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This paper analyses the volatility transmission between European Global Systemically Important Banks (GSIBs) and implied stock market volatility. A Dynamic Conditional Correlation Generalized Autoregressive Conditional Heteroskedasticity model is applied to determine the dynamic correlation between returns of Europe's GSIBs and the world's most prominent measure of market "fear", the CBOE Volatility Index (VIX). The results identify a higher negative co-relationship between the VIX and GSIB returns during the COVID-19 period compared with the Global Financial Crisis (GFC), with one-day lagged changes in the VIX negatively Granger-causing bank returns. The asymmetric impact of changes in implied volatility is examined by quantile regressions, with the findings showing that in the lower quartile–where extreme negative bank returns are present–jumps in the VIX are highly significant. This effect is more pronounced during COVID-19 than during the GFC. Additional robustness analysis shows that these findings are consistent during the periods of the Swine Flu and Zika virus epidemics. [ABSTRACT FROM AUTHOR]

The current phase of intensive globalisation, digitisation, the expansion of fintech companies and the overall impacts of the recent crisis seem to spur further concentration in the banking sector in terms of both the number of banks in operation and the number of banking centres. This research is motivated by the fact that, in contrast to leading financial and banking centres that attract considerable research attention, small banking centres have remained under-researched, despite their large number and the important role they play in their host communities and regions. This paper deals with the recent evolutionary dynamics of 199 small European banking centres and is based on an analysis of the economic performance of individual banks aggregated at the city level where they have their headquarters. The analysed indicators cover size, profitability and the level of risk of particular banks over the 2004–2015 period. In addition, the data were analysed for three basic European macro-regions (western Europe, southern Europe and central and eastern Europe) and in terms of the ownership of the banks headquartered in particular centres (foreign versus domestic). Our investigation shows that, even though a significant decline has been observed in the number of these centres, the financial performance of banks headquartered in small financial centres differs widely, depending significantly upon the European macro-region (a decisive number of defunct banking centres was concentrated in southern Europe) and the ownership structure. [ABSTRACT FROM AUTHOR]

Ambitions for regenerative medicine remain a strong motivator for healthcare research and resource development. Central to the evolving vision for regenerative medicine are stem cells, and now human induced pluripotent stem cells (iPSCs). Against the promissory and technically innovative backdrop of this technology, there has been a growing concern for legitimacy and integrity in science and innovation. This, in turn, has encouraged discourses around the idea of 'responsibility', and the notion of 'responsible research and innovation' (RRI), which has gained considerable policy traction in Europe. This paper considers the concept of RRI within the context of a specific European research project: the European Bank for induced pluripotent Stem Cells (EBiSC). EBiSC is a resource development project - a biobank - that has as its stated aims the establishment of a leading European-based bank that will, inter alia, promote wider use of iPSCs and global iPSC banking with the ultimate aim of enhancing the health of people. Specifically, this paper considers how EBiSC's Phase I (2014-2016) governance activities comply with expectations that might be distilled from RRI, and what RRI might impose on EBiSC's post-Phase II (2017-2019) entity. In doing so, it offers some guidance on how RRI might be operationalised at the project level. [ABSTRACT FROM AUTHOR]

The EU Bank Recovery and Resolution Directive (BRRD) shifts the focus from reacting in the face of a crisis, to planning and preparing to avoid uncoordinated, ad hoc measures and aims to ensure banks resolvability; it strengthens and harmonizes early intervention measures and gives supervisors new tools and powers for managing failing banks while continuing part of their business, i.e. critical functions. The BRRD was conceived out of a need to reduce public funds being used to bail out banks considered 'too big to fail' and strengthen cooperation and coordination between Member States. The first part of this paper sets out how key resolution decisions, including during recovery and resolution planning, are taken for cross-border banking groups within the EU, and within the Single Resolution Mechanism (SRM) of the euro area. It also considers the impact of the BRRD on cooperation with third countries (small host countries). The second part of the paper offers a legal analysis of why no autonomous centralized decision-making powers were delegated to the Single Resolution Board (SRB). It considers whether legal judgements made in 1956 and enshrined as the ' Meroni doctrine' actually prohibit delegation of fully autonomous resolution powers to the SRB and more broadly prevent the creation of a centralized resolution agency for the whole EU. [ABSTRACT FROM AUTHOR]

• The values of parameters of a well-calibrated model are useful in detecting micro behavior. • We illustrate the evolution of banks strategy in response to different economic conditions. • It explores the banks reactions to financial shocks. • The result is an early warning indicator which anticipates phases of instability. In this paper, we show that the values of parameters of a well-calibrated model are useful in detecting micro behavior. We use a calibration procedure suitable for validating agent-based models to show how the evolution of model parameters, obtained via a rolling window estimation, illustrates the evolution of agents' strategies in response to different economic conditions. In this regard, we calibrate the well-known financial model of Brock and Hommes using three banking indices (i.e., the S&P SmallCap 600 Financials Index, the STOXX Europe 600 Banks, and the STOXX Asia/Pacific 600 Banks) running from 1994 to 2016. The choice of a spatially and temporally diversified dataset allows us to analyze differences and similarities in the behavior of banks belonging to the different macro areas, as well as to capture agents' reaction to the several economic phases characterizing the time series investigated. [ABSTRACT FROM AUTHOR]

This paper assesses how various types of financial risk such as credit risk, market risk, and liquidity risk affect banking stability in emerging Europe. It also examines how the quality of supervisory standards may have mitigated the vulnerabilities arising from these risk factors. Using panel data, the paper finds that (1) credit quality is of general concern especially in circumstances where credit growth is accelerating; (2) although higher provisioning could adversely affect profits and returns volatility, good supervisory policies on provisioning mitigate such adverse effects; and (3) highly liquid banks are not necessarily more stable because they might be pursuing activities with more volatile returns, but a well-functioning payments system helps to lower the adverse impact on stability. The paper also corroborates earlier evidence of the positive (negative) effect of financial depth (foreign ownership) on stability. [ABSTRACT FROM AUTHOR]

This paper estimates cost efficiency in the banking industry of 11 Central and Eastern European (CEE) countries over the period 1998–2005 using a quantile regression analysis. Our purpose is to investigate for the first time whether cost efficiency in CEE banks differs across quantiles of the conditional distribution. We employ stochastic frontier analysis across quantiles using the Distribution-Free Approach. The reported evidence demonstrates lower efficiency scores for higher conditional distributions. The paper goes further into a second-stage analysis to investigate how risk, measured by non-performing loans and loans loss provisions, affects bank efficiency across quantiles. This second-stage analysis finds that risk asserts a negative impact on cost efficiency, especially in high-order quantiles. Finally, the paper investigates the relationship between bank-specific ‘z’ variables, such as structural reforms, bank concentration and profitability, and cost efficiency across quantiles. [ABSTRACT FROM AUTHOR]

ABSTRACT This paper presents three process assessments that took place in Luxembourg in 2012. It depicts the TIPA® process assessment framework and reports on its usage in three different partially outsourced contexts: a telecommunication service provider, a European institution, and a bank. Finally, this paper presents the lessons learned from these experimentations and some improvement perspectives. Copyright © 2014 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Contemporary theories of the policy process typically assume that policy responses tend to go through long periods of stasis alternated with occasional bursts of intense activity. The concept of policy punctuations has been put forward to denote large-scale changes in public policies that take place in crisis moments. However, research on the dynamics of policy overreaction and underreaction is still in its infancy. It has mostly focused on either small-n cross-sectional analysis of government spending or case studies of single events. A comparative assessment of the extent of disproportionate responses in a crisis is still lacking. To fill this gap, in this paper we develop a framework to conceptualize, operationalize, and ultimately assess disproportionate policy responses systematically from a cross-sectional perspective. We create a series of indexes to measure policy over- and underreactions among the EU member states that experienced the 2007–2008 banking crisis. We found that a large majority of EU countries overreacted through public liability guarantee and budget commitment. On the other hand, regulatory responses are characterized by a greater variation. [ABSTRACT FROM AUTHOR]

Corporate value statements communicate what a firm aspires for and what drives their value creation. In addition, corporate values often also define which behaviors are acceptable and which are not. Ideally, corporate values are representations of a firm's informal corporate values and organizational culture. However, in practice, there is an inherent tension between the aspirations and actual values and ensuing behaviors of and within a firm—let alone the potentially different interpretations of abstract corporate value statements. In this paper, we set out to provide more clarity on what corporate values are, how they are inherently ambiguous, and how in practice they compare to firm involvement in scandals. For this purpose, we study the corporate values of the 25 largest European banks after the financial crisis. “Integrity” appeared to be the most common value among the 25 banks, followed by “customer focus.” Nonetheless, over the past 6 years, 15 out of the 25 studied banks were involved in one or more scandals. Scandals can be systematic or caused by rogue employees, and benefitting the firm or their customers—in the latter case, providing an interesting interpretation of the customer focus value. Additionally, we found that courage or its synonyms were barely mentioned among banks' corporate values, potentially providing an additional explanation for the fast size of the financial crisis. Finally, we found that banks that had inclusive social principles such as respect, solidarity, and equality did not face large‐scale scandals. [ABSTRACT FROM AUTHOR]

With the institutional setting for the Banking Union having been established and become fully operational, market participants, supervisory staff, and academics are gradually getting to terms with the reality of the new two-tier system of supervisory and resolution authorities within the Eurozone. Drawing from media coverage, input from practitioners and the on-going academic debate, the present article seeks to present an-inevitably provisional-assessment of the new regime from a German perspective. While regulatees and their advisers within the country appear to have got used to the new reality, the paper also identifies a number of residual concerns, some of which are attributable to the specific characteristics of the German financial sector, others indicative of broader problems. [ABSTRACT FROM AUTHOR]

The establishment of centralized supervision by means of the Single Supervisory Mechanism (SSM) had to ensure the quality and impartiality of banking supervision, as well as the establishment of a supervisory system more properly aligned with the characteristics of the banking sector. The far-reaching mixed administration of the European Central Bank (ECB) and national competent authorities (NCAs) must also ensure strong and consistent supervision across the participating member states while using the NCAs' local and specific know-how. All elements indicate that a more effective banking supervision was necessary for the Eurozone. This may be challenging given the conflict between the required centralisation of supervision, on the one hand, and the far-reaching mixed administration and composite legal order in place on the other. The first years of experience with the SSM provide a multi-faceted picture of the effectiveness of centralised supervision. This paper discusses the effectiveness of centralised supervision within the context of a far-reaching mixed administration and legal order on the basis of three different elements. Firstly, the basis of supervision is discussed, i.e. the applicable substantive laws for which compliance must be ensured by the ECB, and which concerns the so-called Single Rulebook. Secondly, the organisation of supervision, in practice, is discussed on the basis of one of its most important features: the Joint Supervisory Teams. Lastly, the delineation of supervisory tasks is discussed, as well as its impact on the ECB and, based on the Dutch example, its impact on national supervisory models. These elements illustrate the many steps that have been taken to improve the effectiveness of centralised supervision. They also show how many obstacles are still left to overcome. [ABSTRACT FROM AUTHOR]

This article examines the administrative remedy provided by the Administrative Board of Review (ABoR) of the European Central Bank (ECB), as part of the broader issue of the right of defence of natural and legal persons vis- à- vis ECB supervisory decisions within the Single Supervisory Mechanism (SSM). After presenting an overview of the review panels established in the financial sector in the EU, the article describes the experience with the ABoR by analysing its composition, its mandate and scope of review, the main procedural aspects and the relationship with judicial proceedings before the European Court of Justice. Particular attention is given to the substantial issues dealt with by the ABoR in its Opinions and to some of the major challenges faced in the first 2 years of practice. Among them is the assessment of the correct application of national laws implementing EU legislation by the ECB. The paper identifies two aspects giving particular cause for concern and requiring legislative reforms: (1) the assessment of the suitability of the members of management bodies (fit and proper assessment) and (2) the inclusion of bank holding companies within the scope of banking supervision. [ABSTRACT FROM AUTHOR]

This paper discusses several key issues regarding the current European economic and financial Great Crisis, which essentially is a twin sovereign debt and banking crisis. The shift of the recent world financial crisis into a European sovereign debt crisis is tackled by analyzing how via the banking system the financial contagion was extended from the US to Europe. The explanation focuses on the imbalances of European Monetary Union (EMU) countries balance-of-payments. The European crisis has shown that it can spread quickly among closely integrated economies, either through the trade channel or the financial channel, or both. In this context, TARGET2 payment system of EMU countries became crucial, reflecting funding stress in the banking systems of crisis-hit European countries. The paper concludes that, in the medium term, a successful crisis resolution requires more political integration, which should include a fiscal union and a banking union. However, in the short run, a prompt recovery is essential to get out of trouble, and this requires that surplus countries (particularly Germany) expand aggregate demand and let domestic wages and the ensuing inflation rate increase. [ABSTRACT FROM AUTHOR]

In this paper, we want to analyse how efficiency evolves in the European Union 28 over the period 2003 - 2012. This period is selected to highlight the evolution before and after the global financial crisis. We used a sample of over 1000 banks with data available for at least ten years and at least three banks for each country. For measuring bank efficiency, we used two of the most popular financial ratios, Return on Average Assets (ROAA) and Return on Average Equity (ROAE). Our results showed that European Union integration can be improved and further reforms could be implemented and bank are affected differently by the international financial crisis. [ABSTRACT FROM AUTHOR]

Sparked by the recent great recession and the role of financial markets, considerable interest exists among researchers within both the academic and public community in measuring and modeling systemic risk. This article introduces a new framework for measuring systemic risk by using a risk-adjusted balance sheet approach. In this regard, the analysis of 21 largest commercial banks operating in 7 countries from Central and Eastern Europe, shows potential risk which could threaten all the financial system. The paper concludes new directions for measuring systemic risk by using Merton model. It shows how risk management tools can be applied in new ways to measure and analyze systemic risk in European banking system. [ABSTRACT FROM AUTHOR]

Fifteen countries from CEE region are analyzed in the paper within the period from 2005 till 2010 with the aim of determining the relation between capital availability and economic growth. Moreover, the analysis uses the correlation and panel regression as main tools for confirming the hypotheses. Furthermore, within the paper financial inclusion and availability of financial services as one of the most important topics within EU are being analyzed. The main focus is on empirically investigated correlation between financial development and faster current and future rates of economic growth, with special focus on physical capital accumulation, and economic efficiency improvements. Finally, there is a link established between the growth of the citizens' wealth and economic development of the country and the availability of bank services and foreign capital inflow as well. Consequently, the obtained results indicate that the effects of world economic crisis influenced the citizen's welfare starting from 2009. [ABSTRACT FROM AUTHOR]

Drawing on a new data set of monthly observations, this paper investigates similarities and differences in the discount rate policy of 12 European countries under the Classical Gold Standard. It asks, in particular, whether the bank rate policy followed different patterns in core and peripheral countries. Based on OLS, ordered probit and pooled estimations of central bank discount rate behaviour, two main findings emerge: firstly, the discount rate decisions of core countries were motivated by a desire to keep the exchange-rate within the gold points. In stark contrast, the discount rate decisions of peripheral countries reflected changes in the domestic cover ratio. The main reason for the difference in behaviour was the limited effectiveness of the discount rate tool for peripheral countries, which resulted in more frequent gold point violations. Consequently, peripheral countries relied on high reserve levels and oriented their discount rate policy towards maintaining the reserve level. Secondly, interest rate decisions were influenced by Berlin and London to a similar degree, suggesting that the European branch of the Classical Gold Standard was less London-centred than had been hitherto assumed. In establishing general patterns of discount rate policy, this paper aims to contribute to the wider discussion on monetary policy under the gold standard and the core-periphery dichotomy. [ABSTRACT FROM AUTHOR]

The aim of this paper is twofold. Firstly, to discuss a clustering of a given set of the European banks into groups based on their performance during 1999-2013. Secondly, to compare different dissimilarity measures and to determine which of them suits best for clustering banking ratios. Six ratios that reveal profitability, efficiency, stability and loan portfolio quality of the banks were used. The similarity/dissimilarity between banks was estimated using measures that are based on time series or functional data properties. Two dissimilarity measures that are not commonly used in the literature are proposed and two measures are extended from univariate into multivariate case. The results of our study show that there is no dissimilarity measure which would provide the best clustering results for all ratios. However, dissimilarity measures based on functional data properties in many cases outperfomed measures based on time series properties. The choice of the number of clusters is not that clear. According to different banking ratios, it is found that banks could be grouped into 6-12 clusters. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this paper is to identify banks' strategies in turning uncertainty into opportunities.Design/methodology/approach – Longitudinal analysis from 1990 until 2009 has been conducted to evidence factors affecting environmental uncertainty in the European banking industry and how banks have perceived and reacted to it.Findings – The paper evidences banks' strategies in situations of low and medium levels of uncertainty and suggests some behavior to face a high level of crisis.Practical implications – The paper defines a general framework, based on banks' perception and reaction to uncertainty, that can help banks to become champions in facing the current level of uncertainty.Originality/value – The paper presents a critical analysis of how to face the enormous increase of uncertainty that the financial sector is experiencing. [ABSTRACT FROM AUTHOR]

Purpose - This paper seeks to contribute to the study of the link between financial intermediation and economic growth in the context of the European Union and particularly in the context of the integration of new member-states. Design/methodology/approach - Panel fixed and dynamic Arellano-Bond estimates (with balanced panels) were used to explain and compare the influence of financial intermediation with the real per-capita GDP growth in two sub-sets of EU countries: the first one takes into account the availability of quarterly data and comprises 11 "old" EU countries, excluding Luxembourg, Denmark, Ireland and Sweden, for the period between Q2 1980 and Q4 1998; the second panel includes 24 EU countries (excluding only Luxembourg) for the period between Q2 1999 and Q4 2002. The existing empirical evidence was enhanced by introducing some financial variables to explain the real per-capita GDP growth, namely, the real domestic credit growth, the real foreign liabilities growth, the real growth of the sum of the bonds and money market instruments, in addition to two ratios: bank assets/bank liabilities and domestic credit/bank deposits. Findings - The results obtained confirm the importance of these variables to th~ real per-capita GDP growth and allow one to draw conclusions on some differences in the behaviour and the level of -integration of the two groups of EU countries. There is a relatively more homogeneous behaviour in the first panel, while the results for the second panel indicate that, in spite of the relative heterogeneity and the differences in their historical evolution, all the countries have had to adapt rapidly to the increasing competition and to the new EU market conditions. Originality/value - The paper confirms the influence of financial systems on output growth, as well as the efforts of financial institutions to adapt to the new conditions of the European and global markets in spite of all the differences in the historical evolution and initial conditions among EU member-states. [ABSTRACT FROM AUTHOR]

One of the most innovative features of Basel III was the introduction of a new 'countercyclical' regulatory dimension for banks. In 2013, this dimension was operationalised in the European prudential framework included in the CRR/CRD IV package. Although the uniform implementation of these rules has been welcomed by the European legislator as creating a level playing field for banks and investment firms, this legal analysis reveals the existence of serious competitive disadvantages for small local and regional banks. While the largest entities are incentivised to exploit the arbitrage opportunities hidden in the CRR/CRD IV countercyclical provisions, such opportunities are not available to smaller entities. Thus, the unintended result of the new prudential framework seems to be not only a re-sizing of the banking balance sheets, but also a re-composition of the banking structures. In this paper, one of the building blocks of the Legal Theory of Finance, i.e., the construction of finance as a legal by-product is taken as a point of departure to show how the adoption of the new countercyclical rules paves the way for a new consolidation wave in the banking industry. [ABSTRACT FROM AUTHOR]

This paper assesses the effectiveness of intervention measures adopted by central authorities during 2005-2012 in CEE. We investigate their impact on bank stability in 15 countries from CEE using bank-level data and OLS estimation method. The bank stability is proxied by the natural logarithm of the Z-Score and the non-performing loans to gross loans ratio. Empirical findings suggest that interest rates cuts, as well as domestic and foreign liquidity injections have a significant impact on bank stability in Emerging Europe. Moreover, their effectiveness differs according to several bank characteristics. Policy measures adopted by CEE countries significantly reduced the stability of domestic banks, but increased the stability of banks with a lower level of capitalization. The impact on the Z-score of banking system liquidity policy measures and the policy interest rates cuts is significantly lower in the case of domestic banks, amplified for less- capitalized banks (except for the category regarding banks' solvency), while their impact on large banks remains statistically insignificant. [ABSTRACT FROM AUTHOR]

What explains regulators’ preferences concerning the Single Supervisory Mechanism (SSM)? The paper answers this question by providing an alternative account of the creation of the SSM using an institutionalist perspective. It is argued that the creation of the SSM does not simply reflect the material interests of governments and domestic financial firms, but that regulators’ positions were also significantly affected by the institutional environment in which they operated. Two characteristics of domestic supervisory governance are identified: the institutional responsibilities of banking regulators (microprudential and/or macroprudential) and the fragmentation of supervisory and monetary policies. The empirical analysis demonstrates the relevance of these factors for shaping regulators’ preferences both within and across countries. [ABSTRACT FROM PUBLISHER]

In this paper we analyze the topological properties of the network of the Euro Area banking market network, with the primary aim of assessing the importance of a bank in the financial system with respect to ownership and control of other credit institutions. The network displays power law distributions in both binary and weighted degree metrics indicating a robust yet fragile structure and a direct link between an increase of control diversification and a rise in the market power. Therefore while in good time the network is seemingly robust, in bad times many banks can simultaneously go into distress. This behavior paves the way for Central bank’s actions. In particular we investigate whether the Single Supervisory Mechanism introduced by the European Central Banks and based on banks’ total asset is a good proxy to quantify their systemic importance. Results indicate that not all the financial institutions with high valued total assets are systemically important but only few of them. Moreover the network structure reveals that control is highly concentrated, with few important shareholders approximately controlling a separate subset of banks. [ABSTRACT FROM AUTHOR]

The project of creating a Banking Union is designed to overcome the fatal link between sovereigns and their banks in the Eurozone. As part of this project, political agreement for a common supervision framework and a common resolution scheme has been reached with difficulty. However, the resolution framework is weak, underfunded and exhibits some serious flaws. Further, Member States' disagreements appear to rule out a federalized deposit insurance scheme, commonly regarded as the necessary third pillar of a successful Banking Union. This paper argues for an organizational and capital structure substitute for these two shortcomings that can minimize the systemic distress costs of the failure of a large financial institution. We borrow from the approach the Federal Deposit Insurance Corporation (FDIC) has devised in the implementation of the "Orderly Liquidation Authority" under the Dodd-Frank Act. The FDIC's experience teaches us three important lessons: First, systemically important financial institutions need to have in their liability structure sufficient unsecured (or otherwise subordinated) term debt so that in the event of bank failure, the conversion of debt into equity will be sufficient to absorb asset losses without impairing deposits and other short term credit; second, the organizational structure of the financial institution needs to permit such a debt conversion without putting core financial constituents through a bankruptcy or other resolution process; and third, a federal funding mechanism deployable at the discretion of the resolution authority must be available to supply liquidity to a reorganizing bank. On these conditions, a viable and realistic Banking Union would be within reach--and the resolution of global financial institutions would be greatly facilitated, not least in a transatlantic perspective. [ABSTRACT FROM AUTHOR]

Throughout the euro crisis, the French government has pushed to invert the rules of the Maastricht Treaty. After the height of the crisis had been overcome, one can see the success of the French government. The European Central Bank (ECB) has assumed a fiscal policy role by its extensive government bond buying, the no bailout clause has been replaced by the permanent European Financial Stability Facility and negotiations over a stronger political union have gained new impetus. This contribution traces the influence of different societal actors on the French government's preferences, which have largely shaped the outcome of the European summits. By following the domestic politics approach, it systematically juxtaposes the support or the discontent of the business community, namely that of the financial industry and the industrial interests, with the electoral pressures by the broad French public. The paper asks whether the economic interests trumped the electoral concerns and shows that the strong ties between the French financial sector with the southern periphery have been a driving factor in the first years of the euro crisis. As public opinion grew more and more disgruntled, it constrained the French government, which in turn changed its substantive position in the negotiations and sought to allot many of the responsibilities to the ECB, to avoid further unpopular financial commitments and bank bailouts. [ABSTRACT FROM AUTHOR]

The regulation of capital adequacy within Europe is complex and has only recently started to become coordinated. This paper will first define the European legislation which controls such national regulation and then specifically analyse the functioning of the Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP) in the largest Western European economies. The specific enforcement regime of the SREP is usually left up to national regulators, and thus the 'main focus' of the SREP in each country will be elucidated with the methodology used in each country explained in "Methodological Focus Areas". The countries examined are: Austria, Belgium, France, Germany, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Spain, Switzerland, and the United Kingdom. Conclusions will then be drawn as to the differences in the approaches, and the efficacy of the regulation and the implications for an integrated international enforcement system will be discussed. [ABSTRACT FROM AUTHOR]

In the past 20 years operational and reputational risk has become more intriguing due to the public scandals of rogue tranding in banks like Barings Bank, Allied Irish Banks, Enron. The purpose of this study is to find the connections between operational risk and reputational risk. Our research shows that there may be a loss of reputation due to operational loss events. Moreover, every type of operational risk, from internal fraud, external fraud, legal and liability losses, processing errors, information security breaches, inappropriate business practice, physical security breaches conduct to a loss of reputation. The limitations of this paper are represented by the fact that do not have enough data to show the real impact of the reputation risk to the financial results of the European Banks. [ABSTRACT FROM AUTHOR]

This study adds to the field of public administration by focusing on the nexus between government decision and bank performance scores highlighting the administrative regulatory dimensions of improvements. To this end, this research paper covers a unique database comprising all listed banks that operate on emerging European markets in the period 2005-2011. Country specific characteristics are presented in the light of public administration quality which includes the dimension of governance quality on the one side, and the quality and administrative burden on business environment on the other. Bank performance is defined under two different approaches (accounting vs. market based) taking into account different stakeholders interest (state and central bank authority vs. investors).We account for profit persistency by using a Prais-Winsten regression that allows for both autocorrelation and heteroskedasticity in data. The results call attention to the fact that in emerging European markets regulatory glitches have a positive impact upon bank performance. Market imperfections are a source of profitability as they generate a reliable supply of market share appropriation and thus monopoly power. Also, administrative commitment towards increasing the quality of public services and policies endorsed by diminishing the level of corruption will accelerate private development and thus banking profitability. [ABSTRACT FROM AUTHOR]

Considering the actual financial crisis, banks and financial institutions are facing more and more complex risks. First of all, apart of these risks is due to their inner structure, depending on humans, processes, information, etc. Second, another important risk category that may arise is due to the outer structure of each financial institution, represented mainly by the turbulent economic environment, with accent on this environment's main actors and structure. Having this complex picture, it becomes harder and harder for the analyst to properly measure and manage the impact of all these kind of risks. For this, the present paper identifies some of the most important categories of risks encountered in such systems and tries to find whether there is a strong relation between the identified categories of risks and banks evolution. Also, in an affirmative case, it shall be investigated if this relation depends also on the banking sector. For this, one of the most used tool from the grey systems theory has been used, namely the GRA (grey relational analysis). A case study was considered for a number of 20 banks from Europe, spread in 4 groups based on the banking sector they belong to. The results were concluding. [ABSTRACT FROM AUTHOR]

Due to the recent wave of bank failures, stress tests have been conducted on banks within the European Union. The stress tests, however, only consider the adequacy of a bank's capital ratios, whereas the general financial performance of individual banks is disregarded. In this paper, we use the Self-Organizing Map (SOM) to perform a visual multidimensional and temporal financial performance analysis of European banks. We address several problems concerning financial performance analysis. We deal with the problem of selecting suitable financial ratios by performing dimensionality reduction using Principal Component Analysis. We also deal with difficult data using outlier trimming and normalization techniques, and use the SOM for imputing missing values. We use a decision-framework for choosing the final model, based upon a set of map and clustering quality measures. In addition, we implement a second-level fuzzified Ward clustering for visualization purposes and for assessing the crispness of the solution. The result is a visual SOM model for financial performance analysis of European banks. [ABSTRACT FROM AUTHOR]

The need for prudential supervision imposed to banks by law arises from the action that banking market's basic factors have. Therefore, it is about banks' role in economy. The normal functioning of banks in all their important duties maintains the stability of banking system. Further, the stability of the entire economy depends on the stability of the banking system. Under conditions of imbalance regarding treasury or liquidity, banks are faced with unmanageable crisis and the consequences can be fatal. To ensure long-term stability of the banking system, supervisory regulations were constituted in order to prevent banks focusing on achieving rapidly high profits and protect the interests of depositors. Starting from this point, this paper will carry out a study on existing models of supervision in the European Union's Member States. A comparison between them will support identifying the advantages and disadvantages of each of them. [ABSTRACT FROM AUTHOR]

The article presents research paper about the methodological inquiry of how to measure the real value of the real output of bank services. It states that the paper shows that the bias of the deflated-balance series differs across types of bank services, countries and over time. Moreover, it notes that the official estimate of European bank output growth is most probably biased relative to that of the U.S.

In this paper we analyse the impact of financial liberalization and reforms on the banking performance in 17 countries from CEE for the period 2004–2008 using a two-stage empirical model that involves estimating bank performance in the first stage and assessing its determinants in the second one. From our analysis it results that banks from CEE countries with higher level of liberalization and openness are able to increase cost efficiency and eventually to offer cheaper services to clients. Banks from non-member EU countries are less cost efficient but experienced much higher total productivity growth level, and large sized banks are much more cost efficient than medium and small banks, while small sized banks show the highest growth in terms of productivity. [ABSTRACT FROM AUTHOR]

The financial crisis has made the need for a more integrated regulatory and supervisory framework for the financial services sector evident. An important step towards this aim is the establishment of the Single Supervisory Mechanism. European leaders have committed to moving toward a banking union, in which bank regulation and supervision, deposit guarantees, and the handling of troubled banks will be integrated across at least the euro area and possibly across the wider European Union. This paper provides an overview of research on this topic. We also identify important future research questions that emerge from both the literature and the current debate. [ABSTRACT FROM AUTHOR]

Abstract: In this paper I study the stock market reaction to the announcement of operational losses in European financial companies. Accounting for the effect of the nominal loss amount allows for an examination of the reputational damage caused by operational loss events. The analysis is based on a sample of 136 operational losses stemming from a database of the Association of German Public Sector Banks (Bundesverband öffentlicher Banken, VÖB). All operational loss events affect European financial institutions with settlements reported by the press between January 2000 and December 2009. In line with previous literature, I find a significant negative stock price reaction to the first press announcement of operational losses. Results show that the stock market also reacts negatively to the settlement announcement as losses are confirmed and the loss amount is known. Even after accounting for the nominal loss amount, cumulative abnormal returns are negative following the date of the initial news article and the settlement date indicating damages to the reputation of the firm suffering the operational loss. Multivariate regression results suggest that reputational damages are rather influenced by firm characteristics than characteristics of the operational loss event: companies with a high ratio of liabilities to total assets suffer more severe damages to reputation from operational losses than companies with more equity. [Copyright &y& Elsevier]

This paper reviews some of the recent studies on international capital flows with a focus on the role of European global banks. It presents a revision to the commonly held "global saving glut" view that East Asian economies (along with oil-rich nations) were the dominant suppliers of capital that fueled the asset price boom in many parts of the world in the early 2000s. It argues that the role of funding costs and a "liberal" regulatory regime that allowed for an unprecedented expansion of the balance sheets of European banks was no less important. Finally, we describe the aftermath of the crisis in terms of some of the challenges faced by Europe as a whole and European banks in particular. [ABSTRACT FROM AUTHOR]

The article discusses the regulatory developments in the banking sector in the European Union (EU). It mentions the decision of EU Commissioner Michel Barnier to appoint members of the High-Level Expert Group on structural aspects of the banking sector and a consultation launched by the EU Commission the general orientation of European company law. It cites the decision of EU Commission to prohibit the proposed merger between Deutsche Börse AG and NYSE Euronext Inc. and a study published by the EU Parliament which tackles the situation of the venture capital industry in the EU. It also notes the discussion paper published by the European Securities and Markets Authority (ESMA) which explains the key concepts of the Alternative Investment Fund Managers (AIFM) Directive.

Asset inflation and deflation triggered by the US housing financial system. This paper deals with the financial crisis triggered after the default of subprime mortgages in the United States which expanded to a global systemic crisis. It is divided into a brief introduction and three sections. The first section sums up the dynamics of inflation and deflation of real estate and financial assets which characterizes financeled cycles. The second section covers major effect of financial assets deflation on the American and European banks. The third section focuses on measures implemented by central banks in order to manage this financial crisis. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to test the influence of the paid premium on the value that bank M&A generate. We performed an event study on abnormal returns and a regression analysis in a sample comprised of mergers and acquisitions undertaken by European banks from 1995 to 2004. The results obtained show a negative influence of the premium on abnormal returns obtained by the stockholders for both the purchaser as well as the organisation resulting from the operation. Moreover, the payment with shares of stock in conjunction with a high premium could be a sign of high overvaluation. [ABSTRACT FROM AUTHOR]

Abstract: The European commission has proposed a new legislation harmonising the payment system in the European Union. The proposed Directive on Payment Services, also known as the New Legal Framework will replace Directive 97/5/EC, Recommendations 87/598/EEC, 88/590/EC, 97/489/EC, Article 8 of Directive 97/7/EC and Article 8 of Directive 2002/65/EC. The proposed directive is intended to help simplify existing EU regulation since it would harmonise in a codified way the core legislation on payment services. It is intended to boost consumer confidence in the modern payment infrastructures, such as electronic payments, and to foster trade. While the proposed Directive has been received positively by the business communities, the Directive has also been assailed as falling short of consumer expectations. The proposed Directive has been further weakened by the introduction of new amendments that reduced the payment provider''s obligation by the European Parliament, after intense lobbying from the powerful banking institutions. The European Council is to decide on the European Parliament''s propositions within the co-decision procedure. The proposed Directive is expected to sail through with little opposition – and a compromise formula reached. This paper analyses the proposed Payment Services Directive. [Copyright &y& Elsevier]

Abstract: This paper measures the degree of concentration and competition in the South Eastern European banking sector, an emerging region that has rarely been investigated, over the period 1998–2002. In the empirical part, we opt for a methodology as proposed by Panzar and Rosse based on a non-structural estimation of the H-statistic for both interest income and total operating revenue. The empirical evidence reveals that the banking industry in the region operates under monopolistic competition. This evidence suggests that there is a non-collusive behaviour among the banks, portraying the existence of a contestable market. In addition, an equilibrium is present in the long run and over the years the market conditions are registering a gradual improvement in terms of competition. [Copyright &y& Elsevier]

A co-ordinated approach to fiscal policy in the euro area is desirable from a political economy standpoint if it protects against the harmful side effects which can arise from member states' fiscal policies. At the same time, however, closer economic co-ordination between national governments is perceived by some as a threat to the independence of the European Central Bank and with it the credibility of its price stability mandate. A variant of the open method, which is known as multilateral surveillance, has been assigned the unenviable task of minimizing the costs of macroeconomic co-ordination, while at the same time delivering the benefits. Whilst the open method poses little threat to the independence of the ECB, its effectiveness is contingent, in the absence of legal obligation and the threat of financial penalties, on the impact of peer pressure and consensus-building mechanisms. This paper assesses the potential of these mechanisms and then draws lessons about the scope and limits of the open method in the light of Portugal's recent breach of the Stability and Growth Pact. [ABSTRACT FROM AUTHOR]

The European Bank for Reconstruction and Development (EBRD) is unique among the set of regional development banks in that non-regional members have substantial influence in decision making. Moreover, two other European institutions have direct influence on decision making in the EBRD's Board of Directors. This paper analyses the relative influence of members of the Board of Directors by applying three measures of a priori voting power - the Banzhaf, Johnston, and Shapley-Shubik power indices. Weighted voting schemes, such as the one used by the EBRD, have very distinct properties that allow for the calculation of indicators of voting power using simple, cooperative games in order to determine how voting weight translates into the ability to affect outcomes. Voting power analysis reveals that the United States and Japan have significant influence over electoral outcomes. Influence is concentrated in a subset of members in large part because of the presence of 'dictators' in the EBRD's voting groups. The results demonstrate that relative voting power often diverges from intended influence due to the way decision rules are structured and because of the use of weighted voting. [ABSTRACT FROM AUTHOR]

Acquisitions and mergers are the growth and expansion strategies that are commonly used by the companies in all over the world because of several reasons such as increasing the profit, sales and market share, entering into new markets, operating with economics of scale, coping with managerial problems and so on. This article underlines the characteristics of mergers and acquisitions (M&A), the different types of M&A, the challenges and opportunities for the banking system in Central and Eastern Europe and we analyze the implications of the recently observed sharp expansion of foreign banks in the Central and Eastern European Countries. [ABSTRACT FROM AUTHOR]