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This study finds that equity returns in the banking sector in the wake of the Great Recession and the European sovereign debt crisis have been driven mainly by weak growth prospects and heightened sovereign risk and to a lesser extent, by deteriorating funding conditions and investor sentiment. While the equity return performance in the banking sector has been dismal in general, better capitalized and less leveraged banks have outperformed their peers, a finding that supports policymakers’ efforts to strengthen bank capitalization.

Finance --- Business & Economics --- Investment & Speculation --- Capital market. --- Investments. --- Investing --- Investment management --- Portfolio --- Capital markets --- Market, Capital --- Disinvestment --- Loans --- Saving and investment --- Speculation --- Financial institutions --- Money market --- Securities --- Crowding out (Economics) --- Efficient market theory --- Country risk --- Global Financial Crisis, 2008-2009 --- Econometric models --- Europe --- Economic conditions. --- E-books --- Global Economic Crisis, 2008-2009 --- Subprime Mortgage Crisis, 2008-2009 --- Financial crises --- Country risk, Political --- Political risk (Foreign investments) --- Risk --- Banks and Banking --- Financial Risk Management --- Investments: Stocks --- Financial Crises --- Information and Market Efficiency --- Event Studies --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Financial Institutions and Services: Government Policy and Regulation --- Interest Rates: Determination, Term Structure, and Effects --- Banking --- Economic & financial crises & disasters --- Investment & securities --- Financial services law & regulation --- Stocks --- Capital adequacy requirements --- Yield curve --- Financial regulation and supervision --- Financial services --- Commercial banks --- Banks and banking --- Asset requirements --- Interest rates --- United States

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In distilling a vast literature spanning the rational— irrational divide, this paper offers reflections on why asset bubbles continue to threaten economic stability despite financial markets becoming more informationally-efficient, more complete, and more heavily influenced by sophisticated (i.e. presumably rational) institutional investors. Candidate explanations for bubble persistence—such as limits to learning, frictional limits to arbitrage, and behavioral errors—seem unsatisfactory as they are inconsistent with the aforementioned trends impacting global capital markets. In lieu of the short-term nature of the asset owner—manager relationship, and the momentum bias inherent in financial benchmarks, I argue that the business risk of asset managers acts as strong motivation for institutional herding and ‘rational bubble-riding.’ Two key policy implications follow. First, procyclicality could intensify as institutional assets under management continue to grow. Second, remedial policies should extend beyond the standard suite of macroprudential and monetary measures to include time-invariant policies targeted at the cause (not just symptom) of the problem. Prominent among these should be reforms addressing principal-agent contract design and the implementation of financial benchmarks.

Asset-liability management. --- Economic policy. --- Financial risk management. --- Monetary policy. --- Finance --- Business & Economics --- Banking --- Economic nationalism --- Economic planning --- National planning --- State planning --- Monetary management --- Asset-liability management (Banking) --- Funds management --- Economics --- Planning --- National security --- Social policy --- Economic policy --- Currency boards --- Money supply --- Risk management --- Financial institutions --- Management --- Investments --- Asset-liability management --- Financial risk management --- Monetary policy --- E-books --- Finance: General --- Financial Risk Management --- Macroeconomics --- Financial Markets and the Macroeconomy --- Central Banks and Their Policies --- Financial Crises --- Information and Market Efficiency --- Event Studies --- International Financial Markets --- General Financial Markets: Government Policy and Regulation --- Price Level --- Inflation --- Deflation --- General Financial Markets: General (includes Measurement and Data) --- Economic & financial crises & disasters --- Asset prices --- Asset bubbles --- Asset management --- Financial sector stability --- Stock markets --- Prices --- Financial crises --- Asset and liability management --- Financial sector policy and analysis --- Financial markets --- Financial services industry --- Stock exchanges --- United States

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We study 1,400 UK syndicated loans, together with the financial history of the lead bank and the borrowing firm. We interpret abnormal equity returns around loan announcements as the value of the lending relationship to the firm. We find that: (i) Consistent with previous evidence, the value of lending is higher when the firm is riskier or more opaque, suggesting that it primarily reflects the lead bank’s screening and monitoring activities. (ii) As a bank becomes larger, more profitable or more capitalized, the value of its loans first increases and then decreases. The largest, most capitalised or most profitable banks do not give the most valuable loans. (iii) Firms which receive low-value loans are more likely to experience low profitability and financial distress during the lending relationship. By relating the state of bank balance sheets to borrower performance, we offer a new angle to evaluate the impact of financial conditions on the real economy.

Loans. --- Financial statements. --- Balance sheets --- Corporate financial statements --- Earnings statements --- Financial reports --- Income statements --- Operating statements --- Profit and loss statements --- Statements, Financial --- Accounting --- Bookkeeping --- Business records --- Corporation reports --- Borrowing --- Lending --- Loans for consumption --- Finance --- Credit --- Investments --- Loans --- Financial statements --- E-books --- Banks and Banking --- Investments: Stocks --- Money and Monetary Policy --- Industries: Financial Services --- Financial Markets and the Macroeconomy --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Information and Market Efficiency --- Event Studies --- Public Administration --- Public Sector Accounting and Audits --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Banking --- Financial reporting, financial statements --- Monetary economics --- Investment & securities --- Bank credit --- Stocks --- Financial institutions --- Public financial management (PFM) --- Money --- Syndicated loans --- Banks and banking --- Finance, Public --- United Kingdom

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This note is a reference guide for the unemployment template, an econometric tool that allows researchers to analyze and project labor market indicators for any country with sufficient data coverage. Section I explains the motivation behind designing a new surveillance tool to study labor markets, and summarizes the key features of the template. Section II details the data inputs needed and their sources. Section III describes the methods used to estimate the employment-growth elasticity, a measure of the extent to which employment responds to output. Section IV outlines the medium-term outlook table and projection charts created by the template once the inputs are customized to generate an appropriate elasticity. Finally, Section V presents a discussion on how to interpret the results produced by the template, and of the issues that arise from projecting labor market indicators.

Finance --- Business & Economics --- International Finance --- Capital movements. --- Macroeconomics. --- Capital flight --- Capital flows --- Capital inflow --- Capital outflow --- Flight of capital --- Flow of capital --- Movements of capital --- Economics --- Balance of payments --- Foreign exchange --- International finance --- Capital movements --- Macroeconomics --- E-books --- Exports and Imports --- Foreign Exchange --- Data Transmission Systems --- Multiple or Simultaneous Equation Models: Models with Panel Data --- International Investment --- Long-term Capital Movements --- Information and Market Efficiency --- Event Studies --- Methodology for Collecting, Estimating, and Organizing Macroeconomic Data --- Data Access --- Current Account Adjustment --- Short-term Capital Movements --- Data capture & analysis --- International economics --- Currency --- Foreign direct investment --- Special Data Dissemination Standard (SDDS) --- Exchange rates --- Portfolio investment --- Economic and financial statistics --- Investments, Foreign --- Data transmission systems --- Portfolio management --- Labor --- Labor Economics Policies --- Labor Economics: General --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Demand and Supply of Labor: General --- Unemployment: Models, Duration, Incidence, and Job Search --- Labor Force and Employment, Size, and Structure --- Labour --- income economics --- Labor markets --- Labor force --- Unemployment rate --- Economic theory --- Labor market --- United States