Post-financial Crisis Research Articles

‘Don’t Crunch My Credit’: Member State Governments’ Preferences on Bank Capital Requirements

Across Europe, banks remain, to this day, the main suppliers of finance to the European economy, but also a source of systemic risk. As such, regulating them requires that policymakers find an appropriate balance between restricting their risk-taking behaviour and increasing lending to support economic growth. However, the ‘varieties of financial capitalism’ that characterize national banking sectors in Europe mean that the adoption of harmonised capital requirements has different effects across countries, depending on the country-specific institutional setting through which banks provide lending to the national economy. This article conducts a new analysis of Member State governments’ positions in the post-financial crisis reform of the EU capital requirements legislation, expanding the scope of previous studies on the topic. Here, I examine in detail the positions of Member States on a wider set of issues and for a broader set of countries than the existing literature. Building on the varieties of financial capitalism approach, I explain these positions with regard to structural features of national banking sectors. I find that Member State governments’ positions reveal a general agreement with the proposed increase of bank capital requirements, while seeking targeted exemptions and preferential treatment that they deem necessary to preserve their domestic supply of retail credit.

Questioning Anglocentrism in plural policing studies: Private security regulation in Belgium and the United Kingdom

Recent Continental European scholarship has identified a problematic Anglocentric bias running through the field of comparative plural policing studies. It has sought to counter this bias by emphasizing a series of divergent plural policing trajectories between the more market-friendly countries in the Anglosphere and the more state-centric countries in Continental Europe. While acknowledging the significance of this corrective, we argue that it tends to overemphasize the levels of divergence between these two regions. We substantiate this claim by examining the rise of the private security industry and its regulation by the state in the UK (representing the Anglosphere) and Belgium (representing Continental Europe). Interpreting historical and contemporary data through Sabatier and Weible’s advocacy coalition framework, which focuses on the cut and thrust of democratic politics, we observe how in both countries this important dimension of the plural policing landscape is characterized not by counterposed market-friendly and state-centric trajectories, but rather by a complex mix of state–market interactions. In other words, the dynamics of private security regulation are more state-centric in the UK and more market-friendly in Belgium than recent Continental European scholarship suggests. Moreover, we illustrate how, under conditions of post-financial crisis austerity, the overarching pattern is, if anything, one of convergence towards a common set of political dynamics. This is an important finding that not only makes an original contribution towards private security regulation scholarship but also encourages us to question the nature of Anglocentric bias within comparative plural policing studies.

How has the relationship between safe haven assets and the US stock market changed after the global financial crisis?

In this paper, I investigate how the relationship between safe haven assets and the US stock market has changed since the global financial crisis. To do so, I propose a new concept of bear-market correlation which allows us to see the effectiveness of the safe haven asset as a hedge and portfolio diversification tool. I compute the bear-market correlation of five safe haven assets during two sample periods, pre-financial crisis (1995–2009) and post-financial crisis (2010–2018). My findings are as follows: First, I find that the empirical bear-market correlations are not explained by multivariate normal and t-distributions. Second, I document that the bear-market correlations of both the Japanese yen and gold show notable changes after the crisis. Third, I estimate a multivariate normal mixture, a multivariate t-distribution mixture, and a generalized dynamic conditional correlation model. I document that these mixture models outperform the dynamic conditional correlation model in most cases. Finally, I discuss the economic impact of failing to capture the bear-market correlation for portfolio optimization.

Investigative Study of Investor’s Herding Behavior During Bullish and Bearish Market: A Case of Pakistan Stock Exchange

This study investigates the influence of herd behavior on the Pakistan stock exchange indexes KSE-100 and KSE-30 during bullish and bearish markets. Using the daily market return from 2007 to 2020. We implement the method of main herding measures, Cross-sectional absolute deviation, and Cross-sectional standard deviation, to explore the influence of herd behavior in the emerging market of Pakistan. The results indicate the presence of market-wide herd behavior: (a) along with the different direction of market positive and negative return, (b) when trading volume high, (c) when stock market highly volatile, and (d) during and the post-financial crisis. Moreover, Investors don’t herd when low trading volume and low volatility. Our study fills the gap in the literature and contributes to academic relevance by exploring the influence of herd behavior among both bull and bear periods in markets of Pakistan, it also examines the possible asymmetric effects of herding related to the market with high-low trading volume and market volatility.

Preventing a rebound in carbon intensity post-COVID-19 - lessons learned from the change in carbon intensity before and after the 2008 financial crisis.

The carbon emission rebound of the post-2008 financial crisis teaches us a lesson that avoiding a rebound in carbon intensity is key to prevent the carbon emission increase afterward. Although how carbon emission will change the world after the COVID-19 pandemic is unknown, it is urgent to learn from the past and avert or slow down the potential rebound effect. Therefore, this study aims to identify key drivers of carbon intensity changes of 55 sectors, applying the decomposition techniques and the world input-output data. Our results demonstrate that global carbon intensity fluctuates drastically when shocked by the global financial crisis, presenting an inversed-V shape for the period 2008–2011. Industrial carbon emission and gross output vary among different industries, the growth rate of industrial carbon intensity varies from -55.55% to 23.77%. The energy intensity effect and economic structure effect have opposite impacts on carbon intensity decrease, accelerating and hindering the decreasing carbon intensity, respectively. However, the energy mix effect has a minor impact on carbon intensity decrease. The industrial carbon intensity decomposition results show the impact of technological and structural factors are significantly different among industries. Moreover, the impact of energy intensity is slightly stronger than the energy mix. More measures targeting avoiding the rebound in carbon intensity should be developed.

Islamic and Conventional Banks Stability during Global Financial Crisis: Evidence from Indonesia

This study observes the stability of Islamic and conventional banks in Indonesia mainly during and post global financial crisisand their impact to the general financial stability.Bank stability measured by Z-scores, could be influenced by bank specifics, market concentration, and macroeconomic indicators.Pooled GLS regression analysis wereemployed to examine the Islamic and conventional banks stability. The sample size is 50 banks in Indonesia, consisting of 9 Islamic banks and 41 conventional banks between 2008 and 2017. The finding showed that the stability of the conventional bankslower than the Islamic bank. However,large Islamic banks are significantly less stable than the large conventional banks. Meanwhile, the small Islamic banks are significantly more stable than the small conventional banks. The finding of the study is expected to enhance the understanding of banks stability during and post global financial crisis in general, and within the context of Indonesia in particular.

Pass-Through of Crude-oil Price Shocks to Consumer Prices in Nigeria: Pre and Post 2008 Global Financial Crisis

This study investigates the responses of consumer price index (CPI) to crude oil price shocks in the pre- and post-2008 global financial crisis. The study used the Structural Vector Autoregressive model to analyse monthly data from 2000M01 to 2019M12. The impulse response analysis showed that for pre and post-crisis periods, oil price shocks have a positive impact on CPI. This impact was an insignificant direct momentary increase in pre-crisis CPI before dissipating. Conversely, the impact on post crisis CPI response tends to be stable and long-lasting starting from the third month. The confidence bands for the post crisis CPI are large, indicating the long-lasting positive response in the CPI pose no significant threat to price stability in the long run horizon. In conclusion, CPI response varies in terms of intensity for pre and post crisis periods. In terms of level of significance, the effect of the shocks on CPI is transient and insignificant in both periods. The post crisis oil price shock is not a significant channel that created price instability in Nigeria after the crisis and this study recommend partial deregulation of energy price should be maintained. Establishing oil price –inflation pass-through, external shocks like financial crisis should be accounted for.

The effects of bank levies post-financial crisis in Eastern Europe

ABSTRACT This article quantifies the effects of bank levies after the financial crisis for Central and Eastern European countries (Hungary, Latvia, Romania, Slovakia and Slovenia) from a pooled perspective and country-specific perspective. The results of the analysis emphasise the importance of these bank levies as regulatory tools and the negative externalities they have on other relevant outcomes for the economy. In particular, while these taxes were mostly designed to increase the governments’ budgets, the additional revenues were marginal. They also had a significant negative impact on credit (especially on a short run) and affected foreign direct investment (FDI). The country-level results emphasise the heterogeneity of the impacts of these taxes on the analysed outcome, a heterogeneity that was driven by the way these levies were implemented.

Dependence of Transportation on Industry in Croatia

The transportation sector is the lifeblood of an economy. It is divided into three principal categories, i.e., modes of transportation: air, land, and water. This paper analyzes the post-financial crisis value added data for the Croatian economy (2008–2015) by analyzing the dependence of three categories of the transportation sector on the cumulative of all other sectors, and on the manufacturing sector in particular. The value added of the three categories of the transportation sector is progressively dependent on the value added of the cumulative industry. This may be due to the progressive dependence of the gross national product on transport because of specialization and division of labor resulting in economies of density due to network and agglomeration effects.

Fabricating Effervescence

This paper explores the fabrication, managing, and defending of the “champagne bubble” during the nineteenth and twentieth centuries. Bringing together heterogenous elements – material, cultural, economic, political, legal, mythical – champagne is a powerful symbol and extremely valuable brand. I show how the champagne bubble is both fragile and rigid, both needing to be actively defended, and capable of rising from the ashes of wars as well as economic crises. Just as the bubbles in a champagne glass are influenced by numerous forces, so the metaphorical champagne bubble is subject to complex influences. Some of these are explored in this paper.

Toward a resource poetics in Muriel Rukeyser’s Book of the Dead and Mark Nowak’s Coal Mountain Elementary

ABSTRACT Muriel Rukeyser’s 1936 documentary poem The Book of the Dead appropriates various forms of textual evidence to document a devastating mining disaster that occurred in 1930 in rural Gauley Bridge, West Virginia. Written in the aftermath of the post-2008 financial crisis, Mark Nowak’s 2009 text Coal Mountain Elementary revisits the same landscape Rukeyser had sought out seventy years earlier, and makes use of a similar technique as it combines reports of a 2006 mine explosion in Sago, West Virginia, with news reports from Chinese mining accidents and other materials. Both poems dramatise the distance separating extractivism-vulnerable landscapes of the periphery (rural, or in Nowak’s case, global) from the accumulation of profits in the core. In reading these two texts side-by-side, it becomes clear that beyond their thematic similarities, the two poems also engage and adapt a methodology I call ‘resource poetics’, in which extractivist practices are exposed to view through poems’ material incorporation of textual artefacts testifying to their ruinous effects. As such, the two poems, situated roughly seventy-five years apart, offer trenchant critiques of modernity in its extractivist mode.

Comparison of Takaful & Non-Takaful Insurance Companies of Pakistan Under Pre, During & Post Economic Crisis 2008

The purpose of this study is to examine the determinants of profitability of Takaful Insurance and Non-Takaful Insurance companies under the tenure of pre, during, and post-financial crisis. The stimulus of this study was the absence of research on this topic. The profitability is measured using Return on Assets whereas macro-economic variables i.e. GDP and Inflation and industry-specific variables i.e. Liquidity, Leverage, and Size are used as independent variables. Panel regression results indicated that macro-economic variables had an insignificant impact on the profitability of the Insurance sector under all three phases, whereas industry-specific variables have a miscellaneous impact on profitability. Takaful insurance companies have better liquidity management than the Non-Takaful insurance companies under post-economic crisis tenure too as they get better returns in terms of profitability. It is concluded that insurance companies’ sectors i.e. Takaful-insurance companies and Non-Takaful Insurance companies should emphasize their internal or industry-specific indicators for their stability.JEL Classification: H8, F0, L1, M2How to Cite:AsadUllah, M., Hassan, M., & Siddiqui, Z. A. (2021). Comparison of Takaful and Non-Takaful Insurance Companies of Pakistan: Under Pre, During, and Post Economic Crisis 2008 . Etikonomi, 20(1), 201 – 212. https://doi.org/10.15408/etk.v20i117325.

Can hedge funds benefit from corporate social responsibility investment?

AbstractWe explore the extent to which hedge funds incorporate corporate social responsibility (CSR) considerations in the development of their investment strategies. Using an asset‐weighted composite measure of CSR by fund, we examine the difference in financial performance between hedge funds with high CSR investment relative to those with low CSR investment and document no significant difference. Yet, we find that hedge funds increase their exposure to high‐CSR investments over our sample period, specifically postfinancial crisis. We find that the increases in CSR investment are associated with lower return volatilities in the future. Additionally, hedge funds with higher weighted CSR scores exhibit significantly lower risk factor loadings than funds with lower weighted CSR scores. Our results suggest that hedge funds are able to derive benefits by using CSR considerations as a form of risk mitigation in their investment policies.

Fragile alliances: culture, funding and sustainability in police–academic partnerships

Background Police–academic partnerships have developed significantly over the past decade or so, spurred on by the expansion of the evidence-based policing movement, the increasing value attached to impactful research in the academy, the ascendance of the professionalisation agenda in the police, and the growing necessity of cross-sectoral collaborations under conditions of post-financial crisis austerity. This trend has given rise to a burgeoning literature in the discipline of criminology which is concerned with charting the progress of these partnerships and setting out the ideal conditions for their future expansion. Aims and objectives we advance a sympathetic critique of this literature, adding a note of caution to its largely optimistic outlook. Methods we do this by combining a narrative review of the literature on police–academic partnerships with insights from elsewhere in the social sciences and observations from our experience of running the International Strand of the N8 Policing Research Partnership. Findings and discussion while we recognise that police–academic partnerships have certainly come a long way, and have the capacity to make important contributions to police work, we argue that they remain ‘fragile’ alliances, beset with fractious occupational cultures, unreliable funding streams and unsustainable inter-institutional relationships. We also reason that the structures underpinning this ‘fragility’ do not represent problems to be overcome, for they help to protect the integrity of the two professions. Conclusion we conclude by offering pragmatic measures for sustaining police–academic partnerships during those difficult periods characterised by cultural dissonance, a paucity of funding and the turnover of key personnel.

The Effect of Bank Liquidity and Efficiency on Non-Interest Income with National Income as Variables Moderator

Empirically, non-interest income from banks in Indonesia has increased in the last five years. Apart from being caused by efficiency issues and the level of risk in interest income, the increase in non-interest income was due to the proliferation of electronic-based banking services. In an effort to understand the influence factors on non-interest income, this study examines the effect of market concentration on third party funds, credit market concentration, capital adequacy, bank liquidity, bank efficiency, non-performing loans, leverage, and reference interest rates on non-interest income. In addition, testing the effect of bank and macroeconomic characteristics variables on non-interest income with national income as a moderating variable and the effect of bank and macroeconomic characteristics on non-interest income with inflation as a moderating variable. This research uses descriptive methods and causality. The research was conducted at conventional National Commercial Banks in Indonesia, which is divided into the periodization of the financial crisis era, namely 2006-2011 and post-financial crisis, namely 2012-2017. The data collection technique used by researchers is the documentation method. The data analysis technique was performed using unbalance panel data regression analysis. The results showed that bank liquidity and bank efficiency had a significant effect.

Efficiency analysis of Catalonia’s construction industry pre- and post-financial crisis: a data envelopment analysis (DEA) approach

By employing a non-parametric technique rooted in economic production theory—i.e., Data Envelopment Analysis (DEA)—this study evaluates the efficiency level of construction businesses operating in the Spanish region of Catalonia. The empirical application considers a dataset including information for more than 1000 construction businesses from Catalonia during the period 2005-2016. The empirical results reveal that the efficiency level in the Catalan construction industry drastically fell during the period of economic downturn (2009-2012). Also, the findings show that efficiency in the industry improves after 2013; however, the speed of recovery is heterogeneous across businesses. A further analysis highlights that business size is a relevant factor explaining efficiency differences among the sampled businesses: efficiency is evidently lower in micro businesses compared to the figures reported for small and medium and large construction firms

Central Counterparties’ Insolvency and Resolution – The New EU Regulation on CCP Recovery and Resolution

With its new Regulation on the Recovery and Resolution of Central Counterparties, European Capital Markets Law has filled an important void in the regulatory framework for the operation of central counterparties, which has been established with the EU Markets Infrastructures Regulation (EMIR) as early as 2012. With a comprehensive set of preventive and reactive provisions for the restructuring of central counterparties, the new instrument clearly takes a bold step. The provisions build on existing international standards, but are far more granular than these. The present paper assesses the underlying policy and the technical content of the Regulation in the light of the post-financial crisis literature on the systemic relevance of financial market infrastructures.

Enhanced Prudential Standards Under Basel Iii: What Consequences For The Profitability Of Banks

Since the subprime financial crisis, international financial regulatory institutions (Basel, MIFID, Dodd-Frank), have strengthened regulatory requirements on systemically important banks. The Basel Committee on Banking Supervision, and based on the G20 recommendations, has drawn up a reform program to reconfigure the banking system, based mainly on increasing the capital requirement. The program has caused strong resistance from the banking industry leaders, saying that an excessive increase in regulatory capital will lead to an increase in the cost of financing of banks, which will have a negative impact on their profitability, and affect in fine the entire economic system. Due to the divergence of opinions regarding the impact of increasing capital requirements on the banking system, and the drastic lack of empirical literature on the Moroccan banking sector, we have decided to direct our research to fill this empirical deficiency. The main question we want to answer through our analytical approach, is how enhanced capital regulation would impact financial performance of the banking industry? Tio which extent this impact could be alleviated through risk management policies? To do so, and based on the empirical literature on this topic, we have conducted an analytical study, through Mathematical Modeling Analysis to compute the impact of the implementation of reinforced capital regulations on the profitability of banks.The goal of this article is to present the results of the impact analysis on the profitability of Moroccan banks using regression model applied to panel data, covering the 2010-2017 time period. The relevance of this study is derived from the several reforms applied to regulation of capital in the worldwide banking industry during the post-financial crisis period, including Morocco. In Morocco, Bank Al Maghrib, the regulator of banks, introduced reforms in the regulation of capital, through circular 14 / G / 2014 and circular 1 / W / 2016, modifying and strengthening the solvency ratios. This article presents the results of an impact study conducted based on the Panel's Multiple Data Regression Model and applied to 6 Moroccan banks during the post-financial crisis period, i.e., 2010-2017.

Risk Disclosure and Financial Performance: The Case of Islamic and Conventional Banks in the GCC

Purpose – This study aims to explore the extent of risk disclosure (RD) among conventional banks (CBs) and Islamic banks (IBs) listed on stock markets in the Gulf cooperation council (GCC). It also examines the influence of RD on the banks’ financial performance as measured by return on assets (ROA) and return on equity (ROE). Design/methodology/approach – This study uses content analysis to examine RD in the annual reports of 16 CBs and 14 IBs in the GCC for a sample of 240 firm-year observations over the period 2007 to 2014. Findings – The study shows no significant differences between the RD reported in the annual reports of CBs and that of IBs. On average, a CB reported 234 sentences while an IB disclosed 244 sentences of RD in its annual report. The authors also find that both types of banks had an upward trend over the periods. While the means of RD reported by CBs have significantly improved over the period, the RD reported by IBs has not. Similar results are also found when the authors compared the RD pre- and post-financial crisis period. Finally, the authors find that there is a significant association between RD and both models of financial performance (ROA and ROE) for IBs, after controlling other variables. However, RD has a significant association with only ROE for CBs. Research limitations/implications – The bank selection was restricted to publicly traded banks in the GCC. Other financial institutions and different types of industries were not considered. Further research could determine whether the results obtained in this study could be generalized to different industries in the GCC and or in other countries. Practical implications – This study provides evidence on the significant association between RD and the financial performance of CBs and IBs in GCC countries. This study could be helpful to regulatory authorities in encouraging banks to adopt the best practice of RD and thus promote banks’ transparency. Originality/value – This is the first known study to examine the RD practices of both types of banks and their association with banks’ financial performance in five-GCC countries (Kuwait, Qatar, Saudi Arabia, United Arab Emirates and Bahrain), based on a longitudinal analysis of year-end annual reports, covering eight years period from 2007 to 2014.

An Investigation of the Interrelations among Macroeconomic Variables in Thailand under Inflation-Targeting for the Post-Financial Crisis Perio

An Investigation of the Interrelations among Macroeconomic Variables in Thailand under Inflation-Targeting for the Post-Financial Crisis Perio