Finance and Financial Management Commons^™

Korea: Blanket Guarantee, 1997, Bailey Decker

Journal of Financial Crises

Korea entered the Asian Financial Crisis in August 1997 with highly leveraged firms and a banking system inexperienced in managing systemic risk. Korea faced a currency crisis and a banking crisis, as foreign banks froze credit to Korean commercial banks and merchant banks. On August 25, 1997, the Ministry of Economy and Finance (MOEF) announced that it would guarantee all Korean financial institutions’ foreign debt—both existing debt and new borrowings. Nonetheless, foreign lenders continued to withdraw credit from Korean financial institutions. On November 19, 1997, a newly appointed MOEF minister announced a suite of measures to promote foreign creditors’ confidence …

Ireland: Credit Institution (Financial Support) Scheme, 2008, Stella Schaefer-Brown

Journal of Financial Crises

The Global Financial Crisis exposed fragilities in the Irish banking system and led to widespread runs on Irish banks. Irish authorities attempted to address the runs on September 22, 2008, by increasing the country’s deposit guarantee limit from EUR 20,000 to EUR 100,000 (USD 28,800 to USD 140,000) and raising the coverage of deposits from 90% to 100%. When the runs continued, the Irish minister for finance announced a blanket guarantee of bank liabilities on September 30 without consulting European Union authorities. The announcement specified the blanket guarantee would be effective immediately and remain in effect for two years. The …

Jamaica: Finsac Blanket Guarantee, 1997, Ayodeji George

Journal of Financial Crises

After a period of sustained distress in the early 1990s, Jamaican financial institutions faced significant liquidity issues by 1996, evidenced by runs on banks by depositors. The government responded by creating the Financial Sector Adjustment Company (FINSAC) on January 29, 1997, to rehabilitate weak financial institutions and administer a blanket guarantee on financial sector liabilities. The blanket guarantee covered all deposit-taking financial institutions, life insurance policy providers, and pension funds registered under the Banking Act, Financial Institutions Act, and Insurance Act. Within eligible institutions, the blanket guarantee covered depositors’ funds in licensed deposit-taking institutions, pension funds managed by authorized institutions, …

Indonesia: Blanket Guarantee, 1998, Ayodeji George

Journal of Financial Crises

The Indonesian government closed 16 banks on November 1, 1997. At the time, the government said it would guarantee depositors up to 20 million Indonesian rupiah (IDR; USD 6,000) per account. The lack of immediate full protection for large depositors caused deposit runs throughout the banking sector and undermined foreign confidence in the Indonesian financial system. In response, the Indonesian president on January 26, 1998, announced a blanket guarantee and created the Indonesian Bank Restructuring Agency (IBRA) to administer the guarantee and other bank rehabilitation efforts. The blanket guarantee covered all depositors and nonsubordinated creditors in locally incorporated commercial banks. …

Ecuador: Blanket Guarantee, 1998, Bailey Decker

Journal of Financial Crises

After a series of exogenous shocks hit the Ecuadorian economy in 1997–1998, foreign creditors reassessed their emerging-market risk and reduced external credit lines to Ecuador, thus draining liquidity. The closure of a small bank called Solbanco in April 1998 triggered deposit runs at other banks. Banks sought assistance from the Central Bank of Ecuador (Banco Central del Ecuador, or BCE). By the end of September 1998, the BCE had issued emergency loans to 11 financial institutions, totaling nearly 30% of the money base. The crisis accelerated in August 1998 when Banco de Prestamos, the sixth-largest bank, was closed; the existing …

Finland: Government Guarantee Fund, Blanket Guarantee, 1992, Anmol Makhija

Journal of Financial Crises

Following a period of rapid financial liberalization and a record credit boom in the 1980s, Finland’s financial system suffered steadily increasing loan losses and falling earnings beginning in 1990. The Finnish Parliament created the Government Guarantee Fund (GGF) in April 1992 to support banks with loans, capital, and guarantees. In a press release issued on August 6, 1992, the government said the GGF would “secure the stable functioning of the banking system under any circumstances [emphasis added]”. Six months later, the Parliament of Finland specifically required the GGF to guarantee that all Finnish banks could meet their commitments. The government …

Denmark: General Guarantee Scheme, 2008, Benjamin Hoffner

Journal of Financial Crises

As foreign credit in Denmark dried up during the summer of 2008, Danish banks became increasingly reliant on short-term borrowing. The government took over the failing Roskilde Bank, the country’s eighth-largest bank, in late August. On October 5, 2008, the government announced a voluntary General Guarantee Scheme to fully insure deposits and other senior liabilities of participating banks. Banks could participate in the scheme by becoming members of the financial sector’s banking consortium, Det Private Beredskab, or in English, the Private Contingency Association (PCA), before October 13, 2008. The General Guarantee Scheme fully insured all depositors and senior unsecured creditors …

Blanket Guarantees Survey, Christian M. Mcnamara, Carey K. Mott, Greg Feldberg, Andrew Metrick

Journal of Financial Crises

This paper surveys 10 blanket guarantee (BG) programs across 13 Key Design Decisions. The defining characteristics of these programs in terms of their inclusion in our BG series are (a) that they guaranteed a broader range of liabilities beyond deposit accounts and (b) that the guarantees covered existing liabilities in addition to newly issued ones. Each case represents an effort to eliminate creditors’ incentive to withdraw funding from institutions by guaranteeing that the funding will be paid back even if the institutions are unable to do so themselves. The main themes that emerge are: (a) the inability of blanket guarantees …

Reserve Requirements Survey, June Rhee, Carey K. Mott, Greg Feldberg, Andrew Metrick

Journal of Financial Crises

Banks have a private motive to hold some level of cash and liquid reserves, but the negative externalities of bank runs create a public interest in setting a regulatory level higher than the privately optimal level. We can think of such reserve requirements (RRs) as the original form of liquidity regulation. In this paper, we focus on 14 cases in which central banks adjusted RRs after crises hit, typically to deal with liquidity shortages in the banking system. We observe that RR adjustments have several advantages in a crisis: (1) such changes require little process, and the change for banks …

Fire Sales, The Lolr, And Bank Runs With Continuous Asset Liquidity, Ulrich Bindseil, Edoardo Lanari

Journal of Financial Crises

Banks’ asset fire sales and recourse to central bank credit are modeled with continuous asset liquidity, allowing us to derive the liability structure of a bank. Both asset sales liquidity and the central bank collateral framework are modeled as power functions within the unit interval. Funding stability is captured as a strategic bank run game in pure strategies between depositors. Fire sale liquidity and the central bank collateral framework determine jointly the ability of the banking system to deliver maturity transformation without endangering financial stability. The model also explains why banks tend to use the least liquid eligible collateral with …

Financial Analysis Of Surmodics, Inc., Denver Colgrove

Dissertations, Theses, and Projects

This report aims to provide a financial analysis built from qualitative and quantitative data on Surmodics, Inc., a medical device manufacturer headquartered in Eden Prairie. I will discuss how the firm is performing and compare its financial results to a competitor in the industry, Cardiovascular Systems, Inc. Surmodics has been awaiting approval for various new devices, none more important than the SurVeil DCB. The delays in regulatory approval for these products have delayed millions in revenue for Surmodics, and any further delay increases the company’s level of risk. Throughout the various sections of this report, it will become clear that …

Topics In International Finance, Jonathan Lennon Hsu

Olin Business School Graduate Student Theses and Dissertations

This dissertation focuses on two main unanswered questions that lie at the intersection between international financing, international trade, and supply chains. Firstly, to what extent can international trade networks offer borrowing opportunities for firms that face significant barriers in traditional financing markets? Second, what are the potential impacts of financial globalization on firms’ borrowing and extension of trade credit?

The first chapter seeks to answer the first research question listed above: to what extentcan international trade networks offer borrowing opportunities for firms that face significant barriers in traditional financing markets? I show that firms use their trade flows to borrow …

Examination Of The Role Of Peer Effect On Board Diversity Among Us-Listed Companies, Liyang Wang

Olin Business School Graduate Student Theses and Dissertations

Traditionally, government mandates and investor activism influence board diversity in the United States. This study proposes peer effects as a third important determinant of board diversity. The results suggest that companies consider the progress made by their peers when deciding their own diversity. Interestingly, companies only match the performance of their peers and will spend comparable efforts in improving their diversity according to their peer's progress. Meanwhile, the peer effect has grown stronger in recent years, and companies are more likely to track the performance of mid-level peers. The results provide evidence on a new channel that can affect board …

The Effect Of Climate Change On Firm Level Costs With Focus On Mena Region, Farah Osama Saieed

Theses and Dissertations

This paper has a main objective of identifying the relationship between environmental factors and climate change on operating costs incurred by firms. This paper also attempts to compare the direction and intensity of the effect on different sectors in order to analyze whether climate change effect differs based on the nature of the business operations. Several papers have previously addressed the relationship between climate change factors ad profits. This literature will add to previous studies by observing the effect on the cost rather than the profits. In addition to providing results that minimize endogeneity, which is found in a large …

The Importance Of Teaching Personal Finance, Ryan Brewer

Honors College Theses

Personal finance is a foreign concept to many, yet it is an essential concept for all. This research project considers the impact of a personal finance course being taught in an organized, non-profit setting. A community church offers a finance course to their congregants on an annual basis that is designed to teach short- and long-term personal finance concepts to individuals and families to encourage adequate budgeting and investment practices. This specific project will evaluate the participants skillset and confidence in their financial goals before and after they are involved with the course. The data of study will be collected …

Payday Loans In The Mountain West, 2022, Issac Hernandez-Alcaraz, Vanessa M. Booth, Katie M. Gilbertson, Caitlin J. Saladino, William E. Brown Jr.

Economic Development & Workforce

This fact sheet examines data on payday loans, produced by the Pew Charitable Trusts. We examine payday lending costs, most common loan type, and the average annual percentage rate in the Mountain West (Arizona, Colorado, Nevada, New Mexico, and Utah), and include specific analysis on differences between the states by regulatory category.

Entrepreneurial Finance, Jackson Stewart

Honors Theses

The writings and research presented in this document are for a chapter of a textbook the focuses on entrepreneurship. The chapter focuses on many areas of entrepreneurship including: opportunities, networking, roles, economics, innovations, and history. The area that the potential writings focus on is entrepreneurial finance, or how one acquires capital to start their own business.

There are many ways to gain capital to start a business. These include a variety of investors that can give someone funds or loan that are given out by financial institutions. Investors are a great way to gain capital as investors will give the …

The Livingston Survey 2022, S. Anderson, B. Bovino, M. Brown, Thomas Lam, Et Al

Sim Kee Boon Institute for Financial Economics

The 16 participants in the December Livingston Survey weakened their forecasts for real GDP growth, compared with their projections in the June 2022 survey. The forecasters, who are surveyed by the Federal Reserve Bank of Philadelphia twice a year, expect 2.0 percent annualized growth in real GDP during the second half of 2022. They project 0.4 percent annualized growth over the first half of 2023. The forecasters predict that real GDP will continue to decline and reach -1.0 percent annualized growth in the second half of 2023.

The Financials Of Water: The Case Of Maynilad And Manila Water, Junette A. Perez, Janrick Razon

Center for Business Research and Development

What is water? It is defined in the English Oxford Living Dictionaries as a colorless, transparent, odorless liquid that forms the seas, lakes, rivers, and rain and is the basis of the fluids of living organisms. The paper uses financial ratio analysis to examine the financial performance of the two dominant water and wastewater companies in Metro Manila. It attempts to appreciate how water and wastewater companies perform financially as they confront the complexities of operating an essential utility, water, and wastewater.

Financial Statement Analysis Project: "The Big Simulation", Luna Y. Goldblatt, João Branco Chaves, Andrew M. Landman, Salmin B. Mwinjuma, Braden C. Vitelli

Open Educational Resources

This project uses real-world financial statements (for Best Buy Co. Inc. and Nvidia Corporation) and creates a role-playing game where students can choose to be one of 4 capital market participants: an innovator that designs a brand-new accounting system, a company that prepares its best version of financial statements, an investor that chooses its ideal portfolio stocks, and a forensic accountant that looks for evidence of earnings management. The project helps student learn to conduct financial statement analysis and appreciate the impact of these statements on company financial ratios and capital market performance.