A macroeconomic credit risk model for stress testing the South African banking sector

In this study a macroeconomic credit risk model for stress testing the South African banking sector was developed. The findings demonstrate that macroeconomic shocks have a large impact on credit losses. However, owing to a high level of current capitalisation, the South African banking sector is resilient to severe economic shocks. At the same time, banks are rather sensitive to changes in real interest rates and property prices due to the high share of mortgages at flexible interest rates in their credit portfolios.macro stress testing, financial stability, credit risk

Profitability of foreign banks in Central and Eastern Europe: Does the entry mode matter?

Using data for 265 banks in Central and Eastern European Countries for the period of 1995-2003, this paper analyses the differences in profitability between domestic and for-eign banks. We show that foreign banks, especially greenfield institutions, earn higher profits than domestic banks. However, this effect is acquired rather than inherited, since there is evidence that foreign banks tend to take over less profitable institutions. Profits of foreign banks in CEECs also exceed profits of their parent banks, explaining the reasons for their entry. Further, we study benefits and costs of foreign ownership by analyzing de-terminants of profitability for domestic, takeover, and greenfield banks. Profits of foreign banks are less affected by macroeconomic conditions in their host countries. However, greenfield banks are sensitive to the situation of their parent banks. Only domestic banks enjoy higher profits in more concentrated banking markets, whereas takeover banks suffer from diseconomies of scale due to the fact that they acquired large institutions.foreign banks; bank profits; multinational banking; transition economies

Foreign Bank Presence and Its Effect on Firm Entry and Exit in Transition Economies

This study investigates the impact of foreign bank penetration in Central and Eastern Europe on firm entry. We demonstrate that the acquisition of domestic banks by foreign investors has led to reduced firm creation, smaller average size of entrants and increased firm exit in opaque industries compared to transparent ones. At the same time, the entry of greenfield foreign banks spurred firm creation and exit. Unlike previous studies, which use interchangeably the notions of opacity and size, we define opacity in terms of technological process and show that economic significance of foreign bank entry is larger for opaque industries than for industries with large shares of small firms. Our findings can be interpreted as evidence of increased credit constraints and are consistent with theories that argue that foreign bank presence exacerbates informational asymmetries

Foreign Bank Entry and Credit Allocation in Emerging Markets

We employ a unique data set containing bank-specific information to explore how foreign bank entry determines credit allocation in emerging markets. We investigate the impact of the mode of foreign entry (greenfield or takeover) on banks’ portfolio allocation to borrowers with different degrees of informational transparency, as well as by maturities and currencies. The impact of foreign entry on credit allocation may stem from the superior performance of foreign entrants (“performance hypothesis”), or reflect borrower informational capture (“portfolio composition hypothesis”). Our results are broadly in line with the portfolio composition hypothesis, showing that borrower informational capture determines bank credit allocation.banks;ownership;credit allocation

Rapid loan growth in Russia : A lending boom or a permanent financial deepening?

In this paper we look at a number of factors surrounding the sharp increase in lending in Russia. First of all, we discuss the sources of loan growth and factors that have triggered rapid loan growth. Second, we consider the loan portfolio quality, singling out Sberbank and other state banks which could be prone to directed lending and could be subject to lax supervision. Third, we address the potential problem associated with the high exposure of banks to large borrowers and related parties, and concentration of loans to the oil and gas industry. Our analysis shows that rapid loan growth was preceded by strong economic growth and is accompanied by increased investments in fixed assets. In 2003, loan growth was further boosted by the rise in cross-border lending and international bond issuances. The short-term nature of this foreign debt is one of the sources of vulnerability for the Russian banks. The quality and the structure of the loan portfolio has improved significantly in the last years, but the real risk may be hidden because of the negative real interest rates, high growth of loans and lack of transparency. Future loan growth will mainly depend on the success of the current banking reform

Дослідження динаміки захворюваності на COVID-19 в Україні під час військового стану (Study of the dynamics of the incidence of covid-19 in Ukraine during martial law)

COVID-19 серйозно вплинув на різні аспекти нашого життя, і першочергово включаючи саме здоров’я людей по всьому світу. Високий рівень передачі та поки відсутність ефективних терапевтичних засобів кинули виклик всьому людству. COVID-19 є інфекційною хворобою, яка вперше була виявлена в грудні 2019 р. в місті Ухань, Китай, після чого вірус швидко поширився на весь світ. Уже 30 січня 2020 р. Всесвітня організація охорони здоров’я (ВООЗ) оголосила спалах надзвичайною ситуацією у сфері громадського здоров’я інтернаціонального масштабу, а 11 березня 2020 р. – глобальною пандемією. У порівнянні з іншими гострими респіраторними захворюваннями, як-от: SARS або MERS, COVID-19 поширюється швидше завдяки посиленим процесам глобалізації. (COVID-19 has seriously affected various aspects of our lives, and above all the health of people around the world. The high level of transmission and so far, the lack of effective therapeutic agents have challenged all mankind. COVID-19 is an infectious disease that was first detected in December 2019 in Wuhan, China, after which the virus quickly spread around the world. On January 30, 2020, the World Health Organization (WHO) declared an international public health emergency outbreak, and on March 11, 2020, a global pandemic. Compared to other acute respiratory diseases, such as SARS or MERS, COVID-19 is spreading faster due to increased globalization. According to reports of the first 40 cases of COVID-19, the majority of infected patients (73%) were males, and less than half (i.e., 32%) had comorbidities such as diabetes, hypertension, and cardiovascular diseases. It is also reported that the average age of patients was 49 years. The mortality rate in this group was almost 2%. In Ukraine, the first cases date back to March 3, 2020. Since the beginning of the epidemic in Ukraine, the average mortality rate was almost 3.5%, and the average age of patients was 41 years. On the night of February 24, 2022, after the Russian leader addressed his citizens, Russia launched a large-scale offensive on the territory of Ukraine. Martial law was declared by presidential decree at 05:30 on the same day throughout the controlled territory of Ukraine. Following the declaration of martial law, most businesses, food and entertainment establishments were forced to suspend operations due to the threat of airstrikes. Educational institutions of various levels were forced to close on vacation, and later open only for distance learning to prevent the accumulation of large masses of people in one place. As for the incidence statistics for COVID-19, at the beginning of the war, they didn't update at all or were limited updated. Therefore, it is now very important to know what the dynamics of the disease should be expected. To study these dynamics, we will use the SIR model, based on the results of which it will be possible to forecast what to expect from COVID-19.

Rapid loan growth in Russia : A lending boom or a permanent financial deepening?

In this paper we look at a number of factors surrounding the sharp increase in lending in Russia. First of all, we discuss the sources of loan growth and factors that have triggered rapid loan growth. Second, we consider the loan portfolio quality, singling out Sberbank and other state banks which could be prone to directed lending and could be subject to lax supervision. Third, we address the potential problem associated with the high exposure of banks to large borrowers and related parties, and concentration of loans to the oil and gas industry. Our analysis shows that rapid loan growth was preceded by strong economic growth and is accompanied by increased investments in fixed assets. In 2003, loan growth was further boosted by the rise in cross-border lending and international bond issuances. The short-term nature of this foreign debt is one of the sources of vulnerability for the Russian banks. The quality and the structure of the loan portfolio has improved significantly in the last years, but the real risk may be hidden because of the negative real interest rates, high growth of loans and lack of transparency. Future loan growth will mainly depend on the success of the current banking reform

A macroeconomic credit risk model for stress testing the South African banking sector

In this study a macroeconomic credit risk model for stress testing the South African banking sector was developed. The findings demonstrate that macroeconomic shocks have a large impact on credit losses. However, owing to a high level of current capitalisation, the South African banking sector is resilient to severe economic shocks. At the same time, banks are rather sensitive to changes in real interest rates and property prices due to the high share of mortgages at flexible interest rates in their credit portfolios

Foreign Ownership and Market Power in Banking: Evidence from a World Sample

The nexus between ownership and competition in the banking sector is a major concern to policymakers around the world but one that is rarely comprehensively examined. For 131 countries and 13 years we match bank ownership with over 50,000 bank‐year estimates of individual bank market power. We find that ownership does not explain market power at the individual bank level. However, at the country level, foreign bank ownership has a positive and significant impact on market power mainly because foreign banks enter through mergers or acquisitions and not through greenfield investments. The observed increases in market power primarily originate from decreases in the marginal cost