1) The document examines how government intervention in the banking sector during financial crises affects long-term productivity.
2) It finds that higher regulatory forbearance (allowing struggling banks to remain open) reduces short-term economic losses but is negatively associated with post-crisis productivity growth, as it allows inefficient firms to remain in operation.
3) In contrast, tougher policies like bank restructuring that force struggling banks to close are found to yield higher long-term job creation, wages, and economic growth, suggesting financial crises can "cleanse" economies of inefficient firms and banks when governments take a stricter approach.
Here is our recent revision webinar on commercial banks and the UK economy. We look at how commercial banks made a profit (or loss!) and consider the factors that affect how much they can lend out.
The Influencing Factors of Chinese Corporations’ LeverageIJAEMSJORNAL
Faced with the pressure of economic downturn and structural transformation, high debt leverage has become a prominent problem of China's economic development. This article takes 2007-2018 annual data of non-financial companies listed on A-shares as an example, analyzes the influencing factors of Chinese corporations’ leverage, the empirical results find that macroeconomic environment have a significant impact on corporate debt leverage ratio, and sufficient liquidity is conducive to increasing the willingness of enterprises to expand reproduction and has a positive impact on corporate debt leverage. Financial market factors have a significant impact on corporate debt leverage ratios, the greater the financial institution's support for the real economy, the stronger the company's ability to obtain debt financing. The operation indicators of enterprises have a significant impact on the corporate debt leverage ratios, profitability and leverage ratios have a negative correlation, and this negative correlation is the most significant of all influencing factors.
Here is our recent revision webinar on commercial banks and the UK economy. We look at how commercial banks made a profit (or loss!) and consider the factors that affect how much they can lend out.
The Influencing Factors of Chinese Corporations’ LeverageIJAEMSJORNAL
Faced with the pressure of economic downturn and structural transformation, high debt leverage has become a prominent problem of China's economic development. This article takes 2007-2018 annual data of non-financial companies listed on A-shares as an example, analyzes the influencing factors of Chinese corporations’ leverage, the empirical results find that macroeconomic environment have a significant impact on corporate debt leverage ratio, and sufficient liquidity is conducive to increasing the willingness of enterprises to expand reproduction and has a positive impact on corporate debt leverage. Financial market factors have a significant impact on corporate debt leverage ratios, the greater the financial institution's support for the real economy, the stronger the company's ability to obtain debt financing. The operation indicators of enterprises have a significant impact on the corporate debt leverage ratios, profitability and leverage ratios have a negative correlation, and this negative correlation is the most significant of all influencing factors.
Data Quality in the Banking Industry: Turning Regulatory Compliance into Busi...Precisely
During the last 15 years, regulatory requirements in financial services have grown substantially in order to reduce the risk of global, systemic economic failure. Quality data provided through effective data governance and data quality processes is central to achieving effective compliance reporting. Not only does data quality help ensure accurate reporting, but successful compliance significantly enhances other business decisions which rely on high quality data.
This webinar looks at the ramp up in reporting complexity, how successful compliance is linked to data governance and data quality, and how data quality helps empower financial institutions to make better decisions to increase revenue and decrease expense.
View this webinar on-demand for a discussion on:
• Tracing the background for regulatory reporting and key financial regulations
• Understanding how data quality helps institutions succeed with regulatory reporting compliance
• How regulatory reporting improves data for other business decisions
• How financial institutions leverage Trillium DQ to deliver quality data
As current growth rates reach a new low, competition for the future is on the...SimCorp
As growth rates came to a standstill in 2015, we took stock of expectations for the future. Surveying firms worldwide, we discovered them to be optimistic about long-term prospects, and found the pursuit of future profits gathering pace.
Lesson 6 Discussion Forum Discussion assignments will beDioneWang844
Lesson 6 Discussion Forum :
Discussion assignments will be graded based upon the criteria and rubric specified in the Syllabus.
550 Words
For this Discussion Question, complete the following.
1. Review the two articles about bank failures and bank diversification that are found below this. Economic history assures us that the health of the banking industry is directly related to the health of the economy. Moreover, recessions, when combined with banking crisis, will result in longer and deeper recessions versus recessions that do occur with a healthy banking industry.
2. Locate two JOURNAL articles which discuss this topic further. You need to focus on the Abstract, Introduction, Results, and Conclusion. For our purposes, you are not expected to fully understand the Data and Methodology.
3. Summarize these journal articles. Please use your own words. No copy-and-paste. Cite your sources.
Please post (in APA format) your article citation.
Reply to Post 1: 160 words and Reference
Discussion on Bank’s failures and its diversification
Over the last two decades, business cycle volatility has decreased in the US. For example, some analysts claimed that companies handle inventory better today than ever, or that advances in financial systems have helped smooth industry volatility. Some emphasized stronger economic policy. Banking changes were also drastic in this same era, contributing to the restructuring and convergence of massive, global banking institutions in a better-organized structure. The article (Strahan, 2006) points out that some regulatory reform driven by individual countries rendered it possible for banks to preserve their resources and income by gradually diversifying from local downturns. Both low state volatility rates and a decline in partnerships between the local market and the central banking sector is a net influence on the diversification in banks. Considering the less fragile state economies following these intergovernmental financial reforms, there are some signs that financial convergence – while certainly not the only piece of the puzzle – has been less unpredictable.
Another article (Walter, 2005) argues that a long-standing reason for bank collapses during the crisis is a contagion, which contributes to systemic bank failures and the collapse of one bank initially. This indicates why several losses in the crisis period were unintentional, which ensured that the banks remained stable and endured without contagion-induced falls. The response to the contagion was the central government’s deposit policy, bringing an end to defaults. Nevertheless, since the sequence of errors began in the early 1920s, well before contagion was evident, the underlying trigger must be contagion.
Now it seems like the bank sector has undergone a shake-out that was worsened during the crisis by the deteriorating economic conditions. Although the reality that incidents occurred almost syno ...
Conference of the Global Forum on Productivity 2016SPINTAN
Paper by Jonathan Haskel: Productivity slowdowns and inequality speedups: what is the role of intangibles? . Conference of the Global Forum on Productivity. Lisbon 2016
Illiquid collateral and bank lending in euro area - Barthelemy et al. (2017)Benoit Nguyen
Presentation slides for the paper 'Illiquid collateral and bank lending during the Euro sovereign debt crisis'. Full paper downloadable here: https://publications.banque-france.fr/en/illiquid-collateral-and-bank-lending-during-european-sovereign-debt-crisis
The managers most likely to succeed in today’s business environment, are those who understand how to use budgets as business tools, for departmental and personal success.
Managing Budgets is an informative and practical guide to the essential skills needed.
produce accurate and useful budgets.
Poonawalla Fincorp and IndusInd Bank Introduce New Co-Branded Credit Cardnickysharmasucks
The unveiling of the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card marks a notable milestone in the Indian financial landscape, showcasing a successful partnership between two leading institutions, Poonawalla Fincorp and IndusInd Bank. This co-branded credit card not only offers users a plethora of benefits but also reflects a commitment to innovation and adaptation. With a focus on providing value-driven and customer-centric solutions, this launch represents more than just a new product—it signifies a step towards redefining the banking experience for millions. Promising convenience, rewards, and a touch of luxury in everyday financial transactions, this collaboration aims to cater to the evolving needs of customers and set new standards in the industry.
where can I find a legit pi merchant onlineDOT TECH
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@Pi_vendor_247
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What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
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A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
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@Pi_vendor_247
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
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Exploring Abhay Bhutada’s Views After Poonawalla Fincorp’s Collaboration With...beulahfernandes8
The financial landscape in India has witnessed a significant development with the recent collaboration between Poonawalla Fincorp and IndusInd Bank.
The launch of the co-branded credit card, the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card, marks a major milestone for both entities.
This strategic move aims to redefine and elevate the banking experience for customers.
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Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
BYD SWOT Analysis and In-Depth Insights 2024.pptxmikemetalprod
Indepth analysis of the BYD 2024
BYD (Build Your Dreams) is a Chinese automaker and battery manufacturer that has snowballed over the past two decades to become a significant player in electric vehicles and global clean energy technology.
This SWOT analysis examines BYD's strengths, weaknesses, opportunities, and threats as it competes in the fast-changing automotive and energy storage industries.
Founded in 1995 and headquartered in Shenzhen, BYD started as a battery company before expanding into automobiles in the early 2000s.
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On the energy side, BYD is a major supplier of rechargeable batteries for cell phones, laptops, electric vehicles, and energy storage systems.
Which Crypto to Buy Today for Short-Term in May-June 2024.pdf
Vahid Saadi - The cleansing effect of banking crises
1. The Cleansing Effect of Banking Crises
Reint Gropp*
, Jörg Rocholl§
, and Vahid Saadi‡
* Halle Institute for Economic Research (IWH) and University of Magdeburg
§ ESMT European School of Management and Technology in Berlin
‡ IE Business School
BIS-IMF-OECD Conference on Productivity
10-11 January 2018, OECD, Paris
2. Motivation
• We know a lot about the short term real effects of financial crises
• In the short run less investment, employment and growth (Ivashina and
Scharfstein, 2010; Chodorow-Reich, 2014, among others)
• But: We know little about the long-term implications of financial
crises
• Do financial crises have persistent or even permanent effects?
• Wix (2017) shows that labor regulation may affect the recovery path after a
financial crisis.
• This paper: Does long-term productivity depend on the government
intervention in the crisis?
• Forbearance versus Restructuring in the banking sector
3. This paper
• How do financial disruptions affect long-term productivity?
• Recessions are times of low opportunity cost of time and resources and hence,
are times of more productivity-enhancing reallocations (Foster, Grim, and
Haltiwanger, 2016)
• Recessions may slow down productivity growth by intensifying credit
frictions. One important aspect of such credit frictions is the case of legacy
assets in the banking sector (e.g. Caballero, Hoshi, and Kashyap, 2008).
• Does it matter how the authorities deal with the credit disruption?
• Is there a trade-off between the short run and the long run effects of financial
crises?
4. Cleansing effect
• Marginal banks (close to the minimum capital requirement) are hesitant to
realize losses.
• Sunk costs (Dewatripont and Maskin, 1995)
• Soft budget constraints (Caballero et al., 2008)
may encourage banks to maintain lending to inefficient borrowers
• Hence, unproductive firms stay in the market
• This distorts competition:
• Loans to such firms are a subsidy to an inefficient firm,
• Efficient firms have a harder time entering the market or increasing market share.
• This channel further reduces productivity.
• A financial crisis, by forcing marginal banks out of business, may “clean”
the economy of inefficient banks and firms.
7. Empirical challenge
• We test our hypotheses using data on the US metropolitan statistical
areas (MSA)
• Unit of observation: MSA
• Identify exogenous variation in the degree of forbearance in a local
market
• IV approach to instrument for estimated forbearance
• Measure ex-post productivity
• Follow productivity literature: wage growth, patents, per capita growth, firm
entry and exit…
• Regress regulatory foreclosure during 2007/2010 financial crisis on
post crisis (2011/2015) outcomes.
9. Cleansing effect: this paper
• Higher regulatory forbearance to close banks during the crisis is associated
with lower output losses during the crisis
• But: Higher regulatory forbearance is associated negatively with post-
crisis output and productivity growth
• Tough policy during the crisis yields higher job creation rates, higher wages, higher
patent growth, higher new entry of firms years later
• Suggests that a tough stance in a crisis may have long-term benefits.
10. Literature
• Short-term disruptions in:
• lending (Ivashina and Scharfstein (2010), Puri, Rocholl and Steffen (2011))
• investments (Campello, Garaham, and Harvey (2010))
• consumption (Damar, Gropp and Mordel (2014))
• employment (Chodorow-Reich (2014))
• Bank recapitalization
• Homar and van Wijnbergen (2016): recapitalization eliminates the problem of zombie banks.
• Acharya, Eisert, Eufinger, and Hirsch (2017): (exogenously) recapitalized banks continue
lending to zombie firms.
• Schivardi, Sette, and Tabellini (2017): undercapitalized Italian banks engaged in zombie
lending, but the aggregate effects on productivity are small.
• Reallocations
• Mukherjee and Proebsting (2016): crises intensify productivity-enhancing M&A activity.
11. Data
• Census Bureau’s Business Dynamics Statistics
• Number of firms, establishments, entries and exits, job creation and destruction, … for all US
MSAs
• Quarterly Census of Employment and Wages
• average annual wage growth for all US MSAs
• U.S. Patent and Trademark Office
• Number of patents granted for all US MSAs
• Bureau of Economic Analysis
• GDP and GDP per capita growth for all US MSAs
• The universe of US FDIC-insured commercial banks from 2000-2015 from the
SNL
• FDIC’s list of failed banks
• We construct average crisis-period bank restructuring and regulatory forbearance at the MSA
level
12. Regulatory forbearance
• We follow Wheelock and Wilson (2000) and estimate the following
bank failure model:
• failed bank = significant restructuring
• Our MSA level measure of forbearance is (bank size) weighted
average of the residuals from the above equation, which is also
averaged over the time period from 2007 to 2010.
13.
14. Regulatory forbearance
• Does the measure make sense in light of the literature?
• State-chartered banks benefit more from regulatory forbearance than federally
chartered banks. (Agarwal, Luca, Seru, and Trebbi (2014))
• Higher competition in the local banking market reduces regulatory forbearance
(Kang, Lowery, and Wardlaw (2014)).
• Some states are persistently more forbearing than others.
• Cross-guarantee provisions facilitate restructuring of subsidiaries relative to
independent banks (Ashcraft, 2005).
19. Identification: IV
• Bank closures and regulatory forbearance may be endogenous to expectations of future growth.
• local supervisors may be laxer on distressed banks if growth expectations are already gloomy (Agarwal,
Luca, Seru, and Trebbi, 2014)
• Therefore, we need an instrument that
• correlates with regulatory forbearance,
• but does not directly drive growth/productivity.
• Distance to Washington D.C. affects banks’ access to lawyers, lobbying firms, and politicians. It
also matters for revolving door motives.
• This affects banks’ regulatory treatment in case of distress.
• Lambert (2017), Dam and Koetter (2012) use a similar instrument.
• Exclusion restriction : Distance to Washington D.C. is not a driver of productivity, except through
regulatory forbearance.
20. Real outcomes during the crisis
• We run the following regression:
• 𝑦𝑦 represents average MSA-level:
• establishment and firm exit rate
• job destruction rate
• 𝑥𝑥 represents average MSA-level
• bank restructuring or regulatory forbearance
• We instrument 𝑥𝑥 with 𝑙𝑙𝑙𝑙 𝑙𝑙(𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑 + 1)
24. Results: post-crisis outcome
• Forbearance reduces firm failures and restructuring in firms.
• To ascertain the long run real effects of this, we run the following regression:
• 𝑦𝑦 represents average MSA-level:
• establishment and firm entry rate, job creation rate, reallocation rate, employment growth,
wage growth, patent growth, and gdp growth
• 𝑥𝑥 represents average MSA-level
• bank restructuring and regulatory forbearance
• We instrument 𝑥𝑥 with 𝑙𝑙𝑙𝑙 𝑙𝑙(𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑 + 1)
27. Robustness: is this simply mean reversion?
• If regions that were hit more severely simply catch up and revert to the
mean, we should find a negative β when estimating:
29. Conclusion
• Resolving banks’ impaired assets can reduce the problem of zombie lending.
• Keeping distressed banks alive, despite being less destructive for the crisis period,
does not seem to be beneficial for the longer term productivity growth.
• The US financial crisis has not been productivity improving perhaps due to
extensive government support of banks during the crisis.
30. Conclusion
• Should we consider long-run implications for productivity when designing crisis
intervention tools?
• Banking union
• Deposit insurance
• Regulation and supervision
• The political economy is negative: short-run loss for a long-term gain
• Tie policy makers hands? Time inconsistency problem in financial crisis: in the short run it is
always better to bail out.
• Gropp, Güttler and Saadi (2017) show that expectations of a bank bailout may
reduce allocative efficiency outside of a crisis.
• Inefficient firms are more likely to obtain credit when bail-out expectations of Banks are high.