Search results

In this paper we investigate the relationship between loose monetary policy, low inflation, and easy bank credit and house price booms.

Using a panel of 11 OECD countries from 1920 to 2011 we estimate a panel VAR in order to identify loose monetary policy shocks, low inflation shocks, bank credit shocks, and house price shocks.

We show that during boom periods there is a heightened impact of all three “policy” shocks with the bank credit shock playing an important role. However, when we look at individual house price boom episodes the cause of the price boom is not so clear. The evidence suggests that the house price boom that occurred in the United States during the 1990s and 2000s was not due to easy bank credit.

Shocks from the shadow banking system are not separately identified. These are incorporated into the fourth “catch-all” shock.

Our evidence on housing price booms that expansionary monetary policy is a significant trigger buttresses the case for central banks following stable monetary policies based on well understood and credible rules.

This paper uses historical evidence to evaluate the relative importance of three main causes of house price booms. Our results bring into question the commonly held view that loose bank credit was to blame for the U.S. house price bubble of the later 1990s.

The experience of the 1990s renewed economists’ interest in the role of credit in macroeconomic fluctuations. The locus classicus of the credit-boom view of economic cycles is the expansion of the 1920s and the Great Depression. In this paper we ask how well quantitative measures of the credit boom phenomenon can explain the uneven expansion of the 1920s and the slump of the 1930s. We complement this macroeconomic analysis with three sectoral studies that shed further light on the explanatory power of the credit boom interpretation: the property market, consumer durables industries, and high-tech sectors. We conclude that the credit boom view provides a useful perspective on both the boom of the 1920s and the subsequent slump. In particular, it directs attention to the role played by the structure of the financial sector and the interaction of finance and innovation. The credit boom and its ultimate impact were especially pronounced where the organization and history of the financial sector led intermediaries to compete aggressively in providing credit. And the impact on financial markets and the economy was particularly evident in countries that saw the development of new network technologies with commercial potential that in practice took considerable time to be realized. In addition, the structure and management of the monetary regime mattered importantly. The procyclical character of the foreign exchange component of global international reserves and the failure of domestic monetary authorities to use stable policy rules to guide the more discretionary approach to monetary management that replaced the more rigid rules-based gold standard of the earlier era are key for explaining the developments in credit markets that helped to set the stage for the Great Depression.

This study investigates the relationship between credit booms and bank risk in Association of Southeast Asian Nations (ASEAN) countries, with credit information sharing acting as a moderator.

The authors use a two-step System Generalized Method of Moments (SGMM) estimator on a sample of 79 listed banks in 5 developing ASEAN countries: Indonesia, Philippines, Malaysia, Thailand and Vietnam in the period 2006–2019. In addition, the authors perform robustness tests with different proxies for credit booms and bank risk. The data are collected on an annual basis.

Bank risk is positively related to credit booms and is negatively associated with credit information sharing. Further, credit information sharing reduces the detrimental effect of credit booms on bank stability. The authors find that both public credit registries and private credit bureaus are effective in enhancing bank stability in ASEAN countries. These results are robust to regression models with alternative proxies for credit booms and bank risk.

Banks in ASEAN countries tend to have strong lending growth to support the economy, but this could be detrimental to stability of the sector. Credit information sharing schemes should be encouraged because these schemes might enable growth of credit without compromising bank stability. Therefore, policymakers could promote private credit bureaus (PCB) and public credit registries (PCR) to realize their benefits. The authors' research focuses on developing ASEAN countries, but future research could provide more evidence by expanding this study to other emerging economies. In-depth interviews and surveys with bankers and regulatory bodies about these concerns could provide additional insights in the future.

The study is the first to examine the role of PCB and PCR in alleviating the negative impact of credit booms on bank risk. Furthermore, the authors use both accounting-based and market-based risk measures to provide a fuller view of the impact. Finally, there is little evidence on the link between credit booms, credit information sharing and bank risk in ASEAN, so the authors aim to fill this gap.

A case study was conducted to identify and to dispel the current stereotypes in the workplace regarding Generation X and Baby Boomers. For the purpose of the study Generation X consisted of those born between 1961 and 1981, while Baby Boomers consisted of those born between 1943 and 1960. The purpose of this article was to use a custom designed survey based on the literature as the foundation to test congruence or lack of it, to address six commonly held myths presented by Paul and Townsend (1993). Furthermore it was intended to test empirical research gathered by a literature review of the stereotypes in the workplace, to better understand the profiles and factors that motivate the Baby Boomers and Generation X, in conjunction with the following independent variables: age, productivity, motivation, training, mentoring and job satisfaction. The hypothesis tested suggested that Generation Xers are more productive, more motivated, and easily trainable and exhibit higher job satisfaction levels as compared to Baby Boomers. It is important for or ganizations to recognize the limitations that stereotypes create in the workplace. As was demonstrated by the survey, Baby Boomers and Generation Xers are not dissimilar as employees; they possess more similarities than differences. Organizations need to foster an environment of respect/equity for both groups to create synergies between them to build and maintain a productive workforce.

This paper analyses the collapse of credit booms into soft landings or systemic banking crises.

A discrete-time competing risks duration model is employed to disentangle the factors behind the length of benign and harmful credit booms.

The results show that economic growth and monetary authorities play the major role in explaining the differences in the length and outcome of credit booms. Moreover, both types of credit expansions display positive duration dependence, i.e. both are more likely to end as they grow older, but hard landing credit booms have proven to be longer than those that land softly.

This paper contributes to our understanding of what affects the length of credit booms and why some end up creating havoc and others do not. In particular, it calls the attention to the important role that Central Bank independence plays regarding credit booms length and outcome.

The conventional and new inflation bias theories present two distinct facets to explain the outcome of excess inflation without output gains by a discretionary central banker. First is the temptation to achieve a higher than potential output, and, second is not to let it falter. The authors explicitly account for these two distinct dimensions in empirical formulations both exogenously and endogenously. Specifically, the purpose of this paper is to investigate what monetary discretion can and cannot do in terms of dual objectives – inflation and growth – across boom and bust cycles, both directly and indirectly.

(i) Segregate the economic activity into boom and bust cycles; (ii) Explicitly account for the two dimensions of conventional and new inflation bias theories; and (iii) model and estimate the direct and indirect effects of monetary discretion across business cycles.

The results indicate considerable asymmetries in the effects of monetary discretion and distribution thereof across objectives and cycles. The direct impact of monetary discretion tends to induce significantly higher inflation in boom and bust cycles, while it exerts a positive but insignificant effect on output. The inflation effects are more pronounced in boom than bust cycles and vice versa are the output effects. The indirect effects on output via inflation are significantly pernicious, which are more pronounced in expansions than recessions.

In a nutshell, instead of benefiting, monetary discretion tends to harm in terms of both the dual policy objectives, which cautions about its well calculated and constrained use only.

A fitting for the attachment of struts, tension members, etc., to spars or like structural members of the type comprising a boom wholly or partly of circular or polygonal cross section and with its edges lying wholly or partly on a circular are, is adapted to be rotated about the axis of the boom and to be fixed in any position within a given range to suit the inclination of the struts, tension members and the like. As applied to a spar comprising a circular boom a, Fig. 1, joined to another boom by a web a1 the fitting comprises a U‐shaped piece b which fits closely to the boom over an are of 180 deg. and is extended downward by parallel arms b1, b2 to form seatings b3, b4 for a iixing bolt c. The side edges of the fitting converge as shown in Fig. 2. Integral lugs d1, d2 are formed with their sides parallel to a radius of the boom and serve for attachment of a strut. Bolt c is passed through a sleeve g of the type described in Specification 352,767 and serves to secure link plates f1, f2, connected by a yoke piece f3 to which a tension member f is attached. The hole for bolt c is formed after the fitting has been assembled and adjusted to correct alignment with the strut and tension member. A similar fitting is described for a polygonal boom, the bolt c being located perpendicular to a diametrally opposed pair of polygonal boom faces. If the lines of force of strut and tension members are not at right‐angles to the bolt c the fitting may be aligned with the strut and the tension member offset on the yoke f3 the links 1, f2 being then made stiffcr. The tension members may be attached to bolt c2 securing a strut c or to bolts in similar lugs. The bolt c in this case passes through a compression member i such as is shown in Fig. 5, and which may extend for some distance along the boom. In a further modification the fitting a embraces the boom over a greater are than 180 deg. and is therefore made in two halves with a division between the lugs d1, d2. In a still further modification, Fig. 5, the fitting b is similarly shaped to the foregoing but is of sufficient internal diameter to slip over the boom on which it is located by shaped packing pieces h1, h2 and by bolt c. Bracing members may be attached to the boom by angle brackets having a part j fixed to the outer side of the fitting b and having a radially extending arm j1 to which a member such as k is fixed.

Credit booms have frequently been identified as causes of financial crises. However, credit growth, and the supply of finance, in general, is intimately associated with economic growth. The purpose of this paper is to consider why Caribbean countries go through episodes of credit booms.

Two approaches are employed to identify credit booms. The first approach uses an ad hoc classification rule, while the second technique is based on a Markov‐switching vector autoregressive approach. To explain the number of credit boom episodes occurring over a particular period, a count data model is employed.

The results suggest that credit booms were more likely to occur during periods of low inflation, above trend economic growth, investment, money supply changes, and world growth. Relatively under‐developed financial systems as well as capital account liberalisation was also associated with the emergence of credit booms.

It is also possible that bank‐specific factors (e.g. capital adequacy, share of non‐performing loans and bank competition) may also be important determinants of the emergence of credit booms. However, data on these variables were not available over the sample period.

The study provides an alternative approach to identifying credit booms. In addition, the potential role played by external factors and economic policy are also considered.

This paper aims to examine the interaction between fair-value accounting, asset sales and banks’ lending in booms and busts. Throughout, the author uses “fair value” and “mark-to-market” interchangeably, to denote an accounting regime where changes in the prices of banks’ assets affect regulatory capital. “Historic-cost accounting” has been used in the paper to denote an accounting regime where changes in asset prices do not affect regulatory capital.

The author built a model that examines how the accounting regime affects banks’ incentives to sell assets and how the impact of the accounting regime on asset sales affects lending.

In a bust, fair value strengthens banks’ incentives to sell assets. The resulting increase in sales increases banks’ lending capacity. Consequently, lending can be higher under fair value. Conversely, in a boom, historic cost strengthens banks incentives to sell assets. The resulting increase in sales increases banks’ lending capacity. Hence, lending can be higher under historic cost.

This paper identifies a new channel through which the accounting regime could affect lending. The accounting regime can affect banks’ incentives to sell assets. The resulting difference in sales can affect banks’ ability to make new loans. Hence, in a boom, although banks book mark-to-market gains under fair value, asset sales could be higher under historic cost. Lending, thus, could be higher under historic cost. Conversely, in a bust, although banks book mark-to-market losses under fair value, sales could be higher under fair value. Lending, thus, could be higher under fair value.

SONIC boom is the name which has been given to the sound heard on the ground immediately following the passage of an aircraft overhead at supersonic speeds. This sound, which has been compared to nearby thunder, results from the passage of the aircraft's shock‐wave field over the observer.