Browsing by Subject "P30"

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  • Rosefielde, Steven (2004)
    BOFIT Discussion Papers 15/2004
    Published in The European Journal of Comparative Economics vol. 2, no 1 (2005), pp. 3-16
    Andrei Shleifer and Daniel Treisman recently rendered a summary verdict on the post-Soviet Russian transition experience finding that the Federation had become a normal country with the west's assistance, and predicting that it would liberalize and develop further like other successful nations of its type.This essay demonstrates that they are mistaken.It shows factually, and on the norms elaborated by Pareto, Arrow and Bergson that Russia is an abnormal political economy unlikely to democratize, westernize or embrace free enterprise any time soon. JEL classification: P30, P40, P51, P52 Keywords: Russia, transition, welfare
  • Karas, Alexei; Schoors, Koen; Weill, Laurent (2008)
    BOFIT Discussion Papers 3/2008
    Published in Economics of Transition Vol 18, Issue 1 (January 2010), pp. 123-141
    We study whether bank efficiency is related to bank ownership in Russia. We find that foreign banks are more efficient than domestic private banks and - surprisingly - that domes-tic private banks are not more efficient than domestic public banks. These results are not driven by the choice of production process, the bank's environment, management's risk preferences. the bank's activity mix or size, or the econometric approach. The evidence in fnicl suggests that domestic public banks arc more efficient than domestic private banks and that the efficiency gap between these two ownership types did not narrow after the introduction of deposit insurance in 2004. This may be due to increased switching costs or to the moral hazard effects of deposit insurance. The policy conclusion is that the efficiency of the Russian banking system may benefit more from increased levels of competition and greater access of foreign banks than from bank privatization. JEL classification: G21; P30; P34; P52 Keywords: Bank efficiency; state ownership; foreign ownership; Russia
  • Fungáčová, Zuzana; Weill, Laurent; Zhou, Mingming (2017)
    Journal of Financial Services Research 1
    Published in BOFIT Discussion Papers 17/2010.
    This paper examines how the introduction of deposit insurance influences the relationship between bank capital and liquidity creation.
  • Fungáčová, Zuzana; Weill, Laurent; Zhou, Mingming (2010)
    BOFIT Discussion Papers 17/2010
    Published in Journal of Financial Services Research, 51(1), 2017: 97-123
    This paper examines how the introduction of deposit insurance influences the relationship between bank cap-ital and liquidity creation. As discussed by Berger and Bouwman (2009), there are two competing hypothes-es on this relationship which can be influenced by the presence of deposit insurance. The introduction of a deposit insurance scheme in an emerging market, Russia, provides a natural experiment to investigate this issue. We study three alternative measures of bank liquidity creation and perform estimations on a large set of Russian banks. Our findings suggest that the introduction of the deposit insurance scheme exerts a limited impact on the relationship between bank capital and liquidity creation and does not change the negative sign of the relationship. The implication is that better capitalized banks tend to create less liquidity, which sup-ports the "financial fragility/crowding-out" hypothesis. This conclusion has important policy implications for emerging countries as it suggests that bank capital requirements implemented to support financial stability may harm liquidity creation. JEL classification: G21; G28; G38; P30; P50 Keywords: Bank capital, liquidity creation, deposit insurance, Russia
  • Bonin, John P.; Hasan, Iftekhar; Wachtel, Paul (2004)
    BOFIT Discussion Papers 7/2004
    Published in Journal of Banking & Finance vol. 29, no 1 (2005), pp. 31-53
    Using data from 1996 to 2000, we investigate the effects of ownership, especially by a strategic foreign owner, on bank efficiency for eleven transition countries in an unbalanced panel consisting of 225 banks and 856 observations.Applying stochastic frontier estimation procedures, we compute profit and cost efficiency scores taking account of both time and country effects directly.In second-stage regressions, we take these efficiency measures along with return on assets as dependent variables with dummy variables for ownership type, a variable controlling for bank size, and dummy variables for year and country effects as explanatory variables.Methodologically, our results demonstrate the importance of including fixed effects, especially country effects, and also suggest a preference for efficiency measures over financial measures of bank performance in empirical work on transition countries. With respect to the impact of ownership, we conclude that privatization by itself is not sufficient to increase bank efficiency as government-owned banks are not appreciably less efficient than domestic private banks.Our results do support the hypothesis that foreign ownership leads to more efficient banks in transition countries.We find that foreign-owned banks are more cost-efficient than other banks and that they also provide better service, in particular if they have a strategic foreign owner. Moreover, the participation of international institutional investors is shown to have a considerable additional positive impact on profit efficiency, which is consistent with the notion that these investors facilitate the transfer of technology and know how to newly privatized banks.In addition, we find that the remaining government-owned banks are less efficient in providing services, which is consistent with the hypothesis that the better banks were privatized first in transition countries.Finally, efficiency declines with bank size, which could call into question government-orchestrated bank consolidation strategies.We conjecture that the presence of many small and efficient foreign greenfield operations in these transition countries may be responsible for this result. JEL Classifications: P30, P34, P52.
  • Bonin, John; Hasan, Iftekhar; Wachtel, Paul (2008)
    BOFIT Discussion Papers 12/2008
    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 began 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 partic-ipation of foreign banks. By 2005, the banking sectors in many transition countries had developed sufficiently to provide a wide range of services with solid bank performance. Recently, banks have switched their focus from lending to enterprises in a somewhat un-derdeveloped institutional environment to new collateralized lending to households, which accounts for much of the recent growth of credit in many transition countries. Keywords: transition banking, bank privatization, foreign banks, bank regulation, credit growth. JEL codes: G21, P30, P34, P52
  • Fromlet, Hubert (2014)
    BOFIT Policy Brief 15/2014
    During and after the Central Committee’s Third Plenum in November 2013, China announced far-reaching reforms in the spheres of marketization and economic deregulation that included financial markets. While the speed of the rollout of China’s planned reforms is still unknown, officials repeatedly reference the great opportunities for guiding China onto a healthier, more sustainable social and economic track. The risks of such ambitious marketization and deregulation plans need to be considered in the context of speed and sequencing of reforms of the financial sector. We currently lack the skills for overcoming the famously low predictability of financial crises. The areas for skill improvement largely relate to market psychology (behavioral finance) and the understanding of history and macrofinancial aggregates. The much-undervalued discipline of behavioral finance has started to come into its own over the past 10 to 15 years, including the awarding of the 2013 Nobel Prize Robert in Economics to Robert Shiller for his efforts at understanding the psychology of financial markets. This year’s Nobel Prize winner, Jean Tirole, also considers behavioral aspects in his work. Sweden has had two serious banking crises in the past 30 years. The first – and most serious – crisis occurred in the early 1990s, while a smaller crisis took place at the end of the last decade. Both were foreseeable. The first crisis emerged as Swedish banking entered uncharted deregulation waters, a situation Chinese reformers will themselves inevitably confront. Swedish research findings with respect to sequencing, speed of reforms and behavioral finance apply nicely to the Chinese discussion. The italicized discussion focuses on what the Swedish deregulation experience means for Chinese policy choices, but most of these observations are generally relevant for policymakers in emerging markets in Asia and elsewhere. Publication keywords: financial deregulation, Asia, Sweden
  • Ivanenko, Vlad (2005)
    BOFIT Discussion Papers 16/2005
    The paper looks into convergence of Russian institutions with those of other democratic, free-market-oriented states, and considers definitions of "normalcy" that incorporate the concepts of free market, democracy, and government efficiency.The author provides an estimate of Russia s institutional convergence to the standards of the G7 and the Big Five group of large, middle-income countries that includes Brazil, China, and India.In some areas Russia outperforms "Big Five" countries, in others it trails behind.Finally, public mistrust, corruption, and inefficient governance in Russia are discussed in light of the Putin administration s current reform policies. JEL: O57, P30, P52 Keywords: Free market, democracy, institutions, Russia
  • Koivu, Tuuli (2012)
    Suomen Pankki. E 46
    China's economic development has been exceptionally robust since the end of the 1970s, and the country has already emerged as the second biggest economy in the world. In this study, we seek to illuminate the role of the monetary policy in this successful economic performance and as a part of the extensive economic reforms of the last two decades. The five empirical essays seek to discover which monetary policy tools are the most used and most effective for guiding China's economic development. In addition, we explore which monetary policy transmission channels are functioning and to what extent monetary policy impacts inflation and real economic developments in China. The results indicate that the conduct of monetary policy in China differs substantially from what is typical for an advanced market economy, where an independent central bank often aims to hit an inflation target by simply controlling the target interest rate. First, China's monetary policy toolkit is highly diverse. Besides a collection of administrated interest rates, it contains quantitative policy tools and direct guidelines. Second, China's central bank is not independent in its decision-making. For these reasons, it is exceptionally challenging to measure the monetary policy stance or to distinguish monetary policy from other macroeconomic policies in China's case. This has been taken into account in this study by using a variety of monetary-policy indicators. Our results suggest that China's monetary-policy implementation and its transmission to the real economy still rely heavily on quantitative policy tools and direct guidelines; interest rates play a much smaller role, in terms of both usage and effectiveness. Overall, our findings suggest that the direct link between monetary policy and real economic performance is weak in China. On the other hand, this study clearly shows that monetary policy has played a key role in price developments, which tells us that monetary policy has been an important factor in China's economic success. Key words: China, monetary policy, economic growth, inflation, exchange rates JEL classification: E50, P30
  • Bonin, John P.; Hasan, Iftekhar; Wachtel, Paul (2004)
    BOFIT Discussion Papers 8/2004
    Published in Journal of Banking and Finance, (29), August-September 2005, pp. 2153-78 as "Privatization Matters: Bank Performance in Transition Countries"
    To investigate the impact of bank privatization in transition countries, we take the largest banks in six relatively advanced countries, namely, Bulgaria, the Czech Republic, Croatia, Hungary, Poland and Romania.Income and balance sheet characteristics are compared across four bank ownership types.Efficiency measures are computed from stochastic frontiers and used in ownership and privatization regressions having dummy variables for bank type.Our empirical results support the hypotheses that foreign-owned banks are most efficient and government-owned banks are least efficient. In addition, the importance of attracting a strategic foreign owner in the privatization process is confirmed.However, counter to the conjecture that foreign banks cream skim, we find that domestic banks have a local advantage in pursuing fee-for-service business. Finally, we show that both the method and the timing of privatization matter to efficiency; specifically, voucher privatization does not lead to increased efficiency and early-privatized banks are more efficient than later-privatized banks even though we find no evidence of a selection effect.JEL Classifications: P30, P34, and P52
  • Staehr, Karsten (2003)
    BOFIT Discussion Papers 1/2003
    Published in The European Journal of Comparative Economics, Vol. 2, n. 2 (2005), pp. 177-202
    Growth regressions have provided important insights into the impact of economic reforms on growth in transition economies.Using principal components to decompose reform variables and construct reform clusters, we address unsettled issues such as the importance of sequencing and reform speed.The results indicate a broad-based reform policy is good for growth, but so is a policy of liberalisation and small-scale privatisation without structural reforms.Conversely, large-scale privatisation without adjoining reforms, market opening without supporting reforms and bank liberalisation without enterprise restructuring affect growth negatively.Swift reform policies allow transition countries to benefit from higher growth for a longer period of time.The speed of reforms otherwise appears to have only limited effects on short-term and medium-term growth. Keywords: Economic reforms, growth, principal components, gradualism versus big-bang JEL classification: P21, P30, C33, H11
  • Godlewski, Christophe J.; Fungáčová, Zuzana; Weill, Laurent (2010)
    BOFIT Discussion Papers 16/2010
    Published in Comparative Economic Studies, 2011, 53, (679-693)
    This paper investigates stock market reaction to debt arrangements in Russia. The analysis of the valuation of debt arrangements by stock markets provides information about the use of debt by Russian companies. We apply the event study methodology to check whether debt announcements lead to abnormal returns using a sample of Russian listed companies that issued syndicated loans or bonds between June 2004 and December 2008. We find a negative reaction of stock markets to debt arrangements that can be explained by moral hazard behavior of shareholders at the expense of debtholders. Further, we observe no significant difference between announcements of syndicated loans and bonds. Thus, our findings support the view that Russian companies could have incentives to limit their reliance on external debt. Keywords: corporate bonds, event study, Russia, stock returns, syndicated loans. JEL Classification: G14, G20, P30.
  • Hartwell, Christopher A. (2014)
    BOFIT Discussion Papers 6/2014
    The volatility of financial markets has been a relevant topic for transition economies, as the countries of Central and Eastern Europe and the former Soviet Union have seemingly en-dured high levels of volatility in their financial sectors during the transition process. But what have been the determinants of this financial volatility? This paper posits that institutional changes, and in particular the volatility of various crucial institutions, have been the major causes of financial volatility in transition. Examining 20 transition economies over various time-frames within the period 1993-2012, this paper applies the GARCH family of models to examine financial volatility as a function of institutional volatility. The results from the EGARCH and TGARCH modelling supports the thesis that more advanced and more stable institutions help to dampen financial sector volatility at their levels, while institutional volatility feeds through directly to financial sector volatility in transition. Keywords: institutions, financial sector, volatility, transition, GARCH, EGARCH, TGARCH JEL Codes: G20, O43, P30