Browsing by Subject "konkurssit"

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  • Takala, Kari; Virén, Matti (1995)
    Suomen Pankin keskustelualoitteita 28/1995
    This paper deals with Finnish bankruptcies.It shows that bankruptcies are strongly related to the business cycle and that they are perhaps even more strongly related to indebtedness, real interest rates and asset prices.The importance of these financial factors probably increased when the financial markets were liberalized in the early 1980s. Although there is a lot of seasonal and cyclical variation in bankruptcies the long run level (especially when adjusted to the number of firms) is almost constant representing some sort of "a natural rate of bankruptcies".What makes bankruptcies so important is the fact that they directly affect production, employment and credit expansion.The credit crunch effect in particular is scrutinized in the paper.
  • Niinimäki, Juha-Pekka; Mälkönen, Ville (2009)
    Bank of Finland Research Discussion Papers 16/2009
    Published in Journal of Financial Stability, Volume 8, Issue 2, April 2012: 84-95
    This paper examines blanket guarantee and restructuring decisions in respect of a multinational bank (MNB) using Nash bargaining, when the threat of a panic motivates countries to take decisions quickly. The failure of the bank would cause unevenly distributed externalities between the countries concerned, which influences restructuring incentives. In equilibrium, the bank is either liquidated or one or both of the countries recapitalizes it. The partition of the recapitalisation costs is sensitive to the country-specific benefits and costs from recapitalisation, panics and liquidation. The home regulator benefits from the privilege of being the only entity that can legally liquidate the MNB. Rational expectations regarding the bargaining result affect the incentives to declare a blanket guarantee.
  • Juselius, Mikael; Tarashev, Nikola (2021)
    BoF Economics Review 3/2021
    While corporate credit losses have been low since the start of the Covid-19 pandemic, their future evolution is quite uncertain. Using a forecasting model with a solid track record, we find that the baseline scenario (“expected losses”) is benign up to 2024. This is due to policy support measures that have kept debt service costs low. However, high indebtedness, built up when the pandemic impaired real activity, suggests increased tail risks: plausible deviations from the baseline scenario (“unexpected losses”) feature ballooning corporate insolvencies. Taken at face value, the low expected loss forecasts are consistent with low bank provisions, whereas the high unexpected loss forecasts call for substantial capital.
  • Choi, Sungho; Francis, Bill B.; Hasan, Iftekhar (2010)
    Bank of Finland Research Discussion Papers 4/2010
    The impact of cross-border bank M&As on bank risk remains an open question. Though geographically diversifying bank M&As have the potential to reduce the risk of bank insolvency, they also have the potential to increase that risk due to the increase in risk-taking incentives for bank managers and stockholders following these transactions. This paper empirically investigates whether cross-border bank M&As increase or decrease the risk of acquiring banks as captured by changes in acquirers yield spreads. The paper also investigates how differences in the institutional environments between bidder and target countries affect changes in yield spreads following M&A announcements. The study finds that bondholders, in general, perceive cross-border bank M&As as risk-increasing activities, unlike domestic bank mergers. Specifically, on average, yield spreads increase by 4.13 basis points following the announcement of cross-border M&As. This study also finds that these yield spreads are significantly affected by the differences in investor-protection and deposit-insurance environments between the transacting countries. However, the study does not find that the regulatory and supervisory environment in the home countries of the transacting parties significantly affects the changes in yield spreads. The overall evidence suggests that regulators should judge the relative environment in both the home and the host countries in evaluating the associated risks of an active multinational financial institution and in setting the sufficiency of the banks reserve positions.
  • Hasan, Iftekhar; John, Kose; Kadiyalad, Padma (2016)
    Bank of Finland Research Discussion Papers 13/2016
    We augment the LLSV creditor rights index with a new “restructuring index” that measures the incentives provided to creditors to grant concessions outside formal bankruptcy. We study the joint impact of the two indexes on a firm’s leverage policy. We show that the two indexes have at most a statistically weak effect on the level of long-term debt. Instead, the two indexes affect the distribution of long-term debt into bank debt, public debt and private placements. Bank debt increases when the values of both indexes are high. Public debt increases when the creditor rights index is high, but the restructuring index is low, and private placements increase when the restructuring index is high, but the creditor rights index is low. Smaller firms with fewer tangible assets borrow more from banks when both the creditor rights and restructuring indexes are high. When aggregated at the country level, these firm-level results suggest that bankruptcy law can influence the relative importance of credit and equity markets as sources of financing GDP growth.
  • Lehto, Jaakko (2005)
    Bank of Finland. Financial market report 3
    The distance-to-default indicator is a measure of a company's default risk. The indicator, which captures market outlook, has generated interest in connection with private sector risk management as well as banks' stability analysis. The predictive properties of the indicator are enhanced by the fact that it is based on market prices of shares.
  • Lehto, Jaakko (2005)
    Suomen Pankki. Rahoitusmarkkinaraportti 3
    Distance-to-default indikaattori kuvaa yrityksen konkurssiriskiä. Tämä markkinanäkemvksen sisältävä indikaattori on herättänyt kiinnostusta niin yksityisen sektorin riskienhallinnassa kuin pankkien vakausanalyysissakin. Mittarin ennakoivaa ominaisuutta tukee sen pohjautuminen osakemarkkinahintoihin.
  • Fungáčová, Zuzana; Turk-Ariss, Rima; Weill, Laurent (2013)
    BOFIT Discussion Papers 2/2013
    Published in Journal of Financial Stability 2021 ; 57 ; December and IMF Working Paper No. 15/103 (May 06, 2015) as High Liquidity Creation and Bank Failures.
    This paper introduces the "Excessive Liquidity Creation Hypothesis," whereby a rise in a bank's core liquidity creation activity increases its probability of failure. Russia experienced many bank failures over the past decade, making it an ideal natural field experiment for testing this hypothesis. Using Berger and Bouwman's (2009) liquidity creation measures, we find that excessive liquidity creation significantly increased the probability of bank failure during our observation period (2000-2007). This finding survives multiple robustness checks. Our results further suggest that regulatory authorities can mitigate systemic distress and reduce the costs to society from bank failures through early identification and enhanced monitoring of excessive liquidity creators.
  • Fungáčová, Zuzana; Weill, Laurent (2009)
    BOFIT Discussion Papers 12/2009
    Published in Economics of Transition, Volume 21, Issue 2, pages 301-322, April 2013 as "Does competition influence bank failures? Evidence from Russia"
    There has been a notable debate in the banking literature on the impact of bank competition on financial stability. While the dominant view sees a detrimental impact of competition on the stability of banks, this view has recently been challenged by Boyd and De Nicolo (2005) who see the reverse effect. The aim of this paper is to contribute to this literature by providing the first empirical investigation of the role of bank competition on the occurrence of bank failures. We analyze this issue based on a large sample of Russian banks over the period 2001-2007 and employ the Lerner index as the metric of bank competition. The Russian banking industry is a unique example of an emerging market which has undergone a large number of bank failures during the last decade. Our findings clearly support the view that tighter bank competition is detrimental for financial stability. This result is robust to tests controlling for the measurement of market power, the definition of bank failure, the set of control variables, and the particular linear specification of the relationship. The normative implication of our findings is therefore that measures that increase bank competition could undermine financial stability.
  • Vilmunen, Jouko (2009)
    Eurokäteisen liikkeeseenlaskusta on kulunut runsaat seitsemän vuotta. Sujuvan rahanvaihdon jälkeen liikkeessä olevan eurokäteisen määrä on kasvanut ennakoitua nopeammin ja euroseteleiden kysyntä on lisääntynyt myös euroalueen ulkopuolella. Samanaikaisesti euroalueen keskuspankkien yhteistyö rahahuollossa on kehittynyt ja yhteisen rahan tehokkuusetuja on hyödynnetty. Joukko uusia haasteita on myös syntynyt.
  • Korkeamäki, Timo; Koskinen, Yrjö; Takalo, Tuomas (2007)
    Bank of Finland Research Discussion Papers 1/2007
    Published in Journal of Financial Stability, 3, 2007, pp. 33-58
    Finland experienced an extremely severe economic depression in the early 1990s.In the midst of this crisis, significant new legislation was passed that increased supervisory powers official market regulators and reformed bankruptcy procedures significantly decreasing the protection of creditors.We show that the introduction of these new laws resulted in positive abnormal stock returns.The new laws also lead to increases in firms'Tobin's q, especially for more levered firms.In contrast to previous studies, our results also suggest that public supervision of financial markets fosters rather than hampers financial market development. JEL Classification: G34, K22 Keywords: corporate governance, bankruptcy, financial supervision,shareholder protection, creditors' rights, corporate valuations, political economy
  • Peresetsky, Anatoly; Karminsky, Alexandr; Golovan, Sergei (2004)
    BOFIT Discussion Papers 21/2004
    Published in Economic Change and Restructuring, 2011, 44(4), 297-334
    This paper presents results from an econometric analysis of Russian bank defaults during the period 1997 2003, focusing on the extent to which publicly available information from quarterly bank balance sheets is useful in predicting future defaults.Binary choice models are estimated to construct the probability of default model. We find that preliminary expert clustering or automatic clustering improves the predictive power of the models and incorporation of macrovariables into the models is useful.Heuristic criteria are suggested to help compare model performance from the perspectives of investors or banks supervision authorities.Russian banking system trends after the crisis 1998 are analyzed with rolling regressions. Keywords: banks, Russia, probability of default model, early warning systems
  • Milne, Alistair; Wood, Geoffrey (2008)
    Bank of Finland Research Discussion Papers 30/2008
    In autumn of 2007 Britain experienced its first bank run of any significance since the reign of Queen Victoria. The run was on a bank called Northern Rock. This was extraordinary, for Britain had been free of such episodes because by early in the third quarter of the 19th century the Bank of England had developed techniques to prevent them. A second extraordinary aspect of the affair was that it was the decision to provide support for the troubled institution that triggered the run. And thirdly, unlike most runs in banking history, it was a run only on that one institution. This paper considers why the traditional techniques for the maintenance of banking stability failed if they did fail and then considers how these techniques may need to be changed or supplemented to prevent such problems in the future. The paper starts with a narrative of the events, then turns to banking policy before the event and to the policy responses after it. We suggest both why the decision to provide support triggered the run and why the run was confined to a single institution. That prepares the way for our consideration of what should be done to help prevent the recurrence of such episodes in the future.
  • Takala, Kari (2001)
    Suomen Pankki. E 22
    This collection of seven papers deals with three different areas of econometric applications: consumption, asset prices, and forecasting.The papers apply techniques related to the analysis of unit roots and cointegration methods.The first paper deals with consumption theories and formulates an error-correction forecasting model for consumption.A single cointegration relationship is found between consumption, income and net wealth, which is in line with the permanent income hypothesis.The second paper studies the excess sensitivity of consumption to current disposable income. Estimating the coefficient with timevarying techniques, we notice a decline in the coefficient during the period of financial deregulation toward the end of the 1980s and a rise during the recession.Third paper takes a closer look at how useful consumer barometer variables can be in forecasting variables such as consumption and inflation. The first paper on asset prices, is based on the theory of cointegration between house and stock prices, which asserts that real after-tax risk-adjusted returns on assets should coincide in the long run.This paper presents a model for house prices that uses stock prices as a leading indicator to improve the forecasting of housing prices.Another paper on asset prices considers cointegration between house prices and inflation, and finds eg that house prices adjust to consumer prices in the long run and that no excess real appreciation, apart from rental income, is derived from house ownership.The two last papers deal with bankruptcy forecasting and testing for nonlinearities and chaos.It is asserted that bankruptcies can be interpreted as error-correction between supply and demand.Many tests have been developed to study the presence of nonlinearities in economic series.The results of testing unambiguously support that there are strong nonlinearities in economic data, but the evidence for chaos is weak. Key words: cointegration, asset prices, forecasting, nonlinearity, bankruptcy
  • Lucchetta, Marcella; Moretto, Michele; Parigi, Bruno M. (2018)
    Bank of Finland Research Discussion Papers 2/2018
    We show that the impact of government bailouts (liquidity injections) on a representative bank’s risk taking depends on the level of systematic risk of its loans portfolio. In a model where bank’s output follows a geometric Brownian motion and the government guarantees bank’s liabilities, we show first that more generous bailouts may or may not induce banks to take on more risk depending on the level of systematic risk; if systematic risk is high (low), a more generous bailout decreases (increases) bank’s risk taking. Second, the optimal liquidity policy itself depends on systematic risk. Third, the relationship between bailouts and bank’s risk taking is not monotonic. When systematic risk is low, the optimal liquidity policy is loose and more generous bailouts induce banks to take on more risk. If systematic risk is high and the optimal liquidity policy is tight, less generous bailouts induce banks to take on less risk. However, when high systematic risk makes a very tight liquidity policy optimal, a less generous bailout could increase bank’s risk taking. While in this model there is only one representative bank, in an economy with many banks, a higher level of systematic risk could also be a source of systemic risk if a tighter liquidity policy induces correlated risk taking choices by banks.
  • Jokivuolle, Esa; Virén, Matti; Vähämaa, Oskari (2009)
    Bank of Finland Research Discussion Papers 26/2009
    Building on the work of Sorge and Virolainen (2006), we revisit the data on aggregate Finnish bank loan losses from the corporate sector, which covers the Big Five crisis in Finland in the early 1990s. Several extensions to the empirical model are considered. These extensions are then used in the simulations of the aggregate loan loss distribution. The simulation results provide some guidance as to what might be the most important dimensions in which to improve the basic model. We found that making the average LGD depend on the business cycle seems to be the most important improvement. We also compare the empirical fit of the annual expected losses over a long period. In scenario-based analyses we find that a prolonged deep recession (as well as simultaneity of various macro shocks) has a convex effect on cumulative loan losses. This emphasizes the importance of an early policy response to a looming crisis. Finally, a comparison of the loan loss distribution on the eve of the 1990s crisis with the most recent distribution demonstrates the greatly elevated risk level prior to the 1990s crisis.