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The composition of bank liabilities has captured a lot of attention especially after the global financial crisis of 2008–2009. It is argued that a compositional change in non-core liabilities reflects the different stages of financial cycle. Banks usually fund their credits with core liabilities, which grow with households’ wealth, but when there is a faster growth in credits compared to deposits, the banks often resort to non-core liabilities to meet the excess demand for loans. This chapter analyses the relationship between non-core liabilities and credits in a small open economy, namely Turkey. It investigates the relationship under alternative settings and presents consistent evidence on a robust relationship between credits and non-core liabilities under all frameworks. The study also verifies that elevated demand for credit may induce some increase in non-core liabilities. Finally, the relationship between non-core liabilities and credit growth is also affirmed in the long run.

This paper aims to discuss the money creation mechanisms in emerging markets with special focus on external transactions and outlines the implications for monetary policy and financial stability issues.

To make the argument, the authors analyze a historical episode of flows of funds in Korea and Russia and conduct a canonical correlation analysis for a cross-section of emerging market economies.

The authors show that changes in the net foreign assets of the banking system are associated with (or cause) deposits fluctuations. In emerging markets, however, the scope of such fluctuations is limited unless driven by changes in the foreign reserves of a central bank.

Some preliminary implications for financial stability implementation may be drawn from this analysis. Introducing the net stable funding ratio requirement is unlikely to have any significant destabilizing effect on credit creation in emerging markets (in this regard, it is similar to the restriction on banks’ foreign currency position, which is a common prudential measure). Instead, it is likely to trigger a balance of payment adjustment that is similar to that experienced by an economy during its transition from fixed to flexible exchange rate regime.

This chapter surveys papers and the related literature on the relationship between banks’ creditor structure and bank risk during the period of liquidity crises. Departing from the conventional banking literature, which points to deteriorating asset quality to be the culprit for the amplified bank risk in the midst of financial crises, the studies in the aftermath of the global financial crisis look into the liability side of the bank balance sheet as a potential source for the augmented bank risk during the financial crisis when there is a liquidity contraction. Recent studies theorize and provide empirical evidence that banking institutions with a greater share of large lenders and an economy with high noncore bank liabilities in the banking sector may experience heightened bank risk or country risk. We also search for policy implications from this survey.

The author provides an analysis of the underlying structural liability in the banking business by analysing balance sheets across the banking industry. He shows that the structural liability of different banks varies enormously. He argues that asset and liability management professionals need to have a deep understanding of the financial markets and of the many lines that their banks will be running. Even then he suggests that liquidity crises are very difficult to predict or control.

The study explores how banks design their financial structure and asset portfolio in response to monetary policy changes.

The authors conduct the research design for the Vietnamese banking market during 2007–2018. To ensure robust findings, the authors employ two econometric models of static and dynamic panels, multiple monetary policy indicators and alternative measures of bank leverage and liquidity.

Banks respond to monetary expansion by raising their financial leverage on the liability side and cutting their liquidity positions on the asset side. Further analysis suggests that larger banks' financial leverage is more responsive to monetary policy changes, while smaller banks strengthen the potency of monetary policy transmission toward bank liquidity. Additionally, the authors document that lower interest rates induce a beneficial effect on the net stable funding ratio (NSFR) under Basel III guidelines, implying that banks appear to modify the composition of liabilities to improve the stability of funding sources.

The study is the first attempt to simultaneously examine the impacts of monetary policy on both sides of bank balance sheets, across various banks of different sizes under a multiple-tool monetary regime. Besides, understanding how banks organize their stable funding sources and illiquid assets amid monetary shocks is an innovation of this study.

The authors investigate the impacts of international capital inflows on bank lending in the Association of Southeast Asian Nations-6 (ASEAN-6) countries on the dynamics of both bank loan volumes and credit risk-taking. The authors further explore the heterogenous impacts of different components of the foreign capital. As a robustness check, the authors also examine the role of crisis periods and agency problem on the relationship between international capital inflows and bank lending.

The authors explore the impacts of international capital inflows on bank lending in the ASEAN-6 countries, including Malaysia, Indonesia, Thailand, Philippines, Singapore and Vietnam. The authors employ quarterly data from 2005Q1 to 2021Q2 from 45 commercial banks in the ASEAN-6 countries. The article uses bank-fixed and time-fixed effects in the panel dataset to account for any unobserved heterogeneity.

The authors find that capital inflows to the ASEAN-6 countries are associated with higher bank loan growth and lower loan loss provisions to net interest income ratios. Moreover, the positive relationships between capital inflows to the bank loan growth and credit risk-taking are mainly driven by the dynamics in foreign direct investments (FDIs) and other inflow (OI) components. Contrary to the global financial crisis (GFC), the authors note that the mediating role of capital inflows on bank lending is of particular importance in the COVID-19 pandemic.

This study has some limitations that provide vendors for future research. First, while the authors focus on the impact of capital inflows on bank-level lending activities, future research can also explore the role of foreign capital on bank efficiency and financial stability. Second, although foreign capital fluctuates the most during crisis periods, the movement of capital inflows is also sensitive to other periods of heightened global uncertainty. Thus, rather than focus on the behavior of foreign capital during crisis periods, future research can examine and explore the impacts of capital inflows in different periods of “stop” and “surge” for sudden contraction and boom in capital inflows to the ASEAN-6 countries.

First, the authors provide a comprehensive analysis of international capital inflows' impact on bank lending in the ASEAN region on both bank loan volumes and credit risk-taking. Second, the authors provide evidence of the impact of different forms of foreign capital on the bank lending. Third, the authors investigate the heterogeneous impact of foreign capital on crisis periods and bank sizes, which the authors emphasize the unusual characteristics of the COVID-19 crisis compared with the GFC.

The purpose of the paper is to study the relevance of macroprudential policies (MPPs) in influencing bank lending in small open economies with dual banking systems.

In the analysis, the author employed the dynamic panel data methodology as compared to alternate techniques since it is able to address potential endogeneity challenges.

Using quarterly data from the period 2002–2020, the author finds that MPPs are highly effective in containing the growth of public credit, whereas its impact on private credit is much less effective. The disaggregated findings reveal that macroprudential measures are less effective in containing the growth of private credit by Islamic banks.

The majority of studies on MPPs are focused on emerging and advanced economies, limiting their policy appeal from the standpoint of small open economies. In this connection, this paper contributes to the literature on the relevance of such policies for a small open economy with a dual banking system and significant hydrocarbon exports. The paper's analysis therefore holds relevance for similar economies, both in the region and elsewhere, on the role and relevance of MPPs with emphasis on Islamic banks.

The purpose of this paper is to empirically appraise the health of banking systems by applying a new theoretical framework based on resilience and stability simultaneously. In line with complex system theories, the authors will consider the dynamics of the banking system as a whole, analysing not only banks individually but also the broad environment in which they operate. For doing so, the authors propose a composite indicator (CI) for analysing the resilience and stability of banking systems of developed countries. The main purpose of the indicator is not to make predictions on future banks’ behaviour, but rather to use it as a tool for appraising the overall health of the most salient banking systems.

The authors have designed a theoretical framework of resilience and stability taking into account the review of previous literature. The authors have identified the main factors underlying these two concepts that can be appraised as complementary targets. The authors have applied multiple factor analyses to identify the main determinants of banks’ resilience and stability, and the authors have constructed a CI giving different weights to the relevant dimensions previously identified. The authors have tried different model specification and the authors have chosen the simplest model that render better empirical results. The authors construct the resilience and stability indicator for the group of G7 countries, Spain and Portugal, from 2004 up to 2015.

First, resilience–stability indicators for the group of countries analysed reveal quite different patterns in the aftermath of the financial crises. While some countries have improved its relative position within the ranking, the authors find others evolving just in the opposite direction. Second, the relative position of countries in terms of the resilience–stability indicator allows the authors to identify Canada and the USA as examples of best practices. Third, by analysing countries individually the authors will be better able to identify potential weakness and areas for improvement in each case.

The evolution of the resilience and stability indicator will serve as an early warning system for policy makers and supervisors in identifying signs of weakness, as well as a useful tool to identify the best practices. Furthermore, this indicator will allow to better assessing the potential vulnerability of banking systems in the advent of a forthcoming crisis. Therefore, this measurement should not be interpreted as an absolute value but as a warning signal of potential weakness in each case.

The main contribution of this paper to the existing literature is that it introduces a new reconceptualization of the health of the banking system in line with complex theories. The theoretical background is based on a comprehensive framework of resilience and stability as complementary targets. The CI summarises into a single figure a multidimensional concept like resilience and stability. The variables that the authors have used for the construction of the indicator have been validated by applying multiple factor analysis. The authors have empirically appraise the resilience and stability of a group of advanced economies that encompass the group of the more developed countries in the world and the two European cases that have receive financial support in order to see if there are remarkable differences.

This paper starts from the observation that small businesses in France report a significant fraction of their net income in the form of non-core earnings. Consequently, the purpose of this paper is to examine the persistence and informativeness of both core and non-core earnings of small businesses listed on the Euronext Paris market.

Panel regressions estimated with heteroskedasticity robust standard errors are used to investigate the relationships between earnings components, future performance and stock market valuation of small businesses.

The findings show that core and non-core earnings of the current year (t), contrary to those of the previous year (t−1), make it possible to predict the performance of the next year (t+1). However, only the persistence of current core earnings is valued by the stock market.

The study puts forward an anomaly of market efficiency. Thus, it shows that investors in the French stock market do not appropriately price a part of the available financial information (i.e. non-core earnings) that may contribute to a better assessment of the future performance of listed small businesses.

The persistence of non-core earnings is certainly less important than that of core elements but able to help investors appraise the future performance of listed small businesses. Hence, it represents useful financial information for investors.

This paper contributes to the existing literature by investigating the relationships between earnings, future performance and stock market valuation of listed SMEs, especially. Thus, the findings of this research allow a better understanding of earnings components properties (i.e. persistence) and their implication on the stock market valuation (i.e. informativeness) of listed SMEs. Given the observed specificities of earnings for this category of firms, these findings may be of particular interest to both researchers and investors.