Central and Commercial Bank Balance Sheet Risk Before, During, and after the Global Financial Crisis

2015 ◽  
Author(s):  
Joeseph Crowley
Keyword(s):  
Financial Crisis ◽  
Commercial Bank ◽  
Global Financial Crisis ◽  
Balance Sheet ◽  
The Global Financial Crisis

scholarly journals Risk management of Islamic banks: A search for empirical evidences

2017 ◽  
Vol 14 (2) ◽  
pp. 8-16
Author(s):  
Sayed M. Fadel ◽  
Jasim Al-Ajmi
Keyword(s):  
Risk Management ◽  
Financial Crisis ◽  
Management Practices ◽  
Global Financial Crisis ◽  
Risk Mitigation ◽  
Balance Sheet ◽  
Islamic Banks ◽  
Risk Levels ◽  
Management Techniques ◽  
The Global Financial Crisis

The objectives of this study are to determine 1) the effect of global economic and financial crisis on risk management, 2) the severity of different types of risk facing Islamic banks, 3) the risk levels of Islamic financial modes, 4) risk assessment techniques, and 5) risk management techniques. The structure of the balance sheet, the nature of Islamic finance instruments and funding sources have a great impact on the level of risk exposure of banks and the instruments. Credit risk is found to be the most serious risk, followed by liquidity risk, market risk and operational risk, in descending order of importance. As for the riskiness of Islamic financing modes, mudarabah is perceived to be the riskiest, followed by musharakah, while murabahah ranked as the least risky mode. Moreover, Islamic banks are found to use traditional risk management techniques more than sophisticated measurements. They also adopt risk mitigation techniques that are used by conventional banks in preference to techniques that are considered to be unique to Islamic banks. This paper is the first to study the risk management practices of Islamic banks operating in Bahrain. It also provides evidence about these practices after the global financial crisis that affected all countries, including Bahrain.

The Swiss Sovereign Money Initiative

2018 ◽  
Vol 51 (4) ◽  
pp. 621-644
Author(s):  
Katrin Assenmacher ◽  
Claus Brand
Keyword(s):  
Central Bank ◽  
Commercial Bank ◽  
Commercial Banks ◽  
Global Financial Crisis ◽  
Balance Sheet ◽  
Jel Classification ◽  
Constitutional Amendment ◽  
Demand Deposits ◽  
Bank Balance Sheets ◽  
The Global Financial Crisis

Abstract On 10 June 2018, Switzerland voted against a constitutional amendment to introduce a system of sovereign money or Vollgeld. The proposal foresaw that all money be created by the central bank and that commercial banks be banned from creating demand deposits. Demand deposits would have been required to be held in off-balance sheet accounts at commercial banks. We discuss the specific features of this proposal and compare them to its historical predecessor, the Chicago plan. We argue that the Swiss initiative would not have tangibly enhanced financial, monetary, and economic stability. Specifically, if implemented earlier, it would not have addressed the root causes of the Global Financial Crisis and would have been ineffective in changing its course and its consequences for Switzerland. Though the Vollgeld proposal would have turned commercial bank into central bank money, close-money substitutes would likely have remained on the liability side of commercial bank balance sheets. Vollgeld would also unlikely have redeemed promises of ancillary effects such as a reduction in public debt, more sustainable economic growth, and less complex regulation. Forestalling and tackling financial imbalances requires limiting leverage and safeguarding liquidity buffers through bank-level and system-wide rules and regulation. Zusammenfassung Am 10. Juni 2018 lehnten drei Viertel der Schweizer Stimmberechtigten eine Verfassungsänderung ab, die ein Vollgeldsystem in der Schweiz eingeführt hätte. Der Vorschlag hätte der Notenbank das alleinige Recht zur Geldschöpfung gegeben und den Geschäftsbanken die Schaffung von Sichteinlagen verboten. Zahlungsverkehrskonten hätten von den Geschäftsbanken ausserhalb ihrer Bilanz geführt werden müssen. Wir diskutieren die Einzelheiten des Vorschlags und vergleichen sie mit dessen Vorgänger aus den 1930er Jahren, dem Chicago Plan. Wir argumentieren, dass sich die monetäre und wirtschaftliche Stabilität sowie die Finanzstabilität in der Schweiz durch die Annahme der Initiative nicht wesentlich verbessert hätten. Ein bestehendes Vollgeldsystem hätte nicht bei den Ursachen der Finanzkrise angesetzt und wäre unerheblich für ihren Verlauf und ihre Folgen für die Schweiz gewesen. Obwohl mit Vollgeld Sichteinlagen bei Geschäftsbanken in Zentralbankgeld umgewandelt worden wären, hätten geldnahe Einlagen auf der Passivseite der Bilanz weiter existiert. Vollgeld hätte auch Versprechen wie eine Senkung der Staatsverschuldung, ein nachhaltigeres Wachstum und eine weniger komplexe Bankenregulierung nicht erfüllt. Die Verhinderung und Bewältigung von finanziellen Ungleichgewichten erfordert eine Regulierung sowohl auf Bankenebene als auch für das Finanzsystem insgesamt, um die gesamtwirtschaftliche Verschuldung zu beschränken und Liquiditätspuffer zu schaffen. JEL Classification: E42, E50

scholarly journals The global financial crisis: Implications for capital to agribusiness

2012 ◽  
Vol 6 (1-2) ◽  
pp. 59-62
Author(s):  
Bruce L. Ahrendsen
Keyword(s):  
Financial Crisis ◽  
Interest Rates ◽  
Global Economy ◽  
Global Financial Crisis ◽  
Balance Sheet ◽  
The United States ◽  
The European Union ◽  
Financial Obligations ◽  
General Business ◽  
The Global Financial Crisis

The global economy has continued to experience lingering effects of the global financial crisis that began in 2007. Although attention was initially given to the liquidity crisis and survival of some the world’s largest corporations and institutions, the financial crisis is likely to have long-lasting implications for agribusiness. As the world slowly recovers from the crisis, another round of problems are emerging as governments and international institutions attempt to unwind the positions they took in an effort to prevent the global economic bubble from bursting. Perhaps the most problematic factor for businesses is access to capital in sufficient amounts and at affordable rates. Governments and institutions, particularly in the United States (U.S.) and the European Union, have increased their financial obligations as the result of activities taken to curtail the economic crisis. These financial obligations and the associated financial risks place pressure on financial markets and tend to restrain the availability of capital and increase the cost of capital for businesses. However, the U.S. agricultural credit market has not experienced problems to the same extent as general business (commercial and industrial) and real estate credit markets have. In general, U.S. farm businesses have a strong balance sheet, adequate repayment capacity, sufficient amount of assets to offer collateral for loans, and reasonable profits. Thus, U.S. farm businesses have had an ample supply of credit at relatively low interest rates.

scholarly journals Finland

2016 ◽  
Vol 2016 (369) ◽  
Author(s):  
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Balance Sheet ◽  
Financial Fragility ◽  
Foreign Investors ◽  
Balance Sheets ◽  
Cross Border ◽  
The Government ◽  
The Global Financial Crisis

This Selected Issues paper examines Finland’s sectoral balance sheets and how they have evolved since the global financial crisis; the analysis reveals that financial vulnerabilities have risen in most sectors. Indebtedness has increased for nonfinancial corporations (NFCs), households, and the government, increasing their financial fragility and vulnerability to shocks. Also, cross-border financial exposures have risen on both sides of Finland’s balance sheet. Specifically, banks’ balance sheets have grown considerably, largely owing to a rise in foreign liabilities. NFCs and the government have also relied in part on foreign investors to finance their debt increases.

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.

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