Browsing by Subject "G18"

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  • Cheung, Yin-Wong (2020)
    BOFIT Policy Brief 13/2020
    This article recounts China’s renminbi (RMB) internationalization experiences since the 2009 RMBcross-border trade settlement initiative. In the first few years, the RMB made inroads into global financial markets and had a few remarkable accomplishments, including the Special Drawing Right currency status. Since the 2015 market turmoil, RMB internationalization has levelled off – possibly due to changes in both domestic and geopolitical conditions. The RMB is currently under-represented in the global market compared with China’s economic importance. China’s deliberate and schematic policies will elevate the RMB’s global stature in a gradual manner but there will not be a leapfrogging in the near term.
  • Fang, Yiwei; Hasan, Iftekhar; Li, Lingxiang (2014)
    BOFIT Discussion Papers 19/2014
    ​The dynamic banking reforms of Central and Eastern Europe (CEE) following the collapse of the Soviet Union provide an ideal research setting for examining the causal effect of institutional development on financial reporting. Using five earnings quality measures, we consistently find that banking reform improves accounting quality and reduces earnings management incentives in the 16 transition countries considered. The results strongly hold in our within-country and difference-in-difference models, as well as in non-parametric analyses. We also find supporting evidence for the notion that excessive risk-taking of banks impairs earnings quality. As a result, banking reform improves earnings quality partially through its ability to curb risk-taking behavior. Publication keywords: earnings management, earnings quality, institutional development, bank risk-taking
  • Kauko, Karlo (1998)
    Suomen Pankin keskustelualoitteita 28/1998
    In this paper a game theoretic duopoly model is developed to analyse the development of an interbank payment system.There are two competing banks in the model, and payment services offered to the public are among their main products.The customer of the larger bank uses mainly intrabank payment services; these services are assumed to be of high quality.This creates a so-called network externality, meaning that many customers prefer to use the large bank for quality reasons.The development of interbank payment systems reduces the significance of this factor and hence benefits the small bank.A big bank has a sufficient incentive to develop the system only if a fee is charged for using payment systems.The role for public investment depends critically on the pricing of payment services.If banks offer payment services free of charge, their incentives to develop the system are strongly biased, and it would be efficient for the central bank to have an active role in developing the system.If instead payment services are directly priced, eventual distortions are much less serious, and the role of the central bank need not be as prominent. JEL Classification Numbers: G18, G21, L13 Keywords: banks, payments systems, network externality, duopoly
  • Leinonen, Harry (2009)
    Bank of Finland. Expository studies. A 113
    This publication consists of seven studies on retail payment issues presented as preliminary versions at the annual Bank of Finland Payment Habits Seminar in 2008. Interest in retail payment services has recently been growing at a fast pace among authorities and the general public. For this, there are several reasons: developments in technology, changes in the competitive framework and globalization. Authorities have become increasingly concerned about the efficiency and standardization issues of retail payments. A key topic of research appears to be the extent to which the payment habits of the general public can and should be switched to options that are more efficient for the society as a whole, as well as the means of achieving this. The current marketing setup seems to bias customers against change and to promote the use of legacy solutions and old habits instead of the modern solutions. However, recent trends for change seem to be pointing in new directions for the evolution of payment habits. Keywords: payment services, payment costs and pricing, card payments, electronic and mobile payments JEL classification numbers: G10, G18, F15, H4, L86, 033
  • Ristolainen, Kim (2018)
    Bank of Finland Research Discussion Papers 11/2018
    The recent financial crises have brought into focus questions regarding the quality of banks' assets. We study the patterns in banks reserving for and reporting of loan losses in the EU before and after implementation of the Single Supervisory Mechanism (SSM). We find that banks that 1) have less tier 1 capital, 2) are smaller, 3) are less liquid and 4) have smaller net interest margins either report relatively smaller loan loss reserves or less loan losses, even after including various controls. This supports the hypothesis that financially weaker banks may have a larger incentive to engage in balance sheet window dressing. We further find that the SSM has reduced but not eliminated the under-reserving and under-reporting bias. In addition, there has been a separate positive effect on the overall proportion of nonperforming loans (NPLs) that are realised as losses among the banks that have been under direct supervision by the SSM since implementation of the SSM.
  • Yao, Yi; Yang, Rong; Liu, Zhiyuan; Hasan, Iftekhar (2012)
    BOFIT Discussion Papers 9/2012
    Published in Global Finance Journal, Volume 24, Issue 1, 2013, Pages 44-68
    This study investigates the effectiveness of government intervention in rescuing bearish markets in a transition economy. Focusing on a pre- and a post-intervention period, the findings reveal that government intervention successfully rescued bearish markets in China and led to a fundamental change in institutional trading strategy after the intervention. We observe that following an intervention, institutions are more sensitive to long-term stock market regulations, whereas individual investors are more concerned about the rules related to their short-term interests. Evidence suggests that a credible signal from the government can be helpful in creating a positive outcome in the market (Bhanot and Kadapakkam, 2006). The findings are important to the current debate regarding the role of govern-ment intervention in markets in other transitional economies, as well as in developed countries. Keywords: Government Intervention; Institutional Trading Strategy. JEL Codes: G15, G18, G32
  • Chatterjee, Sris; Gu, Xian; Hasan, Iftekhar; Lu, Haitian (2019)
    BOFIT Discussion Papers 18/2019
    Drawing upon evidence from the Chinese corporate bond market, we study how ownership structure affects the cost of debt for firms. Our results show that state, institutional and foreign ownership formats reduce the cost of debt for firms. The benefits of state ownership are accentuated when the issuer is headquartered in a province with highly developed market institutions, operates in an industry less dominated by the state or during the period after the 2012 anti-corruption reforms. Institutional ownership provides the most benefits in environments with lower levels of marketization, especially for firms with low credit quality. Our evidence sheds light on the nexus of ownership and debt cost in a political economy where state and private firms face productivity and credit frictions. It is also illustrative of how the market environment interacts with corporate ownership in affecting the cost of bond issuance.
  • Leinonen, Harry (2008)
    Bank of Finland. Expository studies. A 111
    Payment services are constantly developing. However, current payment methods have developed out of paper-based services during a period with severe limitations on ICT resources. These limitations have now almost entirely disappeared, and customers are interested in new forms of digitalised and integrated payment instruments. Within the payment industry, we can see a trend towards internationally standardised network-based services, as in several other similarly ICT-dependent industries. This publication seeks to summarise current development trends, user demands, cost and pricing issues, technology and business trends as well as official views on payment developments. It endeavours to identify the most important factors affecting future payment habits for the period post-2010. Based on the analysis, technological developments will support completely integrated electronic payments processed in real time. The mobile phone seems likely to become an important device for initiation and acceptance of payments. The information conveyed as part of a payment transaction will be extended to encompass all information necessary for further and later use (for example, ordering and invoicing data). However, the prevailing practice of widespread (cross-)subsidisation makes it hard for end-users to perceive the actual cost differences between alternative means of payment, thus delaying the adoption of more efficient payment habits. The current market structures also contain strong barriers to competition in the form of monopoly, oligopoly or service provider cooperation. Official measures by authorities to increase competition along the lines of modern policies for other network industries would speed up developments in payment services as well. Keywords: payment services, electronic payments, payment trends, future payment instruments JEL classification: G10, G18, F15, H4, L86, O33
  • Hasan, Iftekhar; Jackowicz, Krzysztof; Kowalewski, Oskar; Kozłowski, Łukasz (2014)
    BOFIT Discussion Papers 2/2014
    Published in Communist and Post-Communist Studies, Volume 50, Issue 4, December 2017, Pages 245–261
    This study investigates the relationship between politically connected firms and their access to bank financing in a post-communist eras in Poland. Overall, it finds that "recent" political connections do influence access to bank financing and the value of such connections increased during the financial crisis. However, it also observes that the positive relationship mentioned above is substantially weaker in Poland relative to other emerging countries and we attribute this phenomenon to the instability of the Polish political climate. Keywords: political connections, bank financing, global financial crisis JEL: GO1, G18, G32
  • Bohl, Martin T.; Schuppli, Michael; Siklos, Pierre L. (2009)
    BOFIT Discussion Papers 20/2009
    Published in China Economic Review, Volume 21, Issue 1, March 2010: 190–201
    This paper investigates whether seasonalities in daily stock returns are related to the trading behavior of individual and institutional investors. The change in the investor structure of B-share markets in Shanghai and Shenzhen after the abolition of ownership restrictions in 2001 provides a unique testing environment. We show that day-of-the-week effects are attenuated after the market entrance of Chinese individual investors, who had previously not been allowed to trade in B-shares. Our empirical results suggest that institutional rather than individual investors are a main driving force behind such anomalies. In addition, we find evidence of reduced index return autocorrelation and US spillover effects in the post-liberalization period. Keywords: institutional investors, individual investors, stock return seasonalities, Chinese stock markets, GARCH model JEL: G12, G14, G18
  • Cheung, Yin-Wong; Hui, Cho-Hoi; Tsang, Andrew (2017)
    BOFIT Discussion Papers 7/2017
    On August 11, 2015, China revamped its procedure for setting the official central parity of the renminbi (RMB) against the US dollar. Our empirical investigation suggests that the intertemporal dynamics of China’s central parity shifted after this policy change, though the deviation of the RMB offshore rate from the central parity and the US dollar index remained the two significant determi-nants of central parity after the policy change. In contrast, the VIX index only offered explanatory power up to August 2015. Thereafter, the onshore RMB rate and the difference between the one-month offshore and onshore RMB forward points have significant impacts on the central parity. While the US dollar index effect remains, we find no evidence of a rate-fixing role for the RMB exchange rate against the currency basket announced by China in December 2015.
  • Hasan, Iftekhar; Massoud, Nadia; Saunders, Anthony; Song, Keke (2015)
    Bank of Finland Research Discussion Papers 3/2015
    Published in Journal of Banking & Finance, Volume 54, May 2015: 87–103
    Tracing the SEC ban on the short selling of financial stocks in September 2008, this paper investigates whether such selling activity before the 2008 short ban reflected financial companies’ risk exposures in the subprime crisis. The evidence suggests that short sellers sold short stocks that had the greatest asset and insolvency risk exposures, and that the short selling of financial firms’ stocks was not significantly greater than that of non-financial firms. When the short ban was in effect, the market quality of financial stocks without subprime asset exposure had deteriorated to a larger degree than that of financial companies with subprime asset exposure. The findings imply that such a regulation may mute the market disciplining effects of investors and may also serve as a counterweight to any perceived macro or systemic risk reduction benefits resulting from such a ban. Keywords: short selling, subprime assets, financial crisis, short-sale ban, CDS spread