Fragile by Design

2016 ◽  
Vol 5 (1) ◽  
pp. 48-52
Author(s):  
Po-Keng Cheng
Keyword(s):  
Financial Crisis ◽  
Significant Influence ◽  
Credit Rating ◽  
Banking System ◽  
Credit Boom

This paper provides review for which demonstrates the links between politics and banking. In addition to the perspective in , several recent studies relating to financial crisis are also introduced here. Issues about illiquidity, insolvency, credit boom, accuracy of credit rating, and neglected risk are discussed. Banking system is the bridge connecting households and sectors in the economy, where the design of the banking system has significant influence on the developments of countries.

Effect of Financial Crisis in Efficiency and Strategic Homogeneity of Indian Commercial Banks: An Empirical Investigation

GIS Business ◽  
2019 ◽  
Vol 14 (1) ◽  
pp. 1-10
Author(s):  
Subroto Chowdhury
Keyword(s):  
Financial Crisis ◽  
Commercial Banks ◽  
Empirical Investigation ◽  
Credit Rating ◽  
Banking Industry ◽  
Cluster Formation ◽  
Banking System ◽  
Contemporary World ◽  
Asset Class

The financial crisis has send shock waves cutting across boundaries and economies. Major economies are still struggling to recover. The cause of the crisis was primarily the inefficiency of the banking system to manage their sub -prime asset class. It reflected the importance of efficiency of the banking system irrespective of the credit rating which signifies its quality of asset class. In the contemporary world economy no economic system can remain isolated. Indian banking system also felt the shock but managed it efficiently. This motivates for a comprehensive analysis to discover whether the so called resilience was due to some policy stimulus or the Indian banking industry is intrinsically efficient. Also, the pattern of grouping of the banks plays an important role in providing stability in the inter-connected system. Thus technical analysis of the banks along with the dynamics of cluster formation after factoring the pre and post financial crisis time periods was studied , so that it can provide valuable inputs in designing strategic outlook regarding the Indian banking industry. Key words: Technical Efficiency, DEA, Indian Commercial Banks, Cluster Analysis

scholarly journals Empty talk? University voices on the Global Financial Crisis

2010 ◽  
Vol 6 (4) ◽  
Author(s):  
Todd Bridgman
Keyword(s):  
Financial Crisis ◽  
News Media ◽  
Global Financial Crisis ◽  
Housing Prices ◽  
Banking System ◽  
Policy Makers ◽  
The Us ◽  
Complex Events ◽  
The Global Financial Crisis ◽  
Company Sector

The global financial crisis (GFC) which began in 2007 with a liquidity squeeze in the US banking system and which continues to play out today has affected us all, whether through the collapse of the finance company sector, rising unemployment, falling housing prices or the recession which followed the initial market crash. The speed and scope of the crisis surprised most experts – policy makers included. Specialists from a myriad of disciplines, from economics and finance to risk management, corporate governance and property, are trying to make sense of what happened, why it happened and what it means for us now and into the future. Members of the public rely on the news media to keep them informed of the crisis as it unfolds and they rely on experts to translate these complex events into a language which they can understand. The GFC is educating us all, and it is important that we all learn from it to avoid making the same mistakes again. 

scholarly journals Are rating agencies still credible after the subprime crisis?

2017 ◽  
Vol 14 (2) ◽  
pp. 82-87
Author(s):  
Eleonora Isaia ◽  
Marina Damilano
Keyword(s):  
Financial Crisis ◽  
Stock Price ◽  
Credit Rating ◽  
Conflicts Of Interest ◽  
Strong Support ◽  
Subprime Crisis ◽  
Multivariate Tests ◽  
Rating Agencies ◽  
Price Reaction ◽  
Stock Price Reaction

Reputational concerns should discipline credit rating agencies (CRAs), eliminate any conflicts of interest, and motivate them to provide unbiased ratings. However, the recent financial crisis confirms models of CRAs’ behavior that predict inflated ratings for complex products and during booms. We test whether CRAs suffered a reputational damage for this behavior. We find strong support in the data for our hypothesis. The stock price reaction to rating revisions is significantly lower after the financial crisis, particularly in the financial sector. In multivariate tests, we find that the stock price reaction is lower, on average, in the post-crisis period by 2.3%.

scholarly journals Deposit flows and structure in Serbia

Bankarstvo ◽  
2020 ◽  
Vol 49 (4) ◽  
pp. 68-87
Author(s):  
Milena Lazić ◽  
Ksenija Zorčić
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Banking System ◽  
Financial System ◽  
Banking Regulation ◽  
The Stability ◽  
The Global Financial Crisis ◽  
Deposit Guarantee Schemes

Having drawn attention to the existing banking regulation issues, the Global Financial Crisis also raised awareness of the importance of depositors' confidence for the stability of the financial system, and brought the role and significance of the deposit guarantee schemes to the fore. Serbian economy started experiencing its effects in Q4 2008, in parallel with the global spreading of the crisis. This paper focuses on the fluctuations in deposit levels and structure in the Serbian banking system, between 2008 and 2019. It also aims to underscore the importance and development perspectives of the Serbian deposit guarantee scheme.

scholarly journals FINANCIAL CRISIS AND LOCAL BANKS: A REVIEW OF BANK-FIRM RELATIONSHIPS IN ITALY

2017 ◽  
Vol 14 (3) ◽  
pp. 249-258 ◽  
Author(s):  
Andrea Quintiliani
Keyword(s):  
Financial Crisis ◽  
Empirical Analysis ◽  
Research Question ◽  
Banking System ◽  
Relationship Lending ◽  
Critical Elements ◽  
Risk Return ◽  
The Impact ◽  
The Relationship ◽  
The Empirical Analysis

This paper focuses on bank-firm relationship in an economic deeply changing environment. The objectives of the paper are two-fold: to understand, compared to the overall banking system, if the lending activities and economic-financial performances of Italian local banks have changed after the outbreak of the financial crisis; and to understand what are the conditions that allow to develop a model of a local bank capable of supporting the development routes of SMEs, by an appropriate risk/return profile. In order to answer the first research question, the paper presented an empirical analysis, covering the period 2007-2011, of Italian Cooperative Credit Banks (a particular category of local banks) compared with the system of bank groups with operability spread over much of the Italian territory and not. The empirical comparative analysis has the aim to see the effects of the crisis on the relationship bank-firm through the reading of the impact on the dynamics of lending and on the profiles of structure, riskiness, profitability and efficiency of the banks under examination. In order to provide an answer to the second research question, the paper provides some insight of evolutionary nature reflection in the bank-firm relationship. In accordance with the doctrinal postulates of the relationship lending the empirical analysis shows how the financial then real crisis has not induced Cooperative Credit Banks to restrict credit to local firms. The survey evidences have however highlighted some critical elements that are reflected inevitably on the local bank’s risk-return profile. Based only on quantitative data of statement, the empirical analysis represents a limit in this kind of research. This paper is useful to stimulate the debate of experts as well as to focus on the studies of local banks in particular in the light of their anti-cyclic role. Even if abounding in subjects about local banks and relationship lending literature faces only marginally the effects of global crisis on business profiles of local banks.

scholarly journals Credit Rating Strategies: A Study of GCC Banks

2020 ◽  
Author(s):  
Y. Sree Rama Murthy ◽  
Saeed Al-Muharrami
Keyword(s):  
Financial Crisis ◽  
Commercial Banks ◽  
Credit Rating ◽  
Global Financial Crisis ◽  
Focal Point ◽  
Credit Ratings ◽  
Islamic Banks ◽  
Before And After ◽  
Capital Ratios ◽  
Financial Strategies

<p><b>Purpose</b></p> <p>It is difficult to predict when the next financial crisis will happen. Identifying financial strategies, which help a bank to survive a crisis, is the main purpose of the paper. This paper examines the financial strategies of those banks, which managed to retain good credit ratings both before and after the global financial crisis, so as to throw light on the characteristics of banks which managed to remain steady and stable. </p> Design <p>This paper analyses Fitch credit ratings of 51 banks Islamic and commercial banks operating in GCC, divided into pre global financial crisis (2002 to 2007) and post global financial crisis (2008 to 2013) periods. Trend and behavior of average ratios of top rated banks in both the periods is first attempted before moving to “Ordered Choice Logit” regression method to further analyze the data. </p> <p><b>Findings</b></p> <p>Size and cost management are very important factors in ratings, both before and after the financial crisis. As long as asset quality is under control, liquidity is the focal point in achieving good ratings. Top rated Islamic banks seem to be following a strategy of allowing capital ratios to trend down during a crisis as long as capital is well above the regulatory requirements. </p> <p><b>Originality and Value</b></p> <p>The paper is the first of its kind which examines credit rating strategies of Islamic banks as well as commercial banks. <a>The findings of the paper are extremely important for banks as they throw light on appropriate strategies to be adopted by banks during crises.</a></p>

scholarly journals Credit Rating Strategies: A Study of GCC Banks

2020 ◽  
Author(s):  
Y. Sree Rama Murthy ◽  
Saeed Al-Muharrami
Keyword(s):  
Financial Crisis ◽  
Commercial Banks ◽  
Credit Rating ◽  
Global Financial Crisis ◽  
Focal Point ◽  
Credit Ratings ◽  
Islamic Banks ◽  
Before And After ◽  
Capital Ratios ◽  
Financial Strategies

<p><b>Purpose</b></p> <p>It is difficult to predict when the next financial crisis will happen. Identifying financial strategies, which help a bank to survive a crisis, is the main purpose of the paper. This paper examines the financial strategies of those banks, which managed to retain good credit ratings both before and after the global financial crisis, so as to throw light on the characteristics of banks which managed to remain steady and stable. </p> Design <p>This paper analyses Fitch credit ratings of 51 banks Islamic and commercial banks operating in GCC, divided into pre global financial crisis (2002 to 2007) and post global financial crisis (2008 to 2013) periods. Trend and behavior of average ratios of top rated banks in both the periods is first attempted before moving to “Ordered Choice Logit” regression method to further analyze the data. </p> <p><b>Findings</b></p> <p>Size and cost management are very important factors in ratings, both before and after the financial crisis. As long as asset quality is under control, liquidity is the focal point in achieving good ratings. Top rated Islamic banks seem to be following a strategy of allowing capital ratios to trend down during a crisis as long as capital is well above the regulatory requirements. </p> <p><b>Originality and Value</b></p> <p>The paper is the first of its kind which examines credit rating strategies of Islamic banks as well as commercial banks. <a>The findings of the paper are extremely important for banks as they throw light on appropriate strategies to be adopted by banks during crises.</a></p>

scholarly journals Fiscal Policy in a Financial Crisis: Standard Policy versus Bank Rescue Measures

2012 ◽  
Vol 102 (3) ◽  
pp. 77-81 ◽  
Author(s):  
Robert Kollmann ◽  
Werner Roeger ◽  
Jan in't Veld
Keyword(s):  
Fiscal Policy ◽  
Financial Crisis ◽  
Banking Sector ◽  
Banking System ◽  
State Aid ◽  
Government Support ◽  
Real Activity ◽  
Government Purchases ◽  
Macroeconomic Effects ◽  
Positive Effect

A key dimension of fiscal policy during the financial crisis was massive government support for the banking system. The macroeconomic effects of that support have, so far, received little attention in the literature. This paper fills this gap, using a quantitative dynamic model with a banking sector. Our results suggest that state aid for banks may have a strong positive effect on real activity. Bank state aid multipliers are in the same range as conventional fiscal spending multipliers. Support for banks has a positive effect on investment, while a rise in government purchases crowds out investment.

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