Matching International Financial Shocks in Emerging Markets

In the present paper, we develop a two-sector general equilibrium model of a small open economy to explore the transmission mechanisms of external financial shocks. In particular, we use a cash-in- advance model with limited participation augmented with a financial friction in the form of a fundamentals-related risk premium on external funds. The friction amplifies the effects of external financial shocks, especially when the economy is highly indebted in foreign currency. For a set of Latin American economies, the theoretical model is calibrated to match the empirical impulse responses of output, investment, trade balance, and domestic credits in response to an adverse shock to the country risk premium. In addition, we analyze the role of monetary policy during the financial crisis.Emerging Markets, Financial Crises, International Capital Markets

International financial shocks in emerging markets

In the present paper, we develop a two-sector general equilibrium model of a small open economy to explore the transmission mechanisms of external financial shocks. In particular, we use a cash-in- advance model with limited participation augmented with a financial friction in the form of a fundamentals-related risk premium on external funds. The friction amplifies the effects of external financial shocks, especially when the economy is highly indebted in foreign currency. For a set of Latin American economies, the theoretical model is calibrated to match the empirical impulse responses of output, investment, trade balance, and domestic credits in response to an adverse shock to the country risk premium. In addition, we analyze the role of monetary policy during the financial crisis

Foreign banks, corporate strategy and financial stability: lessons from the river plate

This paper analyzes the risk taking of branches and subsidiaries of international bank holding institutions from the perspective of host country regulators in two Latin American financial systems: Argentina and Uruguay. Using both theory and empirics, we analyze differences in the risk attitudes of these institutions in the run up to the major financial crises of 2001-02. The empirical part of this paper is based on a rich bank-level dataset on corporate structures, balance sheets, and ownership of banks. We find that foreign banks branches have taken on fewer risks than subsidiaries and relate this to differences in the legal responsibility of parent banks. This research not only shows original results concerning banks corporate strategies in the face of country risk, but also contributes to the debate on appropriate banking regulation

The countercyclical behavior of national development banks in Latin America and the Caribbean

This paper investigates empirically the cyclical lending patterns of national development banks. To this purpose, we compare the lending activity of national development banks, across crisis and normal times, with that of public, foreign and domestic private banks using information on the annual financial statements of 336 major banks from 31 Latin American and Caribbean countries over the period of 1995-2014. Using dynamic panel regressions that allow controlling for loan demand and other factors, we find robust evidence that national development and public retail-oriented banks have counteracted the slowdown in the lending activity of private banks during crises by significantly increasing their provision of loans. Our results are particularly important when considering productive lending to the corporate sector. The findings suggest that governments have played an active countercyclical role in their banking systems directly through both national development and retail-oriented public banks. Certainly, national development banks' size, governance structure and financial condition play a key role in determining that the countercyclical response is effective in mitigating the macroeconomic effects of financial turmoil. In addition, iIt is important that special and innovative credit lines are designed in line with the specific needs of companies in times of crisis. Moreover, credit lines for infrastructure projects that increase the countries' productive and export capabilities is also advisable.http://policydialogue.org/files/events/Future_of_National_Development_Banks_-_Countercyclical_Roles.pdfFil: Brei, Michael. University Paris Ouest; France.Fil: Schclarek Curutchet, Alfredo. Universidad Nacional de Córdoba. Facultad de Ciencias Económicas; Argentina.Economía, Econometrí

Rescue packages and bank lending

Forthcomin

The future of national development banks

In the wake of the global financial crisis, there is growing consensus that national development banks play a valuable role in development finance, at multilateral, regional and national level. This paper looks first at the theoretical background justifying a mixed economy approach to development finance, including due to major and pervasive market failures in private financial markets, and the need to help fund new sectors and activities, as part of the process of structural transformation, essential for dynamic, sustainable and inclusive growth. The paper then describes empirically and analyses the key features of national development banks world- wide, based both on secondary sources, as well as original primary research; key features include the long-term maturity at which these banks lend, as well as the high proportion of their assets, which are dedicated to fund productive activities.The paper then analyzes in depth the main functions which national development banks perform. National development banks play at least five crucial roles in the development process: (i) counteracting the pro-cyclical behavior of private financing, by providing counter-cyclical lending; (ii) promoting innovation and structural transformation, which often implies uncertainty, which inhibits private finance, on its own, funding at sufficient scale; (iii) enhancing financial inclusion, especially-but not only in the agriculture sector; (iv) supporting infrastructure investment; and (v) supporting the provision of public goods, and particularly combatting climate change. There are other roles that NDBs could or should play. These include helping develop and deepen financial markets, promote entrepreneurship, and promote internationalization of national firms.http://policydialogue.org/files/events/Future_of_National_Development_Banks_-_Analytical_Framework.pdfFil: Griffith-Jones, Stephany. Financial Markets Program Director Initiative for Policy Dialogue; United States.Fil: Ocampo, José Antonio. Co-President Initiative for Policy Dialogue; United States.Fil: Rezende, Felipe. Hobart and William Smith College; United States.Fil: Schclarek Curutchet, Alfredo. Universidad Nacional de Córdoba. Facultad de Ciencias Económicas; Argentina.Fil: Brei, Michael. University Paris Ouest; France.Economía, Econometrí

Developing a Scalable Benchmark for Assessing Large Language Models in Knowledge Graph Engineering

As the field of Large Language Models (LLMs) evolves at an accelerated pace, the critical need to assess and monitor their performance emerges. We introduce a benchmarking framework focused on knowledge graph engineering (KGE) accompanied by three challenges addressing syntax and error correction, facts extraction and dataset generation. We show that while being a useful tool, LLMs are yet unfit to assist in knowledge graph generation with zero-shot prompting. Consequently, our LLM-KG-Bench framework provides automatic evaluation and storage of LLM responses as well as statistical data and visualization tools to support tracking of prompt engineering and model performance.Comment: To be published in SEMANTICS 2023 poster track proceedings. SEMANTICS 2023 EU: 19th International Conference on Semantic Systems, September 20-22, 2023, Leipzig, German

Foreign Banks, Corporate Strategy and Financial Stability: Lessons from the River Plate *

Abstract This paper analyzes the risk taking of branches and subsidiaries of international bank holding institutions from the perspective of host country regulators in two Latin American financial systems: Argentina and Uruguay. Using both theory and empirics, we analyze differences in the risk attitudes of these institutions in the run up to the major financial crises of 2001-02. The empirical part of this paper is based on a rich bank-level dataset on corporate structures, balance sheets, and ownership of banks. We find that foreign banks' branches have taken on fewer risks than subsidiaries and relate this to differences in the legal responsibility of parent banks. This research not only shows original results concerning banks corporate strategies in the face of country risk, but also contributes to the debate on appropriate banking regulation. * We would like to than