Research background: The evaluation of the predictive strength of MIP indicators in relation to crises is extremely important for the process of coordinating the economic policies of the EU countries. MIP is one of the pillars of the economic crisis prevention procedure. Predictive power of individual indicators has not been tested before their introduction. Purpose of the article: Evaluation of the predictive strength of fourteen MIP indicators in relation to multidimensional crises in the EU countries. Methods: We used ordered probit model to test the ability of MIP indicators to correctly predict episodes of “multidimensional crises” (as defined by the authors) in the period between 2008 and 2017 in all EU Member States. Findings & Value added: We defined “multidimensional crises”, combining several negative phenomena into one limited dependent variable. This work is also novel in its application of probit regression to test the predictive strength of MIP indicators with an ordered probit model. We identified five MIP variables which were statistically significant in predicting “multidimensional crises” for all EU countries: net international investment position, nominal unit labour cost index, house price index, private sector credit flow and general government gross debt. Other variables turned out to be less important or not effective in crises prediction.

No abstract

The paper focuses on central counterparties (CCPs) becoming the buyer to everyseller and the seller to every buyer and thereby ensuring the performance of opencontracts. The role of CCPs increased considerably after outbreak of the crisisin 2008.In 2012 BIS and IOSCO published the Principles for financial market (post-trade)infrastructures. The aim of the paper is to find out whether, and if yes – to whatextent, the mentioned principles have to be modified when applied to CCP servingIslamic financial institutions. It seems that all principles are appropriate forIslamic finance, however some of them should be modified in order to be Shariacompliant.Moreover, in some cases the modification might also be difficult dueto lack of standardized instruments.

Purpose:The evaluation of the predictive power of Macroeconomic Imbalance Procedure (MIP) indicators is crucial for coordinating the economic policies of the EU countries. MIP is one of the pillars of the economic crisis prevention procedure. Design/Methodology/Approach: Using the Bayesian model averaging (BMA) framework, we compare different models where lagged MIP indicators try to explain several macroeconomic variables associated with crises. Findings: The results show that the importance of MIP indicators between 2001 and 2017 was diversified. In the case of annual real GDP growth, including a 1-year lagged house price index, nominal unit labor cost, real effective exchange rate (1-year change), and export market share in the model improves the model's explanatory power most. For explaining inflation rate, export market share (again), and house price index is valid. Practical Implications: The construction of the MIP procedure should be simplified, as not all indicators have a fundamental capability of predicting excessive imbalances which result in crisis events. Indicators are relevant to the current economic priorities of the EU, which do not have a significant capacity to anticipate crisis phenomena should be excluded from the Alert Mechanism. Originality/Value: We use the Bayesian model averaging (BMA) framework BMA that directly deals with heterogeneity by finding a combination of regressors that account for it to the greatest extent within a conditioning set of information. Consequently, BMA appears to be ideally suited for finding robust determinants of "crisis" variables.