17,681 research outputs found

    The cyclical behaviour of European bank capital buffers

    Get PDF
    Using an unbalanced panel of commercial, savings and co-operative banks for the years 1997 to 2004 we examine the cyclical behaviour of European bank capital buffers. After controlling for other potential de-terminants of bank capital, we find that capital buffers of the banks in the accession countries (RAM) have a significant positive relationship with the cycle, while for those in the EU15 and the EA and the combined EU25 the relationship is significantly negative. We additionally find fairly slow speeds of ad-justment, with around two-thirds of the correction towards desired capital buffers taking place each year. We further distinguish by type and size of bank, and find that capital buffers of commercial and savings banks, and also of a sub-sample of large banks, exhibit negative co-movement. Co-operative banks and smaller banks on the other hand, tend to exhibit positive cyclical co-movement.bank capital; bank regulation; business cycle fluctuations

    The Cyclical Behaviour of European Bank Capital Buffers

    Get PDF
    Using an unbalanced panel of accounting data from 1997 to 2004 and controlling for individual bank costs and risk, we find capital buffers of the banks in the EU15 have a significant negative co-movement with the cycle. For banks in the accession countries there is significant positive co-movement. Capital buffers of commercial and savings banks, and of large banks, exhibit negative co-movement. Those of co-operative and smaller banks exhibit positive co-movement. Speeds of adjustment are fairly slow. We interpret these results and discuss policy implications, noting that negative co-movement of capital buffers will exacerbate the procyclical impact of Basel II.Bank capital; bank regulation; business cycle fluctuations

    Interacting demand and supply conditions in European bank lending

    Get PDF
    This paper investigates credit channel of monetary policy by accounting for simultaneous interaction of banks' and firms' credit conditions and their adjustment costs, which are neglected in the previous studies. Based on the European data we find that these conditions are interacting, although their adjustment costs differ across banks, firm size, countries, and over time. The results suggest that a common European monetary policy should then deal with uncertainty over credit market conditions and firms' and banks' country-specific and size-dependent reactions. It should also monitor large firms' exploitation of banks' credit rationing as it can have great impacts on the smaller firms' lending and financial stability conditions.Demand and Price Analysis,

    Email to Chris Shugart of the European Bank for Reconstruction and Development

    Get PDF
    Email to Chris Shugart of the EBRD from Robert Seidman giving a brief description of the work the Seidmans do together, in hopes of working on similar projects in eastern Europe

    Can European Bank Bailouts work?

    Get PDF

    Predictability in the cross-section of European bank stock returns

    Get PDF
    This paper investigates the impact of individual bank fundamental variables on stock market returns using data from a panel of 235 European banks from 1991 to 2005. The sample period marks a significant transition in the European banking sector, characterized by higher competition, lower profit margins in the traditional interest-related business and increasing non-interest income in terms of fees and commissions. In panel regressions, we relate bank stock returns to fundamental accounting information and use several corrections for the standard errors to control for heteroscedasticity, autocorrelation and spatial correlation. Our results indicate that several bank-specific variables exhibit a robust explanatory power across different model specifications. Most important, there is a positive impact of the ratio of loans to total assets, the ratio of non-interest income to total income, and the ratio of off-balance sheet items to total assets on subsequent bank stock returns. In contrast, the ratio of loan-loss-provisions to net interest revenue and the ratio of book value of equity to total assets load negatively on subsequent bank stock returns. Overall, the valuation of bank stocks incorporates both the traditional loan-related side of the banking business and the growing off-balance activities.Asset pricing, bank stock returns, bank-specific accounting ratios.

    The Contents and Timing of a European Banking Union: Reflections on the differing views. CEPS Essay (No. 2), 30 November 2012

    Get PDF
    Although views differ on the precise contents and timing of a genuine banking union, there is wide political agreement in principle on the need for three basic and vital elements: European bank supervision, a European deposit guarantee scheme (DGS) and a European bank resolution mechanism. In this CEPS Essay, H. Onno Ruding offers his personal views on the progress achieved to date, the outstanding issues that will prove the most difficult to resolve and recommendations on the way forward

    A solution for Europe's banking problem

    Get PDF
    Nicolas Véron and Adam Posen believe Europe should build new long term European joint-action to face the likely high rising number of insolvent banks on the continent. The authors propose on the one hand, a centralised triage and restructuring process of bad European banks lead by a new temporary European Institution, a European Bank Support Authority (EBSA), and on the other hand, long-term EU Institutions dedicated to the completion of an integrated market.

    Memory in Contracts: The experience of the EBRD (1991-2003)

    Get PDF
    The objective of this paper is to identify the role of memory in repeated contracts with moral hazard in financial intermediation. We use an original dataset from the European Bank for Reconstruction and Development to test a basic model with repeated moral hazard. To capture the role of memory, we need to control for the adverse selection effect. We propose a simple empirical method to achieve it. Our results unambiguously isolate the effect of memory in the bank's lending decisions.

    The Determinants Of European Bank Profitability

    Get PDF
    The rate of return earned by a financial institution is affected by numerous factors. These factors include elements internal to each financial institution and several important external forces shaping earnings performance. The type of explanation would determine possible policy implications and ought to be taken seriously. This paper reviews the literature on bank performance studies and classifies the bank profitability determinants. The second part of the paper quantifies how internal determinants (“within effects” changes) and external factors (“dynamic reallocation” effects) contribute to the performance of the EU banking industry as a whole in 1994-1998. We construct OLS and fixed effects models, and the results provide a new perspective for understanding the impact of changes in competition on the performance of the EU banking industry. The estimation results suggest that the profitability of European banks is influenced not only by factors related to their management decisions but also to changes in the external macroeconomic environment. The results are in contrast to studies that have examined the structure-performance relationship for European banking and find a positive effect of the concentration and/or market share variables on bank profitability
    corecore