Available data on-budget and off-budget activities of Spanish central, state and local governments

In this paper we present an analysis of the informative content of available public sector data for Central, State (Regional) and Local Governments in Spain. We first review the framework that defines budgetary arrangements in place in Spain, with a special emphasis on the decentralization process. We then present official budgetary projections for the balance of the different levels of Government and compare them with both outturn and national accounts data. We assess the magnitude of the differences between budgetary and national accounts balance data and between the latter and a balance obtained with currently available data on a broad definition of public sector activity. We attempt to establish some regularities in the relations among the different accounting variables.Budget forecasts and monitoring, state and local deficits, off-budget activities.

Spanish banks’ internationalisation strategy : characteristics and comparison

Artículo de revistaBanks’ international strategy and the way in which they have expanded are explanatory factors for the economic effects of their activity. Based on information from individual institutions, the internationalisation strategies of banks based in Spain, the Netherlands and the United States have been compared. In addition, in the Spanish case, whether banks’ risk, efficiency, return and income source type differ according to the chosen model of internationalisation has been tested. The results of this comparison point to Spanish banks with subsidiaries and branches abroad having higher returns but also higher costs than banks whose foreign business is mainly cross-borde

Debt overhang, credit demand and financial conditions

Tradicionalmente, la literatura empírica que ha estudiado el problema del exceso de deuda sobre la inversión empresarial ha estimado directamente la relación entre esta y el apalancamiento, sin diferenciar entre la decisión de una empresa altamente endeudada de no invertir y su capacidad para reunir los recursos necesarios para hacerlo. Usando datos de crédito concedido a sociedades no financieras españolas procedentes de la Central de Información de Riesgos del Banco de España y de las cuentas anuales de estas empresas obtenidas de la Central de Balances del Banco de España para el período 2004-2019, estudiamos en este trabajo el impacto que el nivel de endeudamiento de las empresas tiene sobre su demanda de crédito, como proxy de su demanda de inversión. Nuestros resultados confirman la existencia de una relación negativa, en consonancia con la hipótesis del debt overhang. Adicionalmente, analizamos si dicha relación se ve afectada por las condiciones financieras, y encontramos que una reducción de los tipos de interés a corto plazo mitiga el efecto negativo del apalancamiento de las empresas sobre su demanda de crédito.The empirical literature on the debt overhang hypothesis has estimated the relationship between investment and leverage at the firm level, which does not allow to disentangle between a firm’s decision not to invest as it is highly indebted and its ability to obtain the necessary resources. Using annual Spanish credit data from the Central Credit Register and non-financial corporations’ annual accounts from the lntegrated Central Balance Sheet Data Office Survey for the period 2004-2019, we study the impact of corporate debt on non-financial firms’ demand for bank loans, as a proxy for their willingness to invest. We find a negative relationship between firms’ leverage and demand for bank credit, thus supporting the debt overhang hypothesis. We then study whether such relationship is affected by financial conditions and find that a reduction in short-term interest rates mitigates the effect of firms’ leverage on demand for credit

The relevance of currency-denomination for the cross-border effects of monetary policy

El artículo analiza cómo un cambio en la política monetaria del BCE afecta a los créditos concedidos por los bancos españoles con actividad internacional, dependiendo de si la moneda del préstamo es la del país de contraparte, utilizando datos bancarios individuales. Analizamos la transmisión desde una perspectiva externa, explorando cómo los bancos ajustan sus préstamos externos denominados en moneda local y en moneda extranjera a los cambios en la política monetaria, tanto si son transfronterizos como si son a través de sus filiales ubicadas en otros países. Encontramos que los créditos al sector privado no bancario en moneda local responden mucho menos a cambios en la política monetaria del BCE que los préstamos en moneda extranjera. También encontramos que el impacto sobre los préstamos transfronterizos denominados en moneda extranjera depende de las características de los bancos. Cuando ampliamos el análisis para incluir los préstamos al sector público y financiero, encontramos que la transmisión de la política monetaria se realiza principalmente a través de préstamos en moneda extranjera, pero la heterogeneidad bancaria desempeña un papel en la transmisión a préstamos en moneda local. En general, un endurecimiento de la política monetaria del BCE genera un aumento de los préstamos en el exterior. Los cambios en el tipo de cambio solo afectan a los préstamos denominados en moneda extranjeraWe analyze how a change in ECB monetary policy affects lending of internationally active banks, depending on whether the currency of the claim is the one of the counterparty country, using Spanish individual bank data. We analyse the transmission from an outward perspective, exploring how banks adjust their foreign lending denominated in local and in foreign currency to changes in monetary policy, both cross-border and also through their affiliates located in other countries. We find that non-bank private claims in local currency respond much less to the ECB monetary policy stance than claims in foreign currency. We also find that the spillover effects on cross-border lending denominated in foreign currency depend on banks’ characteristics. When we broaden the analysis to include claims to the public and the fi nancial sector, the transmission of monetary policy is mainly through foreign currency loans, but bank heterogeneity plays a role in the transmission to local currency loans. In general, a tightening of the ECB monetary policy results in an increase in lending abroad. Exchange rate changes only affect foreign currency-denominated lendin

Productivity and infrastructure in the Spanish economy

Version en ingles del Documento de Trabajo "Productividad e infraestructuras en la economia española. En este trabajo se analiza el efecto de la acumulacion de capital publico sobre la productividad del sector privado de la economia española, partiendo de la tesis de que las infraestructuras publicas (especialmente transportes y comunicaciones) son las que tienen un mayor efecto sobre la productividad privada. Utiliza las series publicadas en el Documento de Trabajo n. 9315 titulado "Series de stock de infraestructuras del Estado y de las Administraciones Publicas en España". El trabajo se estructura en cinco epigrafes: introduccion, rasgos estilizados de la productividad privada en el periodo 1964-1990, marco teorico, estimaciones econometricas de los parametros de una funcion de produccion agregada en las que las infraestructuras son un factor adicional y resultados. Incluye dos apendices y bibliografia.(jha

Decentralized multinational banks and risk taking : the Spanish experience in the crisis

En este trabajo se analizan los efectos de los grupos bancarios multinacionales y descentralizados, caracterizados por la gran autonomía de sus afiliados en el exterior, sobre el riesgo del banco, utilizando información confidencial de la supervisión española. Tener actividad en el extranjero, en países cuyos negocios y ciclos financieros pueden estar menos que perfectamente correlacionados con los del país de origen, puede generar una mayor estabilidad en los resultados del grupo bancario consolidado. Tal aislamiento debería ser mayor para los bancos multinacionales y descentralizados. Por otro lado, la actividad internacional de los bancos puede estar asociada a una mayor asunción de riesgos, ya que la capacidad de la matriz para controlar sus filiales puede verse obstaculizada por la distancia o debido al conocimiento más limitado del país de acogida que tiene el grupo. Qué efecto domina es una cuestión empírica que podría tenerse en cuenta en los requisitos de capital y al realizar pruebas de estrés. Proporcionamos evidencia empírica de la relevancia del modelo de entrada en mercados extranjeros, la diversificación geográfica internacional y los movimientos conjuntos entre la economía española y la anfitriona sobre el riesgo ex post del banco. Los resultados son coherentes con la hipótesis de que la diversificación geográfica reduce el riesgoThis paper analyses the effects of decentralized multinational banks, characterized by the large autonomy of the affiliates that the banking group has abroad, on bank’s risk, using Spanish confidential supervisory data. Having activity abroad, in countries whose business and financial cycles may be less than perfectly correlated with those of the home country can generate more stability in the results of the consolidated banking group. Such isolation should be greater for multinational and decentralized banks. On the other hand, the international activity of banks may be associated to more risk taking as distance can hinder the ability of a bank’s headquarters to monitor its subsidiaries or because of the more limited knowledge of the host country that the group has. Which effect dominates is an empirical matter which could be taken into account in capital requirements and when carrying out stress-tests. We provide empirical evidence of the relevance of the model of entry into foreign markets, international geographic diversification and business co-movements between the Spanish and the host economy on bank’s ex-post risk. The results are consistent with the hypothesis that geographic diversification reduces ris

The effect of national discretions on banks

The EU’s transposition of Basel II into European law has been done through the Capital Requirements Directive (CRD). Although the Directive establishes, in general, uniform rules to set capital requirements across European countries, there are some areas where the Directive allows some heterogeneity. In particular, countries are asked to choose among different possibilities when transposing the Directive, which are called national discretions (ND). The main objective of our research is to use such observed heterogeneity to gather empirical evidence on the effects on European banks of more or less stringency and more or less risk sensitivity in capital requirements. Following the approach in Barth et al. (2004, 2006, 2008) we build index numbers for groups of national discretions and applying Altunbas et al. (2007) approach, we provide evidence on their effect on banks’ risk, capital, efficiency and cost. We show that more stringency and more risk sensitivity in regulation not always result in a trade off between efficiency and solvency: the impact depends on the area of national discretion on which such characteristics appl

Business complexity and geographic expansion in banking

Utilizando datos confidenciales españoles de supervisión, este trabajo examina el efecto sobre el riesgo bancario de la complejidad geográfica y empresarial, y su interacción e importancia relativa, donde el grado de complejidad se basa en la estructura corporativa de las filiales del grupo bancario. Los resultados muestran que, mientras la complejidad empresarial genera un mayor riesgo, la complejidad geográfica genera beneficios de diversificación, por lo que reduce el riesgo. Sin embargo, la complejidad geográfica no es buena por sí sola, ya que depende de cómo se desarrolle. Una mayor complejidad empresarial en el extranjero en relación con la nacional puede contrarrestar estos beneficios de diversificación. En la misma línea, centrarse en el extranjero en áreas en las que el grupo no tiene experiencia en el ámbito nacional también se traduce en un mayor riesgo.Using Spanish confidential supervisory data, this paper examines the effect of geographic and business complexity, their interaction and relative importance for banks’ risk, where the degree of complexity stems from the corporate structure of banking groups affiliates. The results show that while business complexity results in higher risk, geographic complexity gives rise to diversification benefits, thus lowering risk. However, geographic complexity alone is not enough, as its effect depends on how it interacts with business complexity. Higher business complexity abroad in relation to that at home may counterbalance the benefits of diversification. In the same vein, focusing abroad on areas in which the group does not have expertise at home also results in higher risk

Saving, investment and international capital mobility in EC countries

Incluye bibliografíaFor the past fifteen years, capital movements have been increasingly liberalised in most industrialized countries. From a theoretical point of view, if capital is perfectly mobile between countries, national savings should respond to global investment opportunities and national investment should be financed drawing on the global pool of capital. Accordingly, there should be no empirical relationship between national saving and investmentyet this was not observable in the analysi