Impact Of Financial Crisis Research Articles

Impact of BASEL 3 norms on performance of commercial banks – A study of select Indian banks

The concept of capital Adequacy in commercial banks in India received focus only after the implementation of Basel norms framed for capital structure across the countries. Given the autonomy to central banks to operate within the framework, the Reserve Bank of India (RBI) has followed a caution approach right from beginning. Even at the time of implementation of Basel 2 norms, the RBI had implemented and monitored the norms more stringently that resulted in having much lesser impact of financial crises 2008 in the financial system of India in general and banking sector in particular. Basel 3 norms were framed keeping in view certain gaps of the Basel 2 norms. The Basel 3 norms are more stringent and stress on creating additional buffers to meet the financial crisis. It also requires banks to maintain additional layer of common equity, capital conservation buffer, countercyclical capital buffer, leverage ratio, minimum liquidity ratio etc. These measures will impact the operational performance of banks. Therefore, this paper is an attempt to analyse the impact of Basel 3 norms on operational performance of banks in India.

Changes in liquidity associated with removal of companies from the FTSE 100 index

This study investigates changes in liquidity associated with removal of companies from the FTSE 100 index during the time period 2008-2016. Using an event study methodology, we document significant negative abnormal returns that are more negative in the period prior to removal and a significant decrease in trading volume once a company is removed from the index. Moreover, regression analysis supports the liquidity hypothesis and documents a significant increase in the spread after removal after controlling for financial crisis impact. Overall, the results report support that changes in liquidity can explain the negative abnormal returns. These findings contribute the theoretical debate regarding the liquidity effects associated with changes in the composition of the FTSE 100 index.

Changes in liquidity associated with removal of companies from the FTSE 100 index

This study investigates changes in liquidity associated with removal of companies from the FTSE 100 index during the time period 2008-2016. Using an event study methodology, we document significant negative abnormal returns that are more negative in the period prior to removal and a significant decrease in trading volume once a company is removed from the index. Moreover, regression analysis supports the liquidity hypothesis and documents a significant increase in the spread after removal after controlling for financial crisis impact. Overall, the results report support that changes in liquidity can explain the negative abnormal returns. These findings contribute the theoretical debate regarding the liquidity effects associated with changes in the composition of the FTSE 100 index.

The Impact of Financial Crisis on Insurance Sector and the Regulatory Response

This paper aims to discuss what happen during the 2008 financial crisis and the reason behind it. This paper also aims to analyze the impact of the financial crisis to insurance sector and how they react. This paper also discussed the Solvency II (applied by the European Commission) as well as the Malaysian Risk-Based Capital. Lastly, this paper also provides some observation and suggestion on how similar crisis can be avoided in the future as well as ways to improve the regulations.

The Impact of Global Financial Crisis on IPO Underpricing in Malaysian Stock Market

This study examines the impact of the Global Financial Crisis (GFC) on Initial Public Offering (IPO) underpricing in the context of an emerging market from January 2006 to December 2011. Models consist of hierarchical and dummy variable regressions have been evaluated. Our results show, firstly, by comparison between the pre-GFC, GFC and post-GFC periods, it can be observed that IPOs initial returns (offer-to-close) are generally lower due to the crisis. Secondly, IPO underpricing provides an average of 17–25% of initial returns in the pre-GFC period, 1–3% during GFC period, and 3–7% in the post-GFC period. Thirdly, the financial crisis does not act as a moderator that worsens the relationship between underpricing of IPO and oversubscription ratio. Lastly, this study dispels the notion that investors should totally shun IPO during crisis period as there are still positive initial returns among the new issues. To the authors’ knowledge, this is the first study on the impact of the GFC on IPO underpricing in Malaysia.

Trade Liberalization and Wages: Evidence from the Closer Economic Partnership Arrangement between Mainland China and Hong Kong

This study investigates a causal relationship between the adoption of the Closer Economic Partnership Arrangement (CEPA) trade liberalization policy and the average wage by exploiting long-term Hong Kong census data from 2001 to 2016. The individual-level analysis shows that the one-sided tariff concession leads to a 9.66% increase in the average wage in the treated industries. The results are robust to various specifications of treatment and consider the impact of financial crisis and contemporary institutional changes. Moreover, we explore the possibility that the effects of exposure to CEPA may be heterogeneous along the dimensions of language skill, age group, educational level, and job skills. We find that the ability to speak Mandarin, a high level of education, and higher-level skills increase the wages of workers after trade liberalization. Therefore, whether trade liberalization increases wage inequality largely depends on the structure and composition of the local labor market.

“Kites” and “anchors”: The (im)mobility strategies of transnational Latin American families against the crisis in Spain

AbstractThe impact of the recent global financial and economic crisis on migration to Spain has generated literature focusing mainly on demographic and labour impacts. Internationally, economic crises have also been linked to the increased vulnerability of migrants and return migration. However, this article reveals a more complex picture of how the crisis is producing new (im)mobilities between Latin America and Europe. It adopts a transnational family approach based on qualitative fieldwork with Colombian, Ecuadorean, and Brazilian migrants. The article offers an analysis of their (im)mobility strategies framed by the socio‐economic impact of the crisis in Spain. Strategies include various configurations of return and remigration as well as permanence in the host country, involving the whole family or some members. They are the consequence mainly of the economic situation but are also shaped by other “crises” related to migrant status and migratory projects as well as gender, intergenerational, and emotional factors.

Exchange rate fluctuations and firm value: impact of global financial crisis

PurposeThe purpose of this paper is to examine the presence of exchange rate exposure and its relationship with currency derivatives usage in the dynamic environment of the global financial crisis of 2008.Design/methodology/approachUsing a sample of 624 Indian firms over the period of April 2001–March 2016, this paper investigates the linear and asymmetric exposure by dividing the full sample period into different sub-periods around the crisis.FindingsThe evidence presented in the paper suggests that the firms are more exposed to the exchange rate changes since the onset of the financial crisis. However, there is a lack of evidence that the usage of currency derivatives is more effective in reducing exposure during the crisis/post-crisis period as opposed to the pre-crisis period.Practical implicationsThe findings are important to investors and managers for a better understanding of firm behaviours in relation to their risk management policies during the period of external shocks like crisis.Originality/valueThere is a paucity of research to explore whether the effect of currency derivatives usage on exchange rate exposure varies during external shocks such as crisis periods. The paper provides novel evidence that the effectiveness of derivatives usage in alleviating exposure becomes less during the dynamic environment of crisis.

The Gendered Consequences of Financial Crises: A Cross-National Analysis

What effects do financial crises have on women's well-being? While much research has addressed various socio-economic and political consequences of financial crises, the gendered impact of financial crises are empirically underexplored. Moreover, extant literature has mainly focused on specific crises or countries with little attempt at determining possible common effects and patterns across the world. To provide broader insight into the gendered consequences of financial crises, we examined the degree to which five types of financial crises—banking crises, currency crises, domestic sovereign debt crises, external sovereign debt crises, and inflation crises—affect women's health and educational outcomes as well as their participation in the formal economy and politics. We also examined the persistence of these effects in the postcrisis years. The results from a panel of 68 countries for the years 1980 to 2010 indicate that financial crises undermine women's participation in the formal workforce, their presence in politics, their educational attainment, and their health outcomes. We also found significant lingering effects of financial crises: the deleterious gendered effects of crises persist even seven years after the end of a crisis.

The impact of global financial crisis on conventional and Islamic banks in the GCC countries

AbstractUsing large dataset from audited financial statements of 81 banks in the Gulf Cooperation Council (GCC) region, this article aims at assessing the performance of Islamic banks and conventional banks during the 2008 financial crisis. Unlike major studies that explored this area of study in the GCC countries, this paper investigates the performance of both types of banks before, during, and after the 2008 financial crisis, while covering four different financial performance measures, namely, efficiency, profitability, liquidity, and solvency. Moreover, this investigation is undertaken while covering a larger time span (2006–2012) than perhaps all similar works that covered similar study on the GCC region. With the use of mixed‐effect linear regression, the paper shows that, compared with Islamic banks, conventional banks have sustained a better performance over the 2006–2012 period in relation to efficiency and return on assets. In this context, the paper puts a note on the shortcomings of the institutional arrangement of the Islamic banks that impeded their performance during the crisis as well as on the active role of GCC governments during the financial crash.

The impact of global financial crisis on informational efficiency: Evidence from price-volume relation in crude palm oil futures market

This study examines price-volume relation in crude palm oil (CPO) futures market during the pre-crisis, crisis and post-crisis periods. Based on daily data from January 2000 to July 2017, cross-correlation function (CCF) provides four findings: First, volatilities of past trading volume and current return are correlated in pre- and post-crisis with an inconsistent sign, supporting the nature of noise trader demand. Second, in the pre-crisis period, both volatilities are negatively correlated within a short time span. Third, during the crisis period, there is no volatility spillover between both series. Fourth, in the post-crisis period, both volatilities of past trading volume and current return are positively correlated within a long time span, in addition to volatility spillover from the current return to the future trading volume which also happens within a short time span. Notably, significant volatility spillovers from trading volume to return across the crisis change the sign of correlations with a longer time span, supporting the “heterogeneity of traders” hypothesis. This study suggests that market participants have become risk-averse, particularly after the crisis. As a result, there has been an increase in volatility persistence which reduces the level of informational efficiency.

FDI-Led-Growth in Malaysia: Autoregressive Distributed Lag (ARDL) Bounds Testing Approach

This study intends to investigate the validity of the foreign direct investment, FDI-led-growth hypothesis in Malaysia in this era. Autoregressive Distributed Lag (ARDL) bounds test approach is adopted to examine the impact of FDI inflow towards growth of Malaysia based on annually data from 1980 to 2016. Empirical results indicate that FDI inflow has significant positive impact on economic growth. This implies that FDI inflow remain important tool for stimulating economic growth of Malaysia. In addition, there is a negative impact of FDI inflow on economic growth during the 1997 Asian Financial crisis and positive impact during the 2008 Global Financial crisis. In terms of policy recommendation, the policy makers should continue to develop strategies to further attract FDI that will contribute to increasing the productivity in the country.

MODELS OF FORECASTING IN THE MECHANISM OF EARLY INFORMING AND PREVENTION OF FINANCIAL CRISES IN CORPORATE SYSTEMS

The paper is devoted to the problem of preventing financial crises in corporate systems, whose activities are becoming more and more complex in the context of globalization. The mechanism of early informing and crisis prevention in corporate systems is proposed, and includes five main modules: an analysis of the financial condition of the corporation, an analysis of the financial condition of subsidiaries, an evaluation of the impact of the financial crisis on a subsidiary on the threat of bankruptcy of the corporation as a whole, forecasting the financial condition of subsidiaries and corporation as a whole, anti-crisis management. The first four modules of the mechanism are the modules of implementation of proactive crisis management in the corporation, aimed at preventing the emergence of a crisis state, both in individual elements and in the corporate system as a whole. The fifth module is used in conditions of the current negative estimation of the financial condition of the corporation, and it is a "response" to existing crisis processes and phenomena in the corporation. After its implementation during the process of monitoring of the financial condition, proactive control modules are started to be used to allow early diagnosis and to prevent a crisis state. Particular attention is paid to such modules of proactive management as the evaluation of the impact of financial crises of subsidiaries on bankruptcy of the corporations as a whole and forecasting financial crises. A model basis for these two modules was developed. Neural networks, the mathematical apparatus of fuzzy logic, and the Caterpillar method were used for developing the models of estimation of the crisis threat in the corporate system. The developed set of models allowed to estimate the threat of financial crises in the parent enterprise and in the subsidiaries of the corporation, not only in the current but also in the perspective periods. The obtained results indicate that the financial condition of the investigated corporation is characterized by low level of the bankruptcy threat. Along with this, there is an increase in the threat of bankruptcy in a number of subsidiaries in the perspective period and the strong impact of local crises on the financial position of the corporation as a whole. The latter leads to the need of implementation of the anti-crisis measures in the corporate structure. An adequate tool for choosing anti-crisis measures and developing scenarios for the implementation of the anti-crisis management strategy is simulation modelling based on the concept of system dynamics.

Dampak Kondisi Makroekonomi terhadap Deposito Perbankan Syariah di Indonesia

Changes in macroeconomic conditions have an impact towards financial industry, particularly in the banking industry. This research aims to look at the impact of global financial crisis and macreconomic variables towards the total deposits of Islamic banking in Indonesia with the VECM method. The period of this study using monthly data from January 2006 until December 2016. The results showed that the global financial crisis has no effect towards the total deposits of Islamic banking in Indonesia. Then, based on the analysis of Impulse Response Function (IRF), the response of total deposits of Islamic banking in Indonesia towards inflation, equivalent rate and lending rate is positive. While the shocks level of conventional banking interest rate and industrial growth is negatively responded by total deposits in Islamic banking. The Forecast Error Variance Decomposition (FEVD) analysis results showed that equivalent rate and interest rate offered by each banking system give most contributed among other variables.

Распределение двусторонней помощи международному развитию: изменения после кризиса

This article examines the impact of financial crisis of 2008-2009 on allocation of development aid. Using OECD data on Official Development Assistance (ODA) allocation for international development by key donor countries, authors test three hypotheses: first, general impact of crisis on ODA allocation; second, impact of crisis on three recipient income groups; third, impact of crisis on relative importance of analyzed factors for ODA allocation decisions. The results show that general impact of crisis on ODA volumes was negative, although donors preferred to increase aid to low-income countries. Impact of factors describing economic situation in donor countries (public debt level, government expenditures and donor growth) increased after crisis. Donor countries might make use of these results to increase efficiency of their development assistance strategies, whereas recipient countries may exploit these results in order to attract more external financing for development.

Global financial crisis 2008 and its vulnerability in SAARC countries

The key objective of the study is to analyze the impact of global financial crisis on export in countries of SAARC region. For current empirical analysis, this study used a gravity model to investigate export of final goods from SAARC countries to high income countries during the period 2003 to 2014. The independent and dependent variables were used in the natural logarithm form of dummy variables. The geographical distance between capitals of trading partners and importer’s and exporter’s GDPs are used as standard independent variables. Consequently, this study includes their dummy variables demonstrating common official language, membership in regional trading agreements and financial crisis. Therefore, to examine the impact of last crisis, model comprises dummy variable (y2007, y2008, y2009 and y2010) representing critical years of study. Moreover, this study also used random effect approach which required that at least one assumption should be fulfilled which is zero correlation of independent variables. The current study concluded that financial markets of SAARC countries remained less vulnerable to financial crisis or bad-loan crisis because of having less exposure to subprime assets and high capital to risk assets ratio. However, trade of goods and services of the SAARC countries with the developed economy resulted in negative effects on most of the SAARC countries. Moreover, the study also revealed that financial crisis had serious repercussion for the other countries of the SAARC region due to lack of appropriate response and that a timely response by countries could save the prolonged negative influence of financial crisis.

How has the global financial crisis affected syndicated loan terms in emerging markets? Evidence from China

AbstractThis paper examines the impact of the recent global financial crisis on the cost of debt capital (syndicated loans) in a leading emerging market, namely China, using the difference‐in‐differences approach. Before the crisis, China adopted banking reforms allowing the entry of foreign banks and more domestic participation in the syndicated loan market. As a result, during the crisis, the volume of syndicated loans grew steadily, in contrast to other countries. In addition, the amount of foreign syndicated loans decreased and average maturity increased compared with the pre‐crisis period. Our findings provide useful information to policy makers for devising effective responses to financial crises.

Causality and contagion in emerging stock markets

Given the evidence of occasional discrete shifts in the conditional variance process, it is essential to test the volatility transmission between financial markets when a reasonable suspicion exists for structural change. This paper aims to study the interdependencies in terms of stock market volatility and to assess the impact of Global Financial Crisis (GFC) on these interdependencies. We found evidence of structural breaks in the volatility of time series for the majority of markets. The results show also that, in view of the crisis, new significant causal linkages appeared together with the intensification of the causal relationship in 40% of the cases in which we find causality during both the tranquil and crisis period. These additional linkages during crisis periods in excess of those that arise during non-crisis periods contributes significantly in amplifying the international transmission of volatility and the risk of contagion.

Evaluating the Impact of the Global Financial Crisis on the Stock Markets of BRICS Countries

The global financial crisis of 2007 - 2008 left every economy in a state of shock and also increased the volatility in the markets across the world since internationalization of capital markets not only gives an opportunity to investors to invest their money in their own country, but also the country of their choice too. Therefore, during the period of crisis, international investors tried to diversify their investments in more promising countries. BRICS countries, being a global market hub, have been growing faster than the world growth rate and saw more investment movements during and after this period. The present study attempted to evaluate the impact of the financial crisis on BRICS countries' stock markets. The impact was examined by analyzing the growth rate of BRICS countries' stock markets index prices in the pre and post crisis period (from 2002-2015) with the application of a dummy based model considering time as a dummy. Our results revealed that the BRICS were subject to a spillover effect during and following the financial crisis. Brazilian, Russian, and Chinese markets had a negative growth in index prices and captured more volatility and thereby, increased the risk of investors ; whereas, the Indian and South African markets captured some degree of shock in the beginning of the crisis, but showed a positive momentum. We further found that in the long run, these nations recovered successfully from the crisis as they invited more foreign investments in their markets to recover.

Physical therapists’ perceptions about patients with incomplete post-traumatic paraplegia adherence to recommended home exercises: a qualitative study

BackgroundThe overall purpose of physical therapy for patients with spinal cord injury is to improve health-related quality of life. However, poor adherence is a problem in physical therapy and may have negative impact on outcomes. ObjectivesTo explore the physical therapists’ perspectives about patients with incomplete post-traumatic paraplegia adherence to recommended home exercises. MethodsA qualitative content analysis was conducted. Data were collected in a convenience sample using semi-structured interviews. Thirteen registered physical therapists in Athens area participated in the study. ResultsFive categories emerged from the data: (1) reasons to recommend home exercise by the physical therapist; (2) obstacles to recommend home exercise by the physical therapist; (3) methods addressing these obstacles; (4) the family's role in the adherence to recommended home exercise; and (5) the impact of financial crisis in adherence to recommended home exercise. All participants found the recommended home exercises essential to rehabilitation and health maintenance, and they value their benefits. They also expressed the obstacles that need to be faced during rehabilitation process in order to promote adherence. ConclusionPhysical therapists should take into account the different obstacles that may prevent patients with incomplete post-traumatic paraplegia adherence to recommended home exercises. These involve the patients and their families, while, financial crisis has also an impact in adherence. In order to overcome these obstacles and increase adherence, communication with patient and family while taking into account the individual's needs, capacities, and resources are essential.