (0.059)
Age -0.029 -0.009 -0.020
(0.050) (0.041) (0.035)
Small -0.297*** -0.143** -0.237***
(0.094) (0.066) (0.062)
Medium -0.161*** -0.036 -0.119***
(0.057) (0.088) (0.045)
Publicly listed -0.134 0.346 -0.070
(0.132) (0.347) (0.137)
Sole proprietorship 0.048 -0.069 -0.008
(0.061) (0.143) (0.054)
Privatized 0.088 0.117 0.105*
(0.079) (0.072) (0.064)
Foreign owned -0.456*** -0.375*** -0.423***
(0.144) (0.079) (0.101)
Government owned 0.058 0.491 0.162
(0.319) (0.338) (0.284)
Exporter 0.139 0.069 0.089*
(0.091) (0.048) (0.048)
Audited 0.176** 0.117** 0.148***
(0.072) (0.056) (0.046)
Innovation 0.132 0.115* 0.138**
(0.086) (0.060) (0.067)
Competition 0.133*** 0.302*** 0.210***
(0.045) (0.083) (0.055)
Subsidized 0.274** 0.348*** 0.319***
(0.111) (0.047) (0.077)
Country FE Yes Yes Yes
Industry FE Yes Yes Yes
Year FE Yes
Number of obs. 2,658 2,813 5,471
Pseudo R2 0.047 0.069 0.056Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 34 / 44
35. 64.2
7.5
18.5
3.1
4.8 4.2
57.7
5.2
26.5
3.1
5.8
4.1
59.7
4.6
24.5
2.6
5.0 5.8
0204060
small medium large
Source of Purchase of Fixed Assets
Internal funds or retained earnings Owner's contribution
Borrowed from banks Borrowed from non-banks
Purchases on credit or advances Other
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 35 / 44
37. Results
2008-2009
small …rms have 27% probability of being credit constrained compared
to 13% for medium …rms.
publicly listed, sole proprietorship and foreign owned …rms are more
credit constrained than privatized and government-owned …rms.
audited and innovative …rms are less likely to be rejected or
discouraged from applying for a bank loan (8% and 12%,
respectively).
2012-2014
younger …rms are more credit constrained than older …rms.
foreign-owned …rms are more likely to receive a loan (21%)
Pooled sample
only small and publicly listed …rms are constrained, while innovative
…rms are not.
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 37 / 44
38. Table 10. Coe¢ cient Estimates of Credit Constraint Determinants - Country Level
2008-2009 2012-2014 Pooled sample
[1] [2] [3] [4] [5] [6]
Lerner index -0.962 -0.340 0.796 0.312 0.469 0.176
(1.046) (0.377) (0.602) (0.235) (0.689) (0.257)
HHI -1.106*** -0.391*** -2.486*** -0.976*** -1.448*** -0.543***
(0.269) (0.097) (0.729) (0.282) (0.262) (0.101)
Capital to assets ratio 2.178* 0.769* 11.963*** 4.694*** 5.619*** 2.109***
(1.279) (0.439) (1.616) (0.648) (0.832) (0.295)
Loan loss reserves 0.247 0.087 6.822*** 2.676*** 5.952*** 2.234***
(0.386) (0.104) (1.352) (0.524) (1.069) (0.397)
Foreign banks 0.463 0.164 0.649*** 0.254*** 0.523*** 0.196***
(0.410) (0.142) (0.138) (0.054) (0.184) (0.068)
Inverse Mills’ratio 0.104 (0.365) 0.879*** (0.247) 0.966*** (0.202)
Country FE No No No
Industry FE Yes Yes Yes
Year FE Yes
Number of obs. 1,468 1,239 2,707
Pseudo R-squared 0.085 0.141 0.108
In‡ation -0.008 -0.003 0.561 0.220 0.335 0.126
(0.087) (0.052) (0.871) (0.343) (0.385) (0.521)
Legal rights 0.169*** 0.059*** -0.051 -0.020 0.049 0.018
(0.021) (0.007) (0.039) (0.015) (0.039) (0.014)
Credit information 1.028*** 0.361*** 1.302*** 0.511*** 1.207*** 0.453***
(0.276) (0.097) (0.225) (0.087) (0.225) (0.082)
Government e¤ectiveness 0.169* 0.059* -0.339 -0.133 -0.197 -0.074
(0.091) (0.032) (0.435) (0.170) (0.167) (0.063)
Regulatory quality 0.357 0.125 -0.021 -0.008 0.075 0.028
(0.264) (0.093) (0.031) (0.069) (0.098) (0.074)
Inverse Mills’ratio 0.089 (0.593) 0.929** (0.368) 1.010** (0.476)
Country FE No No No
Industry FE Yes Yes Yes
Year FE Yes
Number of obs. 1,468 1,239 2,707
Pseudo R-squared 0.102 0.130 0.111
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 38 / 44
39. Results - Banking sector environment
concentrated markets promote access to …nance by 6.3% (information
hypothesis: Petersen and Rajan, 1995; Cetorelli and Peretto, 2000;
Marquez, 2002; Dell’Ariccia and Marquez, 2004; Berger et al., 2004).
tighter capital requirements increase the probability of being
constrained by 5.3% (Albertazzi and Marchetti, 2010; Aiyar et al.,
2014).
1% increase in loan loss reserves increases the probability of being
constrained by 2.7% (EIB, 2014).
higher presence of foreign banks worsens access to credit by 5.3%
(Detragiache et al., 2008; Claessens and Van Horen, 2014).
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 39 / 44
40. Results - Institutional and regulatory environment
1 std increase in information sharing increases the probability of being
constrained by 6.8%.
The negative e¤ect of information sharing on private credit can be
explained in three ways:
From the severity of adverse selection in the absence of information
sharing (Pagano and Jappelli,1993).
From the type of information shared by banks (Padilla and Pagano,
2000).
From the aggregate indebtedness (Bennardo et al., 2009).
Public Vs Private credit registry.
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 40 / 44
41. Table 11. Coe¢ cient Estimates of Credit Constraint Determinants - Interaction
Pooled sample
Lerner index Foreign banks
[1] [2] [3] [4]
Credit information Lerner index 2.368*** 0.888***
(0.489) (0.184)
Credit information Foreign banks -1.337*** -0.502***
(0.377) (0.141)
Credit registry coverage 2.722** 1.022** 0.921*** 0.346***
(1.275) (0.484) (0.275) (0.103)
Lerner index 0.441 0.165
(0.548) (0.207)
Foreign banks 0.518*** 0.195***
(0.148) (0.055)
Inverse Mills’ratio 0.968*** 0.901***
(0.244) (0.236)
Country FE No No
Industry FE Yes Yes
Year FE Yes Yes
Number of obs. 2,707 2,707
Pseudo R-squared 0.114 0.113
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 41 / 44
42. Results - Interaction
more competition signi…cantly mitigates the negative impact of
information sharing and increases access to …nance.
a 1 std decrease in Lerner index will reduce the probability of being
constrained by 4%.
higher presence of foreign banks also mitigates the negative impact of
information sharing and increases access to …nance.
a 1 std increase in share of foreign banks will reduce the probability of
being constrained by 5.6%.
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 42 / 44
43. Conclusion
Demand side analysis: small and foreign-owned …rms are less likely to
need a loan.
Audited and innovative …rms have higher credit demand.
Supply side: small, medium, publicly listed, sole proprietorship and
foreign-onwed …rms were more likely to be constrained in 2008-2009
than in 2012-2014.
Audited and innovative …rms are lees likely to be constrained.
Country side: more concentrated markets promote access to …nance.
tighter capital requirements, high levels of Loan Loss Reserves and
higher presence of foreign banks make …rms more constrained.
higher level of information sharing worsens access to …nance.
However, more competition and higher presence of foreign banks can
mitigate the negative impact of information sharing on bank credit.
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 43 / 44
44. The road ahead
Focus at the needs of SMEs
Diversity on the sources of …nance and lending techniques
Wider and more accurate coverage of public credit bureaus
Better and common legal and regulatory framework across Europe
Not only to support banking supervision, but also to improve the
quality and quantity of data
Apostolos Thomadakis (University of Warwick) (University of Warwick)Determinants of Credit Constrained Firms 21st of July 2016 44 / 44