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21. The Relevance of Financial and Economic Factors for Determining Banking Risk across Europe

Author:
Renata Karkowska
Publication Date:
11-2017
Content Type:
Working Paper
Institution:
Center for Social and Economic Research - CASE
Abstract:
The goal of this study is to identify empirically how country-level development, taking into account the financial and macroeconomic environment, affect the risk profiles of the banking sector in Europe. Through a dataset that covers 3,399 European banks spanning the period 1996-2011, and the methodology of panel regression, the empirical findings document the heterogeneity of banking risk determinants. I examine the implications of bank leverage that manifest itself as spreading and growing instability. The study contributes to and combines the different strands of literature and understanding of the importance of the links between the variables. It also contributes to the literature by focusing on a group of countries from Central and Eastern Europe and the Commonwealth of Independent States that have not been studied before. The extended model provides a causal link between risk in the banking sector and the growth of the financial market and macroeconomy. I apply four measures of country-level development that are available in previous studies: share of foreign ownership in the banking sector; the financial freedom index; the real growth rate; and stock market capitalization. Using these measures, I obtain different results which highlight the fact that the effect of macroeconomic and financial development on banking sector risk-taking is ambiguous.
Topic:
Financial Markets, Economic Growth, Banks, Trade Liberalization, Macroeconomics, and Trade
Political Geography:
Europe, Eastern Europe, Central Europe, and European Union

22. Ethics vs. Ethos in US and UK Megabanking

Author:
Edward J. Kane
Publication Date:
05-2017
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Company law in the US and UK fails to acknowledge that authorities’ propensity to rescue giant banks from the consequences of insolvency assigns taxpayers a coerced and badly structured equity stake in too-big-to-fail institutions. The entrenched managerial norm of maximizing stockholder value lends a misplaced legitimacy to efforts by TBTF managers to take on dangerous levels of tail risk because their bank’s deep downside is effectively eliminated by the prospect of unlimited taxpayer support. Conventional tools of prudential regulation constrain but do not de-legitimate this behavior. To accomplish that end, this paper calls for: (1) a formal recognition of the fiduciary duties that TBTF firms owe to taxpayers and (2) criminalizing aggressive pursuit of safety-net subsidies as “theft by safety net.”
Topic:
Finance, Ethics, Banks, Banking, and Ethos
Political Geography:
United Kingdom, Europe, North America, and United States of America

23. Opening the Vaults: The Use of Tax Havens by Europe’s Biggest Banks

Author:
Manon Aubry and Thomas Dauphin
Publication Date:
03-2017
Content Type:
Working Paper
Institution:
Oxfam Publishing
Abstract:
The world of tax havens is a murky place. In Europe, only one sector is required to publicly report its profits and tax on a country-by-country basis – the banking sector, as a result of regulation following the financial crisis. Since 2015 all banks based in the European Union have been obliged to report on their operations in this way. This report showcases research by Oxfam that uses this new transparency data in depth for the first time to illustrate the extent to which the top 20 EU banks are using tax havens, and in which ways. The urgent need now is to extend public country-by-country reporting to all sectors of the economy. If tax transparency is extended to all sectors, it will be easier for governments to clamp down on tax dodging and to repatriate lost tax revenues that could be used to fight inequality through investment in healthcare, education, social protection and job creation.
Topic:
Inequality, Tax Systems, Banks, Transparency, and Banking
Political Geography:
Europe

24. Calling a Spade a Spade: Canada's Use of Sanctions

Author:
Andrea Charron and Paul Aseltine
Publication Date:
12-2016
Content Type:
Working Paper
Institution:
Canadian Global Affairs Institute (CGAI)
Abstract:
Canada’s use of sanctions is little studied which means the full scope and effect of this tool are not appreciated. Until 2006, Canada applied sanctions in support of the United Nations almost exclusively. Since then, Canada has also applied discretionary sanctions in support of allies such as the European Union and United States’ measures in addition to those required by the UN Security Council. Lacking extraterritorial reach and with this new tendency to layer sanctions (applying UN and additional measures) requires the navigation of multiple pieces of Canadian legislation. Banks and private companies, which are largely responsible for giving effect to Canada’s sanctions, must navigate this legislation. This has ensnared a few Canadians in the process with little evidence that Canada’s application of sanctions is compelling its targets (people, companies, and states) to change their behaviour. Canada’s application of sanctions is a signal of its desire to support multilateral, collective security efforts – nothing more or less.
Topic:
United Nations, Sanctions, European Union, and Banks
Political Geography:
Europe, Canada, North America, and United States of America

25. Interaction between monetary policy and bank regulation: lessons for the ECB

Author:
Marek Dabrowski
Publication Date:
02-2016
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
The European Central Bank (ECB) recently became engaged in macro-prudential policies and the micro-prudential supervision of the largest Euro area banks. These new tasks should help complete financial integration, and make the Euro area more resilient to financial instability risks. However, the multiplicity of mandates and instruments involves a risk of their inconsistency which could compromise the ECB’s core price-stability mandate as well as its independence. The experience of central banks during the recent global financial crisis confirms that such risks are not purely hypothetical.
Topic:
Monetary Policy, Economic Growth, Banks, Macroeconomics, Innovation, Trade, and European Central Bank
Political Geography:
Europe and European Union

26. The condition of and prospects for the private equity funds market in Poland

Author:
Barbara Nowakowska, Piotr Noceń, Michał Surowski, and Michał Popiołek
Publication Date:
02-2016
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
In the publication, Barabara Nowakowska and Piotr Noceń discuss 'Poland’s Private Equity Market: Current Conditions and Development Prospects', and Michał Surowski and Michał Popiołek describe 'Private Equity From a Bank’s Perspective'.
Topic:
Development, Markets, Financial Markets, Economic Growth, Banks, Innovation, and Trade
Political Geography:
Europe, Poland, and European Union

27. Sovereign Bond Purchases and Risk-Sharing Arrangements – Implications for Monetary Policy

Author:
Monika Blaszkiewicz
Publication Date:
07-2015
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
The design of the euro area Quantitative Easing (QE) programme raises the question of whether insufficient liquidity in the bond markets will reduce the impact of the programme and lead to market volatility. While estimates suggests that scarcity of around €102 billion may arise over the life of the programme, to date the QE programme has met its monthly targets and bond market volatility has been managed. Questions also arise in respect of the fact that risk is not fully shared on up to €738.4 billion to be purchased over the life of the programme. Partial risk sharing raises the spectre of defaulting central banks exiting the euro system, and existing members being unwilling to bear associated costs, and thus the future of the euro area. However, estimations suggest that, at present, all national central banks should be able to bare losses stemming from sovereign debt purchases under the current round of QE. This report was prepared within a research project entitled Sovereign bond purchases and risk sharing arrangements: Implications for euro-area monetary policy, which received funding from the European Parliament.
Topic:
Finance, Economic Growth, Banks, Trade, and European Central Bank
Political Geography:
Europe and European Union

28. Corporate debt securities market in Poland: state of art, problems, and prospects for development

Author:
Agnieszka Gontarek, Piotr Kowalski, and Tomasz Gałka
Publication Date:
09-2015
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
The development of the Polish corporate bonds market resulted from changes on the supply side. When the Lehman Brothers went bankrupt, Polish entrepreneurs realized that financing their companies’ operations only with the use of credit, even if contracted from different sources, might not be the best idea. Consequently, Polish business turned to debt instruments – said Piotr Kowalski, one of the keynote speakers during the mBank - CASE Seminar no. 136. In the publication, which is an extended and authorized version of presentations delivered during the abovementioned seminar, the authors discuss various aspects of the corporate debt securities market in Poland. Piotr Kowalski gives a synthetic presentation of the subject of the analysis, Agieszka Gontarek presents selected domestic regulations and factors, and Tomasz Gałka writes about selected consequences of excessive burdens.
Topic:
Debt, Business, Economic Growth, Banks, and Trade
Political Geography:
Europe, Central Asia, Caucasus, Eastern Europe, and Poland

29. An assessment of direct and indirect liabilities of Polish banks AD 2015

Author:
Marek Radzikowski and Mieczysław Groszek
Publication Date:
08-2015
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
The present document is an attempt at a comprehensive analysis of direct and indirect burdens imposed upon banks in 2015. The idea to present such factors — which are often extremely varied in nature — in a single study was born out of the fact that these factors are often considered separately, on the basis of various criteria, which causes them to be split into different groups. This approach results in a fairly common tendency for fragmentary assessment of their impact and, more importantly, in the adoption of piecemeal regulations which fail to take into account the full impact of the actions taken in different areas. This applies in equal measures to supervisory authorities, regulators, analysts, policymakers and the media, which means that, in a somewhat oversimplified sense, the above statement is applicable to the public at large. This situation can be most succinctly characterised in the manner presented below. In the aftermath of the crisis, banks require a new set of instruments to regulate the functioning thereof. This is because they are to become more stable, safe, less risk-prone and more customer-friendly. Each of these areas requires a separate set of regulatory instruments, along with the respective subgroups thereof. Oftentimes they are not synchronised with each other and are usually aimed at the implementation of a specific, particular goal to an excessive extent. In addition, there are also “special tasks” such as the reform of the Credit and Saving Unions (SKOK).
Topic:
Finance, Economic Growth, Banks, and Trade
Political Geography:
Europe, Central Asia, Caucasus, Eastern Europe, Poland, and European Union

30. The Banking Union: State of Art

Author:
Andrzej Reich and Stefan Kawalec
Publication Date:
06-2015
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
It is widely believed that the creation of the banking union initiated the integration of the EU banking market. The process is traced back to June 2012 (EU Summit decided to create the banking union), 4 November 2013 (effective date of the Banking Union Regulation), or 4 November 2014 (operational launch of the Single Supervisory Mechanism, SSM). However, the integration of the EU banking market began much earlier and the creation of the banking union should be considered the final rather than the initial step in the process.
Topic:
Finance, Financial Markets, Regional Integration, Banks, and Fiscal Policy
Political Geography:
Europe and European Union