Browsing by Subject "banks"

Sort by: Order: Results:

Now showing items 1-20 of 37
  • Kärkkäinen, Samu; Nyholm, Juho (2021)
    Bank of Finland. Bulletin 1/2021
    How would the economy react in the long term if the maximum size of housing loans granted by banks were tied to the customer's income instead of the value of the dwelling to be purchased? This question can be examined using the Bank of Finland's general equilibrium model. Based on analysis, the introduction of a maximum debt-to-income ratio, i.e. a debt-to-income cap, would have a moderate impact on long-term economic growth. A debt-to-income cap could, however, dampen economic fluctuations relative to the current loan-to-value cap.
  • Bank of Finland (2020)
    Bank of Finland. Bulletin 2/2020
    The corona crisis has impacted negatively on the Finnish economy and on the country’s banks and their customers in a number of ways. The banks now need to deploy the financial buffers they have been accumulating since the global financial crisis just over a decade ago. By granting new loans and amortisation holidays, the banks can for their part help businesses and households survive the acute phase of the current crisis. At the same time, banks must prepare for an increase in loan losses from previously granted loans.
  • Bank of Finland (2019)
    Bank of Finland. Bulletin 2/2019
    Finnish households are carrying a worryingly large amount of debt. Housing loans and housing company loans have become more common and larger, and their repayment periods have become longer. In addition, the supply of consumer credit has become broader and more varied.
  • König-Kersting, Christian; Trautmann, Stefan T.; Vlahu, Razvan (2020)
    Bank of Finland Research Discussion Papers 14/2020
    We study the impact of disclosure about bank fundamentals on depositors’ behavior in the presence (and absence) of economic linkages between financial institutions. Using a controlled laboratory environment, we identify under which conditions disclosure is conducive to bank stability. We find that bank deposits are sensitive to perceived bank performance. While banks with strong fundamentals benefit from more precise disclosure, an opposing effect is present for solvent banks with weaker fundamentals. Depositors take information about economic linkages into account and correctly identify when disclosure about one institution conveys meaningful information for others. Our findings highlight both the costs and benefits of bank transparency and suggest that disclosure is not always stability enhancing.
  • Mamonov, Mikhail; Vernikov, Andrei (2015)
    BOFIT Discussion Papers 22/2015
    Published in Economic Systems, Volume 41, Issue 2, June 2017, Pages 305–319 as Bank ownership and cost efficiency: New empirical evidence from Russia.
    This paper considers the comparative efficiency of public, private, and foreign banks in Rus-sia, a transition economy with several unusual features. We perform stochastic frontier anal-ysis (SFA) of Russian bank-level quarterly data over the period 2005–2013. The method of computation of comparative cost efficiency is amended to control for the effect of revalua-tion of foreign currency items in bank balance sheets. Public banks are split into core and other state-controlled banks. Employing the generalized method of moments, we estimate a set of distance functions that measure the observed differences in SFA scores of banks and bank clusters (heterogeneity in risk preference and asset structure) to explain changes in bank efficiency rankings. Our results for comparative Russian bank efficiency show higher efficiency scores, less volatility, and narrower spreads between the scores of different bank types than in previous studies. Foreign banks appear to be the least cost-efficient market participants, while core state banks on average are nearly as efficient as private domestic banks. We suggest that foreign banks gain cost-efficiency when they increase their loans-to-assets ratios above the sample median level. Core state banks, conversely, lead in terms of cost efficiency when their loans-to-assets ratio falls below the sample median level. The presented approach is potentially applicable to analysis of bank efficiency in other dollarized emerging markets.
  • Miettinen, Paavo; Saada, Adam; Tiililä, Nea; Vauhkonen, Jukka (2020)
    Bank of Finland. Bulletin 2/2020
    Stricter capital requirements since the global financial crisis have improved the ability of banks to lend and absorb losses in a crisis situation like the coronavirus pandemic. A robust lending capacity is now needed to finance fundamentally sound Finnish companies with liquidity needs. It must be ensured that banks are well-capitalised to withstand future loan losses.
  • Kauko, Karlo (2019)
    BOFIT Discussion Papers 25/2019
    Benford’s law states that the leading significant digits in real-world data sets, provided the data span several orders of magnitude, are not normally uniformly distributed. Deviations from this law may indicate human intervention, even fraud. The data on Chinese banks’ non-performing loans has sometimes deviated from Benford’s law. Up to 2012, the frequency of ones as leading significant digits was lower than predicted by Benford’s law. Surprisingly, the number of ones well exceeded the expected level for large and government-owned banks during 2015–2018.
  • Savolainen, Eero; Vauhkonen, Jukka (2015)
    Bank of Finland. Bulletin 2/2015
    The consequences of a banking crisis could be exceptionally severe in Finland’s concentrated banking system. Regulatory means must therefore be deployed to ensure the capital adequacy and liquidity of Finnish banks remain strong under all circumstances.
  • Kauko, Karlo (2016)
    Bank of Finland. Bulletin 2/2016
    Nordea Group intends to merge its large subsidiary banks operating in other Nordic countries to the Swedish parent company, which is supervised by the Swedish supervisory authority, Finansinspektionen. The importance of the change for Finland is heightened by Nordea's large market share.
  • 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.
  • Karas, Alexei; Pyle, William; Schoors, Koen (2019)
    BOFIT Discussion Papers 10/2019
    Using evidence from Russia, we explore the effect of the introduction of deposit insurance on bank risk. Drawing on within-bank variation in the ratio of firm deposits to total household and firm deposits, so as to capture the magnitude of the decrease in market discipline after the introduction of deposit insurance, we demonstrate for private, domestic banks that larger declines in market discipline generate larger increases in traditional measures of risk. These results hold in a difference-in-difference setting in which state and foreign-owned banks, whose deposit insurance regime does not change, serve as a control.
  • Nykänen, Marja (2021)
    Bank of Finland. Bulletin 1/2021
    Household behaviour and business activity continue to be very much influenced by the COVID-19 pandemic. The prospects for the economic environment returning to a state of normalcy are improving, however, as vaccine rollouts gather pace in Finland and abroad. The Finnish economy has held up better than feared in the worst-case scenarios envisaged one year ago, and the financial system has continued to function well. The economy's better-than-expected performance can be attributed especially to the policy measures put in place domestically and in the euro area, and to the ability of households and businesses to adjust to the emergency conditions.
  • Hellström, Jenni (2015)
    Bank of Finland Bulletin. Blog
    In exceptional circumstances, Eurosystem central banks can also grant credit to banks outside monetary policy operations.
  • Bank of Finland (2021)
    Bank of Finland. Bulletin 1/2021
    The vulnerabilities related to housing finance have increased in Finland during the COVID-19 pandemic. Long housing loans are being taken out more than ever and a larger proportion of new mortgages are being granted to borrowers whose total debts will then be very high relative to income. The persistent upward trend in household indebtedness will undermine the economy’s ability to withstand future economic crises. A debt-to-income cap and a limit on the maturity of housing loans should be introduced without delay to stop the loosening of credit standards.
  • Kerr, William R.; Nanda, Ramana (2015)
    Bank of Finland Research Discussion Papers 28/2015
    We review the recent literature on the financing of innovation, inclusive of large companies and new startups. This research strand has been very active over the past five years, generating important new findings, questioning some long-held beliefs, and creating its own puzzles. Our review outlines the growing body of work that documents a role for debt financing related to innovation. We highlight the new literature on learning and experimentation across multi-stage innovation projects and how this impacts optimal financing design. We further highlight the strong interaction between financing choices for innovation and changing external conditions, especially reduced experimentation costs.
  • 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.
  • Putkuri, Hanna (2016)
    Bank of Finland. Bulletin 2/2016
    Finland’s financial system is, by structure, vulnerable to risks associated with lending for house purchase. Housing loan volumes are large relative to other lending by banks and requirements on banks’ own funds. The fact that household debt levels have increased and that housing wealth constitutes a large proportion of household assets also increases the vulnerabilities. In addition, covered bonds secured by housing loans play a significant role in bank funding and investment. However, the increase in vulnerabilities has largely levelled off in the 2010s.
  • Putkuri, Hanna; Savolainen, Eero (2016)
    Bank of Finland. Bulletin 2/2016
    The current exceptionally low level of interest rates promotes price stability and economic growth in the euro area, but it also puts a strain on retail banking profitability. In Finland, the banks’ most important source of income, net interest income, is now exposed to pressures from several different directions at once. Low interest rates have compressed the spread between lending and deposit rates. At the same time, loan and deposit stocks have increased only slowly. Low interest rates have reduced customers’ debt-servicing expenditure, but may also mask risks.
  • Bank of Finland (2018)
    Bank of Finland. Bulletin 2/2018
    A macroprudential decision taken by the Financial Supervisory Authority's Board in early spring to tighten the maximum loan-to-collateral (LTC) ratio for housing loans will bolster the stability of the Finnish financial system. The policy adjustment will help curtail growing household indebtedness by restricting the provision of large housing loans relative to collateral and by increasing awareness of the risks inherent in such loans. It will not, however, remove the risks associated with outstanding household debt and its protracted growth. New macroprudential tools are still required to contain growing indebtedness.
  • Tuuli, Saara (2019)
    Bank of Finland Research Discussion Papers 4/2019
    This paper investigates the impact of the model-based approach to bank capital regulation (i.e. the Internal Ratings Based Approach; IRBA) on firms' access to finance. A difference-in-differences methodology is used given that the IRBA, introduced as part of Basel II, was adopted by different banks in different times. The results suggest that firms indirectly affected by the new regulation via their main bank adopting the IRBA faced a 6-7 percentage point higher probability of facing a deterioration in their access to finance. When the sample is adjusted for the demand for credit, this estimate increases to 12-13 percentage points. The impact is found to come via increases in the cost of credit and to a smaller extent, reductions in the volume or size of loans. Around three-quarters of the effect is attributed to the sensitivity of the IRBA capital requirements to economic conditions, with adopting banks also found to specialize in low-risk lending.