Biggest Financial Crisis Research Articles

Does Credit Growth in the EMU Banking Sector Follow its Capital Adequacy?1

Abstract We put our hypothesis very straightforward, considering the euro area and the whole European Economic and Monetary Union (EMU) banking sector. The paper’s central hypothesis that capital adequacy of the EMU banking sector influenced credit growth and activities in the nonfinancial sector was confirmed; however, not entirely in all respects expected. We proved that, in general, there was a dependency between banks’ capital adequacy and loan growth in the euro area for the observed period Q1 1999 until Q1 2022; yet the correlation coefficient of 0.48 shows a middle positive relationship of variables. At the same time, more than 23% of loans’ variability might be explained by variability in capital adequacy. All significance tests proved our results valid. Nevertheless, we saw two very different and slightly controversial dynamics in loan growth and capital ratio during the observed period. Therefore, we were forced to separately continue with an analysis for both time frames: the period before the big financial and economic crisis (Q1 1999 - Q4 2008) and the period starting with the big financial and economic crisis (Q1 2009 - Q12022). The linear regression in the pre-crisis period was almost flat. In contrast, a simple linear regression during the crisis showed a relatively high negative correlation at around -0.6. Therefore, the sub-hypothesis that higher capital adequacy resulted in negative credit growth was supported for the crisis period. We believe that this paper offers the main originality and scientific contribution for this particular finding within the data time series deployment.

The impact of natural disasters on the performance and solvency of US banks

PurposeThis paper explores the effect of natural disasters on the profitability and solvency of US banks.Design/methodology/approachEmploying a sample of 187 large-scale natural disasters that occurred in the United States between 2000 and 2014 and a sample of 2,891 banks, we examine whether and how disaster-related damages affect various measures of bank profitability and bank solvency. We differentiate between different types of banks (with local, regional and national operations) based on a breakdown of their state-level deposits and explore the reaction of these banks to damages weighted by the GDP of the states they operate in.FindingsWe find that natural disasters have a pronounced effect on the net-income-to-assets and the net-income-to-equity ratio of banks, as well as the banks' impaired loans and return on average assets. We also observe significant effects on the equity ratio and the tier-1 capital ratio (two solvency measures). Interestingly, the latter are positive for regional banks which appear to benefit from increased customer deposits related to safekeeping, government payments for post-disaster recovery, insurance payouts and decreased withdrawals, while they are significantly negative for banks that operate locally or nationally.Originality/valueWe contribute to the literature by offering various new insights regarding the effects natural disasters have on financial institutions. With climate change-driven natural disasters widely expected to increase both in terms of frequency and severity, their economic fallout is likely to impose an increasing burden on financial institutions. Large, nationally operating banks tend to be well diversified both geographically and in terms of their product offerings. Small, locally operating banks, however, are increasingly at risk – particularly if they operate in disaster-prone areas. Current banking regulations generally do not factor natural disaster risks into their capital requirements. To avoid the next big financial crisis, regulators may want to adjust their reserve requirements by taking this growing risk exposure into consideration.

An Italian perspective on the development of financial mathematics from 1992 to 2008

This paper is intended to be a survey of the development of financial mathematics as seen through the events that I organised, and partly co-organised, between 1992 and 2008. These events all took place in Italy between 1992 and 2003, while in 2008 I was involved in the organisation of an entire special semester in Linz (Austria); this semester is included here because it marks quite well the state-of-the-art of the period just before the so-called big financial crisis that lasted from, roughly, 2008 to 2012. Even if the survey may be affected by my personal views, it can still be seen as reflecting the actual global development since what I am going to describe here concerns major occurrences. For completeness, I also mention, although only briefly, some events that took place in Italy during the given period, but where I was not personally involved.

The Effect of Changes in Economic Growth on Non-Performing Loans (NPLs) Problem in the Greek Banking System

The Greek economy was affected very badly by the global economic and financial crisis of 2007-2008. The main reason of this catastrophic event is that the country’s speedy economic and financial growth in the pre-crisis period heavily based on the foreign funds, and the flow of these funds stopped immediately -even turned to opposite direction- with the spread of the crisis to Europe. This negative happening as well as the rearrangement of the public debts and remarkable reduction in the bank deposits led to a big financial crisis, and thus economic recession. Meanwhile, the loan quality in the banking system worsened extremely -almost half of the credits turned to bad loan- due to the macroeconomic deterioration as well as the banks’ very tolerated lending policies before the crisis, the borrowers’ imperfect attitudes, and improper governance. The improvement in NPLs ratio, which started simultaneously with the modest economic recovery in 2017, decreased it to 30.2 percent in 2020 from its peak level of 48.5 percent in 2016. However, a big part of it has been achieved thanks to write-offs and loan-sales.In this study, it was aimed to measure the effect of the changes in economic growth on these drastic changes in NPLs ratio. Although the changes in the gross domestic product (GDP) and NPLs ratio have always been in consistency with the economic theory, except the pandemic year of 2020, the often big differences between their changing rates imply that some other factors have also played significant role on NPLs movements. The findings of some studies for Greece indicate to remarkable impact of both economic growth and the other factors on bad loans issue. The results of our regression analysis also show that the relation between economic growth and NPLs is not so strong.In spite of the noticeable improvement, NPLs ratio is still at a very high level and requires constant remarkable declines in order to come down to the generally accepted levels. To perform this and have economic and financial recovery at the same time, the recovery should not be achieved only by write-offs and portfolio sales, but by collections from borrowers, and executions. The banks and the government should make the necessary changes in their policies and applications so as to decrease NPLs ratio through new lending, compromise with proper borrowers, and court executions. Keywords: Greece, global crisis, sovereign debt crisis, economic growth, non-performing loans. DOI: 10.7176/RJFA/12-12-05 Publication date: June 30 th 2021

Analysis of Financial Statements as a Competitiveness Advantage of the Firms in the Greek Poultry Sector 2010-2016

The egg industry is a sector which has a very important role in the Greek economy. The current research aimed at analyzing the financial statements of Kartzias G. SA, Tsakiris Family SA, Golden Eggs SA, Sovimo Hellas SA and Augodiatrofiki SA companies with the largest market share in the market. They belong to the food industry and they have the leading role in the market, mainly with producing and selling eggs. The analysis was conducted with the help of financial ratios, specifically Altman’s Z score, on a series of 7 years, from 2010 to 2016. With this analysis and with the help of the Z score model, we can have a look at the financial image of the companies and more importantly the course they had in the big financial crisis that affected many companies in Greece. The results occurred from the analysis mentioned above show that Kartzias G. SA has significantly improved her Z score which at 2016 was at 10.061 and is in no danger of bankruptcy. Next one is Avgodiatrofiki with a Z score of 1.330 at 2016 and is in the gray zone according to Altman’s Z score.

ІНСТИТУЦІЙНІ ПРОБЛЕМИ КОРПОРАТИВНОГО УПРАВЛІННЯ НА ДЕРЖАВНИХ ПІДПРИЄМСТВАХ

The article substantiates the need to improve the mechanism of corporate governance in stateowned enterprises as a competitive sector of the economy, which affects the investment climate and competitiveness of the national economy. Mostly, senior management is not interested in the development of the company because their salaries are low and they are often support rich people, who are only follow own goals such as raising of own profits. The financial performance of state-owned businesses has been analyzed, and many companies have been identified that have the production potential to thrive in the national market but are operating at a loss. All state-owned enterprises have common problems, which connect with employees, who don’t care about inner problems of the company and how they can solve them because of the lack of formed responsibilities and duties in the law. The community believes that institutions are controlling all activity of state-owned enterprises, but the gap in the law has a bad influence on results of the company. As a result, it was found that the tendency to close state-owned enterprises is caused by institutional problems arising from insufficient funding, uncompetitive salaries of senior management, a bad implementation of essential tasks from directors, corruption and lobbying of political parties or individuals in the system of corporate relations. In addition, the COVID-19 pandemic became one of the main reasons of liquidation of state-owned and private enterprises, which weren't ready for this new conditions. Governments of different countries tried to prevent a big financial crisis, but their actions and financial opportunities weren't enough to help enterprises to survive in harsh conditions. As a result, the financial situation of state-owned enterprises isn't acceptable and many of them don't even have money in order to pay salaries to their employees. Meanwhile, they have the production potential to prosper and to compete with other enterprises on the national and international markets. By the way, the legislative transformations of 2021, which aim to improve corporate governance at state-owned enterprises and to introduce foreign experience into the mechanism of corporate relations development, are studied. The directions of improvement of the mechanism of corporate management at the state enterprises are offered.

The process of globalization before and after the 2008 financial crisis

Big financial crisis from 2008 has dramatically changed globalization process by reducing cross-border flow of capital, to a large degree. Crisis has shown numerous deficiencies and negative sides of this process, and there was a big displacement of world economy from developed western countries towards China and other countries in accelerated development. Symptoms of de-globalization, such as populism, economic protectionism and similar, haven't significantly changed the picture of constant integrative processes worldwide. Undoubtedly, in future, globalization will mostly be dependent on the three biggest and most significant economic, political and social entities in the world-USA, EU and China. Tail wind to an overall globalization process is given by Globalization 4.0, which is based on automatization by digital technologies with use in not only production processes, but in health care, education, transport, supply industry as well.

Financial Crisis Expectations Intensify in the U.S.

The article represents a consideration of various expectations and predictions erased during Trump’s presidentship, that a big financial crisis will occur soon and inevitable. Arguments of different authors about the reasons and size of the future crisis are discussed. Noteworthy is that expectations of a big crisis emerged at the background of dynamic growth of U.S. economy which occur in 2017-2018 years as a sudden event after long stagflation. In spite of long waited by many economists ordinary cyclical crisis after 8 years of weak situation since the last recession, American economy demonstrates dynamic growth, which Trump believes has occurred thanks to his economic policy. Among the most important reasons of the future crisis the big budget deficit and huge government debt are at the first place. This conviction is surprisingly wide proliferated, and even prominent economists and successful financial dealers estimate the growing government debt as the source of big danger for American economy. Looks strange, that the debt is not estimated as a financial asset for riskless savings of national and international investors. From this point of view the problem of budget deficits and government debt is rather a management problem than a source of danger. Special attention is attracted to the financial market which is overestimated, and represents really a big danger for economic and financial stability. The behavior of main indexes indicates that a big bubble was created at this market, and it can explode at any time. This is the most probable way the next crisis will occur, and this may be the main reason of the coming crisis. Now, according to the basic economic laws, the further economic growth lasts, the nearer is the next crisis. So, Trump Administration has to be ready for big challenges the future crisis will bring.

A multiplex financial network approach to policy evaluation: the case of euro area Quantitative Easing

Over the last decades, both advanced and emerging economies have experienced astriking increase in the intra-financial activity across different asset classes and increasingly complex contract types, leading to a far more complex financial system. Until the 2007-2008 crisis, the increased financial intensity and complexity was believed beneficial in making the financial system more resilient and less vulnerable to shocks. However, in 2007-2008, the advanced economies suffered the biggest financial crisis since the 1930s, followed by a severe post-crisis recession, questioning the adequacy of traditional tools in predicting, explaining, and responding to periods of financial distress. In particular, the effect of complex interconnections among financial actors on financial stability has been widely acknowledged. A recent debate focused on the effects of unconventional policies aimed at achieving both price and financial stability. Among these unconventional policies, Quantitative Easing (QE, i.e., the large-scale asset purchase programme conducted by a central bank upon the creation of new money) has been recently implemented by the European Central Bank (ECB). In this context, two questions deserve more attention in the literature. First, to what extent, the resources provided to the banking system through QE are transmitted to the real economy. Second, to what extent, the QE may also alter the pattern of intra-financial exposures and what are the implications in terms of financial stability. Here, we address these two questions by developing a methodology to map the multilayer macro-network of financial exposures among institutional sectors across financial instruments (i.e., loans and deposits, debt securities, and equity), and we illustrate our approach on recently available data. We then test the effect of the implementation of ECB’s QE on the time evolution of the financial linkages in the multilayer macro-network of the euro area, as well as the effect on macroeconomic variables, such as consumption, investment, unemployment, growth, and inflation.

Is there an Education Bubble in the Western Balkans?

Bubbles arise in cases where price exceeds the asset's intrinsic value, yet they are notoriously hard to detect. In order for them to develop, a displacement in expectations must occur which will impact the rational perception of the asset's value. Human capital, although not as tangible as other forms of wealth, represents a distinct asset class which increases one's earning potential through education. As the price of an asset is justified by the expectations of future cash flows, the current value of education can be calculated via discounting the value of the future, education-enhanced, earning potential. The aim of this paper is to analyze the newly emerging patterns in the changing educational landscape of the region known as the Western Balkans and identify the possible formation, if not existence, of a bubble. The authors propose an alternative methodology of detecting these market anomalies and utilize empirical evidence to corroborate the finding that the market price of the investment in human capital in Western Balkan countries has started diverging from its fundamental value. Although the focus of this paper is on uncovering a tendency in a highly specific asset class within a narrow geographical area, the preliminary conclusions and related discussions can be extended to detecting such bubbles in other countries and regions that could possibly warn against the eruption of the next big financial crisis.

Political Choices in Hard Times: Voting in the 2010 U.S. House Elections

This paper assesses the explanatory power of rival models of voting behavior in the 2010 elections for the U.S. House of Representatives. Multivariate analyses of data gathered in a 2008–10 national panel survey indicate that a combination of national-level valence and positional issues had strong effects on the choices voters made. Campaigning in 2008 during the biggest financial crisis since the Great Depression, Barack Obama had boldly reiterated the mantra “Change You Can Believe In” to propel his successful race for the presidency. There were serious political consequences when the expectations he raised went unfulfilled. High unemployment and anaemic growth continued to beset the economy in 2010, and the President's landmark health-care legislation and policy proposals in areas such as climate change and immigration were debated in a context of widespread disappointment with his performance. This context enhanced voters' susceptibility to Republican claims that the President's policies initiatives were ill-advised. The result was a politically toxic mix of valence and positional issues which corroded Obama's image and worked strongly against Democratic candidates.

The Need for Measurement of Efficiency in Greek Primary Healthcare

As Greece faces its biggest financial crisis in its modern history, it is urgent to trace all areas where human and capital resources are not exploited to full capacity. There is evidence that sources of inefficiency are abundant in Greek primary care (PC).[1] In Greece, PC is delivered by many different providers, both of the private and the public sector. The main public providers in rural areas are the Health Centres (HCs) of the National Health System, but the population often turns to private or distant, urban providers, due to unproductive organization frameworks of the HCs. The inefficiency of many HCs also leads to serious dissatisfaction. There are typical examples of such cases in many areas in the Health Prefecture of Southern and Western Greece.[2] The measurement of efficiency in healthcare delivery is becoming common practice internationally and is gaining ground in PC. It is accomplished through a variety of parametric and non-parametric methods; all of which include the specification of inputs and outputs by methods such as panel data analysis.[3] Some efforts to measure efficiency in Greek PC have already been performed. The following major obstacles have been encountered: * It is not clear what the targets of Greek PC are, or what resources are used. * The quality of data of inputs used and outputs produced in Greek PC is questionable, as there are inadequate systems of collecting, processing and evaluating data. * Important parameters of the functions of HCs are not routinely measured. Two leading institutes in Greek Health Services, the National School of Public Health and the Centre for Health Services Research of the Medical School of the University of Athens, are implementing a study to help overcome these shortcomings. The first part of the study is model specification. It concerns clarifying through two consensus panels (a Delphi panel and a nominal group) what the key inputs and outputs in the production function are and the relative importance (weight) of each. Indices for severity and quality adjustment will also be produced. The second part of the study is a pilot programme to measure the efficiency of the public HCs of the 6th Health Prefecture of Greece, which covers Southern and Western Greece. The biggest innovation of the study is that it is not based on data routinely collected by Greek health authorities, but on a new questionnaire based on the results of a panel analysis. An obligatory system of data collection has been established in cooperation with the 6th Health Prefecture. …

KETAHANAN KREDIT PERBANKAN SYARIAH TERHADAP KRISIS KEUANGAN GLOBAL

Global financial market becomes fragile and unstable today after big financial crisis (subprime mortgage) hited almost country around the world. Recently, solvability ratio or credit risk becomes focus study again by economic expertise to prevent repreated crisis. The purpose of this paper is to investigate Islamic credit resistant of Islamic banks during global financial crisis in Indonesia. The results of this study show that the amount of Islamic financing and GDP were significantly determined by non-performing financing (NPF). In the other side, conventional banks were influenced positively by inflation rate and Loan to Deposit Ratio (LDR). These findings show the empirical evidence how Islamic banking and economic systems can reduce the effect of global financial crisis significantly to domestic society.Keywords: NPL, NPF, banking stability

How is Greece conforming to Alma-Ata's principles in the middle of its biggest financial crisis?

The international Alma-Ata conference held on September 1978 by the World Health Organisation (WHO) set equity, comprehensiveness, continuity of care, and patient centeredness, as targets for all health systems in the world.1 In order to achieve these targets, it mobilised a ‘primary healthcare movement’ that shifted global thinking about health from specialist, tertiary care towards ambulatory care.2 WHO's report of 2008, Primary Health Care: Now More Than Ever ,3 reconfirmed WHO's adherence to primary health care as the only way for health systems to respond to the challenges of a changing world. How has Greece dealt with Alma-Ata's principals for the last 30 years? And how relevant are these principles today, in the middle of the country's biggest financial crisis? Inspired by Alma-Ata's ideals, Greece instituted a national health system in 1983, so that it could ‘ guarantee that all citizens enjoy the benefits of a complete range of services of high quality, free at the point of service ’.4 Since then, the Greek NHS has been providing free access and full coverage to the entire population, including immigrants. Within NHS or social insurance context, primary healthcare services are delivered through health centres and provincial surgeries in rural areas and through outpatient departments of regional and district hospitals, polyclinics of the social insurance institutions and contracted physicians and diagnostic centres in urban areas. There are also many private physicians and diagnostic centres that provide services directly to the population. A major shortcoming of the Greek healthcare system is that …

Character of the present financial crisis in USA and its possible global consequences

The US economy is facing the first big financial crisis in the 21st century. The author points out that the current crisis is much different from the previous ones by its characteristics, causes, consequences it produces on the world economy and international financial system in particular. The problems that were noticeable in the US loan market in the second half of 2007, which have escalated into a crisis of the financial system in 2008 creating instability in the world financial markets, were mostly caused by the losses on the American real estate market. For the fact that the highly integrated world economy has enabled rapidly and easily transmission the effects of real and monetary trends, reducing, on the other hand, the countries' prospects to protect their economies and populations from their effects it is evident that the way the US manages its financial system has the exceptional significance beyond USA, too. As the increasing number of countries is facing with direct or indirect effects of the current crisis it is in the interest of all those that undertaking actions to stop further negative repercussions on their national economies and ensure global economy growth. .