Banking efficiency in South East Europe: Evidence for financial crises and the gap between new EU members and candidate countries

In this study we compare the cost efficiency of banks in ten South East European countries and find out how differences in efficiency are related to EU membership. The results reveal a statistically significant cost efficiency gap between EU and non-EU banking systems in the region, where on average EU banking systems tend to be more cost efficient than their non-EU counterparts. In contrast to other similar studies analyzing banking efficiency in South East European countries, we also run β-convergence and σ-convergence tests, as proposed in the literature. Based on these tests we can draw conclusions concerning the existence of a catching-up effect, since the detected cost efficiency gap is closing predominantly because of adjustments on the side of the less efficient banks. Additionally, we found that during the 2008 global financial crisis, the average cost efficiency scores of banks in the region improved, which could be explained by enhanced incentives of bank managers for intensified cost optimization in banks in crisis times. Our results suggest that the institutional adjustments in the non-EU countries should continue towards EU standards, as the EU banking systems tend to dominate in terms of measured cost efficiency.     

International spillovers of (un)conventional monetary policy: The effect of the ECB and the US Fed on non-euro EU countries

We estimate a global vector autoregression model to examine the effects of euro area and US monetary policy stances, together with the effect of euro area consumer prices, on economic activity and prices in non-euro EU countries using monthly data from 2001-2016. Along with some standard macroeconomic variables, our model contains measures of the shadow monetary policy rate to address the zero lower bound and the implementation of unconventional monetary policy by the European Central Bank and the US Federal Reserve. We find that these monetary shocks have the expected qualitative effects but their magnitude differs across countries, with southeastern EU economies being less affected than their peers in Central Europe. Euro area monetary shocks have a greater effect than those that emanate from the US. We also find certain evidence that the effects of unconventional monetary policy measures are weaker than those of conventional measures. The spillovers of euro area price shocks to non-euro EU countries are limited, suggesting that the law of one price materializes slowly.     

Measuring the impact of restructuring and country-specific factors on the efficiency of post-crisis East Asian banking systems: Integrating DEA with SFA

This paper investigates the relationship between post-crisis bank restructuring, country-specific conditions and bank efficiency in Asian countries from 1997 to 2001 using an approach that integrates data envelopment analysis and stochastic frontier analysis. We focus on restructuring measures related to bank ownership. The results indicate that although domestic mergers produce more efficient banks, overall, restructuring does not lead to more efficient banking systems. Banking system inefficiencies are mostly attributed to country-specific conditions, particularly, high interest rates, concentrated markets and economic development.     

Do independent fiscal institutions cause better fiscal outcomes in the European Union?

This paper explores the budgetary implications of the independent fiscal institutions (IFIs) in the European Union (EU). We employ a dynamic panel model for the period 2000–2019 and find that these fiscal watchdogs have a positive and significant influence not only on government budget balance for the EU member states, resulting in smaller government budget deficits, but also on countries’ compliance with fiscal rules, results that hold across alternative fiscal balances. IFIs appear to have a beneficial impact on fiscal performance and compliance with numerical targets in countries with poorly designed fiscal responsibility norms but weaker influence when fiscal rules are less binding (well-designed fiscal rules). The findings remain significant regardless the year of accession to the EU (old vs. new members) or euro-area status (euro-area vs. non-euro-area members). However, we document that IFIs play a larger role in countries that established these monitoring bodies before 2013, indicating that experience matters in IFI performance. Also, our findings show that the influence of IFIs remains if we take into account institutional reforms in which their mandates were extended with different powers and tasks, which has a positive and significant effect on fiscal balances. Moreover, we find that, under the circumstance of systemic and banking crises, these institutions are associated with improved fiscal outcomes, reflecting their increased concern about the path of public finances and their role in reducing budgetary forecasting biases. Our results are robust to a variety of specifications and models, including alternative measures of the government budget balance and after controlling for a set of institutional characteristics and for potential endogeneity in the estimations.     

Profit efficiency in the European Union banking industry: a directional technology distance function approach

We employ the directional technology distance function approach and present estimates of profit efficiency in the 25 European Union (EU) member states over the period 1998–2008. This method decomposes profit efficiency into its technical and allocative components. We investigate potential efficiency differences across the old EU region and the new EU member states, across countries and across banks of different size. Our results indicate a significant level of profit inefficiency for the EU region, which is predominantly attributed to allocative inefficiency. Our findings also suggest that banks operating in the old EU region are, on average, more profit efficient than credit institutions in the new EU member states. Overall, we observe considerable variation of efficiency scores across countries and different patterns in efficiency change over time, as well as a negative relationship between bank size and efficiency.     

Policies to benefit from the globalization of corporate R&D: An exploratory study for EU countries

This article explores how the globalization of corporate R&D has led to the emergence of new policy strategies across the EU, involving a more proactive role of governments and a closer connection between innovation policies and FDI promotion policies. The first part presents an analytical framework encompassing the main policy objectives and instruments at stake, which aims at facilitating the design and evaluation of policies geared towards the globalization of corporate R&D. Both the policies to attract inward FDI in R&D and those towards R&D offshoring are addressed, as well as the distinct policy implications of alternative entry modes. The second part provides evidence of the evolution of European policies in response to the globalization of corporate R&D, pointing out a set of country-specific examples and suggesting avenues for policy intervention at the EU level. Although the focus is on the EU, this study may inform policy learning in other developed and developing countries alike.     

Determinants of bank interest margins in Central and Eastern Europe: A comparison with the West

We investigate the determinants of bank interest margins in the Central and Eastern European countries (CEEC). We assess to what extent the relatively high bank margins in CEEC can be attributed to low efficiency or non-competitive market conditions, controlling for the macroeconomic environment and the influence of foreign and state-owned banks. We systematically compare CEEC banks with Western European banks. Our results indicate that banking in the CEEC is on a virtuous path, at least in the EU accession countries: Increased efficiency benefits customers, while capital adequacy supports systemic stability. In the non-accession countries, important policy actions are required.     

Sustainable development of small‐ and medium‐sized enterprises in the European Union: A taxonomy of circular economy practices

This paper focuses on the implementation of circular economy (CE) practices in small‐ and medium‐sized firms in all 28 European Union (EU) countries. The analyses take into account the hierarchical nature of the collected data as firms are nested within EU countries, that is, the heterogeneity between different types of firms and countries according to practices and attitudes towards CE. The multilevel latent class model identifies groups of firms and groups of EU countries that are homogeneous in terms of CE, that is, how the homogeneous groups of small‐ and medium‐sized enterprises (SMEs) are distributed across the groups of EU countries. These results, together with the fact that firms with similar CE attitudes and practices have different demographic and business profiles across groups of countries, shed further light on the topic of green behavior in the EU with implications for businesses' environmental policies. Moreover, indications emerge that European policies favoring the implementation of CE practices should be targeted at least for subgroups of European countries, considering the different composition by typology of SMEs operating in their territories and that, at the same time, policies should be defined within each group of countries to account for the specific features of each of the four classes of SMEs.     

Assimilation of immigrants in Spain: A longitudinal analysis

In this paper we use a new panel dataset to analyse the earnings assimilation of immigrants in Spain. We show that immigrants reduce the wage gap relative to natives by 15 pp during the first 5–6 years after arrival, but the earnings differential does not disappear completely. Earnings assimilation is not homogeneous across different nationalities, being faster for South-American and European (new accession countries to EU) immigrants compared to Africans. Finally, we show that human capital gains within the firm as opposed to higher mobility contribute the most to their assimilation process.     

Adjusted indicators of quality and equity for monitoring the education systems over time. Insights on EU15 countries from PISA surveys

In this work, we investigate how European countries belonging to EU15 are performing in terms of the quality and equity of their educational systems. To do so, we jointly analysed student competencies in mathematics and reading using data collected in four different waves (2006, 2009, 2012, 2015) by the Program for International Student Assessment (PISA) run by the Organisation for Economic Cooperation and Development (OECD). The aim of this analysis is twofold: (i) to assess the associations between students' competencies inmathematics and reading and their socioeconomic status and to investigate how this relationship varies across countries over time; (ii) to present a batch of adjusted indicators relevant to the investigation of educational performance over time in terms of quality (average student competencies) and equity (low association between student achievement and their socioeconomic backgrounds). We fitted a mixed-effect (multilevel) regression model with a bivariate latent structure and random intercepts and slopes to assess the effect of socioeconomic and cultural background on student competencies across countries over time and to assess the performance trajectories of EU15 countries with respect to European Commission benchmarks. We present and discuss our main findings and their implications in terms of the policies of EU15 countries.     

中国影子银行部门系统性风险的形成、影响与应对

本文分析了影子银行风险传染机制及其影响,在违约风险基于会计账户传染的马尔科夫过程假设下,运用投入产出法构建影子银行系统性风险测度模型,以2007-2012年中国影子银行业务数据进行检验,结果显示：信托公司部门是主要的风险源,银行部门是系统性风险最主要的承担者,观测期内影子银行部门系统性风险整体呈现上升趋势。防控系统性风险应从影子银行业务风险隔离机制、资本与杠杆率监管、信息透明度、宏观审慎框架和风险应急机制等建设着手。     

Does income inequality lead to banking crises in developing countries? Empirical evidence from cross-country panel data

This study empirically examines whether increasing income inequality results in banking crises using panel data for 68 countries covering the years 1973 to 2010. The results show that developing countries with high inequality tend to have higher levels of domestic credit and that domestic credit booms increase the probability of banking crises. We also find that developing economies display direct channels from inequality to banking crises without an association with credit booms. We find no consistent evidence that income inequality contributes to banking crises in advanced economies. In developing countries, the probability of banking crises increases dramatically as income inequality levels increase: The probability of a systemic banking crisis within three years is 9.5% when the Gini is as low as 0.2 in developing countries and increases to 57.4% when the Gini is 0.4. These results are robust to several specifications.     

Investor protection,regulation and bank risk-taking behavior

This paper examines whether the influence of investor protection on banks’ risk is channeled through banking regulation, and vice-versa, using panel data from a sample of 567 European and US banks for the 2004–2015 period. As banking regulatory factors, we consider capital stringency, activity restrictions and private monitoring, whereas as investor protection factors, we consider the level of shareholder and creditor protection. We find that banking regulation moderates the positive direct influence of investor protection on banks’ risk, while investor protection reinforces the negative direct influence of banking regulation on risk. Moreover, we show that the negative effect of national regulations on banks’ risk is more pronounced during systemic crisis years. Finally, taking into account market competition, we argue that private monitoring only has a direct effect on banks’ risk, whereas the effects of capital stringency and activity restriction are channeled through market competition.     

An Efficiency Comparison of European Banking Systems Operating under Different Environmental Conditions

The paper investigates the operating efficiency differences of a sample of commercial banks across 10 European countries. First, the paper analyzes the technical efficiency of each country sample following the basic Data Envelopment Analysis (DEA) model incorporating only banking variables. Then, a complete DEA model is introduced, incorporating environmental factors together with the banking variables of the basic model. The comparison between the two models shows that country-specific environmental conditions exercise a strong influence over the behavior of each country's banking industry.     

Determinants of Capital Structure: United Kingdom Versus Continental European Countries

In this paper, we analyze how country‐specific differences influence capital structure indirectly through firm‐specific variables. We apply a system Generalized Method of Moments technique to a panel data sample of companies from five countries (France, Germany, Italy, Spain and the United Kingdom) during the period 1998–2008. As the different financial systems of European economies (bank‐oriented or market‐oriented) may influence capital structure differently through firm‐specific variables, we first examine the determinants of capital structure for each country separately and we then analyze whether the observed differences between the United Kingdom and the continental European countries are relevant. The results show that there are substantial differences in the capital structure choices of firms across five major European countries. These differences are motivated by the type of financial systems of the countries (bank‐oriented and market‐oriented) and influence the capital structure indirectly through the firm‐specific variables. Overall, our results support the relevance of the differences in the capital structure choices of firms across five major European countries, and in particular, the singularity of the United Kingdom (a market‐oriented economy) as opposed to continental European countries (bank‐oriented economies).     

Exploring the effectiveness of research and innovation policies among European Union countries

In this paper we explore the effectiveness of selected research and innovation policies among EU countries. Using data from the AEGIS database and information from the 2015 Bruegel’s Partnership report on research and innovation polices in EU countries, we compare and contrast the response of knowledge intensive firms to a sample of policies. We find that the impact of the policies in our sample varies not only across countries but also across the age of affected firms in those countries. We conclude our analysis with a call for policy makers to begin to investigate the incidence of the impact of their research and innovation policies as measured not only by the age of firms but also by other dimensions.     

Is the emperor wearing new clothes? A social assessment of the European Union 2007–2013 financial framework

ABSTRACT

Over the years, European leaders have proudly waved a social flag as one of the European Union’s (EU) constituent and differentiating elements. This commitment is assessed here through the social footprint of the European 2007–2013 multiannual financial framework among the EU countries and, worldwide, using an extended multiregional input–output model. The focus is on the quantity and the quality of income and jobs generated. We find that well-known differences among its northern, southern and eastern regions threaten the EU’s intentions for high social standards, enabling first- and second-class winners. Core EU countries account for the most of the Funds and, thus, most of the positive economic and social impacts, mainly through spillovers from peripheral regions. Beyond the EU borders, Funds expenditures induce capital compensation boosts in emerging countries not balanced by a similar labor compensation impulse. Indeed, China captures the bulk of low-skilled and temporary employment.     

The linkage between insurance activity and banking credit: Some evidence from dynamic analysis

This paper investigates the long-run and short-run linkages between insurance activity and banking credit for G-7 countries. To minimize the pretest bias and overcome the structural changes, we adopt the bootstrap Granger causality test applied to full sample and subsamples with a fixed window size. The Johansen cointegration test with GMM-IV estimator finds a long-run positive relation between the series. The full sample results of bootstrap Granger causality test show that there is predictive power from life insurance activity to banking credit only for France and Japan, while the short-run causal relationships between nonlife insurance activity and banking credit are country-specific. However, parameter stability test results suggest that the short-run results in full sample are unreliable. The results of rolling VAR models report that the causal linkages between them are time-varying across various subsamples. These findings offer some useful insights for achieving the co-evolution between insurance and banking credit markets.     

Frontier-free Europe: a study of female migrants in the banking sector

Legislation on 'freedom of movement' guarantees the recognition of qualifications between countries of the European Union (EU), and is meant to provide migrants with access to employment in all member states. This paper reports on a study undertaken of EU migrant women in the banking sector in Britain, Germany and Spain. The discusses the experiences of migrants with regard to access to employment and positions abroad comparable to those held prior to migration. Migrants in this case experienced obstacles in the access to such employment. Although their experiences influenced by labour-market needs, findings suggest that the determining factors for barriers encountered were differences in the education and training cultures of countries pre- and post-migration, and the values and attitudes attached to these in of expectations by employers and migrants themselves.     

International propagation of shocks: A dynamic factor model using survey forecasts

This paper studies the pathways for the propagation of shocks across the G7 and major Asia-Pacific countries using multi-horizon forecasts of real GDP growth from 1995 to 2017. We show that if the forecasts are efficient in the long run, the results obtained using these forecasts are comparable to those obtained from the actual outturns. We measure global business cycle connectedness and study the impacts of both country-specific shocks and common international shocks using a panel factor structural VAR model. Our results suggest that there is a strong convergence of business cycles within the group of industrialized countries, as well as within the group of developing economies during non-recessionary periods. In particular, we find an increased decoupling between the industrialized and developing economies after the 2008 recession. However, the direction of shock spillovers during recessions and other crisis periods varies, depending on the nature and origin of the episode.