Monday, October 19, 2020

Bank Equity and Banking Crises

In a recent study "Bank Equity and Banking Crises" by Matthew Baron (of Cornell University), Emil Verner (MIT Sloan), and Wei Xiong (Princeton University), the three economists developed a comprehensive database of bank equity prices and banking crises with a full-sample of 46 countries from 1870-2016. They try to understand the dynamic between bank equity decline and banking crises.

Nonbank Lending

In their recent working paper "Nonbank Lending", economists Sergey Chernenko, Isil Erel, and Robert Prilmeier provided an insightful overview of the sources and terms of private debt financing during the post-crisis period.

The Non‐Bank Credit Cycle

In a new working paper "The Non‐Bank Credit Cycle", researchers Esti Kemp, René van Stralen, Alexandros Vardoulakis, and Peter Wierts tried to look into the cyclical properties of non‐bank credit and its relevance for financial stability.

Crashes and Rebounds in Housing Markets

The focus of the research is to find out if there is any "predictable" pattern following housing "bubbles".

Why Does Credit Growth Crowd Out Real Economic Growth?

The faster the credit growth, the worse it is for real growth (output per worker). This is what Stephen G. Cecchetti and Enisse Kharroubi want to explain in their NBER working paper "Why Does Credit Growth Crowd Out Real Economic Growth?"

Economic Policy Uncertainty in Turkey

The latest addition to the Economic Policy Uncertainty index (EPU). This time is on Turkey, the country who's economy is negatively impacted by policy uncertainty in 2018.

Media Sentiment and International Asset Prices

A new working paper from the IMF which tries to assess the impact of media sentiment on equity markets.

The sovereign-bank “doom loop”

Since the Euro crisis, investors and policymakers are well aware of the so-called "doom loop" between the banking system and the sovereign. That is, a crisis originating in the banking system (sovereign) will weaken the sovereign (banking system), which in turn will worsen the banking (sovereign) crisis itself.In a recent ECB discussion Paper "Managing the sovereign-bank nexus", the 7 economists - Giovanni Dell’Ariccia, Caio Ferreira, Nigel Jenkinson, Luc Laeven, Alberto Martin, Camelia Minoiu, and Alexander Popov - coauthored the paper suggested that the banks and sovereigns are linked by three interacting channels:

The Missing Profits of Nations and Multinationals’ Extreme Profitability in Tax Havens

The economics of tax evasion is a growing field in academic economics. There are much new exciting research trying to understand the mechanism behind global tax evasion. "The Missing Profits of Nations” by Thomas R. Tørsløv, Ludvig S. Wier and Gabriel Zucman is one of the most noteworthy research on the dynamic behind global tax evasions.

Hysteresis – An Underrated Macroeconomics Question

Hysteresis is referred to the hypothesis that recessions may have permanent effects on the level of output relative to trend.