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Developments during the global financial crisis have highlighted the importance of differentiating across financial systems and institutions. Assessments of financial stability have increasingly considered the characteristics of individual banks within a financial system, as well as those with significant international reach, to identify vulnerabilities and inform policy decisions. This paper proposes a simple measure of bank soundness, the Bank Health Index (BHI), to facilitate preliminary analyses of individual financial institutions relative to their peers. The evidence suggests that the BHI is useful for a first-pass identification of bank soundness conditions. Automated spreadsheet templates of the bank Health Assessment Tool (HEAT!) are provided for users with access to the BankScope, Bloomberg and/or SNL database(s).
Bank examination. --- Banks and banking. --- Agricultural banks --- Banking --- Banking industry --- Commercial banks --- Depository institutions --- Finance --- Financial institutions --- Money --- Bank auditing --- Banks and banking --- Auditing --- Examinations --- Banks and Banking --- Finance: General --- Industries: Financial Services --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- General Financial Markets: Government Policy and Regulation --- Financial Institutions and Services: General --- Bank soundness --- Global systemically important banks --- Nonperforming loans --- Financial sector policy and analysis --- Loans --- Financial services industry --- Spain
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This Technical Note discusses the recommendations in the Financial Sector Assessment Program for Spain regarding determinants of bank profitability. Profitability remains higher for Spanish banks than for European peers, especially supported by relatively high net interest margins; however, some Spanish banks still have higher nonperforming loans (NPLs) and provision-to-asset ratios. Panel regression analysis suggests that Spanish banks’ profitability is influenced by a combination of structural and cyclical factors, similar to those influencing other European banks and global systemically important banks. The IMF mission recommends further steps to reduce NPLs and legacy assets, continued cost-cutting measures to enhance the profitability of Spanish banks, and stronger communication between supervisors and banks on business models.
Banks and Banking --- Finance: General --- Macroeconomics --- Industries: Financial Services --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- General Financial Markets: Government Policy and Regulation --- Personal Income, Wealth, and Their Distributions --- Interest Rates: Determination, Term Structure, and Effects --- Financial Institutions and Services: General --- Banking --- Finance --- Bank soundness --- Personal income --- Short term interest rates --- Global systemically important banks --- National accounts --- Financial sector policy and analysis --- Financial services --- Nonperforming loans --- Financial institutions --- Banks and banking --- Income --- Interest rates --- Financial services industry --- Loans --- Spain
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This paper examines the transitional macroeconomic costs of a synchronized global increase in bank capital adequacy requirements under Basel III, as well as a capital increase covering globally systemically important banks. The analysis, using an estimated multi-country model, contributed to the work of the Macroeconomic Assessment Group analysis, especially in estimating the potential international spillovers associated with a global increase in capital requirements. The magnitude of the effects found in this analysis is relatively modest, especially if monetary policies have scope to ease in response to a widening of interest rate spreads by banks.
Bank capital --- Asset requirements --- Capital asset requirements --- Financial responsibility requirements --- Minimum asset requirements --- Requirements, Asset --- Assets (Accounting) --- Capital --- Econometric models. --- Banks and Banking --- Macroeconomics --- Industries: Financial Services --- Financial Markets and the Macroeconomy --- Open Economy Macroeconomics --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Financial Institutions and Services: Government Policy and Regulation --- Financial Institutions and Services: General --- Externalities --- Interest Rates: Determination, Term Structure, and Effects --- Finance --- Banking --- Financial services law & regulation --- Global systemically important banks --- Spillovers --- Central bank policy rate --- Capital adequacy requirements --- Financial institutions --- Financial sector policy and analysis --- Financial services --- Financial regulation and supervision --- Zero lower bound --- Financial services industry --- International finance --- Interest rates --- Banks and banking --- United States
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The paper investigates EU banks’ profitability through the recent financial cycle using banklevel balance sheet and income statement data. We find that banks that were more successful at protecting their profits had a less pronounced deterioration in loan quality and a larger improvement in cost efficiency. They also downsized their assets more aggressively during the crisis, and reduced reliance on wholesale funding more markedly post-crisis. Net interest margins remained broadly stable over the financial cycle, including post-crisis, and there is no clear evidence that aspects of bank business model, such as higher reliance on fees and commission income, were associated with better profitability post-crisis.
Finance --- Banks and Banking --- Finance: General --- Macroeconomics --- Industries: Financial Services --- Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data) --- Financial Crises --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Business Fluctuations --- Cycles --- General Financial Markets: Government Policy and Regulation --- Personal Income, Wealth, and Their Distributions --- Financial Institutions and Services: General --- Banking --- Financial cycles --- Bank soundness --- Personal income --- Global systemically important banks --- Financial sector policy and analysis --- National accounts --- Nonperforming loans --- Financial institutions --- Banks and banking --- Business cycles --- Income --- Financial services industry --- Loans --- United States
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Interconnectedness among global systemically important banks (GSIBs) and global systemically important insurers (GSIIs) has important financial stability implications. This paper examines connectedness among United States, European and Asian GSIBs and GSIIs, using publicly-available daily equity returns and intra-day volatility data from October 2007 to August 2016. Results reveal strong regional clusters of return and volatility connectedness amongst GSIBs and GSIIs. Compared to Asia, selected GSIBs and GSIIs headquartered in the United States and Europe appear to be main sources of market-based connectedness. Total system connectedness—i.e., among all GSIBs and GSIIs—tends to rise during financial stress, which is corroborated by a balance sheet oriented systemic risk measure. Lastly, the paper demonstrates significant influence of economic policy uncertainty and U.S. long-term interest rates on total connectedness among systemically important institutions, and the important role of bank profitability and asset quality in driving bank-specific return connectedness.
Risk. --- Economics --- Uncertainty --- Probabilities --- Profit --- Risk-return relationships --- Banks and Banking --- Financial Risk Management --- Industries: Financial Services --- Investments: Stocks --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Insurance --- Insurance Companies --- Actuarial Studies --- Time-Series Models --- Dynamic Quantile Regressions --- Dynamic Treatment Effect Models --- Diffusion Processes --- State Space Models --- Financial Institutions and Services: General --- Financial Crises --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Finance --- Economic & financial crises & disasters --- Banking --- Investment & securities --- Global systemically important banks --- Global systemically important insurers --- Financial crises --- Insurance companies --- Financial institutions --- Stocks --- Financial services industry --- Banks and banking --- United States
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This Selected Issues paper examines the causes and potential remedies for structural unemployment in France. Structural unemployment in France has long been elevated, and appears to have edged up further since the crisis. This reflects both demand and supply factors, including: high labor taxes, wage stickiness, a growing skill gap, hysteresis effects from the crisis years, a lengthy period of elevated economic uncertainty, inactivity traps created by the unemployment and welfare benefit systems, and demographic factors that have pushed up the labor force. The cyclical recovery is projected to bring down the unemployment rate only slowly. Reducing labor tax wedges can increase both output and employment.
Unemployment --- Labor supply --- Effect of taxation on. --- Taxation --- Banks and Banking --- Labor --- Macroeconomics --- Industries: Financial Services --- Public Finance --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Personal Income and Other Nonbusiness Taxes and Subsidies --- Unemployment: Models, Duration, Incidence, and Job Search --- Employment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Financial Institutions and Services: General --- Unemployment Insurance --- Severance Pay --- Plant Closings --- Labour --- income economics --- Banking --- Welfare & benefit systems --- Finance --- Public finance & taxation --- Labor taxes --- Global systemically important banks --- Taxes --- Financial institutions --- Unemployment benefits --- Expenditure --- Banks and banking --- Income tax --- Economic theory --- Financial services industry --- Unemployment insurance --- France
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The Global Financial Crisis unleashed changes in the operating and regulatory environments for large international banks. This paper proposes a novel taxonomy to identify and track business model evolution for the 30 Global Systemically Important Banks (G-SIBs). Drawing from banks’ reporting, it identifies strategies along four dimensions –consolidated lines of business and geographic orientation, and the funding models and legal entity structures of international operations. G-SIBs have adjusted their business models, especially by reducing market intensity. While G-SIBs have maintained international orientation, pressures on funding models and entity structures could affect the efficiency of capital flows through the bank channel.
Accounting --- Banks and Banking --- Industries: Financial Services --- International Financial Markets --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Business Objectives of the Firm --- International Finance: Other --- Financial Institutions and Services: General --- Public Administration --- Public Sector Accounting and Audits --- Investment Banking --- Venture Capital --- Brokerage --- Ratings and Ratings Agencies --- Financial Institutions and Services: Government Policy and Regulation --- Banking --- Finance --- Financial reporting, financial statements --- Global systemically important banks --- Foreign banks --- Financial statements --- Investment banking --- Financial institutions --- Public financial management (PFM) --- Financial services --- Banks and banking --- Financial services industry --- Banks and banking, Foreign --- Finance, Public --- United States
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The Global Financial Crisis unleashed changes in the operating and regulatory environments for large international banks. This paper proposes a novel taxonomy to identify and track business model evolution for the 30 Global Systemically Important Banks (G-SIBs). Drawing from banks’ reporting, it identifies strategies along four dimensions –consolidated lines of business and geographic orientation, and the funding models and legal entity structures of international operations. G-SIBs have adjusted their business models, especially by reducing market intensity. While G-SIBs have maintained international orientation, pressures on funding models and entity structures could affect the efficiency of capital flows through the bank channel.
United States --- Accounting --- Banks and Banking --- Industries: Financial Services --- International Financial Markets --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Business Objectives of the Firm --- International Finance: Other --- Financial Institutions and Services: General --- Public Administration --- Public Sector Accounting and Audits --- Investment Banking --- Venture Capital --- Brokerage --- Ratings and Ratings Agencies --- Financial Institutions and Services: Government Policy and Regulation --- Banking --- Finance --- Financial reporting, financial statements --- Global systemically important banks --- Foreign banks --- Financial statements --- Investment banking --- Financial institutions --- Public financial management (PFM) --- Financial services --- Banks and banking --- Financial services industry --- Banks and banking, Foreign --- Finance, Public
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The October 2017 Global Financial Stability Report finds that the global financial system continues to strengthen in response to extraordinary policy support, regulatory enhancements, and the cyclical upturn in growth. It also includes a chapter that examines the short- and medium-term implications for economic growth and financial stability of the past decades’ rise in household debt. It documents large differences in household debt-to-GDP ratios across countries but a common increasing trajectory that was moderated but not reversed by the global financial crisis. Another chapter develops a new macroeconomic measure of financial stability by linking financial conditions to the probability distribution of future GDP growth and applies it to a set of 20 major advanced and emerging market economies. The chapter shows that changes in financial conditions shift the whole distribution of future GDP growth.
Banks and Banking --- Finance: General --- Macroeconomics --- Money and Monetary Policy --- Industries: Financial Services --- Real Estate --- General Financial Markets: General (includes Measurement and Data) --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Aggregate Factor Income Distribution --- Financial Crises --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- General Financial Markets: Government Policy and Regulation --- Financial Institutions and Services: General --- Macroeconomics: Consumption --- Saving --- Wealth --- Finance --- Banking --- Economic & financial crises & disasters --- Monetary economics --- Property & real estate --- Emerging and frontier financial markets --- Income --- Global financial crisis of 2008-2009 --- Credit --- Financial markets --- Money --- National accounts --- Financial crises --- Financial sector risk --- Financial sector policy and analysis --- Global systemically important banks --- Financial institutions --- Consumption --- Financial services industry --- Banks and banking --- Global Financial Crisis, 2008-2009 --- Financial risk management --- Economics --- Housing --- Prices --- United States
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The post-crisis financial sector framework reform remains incomplete. While capital and liquidity requirements have been strengthened, doubts remain over other aspects, including the fact that expectations of government support for systemically-important banks (SIBs) remain intact. In this paper, we use a jump diffusion option-pricing approach to provide estimates of implicit subsidies gained by these banks due to the expectation of protection to creditors provided by governments. While these subsidies have declined in the post-crisis era as volatility has declined and capital levels have increased, they remain non-trivial. Even conservative parameterizations of default and loss probabilities lead to macroeconomically significant figures.
Loans, Foreign. --- Foreign loans --- International loans --- Loans, International --- Loans --- Conditionality (International relations) --- Foreign loan insurance --- Banks and Banking --- Financial Risk Management --- Investments: Stocks --- Macroeconomics --- Industries: Financial Services --- Contingent Pricing --- Futures Pricing --- option pricing --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Financial Institutions and Services: Government Policy and Regulation --- Taxation, Subsidies, and Revenue: General --- Financial Crises --- Price Level --- Inflation --- Deflation --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- International Financial Markets --- Financial Institutions and Services: General --- Economic & financial crises & disasters --- Banking --- Investment & securities --- Finance --- Financial crises --- Asset prices --- Stocks --- Asset valuation --- Prices --- Financial institutions --- Asset and liability management --- Global systemically important banks --- Banks and banking --- Asset-liability management --- Financial services industry --- United States
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