This paper investigates how financial-sector leverage affects macroeconomic instability and welfare. In the model, banks borrow (use leverage) to allocate resources to productive projects and provide liquidity. When banks do not actively issue new equity, aggregate outcomes depend on the level of equity in the financial sector. Equilibrium is inefficient because agents do not internalize how th...

This article presents a financial scoring model estimated on Czech corporate accounting data. Seven financial indicators capable of explaining business failure at a 1-year prediction horizon are identified. Using the model estimated in this way, an aggregate indicator of the creditworthiness of the Czech corporate sector is then constructed and its evolution over time is shown. This indicator a...

Electronic commerce or e-commerce is a new phenomenon in the financial markets. The rapid advances made in the information and communications technology sector have facilitated the advent of e-commerce and has resulted in global market euphoria over technology stocks in financial markets. This paper is based on the premise that an initial characterisation of the e-commerce sector is necessary a...

The banking sector is one of the important financial intermediaries in an economic system. Improvement in the banking sector can achieve optimal allocation of financial resources. The performance of banks and other financial service providers has direct effect on economic growth. One of the factors that can affect the banks operation is economic freedom. Economic freedom and freedom of private ...

This paper examines the e↵ects of intra-financial lending – claims between financial institutions – on aggregate investment and credit to the non-financial sector in the United States. Building on Montecino, Epstein, and Levina (2014) we document a large growth in intra-financial assets beginning in the early 1980s. Using a vector autoregression model, we find that intra-financial lending is ne...

The financial intermediation sector is important not only for channeling resources from agents in excess of funds to agents in need of funds (lending channel). By issuing liabilities it also creates financial assets held by other sectors of the economy for insurance purpose. When the intermediation sector creates less liabilities or the value of outstanding liabilities falls, agents are less wi...

The global financial crisis that began in 2007 has forced a re-examination of risk transmission in the financial sector and how it affects financial stability. Risk management concentrates on the analysis of risk at the level of the individual institution and system-wide. This paper illustrates how contingent claims analysis (CCA) can be applied in new ways to improve systemic financial sector ...

The financial intermediation sector is important not only for channeling resources from agents in excess of funds to agents in need of funds (credit channel). They also facilitate the creation of financial assets that can be used for insurance purposes. Then, when the financial sector experiences difficulties that prevent them from creating these assets, agents in the economy (being them househ...