Search Results

You are looking at 1 - 7 of 7 items for :

  • "CAMEL-type bank fundamentals" x
Clear All
Moazzam Farooq and Sajjad Zaheer

matrix of bank characteristics that vary across banks and branch types, that include the standard CAMEL-type bank fundamentals, as well as size (log of total assets), 19 bank reach (log of number of branches), bank age (the number of quarters since start of operations), credit rating, 20 and non-deposit funding to total funding (a proxy for differences in funding structure). Since some of these variables may be endogenous relative to the magnitude of the bank run, they are measured as of before the panic (specifically, at June 30, 2008). In some specifications we

Moazzam Farooq and Sajjad Zaheer
Rapid growth of Islamic banking in developing countries is accompanied with claims about its relative resilience to financial crises as compared to conventional banking. However, little empirical evidence is available to support such claims. Using data from Pakistan, where Islamic and conventional banks co-exist, we compare these banks during a financial panic. Our results show that Islamic bank branches are less prone to deposit withdrawals during financial panics, both unconditionally and after controlling for bank characteristics. The Islamic branches of banks that have both Islamic and conventional operations tend to attract (rather than lose) deposits during panics, which suggests a role for religious branding. We also find that Islamic bank branches grant more loans during financial panics and that their lending decisions are less sensitive to changes in deposits. Our findings suggest that greater financial inclusion of faith-based groups may enhance the stability of the banking system.
Mr. Adolfo Barajas and Mr. Mario Catalan

Measures Based on Partial Influence Functions Our model specifications assume that depositor responses to changes in bank fundamentals can vary depending on the share of pension fund deposits and depositor type. A partial influence function summarizes these interactions by measuring the effect on deposit growth of a marginal change in a fundamental. Let F be any CAMEL-type bank fundamental: F ∊ { CAPR, LIQ, PROFIT, NPLL, NGOVB }. Denote β F and β dF the coefficients (elements of the vectors β and β d ) corresponding to the variables F i,t–l and d j

Mr. V. Hugo Juan-Ramon, Emiliano Basco, Carlos Quarracino, and Mr. Adolfo Barajas

. Furthermore, as discussed in the introduction, in 1998 many analysts considered the Argentine banking system to be solid and well-managed and also among the best regulated and supervised among emerging economies. Their analysis, based on CAMEL-type bank fundamentals, did not at the aggregate level reveal the kinds of vulnerabilities that would later plague the Argentine banking system. However, it is possible that there is still relevant information contained in these fundamentals, namely their variability across banks, that may help explain the extent to which the increase

Mr. Adolfo Barajas and Mr. Mario Catalan
We study the behavior of private pension funds as large depositors in a banking system. Using panel data analysis, we examine whether, and if so how, pension funds influence market discipline in Argentina in the period 1998-2001. We find evidence that pension funds exert market discipline and this discipline gets stronger as the share of pension fund deposits in a bank rises. However, conflicts of interest undermine the disciplining role of pension funds. Specifically, pension funds allocate deposits to banks with weak fundamentals that own pension fund management companies. We conclude that forbidding banks' ownership of companies involved in pension fund management can enhance market discipline.
Mr. V. Hugo Juan-Ramon, Emiliano Basco, Carlos Quarracino, and Mr. Adolfo Barajas
The simple answer to both questions in the title of this paper is: No. We concentrate on the three main risk elements that contributed to the banking system’s difficulties during the crisis: increasing dollarization of the balance sheet, expanding exposure to the government, and, eventually, the run on deposits. We find that there was substantial cross-bank variation in these elements—that is, not all banks were hurt equally by macroeconomic shocks. Furthermore, using panel data estimation for the 1998–2001 period, we find that depositors were able to distinguish high- from low-risk banks, and that individual banks’ exposure to currency and government default risk depended on bank fundamentals and other characteristics. Thus, not all banks behaved equally in the run-up to the crisis. Finally, our results have implications for the existence of market discipline in periods of stress and for banking regulation, which may have led banks to underestimate some of the risks they incurred.