•The use of macroprudential policy has intensified over the years.•Macroprudential measures are significantly associated with the credit supply to SMEs.•The use of macroprudential measures is ...negatively related to SMEs’ credit access.•The loosening policy actions are positively associated to SMEs’ credit access.•The sensitivity to macroprudential measures decreases as the firms’ size increases.
This paper examines the impact of macroprudential policies on small and medium-sized firms' access to bank finance. To this end, we use data from a firm-level survey covering European Union (EU) countries between 2009 and 2017, as well as a recently published database on the use of macroprudential policies in EU countries, the Macroprudential Policies Evaluation Database (MaPPED), which allows us to separately consider the tightening and loosening macroprudential policy measures. We develop several macroprudential indices based on the target of the macroprudential instruments. The results reveal a significant relationship between macroprudential indices and firms' access to finance. The indices are mainly associated with limited access to bank credit for SMEs, taking different firm- and country-level characteristics into account. While use of macroprudential measures could lead to higher capitalisation and make the financial sector more resilient and reduce its risk exposure, this could also mean restricted lending to firms, especially smaller firms with fewer financing options and considerable reliance on bank credit.
In this paper, we study how the use of macroprudential policy instruments is associated with bank funding costs. To accomplish this, we develop several macroprudential indices based on policy ...objectives and include different macroeconomic and bank-level variables, while we also separately analyse the cost of debt and overall cost of funding. Our analysis relies on bank-level data in 43 European countries for the period between 2000 and 2017, and a macroprudential policy dataset based on an IMF survey. The results show the activation of macroprudential policies is chiefly related with lower bank funding costs, with this association being stronger for developed countries than emerging ones. The results also reveal positive links with certain macroprudential measures to bank cost of funding, offering further insight into the repercussions of calibrating and selecting macroprudential tools.
•The use of macroprudential policy has intensified over the years•The activation of macroprudential instruments is significantly associated with lower costs of bank funding•The dampening effect of macroprudential tools on bank funding costs is stronger for developed countries than emerging ones.•The effects of macroprudential policy on the cost of funds depend on the country’s financial and institutional development.
•A cost efficiency gap exists between the banking systems in EU and candidate countries.•The banking cost efficiency is converging in SEE countries.•The efficiency gap is closing, which is mainly due ...to adjustments of the less efficient banks.•EU membership correlates positively with banking cost efficiency.•The cost efficiency of banks in the SEE improved during the 2008 financial crisis.
In this study we compare the cost efficiency of banks in ten South East European countries and find out how differences in efficiency are related to EU membership. The results reveal a statistically significant cost efficiency gap between EU and non-EU banking systems in the region, where on average EU banking systems tend to be more cost efficient than their non-EU counterparts. In contrast to other similar studies analyzing banking efficiency in South East European countries, we also run β-convergence and σ-convergence tests, as proposed in the literature. Based on these tests we can draw conclusions concerning the existence of a catching-up effect, since the detected cost efficiency gap is closing predominantly because of adjustments on the side of the less efficient banks. Additionally, we found that during the 2008 global financial crisis, the average cost efficiency scores of banks in the region improved, which could be explained by enhanced incentives of bank managers for intensified cost optimization in banks in crisis times. Our results suggest that the institutional adjustments in the non-EU countries should continue towards EU standards, as the EU banking systems tend to dominate in terms of measured cost efficiency.
Using a worldwide bank sample from 2000 to 2010, this article analyzes the determinants of bank lending behavior during the global financial crisis highlighting the role of bank capital. It reveals ...that the high quality of the bank funding strategy (tier 1 bank capital and retail deposits) and prevalent government backing were crucial to continuous bank lending during the crisis period. This effect was especially pronounced in non-OECD and BRIC countries. We also point out that, although higher use of tier 2 capital and interbank deposits could be important for increased lending during a normal period, this did not support lending activities during the financial crisis. The article concludes by suggesting that in crisis periods high-quality bank capital is a bank's competitive strength.
•This article analyzes bank lending during the global financial crisis highlighting the role of quality of bank capital.•Tier 1 bank capital was crucial to continuous bank lending during the crisis period.•The positive effect of tier 1 capital on bank lending during the crisis was especially pronounced in developing countries.•In crisis periods, high-quality bank capital acts a bank's competitive strength.
This article examines bank cost efficiency for five new EU Member States from Central and Eastern Europe and the three Baltic States for the period 1996 – 2006. The banking sectors in the selected ...set of countries had undergone a remarkable transformation before they achieved EU membership in 2004. We study cost efficiency differences between countries as well as efficiency improvements fostered by intense legislative and regulatory changes and extensive structural and institutional reforms carried out simultaneously. By employing he SFA approach an improvement in cost efficiency was discovered in the period nvestigated. Some noticeable differences in average cost efficiency among banking sectors an be detected as well. Empirical results also reveal certain significant associations of ost efficiency with country level macroeconomic characteristics, structure of the banking ndustry, and individual bank features. Analysis of correlating factors shows that the evel of competition in the banking sector plays a more important role for cost efficiency mprovements than the ownership structure itself. These results might be of interest to olicy makers and regulatory authorities as they may provide help in detecting policy easures to create a business environment which would further enhance the cost efficiency f CEE banks.
The aim of our research was to compare the methods of privatization of social ownership and monetary system in the countries of former Yugoslavia with the privatization mode and monetary arrangement ...that could be considered as optimal. By applying the method of comparative analysis, it has been found out that the way of socially-owned enterprises being privatized and monetary regulations implemented had the crucial impact on the transition in the countries of former Yugoslavia. In fact, the chosen methods of privatization and monetary arrangements applied in these countries have established economies of uncompetitive enterprises. Privatization was either macro-economically harmful for the domestic savings and capital formation and / or unjust for people. In addition, our analyses have proved that the monetary regulation and foreign exchange policy were either not implemented at all or too little to neutralize the negative consequences of selling companies to foreign investors on the foreign exchange rate. The same goes for the combination of monetary policy and foreign exchange rate policy that should have been implemented so as to prevent speculative import and export of short-term capital. For the countries that have not joined the EU yet, it might be helpful to comply with the conclusions of our research and examine their path toward a market economy. PUBLICATION ABSTRACT
The purpose of this paper is to analyze the loss given default (LGD) determinants in case of a typical loan portfolio consisting of SME loans in a commercial bank operating in one of the quickly ...developing banking markets, i.e. in Slovenia. Accurate LGD estimates of defaulted bank claims are important for provisioning reserves for credit losses, calculating adequate risk capital and determining fair pricing risky bank loans. Findings suggest that reliable LGD estimates can be produced by discounting expected loan related future cash lows and that explanatory factors, such as type of collateral, type of industrial sector, last available loan rating, size of the debt and loan maturity satisfactorily explicate variability of the LGD variable in the specific banking market. All the results are not only relevant to the impairment policy determination and capital adequacy calculation in the specific bank, but also to the evaluation of SME loans characteristics in developing markets.
This article examines bank cost efficiency for five new EU Member States from Central and
Eastern Europe and the three Baltic States for the period 1996 – 2006. The banking sectors
in the selected ...set of countries had undergone a remarkable transformation before they
achieved EU membership in 2004. We study cost efficiency differences between countries as
well as efficiency improvements fostered by intense legislative and regulatory changes and
extensive structural and institutional reforms carried out simultaneously. By employing the
SFA approach an improvement in cost efficiency was discovered in the period investigated.
Some noticeable differences in average cost efficiency among banking sectors can be detected
as well. Empirical results also reveal certain significant associations of cost efficiency
with country level macroeconomic characteristics, structure of the banking industry, and individual
bank features. Analysis of correlating factors shows that the level of competition
in the banking sector plays a more important role for cost efficiency improvements than the
ownership structure itself. These results might be of interest to policy makers and regulatory
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