Post-crisis Changes Research Articles

Stay or move out? Young adults’ housing trajectories in Poland over time and throughout economic cycle

The Great Financial Crisis has made it evident that the housing trajectories of young adults during an economic cycle are subject to change. These changes have been recognized in highly developed housing markets little, however, is known about changes taking place in post-socialist, still often defined as developing, countries. This article aims to foster an understanding of shifting housing transitions among young adults in Poland. This article analyzed pre-crisis and post-crisis changes in the living arrangements of Poles aged from 25 to 34 years old focussing on three types of accommodation: living with parents, renting or owning a flat. The results show that in Poland young people’s access to homeownership is declining and is compensated for by postponing moving out of the family home during the recessionary period and relocating to rental properties during the expansionary period.

Scientific communities, recent crisis and change in economics: a Kuhnian perspective

ABSTRACT Considering Kuhn’s emphasis on the community structure of science, this paper focuses on the scientific community to inquire whether the recent global financial crisis ushered paradigm change in economics. To appraise the nature and the extent of post-crisis change, we examine the methodological constitution of the dominant paradigm identified as New Consensus Macroeconomics, methodological commitments binding paradigm and scientific community, and assess the practice of the community, particularly the treatment of anomalies. Subsequently, an attempt is made to illuminate whether/how sociological and institutional parameters in the community structure of the discipline bear upon prospects of change. Empirically, this research investigates, categorizes and evaluates post-crisis responses and perceptions of the scientific community. The overarching aim is to determine whether economics responded to a major anomaly with critical self-reflection on the adequacy of its methodological toolbox, leading to theory change, and to shed light on institutional aspects influence this process.

From crisis to reform? Exploring three post-COVID pathways

Abstract Crises are often viewed as catalysts for change. The coronavirus disease crisis is no exception. In many policy sectors, proponents of reform see this global crisis both as a justification and an enabler of necessary change. Policy scholars have paid ample attention to this crisis-reform thesis. Empirical research suggests that these proponents of crisis-induced change should not be too optimistic. The question remains why some crises give rise to reform whereas so many others do not. This paper focuses on one particular factor that crisis researchers have identified as important. Crisis research suggests that the outcome of the meaning-making process—the efforts to impose a dominant frame on a population—shapes the prospects of postcrisis change. The paper offers three ideal-typical framing scripts, which researchers can use to study postcrisis trajectories.

The Market Risk Premium for Unsecured Consumer Credit Risk

Abstract We use the prices of credit card asset-backed securities to study the market risk premium associated with unsecured consumer credit risk. We find that the market incorporates a substantial credit risk premium into the prices of these securities. Furthermore, there has been a major repricing of unsecured consumer credit risk since the 2007–2009 financial crisis. We find evidence that this increase is linked to balance-sheet costs imposed by postcrisis changes in regulations that have placed credit card securitizations back onto issuer balance sheets. These regulatory changes may have added more than 100 basis points to the cost of unsecured household credit.

IMF’s Social Protection between Rhetoric and Action: The Case of Egypt

: A substantial body of literature has been produced about the IMF’s drift away from neoliberal orthodoxy in the aftermath of the 2007/08 global financial crisis. This article assesses the degree to which the IMF’s post-crisis change in discourse toward adding more emphasis on social protection was put into action in Egypt’s 2016 economic reform program. Beyond a noticeable discursive change, our research found that there was very little—if any—practical change. First, we demonstrate how the social component of the program was much smaller than the neoliberal or ‘business-as-usual’ component, not only as a share of program measures but also in terms of their magnitude. Second, we found that even this small component had a very similar equivalent in the last major program between the IMF and Egypt in 1991, thus rendering it less novel, and therefore casting doubt on the IMF’s claims of change.

INFLUENCE OF THE ECONOMIC CRISIS ON THE IDENTIFICATION OF COUNTRY PROFILES WITHIN THE EUROPEAN TOMATO MARKET

The objectives of this work are to determine the profiles of the countries that make up the European tomato consuming market and to observe if the economic-financial crisis (2007/2008) has influenced them. Both Lafay’s economic indicators were applied and country profiles and subprofiles were identified through a multilevel two-stage cluster analysis. The empirical analysis covers the period from 2005 to 2016, separated into two periods, pre-crisis (2005–2010) and post-crisis (2011–2016). Most countries obtained import and export profiles that coincide in both indices, Except in Italy. Only one post-crisis profile change was detected, this being for Greece, from an importer to an exporter. As a result of the initial two-stage clustering analysis (both in the pre-crisis and post-crisis period), three clusters were obtained. At the first level of clustering, Italy is identified with a producer profile and Spain and the Netherlands with an exporter profile. At the second level of clustering of the initial larger group, two clusters were identified, Germany and the United Kingdom with an importing sub-profile, and France and Belgium with an exporting sub-profile. In the transition from the pre-crisis to the post-crisis period, Portugal changed from a producer sub-profile to an exporter sub-profile.

Analysis of hysteresis in convergence after global financial crisis of 2007

Researchers of hysteresis outline the long-term change in growth paths of economies. It entails the post-crisis change in growth paths of economies through the change of macroeconomic indicators, such as employment and output. Recessionary shocks might have positive or negative impacts on economies’ growth paths which in turn affects convergence and divergence in economies. In this research, hysteresis is explored in convergence across 110 countries induced by the global financial recession of 2007. Findings suggest that as a post-crisis change, hysteresis in convergence is in place. The difference arises in adaptability of economies to changes. The reason for convergence of poor and rich countries might be more intensive foreign investments in developing nations. These investments have a positive influence on economic performance in developing countries by increasing employment rates.

The Economy of Qualities in a Cross-Border Market: Shopping Tourism as a Performative Practice

The article discusses the performativity of shopping tourism on the Russian-Chinese border using the terminology of M. Callon’s and his co-authors’ economy of qualities. The 2014 crisis has changed the parity of the ruble and the yuan, and has also changed the vector of cross-border tourism in the opposite direction. The authors show how observation of the residents of Blagoveshchensk regarding the purchases of Chinese tourists performs the perception of their social time and sends them “into the past”. They compared their everyday “here and now” knowledge with the knowledge accumulated during the operation of the cross-border local market. The usage of the language of the economy of qualities allows for the expansion of the boundaries of this concept for another type of market, that of the buyer’s market. We also ask about the dynamics of power in the wake of the assertion about the nature of market dynamics. The article consists of three main sections. The first section is a theoretical overview of the use of the concept of performativity in tourism research and the choice of the descriptive language for this empirical case. In the second section, we describe the “Chinese market” and trade practices before the 2014 crisis. The third section contains a reflection on the post-crisis changes and the processes of (re)qualification of goods and themselves. Empirical materials were gathered by the authors in the course of long-term studies in the twin-cities of Blagoveshchensk and Heikhe located on two banks of the Amur River, mainly through observation and interviews.

Treacherous Landscape For Foreign G-Sibs


 
 
 In 2010, the Dodd-Frank Wall Street Reform and Con- sumer Protection Act restructured the regulatory regime for fi- nancial institutions in the United States by mandating corpo- rate governance reforms and requiring that firms maintain high levels of high-quality capital reserves in their U.S. legal entities. Likely the most consequential of the statute’s provi- sions was that which authorized Regulation YY, a landmark regulation that transformed capital planning and risk man- agement processes among financial institutions in the United States. Along with implementing enhanced prudential stand- ards for the U.S. operations of large, complex financial insti- tutions, Regulation YY altered the corporate structure of for- eign banking organizations (“FBOs”) by requiring large foreign banking institutions to establish a new legal entity, called an intermediate holding company (“IHC”). Put simply, IHCs were created to reorganize and capture, in one umbrella legal entity, all non-branch U.S. operations of FBOs. Further, to ensure robust, localized oversight of U.S. operations, each IHC is required to establish their own board of directors and risk committee, separate and apart from the board and com- mittees of the broader organization. IHCs are also required to comply with both the capital and leverage ratio requirements applied to similarly large domestic financial institutions, and the programmatic requirements associated with firms of that size (resolution planning, CCAR, CLAR).
 
 
 
 There is another regulation, though, that when coupled with the far-reaching implications of Regulation YY has dis- parately impacted foreign banking organizations. That regu- lation is Regulation W, a longstanding regulation that limits the amount of intracompany transactions banking organiza- tions can engage in. Following the enactment of Dodd-Frank, Regulation W was amended in several ways which limited spe- cifically the types of transactions that FBOs often engage in with their affiliates to manage their liquidity risk and to ab- sorb liquidity shocks. The post-crisis changes made to Regula- tion W have already begun to be rolled back by U.S. regulators, however there has not yet been a detailed analysis of how spe- cifically the interaction between Regulation YY and Regulation W undermines global financial stability.
 The specific aim of this Note is to evaluate whether Regu- lation YY and Regulation W have destabilized the global fi- nancial system. Institutions’ 2018 and 2019 CCAR results will be the lens through which the impact of the regulations is eval- uated. Specifically, we look at both institutions’ Tier 1 capital ratios and Tier 1 leverage ratios to assess how specifically the IHCs have positioned their liquid capital and adjusted their business model in response to Regulation YY reorganization. Ultimately, we conclude that the interaction between Regula- tion YY and the revised Regulation W has dramatically frag- mented the global flow of capital among FBOs. Regulation YY’s IHC reorganization mandate largely cabins foreign banks’ ability to absorb liquidity shocks through their organi- zations—a result that may pose a serious threat to global fi- nancial stability. That is, the fundamental disruption of insti- tutions’ ability to funnel liquidity to their network of legal entities around the world raises a significant concern regard- ing their resiliency during periods of stress, particularly for those systemically important firms who experienced pervasive liquidity issues in the most recent crisis.
 
 
 
 
 
 

The Scientific Value of Finance After the Crisis

Understanding how users of research cope with episodes that potentially diminish trust in accepted knowledge such as the 2007-2009 financial crisis is important for financial economics. Utilizing citations in practitioner-oriented journals for the first time, I investigate post-crisis changes in authors’ knowledge sources and compare the inert behaviors of academics and practitioners towards science. Rather than abandonment of finance research in the practitioner literature, the evidence shows increased interdisciplinarity. Unpublished, non-scholarly sources become markedly less popular. Engaging in finance scholarship is causally and positively related to leading institutions’ patenting activities, suggesting having a scholarly culture aids firms’ product market recovery after the crisis.

From bombs to boons: changing views of risk and regulation in the pre-crisis OTC derivatives market

At the core of the 2008 financial crisis was a massive, un-publicly regulated market of complex financial products, which transmitted losses in the US residential mortgage market throughout the global financial system. How did the market for over-the-counter (OTC) derivatives grow so large and so risky with so little public supervision and regulation? At the heart of the matter, I contend, are changes in how both derivatives and risk have been understood as objects of governance. This article focuses on the decade preceding the passage of the 2000 Commodity Futures Modernization Act to demonstrate how competing and ultimately shifting understandings of both derivatives and financial risk put in place the conditions of possibility for the definitive deregulation of this market. Through a detailed interpretive analysis of regulatory documents, I show that changes in OTC derivatives regulation have been driven by changes in how regulators interpret derivatives themselves in a context of changing beliefs about risk and its management. Although regulators were acutely aware of OTC derivatives’ contribution to systemic risk as early as the early 1990s, they ultimately concluded that derivatives’ ability to serve as tools of risk management and generators of financial profits was consistent with their goal of promoting deep and liquid financial markets and thus took a decisively hands-off approach to regulation. The article concludes with a discussion of what shifts in interpretation and regulation of derivatives can tell us about the limits and potential for lasting post-crisis changes in financial governance.

Post-Crisis Changes in Global Bank Business Models: A New Taxonomy

The Global Financial Crisis unleashed changes in the operating and regulatory environments for large international banks. This paper proposes a novel taxonomy to identify and track business model evolution for the 30 Global Systemically Important Banks (G-SIBs). Drawing from banks’ reporting, it identifies strategies along four dimensions –consolidated lines of business and geographic orientation, and the funding models and legal entity structures of international operations. G-SIBs have adjusted their business models, especially by reducing market intensity. While G-SIBs have maintained international orientation, pressures on funding models and entity structures could affect the efficiency of capital flows through the bank channel.

Post-Crisis Changes in Global Bank Business Models

The Global Financial Crisis unleashed changes in the operating and regulatory environments for large international banks. This paper proposes a novel taxonomy to identify and track business model evolution for the 30 Global Systemically Important Banks (G-SIBs). Drawing from banks’ reporting, it identifies strategies along four dimensions –consolidated lines of business and geographic orientation, and the funding models and legal entity structures of international operations. G-SIBs have adjusted their business models, especially by reducing market intensity. While G-SIBs have maintained international orientation, pressures on funding models and entity structures could affect the efficiency of capital flows through the bank channel.

The Effects of the Volcker Rule on Corporate Bond Trading: Evidence from the Underwriting Exemption

Using a novel within-dealer, within-security identification strategy, we examine intended and unintended effects of the Volcker rule on covered firms' corporate bond trading using dealer-identified regulatory data. We use the underwriting exemption to isolate the Volcker rule's effects separate from other post-crisis changes in bank regulation and broader trends in market liquidity. We find no evidence of the rule's intended reduction in the riskiness of covered firms' trading in corporate bonds. We find significant adverse liquidity effects on covered firms' corporate bond trading with 20-45 basis points higher costs for customers even for roundtrip trades of shorter duration. These effects do not appear to be transitional. The Volcker rule appears to have increased the cost of the liquidity provided by covered firms and has not decreased the liquidity risk exposure of covered firms. Finally, the Volcker rule has decreased the market share of covered firms. Customers appear to be trading more with non-bank dealers, who are exempt from the Volcker rule but also lack access to emergency liquidity support at the Fed's discount window.

The Effects of the Volcker Rule on Corporate Bond Trading: Evidence from the Underwriting Exemption

Using a novel within-dealer, within-security identification strategy, we examine intended and unintended effects of the Volcker rule on covered firms’ corporate bond trading using dealer-identified regulatory data. We use the underwriting exemption to isolate the Volcker rule’s effects separate from other post-crisis changes in bank regulation and broader trends in market liquidity. We find no evidence of the rule’s intended reduction in the riskiness of covered firms’ trading in corporate bonds. We find significant adverse liquidity effects on covered firms’ corporate bond trading with 20-45 basis points higher costs for customers even for roundtrip trades of shorter duration. These effects do not appear to be transitional. The Volcker rule appears to have increased the cost of the liquidity provided by covered firms and has not decreased the liquidity risk exposure of covered firms. Finally, the Volcker rule has decreased the market share of covered firms. Customers appear to be trading more with non-bank dealers, who are exempt from the Volcker rule but also lack access to emergency liquidity support at the Fed’s discount window.

Post-Crisis Changes in Global Bank Business Models: A New Taxonomy

The Global Financial Crisis unleashed changes in the operating and regulatory environments for large international banks. This paper proposes a novel taxonomy to identify and track business model evolution for the 30 Global Systemically Important Banks (G-SIBs). Drawing from banks' reporting, it identifies strategies along four dimensions-consolidated lines of business and geographic orientation, and the funding models and legal entity structures of international operations. G-SIBs have adjusted their business models, especially by reducing market intensity. While G-SIBs have maintained international orientation, pressures on funding models and entity structures could affect the efficiency of capital flows through the bank channel.

Post-Crisis Political Change in Western Europe

[T]he financial crisis can be best understood as the final catastrophic stage of a process of dismantling the protective institutions that made Western European capitalism politically sustainable …

Processing of settlement and corporate actions versus mobilising and optimising assets: Can securities operations be more than a cost centre?

Securities services are in a unique situation defined by three interacting factors. First, after a decade of crisis and post-crisis changes, an unparalleled level of pressure has been placed on the financial sector profitability. As a result, the subsequent efforts by firms to reduce costs have left securities services with significantly reduced staff and resources. Secondly, the regulatory response to the crisis combined with other factors such as the implementation of Target 2 Securities (T2S) has added additional demands on securities services. Absorbing the additional work with reduced staff and budgets is a challenge and has led many firms to focus only on mandatory projects. Third, at the same time, the great amount of regulatory change and the introduction of T2S created a number of opportunities to strategically improve securities operations. Key opportunities are in reducing fragmentation and complexity in favour of more centralised models for both cash and securities. Such models reduce friction, risk and cost caused by the need to move inventory around. They also enable efficient use of triparty collateral management services. While some first movers are already implementing new strategies in 2018, the great challenge for other market participants is finding the time, resources and budget to define and implement such notable strategic change.

New institutionalism, critical junctures and post-crisis policy reform

ABSTRACTTwo accounts of change dominate with new institutional literature. The first emphasises ‘punctuated equilibria’ in which change is shock-driven, sudden and radical enough to loosen path dependencies. The second emphasises a more gradual-incrementalism and a view of change that is more or less constant. This article argues that neither account is suitable for the policy scholar interested in understanding the complexity of a post-crisis reform period and that a synthesis between these two views would better serve those interested in the nuance of post-crisis change. The article provides this synthesis in the form of a reconceptualization of the critical juncture. This reconceptualization merges the punctuated equilibrium and the gradual-incremental views and, in doing so, presents a much more realistic institutional account of the fine print of policy change post-crisis. The reconceptualization is subsequently justified empirically through the analysis of a specific post-crisis reform period (the Queensland floods of 2010–11).

Experience of Greece on Recapitalization of Banks, Marketing Management and Personnel Retraining in Conditions of Economic Recession

JEL Classification Codes: GOO, G01, G21, HI2, H60, M31. 1. Introduction In the globalizing financial economy the imbalances reflecting peculiarities, limitations and structural weaknesses in development of banking services markets and financial and credit sphere in general occur frequently. Banking systems of countries having emerging markets in conditions of crisis lose reliability and stability, have difficulties with capital and face the problems difficult to resolve (Allegret et al., 2016; Thalassinos et al., 2014; 2015a; 2015b; Thalassinos and Liapis 2014; Athanasenas et al., 2015; Boldeanu and Tache, 2016; Fetai, 2015). The authors define the institutional gaps in the regulatory system related to implementation of neoliberal economic policy conducted as a part of separate market space as the main causes of emerging risks and limitations in the banking sector (Giannarakis, 2016; Rupeika-Apoga and Nedovis, 2015; Theriou and Aggelidis, 2014; Duguleana and Duguleana, 2016). In conditions of global financial risks implementation Greek banking system which had been created with active state participation reduced its financial stability to a large extent. National Financial Bank of Greece was formed in 1828 to control financial, credit and fiscal issues. The history of formation and development of Greek modern banking system is associated with creation of such large Greek banks as Bank of Attika, General Hellenic Bank, Bank of Central Greece, which served as a basis for the institutional design of national financial institutions. Stage-by-stage construction of credit-and-monetary regulation mechanism occurred in 1970-1990. During this period the mechanism of credit-and-monetary regulation aimed at improving Greek banking system first of all according to the Bank of Greece line was being created and strengthened. Fixed final indicators of inflation and GDP growth rate were set as financial market regulators, the achievement of which was ensured by strict control over liquidity and objective information about the processes occurring in the sphere of country's credit-and-monetary regulation. The processes of strengthening and grading the credit-and-monetary regulation legal framework were implemented in the course of financial institutions development. This policy allowed ensuring flexibility and autonomy of the exchange rate which was considered as a decisive factor in achieving strategic macroeconomic indicators. In 1981 Greece joined the European Union, which defined the need for structural reforms in financial and credit system of the country. The Bank of Greece implementing a strategy of ensuring stable exchange rate introduces in this period restrictions on deposits in national currency for non-resident foreigners, on foreign currency debt of commercial banks, on obtaining external credits by national companies with aim of their reorientation to internal credit resources. The entry of Greece into the Economic and Monetary Union on the 1st of January 2001 and into the Common European Currency area created real conditions for transition from economy of closed protective type to an open socially-oriented market economy. The Bank of Greece has a special place in the banking system of the country; it has functions of credit-and-monetary policy development and implementation in order to achieve price stability and support of the state economic policy. State-controlled Greek banks such as National Bank of Greece and Emporiki Bank of Greece, private banks such as Alpha Bank and Piraeus Bank, as well as Eurobank Ergasias (with foreign participation) financial and credit services had a dominating role in the market of financial and credit services. In connection with post-crisis changes in the banking and credit system of the European Union as well as appearance of financial imbalances the structural changes occur actively in Greek banking system; there is a search of instruments ensuring reliability of banks and transparency of financial transactions. …