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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 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.

The global financial crisis has led to increased attention on the relationship of household indebtedness and systemic risks. As a result, macroprudential measures aimed at reducing the risks have been introduced in many countries. The purpose of this paper is to review the recent empirical literature on the measures targeted at households in the housing markets.

This note reviews and discusses the recent empirical literature on macroprudential measures targeted at households in the housing market as well as housing-related tax policy measures.

To date, the literature mostly consists of cross-country studies using aggregate data and looking at a large set of different measures. The studies typically report associations between the measures and the outcome variables of interest (often credit growth and house price appreciation), but do not assess the causal effects of the different measures or the underlying mechanisms.

Exploiting household data together with policy reforms should be a useful step forward in understanding the effects of the measures and uncovering the mechanisms through which they operate. This would also allow studying the distributional effects of the measures. Understanding the distributional effects is important in its own right, but it is also required because the ultimate goals of the macroprudential policies are related not only to the aggregate level of credit but also to the distribution of leverage.

This study aims to examine whether debt financing creates incentives for private firms to engage in earnings management via classification shifting. Especially, the authors examine whether debt-induced financial reporting incentives differ depending on the type of debt (i.e. public bonds versus private loans) and whether such incentives are influenced by the characteristics of external auditors (i.e. initial audits and auditor size).

The study uses data on 93,427 Korean private firms from 2001 to 2016. Classification shifting is measured by the positive correlation between non-core expenses and unexpected core earnings estimated with ordinary least squares.

The empirical analyses reveal that private firms engage in classification shifting as do public firms. Importantly, classification shifting is observed only in private firms that have outstanding debt, but not in private firms without debt. Among debt-financing private firms, classification shifting is more prevalent for firms that issue public debt than for firms that only use private debt. In addition, classification shifting of debt-financing private firms is more successful when they are audited by new auditors that are one of the non-Big 4 firms.

The study provides evidence of classification shifting in private firms, which is novel to the literature. However, the inferences in the study depend on the validity of the model for detecting classification shifting.

This study helps lenders enhance their understanding on the financial reporting behaviors of borrowing firms. The results in this study suggest that lenders should be cautious in using core earnings for their investment decisions.

This study contributes to the literature by providing novel evidence of classification shifting in private firms. In addition, the authors contribute to the literature on debt-induced incentives for financial reporting.

The authors draw on psychological reactance theory, collective mental programming, psychological profiles and financial vulnerability experiences to assess the possibility that the pandemic may induce transformative changes in households' behavioral intentions related to financial decisions after the pandemic is over.

Using a unique survey data drawn from four different countries located in North America, Europe, Africa and Latin America, the authors show that the stressful conditions that accompanied the pandemic have instigated a state of financial vulnerability and stimulated instinctual defensive mechanisms among consumers.

The study results indicate that households have intentions to make defensive decisions in spending, consumption, planning and investment. Furthermore, the authors report evidence that personal psychological heterogeneity (as an individual factor) and collective mental programming (as a cultural factor) play a significant role in shaping households' postpandemic financial intentions.

The study findings carry important practical implications. For financial institutions, marketers and financial advisors, the authors’ work implies that individual and collective factors affect people's perception and behavioral intentions in response to financial adversities. For social planners and legislators, the authors’ work shows that they should expect not only short-term but also long-term reactions to the COVID-19 pandemic.

Most research on the impact of COVID-19 pandemic on households' financial behavior focuses on transitional adjustments made during the pandemic, and little emphasis has been placed on potential postpandemic adjustments. The authors contend that it would be a mistake to analyze the pandemic-induced crisis as a temporary financial hardship.

There is shortage of global research on asset management (AM) by various central governments. This paper aims at reducing this gap.

This general review is based on literature, published government documents, agendas of specialized membership organizations (considered through the qualitative thematic analysis) and the authors’ experiences in advising governments on AM in 30 countries. The study focuses on three topics of recurrent interest among governments and AM experts: drivers of change and response trends; organizational models and attributes of good governance at public AM organizations. It also discusses whether the examined practices conform with New Public Management (NPM).

The paper identifies five key international drivers of change: austerity measures; an increased focus on performance management; changes in political and ideological agendas; technology and business operations changes; and the environmental sustainability agenda. It analyses response trends to these drivers, both positive and negative. Five dimensions of organizational settings that are important for AM are identified, demonstrating the great diversity of practices. The paper outlines governance elements specific to government AM and illustrates related challenges. It also shows that while current AM typically conforms with NPM, there are notable deviations, such as low corporatization and recentralization of AM.

This paper is a broad review; in-depth study of specific aspects is left for further research.

The paper introduces new empirical knowledge about AM approaches at central governments into research discourse, with a broad thematic coverage not achieved before; contributes to the discussion of some hot underexplored topics; hypothesizes why current AM practices deviate from NPM doctrines; and provides unique insights for AM practitioners.

The concept of outsourcing is a recognised business planning strategy; senior corporate management and facilities services have been progressively outsourced in the UK for many years. However, transforming an outsourcing business plan into an effective and balanced operating contract remains challenging. Getting your outsourcing project properly positioned in the business, procuring the right integrated facilities contractor and then subsequently mobilising and managing the contract can be a difficult journey to navigate. This paper describes how to approach the principles and practicalities of outsourcing noncore services and how to make sure that some of the principal pitfalls along the road of the outsourcing project are avoided. It finally offers some ideas on how to get the most out of a project in the long term.