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How does information management and control affect bank stability? Following a national bank holiday in 1933, New York state bank regulators suspended the publication of balance sheets of state-charter banks for two years, whereas the national-charter bank regulator did not. We use this divergence in policies to examine how the suspension of bank-specific information affected depositors. We find that state-charter banks experienced significantly less deposit outflows than national-charter banks in 1933. However, the behavior of bank deposits across both types of banks converged in 1934 after the introduction of federal deposit insurance.

In this paper, we empirically investigate the impact of the COVID-19 pandemic on FX markets. We find important differences between COVID-19 and previous high-risk episodes: the Global Financial Crisis, the Swiss National Bank's removal of the Swiss franc/euro floor, and Brexit. Contrary to these episodes, the USD did not show any safe haven characteristics during the pandemic. Furthermore, the estimated volatility and non-parametric value-at-risk of three currency portfolios indicate that COVID-19 was not as risky as previous stressful events. We provide evidence that investors could minimize COVID-19 risk by investing in the Canadian dollar and the Japanese yen, and by reducing their exposure to European currencies.

Using unique proprietary branch-level lending data obtained from a Chinese national bank, this paper investigates when intra-bank competition intensifies, whether turf wars which arise among parallel credit departments and loan officers shape a bank's lending behavior. Our results show that at both the loan officer level and the credit department level, internal competition is associated with larger loan amounts and loan maturity. These results suggest that employees boost loan volume and establish longer lender-borrower relationships to gain competitive advantages in relative evaluations. We also find that branch presidents with government working experience facilitate the influence of internal competition on aggressive bank lending because they may be more likely to set up tournament incentive schemes for employees. Further results demonstrate that fierce external (inter-bank) competition moderates the association between internal competition and lending behavior.

Most countries in the European Union (EU) delay the transposition of European Commission (EC) directives, which aim at reforming banking supervision, resolution, and deposit insurance. We compile a systematic overview of these delays to investigate if they result from strategic considerations of governments conditional on the state of their financial, regulatory, and political systems. Transposition delays pertaining to the three Banking Union directives differ considerably across the 28 EU members. Bivariate regression analyses suggest that existing national bank regulation and supervision drive delays the most. Political factors are less relevant. These results are qualitatively insensitive to alternative estimation methods and lag structures. Multivariate analyses highlight that well-stocked deposit insurance schemes speed-up the implementation of capital requirements, banking systems with many banks are slower in implementing new bank rescue and resolution rules, and countries with a more intensive sovereign-bank nexus delay the harmonization of EU deposit insurance more.

Following bank failures in 1974, notably in Germany (Bankhaus Herstatt of Cologne on June 16) and the US (Franklin National Bank of New York on October 8), the Central Bank Governors of the G10 countries decided to set up a Committee at the BIS in Basel to improve quality and enhance the effectiveness of banking supervision. The Eurodollar market and the rise of offshore financial centers had concurred to create an increasingly interlinked web of international banking transactions. The system of national supervision of domestic banking system had to be completed by incisive and coordinated action at international level, also to cope with the vulnerability to frauds and interactions with organized crime. The Basel Committee issued in December 1975 the Concordat, which provided a framework for international banking supervision and made a distinction between solvency and liquidity. It was within this emerging frame of reference that the Bank of Italy and the G10 Governors dealt with the crisis of the Banco Ambrosiano Group: the crisis had started in 1977 and was concluded with the formal liquidation on August 6 1982. The measures taken by Governor Ciampi and Treasury Minister Andreatta, the dialectical interactions with the Basel Committee, the G10 Governors (banking supervision and monetary policy) and the IOR in the Vatican City are analized and discussed in this article. In preparing the paper the author could benefit from the extremely competent support of the Historical Archives of the Bank of Italy and the access to documents only recently accessible for public consultation. As is shown, the action undertaken by Governor Ciampi and by the Bank of Italy in the Ambrosiano case contributed to the evolution of banking supervision as regards both the revision of the Concordat and, thereafter, the development of a system of mandatory risk-weighted capital ratios. A parallel lasting lesson is that capital adequacy requirements must be complemented by targeted effective supervisory guidance and oversight of corporate governance for banking firms to prevent, insofar as possible, inappropriate and illegal practices, while ensuring accountability of shareholders and top managers for their wrongdoings.

This study empirically examines the effect of intellectual capital on the financial performance of Ethiopian bank and insurance companies. Specifically, this study examined the effect of VAIC (HCE, SCE, CEE), liquidity, leverage and size on the financial performance of Ethiopian bank and insurance companies. To investigate the effect of such factors, panel data were used from national bank of Ethiopia and from private banks and insurance companies audited annual report. The samples of this study were ten banks and insurance companies covering the period of 2009-2013. To analyze the data, both descriptive and regression analysis were used through STAT version 13, and fixed effect panel data estimation technique is applied based on Hausman specification test results. Furthermore, this study finding suggests that intellectual capital has a positive and significant association with the financial performance of banks and insurance companies in Ethiopia. Subsequently, when the VAIC is segregated in to its three major components, we found that financial performance is positively associated with capital employed efficiency and human capital efficiency, but not with structural capital efficiency. Therefore, many stakeholders such as policy makers, regulators, shareholders, and managers of banks and insurance companies in Ethiopia may use the findings to attach different values to the three components of VAIC.

Between 1909 and 1922 a private deposit insurance company coexisted with the state-sponsored deposit insurance program in Kansas. This paper documents its development using primary sources. In addition, it examines if affiliation with the private deposit insurance (i) had an effect on risk-taking and the probability of failure; (ii) increased confidence among depositors, and (iii) was influenced by a neighboring bank’s membership in the state’s deposit insurance. We find that affiliation with the private deposit insurance did not affect a bank’s likelihood of failure, although smaller national bank members did increase risk-taking. The evidence does not support the hypothesis that the company enhanced depositor confidence. Lastly, we do find strong evidence that a bank’s decision to join the private deposit insurance was influenced by neighboring banks’ affiliation with the Kansas deposit insurance program.

Market definition remains a critical part of most antitrust cases, despite attempts to obviate it. While many commentators have argued that a particular policy change may theoretically broaden or narrow antitrust markets, and thereby affect substantive antitrust enforcement, none has empirically tested the hypothesis. This article does so—albeit crudely—for one class of antitrust cases, mergers. It finds that, in practice and on average, product markets in Clayton Act cases have narrowed since the 1960s and 1970s. This narrowing is not necessarily desirable or undesirable, but it is real. Causes and implications of this narrowing are then explored, including its effect on legal rules like the structural presumption and the rule against out-of-market efficiencies. Two examples from the banking industry illustrate how narrowing can affect substantive antitrust outcomes, with the Department of Justice’s narrower market definition finding greater competitive harm, counting fewer efficiencies, and requiring more divestitures than the Federal Reserve Bank’s broader markets. This divergence suggests that Clayton Act rules are applied in a systematically different way today. As a result, it may be more appropriate to apply these rules—especially the rule against out-of-market efficiencies—to product markets akin in size to those in Philadelphia National Bank and other foundational cases.

We analyze the carbon footprint and emissions of the Swiss National Bank's (SNB) U.S. equity portfolio and compare its carbon performance to those of the world's largest asset manager, BlackRock, and to the Norwegian Government Pension Fund Global (GPFG). The SNB portfolio does as well as BlackRock's but has a significantly worse carbon footprint than the portfolio of GPFG. Few firms are responsible for much of the carbon emissions of the SNB portfolio so that carbon conscious investment approaches have a large impact on portfolio emissions but little impact on performance, diversification, or tracking error. We explore several avenues to reduce the carbon footprint of the SNB's portfolio, while not altering its financial performance. If the SNB excluded the firms with the highest carbon intensity rep- resenting 1% of the portfolio value and reinvested in the companies with the lowest intensity in the same sector, the total financed carbon emissions would be reduced by 22% in 2019, with no impact on the portfolio's financial performance.

In a survey conducted in Rwanda by the Pockets of Effectiveness project, the Central Bank was listed as among the top-performing government organisations in the country. This paper examines the political determinants of the portrayal of the National Bank of Rwanda’s (BNR) achievement of its mandate: promoting price and financial stability. The paper uses the political settlements framework to highlight the political determinants of financial sector reforms in the country. Rwanda’s underlying political economy – and particularly the government’s evolving relationships with domestic capital vis-a-vis foreign capital – has contributing to shaping the Rwandan financial sector’s trajectory. In particular, the Rwandan government has prioritised a strategy of being a financial sector hub, which is based on increased global financial integration and portraying the achievement of ‘best practice’ reforms. These goals have come at the cost of traditional developmentalists goals for central banks, including direct lending for structural transformation. BNR has achieved success in its mandate. However, achieving success in its market-led mandate reduces the policy tools at its disposal to promote structural transformation. The paper argues that reforming BNR along neoliberal lines has mirrored the broader macro-strategy of the country, with the ruling Rwandan Patriotic Front (RPF) choosing to rely increasingly on legitimacy with external actors, rather than supporting the growth of strengthening domestic state– business relationships to support economic transformation.

This paper provides more details on the nature of the equity holdings of the Swiss National Bank (SNB)and estimates its carbon footprint. By analyzing the holdings of the SNB in the 100 most polluting companies in the world, I find that the share of assets owned by the SNB are responsible of between 23% and 38% of the domestic CO2 emissions of Switzerland. This represents as much as the greenhouse gas emissions of all Swiss households combined or 0.05% of global greenhouse gases emissions. Using two different estimation methods, I find that the SNB’s portfolio generates between 13 and 20 million metric tons of CO2 per year. This could be reduced by 99.7% to 0.07 million metric tons of CO2 per year with an investment reallocation of just 2% of the equity portfolio of the SNB.

The Indian government on 30th August 2019 unveiled a plan to merge 10 public sector banks (PSBs) into four, reducing the number of state-owned banks from 18 to 12, in a bid to create “next-generation” financial institutions with stronger balance sheets and bigger risk appetite. Having done two rounds of bank consolidation earlier, this is what Government wants to do for a robust banking system and a $5-trillion economy. Punjab National Bank will take over Oriental Bank of Commerce & United Bank of India to become the country’s largest lender after State Bank of India in terms of business. Canara Bank will subsume Syndicate Bank; Andhra Bank and Corporation Bank will merge with Union Bank of India; and Allahabad Bank will become part of Indian Bank. The key factors for the mergers were: Technological platform, customer reach, cultural similarities, and competitiveness. In 2017, India had 27 PSBs, but the National Democratic Alliance government implemented two rounds of mergers in its previous tenure. One was the merger of five associate banks and Bharatiya Mahila Bank with SBI (from April 2017); second, Dena Bank and Vijaya Bank merged with Bank of Baroda to create the country’s third-biggest lender, which came into effect from April 1 this year. The present paper is based on the study of Public Sector banks total business, deposits and Non-Performing Assets (NPA). The paper also studies the Government’s plan to amalgamate the 10 public sector banks into four large institutions as a part of its attempt to bolster the capital base of these lenders. The paper in the end, studies the impact of PSBs Merger and how customers are likely to be impacted.

This comment letter opposes the adoption of a proposed rule published by the Office of the Comptroller of the Currency (“OCC”) on July 22, 2020. 85 Fed. Reg. 44223 (2020). The proposed rule would determine whether a national bank or federal savings association “makes a loan and is the ‘true lender’ in the context of a partnership between a bank and a third party, such as a marketplace lender.” Id. The proposed rule – to be codified at 12 C.F.R. 7.1031 – would provide that a national bank or federal savings association is deemed to “make” a loan if the institution, “as of the date of origination: (a) Is named as the lender in the loan agreement; or (b) Funds the loan.” Id. at 44228. The proposed rule is designed to operate in combination with the OCC’s recently-adopted “Madden-fix rule.” 85 Fed. Reg. 33530 (2020). Under the Madden-fix rule, a loan that is “made” by a national bank or federal savings association will retain its preemptive immunity from state usury laws under 12 U.S.C. 85 or 1463(g) if the loan is “subsequently sold, assigned, or otherwise transferred” to a nonbank. The proposed rule – in tandem with the Madden-fix rule – would allow a national bank or federal savings association to form “partnerships” with nonbank lenders, including payday lenders and auto title lenders. The two rules would allow a national bank or federal savings association to be treated as the “lender” under 12 U.S.C. 85 or 1463(g) for loans that are originated in its name or that it funds, even if it sells those loans to a nonbank “partner” one day after the loans are originated. 85 Fed. Reg. at 44225. The proposed rule would preempt state “true lender” laws, under which courts apply a substance-over-form analysis and consider several fact-specific issues in determining whether a loan is “made” by a bank as opposed to its nonbank “partner.” The two rules would permit a nonbank “partner” of a national bank or federal savings association to claim preemptive immunity from state usury laws under 12 U.S.C. 85 or 1463(g). The national bank or federal thrift could act as a mere conduit by quickly transferring loans to the nonbank “partner,” which could assume all of the economic risks and control the terms and enforcement of the loans. Such “partnerships” would amount to “rent-a-charter” schemes, which the OCC has barred national banks from entering since the early 2000s. In addition, the proposed rule evidently seeks to preempt a wide range of other state laws – including state licensing, examination, and consumer protection laws – that would otherwise apply to nonbank lenders that establish “partnerships” with national banks or federal savings associations. Thus, the proposed rule’s scope of preemption is not limited to state usury laws and potentially affects a far broader range of state laws. This comment letter argues that the OCC’s proposed rule is unlawful, invalid, and contrary to the public interest for the following reasons: (1) The proposed rule does not comply with 12 U.S.C. 25b, which governs the OCC’s authority to issue rules that seek to preempt state consumer financial laws. (2) The proposed rule unlawfully seeks to override state “true lender” laws without congressional authorization and in contravention of applicable court decisions. (3) The proposed rule is contrary to the public interest because it would allow national banks and federal savings associations to establish “rent-a-charter” schemes with nonbank lenders, thereby encouraging predatory lending and other abusive practices that would inflict very serious injuries on consumers and small businesses. (4) The proposed rule violates the Administrative Procedure Act because the OCC has not provided the required public notice of its intention to reverse the agency’s existing policy banning “rent-a-charter” schemes, as well as the OCC’s factual, legal, and policy reasons for reversing that policy. Accordingly, the OCC may not adopt the proposed rule unless the agency first provides to the public: (A) notice of the OCC’s intention to reverse its existing policy banning “rent-a-charter” schemes and an explanation of the agency’s reasons for doing so, and (B) a reasonable opportunity to submit comments on the OCC’s proposal to reverse that policy and its stated reasons for doing so. This comment letter contends that the OCC should withdraw the proposed rule and should not issue any other rule or order that would (1) override state “true lender” laws, or (2) allow national banks to establish “rent-a-charter” schemes with nonbank lenders.

From September 2011 to January 2015, the Swiss National Bank (SNB) implemented a minimum exchange rate regime (i.e. a one-sided target zone) vis- a-vis the euro to fight deflationary pressures in the aftermath of the Great Financial Crisis. During this period of unconventional monetary policy, the SNB faced mounting criticism from the media and the public on the sizable balance sheet risks that it was incurring. Motivated by this episode, I present a structural model embedded within the target zone framework developed by Krugman (1991) that allows monetary authorities to determine ex-ante the maximum size of foreign exchange market interventions that are expected to be necessary to implement and maintain a one-sided target zone. An empirical application of the proposed model to the aforementioned episode reveals that it is well suited to explain the actual size of these interventions and that, in January 2015, the SNB's euro purchases might indeed have been large without the abandonment of the minimum exchange rate regime, which is consistent with the o fficial statements of the SNB in the aftermath of that episode.

This is a response to the Office of the Comptroller of the Currency's Advance Notice of Proposed Rulemaking for information to help in evaluating the regulatory environment for the digital activities of national banks and federal savings associations. In this comment, we raise concerns relative to consumer protection broadly and specifically as to fair lending and consumer education problems associated with the use of alternative data and machine learning in credit underwriting.

Using unexplored data on Swiss pension funds, we study whether pension funds manage their cash efficiently. While a share of cash is held to meet certain operational and investment needs, the remaining is accumulated from past activity and slowly invested. Most of the variation observed in pension fund cash holdings is, however, attributable to pension fund-specific time-invariant factors rather than to differences in pension funds’ needs. We estimate that pension funds with excessive cash holdings hold an average of 8.4% of total assets in excess cash. Investing this excess cash in a representative portfolio of assets could translate into an additional expected annual return of 30 basis points. Furthermore, we show that pension funds in a deccumulation phase, as well as large pension funds, are more efficient in managing their cash and that the introduction of negative interest rates by the Swiss National Bank triggered a systematic reduction in pension fund cash holdings.

When a currency’s appreciation expectation cannot be offset by lower interest rates which have fallen to the zero lower bound, the monetary authority needs to intervene to prevent currency appreciation due to capital inflows and resulting in foreign reserve accumulation. Based on a standard flexible-price monetary framework, this paper extends a target-zone model in which the intervention policy is incorporated by specifying the asymmetric mean-reverting fundamental dynamics with the smooth-pasting condition at a moving boundary. The solution of the model shows that the exchange rate dynamics is more sensitive to the change in the fundamental when the domestic interest rate is constrained at zero, suggesting more intensive interventions are required to counteract currency appreciation pressure. The empirical results using market data during January 2015 – February 2020 demonstrate that the model can describe the dynamics of the Swiss franc exchange rate following the mean-reverting square-root process. The accumulation of foreign reserves through interventions is negatively co-integrated with the exchange rate volatility and the value of the mean level of the Swiss franc exchange rate in the dynamics, to some extent indicating a reasonably high degree of effectiveness of the Swiss National Bank’s interventions.

Belarusian economy has been stagnating in 2011-2015 after 15 years of a high annual average growth rate. In 2015, after four years of stagnation, the Belarusian economy slid into a recession, its first since 1996, and experienced both cyclical and structural recessions. Since 2015, the Belarusian government and the National Bank of Belarus have been giving economic reforms a good chance thanks to gradual but consistent actions aimed at maintaining macroeconomic stability and economic liberalization. It seems that the economic authorities have sustained more transformation efforts during 2015-2018 than in the previous 24 years since 1991. As the relative welfare level in Belarus is currently 64% compared to the Central and Eastern Europe (CEE) countries average, Belarus needs to build stronger fundaments of sustainable growth by continuing and accelerating the implementation of institutional transformation, primarily by fostering elimination of existing administrative mechanisms of inefficient resource allocation. Based on the experience of the CEE countries’ economic transformation, we highlight five lessons for the purpose of the economic reforms that Belarus still faces today: keeping macroeconomic stability, restructuring and improving the governance of state-owned enterprises, developing the financial market, increasing taxation efficiency, and deepening fiscal decentralization.

National Bank for Agriculture and Rural Development (NABARD) primary function is to touch all aspects of rural economy. Apart from providing financial support to the underserved population of the country, the institution also monitors the functioning and regulation of banks. NABARD have been a boon to millions of rural families across the country.This Paper aims to understand the financial initiatives taken by the NABARD in the rural area.

Long-term inflation expectations are an essential element in the transmission of a central bank’s monetary policy. However, it is not fully understood how these long-term inflation expectations behave, as well as whether and how they can be managed. In this paper, we shed light on possible drivers of long-term inflation expectations of firms using information from the Swiss National Bank (SNB) regional network survey. We extended the standard survey with questions to test whether the long-term inflation expectations of firms can be actively influenced by providing information regarding the central bank’s objective, its past performance and long-term average inflation. We find that this type of information, which we call guidance: a) can influence the long-term inflation expectations of firms to a certain extent; and b) surprisingly, it does not have an impact on the uncertainty surrounding the expectations. However, c) uncertainty itself is positively correlated with the level of inflation expectations, and respondents who are more uncertain place greater weight on the information that they receive. Furthermore, d) short-term inflation expectations; e) the individual characteristics of the firms related to prices; and f) a large unexpected shock, in our case, a large shock to the exchange rate, can help to explain the behaviour of long-term inflation expectations.

This paper investigates firm capital structure decisions in the context of the highly dollarized Cambodian economy. The study makes use of survey data collected in 2014 by the National Bank of Cambodia and JICA Research Institute. Specifically, we focus on estimating the determinants of the ratio of commercial bank loans to total assets under circumstances where bank loans are available only in US dollars. To correct for selection bias in a sample that covers only firms that succeeded in obtaining loans, we apply Heckman’s sample selection model. Our findings on firm hedging behavior in their financing decisions are complicated. Firms with higher returns on assets, and thus stronger capacity to generate internal funds, are more sensitive to currency mismatch risks in relying on US dollar borrowing than firms with lower returns on assets. Development of a local currency loan market would allow Cambodian firms with predominantly local currency revenues to better hedge their currency mismatch risks, leading to greater financial deepening and inclusion and less exposure of financial institutions to systemic risk. Other findings are that collateral and insurance are positively associated with reliance on borrowing, indicating that problems of information asymmetry may need to be overcome in securing loans.

This paper estimates a quarterly Phillips curve for Switzerland, using interpolated data starting in 1963. Since only annual GDP data are available before 1980, the paper first discusses how to interpolate them using a multivariate Chow-Lin procedure and by adapting forecast combination methods. The preferred interpolated series is then used to estimate the Phillips Curve over a 50-year period. The results indicate two structural breaks which appear to coincide with shifts in the Swiss National Bank's monetary policy strategy.

Through textual analysis, the study examines the Indigenous financial reporting compliance of the National Fisheries Corporation of Tuvalu for the years-ending 2007–2014. The results reveal that over the sample period the corporation did not report at all. This is despite the fact that the corporation was under a duty to report through five Indigenous sets of enactments and received a substantial guaranteed loan from the National Bank of Tuvalu to develop its joint ventures with foreign fisheries fleets. There appears little evidence that the corporation has benefitted from technical reporting assistance from foreign experts over a long period of time even though Tuvalu has received substantial monetary and in-kind assistance from foreign donors. The study suggests the use of alternative Indigenous reporting mechanisms to encourage improved reporting by the corporation.

This paper provides empirical evidence for the cyclicality in the job search intensity of unemployed workers using data on job search behavior from the Dutch National Bank Household Survey (DHS), an annual panel survey, for the years 1993 until 2018. I find that job search intensity is counter-cyclical, adding to the mixed results of prior studies that mainly rely on data from the US. This finding is robust to using different measures of search intensity and business cycle indicators. The counter-cyclical pattern seems to be driven by changes in the composition of searchers.

This paper investigates the effect of international swap lines on stock returns using data from banks in emerging markets. The analysis first shows that swap lines by the Swiss National Bank (SNB) had a positive impact on bank stocks in Central and Eastern Europe. It then highlights the importance of individual bank characteristics in identifying the asymmetric effect of swap lines on bank stocks. Bank-level evidence suggests that stock prices of local and less-well capitalized banks as well as banks with high foreign currency exposures and high reliance on short-term funding responded more strongly to SNB swap lines. This new evidence is consistent with the view that swap lines not only enhanced market liquidity but also reduced risks associated with micro-prudential issues.

Self-Help Groups-Bank Linkage Program (SHG-BLP) had expanded significantly and emerged as a dominant model of microfinance in India. National Bank for Agriculture and Rural Development (NABARD) had constituted the teams of acclaimed scientists, technocrats, and practitioners to evaluate the performance and impact of SHG-Bank Linkage Program. These researchers emphasised only physical aspects of the program, and specifically determined the impact of SHG microfinance on the socioeconomic aspect of the rural poor. In this context, the present study aimed at exploring the attitudinal aspect of rural women associated with SHGs. The study consists of a multistage random sample of ‘240’ women SHG members. A well-structured interview schedule, consisting of summated rating attitude scale was administered to the respondents. The findings illustrate that 43.34 percent of the rural women had ‘favourable’ and 26.66 percent had ‘strongly favourable’ attitude towards SHGs. The factor analysis using the principal component method brought forward ‘coping up ability’, ‘personality traits’, ‘resource utilisation and building’, ‘entrepreneurial attributes’, ‘organizational governance’, ‘financial inclusion’ and ‘economic upliftment’ are the precursors of attitude. These seven components could explain 76.02 percent of the total variance in the attitude. Further, study suggests that policy makers, financial institutions and technocrats may consider these seven factors while planning, promoting, implementing, and evaluating any microfinance programme, especially in developing countries. The study also provides a valid and reliable instrument for measuring the attitude of rural women towards SHGs. This Likert-type attitude scale could be widely used in future researches, especially by the scholars from low-income countries for achieving more accurate and reliable results.

This paper analyses the effects of Swiss National Bank (SNB) communication on asset prices. It distinguishes between different monetary policy news contained in press releases following a monetary policy decision. Employing a latent variable approach and event-study methods, I find that medium- and long-term bond yields respond to changes in the communicated inflation and GDP forecasts as well as to the degree of pessimism expressed in press releases. Exchange rates mainly react to changes in the GDP forecast while stocks do not react to SNB communication on monetary policy announcement days. Additionally, short-term expectations about the future path of the policy rate are driven by the communicated inflation forecast. The results underline the role of qualitative news beyond quantitative forecasts in influencing market expectations and asset prices.

This paper investigates the effect of international swap lines on stock returns using data from banks in emerging markets. The analysis first shows that swap lines by the Swiss National Bank (SNB) had a positive impact on bank stocks in Central and Eastern Europe. It then highlights the importance of individual bank characteristics in identifying the asymmetric effect of swap lines on bank stocks. Bank-level evidence suggests that stock prices of local and less-well capitalized banks as well as banks with high foreign currency exposures and high reliance on short-term funding responded more strongly to SNB swap lines. This new evidence is consistent with the view that swap lines not only enhanced market liquidity but also reduced risks associated with micro-prudential issues.

The number and value of mergers and acquisitions (M&As) continue to grow, with record increases in the U.S. and Asia Pacific in 2015. Yet, despite calls from academic literature for more consideration of the human and behavioral factors in such massive change, there remains an inordinate focus on the financial or quantitative aspects. We connect the newer streams of research with efficiency and growth imperatives via an illustrative analysis of ANZ New Zealand's horizontal merger with The National Bank of New Zealand. ANZ successfully completed a brand and technology merger by prioritizing the customer, addressing employees’ socioeconomic concerns, providing enough time and resources to ensure efficiencies, and rebranding enriched customer services and revenues. The results were overwhelmingly positive and provide a useful template for how M&As should be executed in the future using a people-first approach.

Professor William Baude's recent article Constitutional Liquidation outlines a theory of non-judicial precedent, by which indeterminate constitutional meaning can be liquidated clarified and settled - through a course of deliberate practice by non-judicial public officials. While offering a promising start, Baude must still address several important questions, omitted from his article, to develop the theory into something viable. What do we make of precedents that don't explain their own constitutional justification? How do reliance interests factor into the theory? Can judicial precedents form part of a liquidation, and are they necessary to clarify constitutional meaning? How binding are liquidations? And why object to liquidations that override prior judicial interpretations of constitutional language that, by stipulation, is indeterminate? It is essential for Baude to identify more and better examples: the national Bank controversy, relied on by Baude, raises more questions about liquidation theory than it answers.

This paper explains the role of managerial talent in creating value for the shareholders. It is based on the assumption that markets are imperfect therefore one manager performance is different from another manager’s performance in terms of philosophy, style and reputation. Using a panel data of six major banks in Kenya from the year 2006 to 2015 a managerial fixed effect regression model is applied to determine how well managers of the banks were at generating returns for their shareholders. The result indicate that managerial performance as a latent variable can be isolated by regressing dividends paid per share on current earnings per share and prior dividends paid. Out of the six banks, Standard chartered bank managers outperformed other managers by paying significantly higher dividends than what all the rest paid on average. Conversely National bank managers paid significantly lower dividends per share compared to what the peers paid. Therefore investors seeking stable and higher dividends are advised to hire talented managers because their performance is above average. Prior dividends and current earnings are positively and strongly related to dividend policy of major banking institutions in Kenya.

The functioning of the commercial banking system plays an important role in the development of the state under the transformed economy. Also, the economic growth rate of the country stands for the stability of the banking sector. The problems of commercial banks and other subjects of financial sector are instantaneously affecting other areas of economy. The modern Georgian banking system was founded after the collapse of the USSR and the independence of the country. By 1995 the number of banks was more than 100 that was reduced to 16 in 2017. At present, the National Bank of Georgia is supervising the financial sector, which is obliged to analyze and elaborate policies to reduce risks and stability to the minimum. The purpose of the work is to study new banking regulations in Georgia, which entered into force from January 1, 2019 and radically changed the existing lending policy. The article analyzes the regulatory situation as a bank, as well as for business sector and consumers. The work is based on both qualitative as well as quantitative methods of research, in particular analyzing official documents and legal documents and statistical data to make clear the distinction between before and after the regulation period. The recommendations developed based on the results of the research have a practical purpose that can be used when developing various state documents for the regulation of the financial sector.

Just over three years after enacting a Minimum Exchange Rate policy for the Swiss Franc vs. Euro (EUR/CHF), the Swiss National Bank (SNB) removed it in a surprise announcement on January 15, 2015. The announcement shocked the FX market — EUR/CHF dropped 25.5 percent in the minutes that followed the press release. The JPMorgan Chase Institute leveraged a data asset of 395 million de-identified transactions executed by over 44,000 institutional investors to measure hedge fund net flows in EUR/CHF spot and forward transactions during the SNB’s Minimum Exchange Rate policy period. Our analysis uncovers two key findings related to hedge fund trading in EUR/CHF during the Minimum Exchange Rate policy period. First, we observe that after hedge funds executed the long EUR/CHF strategy, they then sold EUR/CHF in the days immediately preceding the next regularly scheduled SNB announcement, reducing their potential losses if the Minimum Exchange Rate policy was removed at that meeting. Second, hedge fund's confidence in the persistence of the SNB's Minimum Exchange Rate policy appears to have peaked in the four weeks before the policy was removed. Taken together, our findings have implications for central banks as they consider how their choices with respect to communicating policy changes might impact financial market stability. When choosing the most appropriate method to communicate policy changes, policymakers can use our results to help weigh market expectations with respect to both the timing of announcements and the policy outcomes in the context of the central bank's desired market impacts.

Under the Standards for Appellate Conduct, Texas attorneys are admonished not to attribute to opposing counsel a position not taken. See Lawyers' Duties to Lawyers, ¶9. (“Counsel will neither ascribe to another counsel or party a position that counsel or the party has not taken.”). But what if an appellate justice does this herself? -- Imputes upon a represented appellant a position not taken, and then knocks it down and resolves the appeal against that party? Or puts her stamp of approval on her law clerk’s strawman-whacking handiwork? Is that a violation of professional standards, given that both the authoring justice and the law clerk are Texas attorneys? Is it merely a matter of setting a bad example? Or does it, perhaps, establish a new precedent for the legitimate use of strawman-type reasoning as a justificatory stratagem in the disposition of appeals, in which the higher court must render an opinion explaining the reasons for its decision? Rather than venturing an answer at this point of the appellate game, this commentator urges by way of amicus letter brief that Kem Thompson Frost, Chief Justice of the Court of Appeals for the 14th Appellate District of Texas, revisit her panel’s opinion, and reconsider the rationale belabored to affirm the judgment for American Express Bank, FSB, a federal savings bank that incidentally no longer even exists, as it has been merged into American Express National Bank. Case cite: SAMEERA ARSHAD and ALMORFA, LLC, v. AMERICAN EXPRESS BANK, FSB, No. 14-17-00676-CV (Tex.App.-Houston [14th Dist.] July 25, 2019, no pet. h.).

Using unique data at transaction and counterparty identity level, we study the microstructure of the Swiss franc FX over‑the‑counter (OTC) derivatives market during a time of stress that was triggered by the decision of the Swiss National Bank (SNB) to remove the Swiss franc‑euro exchange rate floor on 15 January 2015. Building on new methodology based on the topology of the trading network we segment the market into a multi‑layered structure. We observe that the SNB announcement had a clear and differentiate impact on the market from this perspective. Clients in a more central position in the network topology were able to enter the market sooner than peripheral counterparties, while the inter‑dealer core of the market was largely inactive. Using outstanding positions to proxy demand we observe that clients in greater need of trading were offered unfavourable prices if they found liquidity. Overall, our results point to a shortage of liquidity in the phase of market adjustment and highlight the heterogeneous reactions of different market segments during that time.

We study the economic consequences of mandates that require bank auditors to report to bank regulators. Based on survey responses from the European Central Bank and all 28 national bank regulators within the European Union and a review of national banking regulations, we create a novel dataset on these mandates. Exploiting the cross-sectional and time-series variation in these mandates, we find evidence that auditor reporting to bank regulators reduces bank riskiness, as measured by counterparty risk and credit spreads. We also observe a decline in problem loans and risk-weighted assets, as well as improvements in timeliness of loan loss provisions. Additional analyses suggest that mandated auditor reporting increases the effectiveness of supervisory and monitoring efforts and improves market discipline of banks. However, mandated auditor reporting comes with costs: it reduces future lending growth, risky lending, and profitability, and increases audit fees paid by shareholders.

The paper builds a structural macroeconometric model for Kazakhstan to generate short-term and medium-term forecasts for main macroeconomic variables and conduct scenario analyses based on dynamic simulation of the model. Due to the poor quality of quarterly data on GDP and its expenditure components, they have been adjusted using volume indexes. The model consists of aggregate supply, aggregate demand, labor market, asset market, the central bank policy and government side equations. Most equations are estimated via econometric techniques and identities are explicitly introduced in line with economic theory. We combine all the regression equations into a single model and solve for the baseline scenario from 2003 to 2017. The simulation results show that the structural macroeconometric model approximates Kazakhstani economy reasonably well. Ex-ante forecasts under oil prices remaining around 50 and 60 US dollars per barrel are generated and compared with the baseline forecast of the National Bank of the Republic of Kazakhstan.

We live in an era when Modern Monetary Theory has gained purchase. Deficits do not seem to matter to nations or their finance ministers. States believe the can print their way to utopia without a reckoning; this is a scheme freighted with disaster. This article centers on the achievements of America’s greatest finance minister whose grasp of political economy was without equal. Hamilton charted the course for American economic power. His work is timely and worthy of study. Late-18th century America sought commercial growth and new manufacturers yet feared monopolistic economic power. Hamilton’s economic program, centered on a national bank and program for manufacturing, provided the framework for the finance-led transformation of America. In a short time, Hamilton’s elegant solutions (based upon the English financial model) transformed America from a defaulting debtor to a magnet that attracted immense amounts of capital in the 19th century. The burden of the Revolutionary War debt needed to be resolved. Hamilton’s program: the assumption of the states and Confederation debt, its monetization, the establishment of the Bank of the United States, and Report on Manufactures laid the foundation for a vibrant economy. The article demonstrates how Hamilton’s prudent program strengthened the new federal government while providing the blueprint for the commercial society that emerged in the 19th century.

Understanding the effects and transmission of international spillovers is key to ensuring that the best possible decisions are reached by central banks – particularly those of small open economies. This paper analyses the impact of international spillovers on Swiss inflation and the exchange rate, and examines the response of the Swiss National Bank (SNB) to these phenomena. In doing so, the paper compares the recent crisis period starting in mid-2008 with earlier decades. While the exchange rate absorbed a sizeable share of global inflationary pressure before the crisis, spillover effects transmitted through the exchange rate have been the principal cause of the significant decline in Swiss inflation since 2008. The SNB has therefore repeatedly adjusted its monetary policy – and resorted to some unconventional measures – in order to contain these spillover effects. These actions have so far kept the adverse effects of international spillovers on Swiss inflation at bay. However, as Switzerland's experience since the onset of the financial crisis shows, controlling inflation may occasionally become more difficult for small open economies.

In January 2015, in the face of sustained capital inflows, the Swiss National Bank abandoned the floor for the Swiss Franc against the Euro, a decision which led to the appreciation of the Swiss Franc. The objective of this paper is to present a simple numerical framework that helps to better understand the timing of this episode, which we label a “reverse speculative attack”. We model a central bank which wishes to maintain a peg, and responds to increases in demand for domestic currency by expanding its balance sheet. In contrast to the classic speculative attacks, which are triggered by the depletion of foreign assets, reverse attacks are triggered by the concern of future balance sheet losses. Our key result is that the interaction between the desire to maintain the peg and the concern about future losses, can lead the central bank to first accumulate a large amount of reserves, and then to abandon the peg, just as we have observed in the Swiss case.

Krugman (1991)'s target zone model for exchange rate dynamics has become the reference of a large part of this literature. Despite its simplicity and elegance, empirical evidence has been lacking, not least because it is difficult to capture the predicted non-linear relationship between the observable exchange rate and the non-observable fundamental value. This is why we propose a different approach. By inverting locally the relation between exchange rate and fundamental value, we derive analytical expressions for the conditional volatility and the probability density as a function of the exchange rate. This allows us to examine Krugman's prediction directly from historical data, and, furthermore, enables us to test the smooth pasting condition, which is intimately related to the no-arbitrage condition. Concretely, we study the performance of the euro/Swiss franc exchange rate in the extraordinary period from September 6, 2011 to January 15, 2015, when the Swiss National Bank enforced a minimum exchange rate of 1.20 Swiss francs per euro. We show that the data are well explained by the theory and conclude that Krugman's target zone model holds after all, but apparently only under extreme and sustained pressure that pushes continuously the exchange rate very close to the boundary of the target zone.

After the American Civil War, market observers attributed increases in interest rates around quarterly reporting dates to window dressing by national banks. Window dressing is a temporary change in portfolio designed to produce a more appealing report to regulators or to the public. This paper tests for increases in interest rates at quarter end under a natural experiment, a change in the reporting law. Using daily data on the call loan interest rate in New York City, we find no evidence of systematic increases in the call loan rate just before the quarterly reporting dates of national banks.

In this paper, we employ a Dynamic Factor Model (DFM) to nowcast Czech GDP. Using multiple vintages of historical data and taking into account the publication lags of various monthly indicators, we evaluate the real-time performance of the DFM over the 2005–2012 period. The main result of this paper is that the accuracy of model-based nowcasts is comparable to that of the nowcasts of the Czech National Bank (CNB). Moreover, combining the DFM and the CNB nowcasts results in more accurate performance than in the case of the individual nowcasts alone. Our results also suggest that foreign variables are crucial for the accuracy of the model, while omitting financial and confidence indicators does not worsen the nowcasting performance.

This paper analyzes the effects of Swiss National Bank communication on stock investors’ uncertainty. Monetary policy news is identified via changes in short- and medium-term futures prices as well as by applying methods from computational linguistics and dictionary approaches to policy statements. Surprises in policy rate changes and regarding the future path of the policy rate exhibit an asymmetric effect on stock investors’ uncertainty. Moreover, by taking into account various topics addressed in the statements, I show that investors’ uncertainty decreases due to an optimistic tone in communications about economic growth. Increased uncertainty expressed in policy statements translate into increasing stock investors’ uncertainty. The results explain how news contained in monetary policy statements reduce noise in financial markets and therefore contribute to financial stability.

Ethiopian non-life insurance gross premium for the past 10 years has grown on average of 20.74% that doubles the economic growth of the country. Although the sector growth is rapid, penetration rate and density of insurance industry are at very low stage. In 2013/2014, Ethiopian insurance industry’s non life insurance premium penetration rate is below 1% and density is 52.00. The objective of this study is to identify and analyze the factors contributing for the growth of non life insurance gross premium. The study is done based on quantitative secondary data collected from National bank of Ethiopia, Ministry of Finance and Economics, Ministry of Trade and Industry, Central Statics Authority, World Bank and other source. The study used 10 years data from the period 2004/2005 to 2013/2014; it accommodates all insurance company in the study from the date of establishment to the current status. This study used correlation as a method of data analysis; a deductive approach is adopted by constructing an empirical model and hypothesizing its collinear relationship between the factor variables. The factors contributing for the growth of non life insurance gross premium are GDP, Investment Capital, Number of insurance Company, capital of insurance, Branch size of insurance company, Age of insurance company and Government policy. The finding shows that most factors have strong correlation to non life insurance gross premium. Government needs to promote the insurance sector as it is contributing for the economic growth, capital formation and employment generation.

Following the 2008-9 financial crisis, large banks increasingly issued contingent convertible bonds (CoCo bonds) to increase their capital buffers – a policy supported by national bank regulators. This paper examines whether the issuance of CoCo bonds provides the same reduction in bank default risk as the corresponding issuance of common equity by analyzing the premium reduction in (single name) credit default swaps (CDS) around the corresponding issuance announcement events. We find that the default risk reduction associated with issuance crucially depends on the CoCo bond’s design features: Only CoCo bond designs with permanent write-down features provide a default risk reduction similar to equity. CoCo bonds with equity conversion features come with a lower subsequent volatility of the bank asset value, but are inferior to equity in terms of their default risk reduction.

The research area of the survey is the balance sheet items of the Bulgarian National Bank (BNB), and the subject - the convergent aspects of the BNB balance sheet items for the period 01.2006 to 03.2018. The purpose of the survey is to identify under the currency board conditions as well as the dynamics, trend and risk parameters of the BNB balance sheet items, focusing on the currency risk of USD-denominated balance sheet positions and the correlation of these positions with the GDP of Bulgaria. Therefor a special focus is placed on currency risk in USD-denominated balance sheet items. The thesis tests the existence of a direct link between dynamics in the BNB balance sheet positions and the growth of GDP, taking into account force majeure factors.

This paper estimates the determinants of financial literacy for school children and also evaluate the effectiveness of the SchoolBank project. SchoolBank is a standard educational module developed by National Bank of Georgia (NBG) in collaboration with Child and Youth Finance International (CYFI). The empirical results show that neither gender and grade nor the geographical location of the school and the source of income do not significantly affect the initial level of financial literacy of selected school children. But a positive interdependence between having a bank deposit and financial literacy is captured. Another contribution of the paper is to evaluate the effectiveness of the SchoolBank project. The study shows the overall improvement of financial literacy among selected school children. Furthermore, we observe that such an improvement of financial literacy is mostly driven by a significant increase of financial knowledge and attitudes, while the effect on financial behavior is very limited.

This case illustrates how exchange rate shocks affect international businesses. The focus is on one recent stark example: the effect on Swatch Group of the Swiss National Bank's January 2015 decision to end its policy of putting a ceiling on the euro/Swiss franc exchange rate. It is useful for an introductory class that defines different exchange rate concepts, illustrates why managers should care about exchange rates, and motivates/previews the study of the macroeconomics of exchange rates, capital flows, and monetary policy. This case is appropriate for use in a first-year MBA course that deals with international economics or finance, though it is written to be standalone and thus could also be employed in an advanced undergraduate or master's level course on international macroeconomics or finance. Excerpt UVA-GEM-0167 Oct. 29, 2018 Swatch Group and Francogeddon “The Swiss National Bank has decided to discontinue the minimum exchange rate of CHF 1.20 per euro with immediate effect and to cease foreign currency purchases associated with enforcing it.” Thomas Jordan, Chairman, Swiss National Bank With that one sentence uttered on a cold Zurich day in early 2015, Thomas Jordan ended the Swiss National Bank (SNB) policy to hold the Swiss franc (CHF) down against the euro (EUR). The policy, which had been in place since September 2011, had SNB purchasing foreign currency in exchange for the Swiss franc in order to maintain a floor of CHF1.2 per euro (or, equivalently, a ceiling of EUR0.83 per franc). Within a week of removing this policy, the franc appreciated over 20% and the stock price of Swatch Group, a Swiss watch manufacturer and exporter, fell by over 20% (Figure 1). Swatch CEO Nick Hayek Jr. proclaimed, “Words fail me! Jordan is not only the name of the SNB president, but also of a river and today's SNB action is a tsunami; for the export industry and for tourism, and finally for the entire country.” . . .

This study investigates the evolution of central bank profits as fiscal revenue (or: seigniorage) before and in the aftermath of the global financial crisis of 2008–9, focusing on a select group of central banks—namely the Bank of England, the United States Federal Reserve System, the Bank of Japan, the Swiss National Bank, the European Central Bank, and the Eurosystem (specifically Deutsche Bundesbank, Banca d’Italia, and Banco de Espana)—and the impact of experimental monetary policies on central bank profits, profit distributions, and financial buffers, and the outlook for these measures going forward as monetary policies are seeing their gradual “normalization.” Seigniorage exposes the connections between currency issuance and public finances, and between monetary and fiscal policies. Central banks’ financial independence rests on seigniorage, and in normal times seigniorage largely derives from the note issue supplemented by “own” resources. Essentially, the central bank’s income-earning assets represent fiscal wealth, a national treasure hoard that supports its central banking functionality. This analysis sheds new light on the interdependencies between monetary and fiscal policies. Just as the size and composition of central bank balance sheets experienced huge changes in the context of experimental monetary policies, this study’s findings also indicate significant changes regarding central banks’ profits, profit distributions, and financial buffers in the aftermath of the crisis, with considerable cross-country variation.