Spanish Credit Institutions Research Articles

The Spanish economy and banking system’s exposure to material third countries

Rationale Each year, the Banco de España identifies a list of third countries (i.e. those outside the European Economic Area) to which Spanish credit institutions have relevant exposures. To that end, it is important to analyse the Spanish economy’s exposure to these material third countries from a number of perspectives. Takeaways •In 2022, the Banco de España identified the United Kingdom, the United States, Mexico, Brazil, Türkiye, Chile, Peru and Colombia as material third countries for the Spanish banking system. This article describes the Spanish economy’s banking, trade and financial exposure to these countries. •The most significant exposures are to the United Kingdom, which heads most of the variables under consideration. The United States also ranks very highly among the developed countries. •Among the emerging market economies, the exposure to Brazil and Mexico in terms of bank assets and liabilities and Spanish outward foreign direct investment is noteworthy. The degree of exposure to other countries is much lower, with Chile and Türkiye ranking above Colombia and Peru.

Riesgo climático y oferta de crédito en España

Rationale The 2015 Paris Agreement is a milestone in the global fight against climate change. Against this backdrop, and as a result of credit institutions’ alignment with the agreement, it is important to analyse its impact on lending to firms. Takeaways •The 2015 Paris Agreement represents one of the first initiatives intended to foster the transition to a greener economy and, consequently, to reduce carbon dioxide (CO2) emissions. •The findings of this article show that lending by Spanish credit institutions to more polluting firms appears to have declined somewhat between 2014 and 2019. •The evidence presented also suggests that, during that period, the banks most exposed to climate risk reduced their supply of credit to firms operating in more polluting sectors in order to mitigate this risk. However, in quantitative terms, the effects are moderate.

Impact of the application of IFRS 9 on listed Spanish credit institutions: implications from the regulatory, supervisory and auditing point of view

PurposeAt the European level, on January 1st 2018, the accounting standard IFRS 9, on the principles for the accounting information of financial instruments entered into force. The objective of this research paper is to analyse the impact of the first application of IFRS 9 on the credit institutions listed in Spain, specifically, its effects on their financial statements and the corresponding audit reports.Design/methodology/approachIn order to achieve research purpose, a descriptive analysis of the analysed entities has been carried out, through the financial and economic indicators, and through the review of the corresponding audit reports.FindingsThe results show that the application of IFRS 9 had a significant effect (both positive and negative) on the results of the subject companies. Based on the audit reports, the application of this new standard increased the degree of complexity and that of accounting estimates in the financial statements.Originality/valueThis research is an important contribution to the literature on this topic because it analyses the impact of IFRS 9 under the main points of view that allow for a more complete understanding of the standard thus addressing the regulatory accounting standpoint, the economic–financial impact and the consequences on the implementation process.

A fuzzy-set qualitative comparative analysis model to predict bank bailouts: a study of the Spanish financial system

This paper examines the restructuring of the Spanish financial system. This study is justified by the massive economic and social impact of this process in Spain. Based on the annual accounts and the annual reports of Spanish credit institutions, a model was created to predict the possibility of bank failure or bailout. The variables were selected following a review of the literature. They included the legal form of the credit institution (savings bank versus bank), leverage, real estate investment, gross operating margin, staff costs and non-performing loans. Two variables that had not previously been used in studies of this type were also included in the model: risk-weighted assets and coverage (as part of the provisions for non-performing loans). Fuzzy-set qualitative comparative analysis (fsQCA) was used for the analysis. Use of fsQCA is another novel aspect of this study. This technique has never been used to predict corporate bankruptcy or the failure of credit institutions. Proposals were made and tested using data on Spanish banks and savings banks for the year 2010, a critical year for the Spanish financial system. The results yield several interesting conclusions. First, greater leverage increases the probability of survival, contrary to the opinion of most scholars. This result shows that the problem facing Spanish credit institutions was the closure of international markets, not the level of debt. Another key conclusion is that financial institutions with higher staff costs have a greater chance of survival. Therefore, the widespread policy of reducing human resource costs should be reconsidered. Finally, the risk-weighted assets measure offers an excellent predictor of failure of credit institutions, as well as providing other benefits, which substantially increase the value of this measure.

Competitive environment and bank development

PurposeRight up to the moment, the financial sector has been considered a clean and a neutral sector, as far as social and environmental impact concerns. The purpose of this paper is to determine the attitude of Spanish credit institutions to the sustainable development.Design/methodology/approachDelphi methodology was used to test the viability and validity of the questionnaire and to choose the best systematic way of communication. The research to understand society and environment focussed on investments was conducted using a survey completed by 57 Spanish credit institutions. Various types of statistical analyses were performed to assess the questionnaire.FindingsThe higher the entities’ investment is in environmental projects, the more sensitive they will be about social responsibilities issues. However, the higher the percentage invested in funding to communities or dejected regions and in cultural projects.Research limitations/implicationsTo know, measure and evaluate the activities of a credit institution in the environment, it is necessary to define indicators for the policies, procedures and management practices adequate for the sector.Practical implicationsCredit Spanish Institutions sector organizations are responding positively to sustainable development and, in the process, enhancing stakeholder value.Social implicationsIn various practices of credit institutions, implementing a preventive environmental approach or undertaking initiatives to promote greater environmental responsibilities – along with the possibility to allocate funds for certain projects – environmental conditions are also considered.Originality/valueTo develop good environmental practices in credit institutions, they apply the principles of sustainability and identify and quantify the environmental risk in the normal internal process of risk assessment.

Prediction of financial distress in the Spanish banking system

Purpose The purpose of this study is to construct the first short-term financial distress prediction model for the Spanish banking sector. Design/methodology/approach The concept of financial distress covers a range of different types of financial problems, in addition to bankruptcy, which is not common in the sector. The methodology used to predict financial problems was artificial neural networks using traditional financial variables according to the capital, assets, management, earnings, liquidity and sensibility system, as well as a series of macroeconomic variables, the impact of which has been proven in a number of studies. Findings The results obtained show that artificial neural networks are a highly suitable method for studying financial distress in Spanish credit institutions and for predicting all cases in which an entity has short-term financial problems. Originality/value This is the first work that tries to build a model of artificial neural networks to predict the financial distress in the Spanish banking system, grouping under the concept of financial distress, apart from bankruptcy, other financial problems that affect the viability of these entities.

Econometric model to estimate the Probability of Default and Loss Given Default in the EBA stress test in 2016

In this research, an econometric with panel data using Ordinary least squares OLS model is constructed following the guidelines recommended by the EBA stress test methodology for 2016. The findings indicate that macroeconomic factors affecting defaults are the expected ones in the Spanish credit institutions. However, loan impairments do not follow the patterns that a priori would be normal. Divergent is outcomes in defaults and impairments: the Non-Performing Loans (NPL) is pro-cyclical and impairment losses are counter-cyclical.

Differential Effect on the Determinants of the Late Payments According to the Economic Cycle

From 2004 to 2007, the Spanish financial system grew at a very rapid rate. However, from 2008 to 2012 impairment losses amounted equivalent to 25% of Spanish GDP.The objective of this paper is investigate how have affected the main problems that have suffered the Spanish economy on the late payments on Spanish credit institutions. And to check whether the effect of these problems is different on stages of growth with respect to the stages of crisis.The main results, according the test Chow, confirmed that there is a structural break in the model in 2007. Also the increase in unemployment increases the late payments and this increase is greater in the stages of growth compared to the stages of recession. The decrease in the price of housing increases the late payments. The increase in equity decreases the late payments, in these two variables decrease is greater in the recession stages compared to the growth stages.

Risk Profile Indicators and Spanish Banks’ Probability of Default from a Regulatory Approach

This paper analyses the relationships between the traditional bank risk profile indicators and a new measure of banks’ probability of default that considers the Basel regulatory framework. First, based on the SYstemic Model of Bank Originated Losses (SYMBOL), we calculated the individual probabilities of default (PD) of a representative sample of Spanish credit institutions during the period of 2008–2016. Then, panel data regressions were estimated to explore the influence of the risk indicators on the PD. Our findings on the Spanish banking system could be important to regulatory and supervisory authorities. First, the PD based on the SYMBOL model could be used to analyse bank risk from a regulatory approach. Second, the results might be useful for designing new regulations focused on the key factors that affect the banks’ probability of default. Third, our findings reveal that the emphasis on regulation and supervision should differ by type of entity.

Determinants of interest margins in Spanish credit institutions before and after the 2008 financial crash

As interest margins of credit institutions affect economic performance of countries, finding out which are the main determinants of their evolution is a research task of great interest at current times. This is the purpose of the present paper as regards to the Spanish case over the period 2004-2012. Based on the econometric contributions by Ho and Saunders (1981) and some of its extensions, the authors develop a model that includes as explanatory variables the factors usually examined in the literature and other singular variables that might be relevant. Particularly, the rate of leverage, the quality of their assets measured according to their risk, and the profit obtained from the selling of assets, including real estate ones. The research also provides an analysis of differences between banks and savings banks.

Dotaciones para los deterioros de los créditos. Un estudio por ciclos económicos

This paper studies the determinants of the provisions for impairment of loans in the Spanish credit institutions in the period 1983 to the second quarter of 2013. There are other significant factors in addition to the loan default, such as generic provisions, the interest margin, and the seasonal nature focused in the fourth quarter and in periods of crisis. As it is an extended period, how the determining factors affected each one of the four economic cycles are studied. Important similarities were found in periods of crisis and the growth, with singularities in their own cycles. The contributions of this research are: i) the different behaviour of the same explanatory variables at different periods of the economic cycle, ii) the different behaviour of the losses and defaults during periods of crisis, and iii) the seasonality detected in the fourth quarter of each year. Furthermore, how it affects the quarterly and half-year results that financial institutions publish in the CNMV.

La solvencia de las entidades de crédito españolas. Un análisis con datos de panel

This paper studies the determining factors that have influenced the solvency of Spanish credit institutions. Eight hypotheses are contrasted with data obtained from the annual accounts of credit institutions covering the period from 2004 to 2011.Two methodologies are used for testing the hypotheses. Econometric models an unbalanced panel data was used for the first six. From the results, it appears that a there is a dependence on the wholesale markets and the socio-economic situation, which has led to an increase in arrears and decline, contributing negatively to solvency. The portfolio of assets, investment property, leverage, increase in personnel expenses and administration and marginal interest and other income contribute to higher solvency. For the last two hypotheses discriminant analysis is used. A contrast between the different behaviours presented by the variables used in the econometric model and two sub-groups within the sample, that is: savings banks and banks on the one hand and entities that have received aid and on the other hand those that have not needed it. The results indicate that differences do exist between entities without aid, although not between commercial and savings banks.

Spanish credit institutions: do efficiency and solvency support the first decisions on bank restructuring from a financial point of view 2008-2012?

The restructuring processes of the Spanish financial entities over the last years has led us to analyze financially how efficiency and solvency of banks and savings banks explain the decisions of incorporation and control of these entities. We analyze 51 Spanish financial entities for the period 2008-2012. The results show higher solvency and efficiency of banks over savings banks. On the other hand, after the first integrations it is observed that it is still early for these ratios to improve on the results obtained by the entities before the integrations. However, from the financial point of view, these integrations do explain how correct the start-up and intensification of the restructuring processes were. There are some exceptions to the global criteria, which are explained by the size, strength and structure of the business and the closeness of its financial management scope to the area and business structure of the bigger banking groups.

Development of a Classification of Spanish Credit Institutions Based on the Concept of Stakeholder

Corporate Social Responsibility (CSR) assumes that banks voluntarily incorporate social and environmental criteria in their economic activities and relationships with stakeholders. The reason why a credit institution decides to involve itself in social activities is a question which the literature on economics has tried to answer. We highlight the relationship created between the credit institution as a social organization and its various stakeholders, analyzing the importance assigned to each of them. Our goal is to find distinct profiles of credit institutions, depending on their degree of concern about CSR (Corporate Social Responsibility). The field work was conducted by means of a survey answered by 57 Spanish credit institutions. The results show the interest of such institutions in CSR in relation to the entire Spanish financial sector. Three clusters are distinguished according to how they think about CSR. In the first cluster there are institutions with responsibility focused on employees. It includes entities whose priority stakeholders are shareholders and employees. In the second cluster, we find institutions with responsibility focused on society. Among the stakeholders they act primarily towards customers, society and the environment. The third cluster is made up of institutions with responsibility focused on legislation (norms). In the third cluster, there is Friedman's vision, which considers the social responsibility of the bank as the maximization of Profit. DOI: http://dx.doi.org/10.5755/j01.ee.23.5.667

The Social Outlay: A Focus on Spanish Credit Institutions

Society expects that as well as providing services, banks should behave as good citizens, just like anyone else. The fieldwork to understand society-focused investments was conducted using a survey completed by 57 Spanish credit institutions. The purpose of this research is to identify society-focused investments. Concurrently, we recognize that there are different strategies in terms of ways of investing in society. So on the one hand, we find sponsored societies, and on the other, entities that make real investments in society. Moreover, the larger the investments of entities in environmental projects, the more they see themselves as more concerned about issues of social responsibility.

The Spanish Banks in face of the Corporate Social Responsibility Standards: previous analysis of the financial crisis

Transparency of information in the field of CSR (Corporate Social Responsibility) is common to various standards. In recent years there has been a proliferation of standards and models for the formalization of CSR strategies. The objective is to assess the degree of implementation of standards of normalization. The analysis was conducted with data from the year 2008, coinciding with the first signs of the financial crisis, serving as a reference point to analyze the effect of the crisis. The field work was conducted using a survey answered by 57 Spanish credit institutions. We found a low degree of implementation of standards. The GRI (Global Reporting Initiative) and the ISO 14001 stood out. In view of the orientation of credit institutions towards the market, Banks have incorporated much more elaborated and comprehensive quality standards than other credit institutions, such as the implementation of the standard AS 1000 that is equivalent to the joint implementation of the ISO 14000 and 9000.

LOS GRUPOS DE INTERÉS EN LAS ENTIDADES DE CRÉDITO ESPAÑOLAS

Here we describe the origins, evolution and classification of stakeholders. It highlights the relationship created between the credit institution as a social organization and its various stakeholders, analyzing the importance attached to them. The field work was conducted through a questionnaire answered by 57 Spanish institutions. The results show the sensitivity of banks to CSR (Corporate Social Responsibility), with regard to the entire Spanish financial sector. Our goal is to analyze the importance of the various stakeholders: shareholders, employees, customers, suppliers, community and public administration for the Spanish credit institutions. Credit institutions focus their interest mainly on two interest groups: employees and customers. Transparency and open dialogue about performance, priorities and future plans for sustainability are actions to be implemented in order to inspire confidence and future.

Spain: Financial Sector Assessment Program - Technical Note: Nonfinancial Equity Investments of Spanish Credit Institutions

Spain: Financial Sector Assessment Program - Technical Note: Nonfinancial Equity Investments of Spanish Credit Institutions

The global financial environment and spanish cooperative banking

The phenomenon of globalization has an effect on all the fields of economic and financial activity. In this increasing competitive environment, the majority of the Spanish credit institutions have been integrated in a cooperative banking group: the Grupo Caja Rural. In other countries of long cooperative tradition, important credit institutions have responded to challenges presented by economy internationalization and the increasing competence in financial markets with the abandonment of mutuality and cooperative model. These changes have been justified by companies in order for their own survival and business growth necessities. In Spain, the reaction has been the opposite. In spite of that, some elements can make one think of a possible demutualization process in the Grupo, due to the trivialization of cooperative principles. (JEL G21, O52)

Collateral, type of lender and relationship banking as determinants of credit risk

This paper analyses the determinants of the probability of default (PD) of bank loans. We focus the discussion on the role of a limited set of variables (collateral, type of lender and bank–borrower relationship) while controlling for the other explanatory variables. The study uses information on the more than three million loans entered into by Spanish credit institutions over a complete business cycle (1988–2000) collected by the Bank of Spain's Credit Register ( Central de Informaci ó n de Riesgos). We find that collateralised loans have a higher PD, loans granted by savings banks are riskier and, finally, that a close bank–borrower relationship increases the willingness to take more risk.