THE FINANCIAL CRISIS IMPACT ON ETHICAL FINANCIAL INSTITUTIONS

Into the broad context of the ethical behavior topic in economy, outlined mainly during the last two decades, the appearance of ethical banking was an event with a particular social, economic and competitive incidence. Banking ethics had become an imperatethical bank; sustainability indices; ethical financial products; financial crisis; data envelopment analysis

THE FINANCIAL CRISIS IMPACT ON ETHICAL FINANCIAL INSTITUTIONS

Into the broad context of the ethical behavior topic in economy, outlined mainly during the last two decades, the appearance of ethical banking was an event with a particular social, economic and competitive incidence. Banking ethics had become an impera

The necessity of operational risk management and quantification

Beginning with the fact that performant strategies of the financial institutions have programmes and management procedures for the banking risks, which have as main objective to minimize the probability of risk generation and the bank’s potential exposure, this paper wants to present the operational risk management and quantification methods. Also it presents the modality of minimum capital requirement for the operational risk. Therefore, the first part presents the conceptual approach of the operational risks through the point of view of the financial institutions exposed to this type of risk. The second part describes the management and evaluation methods for the operational risk. The final part of this article presents the approach assumed by a financial institution with a precise purpose: the quantification of the minimum capital requirements of the operational risk.Operational risk, operational risk profile, standard approach, gross income, administrative general expenses

Immigrants’ impact on financial market –European countries’ evidence

The aim of this research is to answer to the question of whether immigrants’ inflow might influence financial markets. The qualitative analyses of descriptive statistics and immigrants’ nationality allowed us to ascertain which the most preferred immigrants’ destinations are across the European countries, but also to get a picture of the countries from which most immigrants come from. Then, using annual data ranging from 1998 to 2014 for 20 European countries, a three-fold analysis was performed as to unveil complementary statistical links between immigrants’ inflow and several financial sector specific indicators. The analysis comprehensively considered the main components of the financial sector, namely the banking sector, the insurance one, the capital market and private pensions. First we relied on the correlation and causality approach, complemented by the use of a panel regression with fixed effects. According to the country by country investigation, the information provided by the descriptive statistics, by the causality test and by the size of the fixed effects estimated through panel regressions shows that Germany clearly detaches itself among the other European countries considered. This most wanted destination among European countries and the second most preferred in the world, records the most pronounced and persistent influence of the number of immigrants on several financial sector features. From the standpoint of the financial sector, the most influenced by immigrants’ inflow, it has been found that bank specific variables are on the top. This result confirms both economic intuition and practice, because immigrants are more prone to use basic banking services rather than invest on the capital market or sign life and non-life insurance contracts

Financial system performance in European Union countries: do country’s governance indicators matter?

The study analyses the impact of country’s governance factors on the financial behaviour and performance of financial intermediaries operating in European Union countries, by covering the period 2000–2017. Empirical evidence provided by the paper relies on a set of financial and political factors that has not been previously studied. Four indicators are jointly used as proxies for capturing the various dimensions of a country’s good governance, while 21 financial indicators represent the alternative dependent variables meant to comprehensively depict the banking sector and capital market development. Each panel regression has been controlled for country’s degree of economic development and its membership to OECD and euro-zone. The findings indicated that various dimensions of political factor caused different effects on financial sector features. Control of corruption, solid political and economic stability determine significant effects on most financial variables considered (almost two-thirds of the financial indicators considered). Even after controlling for the lagged effect of governance factors the main results hold, in that monitoring corruption, maintaining political stability and designing sound economic policies still have an impact on most financial indicators considered. Another interesting conclusion supported by the results is that not all political instability indicators are detrimental for banking and stock market functioning

Towards a Hedonic Pricing Method for the Bucharest Private Housing Market

This paper aims at exploring the drivers of dwellings’sale prices in Bucharest, Romania, over the period 2014-2018. Several housing structural attributes are covered, such as the number of rooms, useful and constructed surface, type of comfort, floor, the number of bathrooms, balconies and parking, the seniority from construction, as well as from renovation, structure type, height regime, and the duration until completion of the real estate transaction. By estimating a standard hedonic price model via OLS regression for a sample of 765 transactions, we notice that all the selected variables, except the floor level and seniority from construction, positively influence the property prices. However, in case of useful and constructed surface, nonlinear relationships with property prices were acknowledged. Robustness checks in form of quantile regressions reinforce the empirical findings.JEL Codes - C21; R3

An Assessment of the Immigration Impact on the International Housing Price

The article highlights the correlation between the evolution of the housing price, as measured by House Price Index, the flow of immigrants and other macroeconomic variables for a sample of 21 representative countries for the period 2007-2014. The proposed model explains and highlights the existence of a positive link between the House Price Index evolution and the flow of immigrants, market capitalization share to Gross Domestic Product and the growth rate of the economy. The novelty of this study is derived from the use of panel data models, the results indicating that for one percent increase in immigration (measured by the flow of immigrants), the housing price changes, in the same way, by 0.045%. It confirms the existence of a positive link, although not significant to the level of the housing price. The article is divided into four parts: the first part explains the choice of this topic; the second part presents an overview of the main ideas that are found in the literature; the third part presents the methodology and models applied to identify the immigration impact on the housing price and the fourth part contains conclusions, test limits and future research directions

Central Banks’ Response to the Current Financial Crisis – Between Costs and Benefits

Our study is inserted in the thematic area dedicated, during recent years, to the research on central banks’ response to financial crisis. The global financial crisis has outlined a series of weaknesses located at regulatory and supervisory activities’ level, causing major central banks to face a new operating environment, in which traditional monetary policy tools are ineffective (key interest rate close to zero) in restoring the financial markets’ proper functioning. The unconventional monetary policy measures, the dramatic fall of the key interest rate, the balance sheet structure modification and extension of collateral accepted by central banks are the main issues on which we focused our attention, to highlight the costs and benefits recorded by these institutions. All major central banks have implemented highly innovative, flexible facilities and the main beneficiaries have been the banking systems in their entirety.Financial crisis; Central banks; Unconventional monetary policy

LIMITS AND VULNERABILITIES OF BANKING PROFITABILITY INDICATORS DURING THE FINANCIAL CRISIS

Bank performance measurement, as an expression of banks’ ability to generate sustainable profits, is a topic of major interest, located in the core of all categories of participants involved in the banking business: banking supervisory authorities, rating agencies, shareholders, investors and analysts of banking activity. Recent developments in bank profitability during the global financial crisis have highlighted a number of limitations of traditional banking performance measurement indicators, in respect of their capacity to provide relevant, credible and genuine information related to credit institutions’ activity. In this article we intend to argue, by investigations at conceptual and quantitative level, the extent to which traditional indicators of bank profitability provide a comprehensive and real insight into the credit institutions’ financial performance. The empirical study applies the stress test methodology, through which is assessed the extent to which Romanian banking system‘s performance, represented by ROE, changes in the context of defining adverse, but plausible scenarios. Hence, it had been simulated ROE’s degree of response for three types of scenarios. We have applied both univariate stress tests (sensitivity analysis) in order to isolate the potential impact of each risk factor on bank profitability, and multivariate stress tests, which allow the simultaneous application of multiple shocks on risk factors. The results show the most important risk factors that adversely affect banking system’s profitability and the concrete value by which profitability is expected to decrease for each scenario analyzed