This article analyzes the experience of four asset management companies (AMCs) or ʽbad banks' established in China in 1999 to address a systemic build-up of non-performing loans (NPLs). It describes ...the modalities of NPL transfers across several rounds of government interventions. It explains the AMCs evolving asset structure, funding and operations, with particular focus on a significant change in their business model. Overall, AMCs have helped stabilize the Chinese financial sector, albeit at a substantial fiscal cost. While they became permanent features of the financial system, the expansion of non-core activities has reduced their ability to perform their original function and generated additional systemic risk. Recent developments point to a renewed role, although a deeper reform of the NPL market will also be needed.
The recent financial crisis poses the challenge to understand how systemic risk arises endogenously and what architecture can make the financial system more resilient to global crises. This paper ...shows that a financial network can be most resilient for intermediate levels of risk diversification, and not when this is maximal, as generally thought so far. This finding holds in the presence of the financial accelerator, i.e. when negative variations in the financial robustness of an agent tend to persist in time because they have adverse effects on the agent's subsequent performance through the reaction of the agent's counterparties.
The significant changes in factors such as interest rates, investment demand, and price indices greatly influence the response patterns of the financial system, bringing about increased uncertainty ...to financial markets. Exploring methods to enhance financial stability and regulatory capabilities, effectively mitigating market disruptions caused by emerging phenomena, constitutes a highly meaningful research topic. The authors, building upon the foundation of the classic chaotic financial system, constructed a three-dimensional double-well random resonance system by incorporating interest rate-related input signals and conducted theoretical analysis on its dynamical characteristics. In this paper, the periodic signal is set as the economic intervention value at the national level, while the noise signal is set as the external market fluctuation value. The impact of three scenarios on the financial system is analyzed: government intervention, the combined effect of government intervention and external market fluctuations, and minimal government intervention. The results indicate that under appropriate intervention conditions, when external market shocks, considered as noise, impact the financial system, the double-well random resonance system can dissipate them into ordered benign signals, enhancing system stability. This maximizes the potential applications of the financial system, prevents financial instability, and provides decision-making references for government regulation of the financial system under certain conditions.
► The paper shows factors that contribute to systemic risk of financial institutions. ► We highlight how to improve the policies that contribute to financial stability. ► We demonstrate how the ...financial cycle could influence financial stability. ► Empirical results show the role of capital to a more resilient financial system.
This paper analyses various issues that need to be tackled when promoting financial stability, reviewing the progress made in certain key areas and the remaining challenges. It explores the measurement of systemic risk and of individual institutions’ contribution to it. It discusses aspects of macroprudential frameworks, including how the countercyclical capital buffer envisaged in Basel III takes into account the properties of the financial cycle and the strengths and weaknesses of macro-stress tests. It analyses some of the challenges of how best to monitor financial systems and the broader economy in order to detect signs of vulnerability that might lead to future bouts of financial instability and of how to set prudential policy accordingly. And it discusses the evolution of capital adequacy standards and the new emphasis on liquidity standards in international regulation.
The aim of this paper is to examine the role of gold in the global financial system. We test the hypothesis that gold represents a safe haven against stocks of major emerging and developing ...countries. A descriptive and econometric analysis for a sample spanning a 30
year period from 1979 to 2009 shows that gold is both a hedge and a safe haven for major European stock markets and the US but not for Australia, Canada, Japan and large emerging markets such as the BRIC countries. We also distinguish between a weak and strong form of the safe haven and argue that gold may act as a stabilizing force for the financial system by reducing losses in the face of extreme negative market shocks. Looking at specific crisis periods, we find that gold was a strong safe haven for most developed markets during the peak of the recent financial crisis.
This special issue of Organization treats cooperatives as alternative forms of business and organization, focusing on worker-owned-and-governed forms. In reviewing extant research and considering the ...seven articles in this special issue, we treat five main challenges that workers’ cooperatives face: (1) the organizational resources, structures, and dynamics allowing for social as well as economic resilience for worker cooperatives; (2) the complex types and roles of leadership in worker cooperatives and related organizational forms; (3) the capacity of and obstacles to the reinvention of democracy within cooperatives; (4) the relationships between cooperatives and organized labor, the state, the community, and the larger financial system; and (5) the pursuit of cooperative values and policies within international market and environmental contexts. The examination of these challenges in relation to the worker cooperatives specifically can inform new projects in employee ownership and governance as well as perhaps assist with democratic organizational transformations in other firms and sectors.
This study empirically investigates the relationship between banks' green lending and their credit risk, and how Chinese green finance regulations contribute to the solvency of individual banks and ...the resilience of the financial system. Analysing a sample of 41 Chinese banks from 2007 to 2018, we find that the association between a bank's (relative) green lending as a proportion of its overall loan portfolio, and its credit risk, depends critically on the size and structure of state ownership. While the implementation of China's Green Credit Policy reduces credit risk for the major state‐controlled banks, it increases credit risk for the city and regional commercial banks. This performance difference appears largely due to information and expertise asymmetries, with the city and regional commercial banks having less access to information and expertise necessary to evaluate the credit risk of green lending. Understanding this phenomenon can help policymakers tailor green finance policies according to banks' characteristics. It also suggests that mechanisms and platforms for the city/regional commercial banks to learn from the major state‐controlled banks could be beneficial.
The geography of initial coin offerings Huang, Winifred; Meoli, Michele; Vismara, Silvio
Small business economics,
06/2020, Volume:
55, Issue:
1
Journal Article
Peer reviewed
Open access
Initial coin offerings (ICOs) are a rapidly growing phenomenon wherein entrepreneurial ventures raise funds for the development of blockchain-based businesses. Although they have recently sprouted up ...all over the world, raising millions of dollars for earlystage firms, few empirical studies are available to help understand the emergence of ICOs across countries. Based on the population of 915 ICOs issued in 187 countries between January 2017 and March 2018, our study reveals that ICOs take place more frequently in countries with developed financial systems, public equity markets, and advanced digital technologies. The availability of investment-based crowdfunding platforms is also positively associated with the emergence of ICOs, while debt and private equity markets do not provide similar effects. Countries with ICO-friendly regulations have more ICOs, whereas tax regimes are not clearly related to ICOs.
This study conducted the econometric analysis to test the hedge and safe haven effects of Non-fungible Tokens (NFTs) on major traditional asset markets in the global financial system. We investigate ...the estimates of these effects in times of extreme market conditions and the COVID-19 crisis. Our empirical results show evidence of the hedge and safe haven properties of NFTs, confirming two main findings: (i) NFTs act as a hedge and safe haven for particular stock markets and oil, bond, and USD indices, even though the degree of effects varies across asset classes; and (ii) NFTs also serve as sheltering facilities for the markets mentioned above, with more substantial safe haven benefits for bond and USD indices during the recent pandemic crisis.
The financial system needs to develop in order for natural resource exports to have a positive effect on economic growth. Yet, an advanced financial system is crucial for transferring the revenues ...from oil exports to productive investments. If the level of development of the financial system remains under a certain threshold, the effect of natural resource exports on economic growth is too low. In this vein, the determination of the level and the deepness of financial development that has a positive impact on the growth of natural resource exports should be clarified. The aim of this study is to investigate the relationship between the impact of natural resource exports on economic growth and the level of financial deepening by using the data of the selected Next-11 countries for the period of 1996–2016. Nonlinear panel data methodology is used in the study. Based on the empirical results, for the first regime, where the rate of financial deepening is under 45%, the increase in oil exports does not have a statistically significant effect on ecenomic growth. For the second regime, where financial deepening is over 45%, one unit increase in oil exports causes a 7% increase in economic growth.
•Impact of natural resource exports on economic growth and financial deepening of selected Next-11 countries for period 1996-2016.•The stationarity conditions of the series, the CIPS test (Cross Sectionally Augmented IPS), developed by Peasaran (2007).•For the first regime, the increase in oil exports does not have a statistically significant effect on ecenomic growth.•For the second regime, where financial deepening is above 45%, one unit increase in oil exports causes a 7% increase in economic growth.
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