Search

Governments worldwide reacted swiftly to the global financial crisis by tougher regulations. This paper investigates the impacts of the regulatory environment on operating costs using panel data of 2,200 German banks over the timeframe from 1999 to 2014. We estimate cost functions with and without proxies for regulation and analyze the results with respect to period, bank size, and group affiliation. Our results show that regulatory costs were peaking in 2001, 2008, and lately since 2012. Most interesting, however, is the asymmetry of regulation: Whereas the cost effects were symmetric for all banks until 2003, the last ten years were different. Larger institutions and savings banks could neutralize the impacts of increasing regulation on operating costs. In contrast, smaller banks, especially if they are cooperative banks, were facing significant cost increases. We therefore expect unintended structural shifts like a reduction in the diversity of banks, which are negative for competition, service quality, and for the stability of the financial system. Zusammenfassung Weltweit wurde als Folge der globalen Finanzkrise die Regulierung des Finanzsektors verschärft. Dieser Beitrag geht der Frage nach, welche Konsequenzen diese Regulierungsmaßnahmen für die operativen Kosten im Bankengeschäft haben. Auf der Basis von Paneldaten von 2,200 in Deutschland aktiven Banken über den Zeitraum von 1999 bis 2014 schätzen wir Kostenfunktionen mit und ohne Proxies für Regulierung und werten die Ergebnisse nach Beobachtungsjahr, Bankengröße, und Gruppenzugehörigkeit aus. Unsere Ergebnisse zeigen Kostenspitzen in den Jahren 2001, 2008, und zuletzt seit 2012. Am interessantesten sind jedoch die asymmetrischen Effekte der Bankenregulierung: Während unsere Modelle bis einschließlich 2003 nahezu gleichmäßige Kostenbelastungen anzeigen, änderte sich dies deutlich mit dem Jahr 2004. Im Gegensatz zu großen Institute und Sparkassen, die die Regulierungskosten nahezu neutralisieren konnten, sahen sich kleine Institute und Genossenschaftsbanken mit deutlichen Kostensteigerungen konfrontiert. Als Folge dieser asymmetrischen Kostenwirkungen staatlicher Bankenregulierung erwarten wir unbeabsichtigte Strukturveränderungen wie z.B. Konzentrationsprozesse, die sich negativ auf Wettbewerb, Dienstleistungsqualität, und letztendlich auch negativ auf die Stabilität des gesamten Finanzsystems auswirken werden. JEL Classification: G21, G38

Even though small and medium enterprises (SMEs) represent the majority of the Egyptian firms, their value added is relatively low. According to previous research, SMEs face a financing gap that causes undercapitalization and represents an obstacle that hinders SMEs from growth. This paper analyzes the current situation of SMEs in Egypt and addresses the question whether the financing problem still exists. In addition, we discuss the role of venture capital as a possible source of financing. Based on data which has been gathered using questionnaires, it is investigated whether Egyptian SMEs do know and would accept venture capital financing for their businesses. Our results show that access to finance is still a significant bottleneck for Egyptian SMEs. Venture capital financing could help to close this financing gap.

The importance of ratings for investors’ decisions and for the perceptions of the financial health of a nation pointed out the need that credit rating agencies should be regulated in some way. Regulators and market participants believed that the credit rating agencies need to abide by standards of corporate governance and supervision due to their pivotal role in the US subprime crisis. This belief was amplified recently because the rating agencies were deeply involved in the European debt crisis after various sovereign debt ratings were significantly downgraded. Therefore, the paper highlights the critique against the agencies’ role in the two most recent crises and reviews the regulation proposals which subject the rating agencies to behavioral standards.

The forward premium puzzle in the exchange rate market, resulting from the deviation and failure of interest rate parity, has awakened the interest of speculators to perform carry trade activities. Across literature the main risk associated and measured for carry trade has been the exchange rate risk and crash risk related to the relevant currencies used. But within the literature, the influence of maintained currencies on the carry trade results has not yet been covered. This paper analyzes the potential performance and the risk of carry trade strategies within a maintained exchange rate regime. For this analysis an empirical study of carry trade strategies applied between the EGP and other currencies has been used and compared to those with the USD as an example for a maintained exchange rate. Our risk and return analysis clearly shows a combination of high return and low risk for the maintained currency carry trade.

The paper is analyzing current problems of the Egyptian banking sector, which is dominated by public banks. The reported problems include a massive proportion of non-performing loans in the banks’ credit portfolios as well as significant profitability problems, especially in the public banks. Some empirical data is gathered using a bank-specific Return on Equity-Analysis. Results support the reported problems and also show some structural weaknesses of both public and private banks.