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We analyze the effect of subsidies on firm R&D, conditional on firms' access to external financing during the financial crisis when access to external financing was particularly difficult. Specifically, we determine whether subsidies can mitigate or completely offset the effect of external financing constraints of firms or banks. Financial constraints are considered through (i) firms' credit ratings, and (ii) the capital reserves of their banks. Subsidies were found to help maintain R&D investments during the crisis, especially when financial constraints were present. After the crisis, the subsidized firms reached the level of R&D spending they had prior to the crisis. [ABSTRACT FROM AUTHOR]

Protected areas form the backbone of global conservation efforts. Vegetation is the primary foundation for achieving conservation goals, and soil seed banks is a cryptic biodiversity reservoir for recruiting species that may not be represented in above‐ground vegetation. Unfortunately, unmanaged grazing by wild herbivores has led to vegetation degradation in semi‐arid to arid regions. However, experimental evidence on the long‐term impacts of wild herbivores on soil seed banks is largely lacking. Here, with the aim of examining how wild herbivores impact soil seed banks, we investigated the composition of the germinable seed banks in three protected areas (Yathong, Mungo and Boolcoomatta) along a semi‐arid to arid precipitation gradient in south‐eastern Australia. The density and species richness of the soil seed banks increased with increasing aridity, which indicated that the soil seed banks in arid regions is an important biodiversity reservoir. The effects of wild herbivores on soil seed density were strongly dependent on precipitation. Wild herbivores disrupted the soil seed banks at the most arid site but promoted the accumulation of seeds in the soil at the least arid site. Grazing was linked to an increase in the frequency of the seeds of introduced species and decrease in the frequency of the seeds of perennials. Synthesis and applications: Disruption of the soil seed banks by the grazing of wild herbivores could lead to the failure of post‐rain pulses of vegetation growth and hamper efforts to restore vegetation in protected areas. Therefore, suppressing wild herbivore numbers is a strategy that could enhance soil seed bank reserves and revegetation efforts in arid protected areas. [ABSTRACT FROM AUTHOR]

Small finance banks (SFBs) are a special category of banks incepted by the Reserve Bank of India in 2015 to cater to the financial needs of the underserved population of the country with the aim of financial inclusion. They serve the priority sector and the unorganised sector of the country. This article analyses and evaluates the performance of these banks on the basis of various financial parameters such as capital adequacy, asset management, management quality, earning quality and liquidity derived from the CAMEL framework. Following a robust evaluation methodology, namely data envelopment analysis (DEA), a sample of all the SFBs operating in India to date is taken. As per the composite rating of CAMEL, results show that the majority of SFBs exhibit satisfactory performance. Utkarsh SFB Limited is ranked at the first position and is followed by Fincare SFB Limited on the second position. Jana SFB Limited stands at the last position amongst all the banks, preceded by ESAF SFB Limited. The results of DEA show average inefficiency among SFBs. The calculated efficiency scores of SFBs highlight that Capital SFB, Fincare SFB, Jana SFB, Shivalik SFB and Utkarsh SFB are the most efficient banks, with a technical efficiency score of 1. ESAF SFB has the lowest efficiency score. Scale inefficiency is the major reason for inefficiency. The study provides valuable insights to the authorities, managers and investors about the performance of these banks and gives them a future vision of the sustenance of these banks. [ABSTRACT FROM AUTHOR]

We analyze the role of retail central bank digital currency (CBDC) and reserves when banks exert deposit market power and liquidity transformation entails externalities. Optimal monetary architecture minimizes the social costs of liquidity provision, and optimal monetary policy follows modified Friedman rules. Interest rates on reserves and CBDC should differ. Calibrations robustly suggest that CBDC provides liquidity more efficiently than deposits unless the central bank must refinance banks and this is very costly. Accordingly, the optimal share of CBDC in payments tends to exceed that of deposits. [ABSTRACT FROM AUTHOR]

It is widely assumed that the renminbi (RMB) cannot acquire a meaningful place in central bank reserve portfolios without full liberalization of China's capital account. We argue that the RMB can in fact develop into an international reserve currency in the absence of capital‐account convertibility. Trade and investment links can drive use despite limited access to Chinese financial markets. But this route to currency internationalization requires policy support. China must provide access to RMB through loans and the People's Bank of China (PBoC) currency swaps. It must ensure the convertibility of RMB into US dollars in offshore markets. It must provide RMB services at a stable and predictable price. Currency internationalization without full capital‐account liberalization thus requires the RMB to be backed by dollar reserves, which the PBoC consequently will continue to hold and use. Hence, we do not foresee RMB internationalization as supplanting dollar dominance. [ABSTRACT FROM AUTHOR]

Several policymakers and academic works have been discussing the nature of Central Bank Digital Currency (CBDC) as well as its debated relationship with crypto-assets. CBDC would allow the private (non-financial) sector to access the central bank’s reserves. Given its superior hierarchy in the money spectrum, CBDC adoption could trigger a strong or mild conversion from deposits, depending on its design, with strong impacts on the assets and liabilities composition and magnitude of different actors. The aim of this paper is to study the dynamics related to the transmigration process from deposits to CBDC as well as the process of money creation through a detailed step-by-step analysis, tracking the transactions between the institutions involved in its adoption. It underlines the validity of the endogenous money theory (EMT) in describing those transactions while clarifying the maintenance of the commercial banks’ vital role in the process of money creation, in a world with the emergence of CBDC. [ABSTRACT FROM AUTHOR]

The Federal Reserve is currently in the process of reducing the size of its balance sheet. Major questions, especially in light of the surprising impact of its 2019 reductions, are what its ultimate size will be. Many factors will play into that, including the interaction of bank capital and liquidity requirements with the size of reserves and the impact on the ability of the private market to absorb Treasury debt issuance, the willingness of banks to regularly use the discount window and other market participants to borrow at the standing repo facility, as well as the ongoing risk that a large Fed balance sheet can generate large losses to the System. [ABSTRACT FROM AUTHOR]

We study the Ricardian Equivalence Theorem in the presence of a reserve requirement. Banks pay depositors the deposit rate and receive the borrowing rate on loans. Equivalence fails because the reserve requirement drives a wedge between the deposit and borrowing rates implying that government faces a different intertemporal tradeoff than savers. A tax cut financed by an increase in government debt causes an increase in savings but only increases the supply of loanable funds by a fraction because of the reserve requirement. This causes interest rates to rise and consumption to fall. We also show that if the central bank pays interest on reserves at the borrowing rate, the various rates are equal, however, equivalence still fails. The reason is that future taxes to pay down the debt must be higher for the central bank to pay interest and consumption will fall in response. [ABSTRACT FROM AUTHOR]

There is no gainsaying the fact that the money market is one of the most important components of the banking institution. This article proposes viable Islamic money market instruments from the experience of Malaysia and Nigeria for the nascent Islamic banking institution in the Republic of Benin. The money market is the mechanism for the management of the required liquid asset and statutory reserves in the banking system. It serves the purpose of the maintenance of minimum liquidity ratio and statutory reserve that represents the daily requirement of the banking institution. It is how the Central Bank passes monetary policies to the subordinate banks. The role of the money market in the banking system as a keeper of liquid assets rate it above other branches of the financial market. The proposal is derived from the experience of Malaysia, which is a leading Islamic banking jurisdiction, and Nigeria, which is a relatively new African Islamic finance regime. The study adopts a qualitative method. [ABSTRACT FROM AUTHOR]

Exactly what form the money of the future will take remains an open question. Central bank digital currencies (CBDCs), tokenised deposits and stablecoins have been discussed as potential candidates. This paper argues that reserve-backed tokens (RBTs) — backed solely and fully by central bank reserves — also represent a credible solution. RBTs pose a unique combination of benefits. Notably, they are safer than, and can crowd out, the unstable breeds of stablecoins. They can adopt a more flexible design than retail CBDCs and thus foster greater competition and innovation. Furthermore, compared with bank deposits, RBTs are immune to runs and are unencumbered by legacy features. Naturally, there are attendant risks and unknowns, but this paper argues that careful design and gradual rollout would help harness the benefits of RBT while mitigating the risks. [ABSTRACT FROM AUTHOR]

The Journal of Payments Strategy & Systems has published an editorial that highlights several papers on relevant developments in the payments industry. One paper discusses the impact of US and EU sanctions on Russia and the alternative methods India is exploring to transact with Russian entities. Another paper explores how multilateral platforms based on distributed ledger technology (DLT) can improve cross-border payments. Additionally, there are papers on reserve-backed tokens, participants' data in ISO 20022 messages, declined card payments, and the design of central bank digital currencies (CBDCs) to combat money laundering. The editorial also includes announcements for country reports, book reviews, and a call for papers. [Extracted from the article]

Purpose: Bank lending is the major source of monetary expansion. Bank-led money creation is a key issue in both conventional and Islamic financial systems. The purpose of this paper is to examine the issues related to Islamic banking money creation. In this conceptual paper, the authors investigate the involvement of profit and loss sharing (PLS) in money creation and especially how can PLS limit money creation "out of nothing." In this regard, the authors examine the potential of the PLS principle in tackling the excessive money creation phenomenon. Design/methodology/approach: This study uses a normative approach regarding Islamic bank money creation that fits Sharia directives. In fact, this study discusses "what ought to be," that is, the values and norms of PLS money creation that impede excessive money creation. Findings: Overall, Islamic banks create money differently compared to conventional ones. Especially, by avoiding a purely financial intermediary, money creation under the PLS principle sustains a strong relationship with the real economy and leads to a lower money multiplier. Therefore, PLS mechanisms allow financing through real assets and not credit assets "out of nothing." This could prevent excessive money creation from causing harmful effects on indebtedness and financial instability. Practical implications: PLS offers a valuable resolution for banking system money creation through the optimization of Islamic bank financing by facilitating the separation of the monetary function from the credit one. This reform thought reinforces the stability value of money allowing it to fully perform its functions with reference to the directives of Sharia. This especially allows the integrity and purchasing power of money, the reduction of the gap between the evolution of both real and financial economies and, consequently, the indebtedness and crisis. It is recommended to promote PLS financing by reforming institutional and regulatory constraints. Originality/value: This study addresses the contemporary issue of money creation by Islamic banks through the PLS approach. The conceptual framework of this paper highlights the reformist role of PLS in limiting money creation through Mudarabah approach within fractional reserve banking. [ABSTRACT FROM AUTHOR]

This paper considers the use of loan loss reserves (LLRs) in the banking production process and treats it as one variable with a dual role. We establish a three-stage network Data Envelopment Analysis model to address this issue. Using a sample of 43 Chinese commercial banks over the period 2011–2019, the results show that the banks with the ratio between LLRs and total loans less than 1% have higher level of efficiency compared to the ones holding the ratio greater than 1%. The results show that when excluding LLRs in the production process, the efficiency scores are significantly inflated. We find that small and medium sized banks are more efficient than their big counterparts, however, the results show that big banks hold more than enough amounts of LLRs than the one required by the regulatory authority. When LLRs are excluded from the production process, it shows that big banks perform better than small and medium sized banks. Our findings show that less liquid banks perform better than the ones with higher levels of liquidity no matter in which way LLRs are treated. Finally, we find that lower capitalized banks, compared to the ones with high levels of capitalization, are less efficient. however, it shows that higher capitalized banks consistently keep more than 1% LLRs out of total loans. [ABSTRACT FROM AUTHOR]

One of the signature policy achievements of the Progressive era was the passage of the Federal Reserve Act in 1913. This paper argues that the original Act did not create an effective central bank and consequently did not bring about significant structural change in domestic monetary institutions. Early leaders of the Federal Reserve, frustrated with the constraints on reserve bank operations, actively lobbied Congress to secure changes to the Act. These efforts only succeeded after the U.S. entered World War 1 in the spring of 1917, triggering a transformation in the monetary base that elevated the position and centrality of the Federal Reserve. Seen in this light, the wartime amendments were a victory for the activist institution-builders within the Federal Reserve in addition to being essential for the federal government's ability to finance the war effort. [ABSTRACT FROM AUTHOR]

This study aims to determine whether the same bank-specific and macroeconomic determinants affect banks' profitability and liquidity. To achieve the set goal, panel data regression analysis was applied with fixed effects or random effects depending on the results of the Hausman test, as explained in the Results. The research is based on the use of aggregate data on bank-specific and macroeconomic determinants of banks' profitability and liquidity in West Balkan countries during the period from 2007 to 2022. The dependent variables in the study are ROA, ROE used as proxies for banks' profitability, and banks' liquid reserves to banks' total assets as a proxy for banks' liquidity. The findings confirm that the bank-specific and macroeconomic determinants affect both banks' profitability and liquidity in the same direction, except for a few variables. The main contribution of this research is a comprehensive and parallel view of banks' profitability and liquidity determinants that enables a guide for bank management to better understand the significance of bank-specific and macroeconomic determinants' effects on their business. The obtained results can improve the balance between the two important principles of banking business. [ABSTRACT FROM AUTHOR]

As a matter of arithmetic, the trends of US government debt and deficits will eventually result in an outrageously high government debt-to-GDP ratio. But when exactly will the United States hit the constraint of infeasibility and how exactly will policy adjust to it? This article considers fiscal dominance, which is the possibility that accumulating government debt and deficits can produce increases in inflation that “dominate” central bank intentions to keep inflation low. Is it a serious possibility for the United States in the near future? And how might various policies change (especially those related to the banking system) if fiscal dominance became a reality?. [ABSTRACT FROM AUTHOR]

This paper investigates the relation between bank liquidity and borrowing from a lender of last resort on a high frequency basis during a financial crisis. The paper evaluates weekly observations of individual bank borrowing of clearinghouse loan certificates by a panel of New York Clearing House member banks during the crisis of 1884. Naturally, banks with higher reserve ratios borrowed lower amounts, but banks replaced a dollar of reserves with less than a dollar of borrowing from a lender of last resort. [ABSTRACT FROM AUTHOR]

Money is also on the verge of another revolutionary transformation in its long history. The emergence of cryptocurrencies and stablecoins has laid a foundation for the next wave of metamorphosis in money. In response to private digital currencies, reserve banks are considering issuing digital versions of their fiat currencies labelled as Central bank digital currencies (CBDCs). It is vital to reveal the catalysts for global interest in sovereign digital currencies. The current research aims to identify and prioritise the motivations for launching central bank digital currencies in emerging markets. With the help of the literature survey and qualitative expert interviews, the study identified four major and 13 sub-categories of motivations. A fuzzy analytical hierarchal process was employed to determine the relative importance of these motivations and sub-motivations. The study's outcomes revealed that payment-related motivations are the most significant motivations for launching government-backed digital currencies. In addition, encouraging financial inclusion and payment efficiencies dominate in sub-criterion. [ABSTRACT FROM AUTHOR]

The study seeks to assess the impacts of the banking sector on the Sierra Leone economy. The Case study research design was adopted for this study. The Pooled OLS regression Model, Correlation Matrix, and Descriptive Statistics were employed in the study. E-Views was used to analyze the panel data using the Pooled OLS regression data, Descriptive statistics, and the Correlation Matrix. The Pooled OLS econometric result shows that Bank Liquid Reserves to Assets positively correlates with Gross Domestic Product with a coefficient value of 0.8425. It was further revealed that the relationship is highly significant (p-value of 0.0158 and a t-stat of 2.4560. Domestic credit to the Private Sector has a negative relationship with the Gross Domestic Product with a coefficient value of (-0.155367). This relationship was further revealed to be highly insignificant (p-value of 0.7533 and t-stats of -0.3152). The result also shows that Deposit Interest Rates have a positive coefficient value of (2.1040), which is also highly significant (p-value of 0.0013 and t-stats of 3.3050). The study further revealed that the Gross Domestic Product (% of GDP) has a negative relationship with the GDP, with a coefficient value of (-0.2055). It further revealed that the result is highly insignificant (p-value of 0.1383 and t-stats of -1.4944). On the other hand, Interest rate spread has a negative relationship with the Gross Domestic Product with a coefficient value of (-3.0265). It was further revealed that the relationship is highly significant (pvalue of 0.0000 and t-stats of -4.8611). [ABSTRACT FROM AUTHOR]

The study deals with determining the structure of international currency reserves of central banks in terms of adequacy and accumulation criteria. The authors argue that the exchange rate regime is not neutral to political regimes. Autocracies gravitate more toward fixed exchange rate regimes, while democracies, on the contrary, toward floating exchange rates. This is also related to the issue of central bank independence. The authors conducted a study of the evolution of metrics used to assess the adequacy of currency reserves. The features of indicators for assessing foreign exchange reserves (Reddy, Guidotti-Greenspan, ARA criteria) are determined, which focus on the issue of taking into account capital flows in determining the adequacy of reserves and their hypertrophy. The advantages of the ARA criterion are given, which are manifested in the desire of countries to accumulate foreign exchange reserves with a prudent purpose. Disagreements in the assessment of the volume and structure of foreign exchange reserves lie in the high volatility of global capital flows, which gives rise to the phenomenon of "excessive capital flows". Particular attention is paid to the problem of the theoretical approaches explaining the process of accumulation of currency reserves. In particular, evasion of structural reforms, "new" or monetary mercantilism, financial mercantilism, prudential and competitive accumulation. In Ukraine, for example, there is a demand for structural reforms, but the political time horizon limit is often an obstacle to their effective implementation. Attention is focused on the issue of independence of central banks in terms of political regimes, which is manifested in the peculiarities of the structure and accumulation of currency reserves. The originality of the article is due to the need to define new theoretical approaches to assess the adequacy of currency reserves in view of the political system that determines the regime of exchange rates and the design of institutions of macro-financial stability. [ABSTRACT FROM AUTHOR]

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

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

The US banking system has experienced stress in 2023 with four regional banks failing and the Federal Reserve hiking interest rates. The latest challenge is potential defaults from commercial real estate, since the pandemic has normalized remote work in large cities. Will banks kick this can down the road or are some willing to take the hit now, betting on smaller losses a few years from now? [ABSTRACT FROM AUTHOR]

We use text-mining techniques to measure the accessibility and quality of information within the texts of interest rate announcements published by the Bank of Israel over the past decade. We find that comprehension of interest rate announcements published by the Bank of Israel requires fewer years of education than interest rate announcements published by the Federal Reserve and the European Central Bank. In addition, we show that the sentiment within these announcements is aligned with economic fluctuations. We also find that textual uncertainty is correlated with the volatility of the domestic financial market. [ABSTRACT FROM AUTHOR]

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

Decision makers often ask experts to forecast a future state. Experts, however, can be biased. In the economics and psychology literature, one extensively studied behavioral bias is called herding. Under strong levels of herding, disclosure of public information may lower forecasting accuracy. This result, however, is derived only for point forecasts. In this paper, we consider experts' probabilistic forecasts under herding, find a closed-form expression for the first two moments of a unique equilibrium forecast, and show that the experts report too similar locations and inflate the variance of their forecasts because of herding. Furthermore, we show that the negative externality of public information no longer holds. In addition to reacting to new information as expected, probabilistic forecasts contain more information about the experts' full beliefs and interpersonal structure. This facilitates model estimation. To this end, we consider a one-shot setting with one forecast per expert and show that our model is identifiable up to an infinite number of solutions based on point forecasts but up to two solutions based on probabilistic forecasts. We then provide a Bayesian estimation procedure for these two solutions and apply it to economic forecasting data collected by the European Central Bank and the Federal Reserve Bank of Philadelphia. We find that, on average, the experts invest around 19% of their efforts into making similar forecasts. The level of herding shows an increasing trend from 1999 to 2007 but drops sharply during the financial crisis of 2007–2009 and then rises again until 2019. This paper was accepted by Yan Chen, behavioral economics and decision analysis. Supplemental Material: The electronic companion and data are available at https://doi.org/10.1287/mnsc.2022.4487. [ABSTRACT FROM AUTHOR]

This study focuses on working capital management and their various financial ratios to understand various aspects of Indian Banking industry guided by Reserve Bank of India (Central Bank of India). Indian banking industry undergoes huge transformation from earlier years due to their various innovation in banking industry in terms of technological aspect, globalisation and privatisation. For this study, five major banks, namely State Bank of India, HDFC, ICICI, AXIS and KOTAK MAHINDRA, having market share of 73% in Indian banking industry, have been considered and data was collected from money control website of these five major banks from 2011 to 2022. The analysis of these data depicts status of working capital management during pre-COVID and post-COVID period. Main focus of the study is to find the relationship of Return On Assets (ROA) of the bank with other financial ratios and to explore whether there is any significant difference among ROA of selected banks and finally to find status of ROA for selected banks during the pre and post pandemic period. [ABSTRACT FROM AUTHOR]

Today's financial and banking systems are built on fractional reserve banking. This article sheds light on the role of commercial banks with regards to money creation/production under this system of fractional reserve banking. After exploring the nature of the process of money creation/production, the research paper diligently scrutinizes this process through the lenses of legal and religious moral precepts and ethic. The article concludes, with solid supporting arguments, that money creation/production under fractional reserve banking is immoral, ethically wrong and harmful at both individual and societal levels, with numerous legal and religious violations at its core. [ABSTRACT FROM AUTHOR]

This paper presents a version of the model of voluntary reserve targets (VRT) developed in Baughman and Carapella (2020) simplified to have a Walrasian instead of frictional interbank market. First, the model makes transparent the role of target setting in controlling the market rate. Second, the simplicity of the model allows for an analysis of the interaction between VRT and tolerance bands, which are a common tool for controlling rate variability. We find that the persistent overshooting of interbank rates observed during the Bank of England's experiment with VRT may derive from the interaction between target setting and tolerance bands, a new explanation relative to the literature. We also suggest a simple remedy. [ABSTRACT FROM AUTHOR]

Quantitative easing (QE) programs have driven unprecedented expansions in the supply of central bank reserves around the world over the past two decades, fundamentally changing the implementation of monetary policy. The collapse in money multipliers following QE episodes has often been interpreted as implying banks are happy to passively hold most of the reserves created by QE. This paper develops a simple microsimulation model of the banking sector that adapts the traditional money multiplier model and allows for bank reserve demand to be inferred from monetary aggregates. The model allows the use of unwanted reserves by banks to play out over time alongside QE purchases and incorporates both significantly higher reserve demand after 2008 and capital constraints. With these additions, the model explains the persistently lower money multipliers seen in the United States following QE, as well as the growth in commercial bank deposits. The model suggests the demand from banks for reserves has increased substantially since the introduction of QE but not to the point where banks are passively absorbing all newly created reserves. [ABSTRACT FROM AUTHOR]

Under fractional reserve banking system, banks activity and operations rely primarily on demand deposits, which are often known as current accounts, especially when it comes to granting loans. Consequently, bank deposits are the primary source of 'inexpensive' funding for commercial banks. This article aims to analyze and discuss the widely agreed upon characterization of the demand deposit as a loan contract. Since all today's legal systems consider the demand deposit a loan contract, this article attempts to challenge this characterization by discussing the arguments and building blocks of the loan theory and examining the essence of both contracts through the lens of law and jurisprudence. The paper concludes that the demand deposit contract cannot be considered a loan contract, with supporting solid arguments from economic and legal perspectives. [ABSTRACT FROM AUTHOR]

Central bank reserves function as a liquidity buffer to mitigate country exposure and vulnerability to external shocks. Emerging Market Economies are the countries most exposed to the volatility of capital flows and have usually preferred to build up large war-chests of international reserves as a self-insurance mechanism, as it is under their full discretion. Nevertheless, the standard practice of immobilizing large amounts of "cash" to insure against jumps in volatility and risk-aversion could be enhanced. The inclusion of hedging strategies in the strategic asset allocation decision can help to enhance the risk management of the national balance sheet, transferring funds to those scenarios when reserves are most needed. This paper presents a practical approach that we propose to enhance the analysis of the strategic asset allocation of a central bank, and to explore the benefits of including in the construction of the efficient portfolio the analysis of correlations between the reserves' portfolio and the country's main vulnerabilities to external shocks. [ABSTRACT FROM AUTHOR]

The Covid-19 pandemic has been a trouble and deeply affected the economic conditions of countries. Economy administrators and particularly central banks have been tested seriously in this period. In this period, one of the essential tasks of central banks is to provide the need of liquidity of markets. However, the main objective of Central Banks is price stability. Monetary policies should be applied sensitively by central banks, especially in crisis periods. While liquidity needs of markets taking place, central banks intervene and effort to support declining liquidity. This study examined central banks' monetary policies in the fragile five countries (Turkey, Brasil, India, Indonesia, and South Africa). We investigated these countries' central bank policies, including interest rate, inflation, central bank reserve, exchange rate, and fragile states index in the pandemic period. We determined that the most fragile country among the five countries is Turkey according to the fragile states index, inflation, interest rate, and central bank reserve in the pandemic period. [ABSTRACT FROM AUTHOR]

The study presents a comparative analysis of the two modern pro-market schools in the field of monetary theory and banking – the school of free banking with fractional reserves and the school of full deposit reservation. In this way, the paper outlines the guidelines to be followed in developing theories, concepts and proposals for improving or perfecting the money supply management. In concrete terms, the analysis considers the alternatives for the implementation of banking and the positioning of the central bank in the schools of free banking with fractional reserves and the full reservation of deposits, the methodological nature of a market process in their frameworks and an interpretation of the two schools in relation to the functions of deposits, the interest rate, deflation and quantitative easing. [ABSTRACT FROM AUTHOR]

Unlike past literature adopting the loanable funds view, we follow the financing model of bank intermediation in order to analyse the monetary mechanisms relating to reserve requirements and compute banks' margins on their lending and deposit activities. We show that, when remunerated at a rate below the money market interest rate, reserve requirements increase the spread between bank loans and deposits interest rates, without any impact on the level of interest rates. We review and analyse the uses of reserve requirements as a prudential tool and as a monetary policy instrument. We also analyse their use for capital flows management and for de‐dollarization in emerging economies. We argue that reserve requirements are a sub‐optimal and outdated policy tool, and we suggest imposing direct taxes on banks' deposits and loans interest payments, as a more efficient alternative to reserve requirements. [ABSTRACT FROM AUTHOR]

We quantify the impact of bank market power on monetary policy transmission through banks to borrowers. We estimate a dynamic banking model in which monetary policy affects imperfectly competitive banks' funding costs. Banks optimize the pass‐through of these costs to borrowers and depositors, while facing capital and reserve regulation. We find that bank market power explains much of the transmission of monetary policy to borrowers, with an effect comparable to that of bank capital regulation. When the federal funds rate falls below 0.9%, market power interacts with bank capital regulation to produce a reversal of the effect of monetary policy. [ABSTRACT FROM AUTHOR]

In order to analyse the currency crises in Turkey over the period of January 1990 and October 2019, we first dated currency crises with meta‐possibilistic fuzzy index functions. Then, we determined the significant predictors or leading indicators of currency crisis with logistic regression. Finally, we tried to measure and compare the in‐sample and out‐of‐sample performances of our method with an index generated by principal component analysis (PCA). We found that the models using the currency crisis index generated by our method have higher in‐sample and out‐of‐sample performances than the models using the currency crisis index generated by PCA. We concluded that the change in real exchange rate, bank loans over bank deposits, bank reserves over bank assets, growth in foreign reserves, growth in central bank foreign assets, M2 over foreign assets, change in exports, change in imports, industrial production index, M1 growth, M2 growth, foreign reserves over M1, central bank foreign assets over M1 and public sector credit growth are the leading indicators of currency crisis among 20 explanatory variables. As policy implications, we recommend that government and the monetary authority should strictly monitor the ratio of bank loans over bank deposits, public sector credit growth, the volatility of foreign trade, ratio of foreign reserves and central bank foreign assets over money supply among significant explanatory variables to avoid currency crisis as policy implications. [ABSTRACT FROM AUTHOR]

The topic of the Federal Reserve's (the Fed's) implementation of monetary policy has a significant presence in economics textbooks. Unfortunately, as the Fed purposefully shifted the way it implements monetary policy to an environment with ample reserves in the banking system, many textbooks have not kept up. The authors walk through the key policy tools the Fed uses to implement policy in the ample-reserves regime. Next, they contrast the current framework with the pre-2009 regime to highlight that there are substantial differences in the policy tools and concepts that should be taught in the classroom. Finally, they review six, 2020 or 2021 edition, principles of economics textbooks and quantify how well they cover the key concepts associated with the way the Fed implements policy. [ABSTRACT FROM AUTHOR]

Copyright of Gharee for Economics & Administration Sciences is the property of Republic of Iraq Ministry of Higher Education & Scientific Research (MOHESR) and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

In the present paper we argue that the theory of contracts embraced by many libertarian scholars and relied upon by them in sundry important debates (e.g. over morality of the fractional reserve banking or loan maturity mismatching etc.), that is, the title transfer theory of contracts (TTT) should be rejected as not being able to account for the binding force of future-oriented contracts, including contracts deemed enforceable by those scholars themselves. The TTT claims that the only contracts that should be legally binding are these where the debtor's failure to abide by them constitutes a violation of the creditor's private property rights. However, as we argue, no default of the debtor in a future-oriented contract can in itself amount to such a violation. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this paper is to better understand the differences between community and non-community banks (CBs and Non-CBs) in the US. As the former have been declining in numbers, previous literature shows inherent differences between the business models of CBs and Non-CBs. This study attempts to gauge whether the impact of the reserve elimination during the Covid pandemic affected all banks similarly or whether community banks showed a differentiated response. Design/methodology/approach: On March 26, 2020, the Federal Reserve, at the onset of the Covid pandemic, altered the depository institution reserve requirement for the first time since 1992. This significant change in policy led to the reserve requirement reduction from 10% to 0%. This study examines the impact of the 2020 reserve elimination on all community banks and non-community banks in the US and finds that although the level of cash to assets increased at both types of depository institutions post reserve elimination, the impact on liquidity-focused ratios was more pervasive at community banks in the first quarter post the regulatory shift. Among community banks, the largest depository institutions experienced the biggest balance sheet adjustments in the June 2020 quarter that followed the change in Federal Reserve's policy. Further, the study finds that over two-quarters post reserve elimination, the non-community banks demonstrate a greater increase in balance sheet liquidity. Past literature shows that community banks tend to carry more liquidity than non-community banks and small community banks tend to carry more liquidity than their larger counterparts. These previous findings may provide some explanation for the different speed documented in this study at which various banks have reacted to the reserve elimination in 2020. Findings: This research finds that community banks had a quicker response to the change in the reserve elimination, showing quick increases across liquidity ratios. The larger non-community banks tended to play catch up, increasing their liquidity in the subsequent quarter. The study also shows that the changes in liquidity were initially driven by the segment of large community banks. Originality/value: This study looks at how the reserve elimination enacted by the Federal Reserve in March 2020 in response to the Covid pandemic affected community versus non-community banks. Currently, as far as the authors know, there are no other published papers that look at this issue. [ABSTRACT FROM AUTHOR]

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