Capital Structures and Portfolio Composition During Banking Crisis PDF Download
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Author: Mr.Alberto M. Ramos
Publisher: International Monetary Fund
ISBN: 1451854358
Category : Business & Economics
Languages : en
Pages : 55
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Book Description
This paper constructs a theoretical framework that rationalizes banks’ short- and long-run adjustment dynamics—in portfolio composition and in the capital structure—following a period of financial distress. The model captures stylized facts about banks’ behavior following a shock to the capital base—namely, the rush to liquidity and credit crunch. Bank panel data show that Argentine domestic retail banks underwent a period of adjustment of six quarters following the Mexican devaluation crisis, reducing their risk-exposure since, owing to bank capital scarcity, depositors became less prone to tolerate bank default risk. Foreign-owned banks suffered a milder shock and adjusted immediately.
Author: Mr.Alberto M. Ramos
Publisher: International Monetary Fund
ISBN: 1451854358
Category : Business & Economics
Languages : en
Pages : 55
Get Book Here
Book Description
This paper constructs a theoretical framework that rationalizes banks’ short- and long-run adjustment dynamics—in portfolio composition and in the capital structure—following a period of financial distress. The model captures stylized facts about banks’ behavior following a shock to the capital base—namely, the rush to liquidity and credit crunch. Bank panel data show that Argentine domestic retail banks underwent a period of adjustment of six quarters following the Mexican devaluation crisis, reducing their risk-exposure since, owing to bank capital scarcity, depositors became less prone to tolerate bank default risk. Foreign-owned banks suffered a milder shock and adjusted immediately.
Author: Alberto Ramos
Publisher:
ISBN:
Category :
Languages : en
Pages : 54
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Book Description
This paper constructs a theoretical framework that rationalizes banks` short- and long-run adjustment dynamics in portfolio composition and in the capital structure following a period of financial distress. The model captures stylized facts about banks` behavior following a shock to the capital base namely, the rush to liquidity and credit crunch. Bank panel data show that Argentine domestic retail banks underwent a period of adjustment of six quarters following the Mexican devaluation crisis, reducing their risk-exposure since, owing to bank capital scarcity, depositors became less prone to tolerate bank default risk. Foreign-owned banks suffered a milder shock and adjusted immediately.
Author: Michael E. Lewitt
Publisher: John Wiley and Sons
ISBN: 0470622350
Category : Business & Economics
Languages : en
Pages : 310
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Book Description
In The Death of Capital, respected portfolio manager and longtime investment professional Michael Lewitt looks at how the U.S. economy has increasingly been dominated by short-term speculation rather than industrial expansion in recent years. These disastrous trends, described here as financialization, ignore the fact that capital itself is a highly unstable process rather than a fixed object or category. As a result of our failure to understand the true nature of capital, we have developed a financial and regulatory system that does exactly the opposite of what it should be doing—favoring obscurity over transparency and fomenting instability rather than growth. In explaining where we have gone wrong Lewitt pulls few punches in criticizing some of the counterproductive forces that have led to the death of capital—including Wall Street practices such as private equity and derivatives trading—which he views both as economically unproductive and morally misguided. Page by informative page, this timely guide: Addresses "financialization" and its consequences, such as a weaker U.S. dollar, the destruction of American industries, and the loss of American economic and political influence Explores the most important aspects of capital and capitalism through the prism of four of the world’s great economic thinkers Discusses how the legal system aided economic weakening by privileging short-term investment goals Calls for politically controversial reforms such as stricter regulation of hedge funds and private equity firms, banning naked credit default swaps and Structured Investment Vehicles, and principles-based reforms to improve systemic stability Financial reform is needed to make sure capital does not die again. Filled with in-depth insights and practical advice, The Death of Capital is not just a play-by-play of the recent financial crisis, but an original and passionate analysis of the trends that led to it and what can be done in a regulatory sense to address the problems.
Author: Carl-Johan Lindgren
Publisher:
ISBN: 9781557758712
Category : Business & Economics
Languages : en
Pages : 103
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Book Description
An IMF paper reviewing the policy responses of Indonesia, Korea and Thailand to the 1997 Asian crisis, comparing the actions of these three countries with those of Malaysia and the Philippines. Although all judgements are still tentative, important lessons can be learned from the experiences of the last two years.
Author: Uroš Herman
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 40
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Book Description
In this paper, we investigate whether a firm’s composition of foreign liabilities matters for their resilience during economic turmoil and examine which characteristics determine a firm’s foreign capital structure. Using firm-level data, we corroborate previous findings from the (international) macroeconomic literature that the composition of foreign liabilities matters for a country’s susceptibility to external shocks. We find that firms with a positive equity share in their foreign liabilities were less affected by the global financial crisis and also less likely to default in the aftermath of the crisis. In addition, we show that larger, more open, and more productive firms tend to have a higher equity share in total foreign liabilities.
Author: Financial Crisis Inquiry Commission
Publisher: Cosimo, Inc.
ISBN: 1616405414
Category : Political Science
Languages : en
Pages : 692
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Book Description
The Financial Crisis Inquiry Report, published by the U.S. Government and the Financial Crisis Inquiry Commission in early 2011, is the official government report on the United States financial collapse and the review of major financial institutions that bankrupted and failed, or would have without help from the government. The commission and the report were implemented after Congress passed an act in 2009 to review and prevent fraudulent activity. The report details, among other things, the periods before, during, and after the crisis, what led up to it, and analyses of subprime mortgage lending, credit expansion and banking policies, the collapse of companies like Fannie Mae and Freddie Mac, and the federal bailouts of Lehman and AIG. It also discusses the aftermath of the fallout and our current state. This report should be of interest to anyone concerned about the financial situation in the U.S. and around the world.THE FINANCIAL CRISIS INQUIRY COMMISSION is an independent, bi-partisan, government-appointed panel of 10 people that was created to "examine the causes, domestic and global, of the current financial and economic crisis in the United States." It was established as part of the Fraud Enforcement and Recovery Act of 2009. The commission consisted of private citizens with expertise in economics and finance, banking, housing, market regulation, and consumer protection. They examined and reported on "the collapse of major financial institutions that failed or would have failed if not for exceptional assistance from the government."News Dissector DANNY SCHECHTER is a journalist, blogger and filmmaker. He has been reporting on economic crises since the 1980's when he was with ABC News. His film In Debt We Trust warned of the economic meltdown in 2006. He has since written three books on the subject including Plunder: Investigating Our Economic Calamity (Cosimo Books, 2008), and The Crime Of Our Time: Why Wall Street Is Not Too Big to Jail (Disinfo Books, 2011), a companion to his latest film Plunder The Crime Of Our Time. He can be reached online at www.newsdissector.com.
Author: Ms.Yuko Hashimoto
Publisher: International Monetary Fund
ISBN: 1498311474
Category : Business & Economics
Languages : en
Pages : 40
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Book Description
This paper assesses the role of bank and nonbank financial institutions’ balance sheet foreign exposures and risk management practices in driving capital flow responses to global risk. Using a unique and previously unexplored dataset on domestic and cross border balance sheet positions of financial institutions collected by the IMF, we show that the response of overall capital flows to global risk shocks is associated with the on-balance sheet foreign exposures of nonbanks, but not with that of banks. A possible interpretation is that risk-averse and dynamically optimizing nonbanks reduce their foreign risk exposure when global risk perceptions increase, leading to capital flows, while banks tend to be hedged against these risks off balance sheet. In advanced countries, the findings suggest that nonbank portfolio adjustment to changing risk conditions may take place through derivatives transactions with banks, the hedging practices of which trigger bank related capital flows rather than portfolio flows.
Author: Yile Jiang
Publisher:
ISBN: 9781361009468
Category :
Languages : en
Pages :
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Book Description
This dissertation, "Banking, Corporate Capital Structure, and the Real Economy" by Yile, Jiang, 蒋一乐, was obtained from The University of Hong Kong (Pokfulam, Hong Kong) and is being sold pursuant to Creative Commons: Attribution 3.0 Hong Kong License. The content of this dissertation has not been altered in any way. We have altered the formatting in order to facilitate the ease of printing and reading of the dissertation. All rights not granted by the above license are retained by the author. Abstract: This dissertation consists of two independent essays on banking, corporate capital structure, and the real economy, with evidence from China and the United States. The first essay examines how relationship bank health affects a firm's debt choices. After identifying firms' own relationship banks, we apply logistic regression on rated firms in the US between 1998 and 2013. We find that, when the leverage of a firm's relationship bank decreases, the firm will be more likely to issue public bonds. The leverage of the whole banking sector has a similar impact, which is 1.35 times that of a firm's relationship bank's leverage. As for contract design changes, average loan size slightly decreased, while average bond size significantly increased; the maturity of both loans and bonds significantly shortened; the cost of loans and bonds rocketed to a very high level during the crisis period. Overall, this essay provides evidence of the supply-side effect of corporate debt structure and shows that bank health and leverage have an effect on firms' choices between bank loans and public bonds. This essay adds to the literature by putting forward a new credit supply-side effect, to understand how firms' debt structure varies, a matter which has been much explored with regard to demand-side effect. Apart from that, we use a more general and direct measure to capture bank health and its lending behaviour through the effect of leverage. The second essay examines the cyclicality of equity and liabilities financing of listed firms in China. First we find that simple correlation does not give us robust cyclicality results. We argue that this is largely due to small observations in calculating simple correlations. Next, we perform panel regressions controlling firm characteristics and year and firm fixed effects. We find that equity financing is pro-cyclical for all firm groups, while liabilities financing is pro-cyclical for only mid-large firm groups. To finance asset increment during economic recovery, small firms rely more on equity financing, while large firms rely more on liabilities financing. Lastly, we examine the cyclicality of corporate leverage using the same framework. We find that only some large firms' leverages move counter-cyclically with the real economy. The similar cyclicality of equity finance and liabilities finance cancels each other such that the cyclicality of corporate leverage is affected and differs across different firms. Overall, this essay shows that economic conditions affect equity and liabilities financing of Chinese listed firms. Most firms have similar pro-cyclicality of equity and debt financing. Compared with firms in the US, firms in China rely more on equity markets but less on liabilities markets during economic upturn, especially for small firms. This essay adds to the literature by applying standard methodologies to listed firms in China, to make comparisons with US firms. More importantly, this essay shows that the discrepancy in the results of corporate leverage cyclicality in Chinese literature is understandable and is partly due to the similar cyclicality pattern of equity and liabilities finance. Subjects: Business cycles Corporations - Finance Banks and banking
Author:
Publisher: Lulu.com
ISBN: 9291316695
Category : Bank capital
Languages : en
Pages : 294
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Book Description
Author: Joseph M. Berrospide
Publisher: DIANE Publishing
ISBN: 1437939864
Category : Business & Economics
Languages : en
Pages : 50
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Book Description
The effect of bank capital on lending is a critical determinant of the linkage between financial conditions and real activity, and has received especial attention in the recent financial crisis. The authors use panel-regression techniques to study the lending of large bank holding companies (BHCs) and find small effects of capital on lending. They then consider the effect of capital ratios on lending using a variant of Lown and Morgan's VAR model, and again find modest effects of bank capital ratio changes on lending. The authors¿ estimated models are then used to understand recent developments in bank lending and, in particular, to consider the role of TARP-related capital injections in affecting these developments. Illus. A print on demand pub.
