It is high time we rediscovered the role of the financial cycle in macroeconomics. In the environment that has prevailed for at least three decades now, it is not possible to understand business ...fluctuations and the corresponding analytical and policy challenges without understanding the financial cycle. This calls for a rethink of modelling strategies and for significant adjustments to macroeconomic policies. This essay highlights the stylised empirical features of the financial cycle, conjectures as to what it may take to model it satisfactorily, and considers its policy implications. In the discussion of policy, the essay pays special attention to the bust phase, which is less well explored and raises much more controversial issues.
This paper investigates the relevance of non-traditional activities in the estimation of bank efficiency levels using a sample of 752 publicly quoted commercial banks from 87 countries around the ...world, allowing comparison of the impact of such activities under different levels of economic development, geographical regions and other country characteristics. We estimate both cost and profit efficiency of banks using a traditional function that considers loans and other earnings assets as the only outputs, and two additional functions to account for non-traditional activities, one with off-balance sheet (OBS) items and the other with non-interest income as an additional output. Controlling for cross-country differences in regulatory and environmental conditions, we find that, on average, cost efficiency increases irrespective of whether we use OBS or non-interest income, although the results for profit efficiency are mixed. Our results also reveal that while the inclusion of non-traditional outputs does not alter the directional impact of environmental variables on bank inefficiency, regulations that restrict bank activities and enhance monitoring and supervision provisions improve both cost and profit efficiency.
We find that central bank reserves injected by QE crowd out bank lending. We estimate a structural model with cross-sectional instrumental variables for deposit and loan demand. Our results are ...determined by the elasticity of loan demand and the impact of reserve holdings on the cost of supplying loans. The reserves injected by QE raise loan rates by 7.4 basis points, and each dollar of reserves reduces bank lending by 7.7 cents. Our results imply that a large injection of central bank reserves has the unintended consequence of crowding out bank loans because of bank balance sheet costs.
Research Questions: As an output of double-entry bookkeeping practices, when were the balance sheets first seen in Ottoman Empire? What factors (people, legislation, internationalization, etc.) ...impacted the layout or format of the balance sheets until the Capital Markets Law was enacted in 1982 in Turkey? When were the classified balance sheets first seen in Turkey before 1982? Motivation: The study is inspired by country-specific financial reporting history studies. Idea: This study investigates the history of the classified balance sheets in Turkey before 1982 regarding changes, developments, and evolutions and aims to explore the development of classified balance sheets in the Ottoman and Turkey. Data: For the study, secondary sources such as accessible textbooks adopted by higher education institutions by 1982 in Turkey are scanned and examined. Findings: The study argues that classified balance sheets in Turkey before 1982 evolved by translating from French, German, and American sources. This could be observed in the accounting textbooks published by different authors with different educational backgrounds. Contribution: The findings may help interested researchers pursue comparative studies or explore such developments and evolutions in their jurisdictions.
International Comparative Household Finance Badarinza, Cristian; Campbell, John Y; Ramadorai, Tarun
Annual review of economics,
01/2016, Volume:
8, Issue:
1
Journal Article
Peer reviewed
Open access
This article reviews the literature on international comparative household finance. It presents summary statistics on household balance sheets for 13 developed countries and uses these statistics to ...discuss common features and contrasts across countries. It then discusses retirement savings, investments in risky assets, unsecured debt, and mortgages.
Insolvency of Companies in Romania Iulia Cristina Iuga; Ionela Cornelia Cioca; Teodor Hada
"Ovidius" University Annals. Economic Sciences Series (Online),
02/2024, Volume:
XXIII, Issue:
2
Journal Article
Peer reviewed
Open access
The purpose of the paper is to analyze the main aspects regarding the insolvency of companies in Romania. The main objectives considered were the theoretical presentation of the concept of ...insolvency, the principles of insolvency, legislative regulations, the report of the judicial liquidator. In the case study presented for the company X SRL, we presented some accounting records, the statement of payments and receipts, as well as information related to the liquidation balance sheet.
One of the top priorities of the Chinese government's oversight is to address the conflicts between economic growth and resource consumption and between economic development and ecological damage. In ...this regard, the advocacy and compilation of the natural resources balance sheet can boost the efficiency of the government's oversight and improve the quality of resource management. However, China's natural resources balance sheet is still at an exploratory stage, lacking the theoretical framework of balance sheet preparation, preparatory ideas, and a reporting system, which must be established urgently. First, the study states the purpose of compiling the natural resources balance sheet, and, subsequently, analyzes the theoretical basis, framework system, preparatory ideas, and sample sheet format, thereby offering theoretical and methodological support for its preparation. Moreover, the development, functions, deficits, and future development of the balance sheet are analyzed in the context of the Chinese system, which provides theoretical and methodological support for the preparation of the natural resources balance sheet and government oversight.
•National resources balance sheet has information disclosure function.•National resources balance sheet can enhance management and supervision.•National resources balance sheet can reverse ecological damage.
Recent years have seen a sharp decline in the use of balance sheet-based covenants in private debt contracts. I hypothesize that changes in accounting standards can explain part of this decline. ...Standard setting has shifted towards a “balance sheet approach”, which I predict has made the balance sheet less useful for contracting. I measure the effect of the balance sheet approach on specific borrowers using a volatility ratio. I find that borrowers with greater volatility ratios are less likely to have balance sheet-based covenants. This evidence is consistent with reductions in the contracting usefulness of the balance sheet being associated with reductions in balance sheet covenants.
▶ In recent years, balance sheet covenants are used less frequently in debt agreements. ▶ I consider the role of accounting standards in this decline. ▶ Specifically, I examine whether the shift to the “balance sheet approach” has influenced covenants. ▶ I find that accounting standards are associated with balance sheet covenant use. ▶ The same is not true of income statement covenant use, which has not changed.
Using the Life Cycle Assessment (LCA) approach, environmental benefits in terms of CO2 stored in chestnut wood in Italy have been calculated. Using one of the methodologies proposed under the LCA ...umbrella, a physical and formal balance sheet of CO2 has been built. Chestnut forests (Castanea sativa Mill.) are one of the most critical forest types in Europe. They cover an area of 800,000 hectares in Italy, most of which are managed as coppices. Chestnut wood’s high-quality physical-chemical and mechanical characteristics and medium-long durability explains its widespread uses. In this case study a section of a public forest in Central Italy (Lazio Region) has been considered. In the section, during the rotation, two types of intervention were carried out: thinning at 19 years of age, and final cutting at the age of 32. A production of 416 and 93 m3ha−1 for final cutting and thinning, respectively, was recorded. The global amount of 507 m3 is the functional unit, which has stored 547,875 kgCO2. The combination of forest management and sawmill processing produces semi-finished chestnut timber products for 125 m3, which have a physical storage of 135,210 kgCO2. Using the formal balance sheet of CO2, total emissions from processing were recorded for a total of 27,766 kgCO2. At the exit of sawmill, products stored 107,444 kgCO2, which is the amount of Net-Carbon Dioxide Surplus (Net-CDS). Transportation from sawmill to market reduces the sequestered CO2 by 0.77 kgCO2/km. The Net-CDS represents a competitive advantage in the timber market. If tree species have the same physical, chemical, mechanical and price parameters, the timber consumer would prefer to buy wood with the highest Net-CDS.
A tale of two tightenings Lu, Yundi; Valcarcel, Victor J.
Journal of economic dynamics & control,
September 2024, 2024-09-00, Volume:
166
Journal Article
Peer reviewed
Open access
Balance sheet policy is now a prominent facet of monetary policy. Based on the U.S. experience between 2017 and 2019, Smith and Valcarcel (2023) show the first period of quantitative tightening (QT1) ...was markedly different from earlier balance sheet expansions. This paper provides evidence the Federal Reserve's second balance sheet unwind effort that began in January 2022 (QT2) is strikingly different from QT1. We find substantial announcement effects during QT2 for various treasury yields and interest rate spreads, which are largely absent from QT1. At the time of this writing—by February 2023—both episodes have experienced a similar percent reduction in reserve balances. Yet, QT2 shows a stronger market response upon implementation. Not only are the underlying financial conditions different across the two periods, but the conduct of monetary policy in 2022 seems to be different as well. A clearer signaling mechanism for the expectations channel of monetary transmission takes place during QT2 than was apparent during QT1. The liquidity effects that seemed to be so important during QT1 have been largely attenuated during the second episode of balance sheet tightening.
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