Browsing by Subject "banking sector"

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  • Koskinen, Kimmo (2016)
    Bank of Finland. Bulletin 2/2016
    The year got off to an uncertain start for the European banking sector, and market turbulence was strong in the first half of 2016. The uncertainty has reflected increased concerns about the growth prospects for the global economy. Rising credit risks in the energy sector, weak market liquidity and uncertainty about monetary and economic policies’ ability to support economic growth have increased market volatility. Uncertainty over global growth prospects has also focused strongly on the banking and financial sector, which is particularly sensitive to changes in the economic outlook. Although the profitability and liquidity position of the European banking sector has improved on average in recent years and capital adequacy has advanced, the banking business is facing numerous risks both in the short and the long term. Banks' long-term profitability and the sustainability of their operating models have been singled out as special causes for concern.
  • Jokipii, Terhi; Lucey, Brian (2006)
    Bank of Finland Research Discussion Papers 15/2006
    Published in Economic Systems, 31,1, 2007: 71-96
    Making use of ten years of daily data, this paper examines whether banking sector co-movements between the three largest Central and Eastern European Countries (CEECs) can be attributed to contagion or to interdependence. Our tests based on simple unadjusted correlation analysis uncover evidence of contagion between all pairs of countries. Adjusting for market volatility during turmoil, however, produces different results. We then find contagion from the Czech Republic to Hungary during this time, but all other cross-market co-movements are rather attributable rather to strong cross-market linkages. In addition, we construct a set of dummy variables to try to capture the impact of macroeconomic news on these markets. Controlling for own-country fundamentals, we discover that the correlations diminish between the Czech Republic and Poland, but that coefficients for all pairs remain substantial and significant. Finally, we address the problem of simultaneous equations, omitted variables and heteroskedasticity, and adjust our data accordingly. We confirm our previous findings. Our tests provide evidence in favour of parameter instability, again signifying the existence of contagion arising from problems in the Czech Republic affecting Hungary during much of 1996.
  • Bank of Finland (2016)
    Bank of Finland. Bulletin 1/2016
    Increasing market uncertainty over the condition of banks in early 2016 was not due solely to concerns about global economic growth but also above all reflected concerns about banks’ non-performing loans and declining profitability amid low interest rates and subdued growth. Nonetheless, the condition of the European banking sector is gradually improving, despite major cross-country differences. Notwithstanding the positive developments, banks nevertheless remain vulnerable to deteriorations in the operating environment.
  • Bank of Finland (2018)
    Bank of Finland. Bulletin 5/2018
    Housing company loans and consumer credit add to high and rising levels of household indebtedness. The macroprudential toolkit needs to be replenished with borrower-based instruments that take into account loan applicants’ repayment ability and are able to address the rise of household indebtedness as a whole. Nordea's redomiciliation has increased the size and structural vulnerability of the Finnish banking sector. Italy's budget crisis and Brexit proceedings have contributed to uncertainty in Europe. Cyber risks and climate change pose yet further challenges for financial stability.
  • Bank of Finland (2019)
    Bank of Finland. Bulletin 2/2019
    Whereas recent economic and financial developments in Finland do not pose any immediate threats to financial stability, the permanent risks related to household indebtedness and the structure of the banking system have increased further.
  • Savolainen, Eero; Tölö, Eero (2017)
    Bank of Finland. Bulletin 2/2017
    The Finnish, Swedish, Norwegian and Danish banking sectors have broadly similar strengths and weaknesses. Their profitability is strong, capital adequacy solid, and loan losses have been at historically low levels for a long time. On the other hand, the national banking sectors are large and concentrated and their systemic risks relate largely to lending to the residential and commercial real estate markets.
  • Ahoniemi, Katja; Koskinen, Kimmo (2021)
    Bank of Finland. Bulletin 1/2021
    The COVID-19 pandemic has led to an increase in the credit risk faced by European banks. Although the pandemic’s negative impact on the economy has been eased thanks to various support measures, there is still much uncertainty attached to how the crisis will play out. Banks in general are showing stronger resilience to risk than they did in previous crises. The state of the banking sector will be assessed in spring 2021 by means of stress tests. If the stock of non-performing loans increases, it could be difficult for banks to continue supplying credit to the real economy. The European Commission has proposed an action plan to reduce the number of non-performing loans.
  • Kerola, Eeva; Koskinen, Kimmo (2019)
    Bank of Finland. Bulletin 4/2019
    Negative interest rates have been an integral part of the ECB's overall monetary accommodation for just over five years now. The ECB lowering its deposit facility below zero has especially reduced the cost of market-based funding for banks and has been passed through to the real economy as lower interest rates on bank loans. Although low levels of interest rates do compress banks’ net interest margins, challenges to bank profitability in the euro area are largely related to long-term structural issues. Studies suggest that the benefits of negative interest rates outweigh their drawbacks.
  • Solanko, Laura (2017)
    Bank of Finland Bulletin. Blog
    After a long recession, the Russian economy is finally showing signs of moderate growth. The economy is expected to expand by 1.5 % this year, and most analysts forecast roughly similar growth rates in the coming years, too. There is a wide consensus among both Russian and foreign researchers that without major structural reforms Russia’s potential growth rate will remain at around those levels. This implies that Russian growth rates will remain well below the global average for the foreseeable future.
  • Barisitz, Stephan; Fungáčová, Zuzana (2015)
    BOFIT Policy Brief 3/2015
    The situation of banks in Ukraine is exceptionally challenging for a number of reasons: They have not managed to recover from the 2008–2009 crisis before being hit again in 2014. The deep Ukrainian recession and the plunge of the hryvnia together with strong exposure to geopolitical tensions tipped the banking sector again deeply into the red and created an environment of persistent uncertainty. Many foreign-owned banks have left the country. In addition to chronic structural shortcomings like weak rule of law and protection of creditor rights or excessively high corruption and opaque ownership structures;the most significant problems that are currently plaguing the sector include high and growing credit risk and high exchange rate risk. The country is subject to a dramatic credit crunch and to even larger deposit outflows. Financial intermediation has practically collapsed. The number of insolvent banks is quickly rising. The major shock-absorbing factor is the IMF’s and the international community’s ongoing commitment to financially assist Ukraine.