'Flight to quality' in banking and economic activity

Article Abstract:

Data regarding the behavior of new bank loans were analyzed to study 'flight to quality' through a new variable, the proportion of safe loans called %Safe. Findings revealed that %Safe can be used to forecast real GDP and inventory investment, but not for investment in structures and equipment. %Safe drops after a policy tightening and a rise in %Safe causes policy loosening. %Safety performs better than M2 in Granger causality tests, impulse response functions and variance decompositions, and performs as well as the spread.

Bank Loans NEC, Investments, Credit

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Credit derivatives in banking:useful tools for managing risk?

Article Abstract:

A study is conducted into credit derivatives in banking, with an evaluation of the extent to which these can be used as implements for managing risk. The observation is made that the launch of a credit-derivatives market may, however, cause the break down of other markets for loan risk-sharing.

Methods, Banking industry, Finance, Practice, Risk management, Loan servicing

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Conflict of interest in universal banking: Bank lending, stock underwriting, and fund management

Article Abstract:

Research investigating the benefits and the costs of universal banking on the basis of data illustrating Initial Public Offerings of businesses in Israel is presented. Particular attention is given to stock performances by the lending banks in the years following the initial public offerings.

Management, Israel, Public investments, Going public (Securities), Initial public offerings, Universal banks

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