Reclassification of Financial Instruments in the Financial Crisis – Empirical Evidence from the European Banking Sector

2010 ◽  
Author(s):  
Khaled Kholmy ◽  
Jürgen Ernstberger
Keyword(s):  
Financial Crisis ◽  
Empirical Evidence ◽  
Banking Sector ◽  
Financial Instruments ◽  
European Banking

scholarly journals Reluctant Europeans? British and French Commercial Banks and the Common Market in Banking (1977–1992)

2020 ◽  
Vol 21 (3) ◽  
pp. 768-798 ◽  
Author(s):  
ALEXIS DRACH
Keyword(s):  
Financial Crisis ◽  
Commercial Banks ◽  
Banking Sector ◽  
Financial Integration ◽  
Common Market ◽  
European Banking ◽  
The Common ◽  
Banks And Banking ◽  
European Financial Integration

More than ten years after the financial crisis, the challenges of European banking and of the eurozone highlight that the existence of a European common market in banking is at best partial. Examining how British and French commercial banks and banking associations responded to the plans for a European common market in banking between 1977 and 1992, this article contributes to explaining this partial character, and highlights that this project was primarily political. This challenges the widely held view that large companies tended to push for more integration. This article shows that until the mid-1980s, the banking sector was not necessarily calling for European financial integration in the form of a common market in banking for at least three reasons: they doubted the usefulness of such a move, they feared an increase in regulation, and they focused more on domestic or global matters than on European ones.

scholarly journals Common Ownership Patterns in the European Banking Sector—The Impact of the Financial Crisis1

2021 ◽  
Author(s):  
Albert Banal-Estañol ◽  
Nuria Boot ◽  
Jo Seldeslachts
Keyword(s):  
Financial Crisis ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Common Ownership ◽  
European Banking ◽  
And Performance ◽  
The Global Financial Crisis ◽  
The Impact ◽  
Capital Injections ◽  
Ownership Patterns

Abstract We provide a description of ownership patterns in the top 25 European banks for the period 2003–2015, where we especially focus on the global financial crisis. Investment managers, such as Blackrock, are dominant in terms of number of blockholdings in different banks, maintaining fairly stable “common ownership” networks throughout our sample. However, the financial crisis led to capital injections by governments in several banks in trouble, which in turn led to a jump in holdings by governments, which typically are “non-common owners” (i.e., they hold only shares in only one bank). This jump translated into these investors temporarily being the top investor with a large share, and non-common owners being the majority among large shareholders. A brief comparison with US banks uncovers large ownership differences between the European and US banking sectors. We briefly discuss what these ownership patterns might imply for competition, stability and performance in the banking industry.

scholarly journals Determinants of financial instruments risk disclosure: An empirical analysis in the banking sector

2020 ◽  
Vol 17 (2) ◽  
pp. 20-31
Author(s):  
Alessandra Allini ◽  
Luca Ferri ◽  
Marco Maffei ◽  
Annamaria Zampella
Keyword(s):  
Banking Sector ◽  
Banking System ◽  
Optimal Level ◽  
Financial Instruments ◽  
Risk Disclosure ◽  
Country Factors ◽  
Ifrs 7 ◽  
European Banking ◽  
Country Selection ◽  
The Uk

This study investigates the effects of firm and country factors, considered as determinants of the financial instruments risk disclosure (FIRD) proxied by IFRS 7 in the European banking system. We select 582 banks-year observations based on the largest five European economies (France, Germany, Italy, Spain and the UK) as provided by the International Monetary Fund (IMF). Our analysis covers a period of 8 years (2007-2014) and adopts an OLS model. Results show that both firm (the type of auditor, board size and profitability) and country factors (financing environment, regulatory environment, and organizational status) affect FIRD. Limitations for this paper could relate to country selection, as well as on the breadth of the sample. Nevertheless, these aspects could unveil possible areas of future inquiry. The contribution of the study is twofold. It enriches the literature about firm and country determinants on financial instruments risk disclosure, as combined rather than single-standing variables. Yet, it draws the attention of banks’ management and investors on what the crucial factors to reach an optimal level of FIRD are and gain the confidence of capital markets, reducing information asymmetries. This is the first empirical investigation on the determinants of FIRD, using IFRS 7, in the European banking sector that adopts firm and country factors in a combined effort.

Banking Overleveraging and Macro Instability: A Model and VSTAR Estimations

2016 ◽  
Vol 236 (6) ◽  
Author(s):  
Frauke Schleer ◽  
Willi Semmler
Keyword(s):  
Financial Crisis ◽  
Banking Sector ◽  
Capital Requirements ◽  
Banking Union ◽  
Star Model ◽  
European Banking Union ◽  
Regulatory Policies ◽  
European Banking ◽  
The Difference ◽  
Run Up

Abstract:Overleveraging of the banking sector has been considered one of the main causes of the 2007–09 financial crisis and the subsequent great recession. It was also of major concern for the subsequent BIS regulatory policies resulting in Basel III and its request for higher capital requirements. It has now become highly relevant for the planned European banking union. Overleveraging of the banking sector exposes the financial sector and the macroeconomy to vulnerabilities, but also, as critics state, seems to constrain credit flows to the private sector. We present here a measure of overleveraging, defined as the difference between actual and sustainable debt, conduct an empirical study on overleveraging for 40 banks in Europe, and study the vulnerabilities and credit contractions that can arise subsequently. Before the year 2004 overleveraging had not been a serious problem as leverage was on a sustainable level. However, in the run-up to the financial crisis, actual and optimal debt spread apart and the banking sector began to suffer from overleveraging. We use a non-linear Vector STAR model to evaluate the hypothesis that periods of increasing debt levels are accompanied by more severe credit constraints than periods of low leveraging. We demonstrate this for country groups across Europe.

scholarly journals A Liquidity Shortfall Analysis Framework for the European Banking Sector

Mathematics ◽  
2020 ◽  
Vol 8 (5) ◽  
pp. 787
Author(s):  
Oana-Maria Georgescu ◽  
Dimitrios Laliotis ◽  
Miha Leber ◽  
Javier Población
Keyword(s):  
Empirical Evidence ◽  
Banking Sector ◽  
Analytical Framework ◽  
Stress Factor ◽  
Stress Factors ◽  
Analysis Framework ◽  
Stress Indicator ◽  
Linear Behavior ◽  
Level Data ◽  
European Banking

This paper presents an analytical framework for the identification of vulnerabilities arising from the liquidity and funding profile of banks. It is composed of two pillars—estimation of liquidity needs and the counterbalancing capacity of the total liquid assets—that determine a liquidity surplus or shortfall and the drivers for a range of plausible scenarios. Granular bank-level data on the structure of liabilities, maturation profile, liquid assets quality composition, and asset encumbrance are used for that purpose, also taking into account associated commonality effects. A new liquidity metric is introduced—the distance to liquidity stress indicator (DLSI)—which measures the required stress factor for banks to become illiquid. The novelty of the approach (i.e., taking into account asset encumbrance to determine counterbalancing capacity) provides empirical evidence that asset encumbrance has a significant impact on a bank’s liquidity position, leading to the non-linear behavior of liquidity shortfalls, even in the case of linear stress factors.

scholarly journals ACTORS OF THE INSTITUTIONAL REFORMS OF THE EUROPEAN BANKING SECTOR IN RESPONSE TO THE CRISIS

2019 ◽  
pp. 234-245
Author(s):  
Małgorzata Zaleska
Keyword(s):  
Financial Crisis ◽  
Deposit Insurance ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Banking Union ◽  
Institutional Changes ◽  
Special Focus ◽  
Institutional Reforms ◽  
European Banking Union ◽  
European Banking

The article presents the main European policy makers implementing the reform of the banking sector in response to the contemporary global financial crisis. The institutional changes are assessed in the paper, including the establishment of the European banking union, modifications in the EU deposit insurance systems and considerable strengthening of the role of central banks, with special focus on the European Central Bank. Moreover, potential sources of another financial crisis are identified and further institutional changes in finance are proposed.

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