Browsing by Subject "kriisit"

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Now showing items 21-40 of 297
  • Freystätter, Hanna (2012)
    Bank of Finland. Bulletin. Monetary policy and the global economy 4
    The wealth shock caused when the housing price bubble burst in Spain will have strong, long-lasting effects. As a consequence of the bursting of the bubble, financial factors (such as weaker balance sheets and higher costs of funding) weigh on the investment and consumption potential of companies and households. In this article, we use a model simulation to illustrate the procyclical effect of financial factors on the economic downswing in Spain. The economic programme of the country must be based on a realistic assessment of economic development that captures the significant and long-term negative growth contribution of financial factors. Economic policy measures should be adopted to avert the threat of balance sheet recession facing Spain and avoid any permanent effects of the crisis on the output potential of the economy.
  • Gächter, Simon; Riedl, Alesandra; Ritzberger-Grünwald, Doris (2013)
    BOFIT Discussion Papers 3/2013
    We analyze business cycle convergence in the EU by focusing on the decoupling vs. convergence hypothesis for central, eastern and south eastern Europe (CESEE). In a nutshell, we find that business cycles in CESEE have decoupled considerably from the euro area (EA) during the financial crisis in terms of both cyclical dispersion (i.e. the deviation of output gaps) and cyclical correlation. The results are mainly driven by smaller countries, which can be explained by the fact that small economies seem to have larger cyclical swings as they are more dependent on external demand, which causes a decoupling in terms of higher output gap deviations from the EA cycle in times of economic crises. At the same time, this does not necessarily affect business cycle synchronization as measured by cyclical correlations, where the strength of the linear relationship of two cycles is measured. However, despite the recent declines in the co-movement, we generally observe high correlation levels of CESEE countries with the EA after their EU accession in 2004. Finally, we find a significant decoupling of trend growth rates between EA and CESEE until the onset of the financial crises. Since the beginning of the crisis, trend growth rates have declined both in CESEE and the EA with the trend growth differential decreasing significantly from about three to below two percentage points in 2011. JEL classification: E32, E52, F15, F33, F44; Keywords: Business cycles, EMU, CESEE, optimum currency areas
  • Gulan, Adam; Haavio, Markus; Kilponen, Juha (2019)
    Bank of Finland Research Discussion Papers 9/2019
    Published in Journal of International Economics 2021; 131; July https://doi.org/10.1016/j.jinteco.2021.103480
    We study macroeconomic consequences of a major trade disruption using the example of the Finnish-Soviet trade collapse in 1991. This is a rare case of a well-identified large trade shock in a developed economy. We find that the shock had a significant effect on Finnish output. While the direct trade channel effect was rather moderate, the shock led to significant tightening of financial conditions. It was therefore endogenously amplified due to the propagation through the domestic financial sector. Even so, the trade collapse was insufficient to generate an all-out economic crisis. It can account for only a part of the Finnish Great Depression (1990 − 1993). The crisis was triggered and prolonged by the meltdown of the overheated financial and banking sectors since 1989. We show that the financial system remained a major independent source of shocks throughout the depression.
  • Gulan, Adam; Haavio, Markus; Kilponen, Juha (2021)
    Journal of International Economics July
    Published in BoF DP 9/2019 http://urn.fi/URN:NBN:fi:bof-201906051219
    We study the macroeconomic consequences of a major trade disruption using the example of the Finnish–Soviet trade collapse in 1991. This is a rare case of a well–identified large trade shock in a developed economy. We find that the shock significantly affected Finnish output. Even so, the trade collapse was insufficient to generate an all–out crisis, and accounts for only a part of the Finnish Great Depression (1990–1993). We show that shocks originating domestically played a major role throughout the depression.
  • Pikkarainen, Pentti (2010)
    Bank of Finland Research Discussion Papers 20/2010
    The paper concentrates on illustrating and assessing central banks liquidity operations during the crisis that started in August 2007. In addition to the ECB, the central banks of Sweden, Switzerland, the United Kingdom, Australia, Japan, Canada and the United States are analyzed. During the crisis the liquidity operations of central banks have converged. In many cases, central bank balance sheets have undergone extremely strong growth. The actions by central banks raise a number of questions concerning exit from the measures taken, the impact of the measures, central banks risks and their governance structure
  • Laine, Tatu; Nummelin, Tuomas; Snellman, Heli (2011)
    Bank of Finland Research Discussion Papers 23/2011
    This study utilises payment system data to analyse market participants liquidity usage and to trace interest rates paid on overnight loans. Our aim is to examine how liquidity usage has changed during the years 2006 2/2011 and to combine this information with data on overnight lending rates between market participants. It turns out that the Furfine algorithm used in the analysis produces overnight interest rates that correlate very closely with the EONIA curve. Based on Finnish payment system data, we identify four separate time periods: normal, start of turmoil, acute crisis and stabilizing period. The results show that, during the acute crisis period, TARGET2 participants holding an account with the Bank of Finland paid, on average, lower overnight interest rates than other banks in the euro area. However, the results reveal there has been some lack of confidence between Finnish participants since the onset of the financial crisis. A new indicator the Grid which we present here shows this very clearly. We suggest that this new indicator could be a highly useful tool for overseers in supporting financial stability analysis.
  • Mäki-Fränti, Petri; Vanhala, Juuso (2020)
    Bank of Finland. Bulletin 3/2020
    The corona pandemic and the related lockdown measures have led to a strong contraction in business turnover and weakening of profitability, particularly in the service industries. If the profitability crisis persists, it will turn into a liquidity crisis and the risk of corporate bankruptcies will increase. Companies can, to some extent, adjust to the decline in turnover by cutting costs, for example by decreasing purchase volumes and by negotiating reductions to other cost items, such as rents. With the help of temporary lay-offs, companies can even adjust staff expenditure rapidly, if necessary.
  • Lindblad, Annika; Silvo, Aino (2020)
    Bank of Finland. Bulletin 3/2020
    Consumer confidence indicators are widely used in monitoring the economic cycle, as they are thought to contain forward-looking information on the path of the economy. Changes in consumer confidence have historically preceded shifts in the economic cycle by about six months. The value of forward-looking indicators is highlighted especially during exceptional inflection points in the economy, such as during the financial crisis or the currently prevailing coronavirus crisis, as these indicators provide readily available information about the future path of the economy. The rebound in consumer confidence and the recovery of the economy appear to be intimately connected.
  • Simola, Heli (2021)
    Bank of Finland Bulletin. Blog
    The global economy and global trade flows have been hit hard by the COVID-19 crisis. The trade collapse in the second quarter of 2020 was even more severe than during the trough of the global financial crisis (GFC) in 2009. However, taking into account the substantial fall in the GDP of most countries during the COVID-19 crisis, the relative trade contraction seems milder compared with the GFC. During the GFC, the combined volume of the GDP in OECD countries contracted by about 5%, and the combined volume of imports of goods and services by 17% from peak to trough (Figure 1). The corresponding figures for the COVID-19 crisis were -12% and -20%, respectively. Trade has also recovered rapidly since the trough in the second quarter of 2020. Trade was almost back at pre-crisis level by the end of the year.
  • Toivanen, Mervi (2013)
    Bank of Finland Research Discussion Papers 19/2013
    This paper analyses the importance of individual bank-specific factors on financial stability. First, we use a novel method to model the spreading of the contagion in the interbank network by implementing an epidemiologic model. Actual data on European banks is exploited with simulated scale-free networks. The average contagion affected 70% and 40% of European banks' total assets in 2007 and in 2010, respectively. Country-level results suggest that French, British, German and Spanish banks are the most contagious ones, whereas banks from Ireland, Greece and Portugal induce only limited negative effects. Secondly, cross-sectional panel estimations are performed to disentangle the leading indicators influencing the level of contagion. Bank clustering, large in-coming interbank loans and bank reputation are more prominent explanatory variables than the size or leverage. Finally, central banks' interventions reduce contagion only slightly. Keywords: contagion, banks, Europe, interbank, epidemiology, panel regression JEL codes: G01, G21, C15
  • Ikonen, Pasi; Oinonen, Sami; Schmöller, Michaela; Vilmi, Lauri (2020)
    Bank of Finland. Bulletin 5/2020
    Stagnation is a period of slow economic growth often characterised by low interest rates and low inflation. It is most commonly associated with the development of the Japanese economy since the early 1990s. In the euro area, the corona crisis together with an already ageing population, diminished productivity growth, and, in places, high levels of debt even before the onset of the current crisis may weaken the economy's ability to recover. There is a danger of the economy slipping into an equilibrium of low interest rates and low inflation, i.e. a liquidity trap. There is also a risk of inflation expectations declining. The policy response in the euro area to the economic outlook weakened by the corona crisis has been swift and decisive. Well-targeted policy measures can mitigate the risk of the economy following an adverse path.
  • Koskinen, Kimmo (2020)
    Bank of Finland. Bulletin 2/2020
    Expectations of a deteriorating economic outlook increased the risks to banks’ operating environment even before the coronavirus pandemic spread to Europe. At the end of 2019, banks’ return on equity was 5.2%, compared with 6.2% a year earlier. While some banks were experiencing profitability challenges already prior to the outbreak of the pandemic, profitability also differs greatly between countries, bank business models and individual banks. Due to the coronavirus pandemic, banks’ income development will further deteriorate, and it is likely to fall well below banks’ imputed cost of equity. The effects of the pandemic are widely reflected in the stock prices of European banks (Euro Stoxx Banks Index), which have fallen by 40% since the beginning of 2020.
  • Rautava, Jouko (2014)
    BOFIT Policy Brief 1/2014
    The activities of Russian troops in Crimea in late February - early March is not exercising the minds only of those interested in foreign policy and security issues; the events also have implications for the Russian economy. This memorandum seeks to assess the impact of the 'Crimea weekend' on Russia's macroeconomic developments. The assessment is based on calculations conducted using BOFIT's Russia model.
  • Alhonsuo, Sampo; Lumiala, Veli-Matti (2007)
    Bank of Finland. Bulletin 2
    The reliability of the financial system in all situations is of vital importance to society. Financial markets have become international in scope, with the extensive adoption of new technology. Although this has brought benefits, it has also increased the potential threats to the system, and particularly the system infrastructure. Authorities and other financial market participants need to be active both in prevention and in preparing to meet new threats as they arise. Increasing internationalisation has reduced the significance of national borders in financial market contingency planning. Within the European Union, a framework based on multinational agreements has been developed to allow advance preparation for potential crises affecting the financial system. This is being tested in exercises at both national and international level. Business continuity and contingency planning carried out independently by companies and organisations in the financial sector also make an essential contribution to maintaining the ability of the financial markets to withstand crises.
  • Westman, Hanna (2014)
    Bank of Finland Research Discussion Papers 28/2014
    Failure in bank corporate governance has been seen as a contributing factor to excessive risk-taking pre-crisis with devastating implications as risks realised during the financial crisis. Unfortunately, the empirical evidence on the impact of managerial incentives on bank crisis performance is scarce. Moreover, bank strategy has not previously been accounted for. Hence, this paper presents novel findings on drivers for risk-taking and crisis performance. Specifically, I find a positive impact of management ownership in small diversified banks and non-traditional banks, the monitoring of which is challenging due to their opacity. The impact is negative in traditional banks and large diversified banks, indicating that shareholders induce managers to take risk where the safety net creates incentives for risk-shifting to debt holders and taxpayers. These findings have implications for both academic research as well as policy making particularly in the domain of corporate governance. Keywords: banks crisis performance, management ownership, traditional vs. nontraditional banking, diversification, safety net, bank opacity and complexity
  • Kajanoja, Lauri (2001)
    Bank of Finland. Bulletin 75 ; 3
  • Komulainen, Tuomas (2001)
    BOFIT Discussion Papers 10/2001
    This study shows that due to herding behaviour and possible capital outflows, emerging market countries are vulnerable to multiple equilibria situations and currency crises.It uses a model by Jeanne (1997), where currency crises can be formed by multiple equilibria and self-fulfilling expectations.We determine the country fundamentals according to balance of payments approach.In this study we introduce capital flows, which depend from crisis probability, into the model.The capital flows are further assumed to follow herding behaviour, which produces a reason and mechanism for the large capital outflows witnessed during the recent crises. The range of country fundamentals, where self-fulfilling crises are possible, is now larger than without capital flows and herding behaviour.Consequently, the country fundamentals have to be better, if the country wants to stay totally out of crises.The model further points out lender interdependence as one shortcoming in the current structure of international capital markets.An empirical application of the model to the Mexican and Asian crises shows that when the possible capital outflows are included, the fundamentals of most emerging market countries were inside the range of multiple equilibria in 1994 and 1996, and so self-fulfilling crises were possible.
  • Komulainen, Tuomas (1999)
    BOFIT Discussion Papers 1/1999
    The paper examines currency crisis theories and applies them in searching for the main causes of the Russian crisis.We first study the determination of the exchange rate and then the first and second generation theories on currency crisis and finally the recent theoretical discussions of the Asian crisis.The main reason for the Russian crisis was the long-standing federal budget deficit.During the last years the deficits were financed mainly via short-term domestic debt.This created expectations of government insolvency and central bank financing.Moreover, the Russian economy has its own basic weaknesses, which render the country incapable of growth and prone to crisis.The Asian crisis was a trigger for the Russian crisis.Lower prices for Russian export products, inadequate financial regulations and lack of information in emerging markets in general are factors explaining this contagion effect.But the main mistakes that led to the crisis were those of the Russians themselves - the federal budget deficits.Thus the repair work should also start from there. Keywords: currency crisis, Russia, budget, contagion
  • Taipalus, Katja (2012)
    Suomen Pankki. E 47
    To promote the financial stability, there is a need for an early warning system to signal the formation of asset price misalignments. This research provides two novel methods to accomplish this task. Results in this research shows that the conventional unit root tests in modified forms can be used to construct early warning indicators for bubbles in financial markets. More precisely, the conventional augmented Dickey-Fuller unit root test is shown to provide a basis for two novel bubble indicators. These new indicators are tested via MC simulations to analyze their ability to signal emerging unit roots in time series and to compare their power with standard stability and unit root tests. Simulation results concerning these two new stability tests are promising: they seem to be more robust and to have more power in the presence of changing persistence than the standard stability and unit root tests. When these new tests are applied to real US stock market data starting from 1871, they are able to signal most of the consensus bubbles, defined as stock market booms for example by the IMF, and they also flash warning signals far ahead of a crash. Also encouraging are the results with these methods in practical applications using equity prices in the UK, Finland and China as the methods seem to be able to signal most of the consensus bubbles from the data. Finally, these early warning indicators are applied to data for several housing markets. In most of the cases the indicators seem to work relatively well, indicating bubbles before the periods which, according to the consensus literature, are seen as periods of sizeable upward or downward movements. The scope of application of these early warning indicators could be wide. They could be used eg to help determine the right timing for the start of a monetary tightening cycle or for an increase in countercyclical capital buffers. Key words: asset prices, financial crises, bubbles, indicator, unit-root JEL classification: C15, G01, G12
  • Berglund, Tom; Mäkinen, Mikko (Elsevier, 2019)
    Research in International Business and Finance January ; 2019
    Published in Bank of Finland Research Discussion Papers 30/2016.
    Using a large panel data set of Nordic (Finland, Norway and Sweden) and European banks for the period 1994–2010, we study whether banks can retain their lessons from the experience of a severe financial crisis. Our key finding is that the Nordic banks had better returns and greater financial stability compared to other European banks during the 2008 crisis, after controlling for key bank characteristics and macroeconomic factors. Our findings are consistent with the learning hypothesis of Fahlenbrach et al. (2012), suggesting that the Nordic banks were able internalize the lessons from the Nordic systemic banking crisis of the early 1990s.