Balkanisation of banking damages international trade and UK GDP

Balkanisation is a way to describe the breakdown of cross-border banking, as nervous lenders retreat in particular from the more troubled parts of the Eurozone or at least try to isolate operations within national boundaries. It is increasing at the Bank level, however the senior policy makers consider this a negative trend – Mario Draghi, president of the European Central Bank, has talked of the need to “repair this financial fragmentation” and Mark Carney, head of global regulatory body the Financial Stability Board, [and now Governor of the Bank of England] has warned that deglobalising finance will hurt growth and jobs by “reducing financial capacity and systemic resilience”. In this article I would like to examine the impact of banking balkanisation on international trade and provide some initial thoughts about remedies for excessive risk in a banking non-balkanising world.

An examination of cross-border strategies in banking

The paper examines the process of bank internationalisation and explores how banks become international organisations and what this involves. It also makes an assessment of the significance of their international operations and determines whether banks are truly global organisations. The empirical data are based on the 60 largest banks in the world and content analysis is used to categorise the information into the eight international strategies of Atamer, Calori, Gustavsson, and Menguzzato-Boulard [Internationalisation strategies. In R. Calori, T. Atamer, & P. Nunes (Eds.), The dynamics of international competition – from practice to theory, strategy series (pp. 162–206). London: Sage (2000)] and Bryan, Fraser, Oppenheim, and Rall [Race for the World strategies to build a great global firm. Boston, MA: Harvard Business School Press (1999)]. The findings suggest that the majority of banks focus on countries or geographic regions in which they have some sort of cultural or economic affinity. Moreover, apart from a relatively small number of very large banks, they are international rather than truly global organisations.

Bank market concentration, relationship banking and small business liquidity

This paper examines two contrasting interpretations of how bank market concentration (Market Power Hypothesis) and banking relationships (Information Hypothesis) affect three sources of small firm liquidity (cash, lines of credit and trade credit). Supportive of a market power interpretation, we find that in a highly concentrated banking market, small firms hold less cash, have less access to lines of credit, and are more likely to be financially constrained, use greater amounts of more expensive trade credit and face higher penalties for trade credit late payment. We also find support for the information hypothesis: relationship banking improves small business liquidity, particularly in a concentrated banking market, thereby mitigating the adverse effects of bank market concentration derived from market power. Our results are robust to different cash, lines of credit and trade credit measures and to alternative empirical approaches.

The impact of deregulation and re-regulation on bank efficiency: evidence from Asia

Following the 1997 crisis, banking sector reforms in Asia have been characterised by the emphasis on prudential regulation, associated with increased financial liberalisation. Using a panel data set of commercial banks from eight major Asian economies over the period 2001-2010, this study explores how the coexistence of liberalisation and prudential regulation affects banks’ cost characteristics. Given the presence of heterogeneity of technologies across countries, we use a stochastic frontier approach followed by the estimation of a deterministic meta-frontier to provide ‘true’ estimates of bank cost efficiency measures. Our results show that the liberalization of bank interest rates and the increase in foreign banks' presence have had a positive and significant impact on technological progress and cost efficiency. On the other hand, we find that prudential regulation might adversely affect bank cost performance. When designing an optimal regulatory framework, policy makers should combine policies which aim to foster financial stability without hindering financial intermediation.

Resilience in crisis reconsidered: the need for values against relativist ethics

The need for a reconsideration of resilience from both a positive and a normative point of view can be discussed using some of the lessons and conclusions drawn from individual resilience studied by psychologists in an educational context. The main point made in this article is that unless we want to approach resilience as a feature which is exogenously given in each population and society and whose dynamics, if any, are not subject to deliberate actions and policies, we need a framework for the evaluation of resilience as a social good. Relying on the hope that resilience is necessarily built in our societies as a force guaranteeing convergence to a socially desirable point of social evolution may be too optimistic and even counterproductive, because it may lead us to an inefficient or biased political and regulatory decision making. When the effect of policies and actions at a national or international level take into account the dynamic effect of such actions on resilience itself, one cannot blindly rely on the goodness of the process any more. This is mainly because resilience is not uniformly embodied in all societies and it does not have a globally positive social value by itself. The issue of socially valuing the options available beyond market-price valuations becomes fundamental in this context.

Package models and the information crisis of prebiotic evolution

The coexistence between different types of templates has been the choice solution to the information crisis of prebiotic evolution, triggered by the finding that a single RNA-like template cannot carry enough information to code for any useful replicase. In principle, confining d distinct templates of length L in a package or protocell, whose Survival depends on the coexistence of the templates it holds in, could resolve this crisis provided that d is made sufficiently large. Here we review the prototypical package model of Niesert et al. [1981. Origin of life between Scylla and Charybdis. J. Mol. Evol. 17, 348-353] which guarantees the greatest possible region of viability of the protocell population, and show that this model, and hence the entire package approach, does not resolve the information crisis. In particular, we show that the total information stored in a viable protocell (Ld) tends to a constant value that depends only on the spontaneous error rate per nucleotide of the template replication mechanism. As a result, an increase of d must be followed by a decrease of L, so that the net information gain is null. (C) 2008 Elsevier Ltd. All rights reserved.

Economic growth in Sweden, 2000-2010 : The dot-com bubble and the financial crisis

    Economic growth is the increase in the inflation-adjusted market value of the goods and services produced by an economy over time. The total output is the quantity of goods or servicesproduced in a given time period within a country. Sweden was affected by two crises during the period 2000-2010: a dot-com bubble and a financial crisis. How did these two crises affect the economic growth?     The changes of domestic output can be separated into four parts: changes in intermediate demand, final domestic demand, export demand and import substitution. The main purpose of this article is to analyze the economic growth during the period 2000-2010, with focus on the dot-com bubble in the beginning of the period 2000-2005, and the financial crisis at the end of the period 2005-2010. The methodology to be used is the structural decomposition method.     This investigation shows that the main contributions to the Swedish total domestic output increase in both the period 2000-2005 and the period 2005-2010 were the effect of domestic demand. In the period 2005-2010, financial crisis weakened the effect of export. The output of the primary sector went from a negative change into a positive, explained mainly by strong export expansion. In the secondary sector, export had most effect in the period 2000-2005. Nevertheless, domestic demand and import ratio had more effect during the financial crisis period. Lastly, in the tertiary sector, domestic demand can mainly explain the output growth in the whole period 2000-2010.

Manipulation in Newspaper Articles : A Political Discourse Analysis of Lexical Choice and Manipulation in Japanese Newspaper Crisis Reporting in the case of North Korea

This paper analyzes some forms of linguistic manipulation in Japanese in newspapers when reporting on North Korea and its nuclear tests. The focus lies on lexical ambiguity in headlines and journalist’s voices in the body of the articles, that results in manipulation of the minds of the readers. The study is based on a corpus of nine articles from two of Japan’s largest newspapers Yomiuri Online and Asahi Shimbun Digital. The linguistic phenomenon that contribute to create manipulation are divided into Short Term Memory impact or Long Term Memory impact and examples will be discussed under each of the categories.The main results of the study are that headlines in Japanese newspapers do not make use of an ambiguous, double grounded structure. However, the articles are filled with explicit and implied attitudes as well as attributed material from people of a high social status, which suggests that manipulation of the long term memory is a tool used in Japanese media.