Macroeconomics Commons^™

Indonesia Deposit Insurance Corporation, Lily S. Engbith

Journal of Financial Crises

To address the risk of capital flight to neighboring countries during the Global Financial Crisis, the Indonesian government raised the limit on insured deposits 20-fold from IDR 100 million to IDR 2 billion per account (about USD 200,000). The President issued two government regulations on October 13, 2008. The first was an emergency decree that authorized the government, in consultation with the Indonesian Parliament, to alter the limit in times of systemic financial distress. The second was a government regulation enacting the actual increase, which has remained in effect since the crisis. All banks operating within Indonesia, including branches of …

Hungary: National Deposit Insurance Fund, Zijin (Phoebe) Lei, Ezekiel Vergara

Journal of Financial Crises

At the height of the Global Financial Crisis (GFC), Hungary announced changes to its deposit-insurance system on October 8, 2008. The government said that it would increase the deposit-insurance cap from HUF 6 million to HUF 13 million (about USD 31,000 to about USD 68,000), the equivalent of roughly EUR 50,000 (about USD 68,000), in line with a European Union (EU) recommendation. Hungary’s finance minister also announced that the state would temporarily provide an unlimited deposit guarantee, following the actions of several European countries. The unlimited guarantee was political, meaning it was not implemented through official legislation. It was effective …

Iceland: Depositors’ And Investors’ Guarantee Fund, Adam Kulam

Journal of Financial Crises

Leading up to the Global Financial Crisis of 2007–2009, Iceland’s three largest banks accumulated assets totaling several times the size of Iceland’s GDP and financed their growth through foreign borrowing. As wholesale funding dried up in 2007, they replaced this borrowing by rapidly gathering deposits through foreign branches and subsidiaries located in the European Union, primarily in the United Kingdom and the Netherlands. In the summer and fall of 2008, international credit markets froze and the Icelandic banks were unable to roll over their maturing liabilities. On October 6, Prime Minister Geir Haarde announced a full guarantee of domestic deposits. …

Greece: Hellenic Deposit Guarantee Fund, Lily S. Engbith

Journal of Financial Crises

Responding to general financial and economic volatility during the Global Financial Crisis (GFC), the Greek government in November 2008 sought to shore up public confidence in the banking system by raising the deposit-insurance limit from EUR 20,000 to EUR 100,000 (127,000 USD) per depositor for three years. The Hellenic Deposit Guarantee Fund (HDGF) was responsible for administering this adjustment, which was accompanied by a fivefold increase in the percentages used for calculating member institutions’ annual contributions. All credit institutions that were authorized to operate in Greece, including branches of foreign banks without their own coverage, were required to participate in …

Hong Kong Sar: Full Deposit Guarantee, Ezekiel Vergara, Lily S. Engbith

Journal of Financial Crises

Following a run on Hong Kong’s fifth-biggest bank in September 2008, the Hong Kong government announced that it would use its Exchange Fund to extend full insurance temporarily to depositors at approved banks. The existing Deposit Protection Scheme (DPS) would continue to insure the first 100,000 Hong Kong dollars (HKD; about USD 13,000) per depositor at each bank; the new program would cover the rest. It also covered a broader set of institutions. The Hong Kong Monetary Authority (HKMA) administered the program, overseen by the Hong Kong Deposit Protection Board (HKDPB); the HKMA was also responsible for managing the Exchange …

France: Deposit Guarantee Fund, Ezekiel Vergara

Journal of Financial Crises

In October 2008, during the Global Financial Crisis (GFC), European Union (EU) officials urged member states to raise their minimum deposit-insurance coverage to at least EUR 50,000 (USD 68,000) to promote confidence in banks. France did not need to increase its deposit-insurance cap to meet this target, as it already guaranteed EUR 70,000. The following year, EU officials passed a directive that required all member states to permanently increase their minimum deposit-insurance coverage to EUR 100,000 by December 31, 2010. French authorities complied with the EU’s directive on September 29, 2010. The Fonds de Garantie des Dépôts (FGD), a private …

Belgium: Protection Fund/Special Protection Fund, Adam Kulam

Journal of Financial Crises

At the height of the Global Financial Crisis (GFC) in fall 2008, the Belgian government increased the coverage limits of its deposit guarantee to restore faith in its banking system, protect savers and depositors, and safeguard financial stability. Belgium joined the European Union’s (EU) efforts to strengthen deposit guarantee systems. The measures complemented the Belgian government’s other efforts to secure domestic banks. The government implemented the emergency measures in October and November 2008 through royal decrees, which Parliament later incorporated into law. In a five-week span, Belgian authorities increased the deposit guarantee from EUR 20,000 to EUR 100,000 (USD 26,820 …

Brazil: Time Deposits With Special Guarantee, Sharon M. Nunn

Journal of Financial Crises

Uncertainty from the Global Financial Crisis spread to the Brazilian financial system in 2008, triggering a flight to quality toward assets with explicit or implicit government guarantees. In the Brazilian context, this meant depositors pulled funds from small and medium-size banks and parked them in larger banks that investors believed the government was more likely to backstop. The National Monetary Council (CMN) created the Time Deposits with Special Guarantee program (DPGE) in March 2009 to bolster liquidity in small and medium-size banks. The CMN put the country’s existing deposit insurer, the Credit Guarantee Fund (FGC), in charge of administering the …

Austria: Unlimited Deposit Guarantee, Sharon M. Nunn

Journal of Financial Crises

After Germany and Ireland implemented unlimited deposit guarantees, Austrian officials passed a law on October 26, 2008, that removed deposit-insurance limits for individual depositors, fearing that Austrians would move their money to countries with higher deposit coverage. The government established the program using the country’s existing, mandatory deposit-insurance system (DIS), which was private, ex post funded, and segmented into sectoral schemes that covered different kinds of financial institutions. During payouts, the schemes covered the first EUR 50,000 (USD 67,000) of guaranteed funds to a given depositor, and the government the government covered the rest. The government required all financial institutions …

Broad-Based Emergency Liquidity Programs, Rosalind Z. Wiggins, Sean Fulmer, Greg Feldberg, Andrew Metrick

Journal of Financial Crises

In this paper, we analyze broad-based emergency liquidity (BBEL) programs. Our main purpose is to assist policymakers who are considering establishing a BBEL program in designing the most effective program possible as efficiently as possible. Our insights are derived from 33 case studies the Yale Program on Financial Stability produced and existing literature on the topic.

Liquidity provision is a long-established mandate of central banks and was a function that private entities performed even before the establishment of central banks. We survey a sampling of cases from the 19th through 21st centuries, drawn from 10 countries and regions, to distill …

Australia: Financial Claims Scheme, Ezekiel Vergara

Journal of Financial Crises

Following the collapse of Lehman Brothers on September 15, 2008, the Australian government intervened in its own banking system, both to support domestic depositors and to keep its banking system competitive with those in countries whose regulators had already intervened. On October 12, 2008, the Australian government announced the Financial Claims Scheme (FCS) to insure bank depositors. The deposit guarantee automatically insured depositors at all authorized deposit-taking institutions and covered a range of deposit accounts. As initially announced, the FCS would provide a blanket guarantee to all depositors with no fee for participation. This blanket guarantee, however, prompted a migration …

Market Support Programs: Covid-19 Crisis, June Rhee, Lily S. Engbith, Greg Feldberg, Andrew Metrick

Journal of Financial Crises

This paper is an analysis of important considerations for policymakers seeking to establish a market support program (MSP). Our main purpose is to assist policymakers who have already made the decision to use an MSP in designing the most effective program possible. Our insights derive from 23 case studies the Yale Program on Financial Stability produced and existing literature on the topic.

By the onset of the Global Financial Crisis (GFC), market-based finance and traditional banking systems were significantly intertwined, and the panic in market-based finance threatened to spread quickly to both traditional banks and the real economy. In response, …

Dividends And Bank Capital In The Global Financial Crisis Of 2007–2009, Viral V. Acharya, Irvind Gujral, Nirupama Kulkarni, Hyun Song Shin

Journal of Financial Crises

The headline numbers appear to show that even as banks and financial intermediaries suffered large credit losses in the Global Financial Crisis of 2007–2009, they raised substantial amounts of new capital, both from private investors and from government-funded capital injections. However, on closer inspection, the composition of bank capital shifted radically from one based on common equity to that based on debt-like hybrid claims such as preferred equity and subordinated debt. The erosion of common equity was exacerbated by large-scale payments of dividends, in spite of widely anticipated credit losses. Dividend payments represent a transfer from creditors (and potentially taxpayers) …

Account Guarantee Survey, Christian M. Mcnamara, Adam Kulam, Greg Feldberg, Andrew Metrick

Journal of Financial Crises

This paper surveys 27 account guarantee (AG) programs across 14 Key Design Decisions. The main themes that emerge are: (a) the importance of considering the effects of AG programs on other parts of the financial system or other jurisdictions, (b) the ability to address moral hazard through heightened supervision, which removes a potential obstacle to adopting AG programs in response to the acute phase of crises, (c) the necessity of developing guarantees that are credible and timely, and (d) the need to design standing AG programs with an eye toward how they will function during crises.

Assessing The Nexus Among Energy Consumption, Foreign Direct Investment And Economic Growth In Sub-Saharan Africa, Olanrele1 Iyabo A., Awode Segun S.

CBN Journal of Applied Statistics (JAS)

This study examines the dynamic relationship among energy consumption, foreign direct investment, and economic growth in Sub-Sahara Africa. Beyond assessing the tripartite causal relationship, the study investigates the extent of impacts among energy consumption, foreign direct investment, and economic growth using the Generalised Method of Moments. The study utilises data from 42 Sub-Saharan African countries spanning 1991 to 2018. Findings from the study show that a percentage increase in energy consumption engenders economic growth by 1.3 percent. Conversely, economic growth increases energy consumption by 0.004 percent. Also, there is a significant one-way causality running from foreign direct investment (FDI) to …

Effect Of Monetary Policy Rate On Market Interest Rates In Nigeria: A Threshold And Nardl Approach, Oluwafemi E. Awopegba, Joseph O. Afolabi, Lydia T. Adeoye, Godwin O. Akpokodje

CBN Journal of Applied Statistics (JAS)

This study examines the effect of monetary policy rate (MPR) on market interest rates in Nigeria. For parsimony, we develop two indexes called the short-term interest rate (SINT) and Lending interest rate (LINT) to represent deposit and lending rates respectively. The nonlinear autoregressive distributed lag (NARDL) and threshold regression models are adopted. The study uses monthly data from 2002:M1 to 2019:M12. The results of the threshold regression model indicate that the degree of the effect of MPR on SINT and LINT above the estimated threshold of 11 and 13 percent respectively is greater and significant than if MPR were to …

Social Dimension Of Inclusive Growth In Ecowas: Implication For Poverty Reduction, Toriola K. Anu, Goerge O. Emmanuel, Ajayi O. Felix

CBN Journal of Applied Statistics (JAS)

This study investigates the implication of the social dimension of inclusive growth on poverty reduction in Economic Community of West African States (ECOWAS) countries. It specifically examines how social indices of inclusive growth comprising of income inequality, education, and health outcomes affect poverty reduction. The study uses a panel dataset of the six (6) lower-middle income countries in ECOWAS which was analysed via panel Difference Generalised Method of Moment (D-GMM). The results show that GDP per capita exerts significant negative effect on poverty while inequality, education and health outcomes do not show significant effect on poverty. Although, the estimates of …

Effect Of Fdi Inflows On Employment Generation In Selected Ecowas Countries: Heterogeneous Panel Analysis, Timothy A. Aderemi, Olawunmi Omitogun, Bukonla G. Osisanwo

CBN Journal of Applied Statistics (JAS)

The aim of this study is to examine the effect of FDI on employment in ECOWAS sub region between 1990 and 2019. The study utilizes a panel autoregressive distributed lag model to analyse the short run and long run relationship between FDI and employment across ECOWAS sub region. In the short run, the impact of FDI on employment is negative and statistically not significant. Meanwhile, in the long run FDI has a positive and statistically significant impact on employment rate. This implies that FDI has the capacity to generate employment in countries in ECOWAS sub region. Therefore, this study recommends …

Impact Of Covid-19 Pandemic On The Nigeria Stock Market: A Sectoral Stock Prices Analysis, Peter A. Adekunle, Yakubu A. Bello, Udochukwu G. Nwachukwu

CBN Journal of Applied Statistics (JAS)

This study examines the impact of the COVID-19 pandemic on sectoral stock prices in Nigeria stock market using daily data covering from February 28, 2020 to June 26, 2020. Applying the autoregressive distributed lag (ARDL) bounds test, the study finds that COVID-19 pandemic had adverse impact on the stock market indices in the short run. Furthermore, the study documents negative response of sectoral stock prices to the pandemic while the stock prices of the banking sub-sector are the worst hit. Compared to the consumer goods, and industrial subsector indices, the speed of adjustment to long run equilibrium is faster for …

Inaccessible Interpolated Imagery: How Coffee Farmers In The State Of Chiapas Might Access Political Economic Opportunity Through Representation, Paolo Fiann Bicchieri

Master's Theses

Here is a useful parable to boil down the idea of this project and set the tone: when one goes to the bar to tell a story about a fight at the bar, they would never venture to place themselves as the hero of the brawl, taking out three drunkards in a single punch, unless they were really in the bar, at that time, fighting a good fight. One would never do this as the bartender, locals, and regulars would all know if this were the case or not. Yet transnational corporations, governments, and even consumers do this all the …

The Great Resignation: A Content Analysis Of News Sources' Portrayals Of The Covid-19 Labor Shortage., Mackenzie Williams

College of Arts & Sciences Senior Theses

When workers left the labor market in large numbers during the COVID-19 pandemic, proclamations of a labor shortage emerged extensively throughout the news. In this study, I analyze the coverage of the worker shortage among three news sources with different political orientations. Several themes emerged from analyzing a total of 75 articles. The findings showed that the perspective shown in the article, the cause of the labor shortage, restaurant worker portrayal, support of solutions, and opinion of the labor shortage all differed based on the political identity of the news source. This research supports previous findings that show there is …

Monetary Policy And Banking Sector Stability In Nigeria, Didigu Chizoba E., Joshua Nsikak J., Okon Joel I., Eze Annette O., Gopar Jurbe Y., Oraemesi Charles N., Udofia Blessing-Oxford U., Yisa Daniel N., Ejinkonye Jude C., Ette Victoria E.

CBN Journal of Applied Statistics (JAS)

This study investigates the impact of monetary policy on banking sector stability in Nigeria, utilizing quarterly data for the period 2007Q1 to 2021Q4. The study employs the autoregressive distributed lag (ARDL) bounds testing approach to cointegration. Results show that a long run relationship exist between banking sector stability and monetary policy in Nigeria. Furthermore, monetary policy rate, liquidity ratio, and cash reserve ratio are found to enhance banking sector stability. The study recommends, among others, that cash reserve and liquidity ratios should be kept at levels that will prevent excess liquidity in the system.

Inflation: Just How Bad Is It?, Timothy Meyer

Cornhusker Economics

Amidst the chaotic news cycle of politics, the pandemic, and global affairs, a new topic is making headlines – inflation. To some, rising inflation causes greater fear than the other headlines combined; to others, it is nothing more than a minor nuisance. This article will explain why people’s divisive attitudes toward inflation are likely justified.

Waqf Fund Management Through Micro Waqf Bank Program In Indonesia, Fachry Ganiardi Danuwijaya, Nurwahidin M.Ag

Journal of Strategic and Global Studies

Waqf is a muamalah activity that has a very important economic and social role in Islamic history. Waqf is one of solutions to the problem of poverty and social inequality in society. The establishment of the Micro Waqf Bank initiated by the government together with the Financial Services Authority (OJK) has played an important role as one of the new Islamic microfinance institutions in financial inclusion in Indonesia. This paper will discuss how the management of waqf funds through the Islamic Waqf Bank program based on pesantren in efforts to alleviate poverty and social inequality which has become a chronic …

Cryptocurrency, Decentralized Finance, And The Evolution Of Money: A Transaction Costs Approach, James L. Caton Jr, Cameron Harwick

Journal of New Finance

We leverage a transaction costs narrative to provide a theoretically unified presentation of the evolution of exchange, with the latest evolutionary frontier being cryptocurrency and decentralized finance. We show that with each new development in the evolution of money, the new form or medium of exchange must reduce transaction costs relative to relevant alternatives. The development of blockchain and cryptocurrency reduced the cost of transferring currency by removing the need for a trusted third party to intermediate funds while also providing the benefit of anonymity/pseudonymity. Likewise, decentralized finance does not require a third party to intermediate savings and investment and …

Lessons Learned: Lewis "Lee" Sachs, Yasemin Esmen

Journal of Financial Crises

Lewis “Lee” Sachs was counselor to Treasury Secretary Timothy F. Geithner and head of the Obama administration’s Financial Crisis Response Team in the US Department of the Treasury. Mr. Sachs led the development and coordination of the Obama administration’s Financial Stability Plan to stabilize the financial system during the Global Financial Crisis of 2007–09 (GFC). He was tasked with continued coordination with the outgoing Bush administration, as well as putting together a team to develop further restructuring plans and oversee their execution. This “Lessons Learned” is based on an interview with Mr. Sachs.

Lessons Learned: William Nelson, Sandra Ward

Journal of Financial Crises

William Nelson was deputy director, Division of Monetary Affairs, at the Federal Reserve Board during the Global Financial Crisis of 2007–09 (GFC). As the nation’s central bank, chief financial regulator, and lender of last resort, the Federal Reserve Board took the lead in setting monetary policy and stabilizing the financial system during the crisis.

Nelson’s responsibilities at the Fed during the crisis included analysis of monetary policy and discount window policy as well as financial institution supervision, and he regularly briefed the board and the Federal Open Market Committee. He developed special expertise in designing liquidity facilities and was a …

Lessons Learned: Timothy Massad, Yasemin Esmen

Journal of Financial Crises

Timothy Massad was assistant secretary for financial stability at the US Department of the Treasury between 2009 and 2014. He oversaw the $700 billion Troubled Assets Relief Program (TARP), which was passed by Congress in October 2008 to enable the Treasury to buy assets of and invest in banks and companies to stem the financial crisis. Massad was involved in the implementation of TARP as well as its winding down; it ultimately invested $439 billion. This “Lessons Learned” is based on a phone interview with Mr. Massad.

The Effect Of A Financial Crisis On Household Finances: A Case Study Of Iceland’S Financial Crisis, Axel Hall, Andri S. Scheving, Gylfi Zoega

Journal of Financial Crises

Iceland experienced a financial crisis in 2008–2009 when its banking system collapsed, the currency lost half its value, most businesses became technically insolvent, house prices fell, and household debt increased due to indexation to foreign currencies or the price level. This paper tells the story of the crisis and maps the losses to households using a dataset from tax returns that includes all taxpayers in the country and contains the value of housing, mortgage debt, disposable income, and net worth. For relative losses in net worth, the results show that families with children, especially those with parents aged between 24 …

Examining The Current Role Of Out-Of-State Buyers In The Tri-Cities Within The Confines Of Residential Real Estate, Paul Arrowood

Undergraduate Honors Theses

We are seeing an influx of out-of-state buyers into Tennessee, and the Tri-Cities area specifically. As a major emerging housing market in the US, the Tri-Cities is being inundated by people from all states and walks of life seeking a better life in Appalachia. Although the reasons vary by person, many agree that political alignment, taxation levels, and the quietness of this area lends itself to population growth. While most members of the housing industry have noticed this uptick in out-of-state buyers, few have taken the time to analyze their own records or review the empirical evidence that is present …