Asset bubbles, banking stability and economic growth

Wang, Shengquan; Chen, Langnan; Xiong, Xiong

doi:10.1016/j.econmod.2018.08.014

Cited by 14 publications

(9 citation statements)

References 34 publications

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“…Acharya and Naqvi [24] also verify that monetary loosening induces investors to higher returns and as a result to bubble amplification. Wang et al [25] study the banking stability in conjunction with asset bubbles. They study 26 economies.…”

Section: Literature Reviewmentioning

confidence: 99%

Detecting West Texas Intermediate (WTI) Prices’ Bubble Periods

Perifanis¹

2019

Energies

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Oil prices have had considerable surges and bursts since the first oil crisis of 1973. Until then its price was stable, with almost zero volatility. Since then, apart from the two oil crises of 1973 and 1978/9, oil prices had consecutive bubble episodes like the surges up to 2008 and 2014 and their successive bursts, respectively. The trace of these bubble periods is of crucial importance for policymakers, since their drivers and consequences impact global economic developments. Phillips et al. and Phillips et al. methodologies are applied to detect whether West Texas Intermediate prices experienced bubble periods. Both methodologies suggest that WTI prices experienced explosive episodes, which could be fundamentally, speculatively, or politically attributed. Some suggested periods coincide for both methods, but the second methodology seems to be more sensitive than its predecessor is, leading to better bubble detection but also to identification of non-existent bubbles. The identified bubble periods are compared to relevant research in the literature concerning their presence, duration, and explosiveness. The main goal of the research, apart from the detection of bubbles’ presence and duration, is to identify the causal underlying reasons for each explosive episode. Further, we compare the start and endpoints of each bubble episode with time-points when structural changes occurred. The contribution of the paper is that it clearly defines the bubble episodes with their corresponding drivers. The paper identifies the importance of market fundamentals’ swifts in explaining the bubble periods. The findings of the papers can help policymakers and other stakeholders to monitor oil price shifts and their underlying reasons, and then proceed with prompt actions. Since bubble episodes are fundamentally explained, then the practical utility is that by focusing on the market fundamentals, stakeholders can avoid actions that could result in market failures.

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Section: Literature Reviewmentioning

confidence: 99%

Detecting West Texas Intermediate (WTI) Prices’ Bubble Periods

Perifanis¹

2019

Energies

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“…Jokipii and Monnin (2013) define the stability of the banking industry as the "banking sector's probability of default", influencing economic factors such as GDP growth. Additionally, the stability of the banking industry is tightly linked to equity bubbles which encourage firms to invest in innovations and promote growth (Wang, Chen & Xiong, 2019). Therefore, banking stability can be considered as a precondition for investments in innovations.…”

Section: Performancementioning

confidence: 99%

Managerial Perception of Human Capital, Innovations, and Performance: Evidence from Banking Industry

Milošević

Dobrota

Dmitrović

et al. 2021

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This paper aims to examine the relationship between the managerial perception of human capital, innovations, and bank performance. We specifically sought to examine the influence of human capital on bank performance, by introducing the factors of innovation speed and quality. The study was taken in the Serbian banking industry, with the focus on the perception and the viewpoint of CEOs and general managers of different departments. We used a two-phase survey to design the questionnaire and the correlation and regression analyses to examine our hypotheses. Our findings propose that, from managers’ perspective, human capital is critical to the success of banks, and that innovation speed is more influential than its quality. The backward multiple regression model shows that human capital and innovation speed account for 67.5% of the variability of the bank performance. The findings of this research can contribute to bank management policies by revealing how to enhance bank performance by focusing on human capital and innovation agility and readiness. The proposed research model could potentially be implemented in other sectors and industries to hopefully endorse the significance of the detected relationships.

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“…For such countries, it is difficult to get foreign financing, which lowers GDP growth and credit. Therefore, in this context, it is quite obvious that economic growth promotes financial stability (DellAriccia et al, 2008;Wang et al, 2019;Cave et al, 2019). Considering this view, this study regresses economic growth on lag value of bank stability using a fixed-effect estimator to tackle reverse causality.…”

Section: Related Literature and Research Focusmentioning

confidence: 99%

Linking Bank Competition, Financial Stability, and Economic Growth

Ijaz

Hassan

Tarazi

et al. 2020

Journal of Business Economics and Management

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This paper investigates the effect of bank competition and financial stability on economic growth by examining panel-data from 38 European countries over 2001 to 2017. Bank competition is measured with the Boone indicator, and bank stability with Z-scores and non-performing loan ratios, all at the country level. This study employs a fixed-effect estimator, as well as a system generalized method of moment (GMM) estimator to control unobserved heterogeneity, endogeneity, the dynamic effect of economic growth, and reverse causality in its estimation. Results show that bank stability significantly contributes to economic growth in Europe. Economic growth falls during crisis periods (both the global financial crisis and the local banking crisis), highlighting the importance of a resilient banking system during crisis periods. Moreover, empirical outcomes show that lower banking competition supports economic growth and increases financial stability. This study provides a framework for banks and regulators to boost economic growth through the channel of banking stability.

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Asset bubbles, banking stability and economic growth

Cited by 14 publications

References 34 publications

Detecting West Texas Intermediate (WTI) Prices’ Bubble Periods

Detecting West Texas Intermediate (WTI) Prices’ Bubble Periods

Managerial Perception of Human Capital, Innovations, and Performance: Evidence from Banking Industry

Linking Bank Competition, Financial Stability, and Economic Growth

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