The Spanish crisis from a Minskyan perspective: A new episode of financial fragility

Ruiz, Juan Rafael; Cristian, Oana Andreea

doi:10.1080/01603477.2019.1598268

Cited by 3 publications

(5 citation statements)

References 17 publications

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“…Juan Rafael Ruiz and Oana Andreea Cristian argue that reforms such as a new Land Act together with income tax deductions triggered the Spanish housing boom. 55 Foreign residential investors, especially related to tourism, added to the surging demand for houses (by up to 12 percent of total demand in 2002) as they expected to benefit from capital gains. 56 FDI inflows were certainly not the only cause of peripheral housing booms.…”

Section: Portfolio and Fdi Flows And Asset Pricesmentioning

confidence: 99%

Capital Flows and the Eurozone's North-South Divide

Köhler

2023

Politics & Society

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This article offers a monetary perspective on capital flows and the Eurozone's north-south divide. It argues that finance-centric narratives in comparative political economy rightly emphasize financial instability in the periphery, but that the role of capital flows therein requires clarification. The article draws on post-Keynesian monetary theory, coherent accounting, and balance-of-payments data to make three points. First, the focus on the financial account as a driver of current accounts should be abandoned in favor of an analysis of gross capital flows. Gross flows need not stem from excess savings in core countries and can be independent from trade flows. Second, explanations of financial instability in the periphery should go beyond bank flows and consider speculative portfolio flows into bond markets and foreign direct investment into real estate. Third, rising spreads in the periphery during the Eurozone crisis and the outbreak of the pandemic were not triggered by balance-of-payments problems but by a reversal of speculative bond flows. Comparative political economy should thus dedicate more attention to institutions that render peripheral countries susceptible to speculative flows into asset markets.

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Section: Portfolio and Fdi Flows And Asset Pricesmentioning

confidence: 99%

Capital Flows and the Eurozone's North-South Divide

Köhler

2023

Politics & Society

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“…The so-called tension referred to before is analysed in studies such as Serra (2011), Poveda (2011), Royo (2013), Ruiz et al (2016), or Ruiz and Cristian (2019) which focus on the financial system's increasing reliance on international financing, excessive credit expansion and heavy concentration in the real estate sector, weaknesses in the regulatory framework, conflicts of interests among property appraisal firms and credit originators and national regulators' weak response to the increasing risk exposure in the system. Another significant element outlined by Ferreiro et al (2013Ferreiro et al ( , 2016 and Ferreiro and G omez (2015) is the inadequate fiscal policy which these authors consider to have been procyclical, lacking in public expenditure and uncoordinated with the monetary policy implemented by the ECB.…”

Section: Context and General Frameworkmentioning

confidence: 99%

“…2 These securitisations were backed by mortgage loans extended to Spanish residents over the previous decade. 3 See, for example, Whalen (2007), Wray (2008, 2009), Nasica (2010, Dymski (2010), or Ruiz and Cristian (2019). 4 As their 2010 annual reports indicate, credit ratings were high for most savings banks.…”

Section: Orcidmentioning

confidence: 99%

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The weakest links in the crisis of the Spanish Savings Banks

2022

Self Cite

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The bail-out of the Spanish financial system was the largest in the Eurozone. The Spanish savings banks were the main direct recipients of public support between 2010 and 2012 and most of the bail-out money was transferred to the savings banks after a series of mergers and acquisitions were completed among these entities. This article analyses the evolution of the savings banks in the years of economic growth preceding the crisis and their performance in the early aftermath of the 2007 crash using previously unexplored data from the annual financial statements of the 45 savings banks. We conclude it is possible to observe distinct behaviours among the savings banks during the boom years and we estimate the largest part of the bail-out money corresponds to losses registered by a small number of savings banks that were already severely impaired before the merger process got under way.

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“…At the same time Minsky delved into the Keynesian proposal relating to the specific nature of banks as capitalist firms, the functioning and strategies of which are guided by their purpose to enhance financial profits. Because of that, their main function is not defined by the technical work they perform as intermediaries between holders and seekers of savings, but as liquidity makers through loan provision and operations in capital markets (Ruiz and Cristian 2019;Ruiz, Stupariu and Vilariño 2016).…”

Section: Minsky As a Crucible: The Financial And Structurally Unstablmentioning

confidence: 99%