Interest Rate Pass-Through in Central and Eastern Europe: Reborn from Ashes Merely to Pass Away?

In this study, we seek to better understand the interest rate pass-through in five Central and Eastern European countries -- the Czech Republic, Hungary, Poland, Slovakia and Slovenia, the CEE-5. Our pass-through estimates for several retail rates are generally lower than those reported in the literature, given the absence of cointegration between policy rates and long- or even short-term market rates. In addition, the pass-through has been declining over time in the CEE-5, and we argue that it is likely to decrease further in the future. Finally, the pass-through appears similar in the CEE-5 than in Spain and is higher than in core euro area countries. Hence, euro adoption by the CEE-5 would not further increase heterogeneity within the euro area with regard to the interest rate passthrough. However, substantially more research is needed to establish commonalities and differences between the CEE-5 and the euro area with respect to the reaction of prices and output to monetary policy action.http://deepblue.lib.umich.edu/bitstream/2027.42/57231/1/wp851 .pd

Interest Rate Pass-Through in New EU Member States: The Case of the Czech Republic, Hungary and Poland

The characteristics of the interest rate pass-through in the Czech Republic, Hungary and Poland are studied making use of autoregressive distributed lags (ARDL) models. Significant differences are found across market interest rates and countries concerning long-run elasticities of market interest rates to changes in the key policy rate. While the null hypothesis of complete pass-through cannot be rejected for any interest rate in Poland, deviations from complete pass-through are present for several interest rates in the Czech Republic and Hungary. Except for the case of the short-term loan rate for enterprises in Hungary, no significant deviation from symmetry in the speed of adjustment to equilibrium is found in the data.http://deepblue.lib.umich.edu/bitstream/2027.42/40057/3/wp671.pd

The Financial System in the Czech Republic, Hungary and Poland after a Decade of Transition

The Czech Republic, Hungary and Poland (CEEC-3) have undertaken substantial efforts to build a new financial system under the constraints of their legacies from central planning. In this study, first we look at the banking sector. Then we give a description of bond and stock markets. These topics are complemented by an analysis of the structure of funding for the private and public sector, of the financial sector's vulnerability and of the legal conditions for external finance as well as for banking supervision. We find that the financial sector and financial intermediation are internationally integrated already to a large extent. This implies, inter alia, a non-negligible exposure of the corporate sector to exchange rate risk. While funding via equity markets remained modest, local currencydenominated debt issues are important for public financing. Our analysis shows that the legal, supervisory and regulatory infrastructure of the financial system is formally well developed, but suffers from enforcement problems. -- Polen, die Tschechische Republik und Ungarn unternahmen, ausgehend vom Erbe der zentralen Planwirtschaft, substanzielle Anstrengungen zur Errichtung neuer Finanzsysteme. Aufbauend auf einer Untersuchung des Bankensektors sowie der Kapitalmärkte erfolgt eine Analyse der Finanzierungsstruktur des privaten und des öffentlichen Sektors, der Krisenanfälligkeit des Finanzsektors sowie der rechtlichen Regelungen für externe Unternehmensfinanzierung und Bankenaufsicht. Finanzsektoren und -intermediation sind bereits in hohem Maße international integriert. Dies impliziert u.a., dass der Unternehmenssektor einem beachtlichen Wechselkursrisiko ausgesetzt ist. Während die Finanzierung über den Aktienmarkt gering ist, sind in nationaler Währung denominierte Schuldtitel für die Finanzierung des öffentlichen Sektors wichtig. Unsere Analyse zeigt, dass der rechtliche und aufsichtsrechtliche Rahmen der Finanzsysteme formal gut entwickelt ist. Es gibt jedoch Mängel bei der praktischen Umsetzung dieser Standards.Financial System in Czech Republic,Hungary and Poland,Financial Sector Transition,Transition Economics

Interest Rate Pass-Through in Central and Eastern Europe: Reborn from Ashes Merely to Pass Away?

In this study, we seek to better understand the interest rate pass-through in five Central and Eastern European countries – the Czech Republic, Hungary, Poland, Slovakia and Slovenia, the CEE-5. Our pass-through estimates for several retail rates are generally lower than those reported in the literature, given the absence of cointegration between policy rates and long- or even short-term market rates. In addition, the pass-through has been declining over time in the CEE-5, and we argue that it is likely to decrease further in the future. Finally, the pass-through appears similar in the CEE-5 than in Spain and is higher than in core euro area countries. Hence, euro adoption by the CEE-5 would not further increase heterogeneity within the euro area with regard to the interest rate passthrough. However, substantially more research is needed to establish commonalities and differences between the CEE-5 and the euro area with respect to the reaction of prices and output to monetary policy action.interest rate pass-through, monetary transmission mechanism, transition economies, Central and Eastern Europe, Austria, Germany, Spain.

What are the key determinants of nonperforming loans in CESEE?

Credit risk assessment is a crucial part of macroprudential analysis, with the aggregate nonperforming loan (NPL) ratio serving as a proxy for the economy-wide probability of default of the banking sector's overall loan exposure. Therefore, the factors driving the NPL ratio deserve a lot of interest. This study provides a macroeconomic model for nonperforming loans (NPLs) for the Central, Eastern and Southeastern European (CESEE) countries. It is based on panel data for Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, Russia, Slovakia and Ukraine. In line with current literature, our empirical analysis confirms that economic growth is the main driver that is negatively correlated with NPL development. This inverse relation is also indicated by the stock index as a leading indicator for economic developments. However, there are also other important determinants that can help explain the change in NPL ratios in the CESEE countries: past credit growth as well as exchange rate changes coupled with the share of foreign currency loans in total loans. This study confirms and quantifies risk of excessive credit growth as well as foreign exchange lending

Financial System Transition in Central Europe: The First Decade

The Czech Republic, Hungary and Poland (CEEC-3) have undertaken substantial efforts to build a new financial system under the constraints of their legacies from central planning. In this study, first we look at the banking sector. Then we give a description of bond and stock markets. These topics are complemented by an analysis of the structure of funding for the private and public sector, of the financial sector’s vulnerability and of the legal conditions for external finance as well as for banking supervision. We find that the financial sector and financial intermediation are internationally integrated already to a large extent. This implies, inter alia, a non-negligible exposure of the corporate sector to exchange rate risk. While funding via equity markets remained modest, local currency-denominated debt issues are important for public financing. Our analysis shows that the legal, supervisory and regulatory infrastructure of the financial system is formally well developed, but suffers from enforcement problems.

Microsatellite-Based Quantification Method to Estimate Biomass of Endophytic Phialocephala Species in Strain Mixtures

Fungi of the Phialocephala fortinii sensu lato-Acephala applanata species complex (PAC) are ubiquitous endophytic colonizers of tree roots in which they form genotypically diverse communities. Measurement of the colonization density of each of the fungal colonizers is a prerequisite to study the ecology of these communities. Up to now, there is no method readily available for the quantification of PAC strains co-colonizing the same root. The new DNA quantification method presented here is based on the amplification of microsatellites by competitive polymerase chain reaction (PCR). The method proved to be suitable to detect and quantify at least two strains within one single sample by the addition of a known amount of mycelium of a reference strain before DNA extraction. The method exploits the correlation between the reference/target ratio of light emitted during microsatellite detection (peak ratio) and the reference/target ratio of mycelial weights to determine the biomass of the target strain. Hence, calibration curves were obtained by linear regression of the peak ratios on the weight ratios for different mixtures of reference and target strains. The slopes of the calibration curves and the coefficients of determination were close to 1, indicating that peak ratios are good predictors of weight ratios. Estimates of fungal biomass in mycelial test mixtures of known composition laid within the 95% prediction interval and deviated on average by 16% (maximally 50%) from the true biomass. On average, 3-6% of the root biomass of Norway spruce seedlings consisted of mycelial biomass of either one of two inoculated PAC strains. Biomass estimates obtained by real-time quantitative PCR were correlated with the estimates obtained by the microsatellite-based method, but variation between the two estimates from the same root was high in some samples. The microsatellite-based DNA quantification method described here is currently the best method for strainwise estimation of endophytic biomass of PAC fungi in small root sample

Financial System Transition in Central Europe: The First Decade

The Czech Republic, Hungary and Poland (CEEC-3) have undertaken substantial efforts to build a new financial system under the constraints of their legacies from central planning. In this study, first we look at the banking sector. Then we give a description of bond and stock markets. These topics are comple-mented by an analysis of the structure of funding for the private and public sector, of the financial sector's vulnerability and of the legal conditions for external finance as well as for banking supervision. We find that the financial sector and financial intermediation are internationally integrated already to a large extent. This implies, inter alia, a non-negligible exposure of the corporate sector to exchange rate risk. While funding via equity markets remained modest, local currency-denominated debt issues are important for public financing. Our analysis shows that the legal, supervisory and regulatory infra-structure of the financial system is formally well developed, but suffers from enforcement problems

Control of pathogenic PAC strains by non-pathogenic PAC strains in planta does not correlate with higher competitiveness of non-pathogenic PAC strains ex planta

Ascomycetes of the Phialocephala fortinii s.l.—Acephala applanata species complex (PAC) are frequent root endophytes of forest trees. Roots are colonized by multiple PAC genotypes that interact, and recent findings indicate that adverse effects on plant performance caused by pathogenic PAC strains are attenuated by non-pathogenic PAC strains. However, it was not known if this "self-control” works only in planta, or also ex planta, i.e., prior to infection during saprotrophic life of the PAC. Interactions between PAC strains were therefore studied in a plant-free system on malt extract agar. The mycelia of two pathogenic (A and T1) and two non-pathogenic (B and C) PAC strains were mixed pairwise 5:1, 1:1 and 1:5 (fresh weight ratios) and incubated at 15 and 25°C. Mycelial biomass of each strain was measured after 2 and 8 weeks. The combination of strains and the mixture ratio had a significant effect on strain biomass, whereas temperature influenced only the biomass of pathogenic strain T1. Biomass production of strain T1 was inhibited by all other strains, whereas biomass production of the other pathogenic strain A was significantly stimulated by the two non-pathogenic strains. This contrasts strongly with results from a previous experiment in planta using strains A, B and C, because the two non-pathogenic PAC strains successfully inhibited the pathogenic strain, probably by space occupation or the induction of host resistance. Therefore, it is impossible to predict the outcome of PAC-PAC interactions in planta based on the results gained from interactions ex planta

Pesticides in Agricultural Soils: Major Findings from Various Monitoring Campaigns in Switzerland

Synthetic pesticides are widely applied in modern agriculture, where they are used against diseases, pests, and weeds to secure crop yield and quality. However, their intensive application has led to widespread contamination of the environment, including soils. Due to their inherent toxicity, they might pose a risk to soil health by causing harm to non-target organisms and disrupting ecosystem services in both agricultural and other exposed soils. Following the Swiss National Action Plan on the reduction of pesticide risks, Agroscope has conducted several soil monitoring studies that are briefly presented here. All of them resort to different multi-residue trace analytical approaches to simultaneously quantify up to about 150 modern pesticides by either accelerated solvent, or Quick, Easy, Cheap, Efficient, Rugged, Safe (QuEChERS) extraction, followed by separation and detection with liquid chromatography-triple quadrupole mass spectrometry. While partly still in progress, our investigations led to the following major findings this far: Multiple pesticides are commonly present in soils, with individual concentrations in agricultural soils often reaching up to a few tens of µg/kg. Pesticide occurrence and concentrations in agricultural soils primarily depend on land use, land use history and cultivated crops. Pesticides can prevail much longer than predicted by their half-lives, and were found in soils even decades after conversion from conventional to organic farming. Corresponding residual fractions can be in the order of a few percent of the originally applied amounts. We further found negative associations of pesticide residues with the abundance of beneficial soil life, underpinning their potential risk to the fertility of agricultural soils. Traces of pesticides are also detected in soils to which they were never applied, indicating contamination, e.g., via spray drift or atmospheric deposition. These results confirm the general notion of both scientists and legislators that prospective risk assessments (RA; as executed during registration and use authorization) should be confirmed and adjusted by retrospective RA (e.g., by environmental monitoring studies of currently used compounds) to jointly lead to an overall reduced environmental risk of pesticides