scholarly journals IMPACT OF GLOBAL FINANCIAL SHOCK TO INTERNATIONAL BANK LENDING IN INDONESIA

2012 ◽  
Vol 15 (2) ◽  
pp. 75-110
Author(s):  
Tumpak Silalahi ◽  
Wahyu Ari Wibowo ◽  
Linda Nurlian
Keyword(s):  
Financial Crisis ◽  
Balance Sheet ◽  
Bank Lending ◽  
Developed Countries ◽  
Foreign Bank ◽  
International Bank ◽  
Global Banking ◽  
Foreign Affiliates ◽  
Push And Pull ◽  
The Impact

This study intends to determine whether a shock that occurred in developed countries, the source of funding, was transmitted to Indonesia through international bank lending both directly and indirectly. The methods used estimated the determinants of international bank lending. International bank lending is one form of capital flows that have the potential for rapid reversal and that can lead to a financial crisis as it has in the past. Understanding the determinants of bank lending is important as it can be used to mitigate the impact of a financial crisis in the future. The empirical results showed that international bank lending, either directly or indirectly, contributed to the Indonesian crisis. During the shock, Indonesia saw global banking contract financing. It was also found that credit activities by foreign affiliates in Indonesia saw a contraction in the country of the parent bank during the shock. However, it was found that the bank lending by foreign affiliates, as joint ventureswere more stable compared to the branch offices of a foreign bank. In aggregate, international bank lending is affected by push and pulls factors such as economic growth (in developed countries and Indonesia), risk factors, and liquidity conditions, both in Indonesia and globally. As for micro-banking models, other than the push and pull factors, the bank balance sheet and other portfolio assets also affected bank lending activities to Indonesia. Keywords: Global Financial Shocks, Foreign Affiliates, International Bank Lending, transmission path,dynamic panel.JEL Classification: C33, E51, G15

scholarly journals IMPACT OF GLOBAL FINANCIAL SHOCK TO INTERNATIONAL BANK LENDING IN INDONESIA

2012 ◽  
Vol 15 (2) ◽  
pp. 77-114 ◽  
Author(s):  
Tumpak Silalahi ◽  
Wahyu Ari Wibowo ◽  
Linda Nurliana
Keyword(s):  
Financial Crisis ◽  
Balance Sheet ◽  
Bank Lending ◽  
Developed Countries ◽  
Foreign Bank ◽  
International Bank ◽  
Global Banking ◽  
Foreign Affiliates ◽  
Push And Pull ◽  
The Impact

This study intends to determine whether a shock that occurred in developed countries, the source of funding, was transmitted to Indonesia through international bank lending both directly and indirectly. The methods used estimated the determinants of international bank lending. International bank lending is one form of capital flows that have the potential for rapid reversal and that can lead to a financial crisis as it has in the past. Understanding the determinants of bank lending is important as it can be used to mitigate the impact of a financial crisis in the future. The empirical results showed that international bank lending, either directly or indirectly, contributed to the Indonesian crisis. During the shock, Indonesia saw global banking contract financing. It was also found that credit activities by foreign affiliates in Indonesia saw a contraction in the country of the parent bank during the shock. However, it was found that the bank lending by foreign affiliates, as joint ventureswere more stable compared to the branch offices of a foreign bank. In aggregate, international bank lending is affected by push and pulls factors such as economic growth (in developed countries and Indonesia), risk factors, and liquidity conditions, both in Indonesia and globally. As for micro-banking models, other than the push and pull factors, the bank balance sheet and other portfolio assets also affected bank lending activities to Indonesia.Keywords: Global Financial Shocks, Foreign Affiliates, International Bank Lending, transmission path,dynamic panel.JEL Classification: C33, E51, G15

Foreign Banks in the Crisis

2017 ◽  
Author(s):  
Rachel A. Epstein
Keyword(s):  
Financial Crisis ◽  
Central Europe ◽  
Bank Lending ◽  
Foreign Ownership ◽  
Foreign Bank ◽  
Foreign Banks ◽  
Market Model ◽  
Unexpected Finding ◽  
East Central Europe ◽  
East Central

One reason governments have protected their banks from foreign ownership is that they feared foreign-owned banks would “cut and run”—i.e. abandon their host markets—in a financial crisis. An unexpected finding of this chapter, however, is that while foreign banks’ commitments to host markets have indeed been fleeting in crises, those commitments were weakest when the relationship between foreign banks and host markets was not characterized by ownership. Thus it was foreign ownership through a “second home market” model and bank subsidiaries during the acute phase of the US financial crisis (2008–9) that saved East Central Europe from economic catastrophe. In Western Europe, meanwhile, where foreign bank ownership levels were low but cross-border lending was significant, bank lending retreated behind national borders. This chapter also rejects the argument that the Vienna Initiative, a voluntary bank rollover agreement, compelled foreign-owned banks to maintain their exposures in East Central Europe.

scholarly journals Characterization of Modern and Historical Seismic–Tsunamic Events, and Their Global–Societal Impacts

2021 ◽  
pp. SP501-2021-17
Author(s):  
Yildirim Dilek ◽  
Yujiro Ogawa ◽  
Yasukini Okubo
Keyword(s):  
Disaster Management ◽  
Plate Tectonics ◽  
Power Plants ◽  
Active Faults ◽  
Building Design ◽  
Developed Countries ◽  
High Impact ◽  
Global Banking ◽  
Management Plans ◽  
The Impact

AbstractEarthquakes and tsunamis are high–impact geohazard events that could be extremely destructive when they occur at large magnitudes and intensities, respectively, although their causes and potential locations are, for the most part, predictable within the framework of plate tectonics. Amongst the main reasons for their high impact include enormous numbers of casualties, extensive property damage in vast areas, and significant social and economic disruptions in urban settings where populous residential areas, global banking centres, industrial factories, and critical facilities (nuclear power plants, dams) may be located. In order to reduce the impact of these geohazards, the nations, societies, professional organizations and governments need to collaborate to prepare more effective seismic and tsunami risk assessments, disaster management plans, educational and training programmes for increased preparedness of the public, and strategic plans and objectives for capacity building, skill and knowledge transfer, and building of societal resilience. Improved building design and construction codes, and emergency preparedness and evacuation plans should be part of disaster management plans in countries where destructive earthquakes and tsunamis occurred earlier. Fast increasing population in coastal corridors in developing and developed countries is likely to escalate the social and economic impacts of these geohazards exponentially in the future. The chapters in this book present case studies of some of the most salient earthquake and tsunami events in historical and modern times, their origins and manifestations, and efforts and most effective practices of risk assessment and disaster management implemented by various governments, international organizations and inter–governmental agencies following these events. New methods of computing probabilistic seismic hazard risks, delineating respect distance and damage zones along–across seismically active faults and recognizing tsunamigenic and submarine landslides on the seafloor are introduced. The conclusions presented in the chapters show that: (1) scientific understanding of the characteristics of seismically active faults is paramount; (2) increased local (community), national and global resilience is necessary to empower societal preparedness for earthquake and tsunami events; and, (3) all stakeholders, including policy–makers, scientists, local, state and national governments, media, and world organizations (UNESCO, IUGS, GeoHazards International–GHI, Global Geodetic Observing System–GGOS; National Earthquake Hazards Reduction Program–NEHRP) must work together to disseminate accurate and timely information on geohazards, to develop effective legislation for risk reduction, and to prepare realistic and practical hazard mitigation and management measures.

The impact of guaranteed bailout assistance on bank loan overstatement

2016 ◽  
Vol 12 (2) ◽  
pp. 177-210
Author(s):  
Alejandro Hazera ◽  
Carmen Quirvan ◽  
Salvador Marin-Hernandez
Keyword(s):  
Financial Crisis ◽  
Emerging Market ◽  
Balance Sheet ◽  
Bank Loan ◽  
Content Type ◽  
Put Options ◽  
Regulatory Policies ◽  
Ex Post ◽  
Ex Ante ◽  
The Impact

Purpose – The purpose of this paper is to highlight how the basic binomial option pricing model (BOPM) might be used by regulators to help formulate rules, prior to financial crisis, that help prevent loan overstatement by banks in emerging market economies undergoing financial crises. Design/methodology/approach – The paper draws on the theory of soft budget constraints (SBC) to construct a simple model in which banks overstate loans to minimize losses. The model is used to illustrate how guarantees of bailout assistance (BA) (to banks) by crisis stricken countries’ financial authorities may encourage banks to overstate loans and delay the implementation of IFRS for loan valuation. However, the model also illustrates how promises of BA may be depicted as binomial put options which provide banks with the option of either: reporting loan values on poor projects accurately and receiving the loans’ liquidation values; or, overstating loans and receiving the guaranteed BA. An illustration is also provided of how authorities may use this representation to help minimize bank loan overstatement in periods of financial crisis. In order to provide an illustration of how the option value of binomial assistance may evolve during a financial crisis, the model is generalized to the Mexican financial crisis of the late 1990s. During this period, Mexican authorities’ guarantees of BA to the nation’s largest banks encouraged those institutions to overstate loans and delay the implementation of (previously adopted) international “best practices” based loan valuation standards. Findings – Application of the model to the Mexican financial crisis provides evidence that, in spite of Mexico’s “official” 1997 adoption of international “best accounting practices” for banks, “iron clad” guarantees of BA by the country’s financial authorities to Mexico’s largest banks provided those institutions with an incentive to knowingly overstate loans in the late 1990s and early 2000s. Research limitations/implications – The model is compared against only one country in which the BA was directly infused into banks’ loan portfolios. Thus, as conceived, it is directly applicable to crisis countries in which the bailout took this form. However, the many quantitative variations of SBC models as well as recent studies which have applied the binomial model to other forms of bailout (e.g. direct purchases of bank shares by authorities) suggest that the model could be modified to accommodate different bailout scenarios. Practical implications – The model and application show that guaranteed BA can be viewed as a put option and that ex-ante regulatory policies based on the correct valuation of the BA as a binomial option might prevent banks from overstating loans. Social implications – Use of the binomial or similar approaches to valuing BA may help regulators to determine the level of BA that will not encourage banks to overstate the value of their loans. Originality/value – Recent research has used the BOPM to value, on an ex-post basis, the BA which appears on the balance sheet of institutions which have been rescued. However, little research has advocated the use of this type of model to help prevent, on an ex-ante basis, the overstatement of loans on poor projects.

scholarly journals Analysis of some economic-financial ratios to analyse the financial crisis in five-star hotels in Barcelona and Madrid

2019 ◽  
Vol 15 (2) ◽  
pp. 99
Author(s):  
Laia Pie ◽  
Isaac Bonillo ◽  
Judit Barcelo ◽  
Laura Fabregat-Aibar
Keyword(s):  
Financial Crisis ◽  
Balance Sheet ◽  
Financial Ratios ◽  
Construction Costs ◽  
Luxury Hotels ◽  
Analysis System ◽  
Continuous Strategies ◽  
Luxury Hotel ◽  
The Impact ◽  
Hotel Chain

Purpose: Analyse some of the financial ratios to see the impact of the economic crisis on 5-star hotels in Spain.Design/methodology/approach: The information needed to write this article was taken from the Iberian Balance Sheet Analysis System (SABI), the Hotel Occupancy Survey published periodically by the National Statistics Institute, the IDESCAT and the official websites of the hotels analysed.Findings and Originality/value: The results obtained show how the financial crisis did not have a direct impact on luxury hotels, but on the contrary, they continue to increase their success thanks to the best continuous strategies. One test is the luxury hotels that were created in Barcelona and Madrid between 2008 and 2011. The work shows that it does not take into account for a hotel chain to have more than one luxury hotel in the same city, since one both of them may end up showing financial losses. It is also found that it is important to determine the number of rooms that the hotel must have in order to avoid construction costs and to have the maximum efficiency.Research limitations/implications: The study has the problem of not updating the SABI database. In some cases, the information has not been updated since 1990.Practical implications: The result that luxury hotels can cover the fixed assets coefficient with their equity. At the same time, it supports the importance of making a better forecast of the number of rooms in order to help them have a better financing.Social implications: It supports the importance of a single luxury hotel in the same hotel chain in the same city and of making good strategic planning in order to improve the results of financial ratios.Originality/value: The article helps explain how the tourist model in Spain has changed since the beginning of the financial crisis.

Bank Capital Requirements after the Financial Crisis

2019 ◽  
pp. 706-735
Author(s):  
Mark E. Van Der Weide ◽  
Jeffrey Y. Zhang
Keyword(s):  
Financial Crisis ◽  
Structural Changes ◽  
Banking Sector ◽  
Balance Sheet ◽  
Banking System ◽  
Capital Requirements ◽  
Bank Capital ◽  
Regulatory Capital ◽  
Stress Tests ◽  
Global Banking

Regulators responded with an array of strategies to shore up weaknesses exposed by the 2008 financial crisis. This chapter focuses on reforms to bank capital regulation. We first discuss the ways in which the post-crisis Basel III reforms recalibrated the existing framework by improving the quality of capital, increasing the quantity of capital, and improving the calculation of risk weights. We then shift to the major structural changes in the regulatory capital framework—capital buffers on top of the minimum requirements; a leverage ratio that explicitly accounts for off-balance-sheet exposures; risk-based and leverage capital surcharges on the largest banks; bail-in debt to facilitate orderly resolution; and forward-looking stress tests. We conclude with a quantitative assessment of the evolution of capital in the global banking system and in the US banking sector.

scholarly journals The impact of the global financial crisis on the structure of investment portfolios of insurance companies

2011 ◽  
Vol 56 (191) ◽  
pp. 143-161 ◽  
Author(s):  
Jelena Kocovic ◽  
Tatjana Rakonjac-Antic ◽  
Marija Jovovic
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Financial Institution ◽  
Developed Countries ◽  
Insurance Companies ◽  
Financial Health ◽  
Patterns Of Behavior ◽  
The Global Financial Crisis ◽  
Investment Portfolios ◽  
The Impact

This article deals with the impact of the global financial crisis on the scale and structure of investment portfolios of insurance companies, with respect to their difference compared to other types of financial institution, which derives from the specific nature of insurance activities. The analysis includes insurance companies? exhibited and expected patterns of behavior as investors in the period before, during, and after the crisis, considering both the markets of economically developed countries and the domestic financial market of Serbia. The direction of insurers? investments in the post-crisis period should be very carefully examined in terms of their future implications for the insurance companies? long-term financial health, and defined in a broader context of managing all risks to which they are exposed, taking into account the interdependence of these risks. Pertinent recommendations in this regard have arisen from research of relevant past experience and current trends, and also from an analysis and comparison of views on this subject presented by a number of authors.

scholarly journals Bank Liquidity Hoarding and the Financial Crisis: An Empirical Evaluation

2021 ◽  
Author(s):  
Jose M. Berrospide
Keyword(s):  
Financial Crisis ◽  
Asset Management ◽  
Global Financial Crisis ◽  
Balance Sheet ◽  
Empirical Evaluation ◽  
Bank Lending ◽  
Supporting Evidence ◽  
Loan Loss ◽  
Precautionary Motive ◽  
Balance Sheet Liquidity

I test and find supporting evidence for the precautionary motive hypothesis of liquidity hoarding for U.S. commercial banks during the global financial crisis. I find that banks held more liquid assets in anticipation of future losses from securities write-downs. Exposure to securities losses in their investment portfolios and expected loan losses (measured by loan loss reserves) represent key measures of banks’ on-balance sheet risks, in addition to off-balance sheet liquidity risk stemming from unused loan commitments. Furthermore, unrealized securities losses and loan loss reserves seem to better capture the risks stemming from banks’ asset management and provide supporting evidence for the precautionary nature of liquidity hoarding. Moreover, I find that more than one-fourth of the reduction in bank lending during the crisis is due to the precautionary motive.

scholarly journals The Impact of the Global Financial Crisis on the Co-Integration Relationship between Reit and Stock Markets: A Dynamic Co-Integration Approach

2017 ◽  
Vol 9 (7) ◽  
pp. 86
Author(s):  
S. Aydin Yüksel ◽  
Asli Yüksel ◽  
Ümit Erol ◽  
Hakki Öztürk
Keyword(s):  
Financial Crisis ◽  
Stock Markets ◽  
Structural Breaks ◽  
Global Financial Crisis ◽  
Main Tool ◽  
Developed Countries ◽  
Integration Approach ◽  
Variable Nature ◽  
The Global Financial Crisis ◽  
The Impact

The aim of this paper is to analyze the impact of the Global Financial Crisis (GFC) on the co-integration relationship between the REIT and stock market indices using a sample of 10 developed countries. The main tool employed for this purpose is the dynamic co-integration approach. The empirical results strongly suggest that the stock and REIT markets were deeply affected by two successive crises. The first crisis was related to the U.S. subprime problems while the second shock emanated from the European insolvency problems. The shocks led to serious structural breaks in the financial data during the 2007-2012 period. As a result of this and the highly variable nature of the co-integration structure during this period, the conventional and static Johansen tests cannot detect the strong co-integration between the REIT and stock markets which were the result of common negative response of both markets to the successive shocks. Dynamic co-integration approach seems to be a more valid tool to capture the dynamics of the co-integration structure after the GFC. The dynamic approach implies that the destruction of diversification benefits between the REIT and stock markets was essentially a shock related outcome which also implies that the diversification potential between these two markets may still be valid in the absence of shocks.

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