Functional income distriibution in a small European country: the role of financialisation and other determinants

Working papers com arbitragem científicaThis paper provides an empirical analysis of the relationship between the labour income share and financialisation, as well as other related variables in Portugal from 1978 to 2012. We estimate an equation for the labour share that includes standard variables (technological progress, globalisation, education and business cycle) and variables to capture the effect of financialisation. We formulate the hypothesis that the financialisation process may lead to a rise in the inequality of functional income distribution through three channels: the change in the sectoral composition of the economy (due to both the increase in the weight of financial activity and the decrease in government activity), the diffusion of shareholder value governance practices and the weakening of trade unions. Our results show that the financialisation process has an indirect long-term effect on the labour share through its impact on government activity and trade union density. The paper also finds evidence supporting the traditional explanations for functional income distribution, namely globalisation, education and business cycle.info:eu-repo/semantics/publishedVersio

Functional income distribution in portugal: the role of financialisation and other related determinants

Artigo em revista científica internacional com arbitragem científicaThis paper provides an empirical analysis of the relationship between the labour income share and financialisation, as well as other related variables in Portugal from 1978 to 2012. We estimate an equation for the labour share that includes standard variables (technological progress, globalisation, education and business cycle) and variables to capture the effect of financialisation. We formulate the hypothesis that the financialisation process may lead to a rise in the inequality of functional income distribution through three channels: the change in the sectoral composition of the economy (due to both the increase in the weight of financial activity and the decrease in government activity), the diffusion of shareholder value governance practices and the weakening of trade unions. Our results show that the financialisation process has an indirect long-term effect on the labour share through its impact on government activity and trade union density. The paper also finds evidence supporting the traditional explanations for functional income distribution, namely globalisation, education and business cycle.info:eu-repo/semantics/publishedVersio

Diferenças sectoriais no acesso ao crédito bancário em Portugal: uma análise de dados em painel usando o inquérito de conjuntura ao investimento

JEL Classification System: E22, E41Com a crise de dívida que assola Portugal, o racionamento de crédito tem sido apontado como prática corrente por parte dos bancos. As empresas indicam que não recebem o crédito que pretendem. O racionamento de crédito ocorre por haver um desequilíbrio no mercado, entre a procura e oferta de crédito, havendo excesso de procura quem oferece tende a analisar de forma mais pormenorizada e criteriosamente o crédito concedido para assim reduzir o risco o mais possível. A assimetria de informação por partedas empresas é um dos maiores obstáculos na concessão de crédito. A falta de total transparência da empresa leva a que a banca tenda a recusar financiamento como forma de reduzir o risco a que está sujeita, muitas vezes a empresas com capacidade de fazer face ao serviço de dívida. Este estudo possibilita averiguar se em Portugal asempresas dos principais sectores de actividade têm tido o seu crédito racionado e quaisas variáveis que influenciam o racionamento de crédito. De acordo com as conclusões do estudo, em média entre 2002 e 2009 apenas o sector da construção e do imobiliário é que não foram alvode racionamento, os restantes foram alvo de racionamento em diversos períodos da análise.With the debt crisis plaguing Portugal, credit rationing has been considered standard practice by banks. Companies suggest that they don't get the credit they want. The credit rationing occurs because there is an imbalance in the market between demand and supply of credit, there is an excessive demand that leads to a more careful and detailed analysis in order to reduce the as much aspossible. The asymmetry of information by companies is a major obstacle in the concession of credit, the not total transparency of the companies leads banks to withhold funding as a way to reduce the risk to which it is subject, often to companies with the ability to face the debt service. This study makes it possible to ascertain whether companies in Portugal of major sectors have had their credit rationed and which variables influence credit rationing. According to the findings, in average, between 2002 and 2009, only the construction industry and real estate didn’t have their credit rationed, the rest were subject to rationing in various periods during the analysis

Risk management, the subprime crisis and financialisation: the role of risk management in the generation and transmission of the subprime crisis

Documento elaborado e integrado no Projecto FESSUD, University of Leeds, projecto fundado pela União EuropeiaOver time the financial sector has gained greater relevance in the economy, a phenomenon that some call financialisation. Contrary to the mainstream view, financialisation literature emphasises that risk management by financial corporations will not be socially efficient in a context of deregulated markets and will ultimately lead to an increase of aggregate risk and crises. To assess the validity of such claim, in this paper we review the literature on risk management during the Subprime crisis. These failures fall into three categories: technique and methodology, corporate governance and strategy, and regulation and external factors. These failures can be interpreted in the light of the financialisation perspective, which is therefore a valuable approach when addressing regulatory changes in the financial system.info:eu-repo/semantics/publishedVersio

The non-for-profit banks in Portugal: specificities, social role and evolution

Colecção DINÂMIA'CET-RN - Artigo em revista científica nacional com arbitragem científicaEste artigo procura definir as principais diferenças entre a generalidade dos bancos e os dois bancos com atitude não lucrativa que operam no mercado bancário português (Caixa Agrícola e Caixa Económica-Montepio Geral). Encontramos diferenças em termos da forma de captar fundos; em termos dos critérios de governação; do regime fiscal; da aplicação dos lucros; e da atitude em relação ao lucro. A Caixa Agrícola opera de forma mais próxima dos bancos cooperativos do que a Caixa Económica-Montepio Geral. Ambos os bancos têm vindo a modernizar-se e construir grupos financeiros modernos que oferecem uma enorme variedade de produtos e serviços financeiros, semelhantes à generalidade dos bancos. Contudo, isto não foi suficiente para evitar alguma erosão das suas posições no mercado bancário (quer em termos de crédito concedido quer em termos de depósitos recebidos). O impacto da crise financeira de 2008 na rendibilidade da Caixa Agrícola foi semelhante à média do sector bancário. No caso da Caixa Económica-Montepio Geral, o impacto foi menos grave que na média do sector.This paper establishes the main differences between standard commercial banks and the two non-for-profit banks operating in Portugal (Caixa Agrícola – CA – and Caixa Económica Montepio Geral – CE-MG). In particular, we find differences in the way funds are raised, governance criteria, tax regime, application of profits and attitude towards profit. However, CA is more similar to a typical co-operative/mutual bank than CE-MG. Both banks have modernized and transformed into modern financial groups offering a wide variety of financial products similar to any commercial bank. However, this was not enough to avoid an erosion of their market position in terms of credit and deposits. The 2008 financial crisis’ impact on the profitability of CA was similar to the impact on the industry average, whereas on CE-MG the impact was milder.info:eu-repo/semantics/publishedVersio

The impact of Economic Policy Uncertainty on the real exchange rate: Evidence from the UK

The world economy has been punctuated by uncertainty as a result of the 2008 subprime crisis, the European sovereign debt crisis, Brexit, and the 2016 US presidential elections, to mention but a few of the reasons. This study explores how the UK real exchange rate reacts to economic policy uncertainty (EPU) shocks using monthly data for the period 1998 to 2020. We contribute to the literature by identifying the long-run and short-run impacts of EPU using a cointegrated ARDL model, and by studying a country that has been through periods of both relatively low and high uncertainty. Results confirm that EPU has an important effect in the long run by depreciating the exchange rate. In addition to urging policymakers and regulators to concentrate on the sometimes difficult task of keeping policy uncertainty to a minimum as a way of sustaining exchange rate stability and thus promoting long-term economic growth, further evidence is provided on exchange rate fundamentals

Financialisation and the financial and economic crises: the case of Portugal

Documento elaborado e integrado no Projecto FESSUD, University of Leeds, projecto fundado pela União EuropeiaThe notion of 'financialisation' broadly refers to the growing weight of finance in contemporary economies. Taking this into account, the present study focus on the long-run macroeconomic development and recent financial and economic crisis of the Portuguese economy. Contrary to Greece, Ireland, and Spain, the dismal performance of the Portuguese economy is not solely a post-subprime crisis phenomenon. The sharp discontinuity in GDP growth around the turn of the century is a distinctive feature of Portugal in the EU context and, although several factors account for this discontinuity, the process of financialisation of the Portuguese economy is an essential part of the explanation. This process in Portugal was essentially characterised by a large increase in bank credit to the private sector, resulting from a combination of demand- and supply-side factors that produced a wide availability of credit at historically low interest rates. Thus, we suggest that the Portuguese experience can be labelled a ‘debt-led domestic demand growth’ model. However, after 2000 the Portuguese economy experienced a succession of shocks, and an exhaustion of the domestic debt-led growth at a much earlier stage than other countries, resulting in a sharp economic slowdown, with negative consequences for public finances. The high levels of public and private indebtedness were a decisive factor behind the steep rise in the Portuguese sovereign bonds interest rates between 2010 and 2012. Finally, we assess the impact of financialisation in the current account, investment, consumption, and inequality; articulating these domains with the general growth model. Our conclusion is that the increase in the importance of finance ended having a clear negative impact on the three former domains, while the negative impact on income inequality was less pronounced.info:eu-repo/semantics/publishedVersio

Financialisation in the european periphery and the sovereign debt crisis: the portuguese case

Working papers com arbitragem científicaThe financial sector has acquired great prominence in most developed economies. However, some authors argue that the growth of finance is at the root of the current financial and economic difficulties. This paper aims to analyse this claim by looking at financialisation in the European periphery, focusing on the Portuguese case. The emergence of this phenomenon is contextualised from a historical, economic and international perspective. Based on the analysis of several indicators, the paper concludes that the Portuguese economy exhibits symptoms of financialisation, and that this has not only revealed the structural weaknesses of the Portuguese economy but also played an important role in the emergence of the recent Portuguese sovereign debt crisis.info:eu-repo/semantics/publishedVersio

Financialisation in the european periphery and the sovereign debt crisis: the portuguese case

Working papers com arbitragem científicaThe financial sector has acquired great prominence in most developed economies. However, some authors argue that the growth of finance is at the root of the current financial and economic difficulties. This paper aims to analyse this claim by looking at financialisation in the European periphery, focusing on the Portuguese case. The emergence of this phenomenon is contextualised from a historical, economic and international perspective. Based on the analysis of several indicators, the paper concludes that the Portuguese economy exhibits symptoms of financialisation, and that this has not only revealed the structural weaknesses of the Portuguese economy but also played an important role in the emergence of the recent Portuguese sovereign debt crisis.info:eu-repo/semantics/publishedVersio

Report on the financial system in Portugal

Documento elaborado e integrado no Projecto FESSUD, University of Leeds, projecto fundado pela União EuropeiaThis Report assesses the extent, nature, and effects of financialisation in Portugal. It also discusses the contribution of financialisation for the crisis that presently affects the Portuguese economy. The liberalization of the banking sector, the easier access to international financial markets, and the growth of credit fostered the development of the Portuguese financial sector.info:eu-repo/semantics/publishedVersio