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Public debt crisis and the banking system
10th National Competition for Economic Research Grants
International economics
Research Centre or Institution : Centre de Recerca en Economía Internacional (CREI)
Abstract
The objective of the project consists in investigating the relationship between sovereign defaults and the banking system. Specifically, we aim to study the way in which the holding of public bonds by the banking system helps to explain the effects of defaults on the real economy. For this, the Bankscope database was used, and an analysis was undertaken of the holding of public bonds by 10,000 banks in 170 countries, as well as the role that those bonds have had on 14 sovereign crises which occurred during the period 1998-2010. The preliminary results show that: i) during sovereign crises, the banks hold approximately 14% of their assets in public securities, ii) 87% of these bonds are acquired by the banks in normal times, especially in economically less developed countries, iii) when there is a sovereign default, an increase of 10% in public bonds in the possession of a bank is associated with a fall of 2.4% in the loans it grants. These results suggest that the holding of public bonds by the banking system is a key element in understanding the effects of sovereign debt crises.
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19
Jan
2017
Conference Latin American crises in historical perspective Madrid, January 19, 2017
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18
May
2018
7Th NCID Research Workshop Madrid, May 18, 2018
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1
Jun
2021
Conversaciones online desde la Fundación Ramón Areces El papel del sector financiero en la crisis económica actual ONLINE: www.fundacionareces.tv/directo, Tuesday, 1 June 2021, 19:00 hours
- How to prevent contagion during international debt crises 2012 Senior Researcher : Antonio Moreno Ibáñez Research Centre or Institution : Universidad de Navarra. Pamplona.
- The banking and production economies. Influence and regulation 2012 Senior Researcher : David Martínez Miera Research Centre or Institution : Universidad Carlos III de Madrid.
- Over-indebtedness: interaction between public and private debt 2015 Senior Researcher : Hernán Daniel Seoane Bernadaz Research Centre or Institution : Universidad Carlos III de Madrid.
- Multigenerational Inequality in Spain Senior Researcher : Andrea Pîzzo Research Centre or Institution : Universidad Carlos III de Madrid.
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