Rating Agency Reputation, the Global Financial Crisis, and the Cost of Debt

2010 ◽  
Author(s):  
Seung Hun Han ◽  
Michael S. Pagano ◽  
Yoon S. Shin
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Cost Of Debt ◽  
Rating Agency ◽  
The Global Financial Crisis ◽  
The Cost

The More the Merrier? Detecting Impacts of Bank Regulation After the Global Financial Crisis

2019 ◽  
Vol 52 (2) ◽  
pp. 191-212
Author(s):  
Christian Kalhoefer ◽  
Guenter Lang
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Jel Classification ◽  
Operating Costs ◽  
Group Affiliation ◽  
Savings Banks ◽  
The Stability ◽  
The Global Financial Crisis ◽  
The Cost ◽  
Structural Shifts

Abstract Governments worldwide reacted swiftly to the global financial crisis by tougher regulations. This paper investigates the impacts of the regulatory environment on operating costs using panel data of 2,200 German banks over the timeframe from 1999 to 2014. We estimate cost functions with and without proxies for regulation and analyze the results with respect to period, bank size, and group affiliation. Our results show that regulatory costs were peaking in 2001, 2008, and lately since 2012. Most interesting, however, is the asymmetry of regulation: Whereas the cost effects were symmetric for all banks until 2003, the last ten years were different. Larger institutions and savings banks could neutralize the impacts of increasing regulation on operating costs. In contrast, smaller banks, especially if they are cooperative banks, were facing significant cost increases. We therefore expect unintended structural shifts like a reduction in the diversity of banks, which are negative for competition, service quality, and for the stability of the financial system. Zusammenfassung Weltweit wurde als Folge der globalen Finanzkrise die Regulierung des Finanzsektors verschärft. Dieser Beitrag geht der Frage nach, welche Konsequenzen diese Regulierungsmaßnahmen für die operativen Kosten im Bankengeschäft haben. Auf der Basis von Paneldaten von 2,200 in Deutschland aktiven Banken über den Zeitraum von 1999 bis 2014 schätzen wir Kostenfunktionen mit und ohne Proxies für Regulierung und werten die Ergebnisse nach Beobachtungsjahr, Bankengröße, und Gruppenzugehörigkeit aus. Unsere Ergebnisse zeigen Kostenspitzen in den Jahren 2001, 2008, und zuletzt seit 2012. Am interessantesten sind jedoch die asymmetrischen Effekte der Bankenregulierung: Während unsere Modelle bis einschließlich 2003 nahezu gleichmäßige Kostenbelastungen anzeigen, änderte sich dies deutlich mit dem Jahr 2004. Im Gegensatz zu großen Institute und Sparkassen, die die Regulierungskosten nahezu neutralisieren konnten, sahen sich kleine Institute und Genossenschaftsbanken mit deutlichen Kostensteigerungen konfrontiert. Als Folge dieser asymmetrischen Kostenwirkungen staatlicher Bankenregulierung erwarten wir unbeabsichtigte Strukturveränderungen wie z.B. Konzentrationsprozesse, die sich negativ auf Wettbewerb, Dienstleistungsqualität, und letztendlich auch negativ auf die Stabilität des gesamten Finanzsystems auswirken werden. JEL Classification: G21, G38

The 2008–2009 global financial crisis and the cost of debt capital among SMEs: Swedish evidence

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Darush Yazdanfar ◽  
Peter Öhman
Keyword(s):  
Financial Crisis ◽  
Large Scale ◽  
Global Financial Crisis ◽  
Dynamic Panel Data ◽  
Cost Of Debt ◽  
Cross Sectional ◽  
Content Type ◽  
Debt Capital ◽  
Using Data ◽  
The Cost

PurposeThe main purpose of this study is to describe and analyse the relationship between the 2008–2009 global financial crisis and small and medium-sized enterprises' cost of debt capital.Design/methodology/approachStatistical methods, including multiple OLS and dynamic panel data, were used to analyse a longitudinal cross-sectional panel dataset of 3865 Swedish SMEs operating in five industry sectors over the 2008–2015 period.FindingsThe results suggest that the cost of debt was influenced by the financial crisis and another macroeconomic factor, i.e. the interbank interest rate, and by firm-specific factors such as firm size and lagged cost of debt.Originality/valueTo the authors' best knowledge, this is one of few studies to examine the cost of debt among SMEs during the crisis and post-crisis periods using data from a large-scale, longitudinal, cross-sectional database.

scholarly journals Business cycle (de)synchronization in the aftermath of the global financial crisis: implications for the Euro area

2015 ◽  
Vol 19 (5) ◽  
Author(s):  
Stelios Bekiros ◽  
Duc Khuong Nguyen ◽  
Gazi Salah Uddin ◽  
Bo Sjö
Keyword(s):  
Monetary Policy ◽  
Financial Crisis ◽  
Business Cycles ◽  
Euro Area ◽  
Global Financial Crisis ◽  
Wavelet Coherence ◽  
Before And After ◽  
The Global Financial Crisis ◽  
The Cost ◽  
European Economies

AbstractThe introduction of Euro currency was a game-changing event intended to induce convergence of Eurozone business cycles on the basis of greater monetary and fiscal integration. The benefit of participating into a common currency area exceeds the cost of losing autonomy in national monetary policy only in case of cycle co-movement. However, synchronization was put back mainly due to country-specific differences and asymmetries in terms of trade and fiscal policies that became profound at the outset of the global financial crisis. As opposed to previous studies that are mostly based on linear correlation or causality modeling, we utilize the cross-wavelet coherence measure to detect and identify the scale-dependent time-varying (de)synchronization effects amongst Eurozone and the broad Euro area business cycles before and after the financial crisis. Our results suggest that the enforcement of an active monetary policy by the ECB during crisis periods could provide an effective stabilization instrument for the entire Euro area. However, as dynamic patterns in the lead-lag relationships of the European economies are revealed, (de)synchronization varies across different frequency bands and time horizons.

Migration patterns in a remittances dependent economy: Evidence from Tajikistan during the global financial crisis

2014 ◽  
Vol 7 (2) ◽  
pp. 190-202 ◽  
Author(s):  
Alexander M. Danzer ◽  
Oleksiy Ivaschenko
Keyword(s):  
Panel Data ◽  
Financial Crisis ◽  
Global Financial Crisis ◽  
Economic Recession ◽  
Destination Country ◽  
Data Set ◽  
Migration Patterns ◽  
The Global Financial Crisis ◽  
The Cost ◽  
Remarkable Reduction

Before the global financial crisis, Tajikistan was a major labour exporting and the world’s most remittances-dependent country. Remittances had contributed to a remarkable reduction in poverty. This paper exploits a new panel data set spanning the years 2007 to 2009 in order to investigate the effect of the financial crisis on migration and remittances patterns. Expectedly, the economic recession in the main destination country Russia affected Tajikistan through declining remittances. Owing to low diversification in pre-crisis migration patterns, the dependency on sending migrants to Russia and the migration stock there grew. In combination with increased migration risk this suggests that migrants bear part of the cost of the crisis.

scholarly journals A hard nut to crack: Regulatory failure shows how rating really works

2019 ◽  
Vol 23 (3) ◽  
pp. 266-286 ◽  
Author(s):  
Giulia Mennillo ◽  
Timothy J Sinclair
Keyword(s):  
Financial Crisis ◽  
Credit Rating ◽  
Global Financial Crisis ◽  
Third Party ◽  
Credit Rating Agencies ◽  
Private Goods ◽  
Rating Agencies ◽  
Rating Agency ◽  
Before And After ◽  
The Global Financial Crisis

Credit rating agencies such as Moody’s and Standard & Poor’s are key players in the governance of global financial markets. Given the very strong criticism the rating agencies faced in the wake of the global financial crisis 2008, how can we explain the puzzle of their survival? Market and regulatory reliance on ratings continues, despite the shift from a light-touch to a mandatory system of agency regulation and supervision. Drawing on the analysis of rating agency regulation in the US and the EU before and after the financial crisis, we argue that a pervasive, persistent and, in our view, erroneous understanding of rating has supported the never-ending story of rating agency authority. We show how treating ratings as metrics, private goods, and independent and neutral third-party opinions contributes to the ineffectiveness of rating agency regulation and supports the continuing authoritative standing of the credit rating agencies in market and regulatory practices.

scholarly journals Did China's Foreign Exchange Policy Hinder the US Recovery from the Global Financial Crisis?

2011 ◽  
Vol 4 (1) ◽  
pp. 7
Author(s):  
Abhishek Kuma ◽  
Wui-Ken Liow ◽  
Joanna Moss ◽  
Yuan Sun ◽  
Zhong Yi Wang ◽  
...  
Keyword(s):  
Financial Crisis ◽  
Foreign Exchange ◽  
Global Financial Crisis ◽  
President Obama ◽  
Us Economy ◽  
Competitive Disadvantage ◽  
The Us ◽  
Exchange Policy ◽  
The Global Financial Crisis ◽  
The Cost

...substantially undervalued...” - Tim Geithner, US Treasury, January 2011 “...China manipulates its currency...” - Charles Schumer (D), February 2011 “...huge competitive disadvantage...” - President Obama, February 2010 The quotes above convey the perception that China’s foreign exchange policy has had a harmful impact on the US economy. This paper examines whether China’s foreign exchange policy harmed the US economy wit h particular reference to its GDP and unemployment levels since the onset of the GF C. We find, contrary to the commonly held belief, that China’s foreign exchange policy has in fact helped the US recover from the GFC, albeit at the cost of strategi c dependency on Chinese demand for its government debt.

On the formation of a New Paradigm of fiscal Policy

2013 ◽  
pp. 152-158 ◽  
Author(s):  
V. Senchagov
Keyword(s):  
Public Finance ◽  
Fiscal Policy ◽  
Financial Crisis ◽  
Global Financial Crisis ◽  
Domestic Demand ◽  
Real Economy ◽  
New Paradigm ◽  
Monetary Aggregate ◽  
The Past ◽  
The Global Financial Crisis

Due to Russia’s exit from the global financial crisis, the fiscal policy of withdrawing windfall spending has exhausted its potential. It is important to refocus public finance to the real economy and the expansion of domestic demand. For this goal there is sufficient, but not realized financial potential. The increase in fiscal spending in these areas is unlikely to lead to higher inflation, given its actual trend in the past decade relative to M2 monetary aggregate, but will directly affect the investment component of many underdeveloped sectors, as well as the volume of domestic production and consumer demand.

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