scholarly journals АNTI-CRISIS FINANCIAL REGULATION OF THE BANKING SYSTEM: DOMESTIC REALITIES AND FOREIGN EXPERIENCE

2020 ◽  
Vol 01 (01) ◽  
pp. 58-63
Author(s):  
Maksym Zhytar ◽  
Julia Ananieva
Keyword(s):  
Financial Stability ◽  
Financial Regulation ◽  
Banking System ◽  
Financial Policy ◽  
Real Economy ◽  
Conceptual Approach ◽  
Economic Space ◽  
Foreign Experience ◽  
Growth Limit ◽  
Banking Operations

The article substantiates the conceptual approach to the formation of the mechanism for anti-crisis financial regulation of the banking system, which outlines the set of causality and feedback of the elements of the banking system in view of changes in external and internal environments to ensure the development of such a system in the global economic space. The proposed approach identifies the components of the mechanism for anti-crisis financial regulation of the banking system, its features, which are considered and specified in the following elements: a purpose, tasks, subjects, objects, principles, functions, and tools. It has been justified the prospects for adaptation of foreign experience in improving the areas of anti-crisis financial regulation of the banking system by substantiating the main measures and tools, in particular: strengthening control over the activities of banks; focusing banking on financing the real economy; restricting speculative banking operations; separating investment and banking operations; refinancing only those banks that lend to small and medium-sized businesses; stimulating the write-off of problem mortgages; setting a growth limit for large financial corporations; introducing additional taxes and fines for speculative operations of banks and others. Key words: banking system, anti-crisis financial regulation, financial policy, financial stability, crisis, mechanism.

scholarly journals Investigating the Economic and Financial Damage around Currency Peg Failures

2019 ◽  
Vol 12 (2) ◽  
pp. 92 ◽  
Author(s):  
Colin Ellis ◽  
Emilia Gyoerk
Keyword(s):  
Exchange Rate ◽  
Financial Stability ◽  
Currency Crises ◽  
Exchange Rate Regime ◽  
Banking Crisis ◽  
Banking System ◽  
Economic Damage ◽  
Real Economy ◽  
The Past ◽  
Floating Exchange Rate

The choice and structure of a country’s exchange rate regime has wide implications for the effectiveness and flexibility of monetary policy tools, as well as for economic and financial stability. We examine 21 instances where exchange rate pegs have been abandoned in the past, to gauge the potential economic damage associated with pegs failing. The sample includes major exchange rate shifts over the past thirty years, spanning from the Latin America currency crises of the 1990s to the peg abandonment in Egypt in 2016. Given the close interconnection of banks to the sovereign and the real economy, risks often flow through to, and can also be magnified by, the banking system. We therefore examine the interaction of currency peg abandonment with the occurrence of a banking crisis to investigate the different circumstances and impacts of exchange rate pegs failing. We have found that countries that simultaneously suffered a systemic banking crisis during the period of exchange rate regime shift also experienced significantly greater economic and financial damage following the adoption of a freely floating exchange rate. Nevertheless, regardless of whether there was a banking crisis, countries start showing signs of recovery after the same amount of time once the currency floated.

Trennbankensystem – ein Weg zu mehr Finanzstabilität in Deutschland?

2014 ◽  
Vol 15 (1) ◽  
pp. 41-55 ◽  
Author(s):  
Andreas Dombret ◽  
Thilo Liebig ◽  
Ingrid Stein
Keyword(s):  
Significant Role ◽  
Financial Stability ◽  
Banking System ◽  
Real Economy ◽  
The Real ◽  
Considerable Fraction ◽  
The Us ◽  
Proprietary Trading ◽  
Systemically Important Banks ◽  
The Eu

AbstractThis article examines how the introduction of a specialised banking system is likely to impact banks and the real economy in Germany, in particular from a financial stability perspective. This study is motivated by a recently passed law in Germany on a specialised banking system (Trennbankengesetz), current reforms in the US and UK and proposals for the EU. We focus on the consequences of a separation of the savings & loan business and proprietary trading. We conclude that proprietary trading plays a significant role only for large, systemically important banks in Germany. The latter act as universal banks and grant a considerable fraction of all loans that go to domestic enterprises and consumers. Costs for customers, however, are likely to be moderate. In contrast, a specialised banking system may provide the important advantage that insolvent trading units can be separated more easily from the savings & loan business arm and eventually liquidated. In this way, implicit state guarantees may be reduced.

Shadow banking in China: expanding scale, evolving structure

2014 ◽  
Vol 6 (3) ◽  
pp. 198-211 ◽  
Author(s):  
Tong Li
Keyword(s):  
Financial Stability ◽  
Banking System ◽  
Bank Loans ◽  
Data Sources ◽  
Shadow Banking ◽  
Real Economy ◽  
Content Type ◽  
Comprehensive Picture ◽  
Shadow Banking System ◽  
Banking Credit

Purpose – This paper aims to survey available data sources and put China’s shadow banking system in perspective. Although bank loans still account for the majority of credit provided to China’s real economy, other channels of credit extension are growing rapidly. The fast expansion of shadow banking has spurred wide concerns regarding credit quality and financial stability. Design/methodology/approach – This paper explores various data sources, provides an overview of shadow banking activities in China, discusses their close ties with banks and summarizes regulatory issues. Extensive descriptive data are included to provide a comprehensive picture of the nature of shadow banking activities in China. In particular, institutions and products are discussed in great details. Findings – While China’s shadow banking system is by no means simple, it does not (yet) involve the extensive use of financial derivatives. Rather, shadow banking credit is often directly extended to the real economy. In addition, shadow banks are typically interconnected with commercial banks in various ways. The expanding scale and constantly evolving structure of the shadow banking system has posed challenges for financial regulators. Originality/value – This paper attempts to quantify the scale and scope of China’s shadow banking activities and provides a consistent framework as the basis for cross-country comparison of shadow banking systems. This is one of the first scholarly research products that discusses the origin, nature and risks of China’s shadow banking system in a regulatory context.

scholarly journals Analysis of Foreign Experience in the Financial Regulation of the Arctic Territories Development and its Application in the Northern Regions of the Russian Federation

2021 ◽  
pp. 5-29
Author(s):  
Roman V. BADYLEVICH ◽  
Keyword(s):  
Financial Regulation ◽  
Policy Instruments ◽  
The Arctic ◽  
Financial Policy ◽  
Arctic Zone ◽  
Foreign Experience ◽  
Northern Regions ◽  
The Usa ◽  
The Russian Federation ◽  
Regional Financial Policy

The article examines foreign experience in implementing regional financial policy in relation to the Arctic territories. It assesses the experience of such sub-arctic countries as Canada, Finland, Denmark, Norway, Sweden, and the USA. The paper identifies two groups of financial instruments of territorial devel-opment: within the framework of general regional policy (instruments of fiscal capacity equalization, taxa-tion instruments, instruments to increase investment attractiveness) and within the framework of special policy for the development of Arctic territories (program-targeted instruments, special development funds, direct allocation of funds for current expenses and development). It is concluded that the Arctic countries apply different approaches and tools to the development of the regions located in the Arctic zone, the choice of which is determined by the type of state structure, the degree of financial independence of the regions in the sphere of financial regulation, the level of development of the northernmost subjects compared to the rest of the country. In the conditions of Russia, it is possible to use the best foreign experience in the sphere of financial regulation of development of the regions located in the Arctic zone. In particular, it is possible to use the experience of applying program-targeted development tools, the formation of special development funds, which are based on revenues from the use of natural resources of the Arctic, as well as the experience of creating favourable conditions to attract investors for the implementation of economically attractive projects.

scholarly journals Financialization and unconventional monetary policy: a financial-network analysis

2020 ◽  
Vol 30 (5) ◽  
pp. 1385-1428
Author(s):  
Chiara Perillo ◽  
Stefano Battiston
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
Financial Stability ◽  
Banking System ◽  
Real Economy ◽  
Unconventional Monetary Policy ◽  
The Real ◽  
Recent Debate ◽  
Policy Measures ◽  
Net Flows

Abstract Over the last decades, both advanced and emerging economies have experienced the emergence of the phenomenon known as financialization, that, until some time ago, was generally considered beneficial for the economy. The 2007-2008 crisis and the severe post-crisis recession called into question the assumptions underlying the positive perception of the role played by financialization in the economy. In particular, the effects of financialization on financial stability and inequality are now widely recognized. A recent debate focused on the effectiveness of unconventional monetary policy tools in transferring their effects on the financial sphere to the economic sphere (e.g., via stimulating the transmission of resources from the banking system to the real economy). Among these unconventional policy measures, Quantitative Easing (QE) has been recently implemented by the European Central Bank (ECB). In this context, two questions deserve more attention in the literature. First, to what extent QE may generate net flows of additional resources to the real economy. Second, to what extent QE may also alter the pattern of intra-financial exposures among financial actors and what are the implications in terms of financialization. Here, we address these two questions by mapping and analyzing the euro area multilayer macro-network of financial exposures among institutional sectors across financial instruments (i.e., loans, bonds, equity, and insurance and pension schemes) and we illustrate our approach on recently available data. We then test the effect of the implementation of ECB’s QE on some novel measures of financialization that we derive from the time evolution of the financial linkages in the multilayer macro-network of the euro area.

scholarly journals Organizational Design and Rules in Rastin Profit and Loss Sharing Banking

2019 ◽  
Vol 2 (1) ◽  
pp. 9-21
Author(s):  
Bijan Bidabad ◽  
Roohollah Mohammadi ◽  
Mahshid Sherafati
Keyword(s):  
Interest Rate ◽  
Organizational Structure ◽  
Organizational Design ◽  
Banking System ◽  
Public Confidence ◽  
Islamic Banking ◽  
Real Economy ◽  
Positive Effects ◽  
Regulatory Frameworks ◽  
Banking Operations

Purpose: This paper aims to explain the organizational structure of Rastin Profit and Loss Sharing (PLS) Banking. Rastin Banking is a full Islamic Banking System with all necessary parts for banking operations that can be installed in conventional and Islamic banks both. Design: Rastin Banking complies with the nature of the financial intermediary activity (the partnership of depositor in the yields of the fund receiver via the bank). To fulfill this goal, particular organizational structure, accompanying with instruments and workflow are defined. Findings: To handle Rastin Banking, particular theoretical and operational regulatory frameworks should be defined to fulfill the participation operations. In this paper, we will have a look at the necessary organizational structure to setup Rastin Banking. Research limitations: This plan was formed and tested in Bank Melli Iran in order to propose a model for other banks as well. Practical implications: In this system, the investment return of the participation is distributed to the parties of the financial partnership (depositor, entrepreneur, and bank), and it is done by eliminating fixed interest rate, and it is based on the real economy profit (return) of the activity. Social implications: Rastin Banking can lead to important positive effects on growth and economic welfare through money and capital markets. Interest rate as an essential factor in conventional banking is not usable in Islamic banking and other similar institutions that work based on partnership, such as mutual funds and saving and loan associations. Originality/value: Approach of this system is entirely different from conventional banking. In addition to removing usury in banking activities, Rastin Banking uses the best practical ethic finance to creating safe and public confidence environment for banking operations. Article Type: Technical paper

scholarly journals On Shadow Banking and Financial Frictions in DSGE Modeling

2020 ◽  
Vol 71 (2) ◽  
pp. 101-133
Author(s):  
Philipp Kirchner
Keyword(s):  
Financial Stability ◽  
Financial Frictions ◽  
Explanatory Power ◽  
Banking System ◽  
Dsge Models ◽  
Shadow Banking ◽  
Real Economy ◽  
Dynamic Stochastic ◽  
Shadow Banking System ◽  
The Business Cycle

AbstractAt the forefront of macroeconomic research on the causes of the Great Financial Crisis (GFC) was and still is the usage of dynamic stochastic general equilibrium (DSGE) models. To capture the nonlinearities of the GFC, these models were enriched with a variety of financial frictions. This paper focuses on a special subset of these frictions, the shadow banking system. We provide a structured review of the strand of literature that considers shadow banking in DSGE setups and draw particular attention to the modeling approach as well as impact of shadow banking. Our analysis allows the following conclusions: firstly, models featuring shadow banking are better able to simulate realistic movements in the business cycle that are of comparable magnitude to the GFC. Secondly, the models consider amplification channels between the financial sector and the real economy that proved to be of importance during the crisis. Thirdly, the models display a good explanatory power of financial stability measures in the light of shadow banking.

scholarly journals Overhauling China’s Financial Stability Regulation: Policy Riddles and Regulatory Dilemmas

2017 ◽  
Vol 4 (1) ◽  
pp. 1-57 ◽  
Author(s):  
Emilios AVGOULEAS ◽  
Duoqi XU
Keyword(s):  
Financial Stability ◽  
Banking Sector ◽  
Financial Regulation ◽  
Banking System ◽  
Big Bang ◽  
Shadow Banking ◽  
Financial Repression ◽  
Leverage Ratio ◽  
Regulation Policy ◽  
Shadow Banking System

AbstractChina faces a number of important financial-stability risks. A persistent feature of the Chinese banking sector is the rapid formation of non-performing loans (NPLs) during each business cycle. Moreover, lending restrictions and interest-rate caps (“financial repression”) have, in part, given rise to an ever-expanding shadow-banking sector. The article highlights five cardinal sins within the Chinese financial system: (1) bad lending practices by the regulated sector, (2) lax governance, (3) a shadow-banking system that is dominated by short-term claims with no liquidity backstop, (4) stark lack of transparency in the shadow sector, and (5) very high levels of interconnectedness between the shadow and the regulated sector. The article suggests that some of these problems will be alleviated through a regulatory big bang that would abolish the current silo approach to financial regulation streamlining financial stability and conduct/consumer-protection supervision. Furthermore, we recommend the introduction of a binding and all-encompassing leverage ratio that will require banks to hold much higher capital buffers as a means to boost bank resilience, reduce NPLs, and battle interconnectedness with the shadow sector.

scholarly journals FINANCIAL REGULATION AND ENDOGENOUS MACROECONOMIC CRISES

2017 ◽  
Vol 22 (4) ◽  
pp. 896-930 ◽  
Author(s):  
Luca Riccetti ◽  
Alberto Russo ◽  
Mauro Gallegati
Keyword(s):  
Financial Stability ◽  
Financial Regulation ◽  
Banking Regulation ◽  
Financial Fragility ◽  
Real Economy ◽  
Minimum Level ◽  
Ratio Increase ◽  
Macroeconomic Dynamics ◽  
Agent Based ◽  
Simulation Results

We explore the effects of banking regulation on financial stability and macroeconomic dynamics in an agent-based computational model. In particular, we study the minimum level of capital and the lending concentration towards a single counterpart. We show that an overly tight regulation is dangerous because it reduces credit availability. By contrast, overly loose constraints, associated with a high payout ratio, increase financial fragility that, in turn, damage the real economy. Simulation results support the introduction of regulatory rules aimed at assuring an adequate capitalization of banks, such as the Capital Conservation Buffer (Basel III reform).

THE BANK'S DEPOSIT POLICY AND ITS IMPLEMENTATION INSTRUMENTS

2018 ◽  
Author(s):  
Olena Stolyarchuk ◽  
◽  
Dmytro Кovalenko ◽  
Keyword(s):  
Financial Stability ◽  
Banking System ◽  
Financial Policy ◽  
General Strategy ◽  
Use Of Time ◽  
Time Deposits ◽  
Floating System ◽  
Demand Deposits ◽  
Modern Business ◽  
Methodological Principles

The concept of "deposit policy" and "deposit" is considered in the article. The mechanism of formation of deposit policy taking into account the interests of all subjects of deposit relations is considered. The methods of implementation of the deposit policy by means of which the influence on the corresponding instruments for the purpose of formation and realization of the deposit policy is carried out are analyzed. The bank's deposit policy determines the general strategy, regulations and restrictions in the bank's activities to conduct deposit operations with customers. Determining the main components of the deposit policy can serve as a basis for the formation of methodological principles for its development in each bank, as these components reflect all the main aspects of the organization of deposit activities, which must be taken into account in the relevant operations. Deposits of Ukrainian banks, deposits of 10 largest and most popular banks of Ukraine (Privatbank, Ukreximbank, Alfa-Bank, Ukrgasbank, FUIB, Raiffeisen Bank Aval, Ukrsibbank, Universal Bank, Credit Agricole, OTP Bank) are considered. The study proposed the latest, innovative methods of implementing deposit policy, which should be introduced by Ukrainian banks to raise funds and improve their economic and financial policy as a whole. Because in modern business conditions the role and deposit policy of banks in ensuring liquidity and financial stability of the banking system of Ukraine is increasing. Such tools are now-accounts (combining the principles of storage and use of time deposits and demand deposits), supernow-accounts (a type of now-accounts on which accrue income on a floating system), accounts of "tied funds" (provides payment by the client a certain amount using the account), structured deposits (at the end of the term depositors receive 100% of the principal amount of the deposit).

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