http://www.bis.org/cbhub/list/country/country_finland/index.rss Latest research hub papers from Finland en http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1220.pdf Bank of Finland Discussion Papers by Ari Hyytinen - Jukka Lahtonen - Mika Pajarinen Entrepreneurial optimism and survival 2012-04-25T12:37:00Z ?This paper uses entrepreneurs'survival expectations around the time of market entry and subsequent venture exits to study entrepreneurial optimism. Using data on a large number of nascent entrepreneurs in the US and start-ups in Finland, we find that new entrepreneurs survival beliefs are on average optimistic but heterogeneous: Some are excessively optimistic, whereas a small subset holds unbiased beliefs. Entrepreneurial optimism is increasing in the relative (interpersonal) optimism and decreasing in entrepreneurs level of education and industry experience in both countries. At least in Finland, those holding optimistic views are more likely to transit into entrepreneurship. Entrepreneurial optimism and survival 2012-04-25T12:37:00Z Abstract http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Pages/dp2012_20.aspx Full text http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1220.pdf Jukka Lahtonen Ari Hyytinen Mika Pajarinen Ari Hyytinen - Jukka Lahtonen - Mika Pajarinen 2012-04-25 Bank of Finland Discussion Papers D21 L20 http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1219.pdf Bank of Finland Discussion Papers by Iftekhar Hasan - Tania De Renzis - Heiko Schmiedel Retail payments and economic growth 2012-04-20T17:36:00Z This paper examines the fundamental relationship between retail payments and overall economic growth. Using data from across 27 European markets over the period 1995-2009, the results confirm that migration to efficient electronic retail payments stimulates overall economic growth, consumption and trade. Among different payment instruments, this relationship is strongest for card payments, followed by credit transfers and direct debits. Cheque payments are found to have a relatively low macroeconomic impact. Retail payment transaction technology itself is also associated positively to real economic aggregates. We also show that initiatives to integrate and harmonise retail payment markets foster trade and consumption and thereby have a beneficial effect for whole economy. Additionally, the findings reveal that the impact of retail payments on economic growth is more pronounced in euro area countries. Our findings are robust to different regression specifications. The study supports the adoption of policies promoting a swift migration to efficient and harmonised electronic payment instruments. Retail payments and economic growth 2012-04-20T17:36:00Z Abstract http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Pages/dp2012_19.aspx Full text http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1219.pdf Tania De Renzis Heiko Schmiedel Iftekhar Hasan Iftekhar Hasan - Tania De Renzis - Heiko Schmiedel 2012-04-20 Bank of Finland Discussion Papers G20 G21 http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1218.pdf Bank of Finland Discussion Papers by Manthos D. Delis - Iftekhar Hasan - Pantelis Kazakis Bank regulations and income inequality: Empirical evidence 2012-04-20T17:36:00Z ?This paper provides cross-country evidence that variations in bank regulatory policies result in differences in income distribution. In particular, the overall liberalization of banking systems decreases the Gini coefficient and the Theil index significantly. However, this effect fades away for countries with low levels of economic and institutional development and for market-based economies. Among the different liberalization policies, the most significant negative effect on inequality is that of credit controls, which also seem to have a lasting effect on the Gini coefficient. Banking supervision and the abolition of interest rate controls also have a negative yet short-run impact on income inequality. A notable finding is that liberalization of securities markets increases income inequality substantially and over a long time span, suggesting that securitization widens the distribution of income. We contend that these findings have new implications for the effects of bank regulations, besides those related to their impact on financial stability. Bank regulations and income inequality: Empirical evidence 2012-04-20T17:36:00Z Abstract http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Pages/dp2012_18.aspx Full text http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1218.pdf Manthos D. Delis Pantelis Kazakis Iftekhar Hasan Manthos D. Delis - Iftekhar Hasan - Pantelis Kazakis 2012-04-20 Bank of Finland Discussion Papers G28 O15 O16 http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1217.pdf Bank of Finland Discussion Papers by Bill Francis - Iftekhar Hasan - Kose John - Maya Waisman Urban agglomeration and CEO compensation 2012-04-19T17:34:59Z An underlying assumption in the executive compensation literature is that there is a national labor market for CEOs. The urban economics literature, however, documents higher ability among workers in large metropolitans, which results in a real and stable urban wage premium. In this paper, we investigate the link between the spatial clustering of firms in big, central cities (i.e., urban agglomeration) and the level and structure of CEO compensation. Using CEO compensation data for the period 1992-2004, we document a positive relation between the size and centrality of the city in which the firm is headquartered and the total, as well as the equity based portion of CEO pay. Our results are robust to a host of control variables, sensitivity and endogeneity tests, indicating that urban agglomeration may reflect positive externalities, such as knowledge spillovers, business connections and improved access to private information that have a positive effect on CEO pay and incentive driven compensation for good performance. We document gradual human capital gains acquired from big city work experience that are transferable to the rural area, and rewarded for, once the CEO relocates into a smaller, less central community. Our tests provide novel evidence of information spillovers and networking opportunities in big cities that can directly affect how CEOs are compensated. Such sources of information and influence represent something for which firms are willing to pay higher and more incentive driven pay, evidence in favor of a market-based explanation for CEO compensation. Urban agglomeration and CEO compensation 2012-04-19T17:34:59Z Abstract http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Pages/dp2012_17.aspx Full text http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1217.pdf Kose John Maya Waisman Bill Francis Iftekhar Hasan Bill Francis - Iftekhar Hasan - Kose John - Maya Waisman 2012-04-18 Bank of Finland Discussion Papers D8 G3 J3 R1 http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1216.pdf Bank of Finland Discussion Papers by Bill Francis - Iftekhar Hasan - Liang Song - Bernard Yeung What determines bank stock price synchronicity? Global evidence 2012-04-18T17:34:59Z ?This paper examines what institutional and bank-specific factors determine bank stock price synchronicity. Using data on 37 countries from 1996-2007, we find that bank stocks are more aligned with the whole market (1) during the financial crisis; (2) in countries that have more credit provided by banks; (3) in countries that do not have explicit depository insurance; and (4) in countries that have lower bank-level disclosure. The results hold for both emerging and developed economy subsamples. Furthermore, in emerging economies, bank stocks in countries with higher degree of state-owned bank are more synchronized with the whole market, similarly, in developed markets, lower banking freedom enhances bank stock price synchronicity. Finally, the effects of state ownership, protection of property rights, and bank size are all more pronounced when determining bank stock price synchronicity during the financial crisis period. What determines bank stock price synchronicity? Global evidence 2012-04-18T17:34:59Z Abstract http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Pages/dp2012_16.aspx Full text http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1216.pdf Bernard Yeung Liang Song Bill Francis Iftekhar Hasan Bill Francis - Iftekhar Hasan - Liang Song - Bernard Yeung 2012-04-18 Bank of Finland Discussion Papers G12 G14 G15 G21 G38 N20 http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Documents/2012/dp0712.pdf Bank of Finland BOFIT Discussion Papers by Laurent Weill and Christophe Godlewski Why do large firms go for Islamic loans? 2012-04-13T17:34:59Z >A?bstractThis paper examines motivations for large firms to choose an Islamic loan over a conventional loan. This investigation helps understanding the causes of the expansion of Islamic finance activities. We employ a dataset of Islamic and conventional syndicated loans from countries from the Middle East and from Southeast Asia for the period 2001-2009, testing determinants for the choice of an Islamic loan at the facility, firm, and country level. We find that loan characteristics do not influence the choice of an Islamic loan, suggesting that borrowers asking for an Islamic loan are not rationed in terms of maturity and amount. The quality of the borrower does not lead to influence the choice of an Islamic loan, meaning that Islamic loans are not associated with a different default risk than conventional loans. We identify three country-level determinants as potential driving forces expanding the preference for Islamic loans. The strongest determinant is religiosity, i.e. the share of Muslim population in a country, but the quality of institutions and level of financial development also play substantial roles. Why do large firms go for Islamic loans? 2012-04-13T17:34:59Z Abstract http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Pages/dp0712.aspx Full text http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Documents/2012/dp0712.pdf Laurent Weill Christophe Godlewski Laurent Weill and Christophe Godlewski 2012-04-13 Bank of Finland BOFIT Discussion Papers G21 G32 O16 http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1214.pdf Bank of Finland Discussion Papers by Bill Francis - Iftekhar Hasan - Qiang Wu Corporate governance and cost of bank loan 2012-04-12T17:34:59Z ?We investigate the role of corporate boards in bank loan contracting. We find that when corporate boards are more independent, both price and nonprice loan terms (e.g., interest rates, collateral, covenants, and performance-pricing provisions) are more favorable, and syndicated loans comprise more lenders. In addition, board size, audit committee structure, and other board characteristics influence bank loan prices. However, they do not consistently affect all nonprice loan terms except for audit committee independence. Our study provides strong evidence that banks tend to recognize the benefits of board monitoring in mitigating information risk ex ante and controlling agency risk ex post, and they reward higher quality boards with more favorable loan contract terms. Corporate governance and cost of bank loan 2012-04-12T17:34:59Z Abstract http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Pages/dp2012_14.aspx Full text http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1214.pdf Qiang Wu Bill Francis Iftekhar Hasan Bill Francis - Iftekhar Hasan - Qiang Wu 2012-04-12 Bank of Finland Discussion Papers G21 G34 http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1212.pdf Bank of Finland Discussion Papers by Bill Francis - Iftekhar Hasan - Liang Song Are firm- and country-specific governance substitutes? Evidence from financial contracts in emerging markets 2012-04-12T17:34:59Z We investigate how borrowers' corporate governance influences bank loan contracting terms in emerging markets and how this relation varies across countries with different country-level governance. We find that borrowers with stronger corporate governance obtain favorable contracting terms with respect to loan amount, maturity, collateral requirements, and spread. Firm-level and country-level corporate governance are substitutes in writing and enforcing financial contracts. We also find that the distinctiveness of borrowers' characteristics affect the relation between firm-level corporate governance and loan contracting terms. Our findings are robust, irrespective of types of regression methods and specifications.? Are firm- and country-specific governance substitutes? Evidence from financial contracts in emerging markets 2012-04-12T17:34:59Z Abstract http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Pages/dp2012_12.aspx Full text http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1212.pdf Liang Song Bill Francis Iftekhar Hasan Bill Francis - Iftekhar Hasan - Liang Song 2012-04-12 Bank of Finland Discussion Papers G20 G30 G31 G34 G38 http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1213.pdf Bank of Finland Discussion Papers by Chung-Hua Shen - Yu-Li Huang - Iftekhar Hasan Asymmetric benchmarking in bank credit rating 2012-04-12T17:34:59Z ?This study proposes an information asymmetry hypothesis to examine why bank credit ratings vary among countries even when bank financial ratios remain constant. Countries are divided among those with low and high information asymmetry. The former include high-income countries, those in North America and West Europe regions, and those with strong institutional environment quality, whereas the latter group possess the opposite characteristics. This study hypothesizes that the influences of financial ratios on ratings are enhanced in low information asymmetry countries but reduced in countries with high information asymmetry. The sample includes the long-term credit ratings issued by Standard and Poor's from 86 countries during 2002-2008. The estimated results show that the effects of financial ratios on ratings are significantly affected by information asymmetries. Countries wishing to improve the credit ratings of their banks thus should reduce information asymmetry. Asymmetric benchmarking in bank credit rating 2012-04-12T17:34:59Z Abstract http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Pages/dp2012_13.aspx Full text http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1213.pdf Chung-Hua Shen Yu-Li Huang Iftekhar Hasan Chung-Hua Shen - Yu-Li Huang - Iftekhar Hasan 2012-04-12 Bank of Finland Discussion Papers G21 G32 G38 http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1215.pdf Bank of Finland Discussion Papers by Isabelle Distinguin - Iftekhar Hasan - Amine Tarazi Predicting rating changes for banks: How accurate are accounting and stock market indicators? 2012-04-12T17:34:59Z ?We aim to assess how accurately accounting and stock market indicators predict rating changes for Asian banks. We conduct a stepwise process to determine the optimal set of early indicators by tracing upgrades and downgrades from rating agencies, as well as other relevant factors. Our results indicate that both accounting and market indicators are useful leading indicators but are more effective in predicting upgrades than downgrades, especially for large banks. Moreover, early indicators are only significant in predicting rating changes for banks that are more focused on traditional banking activities such as deposit and loan activities. Finally, a higher reliance of banks on subordinated debt is associated with better accuracy of early indicators. Predicting rating changes for banks: How accurate are accounting and stock market indicators? 2012-04-12T17:34:59Z Abstract http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Pages/dp2012_15.aspx Full text http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1215.pdf Isabelle Distinguin Amine Tarazi Iftekhar Hasan Isabelle Distinguin - Iftekhar Hasan - Amine Tarazi 2012-04-12 Bank of Finland Discussion Papers G21 G28 http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1211.pdf Bank of Finland Discussion Papers by Bill Francis - Iftekhar Hasan - Qiang Wu Do corporate boards affect firm performance? New evidence from the financial crisis 2012-04-12T12:35:59Z ?This study uses the current financial crisis as a quasi-experiment to examine whether and to what extent corporate boards affect the performance of firms. Using cumulative stock returns over the crisis to measure of firm performance, we find that board independence, as traditionally defined, does not significantly affect firm performance. However, when we re-define independent directors as outside directors who are less connected with current CEOs, a measure we call true independence, there is a positive and significant relationship between this measure and firm performance. Second, outside financial experts are important for firm performance. Third, board meeting frequencies, director attendance behaviors, and director age also affect firm performance during the crisis. Overall, our results suggest that firm performance during a crisis is a function of firm-level differences in corporate boards. Do corporate boards affect firm performance? New evidence from the financial crisis 2012-04-12T12:35:59Z Abstract http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Pages/dp2012_11.aspx Full text http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1211.pdf Qiang Wu Bill Francis Iftekhar Hasan Bill Francis, Iftekhar Hasan, Qiang Wu 2012-04-12 Bank of Finland Discussion Papers G01 G30 G34 http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1210.pdf Bank of Finland Discussion Papers by Alina Barnett - Martin Ellison Learning by disinflating 2012-03-30T17:36:00Z Disinflationary episodes are a valuable source of information for economic agents trying to learn about the economy. In this paper we are particularly interested in how policymakers can themselves learn by disinflating. The approach differs from the existing literature, which typically focuses on the learning of private agents during a disinflation. We build a model where both the policymaker and private agents learn, and ask what happens if the policymaker has to disinflate to satisfy a new central bank mandate specifying greater emphasis on inflation stabilisation. In this case, our results show that inflation may fall dramatically before it gradually rises to its new long run level. The potential for inflation to undershoot its long run level during a disinflationary episode suggests that caution should be exercised when assessing the success of any change in the policymaker's mandate.? Learning by disinflating 2012-03-30T17:36:00Z Abstract http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Pages/dp2012_10.aspx Full text http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1210.pdf Martin Ellison Alina Barnett Alina Barnett, Martin Ellison 2012-03-30 Bank of Finland Discussion Papers D83 E52 E58 http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Documents/2012/dp0612.pdf Bank of Finland BOFIT Discussion Papers by Sanna Kurronen Financial sector in resource-dependent economies 2012-03-22T17:34:59Z >Abstract?This paper examines financial sector characteristics in resource-dependent economies. Using a unique dataset covering 133 countries, we present empirical evidence that the banking sector tends to be smaller in resource-dependent economies, even when controlling for several other factors which have been shown to have a significant effect on financial sector development in previous studies. Moreover, the threshold level at which the increasing resource-dependence begins to be harmful for domestic banking sector is very low. We also find evidence that the use of market-based and foreign financing is more common in resource-dependent economies. Further, we argue that a relatively small financial sector used to cater the needs of the resource sector might be unfavorable for emerging businesses, thereby hampering economic diversification and reinforcing the resource curse. Financial sector in resource-dependent economies 2012-03-22T17:34:59Z Abstract http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Pages/dp0612.aspx Full text http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Documents/2012/dp0612.pdf Sanna Kurronen Sanna Kurronen 2012-03-22 Bank of Finland BOFIT Discussion Papers G20 O16 O57 Q32 http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Documents/2012/dp0512.pdf Bank of Finland BOFIT Discussion Papers by Risto Herrala and Yandong Jia Has the Chinese growth model changed? A view from the credit market 2012-03-22T17:34:59Z A cornerstone of the Chinese growth model has been the opening up of its economy to private competition. Some observers claim that China has changed course since joining the WTO by increasingly promoting 'state capitalism', the large State Owned Enterprises, thereby compromising a growth model that has served it well. Due to the opaqueness of the Chinese system, even such a major shift in policy has been difficult to verify.We are able to look inside the covert policy process by studying the credit supply to Chinese listed companies, the drivers of the growth miracle, of the past decade. The econometric analysis corroborates the policy shift: we find a significant improvement in credit supply conditions of government firms relative to other firms during the latter part of the decade. The estimations also provide evidence of other major trends in credit supply that reflect the Chinese government's policy objectives. Has the Chinese growth model changed? A view from the credit market 2012-03-22T17:34:59Z Abstract http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Pages/dp0512.aspx Full text http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Documents/2012/dp0512.pdf Yandong Jia Risto Herrala Risto Herrala and Yandong Jia 2012-03-22 Bank of Finland BOFIT Discussion Papers E44 G30 O16 http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1209.pdf Bank of Finland Discussion Papers by Diego Moreno - Tuomas Takalo Optimal bank transparency 2012-02-24T17:34:59Z Consider a competitive bank whose illiquid asset portfolio is funded by short-term debt that needs to be refinanced before the asset matures. In this setting, we show that maximal transparency is not socially optimal, and that the existence of social externalities of bank failures reduces further the optimal level of transparency. Moreover, asset risk taking decreases as the level of transparency decreases towards the socially optimal level. As for the sign of the impact of transparency on refinancing risk, it is negative given the asset's risk, but it is ambiguous if we account for its indirect effect via risk taking. Optimal bank transparency 2012-02-24T17:34:59Z Abstract http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Pages/dp2012_09.aspx Full text http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1209.pdf Tuomas Takalo Diego Moreno Diego Moreno - Tuomas Takalo 2012-02-24 Bank of Finland Discussion Papers http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1208.pdf Bank of Finland Discussion Papers by Paavo Miettinen Information acquisition during a Dutch auction 2012-02-14T17:34:59Z ?In this paper we consider equilibrium behavior in a Dutch (descending price) auction where the bidders are uninformed of their valuations with probability q and can acquire information about their valuation at a positive cost during the auction. We assume that the information acquisition activity is covert. We characterize the equilibrium behavior in a setting where bidders are ex ante symmetric and have independent private values. We show that, if the number of bidders is large, the Dutch auction produces more revenue than would a first price auction. Information acquisition during a Dutch auction 2012-02-14T17:34:59Z Abstract http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Pages/dp2012_08.aspx Full text http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1208.pdf Paavo Miettinen Paavo Miettinen 2012-02-14 Bank of Finland Discussion Papers http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Documents/2012/dp0112.pdf Bank of Finland BOFIT Discussion Papers by Walid Marrouch and Rima Turk-Ariss Bank pricing under oligopsony-oligopoly: Evidence from 103 developing countries 2012-02-13T12:35:59Z >?AbstractWe propose a generic oligopsony-oligopoly model to study bank behavior under uncertainty in developing countries. We derive a pricing structure that acknowledges market power in both the deposit and loan markets and identify two theoretical components to the loan rate: a rent extraction component resulting from the interaction between the choke price of loans and prevailing banking structures, and a markup on deposit funding costs that captures the transformation efficiency of financial intermediation. We then test our structural specification with longitudinal data for 103 non-OECD countries and find that both the market structure under uncertainty and the deposit rate matter significantly in pricing. However, the role played by the rent-extraction share in pricing, on average, dominates funding costs in developing countries, and so underscores the importance of market structure in banks' pricing power. Bank pricing under oligopsony-oligopoly: Evidence from 103 developing countries 2012-02-13T12:35:59Z Abstract http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Pages/dp0112.aspx Full text http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Documents/2012/dp0112.pdf Walid Marrouch Rima Turk-Ariss Walid Marrouch and Rima Turk-Ariss 2012-02-13 Bank of Finland BOFIT Discussion Papers http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Documents/2012/dp0212.pdf Bank of Finland BOFIT Discussion Papers by Ying Fang, Shicheng Huang and Linlin Niu De facto currency baskets of China and East Asian economies: The rising weights Bank 2012-02-13T12:35:59Z >?AbstractWe employ Bayesian method to estimate a time-varying coefficient version of the de facto currency basket model of Frankel and Wei (2007) for the RMB of China, using daily data from February 2005 to July 2011. We estimate jointly the implicit time-varying weights of all 11 currencies in the reference basket announced by the Chinese government. We find the dollar weight has been reduced and sometimes significantly smaller than one, but there is no evidence of systematic operation of a currency basket with discernable pattern of significant weights on other currencies. During specific periods, the reduced dollar weight has not been switched to other major international currencies, but to some East Asian currencies, which is hard to explain by trade importance to or trade competition with China. We examine currency baskets of these East Asian Economies, including major international currencies and the RMB in their baskets. We find an evident tendency of Malaysia and Singapore to increase the weights of RMB in their own currency baskets, and a steadily and significantly positive weight of RMB in the basket of Thailand. These evidences suggest that, the positive weights of some East Asian currencies in RMB currency basket during specific periods largely reflect the fact that these East Asia economies have been systematically placing greater weights on RMB under the new regime of RMB exchange rate. De facto currency baskets of China and East Asian economies: The rising weights Bank 2012-02-13T12:35:59Z Abstract http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Pages/dp0212.aspx Full text http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Documents/2012/dp0212.pdf Shicheng Huang Ying Fang Linlin Niu Ying Fang, Shicheng Huang and Linlin Niu 2012-02-13 Bank of Finland BOFIT Discussion Papers http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Documents/2012/dp0412.pdf Bank of Finland BOFIT Discussion Papers by Jan Babecký, Luboš Komárek and Zlatuše Komárková Integration of Chinese and Russian stock markets with world markets: National and sectoral perspectives 2012-02-13T12:35:59Z >?AbstractInterest in examining the financial linkages of economies has increased in the wake of the 2008/2009 global financial crisis. Applying the concepts of beta- and sigma-convergence of stock market returns, we assess changes over time in the degree of stock market integration between Russia and China as well as between them and the United States, the euro area and Japan. Our analysis is based on national and sectoral data spanning the period September 1995 to October 2010. Overall, we find evidence for gradually increasing stock market integration after the 1997 Asian financial crisis and the 1998 Russian financial crisis. Following a major disruption caused by the 2008/2009 global financial crisis, the process of stock market integration resumes between Russia and China, and with world markets. Notably, the episode of sigma-divergence from the 2008/2009 crisis is stronger for China than Russia. We also find that the process of stock market integration and the impact of the recent crisis have not been uniform at the sectoral level, suggesting potential for diversification of risk across sectors. Integration of Chinese and Russian stock markets with world markets: National and sectoral perspectives 2012-02-13T12:35:59Z Abstract http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Pages/dp0412.aspx Full text http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Documents/2012/dp0412.pdf Zlatuše Komárková Jan Babecký Luboš Komárek Jan Babecký, Luboš Komárek and Zlatuše Komárková 2012-02-13 Bank of Finland BOFIT Discussion Papers http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Documents/2012/dp0312.pdf Bank of Finland BOFIT Discussion Papers by Zuzana Fungácová and Petr Jakubík Bank stress tests as an information device for emerging markets: The case of Russia 2012-02-13T12:35:59Z >?AbstractThe recent financial crisis emphasised the need for effective financial stability analyses and tools for detecting systemic risk. This paper looks at assessment of banking sector resilience through stress testing. We argue such analyses are valuable even in emerging economies that suffer from limited data availability, short time series and structural breaks. We propose a top-down stress test methodology that employs relatively limited information to overcome this data problem. Moreover, as credit growth in emerging economies tends to be rather volatile, we rely on dynamic approach projecting key balance sheet items. Application of our proposed stress test framework to the Russian banking sector reveals a high sensitivity of the capital adequacy ratio to the economic cycle that shows up in both of the two-year macroeconomic scenarios considered: a baseline and an adverse one. Both scenarios indicate the need for capital increase in the Russian banking sector. Furthermore, given that Russia's banking sector is small and fragmented relative to advanced economies, the loss of external financing can cause profound economic stress, especially for medium-sized and small enterprises. The Russian state has a low public debt-to-GDP ratio and plays decisive role in the banking sector. These factors allow sufficient fiscal space for recapitalisation of problematic banks under both of our proposed baseline and adverse scenarios. Bank stress tests as an information device for emerging markets: The case of Russia 2012-02-13T12:35:59Z Abstract http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Pages/dp0312.aspx Full text http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Documents/2012/dp0312.pdf Petr Jakubík Zuzana Fungácová Zuzana Fungácová and Petr Jakubík 2012-02-13 Bank of Finland BOFIT Discussion Papers http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1207.pdf Bank of Finland Discussion Papers by Katja Taipalus Signaling asset price bubbles with time-series methods 2012-02-02T17:34:59Z ?This paper provides an early warning indicator for bubbles in financial markets. The indicator is based on traditional unit root tests, more precisely on the augmented Dickey-Fuller test and may be used in a repeated manner with rolling samples. The performance of the indicator is tested extensively via Monte Carlo simulations and comparisons of the results with the most powerful standard (stability) tests. The new indicator seems to be more robust and to have more power than the standard tests. In empirical application to US stock market data for 1871-2010, the new indicator signals most of the consensus bubbles and gives warning signals well ahead of the crash, in most cases as early as 12 months ahead. The indicator also signals most of the 'negative bubbles' before their turning points. Signaling asset price bubbles with time-series methods 2012-02-02T17:34:59Z Abstract http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Pages/dp2012_07.aspx Full text http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1207.pdf Katja Taipalus Katja Taipalus 2012-02-01 Bank of Finland Discussion Papers http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1206.pdf Bank of Finland Discussion Papers by Ian W. Marsh - Wolf Wagner Why is price discovery in credit default swap markets news-specific? 2012-02-01T17:36:59Z ?We analyse daily lead-lag patterns in US equity and credit default swap (CDS) returns. We first document that equity returns robustly lead CDS returns. However, we find that the CDS-lag is due to common (and not firm-specific) news and arises predominantly in response to positive (instead of negative) equity market news. We provide an explanation for this news-specific price discovery based on dealers in the CDS market exploiting their informational advantage vis-à-vis institutional investors with hedging demands. In support of this explanation we find that the CDS-lag and its news-specificity are related to various firm-level proxies for hedging demand in the cross-section as well as measures for economy-wide informational asymmetries over time. Why is price discovery in credit default swap markets news-specific? 2012-02-01T17:36:59Z Abstract http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Pages/dp2012_06.aspx Full text http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1206.pdf Ian W. Marsh Wolf Wagner Ian W. Marsh - Wolf Wagner 2012-02-01 Bank of Finland Discussion Papers http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1205.pdf Bank of Finland Discussion Papers by Kaushik Mitra - George W. Evans - Seppo Honkapohja Fiscal policy and learning 2012-01-27T17:36:00Z Using the standard real business cycle model with lump-sum taxes, we analyze the impact of fiscal policy when agents form expectations using adaptive learning rather than rational expectations (RE). The output multipliers for government purchases are significantly higher under learning, and fall within empirical bounds reported in the literature (in sharp contrast to the implausibly low values under RE). Effectiveness of fiscal policy is demonstrated during times of economic stress like the recent Great Recession. Finally it is shown how leaning can lead to dynamics empirically documented during episodes of "fiscal consolidations".? Fiscal policy and learning 2012-01-27T17:36:00Z Abstract http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Pages/dp2012_05.aspx Full text http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1205.pdf Kaushik Mitra George W. Evans Seppo Honkapohja Kaushik Mitra - George W. Evans - Seppo Honkapohja 2012-01-26 Bank of Finland Discussion Papers http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1204.pdf Bank of Finland Discussion Papers by Karlo Kauko Why is equity capital expensive for opaque banks? 2012-01-26T17:36:00Z ?Bank managers often claim that equity is expensive relative to debt, which contradicts the Modigliani-Miller irrelevance theorem. This paper combines dividend signalling theories and the Diamond-Dybvig bank run model. An opaque bank must signal its solvency by paying high and stable dividends in order to keep depositors tranquil. This signalling may require costly liquidations if the return on assets has been poor, but not paying the dividend might cause panic and trigger a run on the bank. The more equity has been issued, the more liquidations are needed during bad times to pay the expected dividend to each share. Why is equity capital expensive for opaque banks? 2012-01-26T17:36:00Z Abstract http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Pages/dp2012_04.aspx Full text http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1204.pdf Karlo Kauko Karlo Kauko 2012-01-26 Bank of Finland Discussion Papers http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1203.pdf Bank of Finland Discussion Papers by George A. Waters Quantity rationing of credit 2012-01-17T12:35:00Z Quantity rationing of credit, when firms are denied loans, has greater potential to explain macroeconomic fluctuations than borrowing costs. This paper develops a DSGE model with both types of financial frictions. A deterioration in credit market confidence leads to a temporary change in the interest rate, but a persistent change in the fraction of firms receiving financing, which leads to a persistent fall in real activity. Empirical evidence confirms that credit market confidence, measured by the survey of loan officers, is a significant leading indicator for capacity utilization and output, while borrowing costs, measured by interest rate spreads, is not.? Quantity rationing of credit 2012-01-17T12:35:00Z Abstract http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Pages/dp2012_03.aspx Full text http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1203.pdf George A. Waters George A. Waters 2012-01-16 Bank of Finland Discussion Papers