No full-text available
To read the full-text of this research,
you can request a copy directly from the authors.
Basel II: A new regulatory framework for global banking
... But the Basel II Accord is problematic for a number of reasons despite the faith invested in it by conventional economic opinion in terms of regulating (and thereby 'dampening down') the prospect of future disruption in the global financial system (e.g. Bernanke 2004, Cornford 2005, Guttman 2006).The Accord is both complicate and complex at the same time as it is weak, 'loose' and partially discretionary. Indeed, these two features go hand in hand. ...
In response to the worst crisis since the Great Depression the Federal Reserve undertook a series of different policy measures. These could be divided into two response categories. The first consisted of extensions of traditional monetary-policy tools, which have had to be adjusted and/or ramped up to scale in the face of an unprecedented financial crisis. The second involved entirely new channels of liquidity provision designed to revive or replace financial markets that no longer work properly following their breakdown in the crisis. It is only by looking at those different response strategies that we can full appreciate how the US central bank managed to prevent the world economy from sliding into a dangerous debt-deflation spiral. At the same time monetary policy alone is insufficient to assure an adequate recovery.
'Eckhard Hein examines the causes and consequences of financialisation. His book is economics as it should always be: it combines reflections, data gathering, empirical analysis, theoretical formalization, and policy recommendations. Hein goes beyond the exuberant behaviour of the banking industry to analyse the global financial crisis and the eurozone crisis, showing, through various variants of a Kaleckian growth model, the macroeconomic consequences of the rising dominance of finance over modern capitalism during the last three decades.' - Marc Lavoie, University of Ottawa, Canada.
This article studies the expected consequences of this reform on credit markets. For emerging countries, the article concentrates on the impact on rating. The effects will be differentiated between countries, and whether it is sovereign or corporate debt.
JEL Classifications : G28
In this paper, we examine the role of "financial factors" in Japan and attempt to gauge their recent impact on the Japanese economy. First, we find that proxies for financial factors enter significantly in behavioural equations for loan standards, loan demand, and aggregate demand. Second, we find strong evidence that financial factors contributed to Japan's recent recession. On the loan supply side, exogenous declines in equity prices appear to have led to a sharp increase in bank loan standards and a substantial subsequent decline in loans and economic activity. We also find some evidence that an exogenous contraction in loan supply may have lowered output by a small degree, but only in the early phases of the recession. On the loan demand side, asset price declines also led firms and households to sharply reduce their demand for bank loans and goods, although it is unclear how much this influence may reflect traditional wealth effects. In addition, loan demand shocks, which could reflect balance-sheet problems not captured by our model, account for much of the remainder of the shortfall in loans. Copyright @ 1998 by John Wiley & Sons, Ltd. All rights reserved.
This paper was the keynote address at the conference "Financial services at the crossroads: capital regulation in the twenty-first century." The conference, held at the Federal Reserve Bank of New York on February 26-27, 1998, was designed to encourage a consensus between the public and private sectors on an agenda for capital regulation in the new century.
We present estimates of how much bank loans and real activity in small businesses responded to changes in banks' capital conditions and other bank and aggregate economic conditions. Using data for 1989–1992 by state, we estimated the effects of those factors on employment, payrolls, and the number of firms by firm size, as well as on gross state product. In response to declines in their own bank capital, small banks shrank their loan portfolios considerably more than large banks did. Large banks tended to increase loans more when small banks were under increased capital pressure than vice versa. Real economic activity was reduced more by capital declines and by loan declines at small banks than at large banks. Small banks were making “high-powered loans” in that dollar-for-dollar loan declines in their loans had larger impacts on economic activity than loan declines at large banks did. Capital declines at small banks produced larger changes in economic activity dollar-for-dollar than capital declines at large banks did. Aggregate economic conditions had smaller effects on small firms than on large firms and smaller effects on small banks than on large banks. The evidence hinted that the volume of loans made under Small Business Administration (SBA) loan guarantee programs shrank less in response to declines in bank capital than the volume of loans not made under the SBA loan guarantee programs.