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When all speak, should we listen? A cross‐country analysis of disagreement in policymaking and its implications Economic Notes Pub Date : 2024-02-28 Spandan Banerjee, Rajendra N. Paramanik, Rounak Sil, Unninarayanan Kurup
This study proposes an ‘implicit measure’ of disagreement to investigate presence of any latent discord in the policy briefings of central banks across nations. We analyse Monetary policy statements of the Bank of Japan (Japan), Banco Central do Brasil (Brazil) and Central Bank of the Republic of Turkey (Türkiye) on both specific as well as overall economic outlook by using novel text mining tools
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Mutual insurance for catastrophe hazards: Case of deposit insurance Economic Notes Pub Date : 2024-02-14 Sangkyun Park
Deposit insurance involves catastrophe risk because bank failures spike during a banking crisis. Although mutual insurance is ill-suited for catastrophe risk, the US government structures deposit insurance like a mutual company owned by policyholders. Furthermore, an intertemporal mispricing resulting from a dividend-surcharge arrangement produces several problems. Most importantly, it worsens moral
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Financial inclusion of Muslim minority in Vellore, Tamil Nadu Economic Notes Pub Date : 2024-01-11 Vavangani Ishtiyaq Nadeem, Khalid Waheed, Arshiya Fathima M.S
The study aims to identify the potential determinants of financial inclusion and its impact on the Indian Muslim minority in Tamil Nadu. statistical package for social science and analysis of moment structures software packages were used in the study. Confirmatory factor analysis and structural equation modelling techniques were applied to examine the collected data (n = 300) from the Vellore district
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The monetary policy trilemma from the perspective of European integration Economic Notes Pub Date : 2023-12-13 Gian Maria Tomat
Following the breakdown of the Bretton Woods agreement the international monetary system has operated based on floating exchange rate arrangements and free capital mobility. A most significant subsequent improvement has been the process of European monetary integration, from the institution of the European Monetary System to the Euro currency. The relationships between the short-term interest rates
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Calibrating the countercyclical capital buffer using AUROCs Economic Notes Pub Date : 2023-10-16 Pierluigi Bologna, Maddalena Galardo
While the setting of the countercyclical capital buffer (CCyB) is not an automatic decision, insights from indicators, such as the credit-to-GDP gap, are a starting point to inform the policy decision. This paper identifies an optimal rule to map the credit-to-GDP gap to the guide to set the CCyB. We use Italian data and follow two alternative procedures. First, we apply the criteria suggested by the
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Cryptocurrency and African fiat currencies: A peaceful coexistence? Economic Notes Pub Date : 2023-09-30 Seyram P. Kumah
This study examines the asymmetric behaviour of Bitcoin relative to six major African fiat currencies (Egyptian Pound, Cedi, ZAR, Naira, Rupee and Dinar) for the period 10 August 2015 to 31 December 2022. The time and frequency information in the time series of the currencies were captured applying the ensemble empirical mode decomposition. The quantile regression (QR) and quantile-in-quantile regression
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The inflation game Economic Notes Pub Date : 2023-09-30 Wolfgang Kuhle
We study a game where households buy consumption goods to preempt inflation. This game features a unique equilibrium with high (low) inflation, whenever money supply is high (low). For intermediate levels of money supply, there exist multiple stable equilibria where inflation is either high or low. Equilibria with moderate inflation, however, do not exist, and can thus not be targeted by central banks
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Is the cryptocurrency market a hedge against stock market risk? A Wavelet and GARCH approach Economic Notes Pub Date : 2023-09-16 Susovon Jana, Tarak N. Sahu
This study analyses six major cryptocurrencies and four global stock markets to explore the role of cryptocurrencies as a hedge, safe haven, and diversifier in stock markets. The study employs ADCC-GARCH and Wavelet Coherence Technique, using daily data from 4 January 2017 to 28 February 2023. The study has found that stock returns and unstable cryptocurrency returns have high volatility persistence
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Does financial inclusion empower women in Africa? Economic Notes Pub Date : 2023-08-28 Admasu A. Maruta, Habtamu T. Edjigu, Woubet Kassa
This paper examines the effect of financial inclusion on women's empowerment. We contribute to the growing interest in financial inclusion effectiveness literature by conducting an empirical analysis of 42 African countries to examine the role of financial inclusion in empowering women. We also examine and compare the effectiveness of the three dimensions of financial inclusion viz. usage, access,
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On the relationship between financial inclusion and bank performance Economic Notes Pub Date : 2023-08-09 Mais Sha'ban, Claudia Girardone, Anna Sarkisyan, Thankom Arun
This study examines the relationship between various financial inclusion measures and banks' performance across multiple countries with varying institutional, regulatory and income levels. To construct an aggregate bank performance index, we employ principal component analysis, which utilises a set of critical indicators summarised by the CAMEL rating system, including banks' solvency, asset quality
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Financial intermediation, inclusion, Fintech, and income inequality in Africa: Robust evidence from the supply and demand side data Economic Notes Pub Date : 2023-03-29 Biruk B. Ashenafi, Dong Yan
The current literature on the finance-inequality nexus fall short of providing extensive evidence. This paper fills the gap by framing the financial sector; to the development of financial intermediation (supply side) and individual use of financial services (demand side). The first approach decouples the financial sector into the banking and stock market. We use the 5-year nonoverlapping averaged
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Moments of cross-sectional stock market returns and the German business cycle Economic Notes Pub Date : 2023-01-24 Jörg Döpke, Karsten Müller, Lars Tegtmeier
Based on monthly data covering the period from 1987 to 2021, we analyse whether cross-sectional moments of stock market returns may provide information about the future position of the German business cycle. We apply in-sample forecasting regressions with and without leading indicators as control variables, pseudo-out-of-sample exercises, autoregressive distributed lag models, and impulse-response
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Leverage and firm value Economic Notes Pub Date : 2023-01-20 William R. Pratt, Gustavo A. Barboza, Matthew Brigida
Three highly cited studies with over 6000 citations collectively report a negative relationship between the market value of the firm and leverage. Such empirical findings clearly contradict the hypothesis of leverage adding value to the firm and an optimal capital structure that maximizes firm value—these findings have yet to be resolved. Employing a sample of 3,768 firms consisting of 39,015 observations
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Time-frequency comovement among green financial assets and cryptocurrency uncertainties Economic Notes Pub Date : 2022-12-19 Inzamam Ul Haq
The high energy consumption and carbon footprints have raised environmental and sustainable concerns of green investors and policymakers. This study explores comovements between three green and socially responsible financial assets, S&P global clean energy index (GCEI), S&P green bonds index (GB), DJ sustainability world index (DJSWI) and four cryptocurrency uncertainty/attention indices cryptocurrency
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“Book Review: The Worth of Water by Matt Damon and Gary White” Economic Notes Pub Date : 2022-12-13 Tebaldo Vinciguerra
Gary White and Matt Damon's recent book, The Worth of Water, details the challenges faced and insights gleaned while building a major microcredit initiative to improve access to safe water and/or sanitation. It was presented during the World Water Forum in Dakar (March 2022). I will describe the birth and evolution of this initiative, contextualizing it in the current concern for access to clean water
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Political connections and bank behaviour Economic Notes Pub Date : 2022-12-05 Saibal Ghosh
Using disaggregated data on Indian state-owned banks, we study how political connections influence their lending behaviour. The findings indicate an overall credit expansion of 10% during election years for banks with political connections, driven by increased lending to agriculture and Small and Medium Enterprises. Further disaggregation reveals cycles in such lending driven by electoral considerations
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Does income inequality really matter for credit booms? Economic Notes Pub Date : 2022-11-19 Rym Ayadi, Sami B. Naceur, Sandra Challita
This paper addresses the question whether income inequality is associated with credit booms, alongside other macroeconomic factors. We distinguish between the different types of credit booms—real estate credit booms, household credit booms, firm credit booms and credit booms that turn into crises. Furthermore, our analysis of a sample of 70 countries between 1990 and 2016 does not provide any evidence
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Did cryptocurrencies exhibit log-periodic power law signature during the second wave of COVID-19? Economic Notes Pub Date : 2022-09-21 Bikramaditya Ghosh, Spyros Papathanasiou, Georgios Pergeris
Many studies have associated cryptocurrencies with bubbles, especially during stressed market conditions such as the recent outbreak of the second wave of COVID-19. Although the majority of studies have focused on Bitcoin, we investigate the predictability of bubble formation in the cryptocurrency market by using the log-periodic power law and we uncover some important stylized facts of this market
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Small firms amidst COVID-19: Financial constraints and role of government support Economic Notes Pub Date : 2022-09-07 Radeef Chundakkadan, Rajesh Raj Natarajan, Subash Sasidharan
The coronavirus disease 2019 has severely affected the financially constrained small and medium enterprises (SMEs). In response, various countries employed several policies to support SMEs. Using rich firm-level data from 34 countries, we study the impact of the pandemic-led crisis on cash-strapped SMEs and the role of governments in offsetting losses. Our results suggest that (i) government support
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Effect of abnormal credit expansion and contraction on GDP per capita in ECOWAS countries Economic Notes Pub Date : 2022-08-29 Peterson K. Ozili, Jide Oladipo, Paul Terhemba Iorember
We investigate the impact of abnormal credit expansion and contraction on the gross domestic product (GDP) per capita (CGDP) of Economic Community of West African States (ECOWAS) countries. We analyse abnormal credit from two dimensions: first, the impact of abnormal credit contraction on CGDP and, second, the impact of abnormal credit expansion on CGDP. Using data for 10 ECOWAS countries from 1993
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Do spatial dependence and market power matter in the diversification of cooperative banks? Economic Notes Pub Date : 2022-06-22 Carmelo Algeri, Antonio F. Forgione, Carlo Migliardo
This study examines the determinants of cooperative banks' diversification proclivity, with consideration of the spatial dependence effect. The empirical analysis demonstrates that Italian cooperative banks operate as a network with significant spillover effects that should not be ignored. Indeed, local banks compete in the same market segment, and any shift in their diversification strategy has a
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Are boards ‘substitute’ or ‘complement’ dividend payout? Econometric evidence for Indian banks Economic Notes Pub Date : 2022-01-07 Madhur Bhatia, Rachita Gulati
This study econometrically tests the ‘substitution’ versus ‘outcome’ hypotheses by examining the impact of board governance on the dividend payout policy in the Indian banking industry. The analysis is confined to the period from 2005 to 2018. The results reveal a significant positive influence of overall board quality on the magnitude of payouts, supporting the ‘outcome hypothesis’. At the disaggregated
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Monetarist arithmetic at COVID-19 time: A take on how not to misapply the quantity theory of money Economic Notes Pub Date : 2021-12-30 Julien Pinter
The COVID-19 crisis has revived an old heated debate on whether significant increases in the money supply ultimately lead to higher inflation. Some observers have alluded to the quantity theory of money for that purpose, though in our view, this has sometimes been in a misleading way. Against this background, this paper seeks to clarify several aspects of the quantity theory of money, which are useful
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Technical efficiency of financial inclusion and human development: Insights from the Indian states Economic Notes Pub Date : 2021-12-28 Bhanu Pratap Singh, Anup Kumar Yadava
Financial inclusion programs are used as a major economic development tool in emerging economies. Human development is the major determinant of financial inclusion, creating opportunities for people to better access financial services. The study's major aim is to examine the technical efficiency of financial inclusion of Indian states by Data Envelopment Analysis using human development as input. To
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From financial structure to economic growth: Theory, evidence and challenges Economic Notes Pub Date : 2021-11-19 Guangdong Xu
This paper surveys the theoretical and empirical literature on the contributions of financial structure to economic growth. Whereas the theoretical literature clarifies the channels through which banks and financial markets may affect resource allocation and hence economic performance, the empirical evidence on the connection between financial structure and economic growth is mixed. There are several
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Community banks versus non-community banks: Post the Great Recession Economic Notes Pub Date : 2021-11-13 Alex Fayman, Su-Jane Chen, Timothy Mayes
Community banks (CBs), despite holding a fairly small share of US banking assets, provide vital financial services to key segments of the economy and fill a void untapped by larger non-community banks (Non-CBs). They face challenges brought on by a fast-changing banking landscape, evolving technology, and ever-increasing regulatory burden. To remain competitive and to gain scale-related efficiencies
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Exploring the dependencies among main cryptocurrency log-returns: A hidden Markov model Economic Notes Pub Date : 2021-11-10 Fulvia Pennoni, Francesco Bartolucci, Gianfranco Forte, Ferdinando Ametrano
A hidden Markov model is proposed for the analysis of time-series of daily log-returns of the last 4 years of Bitcoin, Ethereum, Ripple, Litecoin, and Bitcoin Cash. These log-returns are assumed to have a multivariate Gaussian distribution conditionally on a latent Markov process having a finite number of regimes or states. The hidden regimes represent different market phases identified through distinct
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Regulating cryptocurrencies checkpoints: Fighting a trench war with cavalry? Economic Notes Pub Date : 2021-11-09 Giulio Soana
The rise of cryptocurrencies during the last decade has caused growing concerns among national and international regulators. One of the risks identified is that these instruments may constitute an innovative tool for criminals when laundering money. This risk has been confirmed by numerous recent cases which have underlined the criminogenic potential of cryptocurrencies. Through the V antimoney laundering
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Is the value effect due to M&A deals? Evidence from the Italian stock market Economic Notes Pub Date : 2021-10-25 Antonio Roma
This paper empirically characterises the value effect detected in the Italian stock market for the sample period 2000–2018 based on the value premium offered for the acquisition of a value stock. Bids on value stock (as opposed to bids on growth stocks) generate a large and statistically significant average return on the holding of the target in the deal window. Returns on target stocks for a bid make
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The hype of social capital in the finance-growth nexus Economic Notes Pub Date : 2021-08-04 Ibrahim D. Raheem, Kazeem B. Ajide, Xuan V. Vo
The trilogy among economic growth, social capital (SC), and financial development is examined based on three hypotheses: first, SC is important in the finance-growth nexus. Second, there is a threshold effect of SC in the finance-growth nexus. Third, the SC-finance-growth trilogy depends on the countries' income level. Building data set for 70 countries, some interesting results were obtained: (i)
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Housing prices, volatility, and fundamental value Economic Notes Pub Date : 2021-07-28 Gian Maria Tomat
Asset pricing theories imply the existence of a long run relation between real housing prices and rents. The long run relation predicts, that in each time period real housing prices should be equal to the expected present discounted value of subsequent real rents. We use the annual time series for the 1991–2016 period in Italy as evidence regarding the present discounted value relation. Considering
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An industrial-organization approach to conventional and unconventional monetary policy Economic Notes Pub Date : 2021-06-14 Hiroshi Gunji, Kenji Miyazaki
In this study, we use an industrial-organization model of the banking industry with money creation to examine the effect of conventional and unconventional monetary policy on the money stock. We consider quantitative monetary easing, qualitative monetary easing, and a negative interest rate on excess reserve balances as unconventional monetary policy. Our main findings are as follows. First, under
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Financial inclusion, Pradhan Mantri Jan Dhan Yojna Scheme and economic growth: Evidence from Indian States Economic Notes Pub Date : 2021-06-03 Bhanu Pratap Singh, Annu Kumari, Tanya Sharma, Abhishek Malhotra
The study examines the impact of financial inclusion, promoted through the Pradhan Mantri Jan Dhan Yojna (PMJDY) scheme, on the economic performance across the Indian states. Using the index of financial inclusion developed in Sarma (2008), the current study develops a three-dimensional financial inclusion index for 25 major Indian states from 2011 to 2016 to assess the status of financial inclusion
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Financial development and employment: New panel evidence Economic Notes Pub Date : 2021-02-01 Rym Ayadi, Sami Ben Naceur, Mohamed Goaied
This paper adds to the recent literature on finance and employment creation by exploring the effect of finance on the labour market, using data on 143 countries from 1995 to 2015. We also examine whether the impact of financial development on labour is significantly different before and after the 2008 global financial crisis. This paper has five main findings. First, the analysis confirms the positive
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How does the financial market evaluate business models? Evidence from European banks Economic Notes Pub Date : 2021-01-11 Valeria Venturelli, Andrea Landi, Riccardo Ferretti, Stefano Cosma, Elisabetta Gualandri
This paper investigates the way in which the financial market defines and evaluates different business models, using a sample of listed European banking groups from 2006 to 2015. The main findings suggest that the financial market seems to associate a better risk-return trade-off to non-banking fees than to banking ones and that the performance of different business models varies depending on context
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Women as “gold dust”: Gender diversity in top boards and the performance of Italian banks Economic Notes Pub Date : 2020-12-29 Silvia Del Prete, Maria Lucia Stefani
This paper investigates the effects on riskiness and performance of gender diversity in Italian bank boards. Italy deserves special attention because European comparisons for the 2000s show that it was among the European Union countries where women were least represented in bank boardrooms, and this gap remains even in a quota law regime. Our main econometric results suggest that gender diversity may
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GDP-network CoVaR: A tool for assessing growth-at-risk Economic Notes Pub Date : 2020-12-11 Emanuele De Meo, Giacomo Tizzanini
We propose a tool to predict risks to economic growth and international business cycles spillovers: the gross domestic product (GDP)-Network conditional value at risk (CoVaR). Our methodology to assess Growth-at-Risk is composed of two building blocks. In the first step, we apply a machine learning methodology, namely the network-based NETS by Barigozzi and Brownlees, to identify significant linkages
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The external wealth of Arab nations: Structure, trends, and policy implications Economic Notes Pub Date : 2020-11-24 Mahmoud Mohieldin, Ahmed Rostom, Chahir Zaki
The paper makes two contributions. First, it analyzes net foreign assets (NFA) and liabilities in selected Arab countries. Second, the paper examines the effects of policy variables that affect the accumulation of NFA and its components, analyzing how the existence of a sovereign wealth fund (SWF), the country's exchange rate regime, and the development of its financial system affect its NFA. The main
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Cyclicality of commodity markets with respect to the U.S. economic policy uncertainty based on granger causality in quantiles Economic Notes Pub Date : 2020-10-21 Nicholas Apergis, Tasawar Hayat, Tareq Saeed
Given the importance of the U.S. in global commodity markets, the goal is to explore whether U.S. economic policy uncertainty impacts the price performance of certain commodities. The analysis uses the Granger causality in quantiles method that allows us to test whether there are different effects under different market conditions. The results document that economic uncertainty impacts the returns
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The geography of banking: Evidence from branch closings Economic Notes Pub Date : 2020-10-06 Maddalena Galardo, Iconio Garrì, Paolo Emilio Mistrulli, Davide Revelli
In the aftermath of the Great Recession, the number of bank branches declined in most developed countries. In this paper, we investigate how banks have downsized their branch networks in Italy, by comparing the pre‐ and post‐crisis spatial distribution of branches. By using a detailed data set that includes a wide set of controls for the characteristics of each bank branch, we estimate the probability
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Technological leadership and sectorial employment growth: A spatial econometric analysis for U.S. counties Economic Notes Pub Date : 2020-09-24 Valerien O. Pede, Raymond J. G. M. Florax, Henri L. F. de Groot, Gustavo Barboza
This paper studies the determinants of technological catch‐up considering spatial and sectoral aggregation of industries. We investigate how geographical and technological proximity to the technology leader impact regional employment growth. We model technological progress by means of a hierarchical process of catch‐up to the technology leader. We also incorporate measures for knowledge spillover effects
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The relation between municipal and government bond yields in an era of unconventional monetary policy Economic Notes Pub Date : 2020-08-31 David Knezevic, Martin Nordström, Pär Österholm
In this paper, we investigate how the 5‐year Swedish municipal bond yield has been related to the corresponding yield on government bonds during the period that the Riksbank has conducted unconventional monetary policy in terms of bond purchases. Using daily Swedish data on bond yields from February 2015 to January 2018, we first conduct an event study to assess the short‐run effects of the Riksbank's
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The rise of market power and Ramsey‐optimal policy implications Economic Notes Pub Date : 2020-08-07 Mehrab Kiarsi
De Loecker, Eeckhout, and Unger document that since 1980 aggregate markups in the U.S. economy have significantly increased from 21% above cost to 61% now. In light of this evidence, this paper revisits optimal fiscal and monetary policy recommendations of standard New Keynesian models and shows that under empirically relevant calibrations of market power they radically change: the optimal inflation
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Life with habit and expectation: A new explanation of equity premium puzzle Economic Notes Pub Date : 2020-07-30 James P. Cover, Boyi Zhuang
Previous writers have attempted to resolve the equity premium puzzle by employing a utility function that depends on current consumption minus (or relative to) past habit consumption. This paper points out that an individual's current utility may also depend upon how well off in the recent past he or she had expected to be today. Hence we add the concept “expectation formation” to the utility modification
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Business models in finance: Risk and evolution Economic Notes Pub Date : 2020-06-02 Rym Ayadi,Claudio Giannotti,Valerio Pesic
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Trade uncertainties and the hedging abilities of Bitcoin Economic Notes Pub Date : 2020-05-26 Elie Bouri, Konstantinos Gkillas, Rangan Gupta
In this paper, we use daily data from October 2011 to May 2019 to estimate the monthly realized correlation between stock returns of the United States (US) and Bitcoin returns. Then, we relate the realized correlation with a news-based measure of the growth of trade uncertainty for the US. Our results show that the realized correlation is negatively impacted by increases in trade uncertainty, suggesting
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Race in relation to bank depositors and mortgage applications Economic Notes Pub Date : 2020-05-18 Russell Kashian,Robert Drago
Data associated with the Home Mortgage Disclosure Act (HMDA) are often studied for evidence of discrimination in terms of minority applicants or for home location in minority neighborhoods, with mixed results. The present analysis utilizes a data set covering 2014–2016, combining characteristics of home location and applicants from the HMDA data with information on depositor characteristics from the
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A forecast evaluation of the Riksbank's policy‐rate projections Economic Notes Pub Date : 2020-05-17 Martin Nordström
This paper evaluates the forecasting performance of the policy-rate path published by the Swedish central bank, the Riksbank. Using data from 2007 to 2019, I find that the Riksbank's forecast has b ...
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The fourfold relation between the essence of money, inflation, bubbles and debt—A theoretical macrofounded analysis Economic Notes Pub Date : 2020-04-19 Edoardo Beretta
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National culture and (dis)trust in banks: Cross‐country evidence Economic Notes Pub Date : 2020-04-06 Muzaffarjon Ahunov,Leo Van Hove
We examine to what extent a specific aspect of national culture—uncertainty avoidance—can explain cross‐country variations in (dis)trust in banks. Relying on data from the World Values Survey, we find that trust in banks is lower in countries that score high for Hofstede's uncertainty avoidance index. Similarly, with Global Findex data, we find that financial exclusion due to a lack of trust in banks
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Bank intermediation activity in a low-interest-rate environment Economic Notes Pub Date : 2020-02-26 Michael Brei, Claudio Borio, Leonardo Gambacorta
This paper investigates how a prolonged period of low‐interest rates affects bank intermediation activity. We use data for 113 large international banks headquartered in 14 major advanced economies during the period 1994–2015. We find that low‐interest rates induce banks to shift their activities from interest‐generating to fee‐related and trading activities. This rebalancing is stronger for low capitalised
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Does the BRRD affect the retail banking business model in the Euro area? Economic Notes Pub Date : 2020-02-11 Domenica Tropeano
This paper discusses how the introduction of the Banking Recovery and Resolution Directive (BRRD) in European Union legislation may change the retail banking business model, which is the most prevalent model in Southern European countries. The main point is the treatment of deposits in the BRRD. Uninsured deposits may be written down or converted into equity in case of resolution of a bank. This contrasts
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Institutions and the financial development–economic growth nexus in sub‐Saharan Africa Economic Notes Pub Date : 2020-02-10 Olufemi A. Aluko,Muazu Ibrahim
Using a sample splitting approach that does not impose an exogenous quadratic term, we examine the effect of financial development on economic growth in sub‐Saharan Africa by allowing the link to be mediated by the level of institutions. Our findings reveal a disproportionate growth‐enhancing effect of finance, given countries’ distinct level of institutional quality. More specifically, when the International
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Does a bank's business model affect their capital and profitability? Economic Notes Pub Date : 2020-01-29 Matteo Farnè, Angelos T. Vouldis
We use a data‐driven classification of systemically important European banks into business models based on confidential granular supervisory data and investigate whether banks following different models differ with respect to their capitalisation and profitability. Our aim is to locate the banks' business model in a risk‐return space. Using an instrumental variables approach, our econometric methodology
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Performance of value‐ and size‐based strategies in the Italian stock market Economic Notes Pub Date : 2020-01-03 Anna Pirogova, Antonio Roma
This paper investigates the performance of size‐ and value‐based strategies in the Italian stock market in the period 2000–2018. Previous research argued the impossibility to define properly value‐sorted portfolios due to the inaccuracy of book‐to‐market ratios available for Italian listed stocks. Using more accurate data, we implement portfolios sorting based on value and growth stocks, to assess
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Banking business models and risk: Findings from the ECB's comprehensive assessment Economic Notes Pub Date : 2019-12-18 Giovanna Paladino, Zeno Rotondi
We use the results of the ECB's comprehensive assessment to evaluate the importance of the bank business model on risk assessment and the persuasive effectiveness of different supervisory styles on banks’ recapitalization. Our analysis reveals inconsistencies in the information content provided by the various regulatory measures used for assessing bank stability. Moreover, opposite to CET1 ratio, the
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Will FinTech make regional banks superfluous for small firm finance? Observations from soft information‐based lending in Germany Economic Notes Pub Date : 2019-12-10 Franz Flögel, Marius Beckamp
Regional banks have a competitive advantage in that short distances to clients enable the use of soft information for superior lending decisions. If the ambition of FinTech start‐ups to create superior screening and monitoring technologies materialises, this advantage would be diminished and regional banks would become superfluous for small firm finance. To explore this claim, the paper in hand analyses
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How diverse are national banking systems? An analysis on banking business models, profitability, and riskiness Economic Notes Pub Date : 2019-11-05 Giacomo Caterini, Edoardo Gaffeo, Lucio Gobbi
In this paper, we apply an algorithm developed by Martin Weitzman to quantify the extent of diversity among the business models of financial intermediaries at an international level. In particular, we investigate the relationship between the diversity of the business models of EU national banking systems and their profitability and riskiness. We show how Weitzman's approach can be generally applied
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The political economy of migrant remittances Economic Notes Pub Date : 2019-10-04 Emmanuel K. K. Lartey