Download or read book Distress in European Banks written by Mr.Martin Cihak and published by International Monetary Fund. This book was released on 2009-01-01 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: The global financial crisis has highlighted the importance of early identification of weak banks: when problems are identified late, solutions are much more costly. Until recently, Europe has seen only a small number of outright bank failures, which made the estimation of early warning models for bank supervision very difficult. This paper presents a unique database of individual bank distress across the European Union from mid-1990s to 2008. Using this data set, we analyze the causes of banking distress in Europe. We identify a set of indicators and thresholds that can help to distinguish sound banks from those vulnerable to financial distress.

Download or read book Predicting Distress in European Banks written by and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book A New Approach to Early Warning Systems for Small European Banks written by Michael Bräuninger and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper describes a machine learning technique to timely identify cases of individual bank financial distress. Our work represents the first attempt in the literature to develop an early warning system specifically for small European banks. We employ a machine learning technique, and build a decision tree model using a dataset of official supervisory reporting, complemented with qualitative banking sector and macroeconomic variables. We propose a new and wider definition of financial distress, in order to capture bank distress cases at an earlier stage with respect to the existing literature on bank failures; by doing so, given the rarity of bank defaults in Europe we significantly increase the number of events on which to estimate the model, thus increasing the model precision; in this way we identify bank crises at an earlier stage with respect to the usual default definition, therefore leaving a time window for supervisory intervention. The Quinlan C5.0 algorithm we use to estimate the model also allows us to adopt a conservative approach to misclassification: as we deal with bank distress cases, we consider missing a distress event twice as costly as raising a false ag. Our final model comprises 12 variables in 19 nodes, and outperforms a logit model estimation, which we use to benchmark our analysis; validation and back testing also suggest that the good performance of our model is relatively stable and robust.

Download or read book A Strategy for Resolving Europe s Problem Loans written by Mr.Shekhar Aiyar and published by International Monetary Fund. This book was released on 2015-09-24 with total page 79 pages. Available in PDF, EPUB and Kindle. Book excerpt: Europe’s banking system is weighed down by high levels of non-performing loans (NPLs), which are holding down credit growth and economic activity. This discussion note uses a new survey of European country authorities and banks to examine the structural obstacles that discourage banks from addressing their problem loans. A three pillared strategy is advocated to remedy the situation, comprising: (i) tightened supervisory policies, (ii) insolvency reforms, and (iii) the development of distressed debt markets.

Download or read book Banking in Europe written by Mariarosa Borroni and published by Springer. This book was released on 2019-04-09 with total page 118 pages. Available in PDF, EPUB and Kindle. Book excerpt: This Palgrave Pivot provides a comprehensive overview of the dynamics that are affecting the profitability of European banks since the recent crisis period. More specifically, it sheds light on the most crucial changes in profit generation and on the consequential changes in banking strategies due to fiercer competition, reduced margin and changing regulation. The work is divided in four main parts. The first section introduces the changes in bank management policies, considering the periods before and since the crisis. In the second section, the authors review the literature on bank profitability and outline the main determinants of profit generation, and in the third section they provide a cross-country analysis of profitability for a wide sample of European banks during the great financial crisis. In the last section, the authors discuss the results of the quantitative analysis under the new regulatory and competitive framework that is progressively affecting the banking sector (fintech, Basel regulations, etc.). This book will be of interest to academics, researchers and students of European banking.

Download or read book Does Better Governance Necessarily Reduce Financial Distress for European Banks written by Eric Thorez and published by . This book was released on 2017 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper empirically examines whether better governance necessarily reduces financial distress for banks.We have studied 49 banks among the TOP 100 European banks during the period 2006 to 2013 and performed a panel probit regression analysis on the financial distress dummy as our dependent variable using our selected governance, financial and economic explanatory variables.First, we found that governance determinants such as the independent Directors' ratio or the number of board meetings per year do matter to explain bank distress, giving credence to the extent of increasing supervision and regulation.Second, we show that the Tier 1 capital ratio, the ROA and the price to book ratio that we initially identified to use as financial control variables for our regressions give significant results.Hence, we highlight the use of the Tier 1 capital ratio as a key regulatory capital adequacy ratio in the Risk Management departments of European banks.

Download or read book Preventing Banking Sector Distress and Crises in Latin America written by Suman K. Bery and published by World Bank Publications. This book was released on 1997-01-01 with total page 124 pages. Available in PDF, EPUB and Kindle. Book excerpt: World Bank Technical Paper No. 361. Education has emerged as an essential component of the transition to a market economy in Central and Eastern Europe. Although the countries of the region inherited broadly accessible education systems, the legacies of central planning have constrained the systems from fully adjusting to market economies. This study examines empirical trends in access to and financing of education in nine Central and East European countries by drawing on the findings of a World Bank project that examined the social risks facing people and the policy responses taken by governments since 1989. Chapters address access and participation, the labor market, financing, and staff in the education sector.

Download or read book Bank Distress in the European Union 2008 2015 written by Stelios Markoulis and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The recent financial crisis has clearly highlighted the importance of the timely identification of weak banks. This paper introduces and analyses a unique sample of EU banks, which faced distress during 2008-2015 and provides evidence regarding the relationship between distress and bank-specific and macroeconomic variables, paying particular attention to capital, size, and revenue diversification. Findings regarding these variables seem to connect well with current supervisory actions. The paper also focuses on banks in EU countries that faced economic problems and documents that the probability of distress in these countries has been influenced by different factors, in comparison to the rest of the EU.

Download or read book IMF Working Papers written by Martin Cihák and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Systemic Risk of European Banks During the Financial and Sovereign Debt Crises written by Board of Board of Governors of the Federal Reserve System and published by CreateSpace. This book was released on 2014-11-13 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: We propose a hypothetical distress insurance premium (DIP) as a measure of the European banking systemic risk, which integrates the characteristics of bank size, default probability, and interconnectedness. Based on this measure, the systemic risk of European banks reached its height in late 2011 around e 500 billion. We find that the sovereign default spread is the factor driving this heightened risk in the banking sector during the European debt crisis. The methodology can also be used to identify the individual contributions of over 50 major European banks to the systemic risk measure. This approach captures the large contribution of a number of systemically important European banks, but Italian and Spanish banks as a group have notably increased their systemic importance. We also find that bank-specific fundamentals predict the one-year-ahead systemic risk contribution of our sample of banks in an economically meaningful way

Download or read book Dealing with Private Debt Distress in the Wake of the European Financial Crisis A Review of the Economics and Legal Toolbox written by Ms.Yan Liu and published by International Monetary Fund. This book was released on 2013-02-20 with total page 21 pages. Available in PDF, EPUB and Kindle. Book excerpt: The private non-financial sector in Europe is facing increased challenges in meeting its debt servicing obligation. In response, governments are revisiting legal tools and—in some cases—institutional arrangements to deal with over-indebtedness. For households, where the problem in some countries is large but no established best practice exists, reforms have generally sought to allow debtors a fresh start while minimizing moral hazard and preserving bank solvency and credit discipline. For the corporate sector, efforts have focused on facilitating debt restruturing (including through out of court mechanisms). Direct government intervention has been rare.

Download or read book The New Bail In Legislation written by Angela Maria Maddaloni and published by Springer Nature. This book was released on 2021-12-07 with total page 96 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial stability is a pillar of well-functioning financial markets. After the last financial crisis, European policymakers harmonised banking regulation and revised the framework of banking resolution. The introduction of the bail-in legislation is a natural experiment to improve the understanding of banking resolution and how it affected the funding strategies of banks. This book assesses whether financial stability has been strengthened by the change in banks’ resolution policy with a focus on the bail-in. The book shows how banks changed their funding strategies, shrank their balance-sheets and relied more on deposits. The book will discuss inter-alia the mis-selling of bonds, which happened during 2012-2013, analysing whether the bond allocation changed after the bail-in launch. It discusses how the bail-in mechanism was deemed credible by equity holders and argues that the European case would have useful implications for third countries. Finally, the book relates this discussion to the possible collateral effects generated by the new resolution policy during and after the COVID-19 crisis, which will be of particular interest to researchers and policymakers in banking and financial institutions. ​

Download or read book Banking Distress in Europe in the Context of the Global Financial Crisis the Role of Capital Flows written by Mislav Brkić and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Investigating Diversity in the Banking Sector in Europe written by Rym Ayadi and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: A midst stormy waters, financial systems develop and evolve. New institutional forms and instruments are invented and put into use. Some of them turn out to be successful while others disappear: a natural process of creative and dynamic competition argues for diversity. Diversity offers an optimal environment in which new ideas can come to life, existing ideas can evolve and old ideas make a comeback. In the aftermath of the financial crisis, the foundations of several decades of modern and innovative financial systems have suffered serious damage. This has triggered massive state interventions and has led authorities to revamp the regulatory structures and frameworks. While many voices have called for a return to more traditional approaches to banking and finance, no one has argued the merits of diversity. This book investigates the merits of a diverse banking system with a special focus on the performance and role of cooperative banks in seven European countries where they are prominent (Austria, Finland, France, Germany, Italy, the Netherlands and Spain). The theoretical and empirical arguments that are developed in this book tend to support the view that it is economically beneficial to have stakeholder-value banks with a dual bottom-line function, such as cooperative banks. For those who accept this premise, it would suggest that policy-makers should not take or support actions that could jeopardise this valuable element of the financial system in various countries in Europe and of the emerging integrated European financial system. Book jacket.

Download or read book Network Linkages to Predict Bank Distress written by and published by . This book was released on 2015 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: Building on the literature on systemic risk and financial contagion, the pa- per introduces estimated network linkages into an early-warning model to predict bank distress among European banks. We use multivariate extreme value theory to estimate equity-based tail-dependence networks, whose links proxy for the markets' view of bank interconnectedness in case of elevated financial stress. The paper finds that early warning models including estimated tail dependencies consistently outperform bank-specific benchmark models with- out networks. The results are robust to variation in model specification and also hold in relation to simpler benchmarks of contagion. Generally, this paper gives direct support for measures of interconnectedness in early-warning models, and moves toward a unified representation of cyclical and cross-sectional dimensions of systemic risk.

Download or read book Financial Institutions in Distress written by Ronald Davis and published by Oxford University Press. This book was released on 2023-08-25 with total page 467 pages. Available in PDF, EPUB and Kindle. Book excerpt: Political boundaries are often porous to finance, financial intermediation, and financial distress. Yet they are highly impervious to financial regulation. When inhabitants of a country suffering a deficit of purchasing power are able to access and deploy funds flowing in from a country with a surfeit of such power, the inhabitants of both countries may benefit. They may also benefit when institutions undertaking such cross-border financial intermediation experience economies of scale and are able to innovate and to offer funds and services at lower costs. Inevitably, however, at least some such institutions will sometimes act imprudently, some of the projects in which such funds are deployed may be unwise, and other such projects can suffer from unforeseen circumstances. As a result of such factors, a financial institution may suffer distress in one country, and may then transmit such distress to other countries in which it operates. The efficacy of any response to such cross-border transmission of distress may turn on the response being given due effect in both (or all) the territories in which the distressed financial institution operates. This situation creates a conundrum for policymakers, legislators, and regulators who wish to enable those subject to their jurisdiction to access the benefits of cross-border financial intermediation, yet cannot make rules and regulations that would have effect outside that jurisdiction. This book explores this conundrum and offers a response. It does so by drawing on and adding to the literatures on financial intermediation, regulation, and distress, and on existing hard and soft laws and regulations. The book advocates for the creation of a model law that would address the full range of financial institutions, including insurance companies, and that would enable relevant authorities to cooperate with counterparts in advance of the onset of distress and to give appropriate effect in their jurisdiction to measures taken by counterpart authorities in other jurisdictions in which the distressed institution also operates.

Download or read book Risk and Regulation in Euro Area Banks written by Francesca Arnaboldi and published by Springer Nature. This book was released on 2019-10-31 with total page 165 pages. Available in PDF, EPUB and Kindle. Book excerpt: Since the last financial crisis, much work has been undertaken to strengthen the ability to respond to distress in the EU financial system. However, reforms enacted since the Single Resolution Mechanism was created in July 2014 as part of the Banking Union initiated in 2012 mainly focused on non-performing loans, and the third pillar of the Banking Union, namely a European Deposit Insurance Scheme, has not been completed. Against this backdrop, this book focuses on the reasons why the EU banking system continues to remain fragile. In particular, high stocks of non-performing loans in some countries, the Level 3 assets evaluation and high exposure of many banks to the debts of their own governments are among the major concerns. Secondly, the book discusses the completion of the public safety net for banks, including deposit insurance, which remains primarily at the national level. This creates scope for contagion from banking sector fragility to national sovereign debt distress. Of interest to banking researchers, academics and students, this book combines rigorous analysis of the regulatory framework and empirical investigation on EU banking system data to prove that market discipline and risk sharing should be viewed as complementary pillars of the Euro-area financial architecture rather than as substitutes, requiring a reformed institutional framework.