samchain/econo-pairs-v1 huggingface dataset:
Bangalore has transformed itself from a provincial capital into a world class centre for the global IT industry. Mumbai is a thriving commercial centre. MNCs are outsourcing backroom functions and call centres to India, attracted by India’s highly skilled, English speaking, and cost competitive professionals. In manufacturing, India is doing well in automobile, pharmaceuticals and chemicals. The recent BJP victory in state elections is widely seen as the Indian people reaffirming their support for reforms. The current thaw in relations with Pakistan is another positive sign. Worldwide, people are becoming persuaded that the momentum for economic liberalization that has built up is irreversible. A subcontinent is on the move. Nowhere is this more evident than in the self-confidence of Indian companies. As one consultant commented, 5-10 years ago his assignments in India were about how to withstand the competitive threat. But today the question is how to grow the companies beyond India. Therein lies an opportunity for India and Singapore to work together. Responding to globalisation Both India and ASEAN are opening up, reforming their economies, and pursuing the path of globalisation. The rapidly changing and highly competitive environment requires countries to make many changes in policies and strategies, and to cooperate more closely with others, especially in the region, for mutual benefit. Internal restructuring Singapore, being such a small and open economy, feels the need to remain competitive, adapt and upgrade most acutely. We are getting used to the fact that there is no more life-time employment or iron rice-bowl anywhere in the world.

6  All speeches are available online at www.bankofengland.co.uk/speeches  6  On a personal note, I will greatly miss your deep technical expertise, open-mindedness, wisdom, good humour and friendship. Today isn’t really goodbye but au revoir. Because, whether it is the financial system or as colleagues, we know the future will be better if we stay connected. 7  All speeches are available online at www.bankofengland.co.uk/speeches  7
In other words, bankers have, by assumption, short horizons. They aim to maximise their reputation in the market at the end of this period. 4 At the beginning of each period, each bank originates a risky asset, the return on which depends on (i) the banker’s ability, which can be high or low, and (ii) the macro state, which can be good or bad. Both are unobservable to the market. The macro state is good with probability . High bank ability and a good macro state increase the probability of positive asset returns. That is, when the macro state is bad, assets turn out to be bad, irrespective of bankers’ ability. But when the macro state is good, both high and low ability bankers achieve high returns with some probability, with high ability types always achieving high returns and low ability types achieving high returns with probability . Asset returns are realised in the middle of each period and are observed only by banks. If the asset is good, banks make a profit (normalised to be a negligible amount). If the asset is bad, banks face a loss of –1. Because of their short horizons, bankers care about both the present value of their asset returns and their reputation in the market, where is the probability assigned by the market to a banker being high ability. The market is unable to observe banks’ actions directly, so instead infers bankers’ ability from observed bank earnings. Banks’ earnings are affected by their choices when returns are low.

A concern for reputation incentivises banks to seek risky ventures (to keep dancing), the more so the better is the market’s prior on the macro state (the louder the music). We also posit as a larger proportion of banks set risky credit policies, the larger the incentive to pursue similarly risky policies. When others are posting positive earnings, the reputational loss from foreclosing and taking losses is that much greater. This is the “Keynes constraint”. It is better for your reputation to fail conventionally than to succeed unconventionally. These conditions generate the potential for credit booms and busts. The better is the macro state, the greater banks’ incentive to pursue risky projects to preserve reputation, as the market attributes low earnings to low ability. But one bank’s announcement of positive earnings encourages others to announce positive earnings by setting risky policies too. In Rajan’s model this strategic complementarity between banks generates multiple equilibria: in sufficiently good states, banks coordinate on risky policies (“credit booms”), while in bad states they coordinate on tight policies (“credit crunches”). In between, either equilibrium is possible. Define the payoff function  . Substituting gives:  This captures the marginal return to adopting a risky policy. It allows us to define the regions of fundamentals over which risky policies and tight policies dominate respectively.
In non-financial companies, shareholder capital or equity is used to finance the acquisition of assets. The same is true for banks. Equity finances the provision of loans to households and companies. In that sense, additional capital supports lending by banks and does not substitute for it. Higher capital ensures that enough of the finance raised by banks is in a form that is capable of absorbing losses without the banks going bust. Much of the discussion on capital is couched in terms of a ratio to risk-weighted assets. But another more basic yardstick of a bank’s ability to withstand losses is the leverage ratio. This is simply the bank’s capital expressed as a proportion of its assets. So a further test that we should consider is whether banks are making acceptable progress towards the Basel 3 minimum leverage ratio. Basel 3 requires that banks have leverage ratios in excess of 3%. In asking banks to have a larger share of equity on their balance sheet, we are for the most part dealing with legacy issues. The whole point of this exercise is to move more rapidly to put the past and its problems behind us. This emphasis on legacy explains why it is possible to want more capital to back old risks while easing the capital requirements on new lending to the real economy. Frankly, this is about convincingly putting the past behind us. We have not yet released numbers on the capital requirements for each bank.

Andrew Bailey: Challenges of prudential regulation Speech by Mr Andrew Bailey, Deputy Governor of Prudential Regulation and Chief Executive Officer of the Prudential Regulation Authority at the Bank of England, at the Society of Business Economists Annual Dinner, London, 3 June 2013. *  *  *  Thank you for inviting me this evening – it is a great pleasure to have this opportunity and particularly at a time when we are embarking on major reforms to policymaking in the area of financial regulation. The financial crisis has provided hard lessons on what happens when the stability of the financial system is found wanting. It has reminded us how much we depend upon the supply of critical services from banks, insurers, investment firms, asset managers and other parts of the financial sector. If you take the banks as Exhibit One, there is good reason to curse them, but at the same time recent experiences have only served to emphasise how much we depend upon them, like it or not. The new legislation on financial regulation in the UK emphasises the importance of the continuity of supply of critical financial services. This is a permanent public policy objective, and rightly so. I use the term “permanent” deliberately to distinguish this objective from the support provided by Too Big / Important to Fail, which should not be permanent.
GDP growth rates for most of these economies will likely turn positive in 1999. The outlook for the year 2000 is similarly benign. Indeed, the concern for the Korean economy has even turned into one of over-heating. Asia’s nascent recovery has set it apart from other emerging economies. Discerning international investors are placing much lower risk premiums on Asian economies compared to other emerging economies. For example, the difference between the yields on Latin American and Asian US dollar bonds has risen from less than 100 basis points in August 1998 to around 250 basis points in November 1999.1 The Singapore economy too, has recovered strongly, rising together with the regional economies. GDP grew by an estimated 5.6% last year, compared to 0.3% in 1998. This year, we expect the momentum to be sustained, with GDP growth at around 4.5-6.5%. But we cannot be complacent. To ensure that Singapore continues to prosper, we need to remain competitive, regionally and globally. Global markets have become much more integrated and global competition has intensified. We need to be part of this globalisation process and not close our doors to it. This is why we have been gradually introducing more competition into previously protected sectors of the economy, such as the financial sector and the telecommunications sector. These are challenging times ahead for us. But as economic recovery gathers pace, it is easy for euphoria to overtake the need for improvement and change. It could also tempt us to scale back or postpone painful restructuring initiatives.

Mr Lim gives a policymaker’s perspective on the role of macroeconomic modelling in public policy  Opening remarks by Mr Lim Hng Kiang, Member of the Board of Directors of The Monetary Authority of Singapore and Minister for Health and Second Minister for Finance, at the launch of The Monetary Authority of Singapore’s new macroeconometric model of the Singapore economy, the Monetary Model of Singapore (MMS) on 2 February 2000. *  *  *  Introduction It is my pleasure to be here today. This conference provides an excellent opportunity for networking and the exchange of ideas between policymakers, private sector economists as well as academics. Last July, at the Far Eastern Meeting of the Econometric Society in Singapore, I mentioned that the Economics Department of MAS was working on a new macroeconometric model of the Singapore economy, the Monetary Model of Singapore. This model incorporates the latest techniques and thinking in modelling. I am glad that the development work is completed and the model is now ready to be used for policy work. The staff of the Economics Department will be presenting the details of the model later this morning for review and discussion. Post-Asian crisis: a time for reflection The economic outlook for Asia has turned positive. Memories of the Asian financial crisis and of the economic recession that followed have already started to fade. The crisis Asian economies are recovering - we see production, exports and consumption growth rebounding, some even surpassing pre-crisis levels.
Second, since foreign banks are active in more than one market they usually hold a more geographically diversified credit portfolio. Therefore they are less likely to be affected by stress in the local market. Third, as affiliates of foreign-owned banks generally have better access to international funding they contribute to less volatile lending over the local business cycle. For this reason they can serve as a countervailing force to the local business cycle. Finally, as I have already touched upon, foreign bank entry can have a positive impact on the host country authorities, which in turn may induce stricter regulation and improved financial supervision. For all these reasons foreign banks have the potential to contribute to the overall soundness of local banking systems. Having said this, I am of course aware that there are also problems associated with cross-border banking. First of all, as has become evident during this crisis, the increasing globalisation of financial markets can create strong contagion effects across markets. Problems in one country tend to spill over to other countries very fast, generating a snowball effect where problems grow along with the costs of handling them. Furthermore, it has become clear that it can be extremely difficult and costly to deal with distressed banks in a cross-border setting. The reason for this is that there are many stakeholders involved and that the resolution of failing institutions is even more poorly defined at the international level than at the national level.

We are likely to meet the numerical values of the Maastricht criteria by the end of 2009 and Estonia expects to join the euro area in 2011, in full accordance with the Treaty provisions. It is clear that in order to adopt the euro, the key issue of Estonia's fiscal policy is ensuring sustainable public finances in the next years. Looking at longer-term growth potential, it would be advisable not to achieve this by excessive increases in the tax burden. BIS Review 90/2009  1  Finally, the way out from the current crisis depends critically on further strengthening of the EU Single Market for goods, services and production factors (including capital, labour and know-how). To conclude I would like to assure that Eesti Pank is always open for your inquires and cooperation. Thank you for your attention! 2  BIS Review 90/2009
20  See for example Kydland, Finn and Edward Prescott (1977), “Rules rather than discretion: The inconsistency of optimal plans”, Journal of Political Economy, vol. 85, pp. 473–490. 21  The February Monetary Policy Report discusses the macroeconomic consequences of a fall in housing prices in the article “The household balance sheet and the macroeconomic assessment”. 14  BIS central bankers’ speeches  imbalances rather than to financial stability. They are also imbalances that must be viewed in a much longer perspective than the perspective we usually adopt when we make decisions about the repo rate. Financial and macroeconomic imbalances of this type can of course result in financial crises, but do not do so automatically. We should therefore distinguish between avoiding such imbalances and avoiding crises than threaten the financial system. In both cases I believe that we need an active policy alongside the standard stabilisation policy. I am sure that everyone agrees that the Riksbank has a central role to play in analysing the emergence of financial and macroeconomic imbalances. However, what the role of the Riksbank should be when it comes to deciding on measures to counteract imbalances in the longer term is a more open question at present. In my view, it is important that macroprudential policy is put in place as a separate policy area. This would be good for financial stability, but also good for macroeconomic stabilisation.

Hopefully, I have managed to shed light on some of those principles today. Thank you for your attention. 4  BIS Review 45/2007  BIS Review 45/2007  5  6  BIS Review 45/2007  BIS Review 45/2007  7  8  BIS Review 45/2007  BIS Review 45/2007  9  10  BIS Review 45/2007  BIS Review 45/2007  11
To ameliorate the impact of bank balance sheets shrinking, companies are using technology to experiment with bringing buy-side liquidity into secondary markets. The challenge, as many have observed, is how these solutions can help to maintain liquidity in times of market volatility. 15 Second, companies are staying private for longer. According to McKinsey, in the US which drove the dot-com boom and is driving the “unicorn” and “decacorn” phenomenon, the average age of technology companies going public in 2014 was 11 years, up from 4 years in 1999 13. This has been enabled by the prolonged period of low yields, which has driven institutional investors to seek higher returns from liquidity and credit risk in private markets. McKinsey also found that 150 software companies were able to reach USD 10 billion in value through private financing in 2015, compared to just 10 in 2011. In Singapore, private equity assets under management grew 24% per annum on average for the last five years to over USD 100 billion in 2015. This creates a role for industry bodies like ASIFMA, which are set up around public markets like credit and equity, to support companies on their longer journey in private markets, and introduce the benefits of market transparency and market discipline while the companies remain private. 16 Third, underlying macro trends are supportive of investment continuing to flow from Developed Markets to Emerging Markets. On the one hand, accommodative monetary policies in developed economies will drive an ongoing search for relative yield in emerging markets, including in Asia.

ASIFMA has supported that journey over the past ten years by improving transparency through market surveys, advocating innovative solutions through white papers and roadmaps, and building consensus on best practices through events like these and collaboration with other industry bodies. 28 The economic opportunities in Asia are immense, and despite the cyclical slowdown, the region’s financing needs will continue to grow. Asia needs to continue strengthening its capital markets, especially its bond markets. Singapore will support Asia’s bond market by introducing a new Asian Bond Grant scheme, encouraging rated issuances, and supporting secondary market liquidity. 29  Please enjoy the rest of the conference. Thank you.
The engineering industry began to doubt the quality of their order books. Prices for oil, gas, aluminium and ferro-alloys fell, as did freight rates. The fragility of the Norwegian krone was illustrated when investors fled the currencies of small countries, and the krone weakened considerably. When speculators withdrew, daily fluctuations increased and hedging against exchange rate volatility became more expensive. On Christmas Eve, the krone fell to its lowest level in ten years. We are now in the deepest downturn in OECD countries in the postwar period. The US economy may already have shrunk by around 2½ per cent since the crisis erupted in September. Output has fallen at the same rate in many European countries, and perhaps by twice that rate in Japan and Korea. For a long period there were hopes that growth in China and other emerging market economies would hold up. But they are also now severely affected by the crisis. Output is also contracting in Norway, but so far probably somewhat less so than abroad. What is happening now is more than a normal fluctuation in the business cycle. The world is facing a crisis of confidence, with faltering faith in the future and a loss of confidence in banks, counterparties and contractual partners. The authorities have taken extraordinary action, as in a state of emergency, deploying a wide range of established and new policy instruments.

In the small community of Polden, in the Hamsun trilogy August, far away from large capital markets, the inhabitants live impoverished lives, subsisting on a little fishing and agriculture. But the community changes when wealth arrives in the form of a herring windfall. August says: “… you’re not to plant anything you can eat near your door. It doesn’t look right. I’ve got something better to put there – bushes, garden shrubs.” 9 Farming is abandoned, and then, a few years later, the herring disappears. The Norwegian government has not followed August’s advice, but has spread its wealth. It is partly invested in ownership interests in Norwegian companies, partly in infrastructure, partly in oil and gas and partly in equities and bonds abroad. When there are prospects of markedly slower growth, as is the case now, the value of all government assets falls. This also applies to buildings, roads, the power supply and other infrastructure where the government does not concern itself with regular valuations. Investments abroad by the Government Pension Fund – Global are also spread between equities and bonds from all over the world. The equity portion is now being increased from 40 to 60 per cent. A long-term investor receives extra compensation because the value of equities fluctuates considerably. Many are now incurring losses on equities and corporate bonds. This experience will result in higher required returns in the future. Under the Fund’s strategy, more equities will be bought when equity prices fall and fewer when they rise.
At the beginning of the pandemic, we launched a preferential refinancing programme for banks lending to SMEs. Now Mr Aksakov has suggested that we review these decisions. But I would like to remind you that we needed to ensure that small businesses had access to funding as fast as possible during the pandemic. 409 billion rubles were taken out of the limit. But I would like to say that this program will be phased out gradually over the course of a year. However, at the same time, we are extending the operation of this instrument (it will be possible to obtain preferential refinancing until September 30). Why? Because rate cuts after the transition to a loose monetary policy and measures of government support for SMEs bring about sufficient lending potential in this segment. It really was a rapid-response anti-crisis measure. How do borrowers feel now? The restructuring programmes have helped them withstand the shock of Q2. Undoubtedly, it is important to understand that some borrowers may not cope with the repercussions of the epidemic, and we can see that banks have already been carefully evaluating borrowers’ business and loans have been available for more efficient businesses. And despite the stress, there has not been significant loan impairment as was the case in 2014– 2015. The share of non-performing and bad loans in H1 2020 in the corporate portfolio increased slightly (by 0.1 p.p. to 11.1%).

The business loans segment accounted for most of the improvement in 2022, with an incipient increase in the households segment. In the sectors hardest hit by the pandemic, the share of Stage 2 loans fell very sharply (by 3.4 pp to 14.6%), albeit holding above the average for lending to non-financial business activities (9.8%). - Forborne exposures were down by 0.8 pp to 4.2% of total lending to the resident private sector, having declined by 16.5% since end-2021, when they reached pre-pandemic levels. - The proportion of ICO-backed credit classified as Stage 2 shrank by 0.8 pp to 19.6% of the total. However, non-performing assets increased by 78.8% in 2022, lifting the NPL ratio to 7.1% (up by 3.6 pp on 2021). The reduction in the size of this portfolio (11.3% in 2022) accounted for 0.8 pp of the increase in the NPL ratio. - Foreclosed assets decreased by 14.5% in 2022, to stand at € billion at December. Since the start of the pandemic, these assets have fallen by more than € billion (36%), on top of the declines recorded in the years leading up to the health crisis. Profitability  6  - Return on assets (ROA) fell by 2 bp in 2022, although this drop owed mainly to lower extraordinary income compared with 2021. Excluding these items, ROA increased by 8 bp. - This performance mainly reflects the improvement in net interest income, which increased by 17.1% year-on-year due to the uneven passthrough of higher interest rates to loans and deposits.