Foreign Currency Loans and Systemic Risk in Europe

Yeșin, Pınar

doi:10.20955/r.95.219-236

Cited by 27 publications

(29 citation statements)

References 16 publications

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“…floating versus fixed) and policy responses to the crisis. The countries that were hit hardest were Hungary, Poland, the Baltic States, Bulgaria, Romania and Ukraine, while Slovenia, Slovakia and the Czech Republic experienced fewer problems (Bohle, 2014;Dübel & Walley, 2010;Marer, 2010;PFS Advisory Team, 2012;Yesin, 2013). 3 For a related discussion on decision-making under conditions of uncertainty see Gigerenzer (2016) and Savage (1972).…”

Section: Fundingmentioning

confidence: 99%

Spatializing the future: financial expectations, EU convergence and the Eastern European Forex mortgage crisis

Pellandini-Simányi

Vargha

2018

Economy and Society

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Existing accounts of failure to predict the financial crisis focus on the complexity of the financial system, and are less useful for understanding crises in non-securitized markets. We examine the roots of optimism leading up to the Eastern European mortgage crisis through the case of Hungary, and use recent theories of expectations, which understand them as both pragmatic and fictional practices that commonly incorporate narratives. Based on archival research and interviews with bankers, regulators and legislators, we demonstrate how the EU convergence narrative was central in forming optimistic expectations. Fusing the underspecified convergence process with an orientalist geographical imaginary, this narrative and its associated measures translated growing indebtedness as 'catching up' with

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Section: Fundingmentioning

confidence: 99%

Spatializing the future: financial expectations, EU convergence and the Eastern European Forex mortgage crisis

Pellandini-Simányi

Vargha

2018

Economy and Society

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“…Currency mismatch is thought to have been a key amplifier during the Asian crisis in the late 90s (for example, Corsetti et al (1999)). Moreover, currency mismatch in Eastern Europe has been documented and discussed as a source of systemic risk, for example by Ranciere et al (2010b) andYesin (2013).…”

Section: Background On Foreign Currency Debtmentioning

confidence: 99%

“…However, because of the balance sheet channel, devaluations can be contractionary (Bebczuk et al (2010) and Kohn et al (2015)), cause or worsen currency crises (Aghion et al (2001), Aghion et al (2004), Ranciere et al (2010a)), and create systemic risk (Dell'Ariccia et al (2016b) and Yesin (2013)). In addition, they may feed back onto bank balance sheets through higher credit risk, causing a reduction in cross-border lending (Bruno and Shin (2014) and Avdjiev et al (2016)).…”

Section: Introductionmentioning

confidence: 99%

Foreign Currency Loans and Credit Risk: Evidence from U.S. Banks

Schmidt‐Eisenlohr

2017

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Evidence from U.S. Banks Abstract When firms borrow in foreign currency but collect revenues in local currency, exchange rate changes can affect their ability to repay their debt. Using loan-level data from U.S. banks' regulatory filings, this paper studies the effect of exchange rate changes on firms' loan payments. A 10 percent depreciation of the local currency makes a firm with foreign currency debt 69 basis points more likely to become past due on its loans than a firm with local currency debt. This result implies that firms do not perfectly hedge against exchange rate risk and that this risk translates into credit risk for banks. The findings lend support to both the balance sheet channel and the financial channel of exchange rates. Terms of use: Documents inJEL-Codes: F310, G150, G210.

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“…Debt also creates opportunities for abuses leading to scandals and causes social tensions (e.g., credit unions scandal in Poland, as well as Swiss franc mortgage problem experienced by many European countries, or the whole issue of unethical behaviour on the part of financial market professionals during the sub-prime crisis, including the LIBOR manipulation scandal. See, for instance, [5][6][7][8]). Further, debt-particularly excessive debt-has an adverse effect on health, both mental and physical [9][10][11][12][13], and eventually on financial well-being and overall life satisfaction [14][15][16].…”

Section: Introductionmentioning

confidence: 99%

Sustainable Debt Behaviour and Well-Being of Young Adults: The Role of Parental Financial Socialisation Process

Cwynar

Baryła-Matejczuk

et al. 2019

Sustainability

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Literature shows that parental financial socialisation plays an important role in attaining financial literacy as well as in shaping sustainable financial behaviours and that both translate into increased well-being indicators and financial security on micro- and macroeconomic levels. However, debt literacy and debt behaviour seem to be unique. Very little is known about the childhood financial socialisation process through which adults’ sustainable debt behaviour is shaped and how debt behaviour may affect well-being. This study tests a hierarchical model of childhood financial socialisation consisting of five levels: the anticipatory parental socialisation, and later life financial learning outcomes (particularly, debt literacy levels), financial attitudes, debt behaviour, and well-being. Using data collected from a purposive sample of young adult Poles (N = 600) during the period from 10 to 13 November 2018 and employing structural equation modelling, we have found evidence confirming the hierarchical relationship of literacy–attitude–behaviour. Our data do not support, however, either the hypothesised positive relationship between parental socialisation and objectively measured debt literacy or the assumed relationships between debt behaviour and well-being indicators. We posit that country-specific factors related to generational differences entailed by system-wide transition and the specificity of debt behaviour, respectively, are key for explaining these empirical deviations from the assumed conceptual framework. Finally, we found no significant differences between the models estimated separately for maternally conditioned and paternally conditioned respondents.

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Foreign Currency Loans and Systemic Risk in Europe

Cited by 27 publications

References 16 publications

Spatializing the future: financial expectations, EU convergence and the Eastern European Forex mortgage crisis

Spatializing the future: financial expectations, EU convergence and the Eastern European Forex mortgage crisis

Foreign Currency Loans and Credit Risk: Evidence from U.S. Banks

Sustainable Debt Behaviour and Well-Being of Young Adults: The Role of Parental Financial Socialisation Process

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