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21 – 30 of 463This chapter is devoted to the issue of ensuring financial stability in the state. The main goal of the research is to determine the role and policy of the National (Central…
Abstract
This chapter is devoted to the issue of ensuring financial stability in the state. The main goal of the research is to determine the role and policy of the National (Central) Bank, which was called up, together with the Government, to ensure financial stability in the Republic of Belarus. The actions of the National Bank for the implementation of monetary policy, macroprudential regulation, and supervision are reviewed. It is noted that the regulation and supervision of banks, nonbank credit and financial organizations, the payment system, the sector of other financial intermediaries (leasing activities, microfinance activities, activities of forex companies) is carried out by the National Bank of the Republic of Belarus. The main practical actions of the Government and the National Bank aimed at maintaining and ensuring financial stability is highlighted: monitoring of financial stability (goals, tasks, objects, monitoring directions are defined); creation of the Financial Stability Board (goals, objectives, representation, personal responsibility); disclosure of information on financial stability is carried out on an ongoing basis – the publication of the analytical review “Financial Stability in the Republic of Belarus.” The research provided a summary of the state of the country's financial sector and presented the achievements of the National Bank and state institutions for ensuring financial stability. The main problems affecting financial stability are highlighted: insufficient efficiency of the activities of large enterprises of the real sector of the economy; high levels of credit risk in banks; high dollarization of bank balance sheets. The directions of development of the financial market of the Republic of Belarus, contributing to ensuring financial stability are presented.
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Łukasz Kurowski and Paweł Smaga
Financial stability has become a focal point for central banks since the global financial crisis. However, the optimal mix between monetary and financial stability policies…
Abstract
Purpose
Financial stability has become a focal point for central banks since the global financial crisis. However, the optimal mix between monetary and financial stability policies remains unclear. In this study, the “soft” approach to such policy mix was tested – how often monetary policy (in inflation reports) analyses financial stability issues. This paper aims to discuss the aforementioned objective.
Design/methodology/approach
A total of 648 inflation reports published by 11 central banks from post-communist countries in 1998-2019 were reviewed using a text-mining method.
Findings
Results show that financial stability topics (mainly cyclical aspects of systemic risk) on average account for only 2%of inflation reports’ content. Although this share has grown somewhat since the global financial crisis (in CZ, HU and PL), it still remains at a low level. Thus, not enough evidence was found on the use of a “soft” policy mix in post-communist countries.
Practical implications
Given the strong interactions between price and financial stability, this paper emphasizes the need to increase the attention of monetary policymakers to financial stability issues.
Originality/value
The study combines two research areas, i.e. monetary policy and modern text mining techniques on a sample of post-communist countries, something which to the best of the authors’ knowledge has not been sufficiently explored in the literature before.
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Despite a slight deceleration in Estonia to 3.7%, inflation is still rising faster in the Baltic states than the euro-area average. This can partly be explained by higher…
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DOI: 10.1108/OXAN-DB225007
ISSN: 2633-304X
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Climate and environment-related financial risks could significantly and negatively impact the financial sector in future, particularly its financing to those sectors adversely…
Abstract
Climate and environment-related financial risks could significantly and negatively impact the financial sector in future, particularly its financing to those sectors adversely impacted by the climate-related risks, low-carbon policies and the transition from traditional energy sources-based economy to a more sustainable system with alternative energy sources. The participatory countries of the Paris Agreement agreed to align finance flows with a low-emission, low-carbon and climate-resilient growth, in order to facilitate achieving the long-term climate goals. The financial sector, therefore, needs to play a proactive role in aligning financial flows. It is, therefore, of utmost importance to study low-carbon finance and climate-related financial risks. This chapter examine how climate change can affect the financial sector. It discusses the concept, nature, measurement of climate risks and climate-related financial risks and associated prospects and challenges in the assessment and the measurement of these risks. It also presents the green financing initiatives and role of central banks and supervisory authorities and their monetary and financial policies in enhancing green financing and redirecting finance to low-carbon activities. In the financial sector, the insurance industry is highly vulnerable to such risks. The banking sector is yet to witness the serious impact of these risks. With the slowing of global economic growth, appropriate policies are needed to encourage banks to provide increased green finance with an adequate profitability. Studies recommend that climate-related risk has a strong potential impact on banks’ loan default rate as well as on the financial stability, there is hence a need to incorporate climate-related criteria and the systemic risk arising out of climate change into banks’ decision-making process and risk modelling and management. There is a need for developing an appropriate methodology for assessing and reducing these risks. Moreover, observers also anticipate a need for cooperation between banking regulators and banks to develop and adopt best practices in the management of environmental risks. The environment-related risks will call forth a multi-country, or regional, research office to collect and compile the required data and undertake analysis to enhance the banking sectors’ understanding of, and capacity to address, potential systemic environmental risks. What is needed is to test the feasibility of incorporating forward-looking scenarios for assessing potential impacts of providing credit to environmentally unsustainable or sustainable activities on financial stability.
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Cicilia A. Harun and Raquela Renanda Nattan
This paper aims to examine non-core deposit (NCD), or the fraction of deposit most likely to be withdrawn, based on bank liquidity behavior. NCD is an analytical component of bank…
Abstract
Purpose
This paper aims to examine non-core deposit (NCD), or the fraction of deposit most likely to be withdrawn, based on bank liquidity behavior. NCD is an analytical component of bank deposit; hence, its withdrawal rate is crucial.
Design/methodology/approach
The paper categorizes all 114 commercial banks in Indonesia using K-Median clustering and produces NCD coefficients for each cluster. Clustering result resembles the bank ownership-based grouping.
Findings
Generally, state-owned banks and private-domestic banks have smaller NCD coefficients compared to foreign-owned, joint-venture and regional government-owned banks. The NCD coefficient then can form thresholds for an event of extreme deposit withdrawal for macroprudential surveillance.
Originality/value
NCD is an analytical indicator that can be useful to manage the liquidity risk of banks; however, this indicator is rarely found in the literatures, hence not many know how to estimate the indicator.
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Vinicius Phillipe de Albuquerquemello and Cássio Besarria
The aim of this paper is to assess whether the inclusion of the rental housing market affect the dynamics of the real business cycles (RBCs).
Abstract
Purpose
The aim of this paper is to assess whether the inclusion of the rental housing market affect the dynamics of the real business cycles (RBCs).
Design/methodology/approach
For this investigation, the authors model and estimate two dynamic stochastic general equilibrium (DSGE) versions for the US economy, one with and one without the presence of residential rent.
Findings
The findings provide evidence that the inclusion of the rental housing market can improve the assessment of public policies and the projection of scenarios in the face of sudden macroeconomic shocks. The addition of this secondary housing market augments the effect of total factor productivity (TFP) shock on output and consumption. In addition, it increases the effect of the credit shock on the demand for housing. The latter highlights the role of credit for the real estate market. Therefore, the authors recommend that analysts and macro-prudential authorities consider adding it to their models.
Originality/value
The findings provide evidence that the inclusion of the rental housing market can improve the assessment of public policies and the projection of scenarios in the face of sudden macroeconomic shocks.
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From January 2021, the potential flow of Chinese household non-mortgage loans, including business loans and short-term consumption loans to the residential real estate market, has…
Abstract
Purpose
From January 2021, the potential flow of Chinese household non-mortgage loans, including business loans and short-term consumption loans to the residential real estate market, has attracted the attention of the regulatory authorities. This study aims to examine the effects of household non-mortgage loans on the Chinese residential real estate market.
Design/methodology/approach
Based on a monthly data set between July 2011 and December 2019, this study adopts a cointegration analysis.
Findings
This study finds that household non-mortgage loans do play a significant role in driving residential real estate prices in China.
Originality/value
While many studies have examined the Chinese real estate market and its linkage with the financial system and the economy, this study is the first of its kind in the academic literature that exclusively focusses on the role of non-mortgage loans in real estate prices, and makes an original contribution.
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Zulkefly Abdul Karim, Danie Eirieswanty Kamal Basa and Bakri Abdul Karim
This paper aims to investigate the relationship between financial development (FD) and monetary policy effectiveness (MPE) on output and inflation in ASEAN-3 countries (Singapore…
Abstract
Purpose
This paper aims to investigate the relationship between financial development (FD) and monetary policy effectiveness (MPE) on output and inflation in ASEAN-3 countries (Singapore, Malaysia and the Philippines).
Design/methodology/approach
This study uses an open economy structural vector autoregressive model to generate MPE. Then, an autoregressive distributed lagged (ARDL) model is used to analyze the effect of FD on MPE across countries.
Findings
The findings revealed that FD plays a different role in MPE across countries. In Malaysia, a more developed financial system tends to reduce the MPE on output, whereas in Singapore, results show that the more developed financial system (stock market capitalization) tends to increase MPE on output. However, in the Philippines, the main results show that the effect of FD (liquid liabilities) upon MPE on output is depending on the policy variable (interest rates or money supply).
Originality/value
This paper fills this gap by providing the first study of ASEAN-3 countries in examining how effective is a monetary policy in response to the development of the financial market across the country. Second, this paper considers two FD indicators, namely, the banking sector and capital market development in investigating its effect on MPE on output and inflation. Third, the authors construct the MPE in each country using a structural (identified) VAR model by aggregating the response of output growth and inflation rate on monetary policy changes (interest rate and money supply) using impulse–response function. Regarding this, the results of this study provide new empirical evidence and insight into the long debate on the relationship between FD and the MPE.
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