Browsing by Subject "P27"

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  • Bonin, John; Hasan, Iftekhar; Wachtel, Paul (2014)
    BOFIT Discussion Papers 8/2014
    Modern banking institutions were virtually non-existent in the planned economies of cen-tral Europe and the former Soviet Union. In the early transition period, banking sectors be-gan to develop during several years of macroeconomic decline and turbulence accompa-nied by repeated bank crises. However, governments in many transition countries learned from these tumultuous experiences and eventually dealt successfully with the accumulated bad loans and lack of strong bank regulation. In addition, rapid progress in bank privatiza-tion and consolidation took place in the late 1990s and early 2000s, usually with the par-ticipation of foreign banks. By the mid 2000s the banking sectors in many transition coun-tries were dominated by foreign owners and were able to provide a wide range of services. Credit growth resumed, sometimes too rapidly, particularly in the form of lending to households. The global financial crisis put transition banking to test. Countries that had expanded credit rapidly were vulnerable to the macroeconomic shock and there was con-siderable concern that foreign owners would reduce their funding to transition country sub-sidiaries. However, the banking sectors turned out to be resilient, a strong indication of the rapid progress in institutional development and regulatory capabilities in the transition countries. Keywords: transition banking, bank privatization, foreign banks, bank regulation, credit growth JEL codes: G21, P27, O57
  • Delis, Manthos D.; Hasan, Iftekhar; Ongena, Steven (2019)
    Journal of Financial Economics 2
    Published in Bank of Finland Discussion Paper 18/2018 "Democratic development and credit".
    Does democratization reduce the cost of credit? Using global syndicated loan data from 1984 to 2014, we find that democratization has a sizable negative effect on loan spreads: a 1-point increase in the zero-to-ten Polity IV index of democracy shaves at least 19 basis points off spreads, but likely more. Reversals to autocracy hike spreads more strongly. Our findings are robust to the comprehensive inclusion of relevant controls, to the instrumentation with regional waves of democratization, and to a battery of other sensitivity tests. We thus highlight the lower cost of loans as one relevant mechanism through which democratization can affect economic development.
  • Delis, Manthos D.; Hasan, Iftekhar; Ongena, Steven (2018)
    Bank of Finland Research Discussion Papers 18/2018
    Does democratization reduce the cost of credit? Using global syndicated loan data from 1984 to 2014, we find that democratization has a sizeable negative effect on loan spreads: a one-point increase in the zero-to-ten Polity IV index of democracy shaves at least 19 basis points off spreads, but likely more. Reversals to autocracy hike spreads more strongly. Our findings are robust to the comprehensive inclusion of relevant controls, to the instrumentation with regional waves of democratization, and to a battery of other sensitivity tests. We thus highlight the lower cost of loans as one relevant mechanism through which democratization can affect economic development.
  • Mehrotra, Aaron; Rautava, Jouko (2007)
    BOFIT Discussion Papers 11/2007
    Published in Journal of Chinese Economic and Business Studies, Vol. 6, No. 3, 2008, pp. 225-239
    This paper evaluates the usefulness of business sentiment indicators for forecasting developments in the Chinese real economy.We use data on diffusion indices collected by the People's Bank of China for forecasting industrial production, retail sales and exports.Our bivariate vector autoregressive models, each composed of one diffusion index and one real sector variable, generally outperform univariate AR models in forecasting one to four quarters ahead.Similarly, principal components analysis, combining information from various diffusion indices, leads to enhanced forecasting performance.Our results indicate that Chinese business sentiment indicators convey useful information about current and future developments in the real economy.They also suggest that the official data provide a fairly accurate picture of the Chinese economy. Keywords: forecasting, diffusion index, VAR, China. JEL: E32, E37, P27
  • Kim, Byung-Yeon; Korhonen, Iikka (2002)
    BOFIT Discussion Papers 15/2002
    Published in Economic Systems vol 29, no 2 (2005), pp. 144-162
    We use a dynamic heterogeneous panel model to estimate real equilibrium exchange rates for advanced transition countries.Our method is based on out-of-sample estimations from middle-income and high-income countries, and we use a pooled mean group estimator.We find that exchange rates have converged in recent years in five transition countries (Czech Republic, Hungary, Poland, Slovakia, and Slovenia) with real equilibrium exchange rates expressed in the US dollars.However, we also find that the currencies of the transition countries studied are substantially overvalued if real effective exchange rates are used. Keywords: exchange rates, transition economies, dynamic heterogeneous panel estimations JEL Classification: C33, F31, P27
  • Kinoshita, Yuko; Campos, Nauro F. (2004)
    BOFIT Discussion Papers 10/2004
    This paper investigates the importance of factor endowment vis-à-vis institutions in explaining the locational choice of foreign investors during the 1990s.Using dynamic panel estimation on data for transition economies, we find that low labour costs, bureaucratic efficiency ("institutions"), agglomeration economies and natural resource abundance are key factors explaining foreign investors' decisions.However, sampling proves fundamental as these overall determinants mask deep and, so far empirically unexplored, differences between groups of recipient countries.For example, for the former Soviet Union economies we estimate that labour costs are no longer crucial, but abundance of natural resources and (interestingly) lower levels of human capital are.For Eastern Europe, we find that external liberalisation (one aspect of economic reform) is crucial in foreign investor's decisions.The main message is that minimising sampling biases and accounting for previously omitted variables yields a different, much richer picture than previously available. JEL classification: F21, O16, C33, P27 Keywords: Foreign direct investment, dynamic panel estimation, transition economies
  • Ledyaeva, Svetlana; Linden, Mikael (2006)
    BOFIT Discussion Papers 17/2006
    Barro and Sala-I-Martin empirical framework of neoclassical Solow-Swan model is specified to determine the FDI impact on per capita growth in 74 Russian regions during period of 1996-2003.The Arellano-Bond GMM-DIFF methodology, developed for dynamic panel data models, is used in estimations.Results imply that in general FDI (or related investment components) do not contribute significantly to economic growth in Russia in the analyzed period. Regional growth in 1996-2003 is explained by the initial level of region's economic development, the 1998 financial crisis, domestic investments, and exports.However some evidence of positive aggregate FDI effects in higher-income regions is relevant.Another interesting result is that natural resource availability seems to be growth-inducing in rich regions, while in poor regions it is not significant.We also found convergence between poor and rich regions in Russia.However FDI seems not to play any significant role in the recent growth convergence process among Russian regions. Key words: Foreign Direct Investment (FDI), Russian regional economy, and economic growth JEL Classification: E22, F21, P27
  • Merlevede, Bruno; Schoors, Koen (2005)
    BOFIT Discussion Papers 11/2005
    Published in Journal of Economic Policy Reform, 2007, Vol.10, No.1, pp. 29-50
    We analyse how the choice of reform speed and economic growth affect one another.We estimate a system of three equations where economic growth, economic reform and FDI are jointly determined. New reforms affect economic growth negatively, whereas the level of past reform leads to higher growth and attracts FDI.This means that the immediate adjustment cost of new reforms is counterbalanced by a future increase in FDI inflows and higher future growth through a higher level of past reform.Reform reversals contribute to lower growth.We use the model to simulate the impact of big bang reform and gradualist reform on economic growth.This is only meaningful in the presence of reform reversals, which requires aggregate uncertainty about the appropriate reform path.Using the coefficients from the empirical model, we find that even relatively small ex ante reversal probabilities suffice to tilt the balance in favour of gradualism. The case for gradualism gains strength if policymakers are short-sighted, but weakens if voters are myopic. JEL Classification: O57, P21, P26, and P27 Keywords: policy reform, gradualism, big bang, FDI, economic growth
  • Korte, Niko (2012)
    BOFIT Discussion Papers 15/2012
    This study examines the forecasting power of confidence indicators for the Russian econ-omy. ARX models are fitted to the six confidence or composite indicators, which were then compared to a simple benchmark AR-model. The study used the output of the five main branches as the reference series. Empirical evidence suggests that confidence indica-tors do have forecasting power. The power is strongly influenced by the way which the in-dicator is constructed from the component series. The HSBC Purchasing Managers' Index (PMI), the OECD Composite Leading Indicator (CLI) and the OECD Business Confidence Indicator (BCI) were the best performers in terms of both the information criterion and forecasting accuracy. Keywords: confidence indicators, forecasting, Russia JEL Codes: E37, P27