Business Commons^™

Malaysia: Reserve Requirements, Afc, Bailey Decker

Journal of Financial Crises

Bank Negara Malaysia (BNM) unpegged the ringgit in July 1997, days after Thailand floated the baht. Ringgit depreciation and adverse investor sentiment worsened, contributing to a domestic liquidity shortage and capital flight. Malaysia experienced market instability in the early months of 1998, particularly pressure on its exchange rate, foreign currency reserves, and interest rates. At the same time, disruptions in the domestic money market and loan intermediation process caused an increase in lending rates, which resulted in debt servicing problems and weakened financial stability. To facilitate lending and productive economic activity, BNM twice lowered the statutory reserve requirement (SRR) at …

India: Reserve Requirements, Gfc, Sharon Nunn, Carey K. Mott

Journal of Financial Crises

As international funding sources dried up during the Global Financial Crisis of 2007–2009 (GFC), businesses in India sought funds from domestic financial institutions, straining banks and lifting short-term lending rates. The liquidity pressure, coupled with sharp asset price corrections and rupee depreciation, restricted credit expansion in India. The Reserve Bank of India (RBI) responded with a suite of liquidity measures, including cuts to its two reserve requirement ratios, the cash reserve ratio (CRR) and the statutory liquidity ratio (SLR). The RBI cut the CRR over the course of four months from October 2008 to January 2009, lowering the ratio from …

Jamaica: Reserve Requirements, Gfc, Corey N. Runkel

Journal of Financial Crises

In October 2008, the Global Financial Crisis (GFC) and liquidity shortages rocked American and European markets, causing investors to exit liquid Jamaican-dollar assets. The Bank of Jamaica (BOJ) feared a “disorderly depreciation” in the Jamaican-dollar (JMD) exchange rate to the US dollar (BOJ 2009, 44). In response, the BOJ raised required reserve ratios for cash and other liquid assets, the first increases since 2002. The BOJ raised reserve ratios three times—in December 2008, January 2009, and February 2009—because the central bank could not change its requirements by more than 200 basis points per month. The BOJ raised the requirement for …

Czech Republic: Reserve Requirements, 1997, Benjamin Hoffner

Journal of Financial Crises

In the first quarter of 1997, fiscal and current account deficits in the Czech Republic put pressure on the koruna’s pegged exchange rate as capital flowed out of the domestic economy. Although the Czech National Bank (CNB) committed to tight monetary policy to protect the peg, on April 11, the CNB announced a lowering of the minimum reserve requirement (RR) ratio from 11.5% to 9.5%, effective May 8. The RR ratio (RRR) reduction (RRR) reflected a compromise with the government, which had petitioned the central bank to ease monetary policy. To improve the balance of payments, the government also implemented …

Colombia: Reserve Requirements, Gfc, Natalie Leonard, Bailey Decker

Journal of Financial Crises

On May 6, 2007, the Bank of the Republic (BR), the central bank of Colombia, introduced countercyclical marginal reserve requirements (RRs) on increases in banks’ deposit accounts to constrain leverage and credit risk in the financial system. A month later, the BR also raised the ordinary RR on outstanding deposit balances. The BR kept those requirements in place for more than a year. In June 2008, when the effects of the Global Financial Crisis (GFC) began to temper economic and credit growth, the BR eliminated marginal RRs. Also in June 2008, however, the BR raised the ordinary RR on outstanding …

China: Reserve Requirements, 2015–2016, Carey K. Mott

Journal of Financial Crises

After China devalued the renminbi against the US dollar in August 2015, Chinese equity markets experienced a significant drop that spilled into international markets. The People’s Bank of China (PBOC) adjusted the reserve requirement ratio (RRR) five times between February 2015 and October 2015: three times before the market turmoil, to allocate credit to preferred sectors, and twice in response to the crisis to release liquidity into the financial system. Throughout this cycle, the central bank applied lower RRRs to rural credit institutions, agricultural lenders, leasing and financing companies, and other sectors in which government policy promoted lending. Although the …

China: Reserve Requirements, Gfc, Carey K. Mott

Journal of Financial Crises

In 2008, China experienced several natural disasters that slowed economic growth, and fearing contagion from the Global Financial Crisis (GFC), the central bank cut the reserve requirement ratio (RRR) three times for large financial institutions, to 15.5%, and four times for small and medium-size financial institutions, to 13.5%. This monetary easing, combined with a USD 586 billion fiscal stimulus package, caused explosive credit growth in China. One year after these RRR cuts, the central bank hiked the ratio 12 times, to a historically high 21.5% for large banks in June 2011; however, it maintained a different ratio for rural credit …

Argentina: Reserve Requirements, 1994–1995, Natalie Leonard

Journal of Financial Crises

The devaluation of the Mexican peso in December 1994 sparked concerns about the quality and safety of government debt across Latin American countries, including Argentina. In late 1994 and 1995, Banco Central de la Republica Argentina (BCRA) implemented three changes in reserve requirement policy to restore liquidity throughout the financial system and defend the currency peg to the US dollar. First, it lowered the existing minimum reserve requirement, which required banks to hold reserves entirely in cash (pesos or US dollars). This released more than ARS 4 billion (USD 4 billion) in resources into the banking system, according to the …

Brazil: Reserve Requirements, Gfc, Sean Fulmer

Journal of Financial Crises

After the collapse of Lehman Brothers in September 2008, deposits began to accumulate at large Brazilian banks, representing a flight to safety away from small and medium-sized banks. While total deposits in the Brazilian financial system grew by 13% from August 2008 to January 2009, the total deposits held by small and medium-sized banks declined by 23% and 11%, respectively. Because of high statutory reserve requirements and legal disincentives to lend directly to financial institutions, the Central Bank of Brazil (BCB) used reserve requirements as its primary tool for providing liquidity to incentivize large banks to provide credit to smaller …

Thailand: Fidf Blanket Guarantee, 1997, Ayodeji George

Journal of Financial Crises

The Thai government’s decision to allow the baht to float in July 1997 was the pivotal event of the Asian Financial Crisis. The baht fell 20% by the end of the month, further pressuring Thai financial institutions that had borrowed heavily in US dollars and other foreign currencies. In early August, Thailand’s Finance Minister and the Bank of Thailand (BOT) announced the suspension and restructuring of insolvent finance companies and a blanket guarantee covering depositors and creditors of all domestic banks and the remaining finance companies, administered by the BOT’s Financial Institutions Development Fund (FIDF). However, the blanket guarantee was …

Mexico: Fobaproa Blanket Guarantee, 1993–1994, Stella Schaefer-Brown

Journal of Financial Crises

On December 22, 1994, the Mexican government allowed the peso to float freely against the US dollar, aggravating the run on peso deposits, leading to the rapid devaluation of the peso, and sparking the peso crisis. The following week, the Bank of Mexico announced that the Mexican deposit insurer would fully guarantee all commercial bank deposits and liabilities except subordinated debt. The announcement of the blanket guarantee appeared effective at reassuring foreign investors, as the central bank was soon able to ease the liquidity support that it had been providing to banks during the crisis. The government created a deposit …

Sweden: Bank Support Authority, Blanket Guarantee, 1992, Anmol Makhija

Journal of Financial Crises

Following a period of rapid financial liberalization and a record credit boom in the 1980s, Sweden’s financial system suffered its worst shock in the post–World War II period. Swedish banks were heavily dependent on foreign credit, which dried up amid signs of instability. The Swedish government announced a blanket guarantee on September 24, 1992, for all banks’ obligations except share capital and perpetual subordinated loans. According to a 1995 IMF Working Paper by Drees and Pazarbasioglu, the purpose of the blanket guarantee was “to guarantee the stability of the payments system and to safeguard the general supply of credit.” The …

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 …

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, …

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 …

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 …

Manufactured Homes In Nevada Counties, Joshua Padilla, Annie Vong, Caitlin J. Saladino, William E. Brown Jr.

Housing & Real Estate

This fact sheet presents data on the share of manufactured homes in each of Nevada’s 17 counties, as reported in the June 2022 The Daily Yonder article, “With Housing Shortage Still Ongoing, Manufactured Homes are Gaining Ground,” by Kristi Eaton. The original report includes data made available by the Housing Assistance Council (HAC) for each county in the United States from 2009 and 2018.

Unwilling Gamblers And Loaded Dice: Considering Recession And Crisis As A Natural Effect Of Financial Capitalism, Darlene N. Moorman

The Downtown Review

Under financial capitalism, ordinary people are increasingly becoming 'unwilling gamblers' of a risky and unstable system. This paper explores the social and institutional change behind the neoliberal movement and considers how the politics and policies of neoliberalism have contributed to a certain environment of financial instability. Looking at the changing nature of the economy, the rapid expansion of the financial sector, and the persisting issue of moral hazard underlying risky and speculative behaviors among other items, reveals a financial system in which recessions and crises can be considered a natural, although not inevitable, effect.

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 Penn Effect And Marx's International Law Of Value: A Review Of Value And Unequal Exchange By Andrea Ricci, Giuseppe Quattromini

Markets, Globalization & Development Review

Placing itself in the revival of interest in unequal exchange, Ricci's book claims the need to give the theory a new conceptual foundation to justify recent proposals to estimate unequal exchange on the basis of the so-called Penn effect. In order to do that, Ricci identifies Marx's international law of value as a fitting theoretical framework and hence develops a radically innovative theory of global capitalist exploitation through international trade. Finally, he assesses the magnitude of unequal exchange over the past three decades by producing estimates based on the proposed approach.

Nevada Workforce Diversity, Equity, And Inclusion Study 2022, Jan Jones Blackhurst, Becky Harris

International Gaming Institute Faculty Publications

Diversity, Equity, and Inclusion (DEI) metrics enable organizations to set concrete goals and self-monitor their performance. In 2021, Nevada’s legislature passed Senate Bill No. 267 (SB267), authorizing the University Nevada, Las Vegas (UNLV) to study DEI benchmarks in the State. The study is designed to produce actionable results capable of informing policy and employer best practices in Nevada. This study was piloted in 2021, with study participation taking place between January 3-April 30, 2022.

The questions in the study were crafted based on DEI public policy considerations as well as metrics for gauging the scope of offerings available to women …

A Survey Of Retail Trade Patterns In South Dakota: 2012-2021, Rand E. Wergin

Faculty Publications

This paper provides an analysis of retail sales and retail trade in the state of South Dakota for the years 2012 to 2021. This analysis will provide valuable information to community leaders in the cities and towns of South Dakota. Along with measures such as unemployment and inflation, Retail Pull (RP) provides a measure of community’s economic health. For example, retail is often the largest employer in a city, particularly the smaller communities of South Dakota, and a robust retail sector provides a tax base to support community services. Thus, the economic health of the community depends on the viability …

Encouraging Social Entrepreneurship, Kanyaporn Skutalakul

Asian Management Insights

It’s about taking the first steps.

Evaluating Utah's Rural Online Initiative: Empowering Organizational Leaders Through Remote Work, Paul A. Hill, Amanda D. Ali, Lendel K. Narine, Andrea T. Schmutz, Tyson M. Riskas, Debra M. Spielmaker

The Journal of Extension

Compared to urban counties, Utah's rural counties experienced high levels of unemployment. Informed by a statewide needs assessment, Utah State University Extension developed a remote work leadership course to equip business leaders with knowledge and skills to create remote jobs as a solution to rural unemployment. This descriptive evaluation study collected data from course participants (N = 62). Findings showed short-term outcomes were achieved; participants experienced increases in knowledge and skills and had more positive intentions toward creating remote jobs and hiring employees from rural counties. Extension professionals can design and evaluate their programs using the framework in this study.

A Psychological Profile Of The Digitized Economy: Who Buys Cryptocurrencies, Nfts, And Meme-Stocks (And Why)?, Nicole Wolfe

Undergraduate Student Research Internships Conference

As the global digital economy continues to grow in interest and financial worth, it is imperative to harvest data to gain early information on this nuanced economy. Already, we have witnessed billions of dollars in losses and wins at the blink of an eye, encouragement to invest from well-known celebrities and politicians, and high anxiety from the newness, power consumption, and potential outcomes of this nuanced system. Stemming from the lack of solid evidence in this emerging field, we hope to gain more insight on the early players and variation within the digitized economy. Similarly, we hope to identify specific …