Liquidity support to banks during Indonesia's financial crisis

During the 1997–98 financial crisis, Bank Indonesia provided liquidity support to many banks experiencing difficulties. This policy became controversial because of the magnitude of the likely losses to the government, which in the end would have to be borne by the general public. Suspicions of corruption involving bankers and officials of Bank Indonesia fuelled the debate. Surprisingly, however, concerns of this kind have not been raised in relation to the far larger amount of support provided to banks by the government in the form of recapitalisation bonds. The public's lack of understanding of the operations of the banking sector further complicated the debate. This paper attempts to shed some light on the central bank's actions and on the proposed solutions to the problems that arose from them.     

Working capital management during the global financial crisis: Evidence from Japan

This paper demonstrates the adjustment speed of firm working capital and the relationships between working capital and firm performance in Japan during the global financial crisis. Using quarterly firm-level data, we find that the adjustment of working capital was weaker during the crisis. Moreover, the negative relationship between excess working capital and firm performance became more significant during the crisis, especially for larger firms. However, this crisis-related working capital–firm performance effect does not appear to persist for very long, because to finance any excess working capital, firms borrow from banks and reduce their internal cash both during and outside periods of crisis.     

International banking and transmission of the 1931 financial crisis

In May to July 1931, a series of financial panics shook central Europe before spreading to the rest of the world. This article explores the role of cross‐border banking linkages in propagating the central European crisis to Britain and the US. Using archival bank‐level data, the article documents US and British banks’ exposure to central European frozen credits in 1931. Central European lending was mostly done by large and diversified commercial banks in the US and by small and geographically specialized merchant banks/acceptance houses in Britain. Differences in the organization of international bank lending explain why the central European crisis disturbed few US banks but endangered many British financial institutions.     

Japanese repo and call markets before,during, and emerging from the financial crisis

We empirically investigate the relationship between the Japanese general collateral (GC) repurchase agreement (repo) and uncollateralized call rates before, during, and emerging from the recent financial crisis. Unlike the US and many other countries, the Japanese GC repo rate had been higher than the uncollateralized call rate, despite the former being secured by collateral. Moreover, during the financial crisis, the Japanese GC repo rate rose, whereas the US Treasury GC repo rate decreased. The results of our empirical analysis suggest that segmentation between the Japanese repo and call markets was an important factor in explaining these features. Our results also imply that the Bank of Japan’s policy actions during and after the financial crisis were effective to some extent in lowering both the repo and call rates, and stabilizing the relationship between them.     

Regional financial technology and shadow banking activities of non-financial firms: Evidence from China

Financial technology has greatly revolutionized the finance industry. However, the impact of financial technology on the shadow banking activities of non-financial firms has not been examined. Using a sample of Chinese listed firms from 2011 to 2018, we find that regional financial technology is positively associated with the shadow banking activities of non-financial firms, which is more pronounced for firms with low profitability and firms listed only in China’s A-share market. We show that financial technology can enhance the shadow banking activities by alleviating financing constraints. In addition, an increase in the equalization of profit rate and an increase in investment in the real economy reduce the positive effect of financial technology on the shadow banking activities. Further analysis suggests that financial regulations can attenuate excessive shadow banking activities of non-financial firms driven by financial technology.     

Bank market power, economic growth and financial stability: Evidence from Asian banks

This paper examines whether Asian banks are still prone to moral hazard in the aftermath of the 1997 Asian crisis. Using a sample of commercial banks from 12 Asian countries during the 2001–2007 period, our empirical findings highlight that greater market power in the banking market results in higher instability. Although banks are better capitalized in less competitive markets their default risk remains higher. A deeper investigation however shows that such behaviour is dependent on the economic environment. Higher economic growth contributes to neutralize greater risk taking and higher instability in less competitive markets.     

The dynamic contagion of the global financial crisis into Japanese markets

This paper investigates the risk contagion channel of the global financial crisis into Japan using daily data on bond risk premiums for the financial and manufacturing industries from July 18, 2006 to May 25, 2010. We employ a bivariate EGARCH model with the constant exogenous contagion impacts of foreign industries and the time-varying endogenous contagion impacts of domestic industries. We find evidence that: (i) a constant exogenous impact from foreign industries appears in the risk premium for 5-year bonds issued by manufacturing industry firms, and (ii) contagion only exists from the manufacturing industry to the financial industry, and that there is no evidence of any reverse causation, even during the Lehman Brothers shock on September 15, 2008. Thus, in Japan, risk transfers from foreign industries to the domestic manufacturing industry, and thence to the domestic financial industry.     

The Japanese labour market during the global financial crisis and the role of non-standard work: A micro perspective

This paper analyses aggregate labour dynamics during the global financial crisis in Japan and the role of non-standard work using micro data. The analysis proceeds in two steps. First, using comprehensive establishment-level datasets for the period 1991–2009, it provides a detailed portrait of the adjustment behaviour of establishments at the micro level. Second, it compares aggregate labour market dynamics during the global financial crisis with that observed during the 1997 crisis and decomposes the observed differences into components that can be attributed to changes in the micro-adjustment behaviour of Japanese establishments, changes in the incidence of non-standard work and changes in the distribution of shocks across establishments. It finds that the incidence of non-standard work has increased considerably, worker turnover is much higher among non-standard than standard workers and adjustments in working-time are less important for non-standard workers. Counterfactual simulations suggest that the employment response during the global crisis would have been smaller if the incidence of non-standard work remained at the level observed during the 1997 crisis. The relatively small employment response observed during the global financial crisis is therefore driven by factors other than the increase in the incidence of non-standard work.     

The performance of minority banks in a deregulated banking environment

This study examined 58 performance ratios for minority banks in 1980 and 1988. Its purpose was to evaluate the impact of deregulation on high and low performance minority banks. The study found that deregulation had a positive impact on those banks in the high performance groups in 1980 and a negative affect on those banks in the low performance groups in 1980. The study also found minority banks, in general, needed to improve management efficiency. Management efficiency of low performance minority banks seemed to have deteriorated in the deregulation period. The authors suggest that low performance minority banks be given closer regulatory supervision and aid in developing efficient management in their organizations.     

Time-varying beta and the Asian financial crisis: Evidence from the Asian industrial sectors

This paper empirically investigates the effects of the Asian financial crisis of 1997–98, and the period immediately afterwards, on the time-varying beta of four industrial sectors (chemical, finance, retail and industry) of Indonesia, Singapore, South Korea, and Taiwan. We apply daily data from 1992 to 2002 and the bivariate MA-GARCH model (BEKK) to create the time-varying industrial betas. Results provide evidence of the influence of the Asian financial crisis, and the period after, on the time-varying industrial betas of these countries. These results may have implications for investors who are interested in portfolio risk management.     

The Swedish banking crisis: roots and consequences

The article analyses the Swedish banking crisis in the early1990s. Newly deregulated credit markets after 1985 stimulateda competitive process between financial institutions where expansionwas given priority. Combined with an expansive macro policy,this contributed to an asset price boom. The subsequent crisisresulted from a highly leveraged private sector being simultaneouslyhit by three major exogenous events: a shift in monetary policywith an increase in pre-tax interest rates, a tax reform thatincreased after tax interest rates, and the ERM crisis. Combinedwith some overinvestment in commercial property, high real interestrates contributed to breaking the boom in real estate pricesand triggering a downward price spiral resulting in bankruptciesand massive credit losses. The government rescued the bankingsystem by issuing a general guarantee of bank obligations. Thetotal direct cost to the taxpayer of the salvage has been estimatedat around 2 per cent of GDP.     

Board characteristics and efficiency of value added by banks: Evidence from an emerging economy

This paper estimates the efficiency of value added by banks using their total resources (physical capital resources and intangible resources) and finds an association between board characteristics and efficiency of value added. The paper is grounded in the theory of resource and knowledge based view of the firm, and agency theory, and tries to establish links between these two theories. This study departs from existing literature of examining the effect of board characteristics on financial performance, corporate sustainability, and corporate environmental responsibility, and tries to understand the relationship between board characteristics and the efficiency of value added by banks through their resources. This is also the first study of its kind to study the relationship between board structure characteristics and value creation in Indian banks using the Value Added Intellectual Coefficient (VAIC) methodology. Using the data for 41 commercial banks in India from 2008 to 2017 and by employing Prais-Winsten Regression, this study finds that board meetings and CEO-Chairman duality significantly and positively influence the efficiency of value added by banks through their total resources and intellectual capital resources. At the same time, independence in the boards negatively influences the efficiency of value added through physical capital resources. Overall, the findings of the paper indicate that board governance influences bank performance measured in terms of efficiency of value added. Policymakers, regulators, and bank managers should frame appropriate policies to ensure more board meetings, and the presence of board duality.     

The role of banks in financial integration: evidence from new EU members

EU enlargement involves the simultaneous liberalisation of goods and financial markets. While the issue of free trade in capital versus goods has frequently been the subject of study in international economics, the emphasis has typically been on physical capital (machines etc) rather than financial capital. This paper considers this distinction in a world with asymmetric information, moral hazard and hence credit rationing, and explores the resulting ambiguous theoretical predictions via an econometric analysis of the entry of the Central and Eastern European Countries to the EU.     

The causes of the recent financial crisis and the role of central banks in avoiding the next one

The recent financial crisis revealed that in a world of large asymmetries of information, of complex financial innovations and incomplete regulatory frameworks “self regulation” obviously does not work. But we have also seen that the governmental stabilisation policies have not worked well either. This paper argues that there have been, at least, two main contributors to the recent financial crisis. The one is supervision and regulation policy, the other is monetary policy. Easy monetary policy designed to ward off perceived risks of deflation in 2002–04 contributed to the boom in the housing market in 2004 and 2005 by keeping interest rates too low for too long. Particularly the US-Fed has played a crucial role by fuelling the asset-price, boom-bust cycle that led to the sub-prime crisis and the following global financial crisis. Moreover, this paper analyses what central banks can do to help avoid a next financial crisis. In particular, the role and limits of supplementary macro-prudential instruments are discussed.     

近期越南金融危机的评估

按照国际通行标准,越南已经发生金融危机。越南金融危机事出有因,是其经济虚高增长的"矫枉过正",它对周边国家经济影响有限,但给我们提供了经验教训。只要发展基础没有改变,越南今后的经济前景仍可看好。     

以浙江为例,看后危机时代开发区的发展

自1984年国务院批准设立第一个宁波经济技术开发区以来,一度开发区群雄并起、良莠混杂。清理整顿前我国有各类开发区超过6000家,但经国务院批准的仅232家,省级批准的也不过1019家。随着2003年的清理整顿,开发区的数量有了一定的减少,与此同时各类国家级开发区数量基本保持稳定,