Aneta Hryckiewicz

Transmission of Bank Liquidity Shocks in Loan and Deposit Markets: The Role of Interbank Borrowing and Market Monitoring

We examine the international transmission of bank liquidity shocks from multinational bankholding companies to their subsidiaries. Our findings are consistent with the studies that document that parent bank fragility negatively affects lending by subsidiaries. We further find that reduction in foreign bank lending is stronger for those that are dependent on the interbank market. Moreover, foreign bank lending is determined by different factors in emerging markets and in developed countries. Finally, we show that liquidity needs determine the change in deposits in developing economies, especially during the recent crisis whereas market discipline is relatively more dominant in developed countries.

What do we know about the impact of government interventions in the banking sector? An assessment of various bailout programs on bank behavior

Systemic banking crises have placed enormous pressure on national governments to intervene. The empirical literature, however, is inconclusive on what an optimal bailout program should look like to mitigate the negative consequences of government interventions in the banking sector. We find that, in general government interventions have a negative impact on banking sector stability, significantly increasing its risk. In particular, we find that among bailout measures, nationalization and asset management companies (AMCs) contribute most to the risk effect and that among liquidity support mechanisms, public guarantees are the largest contributor to the risk effect. However, we also find that by making an appropriate choice of intervention mechanisms, governments can mitigate the negative consequences stemming from the above-mentioned effects.

Pension Reform, Institutional Investors’ Growth and Stock Market Development in the Developing Countries: Does it Function?

In this paper, we evaluate an empirical link between recent institutional assets’ growth, institutional behaviour and stock market performance in the developing countries. Using the GMM technique on the panel of eight Central and Eastern European (CEE) developing countries over the period of 1995-2006, our results indicate that institutional development exerts a robust and significant impact on the securities markets’ growth in the developing countries. In particular, we find that institutional investors contribute to the greater activity of the emerging capital markets and this effect is a result of higher demand for the local securities induced by these institutions. In addition, in countries where the institutional investors actively participate in the corporate governance, their presence possibly reduces the cost of capital for firms and also positively influences the stock market capitalization. Our findings suggest that the pension reform has contributed significantly to the institutional development and stock market growth in the CEE countries.

The Economic Determinants and Engagement Modes of Foreign Banks in Central Europe

In the last fifteen years foreign banks have expanded their presence significantly in almost all developing economies. The transition countries are among those economies that have experienced one of the highest levels of banking internationalization in the world. The foreign controlled banking asset in these countries ranges from 70 per cent in Poland to almost 100 per cent in Slovakia. With our study using panel data we examine the economic determinants of foreign bank engagement in the four local banking markets in Central Europe during the period 1994-2004. In addition, we study whether the economic determinants affect different entry vehicles of foreign banks into the Central European markets. Our results show that the most important factors determining foreign bank engagements were (i) large potential of the Central European banking markets and low degree of their financial sophistication (ii) the legal origin of the home country, (iii) the size of the economic growth rates differentials between host and home markets, and (iv) finally the distance between the host country and the foreign bank headquarter. We also find that most foreign banks investments occurred in the period of poor creditor rights protection. Moreover, our results present that the economic determinants had an impact on the decision of the organization form of the foreign banks entering the Central European banking markets. Our results are robust to several controls, including the lack of independence of investment decisions.

The Truth about the Role of the Government in Promoting Innovative Growth in Developing Countries – An Empirical Analysis Based on the Experiences of New EU Members

The smart growth strategy has gained considerable attention recently. Governments all over the world are trying to reform their countries to increase the level of innovation and spur growth following this strategy. Despite the recent popularity of this theory, it is less clear whether the governments in developing countries are able to achieve these goals. The political literature claims that many of the necessary reforms might go against the interests of various parties. Our results are consistent with this view. These results show that only reforms that do not endanger officials’ interests are efficient in spurring innovation in a country. Thus, the education sector seems to be the best driver of R&D development in developing countries. Further, our results suggest that the creation of an institutional R&D infrastructure significantly supports the R&D sector, despite the weak progress of other reforms. The results are robust to various innovation measures and estimation techniques.

What's Wrong with Government Interventions? Wrong Banks, Inadequate Strategies or Ineffective Measures?

The current crisis has promoted the regulatory authorities to implement the directives regulating the future authorities’ actions in resolving the systemic banking crises. The recent results however document that only a small portion of banks gets recovered, as a result of government interventions. With our study we look for the reason and investigate how effective are the regulatory intervention instruments. Consistent with the theory, our results show that weaker banks are more likely to get the government support during the crisis. We also document that the type of the support addresses the banks’ problems. Our regression results however indicate that at the end the intervened banks are more likely to go bankrupt than their non-intervened counterparties. We argue that government interventions must be sufficiently large, and an optimal banking recovery program should include a deep restructuring process. Our results are consistent with the literature opting for the bail-in before the implementation of the bail-out instruments.

The economic determinants and behavior of foreign banks in emerging countries during a period of global economic downturn

In recent years, foreign banks have significantly expanded their presence in many emerging countries. In our study, we use panel data to examine the economic determinants of foreign banks’ entry modes into emerging European countries during the period from 1994 to 2008. Our results suggest that a parent banks choice of an organizational structure is a function of its strategic plans in the region and the countries’ characteristics. After further consideration of the financial crisis of 2007–2010, we find that as a result, parent banks tend to behave differently toward their foreign affiliates depending on its organizational structure. Our findings suggest that these differences are especially observable during periods of economic expansion and home financial distress.