Systemic risk in the netting system

Article Abstract:

Sudden liquidity or solvency problems by a bank in interbank clearing networks may preclude settlement of its creditors' claims, thus putting at risk settlement of other institutions. An examination of the potential size of the 'domino effect' in the Italian netting system simulated a network participant's settlement failure and measured the impact on the rest of the network. Results revealed that the average number of systemic crises is small and that the systemic crises themselves are small, in terms of number of institutions involved and of monetary losses. These indicate that the differences are primarily due to the much smaller volume of funds involved in the Italian system and to structural differences.

Financial Transactions Processing, Reserve, and Clearinghouse Activities, Functions related to deposit banking, Clearinghouse Assns, Analysis, Bank clearinghouses, Liquidity (Finance)

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On the determinants of bank interest margins under credit and interest rate risks

Article Abstract:

Factors affecting bank interest rates are directly influenced by the operating costs of the bank, its market power, level of interest rate risk and the extent of credit risk. The ideal bank interest margin has been studied using a modest firm theoretical model. The firm-theoretical model has indicated several factors that conclude the ideal bank interest decision such as regulations, cost, interest rate risk and credit risk. One trend that adversely affects the bank's spread is an increase in equity capital while facing a minimal interest rate risk.

Interest Rates, Management

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The stock-market reaction to dividend cuts and omissions by commercial banks

Article Abstract:

Banks experience substantial negative abnormal returns around the announcement date of dividend cuts and omissions. Banks' reactions are also stronger than the valuation effects arising from the release of other negative bank announcements. These were gleaned from an investigation of a total of 81 dividend reductions by 56 commercial banks from 1974-1991. Significant abnormal returns of -8.02% for the two-day event window and -11.46% for a two-week period were observed.

Securities and Commodity Exchanges, Security and commodity exchanges, Securities Exchanges, Dividend Policy, Research, Prices and rates, Dividends, Stock-exchange, Stock exchanges, Exchanges

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