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Bank Funding Costs For International Banks
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Book Synopsis Bank Funding Costs for International Banks by : MissRita Babihuga
Download or read book Bank Funding Costs for International Banks written by MissRita Babihuga and published by International Monetary Fund. This book was released on 2014-04-30 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the determinants of bank funding costs for a sample of internationally active banks from 2001–12. We find that changes in banks’ unsecured funding costs are associated with bank-specific characteristics such as an institution’s credit worthiness and the return on its market value, and importantly, on the level and quality of capital. Similarly, market factors such as the level of investor risk appetite, as well as shocks to financial markets—notably the US subprime crisis and the Euro Area sovereign debt crisis—have also been key drivers of the sharp rise in bank funding costs. We also find evidence that large systemically important institutions have enjoyed a funding advantage, and that this advantage has risen since the onset of the two crises. With the exception of Euro Area periphery banks, by end-2012 the rise in funding costs had generally been reversed for most major banks as a result of improvments in bank asset quality as well as steps taken to increase resilience, notably higher capitalization. Our results suggest increased capital buffers may potentially support bank lending to the real economy by reducing bank funding costs.
Book Synopsis Foreign Currency Bank Funding and Global Factors by : Signe Krogstrup
Download or read book Foreign Currency Bank Funding and Global Factors written by Signe Krogstrup and published by International Monetary Fund. This book was released on 2018-05-09 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: The literature on the drivers of capital flows stresses the prominent role of global financial factors. Recent empirical work, however, highlights how this role varies across countries and time, and this heterogeneity is not well understood. We revisit this question by focusing on financial intermediaries’ funding flows in different currencies. A concise portfolio model shows that the sign and magnitude of the response of foreign currency funding flows to global risk factors depend on the financial intermediary’s pre-existing currency exposure. An analysis of a rich dataset of European banks’ aggregate balance sheets lends support to the model predictions, especially in countries outside the euro area.
Book Synopsis Central Bank Dollar Swap Lines and Overseas Dollar Funding Costs by : Linda S. Goldberg
Download or read book Central Bank Dollar Swap Lines and Overseas Dollar Funding Costs written by Linda S. Goldberg and published by DIANE Publishing. This book was released on 2010-08 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: Following a scarcity of dollar funding available internationally to banks and financial institutions, in Dec. 2007 the Federal Reserve began to establish or expand Temporary Reciprocal Currency Arrangements with 14 foreign central banks. These central banks had the capacity to use these swap facilities to provide dollar liquidity to institutions in their jurisdictions. This paper presents the developments in the dollar swap facilities through the end of 2009. The facilities were a response to dollar funding shortages outside the U.S. during a period of market dysfunction. The dollar swap lines among central banks were effective at reducing the dollar funding pressures abroad and stresses in money markets. Charts and tables.
Book Synopsis Bank Solvency and Funding Cost by : Mr.Stefan W. Schmitz
Download or read book Bank Solvency and Funding Cost written by Mr.Stefan W. Schmitz and published by International Monetary Fund. This book was released on 2017-05-15 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents new evidence on the empirical relationship between bank solvency and funding costs. Building on a newly constructed dataset drawing on supervisory data for 54 large banks from six advanced countries over 2004–2013, we use a simultaneous equation approach to estimate the contemporaneous interaction between solvency and liquidity. Our results show that liquidity and solvency interactions can be more material than suggested by the existing empirical literature. A 100 bps increase in regulatory capital ratios is associated with a decrease of bank funding costs of about 105 bps. A 100 bps increase in funding costs reduces regulatory capital buffers by 32 bps. We also find evidence of non-linear effects between solvency and funding costs. Understanding the impact of solvency on funding costs is particularly relevant for stress testing. Our analysis suggests that neglecting the dynamic features of the solvency-liquidity nexus in the 2014 EU-wide stress test could have led to a significant underestimation of the impact of stress on bank capital ratios.
Book Synopsis Bank Solvency and Funding Cost by : Christoph Aymanns
Download or read book Bank Solvency and Funding Cost written by Christoph Aymanns and published by International Monetary Fund. This book was released on 2016-03-15 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: Understanding the interaction between bank solvency and funding cost is a crucial pre-requisite for stress-testing. In this paper we study the sensitivity of bank funding cost to solvency measures while controlling for various other measures of bank fundamentals. The analysis includes two measures of bank funding cost: (a) average funding cost and (b) interbank funding cost as a proxy of wholesale funding cost. The main findings are: (1) Solvency is negatively and significantly related to measures of funding cost, but the effect is small in magnitude. (2) On average, the relationship is stronger for interbank funding cost than for average funding cost. (3) During periods of stress interbank funding cost is more sensitive to solvency than in normal times. Finally, (4) the relationship between funding cost and solvency appears to be non-linear, with higher sensitivity of funding cost at lower levels of solvency.
Book Synopsis Global Banks’ Dollar Funding: A Source of Financial Vulnerability by : Mr.Adolfo Barajas
Download or read book Global Banks’ Dollar Funding: A Source of Financial Vulnerability written by Mr.Adolfo Barajas and published by International Monetary Fund. This book was released on 2020-07-03 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: Leading up to the global financial crisis, US dollar activity by global banks headquartered outside the United States played a crucial role in transmitting shocks originating in funding markets. Although post-crisis regulation has improved banking systems’ resilience, US dollar funding remains a global vulnerability, as evidenced by strains that reemerged in March 2020 in the midst of the COVID-19 crisis. We show that shocks to US dollar funding costs lead to financial stress in the home economies of these global non-US banks, and to spillovers to borrowers, especially emerging economies. US dollar funding vulnerability amplifies these negative effects, while some policy-related factors act as mitigators, such as swap line arrangements between central banks and international reserve holdings. Thus, these vulnerabilities should be monitored and, to the extent possible, controlled.
Book Synopsis International Banking by : Emmanuel N. Roussakis
Download or read book International Banking written by Emmanuel N. Roussakis and published by Praeger Publishers. This book was released on 1983 with total page 570 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Bank Debt in Europe by : Mrs.Vanessa Le Lesle
Download or read book Bank Debt in Europe written by Mrs.Vanessa Le Lesle and published by International Monetary Fund. This book was released on 2012-12-20 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: The crisis in Europe has underscored the vulnerability of European bank funding models compared to international peers. This paper studies the drivers behind this fragility and examines the future of bank funding, primarily wholesale, in Europe. We argue that cyclical and structural factors have altered the structure, cost, and composition of funding for European banks. The paper discusses the consequences of shifting funding patterns and investor preferences and presents possible policy options and bank actions to enhance European bank funding models’ robustness.
Book Synopsis The Management of International Banks by : S. Davis
Download or read book The Management of International Banks written by S. Davis and published by Palgrave Macmillan. This book was released on 1983 with total page 246 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Benefits and Costs of Bank Capital by : Jihad Dagher
Download or read book Benefits and Costs of Bank Capital written by Jihad Dagher and published by International Monetary Fund. This book was released on 2016-03-03 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: The appropriate level of bank capital and, more generally, a bank’s capacity to absorb losses, has been at the core of the post-crisis policy debate. This paper contributes to the debate by focusing on how much capital would have been needed to avoid imposing losses on bank creditors or resorting to public recapitalizations of banks in past banking crises. The paper also looks at the welfare costs of tighter capital regulation by reviewing the evidence on its potential impact on bank credit and lending rates. Its findings broadly support the range of loss absorbency suggested by the Financial Stability Board (FSB) and the Basel Committee for systemically important banks.
Author :International Monetary Fund. Monetary and Capital Markets Department Publisher :INTERNATIONAL MONETARY FUND ISBN 13 :9781498372930 Total Pages :0 pages Book Rating :4.3/5 (729 download)
Book Synopsis Global Financial Stability Report, April 2015 by : International Monetary Fund. Monetary and Capital Markets Department
Download or read book Global Financial Stability Report, April 2015 written by International Monetary Fund. Monetary and Capital Markets Department and published by INTERNATIONAL MONETARY FUND. This book was released on 2015-04-15 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The current report finds that, despite an improvement in economic prospects in some key advanced economies, new challenges to global financial stability have arisen. The global financial system is being buffeted by a series of changes, including lower oil prices and, in some cases, diverging growth patterns and monetary policies. Expectations for rising U.S. policy rates sparked a significant appreciation of the U.S. dollar, while long term bond yields in many advanced economies have decreased—and have turned negative for almost a third of euro area sovereign bonds—on disinflation concerns and the prospect of continued monetary accommodation. Emerging markets are caught in these global cross currents, with some oil exporters and other facing new stability challenges, while others have gained more policy space as a result of lower fuel prices and reduced inflationary pressures. The report also examines changes in international banking since the global financial crisis and finds that these changes are likely to promote more stable bank lending in host countries. Finally, the report finds that the asset management industry needs to strengthen its oversight framework to address financial stability risks from incentive problems between end-investors and portfolio managers and the risk of runs due to liquidity mismatches.
Book Synopsis Italian Sovereign Spreads by : Ms.Edda Zoli
Download or read book Italian Sovereign Spreads written by Ms.Edda Zoli and published by International Monetary Fund. This book was released on 2013-04-03 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: Volatility in Italian sovereign spreads has increased since mid-2011. This paper finds that news on the euro area debt crisis and country specific events were important drivers of sovereign spreads. Movements in sovereign spreads affect CDS spreads and bond yields of Italian banks, and are transmitted rapidly to firm lending rates. Banks with lower capital ratios and higher nonperforming loans were found to be more sensitive to swings in sovereign spreads. Credit supply constraints due to bank funding shortages from the sovereign debt crisis were a major factor behind the lending slowdown in late 2011, while in 2012 weak demand appears to have been driving changes in credit more than supply.
Book Synopsis Estimating the Costs of Financial Regulation by : Mr.Andre Santos
Download or read book Estimating the Costs of Financial Regulation written by Mr.Andre Santos and published by International Monetary Fund. This book was released on 2012-09-11 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: Staff Discussion Notes showcase the latest policy-related analysis and research being developed by individual IMF staff and are published to elicit comment and to further debate. These papers are generally brief and written in nontechnical language, and so are aimed at a broad audience interested in economic policy issues. This Web-only series replaced Staff Position Notes in January 2011.
Book Synopsis International Bank Lending Channel of Monetary Policy by : Silvia Albrizio
Download or read book International Bank Lending Channel of Monetary Policy written by Silvia Albrizio and published by International Monetary Fund. This book was released on 2019-11-01 with total page 61 pages. Available in PDF, EPUB and Kindle. Book excerpt: How does domestic monetary policy in systemic countries spillover to the rest of the world? This paper examines the transmission channel of domestic monetary policy in the cross-border context. We use exogenous shocks to monetary policy in systemically important economies, including the U.S., and local projections to estimate the dynamic effect of monetary policy shocks on bilateral cross-border bank lending. We find robust evidence that an increase in funding costs following an exogenous monetary tightening leads to a statistically and economically significant decline in cross-border bank lending. The effect is weakened during periods of high uncertainty. In contrast, the effect is found to not vary according to the degree of borrower country riskiness, further weakening support for the international portfolio rebalancing channel.
Book Synopsis Bank Capital and the Cost of Equity by : Mohamed Belkhir
Download or read book Bank Capital and the Cost of Equity written by Mohamed Belkhir and published by International Monetary Fund. This book was released on 2019-12-04 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a sample of publicly listed banks from 62 countries over the 1991-2017 period, we investigate the impact of capital on banks’ cost of equity. Consistent with the theoretical prediction that more equity in the capital mix leads to a fall in firms’ costs of equity, we find that better capitalized banks enjoy lower equity costs. Our baseline estimations indicate that a 1 percentage point increase in a bank’s equity-to-assets ratio lowers its cost of equity by about 18 basis points. Our results also suggest that the form of capital that investors value the most is sheer equity capital; other forms of capital, such as Tier 2 regulatory capital, are less (or not at all) valued by investors. Additionally, our main finding that capital has a negative effect on banks’ cost of equity holds in both developed and developing countries. The results of this paper provide the missing evidence in the debate on the effects of higher capital requirements on banks’ funding costs.
Book Synopsis Bank Solvency and Funding Cost by : Christoph Aymanns
Download or read book Bank Solvency and Funding Cost written by Christoph Aymanns and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Swiss Banking in an International Context by : W. Blackman
Download or read book Swiss Banking in an International Context written by W. Blackman and published by Springer. This book was released on 1989-06-18 with total page 288 pages. Available in PDF, EPUB and Kindle. Book excerpt: A study of Swiss financial institutions which aims to discover why Swiss banking has been so singularly successful in the face of international debt and financial crises. The book also provides a theoretical analysis of international banking, utilizing the Swiss example as a case study.
