290 research outputs found
Determinants of the Venezuelan Banking Crisis of the Mid-1990s: An Event History Analysis
This paper uses event history analysis to test the significance of several macro-economic and bank-specific variables in explaining bank failures during the Venezuelan banking crisis of the mid-1990s. Poor bank profitability, proxied by a low net interest margin, and low GDP growth are found significant in increasing the probability of bank failure. Other useful indicators, for some model specifications, are the share of nonperforming loans and that of non productive assets to banksâ own funds, which raise the likelihood of crisis. A large amount of bank liquid assets, in turn, reduces the likelihood of failure for some model specifications. The opposite is true for high real deposit rates. Although it could be interpreted, at first sight, as a too restrictive monetary policy, this is not supported by the lack of significance of the real lending rate and, even more so, real money growth, a more direct indicator of the monetary policy stance.Venezuela, banking crisis, early indicators
Does the Chinese banking system benefit from foreign investors?
We find empirical evidence that the Chinese banking system has benefited from the entry of foreign investors through higher profitability and increased efficiency of the banking system. Foreign participation, which consists of a minority stake in a Chinese bank (in contrast to the typical pattern in emerging countries), appears to be most effective when the foreign bank acts as a strategic investor. Purely financial investors contribute little, if anything, to bank performance.China; banking system; foreign participation
Europe in the midst of China-US strategic competition: What are the European Unionâs options? Bruegel Working Paper Issue 03, April 2019
With the trade conflict between the United States and China bringing
China-US strategic competition into the open, the European Union faces
an urgent question: how to position itself in the competition. This paper
reviews the impact of the US-led trade war against China and its immediate
consequences for China, the US and the EU. Although protectionism can
never be growth enhancing, European companies could see gains if the
trade confrontation between China and the US ends up reducing their
bilateral trade to the benefit of European companies that export to China.
This is because US exports to China are concentrated in sectors that are
also key for the EUâs exports to China, with the exception of energy and
agricultural products. However, a solution to the US-China trade conflict
that artificially increases Chinese imports from the US can only hurt
European exporters. A much broader and structural deal which pushes
China to reform and open up would not only be beneficial for the US but
also for the EU and the rest of the world.
Against this background, this paper reviews the EUâs options in the new
world of strategic confrontation between China and the US. The most
obvious option would be to continue to safeguard multilateralism, but the
EU should not be naĂŻve in remaining alone, among major economic blocs,
pushing for such an option. The second option would be for the EU to
become more reliant on the Transatlantic Alliance. The last option would be
for the EU to move its centre of gravity towards China, or at least to remain
neutral between the US and China. While it might seem unrealistic today,
this last option might need to be explored if the US continues to move away
from multilateralism and, to some degree, from the Transatlantic Alliance.
For the time being, the European Commission seems to have stepped up its
thinking about the necessary conditions for stronger economic cooperation
with China, which is already an important step in this direction
¿Saldrån ganadoras América Latina y Asia de la actual crisis financiera?
Sorprendentemente, los paĂses emergentes no se estĂĄn viendo afectados de forma significativa por la crisis financiera internacional. Este anĂĄlisis explica las causas de este incipiente âdesacoplamientoâ.
La crisis financiera que viene golpeando las economĂas desarrolladas, y de manera especial a EEUU, no acaba de trasladarse de manera contundente a los paĂses emergentes, como habĂa sido el caso anteriormente en episodios similares. Esta amortiguaciĂłn del impacto sobre emergentes se explica por las numerosas fortalezas que han ido acumulando estas economĂas desde sus crisis en los 90, tales como el menor endeudamiento âsea del sector pĂșblico como privadoâ, la mayor diversificaciĂłn geogrĂĄfica de su comercio exterior y la fortaleza de sus sistemas financieros. A pesar de los riesgos a este escenario âtales como el descontrol de la inflaciĂłn, un fuerte aumento del riesgo paĂs o una brusca caĂda de las materias primas en el caso de AmĂ©rica Latinaâ, parece mĂĄs probable que la posiciĂłn relativamente favorable de las economĂas emergentes respecto a las desarrolladas permitan a estas primeras escalar posiciones en la economĂa mundial, sea a travĂ©s de la adquisiciĂłn de grandes empresas como con la entrada en sectores productivos hasta ahora dominados por los paĂses industrializados
The Asian and European Banking Systems: The case of Spain in the quest for development and stability
After a brief review of the literature on the determinants of financial development, the paper reviews the Asian and European financial systems in terms of their size and efficiency. It also compares the steps taken in the two regions in the quest for financial development and stability, which in a few cases are very similar but differ markedly in others. While there has been a clear move towards a more balanced financial structure in both regions, financial liberalization, as well as the strengthening of bank regulation and supervision occurred later in Asia and with a different speed and sequencing. The most striking difference between the two areas is the degree of international - and regional â financial integration, much lower for Asia. Finally, the case of Spain - as a European country with a finance-led convergence process - is analyzed in more detail. Lessons are drawn from the Spanish experience for Asian countries.Financial development, financial liberalization, Spanish financial system
Implications of the design of monetary policy for financial stability
This paper is a contribution to the literature on the factors behind financial stability, focusing on monetary policy design. In particular, it assesses empirically for a sample of 79 countries in the period 1970 to 2000 whether the choice of the central bank objectives and the monetary policy strategy affect financial stability. We find that focusing the central bank objectives on price stability reduces the likelihood of a banking crisis. This result is robust to several model specifications and groups of countries. As regards the monetary policy strategy, exchange rate targeting significantly reduces the likelihood of a banking crisis for some model specifications and, in particular, for the group of countries in transition.Monetary policy design, monetary policy objectives, monetary policy strategy, financial stability, and banking crisis
What consequences would a post-Brexit China-UK trade deal have for the EU? Bruegel Policy Contribution Issue nË18 | 2016
A China-UK free trade agreement has been extensively discussed since the UKâs vote for Brexit. Many supporters of Brexit argue that the UKâs regained flexibility to strike trade deals with other partners, and in particular with China given its economic size, will be a key advantage. This analysis indicates that a China-UK FTA will be neither as easy nor as clearly advantageous as portrayed by Brexit supporters
The China-Russia trade relationship and its impact on Europe. Breugel Working Paper Issue 4, 2016
This paper analyses empirically how increasingly close trade relations
between China and Russia might affect the European Union (EU).
We show that EU countries are complementary to Russia on the
Chinese market. However, Chinese exports are increasingly relevant
substitutes for EU exports on the Russian market. This means that
an increase in China-Russia economic cooperation should have a
negative impact on European exports. We simulate a scenario in
which trade tariffs between Russia and China are eliminated, which
is found to reduce EU exports to Russia. Finally, a more granular
approach to the question analyses which sectors in Europe will be
more affected by the increasing economic links between China
and Russia, and finds that electronic machinery, equipment and
machinery, and nuclear reactors will be particularly affected. Such
findings obviously show quickly China is moving up the ladder in
terms of export structure and how strategically important it is for
Europe to continue upgrading its industry to compete at the highest
level of that ladder
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