We develop a conceptual framework and an empirical methodology to analyze the effect of rising interest rates on the value of U.S. bank assets and bank stability. We mark-to-market the value of ...banks’ assets due to interest rate increases from Q1 2022 to Q1 2023, revealing an average decline of 10 %, totaling about $2 trillion in aggregate. We present a model illustrating how asset value declines due to higher rates can lead to self-fulfilling solvency runs even when banks’ assets are fully liquid. Banks with high asset losses, low capital, and, critically, high uninsured leverage are most fragile. A case study of the failed Silicon Valley Bank confirms the model insights. Our empirical measures of bank fragility suggest that, in the absence of regulatory intervention, many U.S. banks would have been at risk of self-fulfilling solvency runs.
This study aims to determine the comparison of the financial performance of liquidity, solvency, activity and profitability before and after being designated as an initial public offering. This ...research is classified as quantitative research. The object in this research is PT. Bukalapak Tbk. The type of data used in this research is secondary data. The analytical method used is comparative analysis. To test the hypothesis using the paired sample t-test and the Wilcoxon test. The results of this study conclude (1) There is no significant difference in financial performance in terms of liquidity indicators before and after being designated as an initial public offering. (2) There is no significant difference in financial performance seen from the solvency indicators before and after being determined as an initial public offering. (3) There is no significant difference in financial performance seen from the activity indicators before and after being determined as an initial public offering. (4) There is a significant difference in financial performance seen from the profitability indicators before and after being determined as an initial public offering.
The paper shows that there is a need in most of the Balkan countries to change the law governing the insolvency issue by clearly defining insolvency and thereby removing the confusion surrounding it ...from the legislation. It is also essential to harmonize the legal provisions so that the term insolvency is used consistently throughout the legal text. The paper also shows the need to define solvency properly in textbooks and present the correct methodology to assess solvency. In this way, it can be expected that neither the term (in)solvency nor the (in)solvency indicator(s) will be incorrectly used by scholars from the Balkan region.
Getting bank governance right Martino, Edoardo
Journal of banking regulation,
09/2022, Volume:
23, Issue:
3
Journal Article
Peer reviewed
Shareholders are the residual claimants on the assets of a corporation. Creditors are fixed claimants whose interest lies in the solvency of the borrower. Consequently, shareholders are usually ...thought to have optimal incentives to maximise the value of the corporation. The article challenges this common wisdom and proposes to reform bank governance granting (some) ex-ante governance rights to bank creditors. This aims at fine-tuning bank governance and incumbent substantive regulation, in particular the resolution framework for distressed banks, and enhances the quality of bank decision-making in terms of risk-taking. At the same time, the proposed reform should increase the ex-ante credibility of resolution. The second part of the article operationalises this construct focusing on the specific case of the European Banking Union and discusses the design of the governance status of bail-inable creditors. The analysis demonstrates how bail-inable creditors can correct for shareholders’ perverse incentives and make debt governance work in banking. The policy proposal advanced in the paper would complement substantive regulation and prudential oversight. The governance role of creditors has the potential to be particularly helpful in preventing disproportionate risk-taking decisions in good times, when regulatory and supervisory standards are lax and systemic risk piles-up.
This work aims to present the solvency system currently in the insurance sector in Algeria, more precisely the Solvency I Directive. To identify the shortcomings and limitations of the prudential ...regulation and finally, to offer recommendations necessary to ensure the development of the activity of insurance in Algeria, and consequently the economy in general. Thus, to present the transition from the Solvency I prudential standard to the Solvency II prudential standard, which was implemented on the insurance market in Europe on January 01, 2016. Finally, the Algerian regulation cannot stay away from international reforms, including the Solvency II standard; it must adapt his system to comply with these standards.
Solvency II Directive 2009/138/EC requires an insurance and reinsurance undertakings assessment of a Solvency Capital Requirement by means of the so-called “Standard Formula” or by means of partial ...or full internal models. Focusing on the first approach, the bottom-up aggregation formula proposed by the regulator allows for a capital reduction due to the diversification effect, according to the typical subadditivity property of risk measures. However, once the overall capital has been assessed no specific allocation formula is provided or required in order to evaluate the contribution of each risk source on the overall Solvency Capital Requirement. The aim of this paper is twofold. First, we provide a closed formula for capital allocation fully compliant with the Solvency II Capital Requirement assessed by means of the Standard Formula. The solution enables a top-down approach to assess the allocated Solvency Capital Requirement among the risks considered in the Solvency II multilevel aggregation scheme; we demonstrate that the allocation formula adopted is consistent with the Euler allocation principle. Second, a solution is found as a result of an optimum capital allocation problem based on a Return On Risk Adjusted Capital measure; we establish the equivalence between the Return On Risk Adjusted Capital optimization, when the risk adjusted capital is calculated according to the Standard Formula, and the Markowitz mean-variance optimization.
Метою cmammi е поглиблення та розвиток наукових засад локалвацы глобальных механвмЮ залучення кредитных та тестицйних ресурсю у конmекcmi змцнення фiнaнcовоi' спроможност': територ'юльних громад ...Украши у повоенний перюд. У cmammi визначено сутнсть i значення фiнaнcовоi' спроможност': територ'юльних громад у зaбезпеченнi шслявоенноi в':дбудови Украши; розкрито кращу практику локалвацп глобальних механвмЮ для залучення кредитних та твестицшних ресурс'ю на рiвень територ'юльних громад/мунiципaлimеmiв; обГрунтовано напрями змщнення фiнaнcовоi спроможност': територ'юльних громад Украши у перюд шслявоенно'!' вдбудови за рахунок поеднання глобальних i локальних мехашзмю залучення кредитних та нвестищйних ресурсю. Зд'шснено структурний аналз видаткЮ мюцевих бюджетЮ за економчною клacифiкaцiею зметою виявлення тенденщй змiни динам'ши каптальних видаткЮ за перюд 2014-2021 роки. Наголошено, що в сучаснихумовах необхдно шукати альтернативы! джерела надходжень для зд'шснення в'!дпов'!дних видатшв мюцевих бюджетю, оск'шьки кардинально змнилися mi обсяги та напрями витрачання. На основi анал'ву зарубжного досв!ду фшансування каптальних видаткю бюджетю орган'ю мсцевого самоврядування доведено, що в умовах глобального зростання державного боргу в уах крашах свту найб'шьш привабливими, з позицИзалучення ресурсю для зд'шснення каптальних видаткЮ, виглядають iнвеcmицшнi нструменти. Визначено основы! мaкроекономiчнi та зaконодaвчi ризики, що загрожують iнвеcmицшному клшату Украши, крм вiйcьковоi агреси з боку рф. Доведено можливicmь залучення нвестицш через систему мжнародних фiнaнcових оргaнiзaцiй та банкю розвитку як на локальному, так i регональному р'юнях, на фiнaнcувaння вдновлення iнфрacmрукmури територальних громад Украши. ОбГрунтовано пропозицП щодо синергетичного поеднання глобальних i локальних пдходЮ до фiнaнcувaння пслявоенного вдновлення територальнихгромад. Узв'язку в прогнозованою деф^итнстю мюцевих бюджетЮ у пicлявоеннi роки громадам необхiдно почати застосовувати механвми використання нових фiнaнcових нструментЮ мжнародного ринку - соцальних, клшатичних, зелених облвацш, iмпaкm-бондiв i гбридних фiнaнcових iнcmруменmiв. Доведено, що ключовою ланкою програми фнансового вдновлення мае стати новостворений шсля закнчення вiйни Укра'шський банк вдбудови та розвитку (УБВРj. Перспективою подальших дослджень у цьому напрямi е виявлення оптимальноi структури капталу локальних iнcmиmуmiв розвитку та аналз проритетних напрямкю ювестищй у cферi фiнaнcово-кредиmноi' пдтримки пюлявоенно'!' вдбудови територальних громад УкраЫ.
Issues of ensuring the financial stability of enterprises are extremely important for the socio-economic development of Ukraine. Stable operation of the enterprise is possible only if the ...appropriate level of solvency of the enterprise. That is why the issues and problems related to ensuring solvency are given much attention in the scientific works of scientists from both foreign and domestic scientific schools. At the same time, insufficient attention is paid to long-term solvency as an important component of the system of ensuring the stable functioning and development of the enterprise in the future. The task of the study is to analyze the approaches of scientists to the interpretation of the essence of prospective solvency and its role in ensuring the stable operation of the enterprise, determining the characteristic causes of its decline in modern socio-economic development of Ukraine; development of a proposal to ensure the solvency of the enterprise in the future. In the process of research general and special methods were used: analysis and synthesis, method of comparison, generalization, statistical, etc. The article considers the essence of perspective solvency of the enterprise and its role in ensuring stable functioning of the enterprise. The factors that determine it are systematized. The conceptual model of providing perspective solvency of the enterprise for the purpose of stable functioning and development of the enterprise which provides: definition of system of the corresponding indicators of perspective solvency for their constant monitoring is offered; finding out the possible reasons, which may result in loss of prospective solvency; the sequence of implementation of the necessary measures for its restoration and provision in the future. The results of this study can be used in the process of enterprise management to determine the real state of its solvency and develop measures to ensure it in the medium and long term.
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