Search

Most studies have found that the Covid‐19 pandemic did not negatively impact the euro area banking industry's performance at an aggregate level. This study explores whether this finding still holds using the return on assets of 16 banking groups operating in the euro area and considering bank‐specific factors, idiosyncrasies related to different exposures of their portfolios to the business cycle and weaknesses stemming from underlying structural vulnerabilities. The banking groups are classified into clusters using unsupervised learning techniques. This research contributes to the empirical literature on the determinants of banks' performance by highlighting the importance of banks' heterogeneity, notably controlling for differential performance due to asset quality, solvency and business model. In addition, this paper shows that the magnitude of return on assets' exposure to the business cycle varies across banks and that inflation in the euro area matters only for a subset of them. Importantly, the study sheds some light on the possible reasons for the mixed results in the literature regarding the role of non‐interest income, the T1 capital ratio and inflation. Finally, no significant effects of the Covid‐19 variables on banks' return on assets are found during the first seven quarters of the pandemic. [ABSTRACT FROM AUTHOR]

Copyright of Journal of International Entrepreneurship is the property of Springer Nature and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of External Economic Bulletin / Külgazdaság is the property of KOPINT Konjunktura Kutatasi Alapitvany and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

We investigate several insurance structural indexes, emphasising the internal structure of the insurance market in relation to other financial sectors. The considered factors evaluate economic development, performance of institutional environment, and the cultural characteristics (Hofstede's measures). Data are from official international sources, using panel regressions and hierarchical clusterization. The results show a significant impact of a global institutional index, economic development, and Hofstede cultural dimensions on insurance indexes. We highlight some geographical groups of the countries' behavioural patterns regarding causality relationships between the structural insurance indexes and their drivers. [ABSTRACT FROM AUTHOR]

In this paper, we provide the first analysis of the level and determinants of sovereign exposure of banking systems in Central and Eastern European (CEE) countries, thus contributing to the existing literature on sovereign exposures and the sovereign-bank nexus. Results of descriptive analysis showed that exposure to sovereign debt securities in CEE countries is substantially higher than in euro area countries, which can be explained by the lower development of financial markets in this region. We also found evidence of home-bias in CEE and emphasized the role of different monetary policy regimes in explaining differences in exposure among CEE countries. Results of panel analysis showed that changes of debt securities in bank balance sheets in CEE countries are mostly determined by broader macroeconomic conditions and to a lesser extent by their regulatory frameworks. In addition, we did not find evidence of so-called reach-for-yield behaviour. Our results indicate that efforts to reduce sovereign exposure in CEE countries require strong collaboration of not only regulators, but also of fiscal authorities and other policy makers able to contribute to the development of financial markets in this region. Moreover, regulators should especially focus on reducing the home-bias in CEE.

Copyright of Irrigation & Drainage is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

In this paper, we provide the first analysis of the level and determinants of sovereign exposure of banking systems in Central and Eastern European (CEE) countries, thus contributing to the existing literature on sovereign exposures and the sovereign-bank nexus. Results of descriptive analysis showed that exposure to sovereign debt securities in CEE countries is substantially higher than in euro area countries, which can be explained by the lower development of financial markets in this region. We also found evidence of home-bias in CEE and emphasized the role of different monetary policy regimes in explaining differences in exposure among CEE countries. Results of panel analysis showed that changes of debt securities in bank balance sheets in CEE countries are mostly determined by broader macroeconomic conditions and to a lesser extent by their regulatory frameworks. In addition, we did not find evidence of so-called reach-for-yield behaviour. Our results indicate that efforts to reduce sovereign exposure in CEE countries require strong collaboration of not only regulators, but also of fiscal authorities and other policy makers able to contribute to the development of financial markets in this region. Moreover, regulators should especially focus on reducing the home-bias in CEE. [ABSTRACT FROM AUTHOR]

Copyright of FiFo Discussion Papers is the property of University of Cologne, FiFo Institute for Public Economics and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper examines the effect of international and domestic factors on the sovereign bond spreads for 22 developed countries in North America, Europe and Pacific Rim regions. First, for all the regions the impact of global factors on the sovereign bond spreads is more intense than regional factors. Second, the findings confirm that for the bond spreads of each region over its domestic government bonds, the countries’ local fundamentals are better determinants of the spreads compared to the spread over US government bonds as a safe haven. Third, the influence of worldwide factors in the Eurozone compared to other regions bond spreads is less. Fourth, the relationship of the market sentiment and the investor risk aversion with the sovereign bond spreads of all regions is positive. Equity market volatility plays significant role in yield speads in international bond markets.

Since 2007 farmgate milk prices in EU have become much more volatile and their seasonal pattern has stopped being so explicit. The purpose of this research is to test the hypothesis that seasonality still plays an important role in shaping farmgate milk prices in EU while its amplitude decreases together with the growing integration of the EU milk market with the global market. The aforementioned issues are investigated using Census X-12 procedure of price decomposition and panel random effects model. The results indicate that after 2007 the role of seasonality in determining EU farmgate milk prices has significantly decreased which partially results from the higher integration of the EU milk market with the global market. Nevertheless, seasonality remains an important factor determining the farmgate milk prices in EU. It can be expected that with the further globalization of the milk market, the significance of seasonality in determining farmgate milk prices in EU will be diminishing.

In the "full world" and Anthropocene, global ecological consumption is beyond natural capital's regenerative and absorptive abilities, and ecological consumption of humanity has to be reduced to have an ecologically sustainable future. To achieve the goal of ecological sustainability, influencing factors that could reduce ecological consumption need to be explored. Based on three panel datasets for the time period 1996-2015, this paper estimates the impacts of urbanization, renewable energy consumption, service industries, and internet usage on ecological consumption for all 90 sample countries, the 42 developed countries, and the 48 developing countries. Education and income are taken as control variables in the panel regressions. As a consumption-side indicator, the ecological footprint is selected to measure ecological consumption. The estimations find that (1) urbanization has negative impacts for all sample countries and the developed countries, and it is insignificant for the developing countries, (2) renewable energy consumption and service industries have negative impacts for all of the three samples, and (3) internet usage has lagged negative impacts for all sample countries, and it is an independent and significant force of reducing ecological consumption in the developing countries rather than the developed countries. It is found that there is a positive linear relationship, an inversed U-shaped relationship, and a U-shaped relationship between ecological consumption and income in all sample countries, the developed countries, and the developing countries, respectively. The estimated results provide guidance for evidence-based policymaking on reducing ecological consumption. [ABSTRACT FROM AUTHOR]

In many countries, population ageing is challenging the viability of the welfare state and generating higher demands for long-term care. At the same time, increasing participation in the labour force is essential to ensuring the sustainability of the welfare state. To address the latter issue, affected countries have adopted measures to increase employment; e.g. welfare recipients in Germany are required to be available for any type of legal work. However, 7 per cent of welfare benefit recipients in Germany provide long-term care for relatives or friends, and this care-giving may interfere with their job search efforts and decrease their employment opportunities. Our paper provides evidence of the relationship between the care responsibilities and employment chances of welfare recipients in Germany. Our analyses are based on survey data obtained from the panel study 'Labour Market and Social Security' and on panel regression methods. The results reveal a negative relationship between intensive care-giving (ten or more hours per week) and employment for male and female welfare recipients. However, employment prospects recover when care duties end and are subsequently no longer lower for carers than for non-carers. [ABSTRACT FROM AUTHOR]

How important is to place limits on specific categories of local public spending in order to prevent municipalities' defaults? In this paper we consider Italian municipalities from 2000 to 2012. We use a logit model to investigate which of the main budget indicators (debt repayments, current budget equilibrium, amount of residuals and personnel costs) is relatively more important in affecting the default probability. Our results suggest that a 10% rise in the share of loan repayment over total spending leads to an increase in default probability by 2.6% on average. These findings are robust to alternative model specifications and the inclusion of fixed effects, time dummies and macroeconomic control variables. Our analysis thus shows that Italian municipalities seem to be on the default path when they are incapable to fully internalize the effects of issuing new debt today on the current equilibrium of tomorrow. To place limits on specific types of public spending seems to be relatively less important. [ABSTRACT FROM AUTHOR]

This paper analyzes the impact of information and communication technologies (ICT) on economic growth in developing, emerging and developed countries. The main question is whether the gains from investments in ICT differ between developing, emerging and developed countries. The analysis is based on a high-quality sample of 59 countries for the period 1995–2010. Various panel data regressions confirm the previously reported positive relationship between ICT capital and GDP growth. For the combined sample of all 59 countries, the estimated output elasticity of ICT is larger than the ICT factor compensation share suggesting excess returns to ICT capital. The regressions for the subsamples of developing, emerging and developed countries do not reveal statistically significant differences in the output elasticity of ICT between these three groups of countries. Thus, the results indicate that developing and emerging countries are not gaining more from investments in ICT than developed economies, calling into question the argument that these countries are ‘leapfrogging’ through ICT. [ABSTRACT FROM AUTHOR]

Is corporate social responsibility (CSR) a tool for strategic positioning? While CSR is sometimes used as part of a differentiation strategy, this article analyzes which specific CSR strategies arise in response to competitive pressures. The results suggest that competitive pressures lead firms to increase their positive social actions without necessarily decreasing their social weaknesses. This positive impact varies with specific dimensions of CSR and industry specificities: (1) Competition improves social performance toward core stakeholders to a greater extent than social performance toward peripheral stakeholders. (2) This effect is more pronounced in B2C industries than in other industries. (3) Competition leads firms in “dirty” industries to ignore environmental initiatives. [ABSTRACT FROM AUTHOR]

This paper analyses the determinants of the changes in the non-performing loan (NPL) ratio in selected European emerging markets. The model was estimated on a panel dataset using a fixed effects estimator for seven Central and Eastern European (CEE) countries between Q3:2007 and Q3:2012. The countries analyzed are Bulgaria, Croatia, Czech Republic, Hungary, Latvia, Romania and Slovakia. Although the literature on NPLs is quite extensive, this is the first empirical research on the countries of CEE region using aggregate, country-level data on problem loans. The results suggest that the primary cause of high levels of NPLs is the economic slowdown, which is evident from statistically significant and economically large coefficients on GDP, unemployment and the inflation rate.

The study aims to deepen the analysis on the indirect dependence of government budget balance on private sector credit flow in the countries of Central and Eastern Europe. The added value of this approach consists of two elements. First, the analysis suggests developing the traditional analytical framework of assessing risks to public finance stability by including second round effects of negative fiscal impulses on credit to private sector during recession periods. Second, the study provides empirical evidence on the importance of economic growth transmission channel for the impact of credit accelerator effects on primary deficit. At the same time, nonperforming loans channel proved to be insignificant, especially in relation to the persistency of last year’s budget deficit and the effects of budget allocations pro-cyclicality. However, loan portfolio quality seems to be more relevant in the case of public debt service, through its influence on the evolution of the yield on long-term government securities that is closely related to sovereign risk premium. Nevertheless, strengthening the financial safety net by the introduction of resolution funds will most probably break the link investors saw between credit portfolio quality and the impending increase in budget spending. This expected development across not only CEE countries, but at the EU level also, will facilitate the isolation of sovereign risk premium from non-performing loans’ dynamics.

In this paper, we report on new data on intangible investment at the level of one-digit NACE industries of ten European Union (EU) countries. The data are constructed as a sectoral breakdown by using as control totals the INTAN-Invest database, which contains measures of intangible investment at the level of the aggregate business sector. With the sectoral data, we assess the contribution of intangibles to productivity growth based on growth accounting and econometric estimation of production functions. The growth accounting contribution of intangibles to labor productivity growth is generally highest in manufacturing and finance. The estimated output elasticity of intangibles lies between 0.1 and 0.2, above factor shares but considerably below values found in previous research using aggregate data. [ABSTRACT FROM AUTHOR]

This study empirically investigates whether financial development is associated with a stronger or weaker trade openness–growth relationship. Both linear and nonlinear econometric models are used with panel data for 46 countries from 1983 to 2007. While the new growth theory holds that international trade may spur economic growth by facilitating the adoption of new technology and specialization, the evidence of this study suggests that, to take full advantage of the technology transfer induced by international trade, countries need to develop their financial systems, especially their stock markets. The empirical results indicate that in countries with higher stock market development more trade openness enhances economic growth, while in countries with less stock market development the ability of trade to facilitate growth is feeble. [ABSTRACT FROM AUTHOR]

This paper analyses the determinants of the changes in the non-performing loan (NPL) ratio in selected European emerging markets. The model was estimated on a panel dataset using a fixed effects estimator for seven Central and Eastern European (CEE) countries between Q3:2007 and Q3:2012. The countries analyzed are Bulgaria, Croatia, Czech Republic, Hungary, Latvia, Romania and Slovakia. Although the literature on NPLs is quite extensive, this is the first empirical research on the countries of CEE region using aggregate, country-level data on problem loans. The results suggest that the primary cause of high levels of NPLs is the economic slowdown, which is evident from statistically significant and economically large coefficients on GDP, unemployment and the inflation rate. [ABSTRACT FROM AUTHOR]

Complementary to research on the importance of real convergence for a sustainable euro adopting process, this study analyzes the complexity of the mechanism by which credit growth may become a threat to meeting the inflation rate criterion. The added value of this approach consists of two elements. First, the analysis provides a quantitative mechanism for assessing the fundamental dependence of the output gap on credit development in the economy, econometric results of this study showing that about 15 percent of the credit flow is reflected in the deviation of economic growth from its potential level. Secondly, the study shows that macroprudential policy can contribute to meeting the price stability criterion, especially given that monetary policy instruments have limited effectiveness in countering excessive lending, econometric results showing that about 15 percent of the output gap changes into inflation in the new EU Member States. Thus, even if there are no financial stability indicators among the Maastricht criteria, at least the credit growth represents a macroprudential area with important implications on nominal convergence. [ABSTRACT FROM AUTHOR]

The study aims to investigate the mechanism by which lending to private sector may induce risks to the long-term interest rates convergence process in the new EU Member States. The added value of this approach consists of three elements. First of all, the analysis provides a quantitative mechanism for assessing the fundamental dependence of the bank portfolio quality to the dynamics of the credit accelerator, econometric results showing that about 30 percent of the squared change in the private sector credit flow is reflected in the jump of the rate of non-performing loans. Secondly, the study shows that sovereign risk premium is dependent on the stability of the banking system, considering that about 20 percent of the changes in the rate of non-performing loans are reflected in the level of the CDS rate. Third, empirical assessment highlights the importance of the sovereign risk premium transmission channel related to long-term interest rate, with approximately two thirds of the CDS rate contributing to the level of government bonds long-term yields. In this context, promoting a mix of macroeconomic policies oriented also to limiting the volatility of credit demand accompanied by poor multiplier effects in the economy becomes a fundamental requirement for ensuring a sustainable cost of financing long term public debt. [ABSTRACT FROM AUTHOR]

This paper examines the global imbalances in two eras of globalization. The main focus is on the medium-run factors that determine the current account balances. The results suggest that relatively rich countries with developed financial markets, high quality institutions and high proportion of dependent persons tend to run current account deficits (or lower surpluses) in both periods. On the other hand, the high initial level of net foreign assets increases the current account balance. This holds especially in the prewar period. The government budget balance has a positive effect on the current account balance in some instances. In the prewar period, the government budget balance plays the role only in the short-run, suggesting the importance of the short-run fluctuations in the current account balance. The twin deficits hypothesis plays a more important role in the second era of the globalization. However, it holds only for developing countries. These results suggest that the twin deficit hypothesis and the global savings glut hypothesis are not mutually exclusive. [ABSTRACT FROM AUTHOR]

Panel regressions are used to analyze various measures of state higher education expenditures for 45 states over a time period from 1986 through 2005. Results of panel stationarity tests indicate that each expenditures series contains a unit root. This finding is consistent with the incremental theory of public expenditures and implies that time series of these variables should be differenced if used as dependent variables in regression models. Regression results indicate that changes in state higher education expenditures are significantly procyclical. State higher education spending appears to fully adjust to population growth and over-adjust to CPI inflation. Larger state governments are associated with significantly larger annual adjustments to per capita real state higher education expenditures. No significant evidence is found that state Medicaid or elementary education expenditures crowd out higher education spending. [ABSTRACT FROM AUTHOR]

The role of tourism is of vital economic importance, particularly for small countries with a privileged geographical location and favourable weather conditions. This paper examines the importance of tourism as a conditioning factor for higher regional growth in Portugal by employing the conditional convergence hypothesis of Barro and Sala-i-Martin, associated with the endogenous growth theory. The panel data estimation approach provides evidence of the positive impact of tourism (through the accommodation capacity) on the growth in per-capita income among the Portuguese regions, increasing the rate of convergence. Therefore, tourism can be considered as an alternative source for stimulating higher regional growth in Portugal, if the supply characteristics of this sector are improved. [ABSTRACT FROM AUTHOR]

• We test the hypothesis of leapfrogging through ICT on entrepreneurship • The study focuses on developing, emerging and developed countries • Developing and emerging countries are not earning more than developed economies • The countries' absorptive capacity that completes the ICT effects are mixed In this study, we investigate the impact of information and communication technologies (ICTs), represented by ICT capital services, on total entrepreneurial activity (TEA) in developing, emerging and developed countries with particular attention on countries' absorption capacities over the period 2006-2016. First, our results suggest a positive relationship between ICT capital services and entrepreneurship in the whole sample. Second, while the results concerning subsamples are larger in developing and emerging countries than in developed countries, the comparisons do not reveal statistically significant differences in the contribution of ICT capital services to entrepreneurship in these three groups of countries. Thus, regarding the benefits of ICTs in promoting entrepreneurship, developing and emerging countries are not earning more than the developed economies. This challenges the argument that these countries are 'leapfrogging' through ICT. Concerning the absorption capacity, we find that secondary school enrolment is the best channel of ICT entrepreneurial effect, not tertiary school enrolment, and innovation is a complement to ICT in promoting entrepreneurship only in emerging countries and developed countries, but not in developing countries. [ABSTRACT FROM AUTHOR]