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What Makes a Good ʽBad Bankʼ? The Irish, Spanish and German Experience

What Makes a Good ʽBad Bankʼ? The Irish, Spanish and German Experience

September 2016

This paper looks at the ‘bad banks’ set up to deal with non-performing loans in Ireland, Spain and Germany as well as the factors required to make such asset management companies achieve their objectives.

Topics: Public financesEU Member State economies; Financial marketsEconomic crisis

Series: Discussion Papers

 
Quarterly Report on the Euro Area (QREA), Vol.15, No.2 (2016)

Quarterly Report on the Euro Area (QREA), Vol.15, No.2 (2016)

July 2016

Volume 15 N. 2 (2016) of the QREA looks at the role of cross-border risk sharing, both through financial and labour market incomes generated across borders and through cross-border fiscal transfers, in mitigating asymmetric shocks, and compares the situation in the euro area to that of the United States. Other sections examine the mechanisms through which financial markets effect the real economy and confidence spillovers in the euro area.

Topics: Economic policy coordination ; Economic indicators ; Financial markets ; The euro

 
Macroeconomic Relevance of Insolvency Frameworks in a High-debt Context: An EU Perspective

Macroeconomic Relevance of Insolvency Frameworks in a High-debt Context: An EU Perspective

June 2016

A look at insolvency frameworks in the EU and their macroeconomic relevance for dealing with high levels of debt and non-performing loans.

Topics: Structural policies, growth and development ; Financial markets

Series: Discussion Papers

 
Quarterly Report on the Euro Area (QREA), Vol.14, No.4 (2015)

Quarterly Report on the Euro Area (QREA), Vol.14, No.4 (2015)

January 2016

This edition of the QREA reviews the issue of shocks and adjustment in the light of recent crises. It analyses the functioning of a key internal adjustment process in EMU, the "relative price mechanism", as well as the "real interest rate mechanism". It also reviews the different implications of high levels of indebtedness.

Topics: Economic policy coordination; Structural policies, growth and development; EU Member State economies; Labour markets;

 
The Impact of Rapid Credit Growth on Slovakia’s Housing Market

The Impact of Rapid Credit Growth on Slovakia’s Housing Market

December 2015

This paper looks at the macroeconomic impact of the growth in lending for home purchases in Slovakia and suggests policies that could make the housing market more resilient.

Topics: Structural policies, growth and development, EU Member State economies, Public finances, Financial markets

Series: Economic Briefs

 
Using financial variables to estimate the Irish output gap: do they make a difference?

Using financial variables to estimate the Irish output gap: do they make a difference?

December 2015

Standard potential output estimates during Ireland’s housing boom failed to detect the build-up of imbalances and risks to the country’s public finances. This paper looks at an alternative methodology, including financial variables such as property prices and bank credit, which would have supported a more cautious assessment at the time.

Topics: Public finances ; EU Member State economies ; Financial markets

Series: Economic Briefs

 
Interlinkages between Household and Corporate Debt in Advanced Economies

Interlinkages between Household and Corporate Debt in Advanced Economies

October 2015

This paper explores the connections between household and corporate deleveraging.

Topics: EU Member State economies ; Financial markets ; International Economic and non-EU economies

Series: Discussion Paper

 
Small Firms and Domestic Bank Dependence in Europe’s Great Recession

Small Firms and Domestic Bank Dependence in Europe’s Great Recession

September 2015

Author(s): Mathias Hoffmann, Bent E. Sorensen

Mathias Hoffmann (University of Zurich & CESifo) and Bent E. Sørensen (University of Houston & CEPR) look at the relationship between the dependency of small firms on domestic banks and their vulnerability to global banking sector shocks.

This Discussion Paper was prepared under DG ECFIN’s 2014-2015 Fellowship Initiative “Growth, integration and structural convergence revisited”.

Topics: Economic policy coordination

Series: Discussion Papers

 
Monetary Policy, Bank Bailouts and the Sovereign-Bank Risk Nexus in the Euro Area

Monetary Policy, Bank Bailouts and the Sovereign-Bank Risk Nexus in the Euro Area

September 2015

Author(s): Marcel Fratzscher, Malte Rieth

Marcel Fratzscher (DIW Berlin, Humboldt-University Berlin and CEPR) and Malte Rieth (DIW Berlin) analyse the empirical relationship between bank risk and sovereign credit risk in the euro area. This Discussion Paper was prepared under DG ECFIN’s 2014-2015 Fellowship Initiative “Growth, integration and structural convergence revisited”.

Topics: The euro, Monetary policy, Financial markets

Series: Discussion Papers

 
An event-study analysis of ECB balance sheet policies since October 2008

An event-study analysis of ECB balance sheet policies since October 2008

July 2015

Author(s): Lucian Briciu, Giulio Lisi

Since the financial and economic crisis, many leading central banks have had to turn to unconventional monetary policies. This paper analyses the immediate impacts on financial conditions of some of the balance sheet policies used by the European Central Bank between October 2008 and January 2015, including its Securities Markets Programme and its Expanded Asset Purchase Programme.

Topics: Monetary policy; Financial markets; The euro

Series: Economic Briefs

 
The Economic Impact of EU Guarantees on Credit to SMEs Evidence from CESEE Countries

The Economic Impact of EU Guarantees on Credit to SMEs Evidence from CESEE Countries

July 2015

Author(s): Pierfederico Asdrubali, Simone Signore

This paper studies the economic effects of an EU credit guarantee scheme for SMEs in Central, Eastern and South-Eastern European countries between 2005 and 2012.

Topics: Financing investment ; Financial markets

Series: Discussion Papers

 
550 - The stabilising properties of a European Banking Union in case of financial shocks in the Euro Area - Fritz Breuss, Werner Roeger, Jan in ’t Veld

550 - The stabilising properties of a European Banking Union in case of financial shocks in the Euro Area - Fritz Breuss, Werner Roeger, Jan in ’t Veld

June 2015

Author(s): Fritz Breuss, Werner Roeger, Jan in ’t Veld

This paper analyses the stabilising properties of a European Banking Union in case of financial shocks in the euro area.

Topics: Economic policy coordination; Financial markets; The euro; Economic crisis

Series: Economic Papers

 
548 - Banking Stress Scenarios for Public Debt Projections - Peter Benczur, Katia Berti, Jessica Cariboni, Francesca Erica Di Girolamo, Sven Langedijk, Andrea Pagano and Marco Petracco Giudici

548 - Banking Stress Scenarios for Public Debt Projections - Peter Benczur, Katia Berti, Jessica Cariboni, Francesca Erica Di Girolamo, Sven Langedijk, Andrea Pagano and Marco Petracco Giudici

April 2015

Author(s):  Peter Benczur, Katia Berti, Jessica Cariboni, Francesca Erica Di Girolamo, Sven Langedijk, Andrea Pagano, Marco Petracco Giudici

The euro area sovereign debt crisis brought to light the potential risks to public finances posed by the banking sector. This paper simulates the potential impact of bank defaults on public finances based on stress test scenarios using an advance analytical methodology.

Categories: Economic crisis ; Financial markets ; Public finances

Series: Economic Papers

 
540 - Identifying Booms and Busts in House Prices under Heterogeneous Expectations - Wilko Bolt, Maria Demertzis, Cees Diks; Cars Hommes, Marco van der Leij

540 - Identifying Booms and Busts in House Prices under Heterogeneous Expectations - Wilko Bolt, Maria Demertzis, Cees Diks; Cars Hommes, Marco van der Leij

December 2014

This paper provides a method for identifying when rising house prices are in danger of becoming bubbles on the verge of bursting. As a result, it is a first step towards establishing an early warning system for house price changes that could help prevent important welfare costs.

Categories: Monetary policy; Financial markets; Economic crisis

Series: Economic Papers

 
524 - Future Directions for the Irish Economy. Conference Proceedings - Graham Stull

524 - Future Directions for the Irish Economy. Conference Proceedings - Graham Stull

July 2014

Ireland's successful conclusion of the financial assistance programme provides an important opportunity to assess the prospects of the Irish economy to achieve good growth, to prevent future banking crises and to lock in budgetary and fiscal improvements that were achieved over the course of the Programme.

Categories: EU Member State economies; Public finances; Financial markets

Series: Economic Papers

 
521 - Liberalised Capital Accounts and Volatility of Capital Flows and Foreign Exchange Rates - Bogdan Bogdanov

521 - Liberalised Capital Accounts and Volatility of Capital Flows and Foreign Exchange Rates - Bogdan Bogdanov

July 2014

An empirical study employing propensity score matching methodologies to estimate the impact of maintaining open capital accounts on the volatility of capital flows and foreign exchange rates using data for 69 countries, in the sample period 1980-2011.

Categories : International economics and non-EU economies; Financial markets
Series : Economic Papers

 
520 - The "imbalanced balance" and its unravelling: current accounts and bilateral financial flows in the euro area - Alexandr Hobza, Stefan Zeugner

520 - The "imbalanced balance" and its unravelling: current accounts and bilateral financial flows in the euro area - Alexandr Hobza, Stefan Zeugner

July 2014

Based on a new database of bilateral financial flows among euro area countries and their major world partners, this paper explores the role of financial links in the accumulation and then adjustment of current account imbalances in the euro area.

Categories : International economics and non-EU economies; Financial markets; Economic crisis
Series : Economic Papers

 
519 - International Capital Flows and the Boom-Bust Cycle in Spain - Jan in ‘t Veld, Robert Kollmann, Beatrice Pataracchia, Marco Ratto, Werner Roeger

519 - International Capital Flows and the Boom-Bust Cycle in Spain - Jan in ‘t Veld, Robert Kollmann, Beatrice Pataracchia, Marco Ratto, Werner Roeger

June 2014

We study the joint dynamics of foreign capital flows and real activity during the recent boom-bust cycle of the Spanish economy, using a three-country New Keynesian model with credit-constrained households and firms, a construction sector and a government. We estimate the model using 1995Q1-2013Q2 data for Spain, the rest of the Euro Area (REA) and the rest of the world.

Categories : Structural policies, growth and development; EU Member State economies; Financial markets
Series : Economic Papers

 
33 - Financing the recovery: the state of Europe’s financial sector

33 - Financing the recovery: the state of Europe’s financial sector

June 2014

Following serious setbacks in the recent banking and sovereign debt crisis, European financial markets have started to function more properly again and have stabilised over recent years. Risk taking in financial markets has returned and disparities in financing conditions across euro-area countries diminished. 

Categories: Financial markets; Structural policies, growth and development; economic crisis
Series: Economic Briefs

 
32 - Fragmentation of wholesale funding markets – an empirical approach to measure country-specific risk premia in banks' bond spreads

32 - Fragmentation of wholesale funding markets – an empirical approach to measure country-specific risk premia in banks' bond spreads

May 2014

This paper presents empirical evidence that euro-area wholesale banking markets have become fragmented along national boundaries.

Categories: EU Member State economies, Financial markets
Series: Economic Briefs

 
516 - What drives the German current account? And how does it affect other EU member states? - Robert Kollmann, Marco Ratto, Werner Roeger, Jan in’t Veld, Lukas Vogell

516 - What drives the German current account? And how does it affect other EU member states? - Robert Kollmann, Marco Ratto, Werner Roeger, Jan in’t Veld, Lukas Vogell

April 2014

We estimate a three-country model using 1995-2013 data for Germany, the Rest of the Euro Area (REA) and the Rest of the World (ROW) to analyze the determinants of Germany’s current account surplus after the launch of the Euro. The most important factors driving the German surplus were positive shocks to the German saving rate and to ROW demand for German exports, as well as German labour market reforms and other positive German aggregate supply shocks.

 
518 - The Puzzle of the Missing Greek Exports - Uwe Böwer, Vasiliki Michou, Christoph Ungerer

518 - The Puzzle of the Missing Greek Exports - Uwe Böwer, Vasiliki Michou, Christoph Ungerer

April 2014

Why is Greece such a surprisingly closed economy? We employ a gravity model of trade to explain the appallingly poor export performance of Greece and argue that weak institutional quality accounts for a large part of this shortfall.

Categories : Structural policies, growth and development; Labour markets; Product markets, Financial markets
Series :Economic Papers

 

Product Market Review 2013 - Financing the real economy

December 2013

The Product Market Review published every two years focuses on the role of product market reforms. This edition's focus is on the interaction between the real economy and the financial sector, asking the question: to what extent does the crisis in the financial sector cast a shadow on economic activity?

 

22 - The future of EMU

April 2013

Summarising the findings of DG ECFIN's fellowship programme on the future of EMU

 

European Economic Forecast - Autumn 2012

November 2012

The short-term outlook for the EU economy remains fragile, but a gradual return to GDP growth is projected for 2013, with further strengthening in 2014. On an annual basis, GDP is set to contract by 0.3% in the EU and 0.4% in the euro area in 2012. GDP growth for 2013 is projected at 0.4% in the EU and 0.1% in the euro area. Unemployment in the EU is expected to remain very high. The large internal and external imbalances that built up in the pre-crisis years are being reduced, but this process continues to weigh on domestic demand in some countries, and economic activity diverges significantly across Member States. At the same time, competitiveness lost in the first decade of EMU in some Member States is being gradually restored, so that export growth is projected to increase progressively as global trade starts reaccelerating. Further progress in consolidating public finances is underpinning this rebalancing process.

 

European Economic Forecast - Spring 2012

May 2012

The EU economy is currently in a mild recession. But a gradual recovery is in sight.

 

453 - Evaluating the Macroeconomic Effects of Government Support Measures to Financial Institutions in the EU - Jan in ‘t Veld, and Werner Roeger

April 2012

Evaluating the Macroeconomic Effects of Government Support Measures to Financial Institutions in the EU

 

450 - Securities Transaction Taxes: Macroeconomic Implications in a General-Equilibrium Model - Julia Lendvai, Rafal Raciborskiz and Lukas Vogel

March 2012

The paper develops a dynamic general equilibrium model with secondary financial market and non-fundamental trade to assess the impact of a securities transaction tax on levels and volatilities of financial and real economic variables.

 

447 - The impact of state guarantees on banks' debt issuing costs, lending and funding policy - Patrice Muller, Shaan Devnani and Rasmus Flytkjaer

January 2012

The effectiveness of state guarantees given to banks in 2008-10 on banks' debt issuing costs, lending and funding policy.

 

European Economic Forecast - Autumn 2011

November 2011

The European Commission publishes comprehensive macroeconomic forecasts twice-yearly in the spring and autumn. In this economic forecast published on 10 November 2011, the European Commission presents its assessment of the economic prospects for the EU and the euro area at the aggregate level. It also analyses developments in all individual Member States, as well as Candidate Countries and the economies of the US, Japan, China, Russia and the EFTA. A special chapter is dedicated to developments in EU labour markets.

Since the last fully-fledged forecast in May 2011, the outlook for the EU and the euro area has deteriorated. The protracted sovereign-debt crisis has taken its toll on confidence affecting investment and consumption. A worsening external economic environment has stalled exports, and the necessary fiscal consolidation is simultaneously restraining domestic demand.

These trends are expected to hold for several quar

 

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