scholarly journals The Impact of the Financial Crisis on Inter-Bank Funding: Evidence from Italian Balance Sheet Data

2011 ◽  
Author(s):  
Giuseppe Cappelletti ◽  
Antonio De Socio ◽  
Giovanni Guazzarotti ◽  
Enrico Mallucci
Keyword(s):  
Financial Crisis ◽  
Balance Sheet ◽  
Bank Funding ◽  
The Impact

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.

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 The Value Relevance of Goodwill: IFRSs and Global Financial Crisis (GFC)

2018 ◽  
Vol 8 (2) ◽  
pp. 26
Author(s):  
Ng Shir Li ◽  
Dennis W Taylor
Keyword(s):  
Financial Crisis ◽  
Financial Reporting ◽  
Global Financial Crisis ◽  
Value Relevance ◽  
Explanatory Power ◽  
Balance Sheet ◽  
Share Price ◽  
Book Value ◽  
Income Statement ◽  
The Impact

This study contributes to the issue of accounting for goodwill by examining the impact of changing from the Australian Generally Accepted Accounting Principles (AGAAP) to Australian International Financial Reporting Standards (AIFRS) on goodwill, 3 years (2002 to 2004) before and 3 years (2006 to 2008) after AIFRS adoption. The sample is drawn from top 200 companies listed on the Australian Stock Exchange (ASX). This study applies multiple regressions. The dependent variable is the closing share price 3 months after the balance sheet date. The independent variables consist of earnings per share, book value per share, goodwill in the balance sheet, goodwill in the income statement (goodwill amortisation and goodwill impairment) and goodwill acquisition. The findings indicate that goodwill accounted for in the income statement and balance sheet do not provide increased explanatory power of market value under AIFRS compared to AGAAP. Moreover, the goodwill in the income statement does not show value relevance in year 2007, but became significant in year 2008 during the global financial crisis (GFC). Also, the age of goodwill recorded in the balance sheet does not affect the value relevance of earnings and book value in the post-adoption period. This study contributes new evidence on accounting for goodwill under pre and post-IFRS accounting regimes in Australia. This is also the first study to examine the separate effects of goodwill accounting on earnings and net assets, with special attention given to the period before and during the GFC in capital markets.

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

Impact of oil and gas prices shocks on banks’ deposits in an oil and gas-rich economy

2018 ◽  
Vol 13 (5) ◽  
pp. 875-901 ◽  
Author(s):  
Abdulazeez Y.H. Saif-Alyousfi ◽  
Asish Saha ◽  
Rohani Md-Rus
Keyword(s):  
Financial Crisis ◽  
Oil And Gas ◽  
Global Financial Crisis ◽  
Balance Sheet ◽  
Islamic Banks ◽  
Aggregate Level ◽  
Price Changes ◽  
Content Type ◽  
Bank Deposits ◽  
The Impact

Purpose The purpose of this paper is to investigate and compare the impact of oil and gas prices changes on bank deposits at the aggregate as well as at the level of commercial and Islamic banks in Qatar over the period 2000–2016. Design/methodology/approach Using the BankScope Database as well as bank-level balance sheet and financial statements data, the authors use one-step system GMM dynamic model to examine and compare the association between oil and gas prices changes with bank deposits in Qatar. The authors also test hypotheses of direct and indirect impacts of oil and gas prices changes on bank deposits. Findings The results indicate that oil and gas prices changes have a direct impact on deposits of banks at the aggregate level in Qatar. However, the authors find that oil and gas price changes significantly affect deposits of Qatari commercial banks directly prompting enhanced lending by banks and the consequent business activities in the economy, while their impact on the deposits of Qatari Islamic banks is indirect, i.e. the impact is permeated through the macroeconomic and institutional characteristics of the country that are reinforced by the growing expectations and commercial sentiment of the country. The authors find that significant association between oil price changes and deposit growth during the global financial crisis 2008 has been distorted. However, the authors find that there was a sharp rise in the deposits of Islamic banks during the period of global financial crisis. Practical implications The results of this study necessitate policy measures that can counter the effects of changes in oil and gas prices on the effectiveness of bank deposits. Originality/value It is widely recognized that oil and gas prices and the level of production are of great importance to the economic development of oil and gas exporting countries. So far, however, no econometric study has been reported in the literature which analyses and compares the impact of oil and gas prices changes on bank deposits of commercial and Islamic banks and also at the aggregate level in any of the oil-exporting economies. Thus, this study provides the first empirical evidence on distinct direct and indirect channels through which oil and gas prices changes may affect bank deposits.

scholarly journals Liquidity of Czech and Slovak commercial banks

2012 ◽  
Vol 60 (7) ◽  
pp. 463-476 ◽  
Author(s):  
Pavla Vodová
Keyword(s):  
Financial Crisis ◽  
Commercial Banks ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Balance Sheet ◽  
Annual Reports ◽  
Lender Of Last Resort ◽  
Liquidity Crises ◽  
Lending Activity ◽  
The Impact

As liquidity problems of some banks during global financial crisis re-emphasized, liquidity is very important for functioning of financial markets and the banking sector. The aim of this paper is therefore to evaluate comprehensively the liquidity positions of Czech and Slovak commercial banks via different liquidity ratios in the period of 2001–2010 and to find out whether the strategy for liquidity management differs by the size of the bank. We used unconsolidated balance sheet data over the period from 2001 to 2010 which were obtained from annual reports of Czech and Slovak banks. The sample includes significant part of Czech and Slovak banking sector (not only by the number of banks, but also by their share on total banking assets). We have calculated five different liquidity ratios for each bank in the sample. The results showed that liquidity of Czech banks has declined during last ten years. On the contrary, liquidity of Slovak banks fluctuated only slightly during the period 2001–2008. Bank liquidity has fallen due to the financial crisis in both countries; the impact is worse for Slovak banks. Both Czech and Slovak banks have become less liquid also as a result of increase in lending activity. Czech and Slovak banks have the same strategies how to insure against liquidity crises: big banks rely on the interbank market or on a liquidity assistance of the Lender of Last Resort, small and medium sized banks hold buffer of liquid assets.

scholarly journals Intervenção na Santa Casa de Campo Grande, MS: Estudo de Caso Sobre a Evolução dos Indicadores Financeiros da Instituição

2020 ◽  
Vol 23 (38) ◽  
pp. 170-177
Author(s):  
Jefferson Levy Espindola Dias ◽  
Pedro Henrique Gamarra Nascimento
Keyword(s):  
Financial Crisis ◽  
Balance Sheet ◽  
Financial Statements ◽  
Financial Indicators ◽  
Net Worth ◽  
The Government ◽  
Financial Administration ◽  
The Impact

A Santa Casa de Campo Grande passou por um período de intervenção pelo poder público durante o período de 2005 a 2013, com a justificativa de reverter o quadro de crise vivido pelo hospital na época. O objetivo deste estudo é verificar o impacto dessa intervenção nos indicadores financeiros da instituição, avaliando, assim, a sua eficácia financeira. O estudo de caso foi realizado através da análise das demonstrações contábeis do período, sendo estas o balanço patrimonial e a demonstração do resultado do exercício. Com esta análise, extraíram-se os índices de liquidez, endividamento e rentabilidade, índices estes que foram interpretados, assim como tiveram sua variação avaliada. O resultado encontrado demonstra um baixo índice de liquidez, com pico em 2013 de 0,6972; índices de endividamento que não poderiam ser cobertos pelo patrimônio líquido da instituição; e, um aumento do prejuízo acumulado e do saldo negativo do patrimônio líquido. Observou-se, portanto, que houve piora nos indicadores financeiros analisados durante o período de intervenção do poder público, evidenciando que o mesmo não cumpriu os objetivos definidos à época da intervenção. Palavras-chave: Indicadores Financeiros. Intervenção. Administração Financeira. Abstract              Campo Grande-MS Santa Casa Hospital underwent a period of intervention by the government from 2005 to 2013, with the justification of reversing the financial crisis the hospital was going through at the time. The objective of this study is to check the impact of this intervention on the institution’s financial indicators, thus evaluating its financial effectiveness. The case study was performed by analyzing the financial statements for the period, which are the balance sheet and the profit and loss statement for each year. With the analysis, the liquidity, indebtedness and profitability indexes were extracted, interpreted, and its variation evaluated. The result shows a low liquidity ratio, peaking in 2013 at 0.6972; indebtedness ratios that could not be covered by the institution's net worth; and, an increase in the accumulated loss and negative net worth balance. Therefore, it was observed that financial indicators analyzed worsened during the government’s intervention, showing that it did not meet the objectives set at the time of the intervention. Keywords: Financial Indicators. Intervention. Financial Administration.

From Financial Crisis to Great Recession: The Role of Globalized Banks

2012 ◽  
Vol 102 (3) ◽  
pp. 225-230 ◽  
Author(s):  
Shekhar Aiyar
Keyword(s):  
Financial Crisis ◽  
Great Recession ◽  
Global Financial Crisis ◽  
Balance Sheet ◽  
Bank Credit ◽  
Real Economy ◽  
Bank Of England ◽  
Bank Funding ◽  
The Global Financial Crisis

This paper provides evidence of the role of globalized banks in transmitting financial stresses to the real economy during the global financial crisis. A novel dataset is constructed from quarterly balance sheet reports provided by all UK-resident banks to the Bank of England. I find that the shock to bank funding from non-resident creditors was transmitted domestically through a significant reduction in bank credit supply. Resident subsidiaries and branches of foreign-owned banks reduced lending by a larger amount than domestically-owned banks, while the latter calibrated the reduction in domestic lending more closely to the size of the funding shock.

„This time is different“?

2021 ◽  
Vol 90 (2) ◽  
pp. 9-29
Author(s):  
Dorothea Schäfer
Keyword(s):  
Financial Crisis ◽  
Balance Sheet ◽  
Banking System ◽  
Real Economy ◽  
Data Set ◽  
Loan Portfolios ◽  
Global Pandemic ◽  
The Individual ◽  
Lending Behavior ◽  
The Impact

Die Coronakrise ist die erste globale Pandemie seit mehr als 100 Jahren. In dieser Hinsicht ist die Coronakrise einzigartig und damit wahrhaft „different“. Aber ist sie auch „einzigartig“ wenn die Reaktion der Finanzinstitute auf die Krise in den Blick genommen wird? Vor dem Hintergrund des mehrgliedrigen Bankensystems in Deutschland untersucht der Beitrag, ob in der Coronakrise das Kreditgewerbe bei der Finanzierung der Realwirtschaft ähnlich agiert, als in vorangegangenen Krisen. Zunächst prüfen wir, wie die Kreditquote, also der Anteil der Kredite an der Bankbilanzsumme, auf die drei großen Krisen dieses Jahrhunderts, Dotcom-Krise, Finanzkrise und Coronakrise, reagiert hat. Grundlage dazu ist ein Paneldatensatz mit den Bankengruppen als Beobachtungseinheit. Im zweiten Schritt vergleichen wir die Entwicklung der Kreditbestände und Marktanteile der Bankengruppen in Coronakrise und Finanzkrise. Unsere Befunde zeigen, dass der Spruch „This time is different“ für das deutsche Bankwesen in der Coronakrise nicht falsch ist. Die empirische Schätzung ergibt, dass kapitalschwächere Bankengruppen in der Finanzkrise die Kreditquote zwar signifikant abgesenkt, diese aber in der Coronakrise signifikant erhöht haben. Der Vergleich der Kreditbestände zeigt für die Banken insgesamt und für einzelne Bankengruppen in der Coronakrise eine deutlich expansivere Kreditvergabe als in der Finanzkrise. The Corona crisis is the first global pandemic in more than 100 years. In this respect, the Corona crisis is unique and therefore truly “different”. But is it also “unique” when the response of financial institutions to the crisis is considered? Against the backdrop of the German banking system the work examines whether in the Corona crisis the banking industry has shown a similar reluctance to finance the real economy as in previous economic crises. Based on a panel data set with the banking groups as an observation unit, we explore the impact of dotcom, financial and corona crisis on the share of loans in the balance sheet of banking groups. Furthermore, we compare lending behavior and the market share trends of the individual banking groups in the financial crisis and the corona crisis. As a result, it can be said that the saying “This time is different” is an appropriate description for the German banking system in the Corona crisis. The empirical estimate shows that capital-weaker banking groups significantly reduced the share of loans in total assets during the financial crisis but significantly increased them during the corona crisis. A direct comparison of the development of loan portfolios shows an opposite trend in the Corona crisis for the banks as a whole, and also for individual banking groups than in the financial crisis.

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