Do country-level financial structures explain bank-level CDS spreads?

Benbouzid, Nadia; Mallick, Sushanta; Sousa, Ricardo M.

doi:10.1016/j.intfin.2017.01.002

Cited by 20 publications

(8 citation statements)

References 48 publications

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“…These data are collected from the IMF's IFS. Even though the cost of credit is neglected to be directly addressed by most of the studies (with the exception of Barajas et al ., ), this is an important conditioning to be accounted for (see, for instance, Benbouzid, Mallick and Sousa, ,b). We expect that credit booms are less likely when the relative cost of credit is high. Growth rate of real GDP ( RGDPgr ).…”

Section: Methodsmentioning

confidence: 99%

Political and Institutional Determinants of Credit Booms

Castro

Martins

2018

Oxf Bull Econ Stat

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The literature that investigates credit booms has essentially focused on their economic determinants. This paper explores the importance of political conditionings and central bank independence and provides some striking findings on this matter. Estimating a fixed effects logit model over a panel of developed and developing countries for the period 1975q1–2016q4, we find that credit booms are less likely when right‐wing parties are in office, especially in developing countries, and when there is political instability. However, they have not proven to depend on the electoral cycle. More independent Central Banks are also found to reduce the probability of credit booms. Moreover, they seem to be more likely to occur and spread within a monetary union.

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Section: Methodsmentioning

confidence: 99%

Political and Institutional Determinants of Credit Booms

Castro

Martins

2018

Oxf Bull Econ Stat

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“…We contend that risk (or a bank's stability levels) affects and determines the interlinkages between the business climate and a bank's innovation capacity. High standards of efficiency/productivity, financial structures, bank characteristics and stability have become a critical issue concerning banks' viability, especially after the GFC (Mallick and Yang, 2011;Mallick and Sousa, 2013;Benbouzid et al, 2017Benbouzid et al, , 2018.…”

Section: Introductionmentioning

confidence: 99%

Financial stability, competitiveness and banks' innovation capacity: Evidence from the Global Financial Crisis

Degl’Innocenti

Grant

Šević

et al. 2018

International Review of Financial Analysis

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This paper provides nuanced evidence on the effect of competitiveness and financial stability on banks' innovation-capacity (technological-change) levels during the Global Financial Crisis (GFC) in 2007-2008. We applied contemporary developments in nonparametric frontier analysis, employing a new index, the Global Financial Centres Index, to measure the business competitiveness of 45 financial centres. Our findings indicated a nonlinear and positive relationship between financial centres' competitiveness, banks' stability and innovation-capacity levels. This suggests that banks' ability to increase stability alongside financial centres' stability in a highly competitive environment acts as a protective measure against the GFC's negative effects.

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“…A related stream of literature studies the effects of regulatory quality in the banking sector and debt markets. For instance, Benbouzid, Mallick, and Sousa (), use bank data from thirty countries over the period 2004 to 2011 to show that a better quality of economic and legal institutions can help reduce banks’ CDS spreads, as banks operating in countries where the regulatory quality is stronger tend to be less affected by spikes in financial stress of 2008 to 2009. Additionally, Benbouzid, Mallick, and Sousa () focus on financial structure indicators (namely, financial stability, depth, access, and efficiency) and country risks (i.e., economic, financial, and political rating risks) to explain why some banks experience higher levels of credit risk relative to others across countries.…”

Section: Literature Reviewmentioning

confidence: 99%

Regulatory quality, financial integration and equity cost of capital

Nagaraj

Zhang

2019

Rev International Economics

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We study the impact of international financial integration on firm‐level equity cost of capital in the presence of regulatory differences. International financial integration reduces the domestic cost of capital in the presence of well‐defined regulations that make it easier for foreign firms to overcome information asymmetry. We study this relationship for 55 countries for the period 2002 to 2014. Using multilevel mixed estimations, we find a negative relationship between cost of capital and both financial openness and regulatory quality. However, economies with better regulatory quality have a positive relationship between financial openness and cost of capital. Our results inform policy on the cost of higher level of regulations on firms’ equity cost of capital, especially when an economy has a high level of financial openness.

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Do country-level financial structures explain bank-level CDS spreads?

Cited by 20 publications

References 48 publications

Political and Institutional Determinants of Credit Booms

Political and Institutional Determinants of Credit Booms

Financial stability, competitiveness and banks' innovation capacity: Evidence from the Global Financial Crisis

Regulatory quality, financial integration and equity cost of capital

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