Analysing UDROP: An instrument for stabilizing the international financial architecture
Axel Lindner
International Finance,
No. 1,
2001
Abstract
This paper analyses implications of a proposal, called UDROP, to reform the standards of international debt contracts. The idea is to give borrowers a roll-over option at maturity for a specified length of time. Using recently developed models of financial crises, the paper shows for which type of crisis UDROP is beneficial. Moral hazard of the borrower is one of the problems UDROP faces which can be addressed by appropriately designing the debt contract.
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Rating Agency Actions and the Pricing of Debt and Equity of European Banks: What Can we Infer About Private Sector Monitoring of Bank Soundness?
Reint E. Gropp, A. J. Richards
Economic Notes,
No. 3,
2001
Abstract
The recent consultative papers by the Basel Committee on Banking Supervision has raised the possibility of an explicit role for external rating agencies in the assessment of the credit risk of banks’ assets, including interbank claims. Any judgement on the merits of this proposal calls for an assessment of the information contained in credit ratings and its relationship to other publicly available information on the financial health of banks and borrowers. We assess this issue via an event study of rating change announcements by leading international rating agencies, focusing on rating changes for European banks for which data on bond and equity prices are available. We find little evidence of announcement effects on bond prices, which may reflect the lack of liquidity in bond markets in Europe during much of our sample period. For equity prices, we find strong effects of ratings changes, although some of our results may suffer from contamination by contemporaneous news events. We also test for pre-announcement and post-announcement effects, but find little evidence of either. Overall, our results suggest that ratings agencies may perform a useful role in summarizing and obtaining non-public information on banks and that monitoring of banks’ risk through bond holders appears to be relatively limited in Europe. The relatively weak monitoring by bondholders casts some doubt on the effectiveness of a subordinated debt requirement as a supervisory tool in the European context, at least until bond markets are more developed.
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Further development and application of an early warning indicator system for observing and evaluating financial crises in prospective EU acceding countries and selected Central and Eastern European countries
Axel Brüggemann, Thomas Linne
IWH-Sonderhefte,
No. 4,
2001
Abstract
Seit Beginn der 1990er Jahre haben mehrere der Beitrittskandidatenländer für eine Mitgliedschaft in der Europäischen Union (EU) sowie Russland und die Ukraine Finanzkrisen durchlaufen. Das jüngst betroffene Land ist die Türkei, wo im November 2000 eine schwerwiegende Finanzkrise ausbrach und deren Folgen immer noch nicht gänzlich absehbar sind. Die Finanzkrisen umfassten dabei sowohl Währungskrisen als auch Bankenkrisen. Eine wichtige Rolle für den Ausbruch von Währungskrisen spielte die oftmalige Fixierung des Wechselkurses mit dem Ziel, das Preisniveau zu stabilisieren. Bei allerdings anhaltend hohen Inflationsraten mündete diese Politik in einer realen Aufwertung der inländischen Währungen und in einem Anstieg der Leistungsbilanzdefizite.
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Foreign banks in economic development: Experiences from the regulated financial system of South Korea
Ralf Müller
IWH Discussion Papers,
No. 110,
2000
Abstract
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Labor Market Analysis and Public Policy: The Case of Morocco
Guillermo Hakim, Julia Lane, Javier Miranda
World Bank Economic Review,
No. 3,
1999
Abstract
This article uses detailed industry and household data to understand why Morocco's labor market performed poorly in 1985–95. The data indicate that marked structural changes and weak demand in the product market were responsible. This article makes two contributions to the literature. The first is specific: it underscores that the demand for labor is a derived demand and that the performance of the product market is an important determinant of the performance of the labor market. The second is more general: it demonstrates that this kind of microeconomic analysis, using data sets that are often available in developing countries, can inform policy design.
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Development of demand for financial support loans for environmental protection investment in trade and industry
Walter Komar
Wirtschaft im Wandel,
No. 11,
1996
Abstract
Seit 1991 war eine starke Erhöhung der Förderkreditnachfrage der gewerblichen Wirt-schaft Deutschlands zu verzeichnen. Dabei nahm die Nachfrage für Investitionszwecke in umweltgesetzlich weitgehend regulierten Schutzbereichen stärker zu als in schwach oder nicht regulierten Bereichen. Weil vorsorgende Maßnahmen nicht umweltgesetzlich vorgeschrieben sind, deutet diese Entwicklung auf die wachsende Bedeutung vorsor-gender (integrierter) Umweltschutzinvestitionen in den Unternehmen hin.
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