THE ROLE OF THE RATING AGENCIES IN THE CURRENT FINANCIAL CRISISPetar Filipov
, 2012, diplomsko delo
Opis: The Subprime crisis that occurred in 2007-2008, was the most disturbing and severe crisis since The Great Depression. The global stock market indexes and housing prices noted a sharp drop. Big corporations, conglomerates, defaulted, were acquired and bailed out, since they could not meet their financing obligations. Substantial number of people lost their jobs worldwide and a lot of sectors in the economy were struggling.
Within this Bachelor seminar paper, it is presented how the credit rating agencies influenced the credit crunch. The main issue discussed in this seminar work is the role of the rating agencies in one of the greatest crushes in history. They (the agencies), actually, participated in creating the structured financial products, which during the housing bubble were increasingly trading. These structured financial products were very complex and highly risky and maybe, the most crucial cause of the crisis.
First, in the seminar paper it is described how the agencies work and their origins. As in the last century, Standard and Poor’s and Moody’s, emerged to great power in the financial system with assigning ratings to issuers of debt. This position in the financial world that the agencies held, has brought many academicians to doubting the possible moral hazard problems within the credit ratings business. Furthermore, it is explained how the financial turmoil emerged and the trends that preceded the credit crunch. Questions regarding the role of the agencies in the securitization process are discussed. For instance, were the rating agencies biased; were the ratings on the structured financial products inflated and if so, what were the incentives for it?
Several theories and empirical evidence has been put forward concerning the importance of the ratings in the securitization process. It is concluded in this paper, that the ratings assigned to the financial derivatives were inflated and the agencies noted increased returns from it, which presents the incentives of the agencies during the housing bubble. These empirical findings also indicate of moral hazard problem within the ratings system.
Ključne besede: Credit rating agencies, Financial crisis, Structured financial products, Securitization, Inflated ratings, Moral hazard
Objavljeno: 29.11.2012; Ogledov: 974; Prenosov: 66
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Večparametrski hierarhični model za oceno kreditnega tveganjaRenato Puklavec
, 2007, magistrsko delo
Ključne besede: bančništvo, banke, bančno poslovanje, krediti, tveganje, kreditna sposobnost, boniteta, optimizacija, informacijski sistemi, modeli, banking, banks, banking management, credit, risk, credit rating, reliability, optimization, information systems, models
Objavljeno: 10.07.2015; Ogledov: 584; Prenosov: 47
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Are cooperative banks better equipped to weather financial crisis than their commercial counterparts?Mitja Stefancic
, 2016, izvirni znanstveni članek
Opis: Background and Purpose: The aim of this paper is to empirically investigate the performance of different types of Italian banks before and during the recent credit crisis with an emphasis on the behaviour of cooperative banks. It is well established in theory that cooperative banks follow more conservative business strategies and care more for stakeholders in comparison to commercial banks. On this background, the paper tries to show the empirical effects of those characteristics on the cooperative bank’s performance during financial distress compared to commercial banks. In fact, the paper can prove that Italian cooperative banks were less exposed to the shocks of the crisis and showed a better performance.
Methodology: In order to assess whether cooperative banks performed differently at all from commercial banks during the 2005-2012 period, return on average assets (ROAA), cost efficiency and loan quality have been investigated by means of a sample of 594 Italian banks, pooled OLS and (when possible) a fixed effects estimator.
Results: Overall, Italian cooperative banks performed better than other Italian banks during the financial crisis. The quality of loans deteriorated less in these banks than in others, while no significant differences have been observed in terms of ROAA and cost efficiency between these and other banks.
Conclusion: My paper provides empirical evidence for a well established theoretically derived hypothesis: Italian cooperative banks operate differently than standard commercial banks which is especially noticeable during times of crisis. The fact empirically demonstrated that different banking models have shown different reactions to the financial crisis and economic downturn has important policy implications. Due to both characteristics of cooperative banks and severe limitations in the financial policies by the Italian government during the credit crisis an ironical pattern has emerged: While Italian cooperative banks were less exposed to the shocks of the crisis, they would have been less able to adjust to them since the financial rescue program was designed primarily for commercial banks.
Ključne besede: cooperative banks, bank performance, bank efficiency, bank soundness, credit crisis
Objavljeno: 28.11.2017; Ogledov: 411; Prenosov: 42
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Macroeconomic determinants of the non-performing placements and off-balance sheet liabilities of Croatian banksManuel Benazić
, Dajana Radin
, 2015, izvirni znanstveni članek
Opis: Background and Purpose: The non-performing placements and off-balance sheet liabilities are often considered key factors that lead to banking crises. Economic and financial crises increase the level of the non-performing placements and off-balance sheet liabilities which can cause significant losses for banks. Effective management and regulatory/ supervisory institutions such central banks should be able to recognize and quantify these effects. Therefore, the purpose of this study is to empirically determine the existence and the quantitative impact of main Croatian macroeconomic variables on the non-performing placements and off-balance sheet liabilities of Croatian banks in the long and short-run.
Methodology: For this purpose the bounds testing (ARDL) approach for cointegration is applied. The ARDL model is performed in two steps. The first step starts with conducting the bounds test for cointegration. In the second step, when cointegration is found, the long-run relationship and the associated error correction model are estimated.
Results: The results indicate the existence of stable cointegration relationship between the variables i.e. in the longrun, an increase in real GDP reduces the level of the non-performing placements and off-balance sheet liabilities of Croatian banks wherein an increase in prices, unemployment, interest rate and the depreciation of the Croatian kuna exchange rate increases their level. On the other hand, in the short-run the results are rather mixed.
Conclusion: To avoid crises, effective bank management and regulatory/supervisory institutions should be able to recognize and quantify these effects. This is a necessary precondition for implementation of an adequate prudential and monetary policy measures for reducing the level of the non-performing placements and off-balance sheet liabilities.
Ključne besede: non-performing placements and off-balance sheet liabilities, non-performing loans, economic and financial crises, credit risk, classification of placements and off-balance sheet liabilities
Objavljeno: 04.12.2017; Ogledov: 275; Prenosov: 121
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