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Reserve Requirements (reserve + requirement)
Selected AbstractsMicroeconomic effects of capital controls: The chilean experience during the 1990sINTERNATIONAL JOURNAL OF FINANCE & ECONOMICS, Issue 3 2003Francisco A. Gallego Abstract This paper provides empirical evidence on some of the microeconomic effects of the capital controls introduced in Chile during the 1990s, in particular, the unremunerated reserve requirement (URR). By looking at financial statements for a group of 73 Chilean firms during 1986,2001, the paper attempts to identify the effects of the URR on the firms' costs and ways of financing. Results show that the effects of the URR are firm specific; for instance, there are striking differences in the response to the URR among firms of different size and those with or without access to international capital markets. Copyright © 2003 John Wiley & Sons, Ltd. [source] BANKING SPREADS IN LATIN AMERICAECONOMIC INQUIRY, Issue 4 2009R. GASTON GELOS Intermediation spreads in Latin America are high by international standards. This paper examines the determinants of bank interest margins in that region using bank- and country-level data from 85 countries, including 14 Latin American economies. The results suggest that Latin America has higher interest rates, less efficient banks, and larger reserve requirements than other regions and that these factors have a significant impact on spreads. However, Latin American countries do not differ markedly from their peers in other aspects that are found important in determining the cost of financial intermediation, such as inflation and bank profit taxation. (JEL E43, E44, G21, O54) [source] Central Bank and Commercial Banks' Liquidity Management , What is the Relationship?ECONOMIC NOTES, Issue 1 2003Ulrich Bindseil The paper explores the relation between individual banks' liquidity management in the euro area and the ECB's management of the aggregate current accounts held by banks with the Eurosystem. It is argued that, in the case of the euro area with its large, remunerated reserve requirements that have to be fulfilled only on average over a one-month period, the banks' demand for working balances to serve as a buffer against market imperfections is always below reserve requirements. It is therefore normally sufficient for the ECB when steering short-term interest rates to control aggregate liquidity in a way that the aggregate banking system is in a position to fulfil adequately its reserve requirements. In particular, the ECB normally does not need to take care of any factors that affect temporarily the demand for working balances, such as the level and uncertainties of interbank payment flows. However, two exceptions are noteworthy and are discussed in the paper: the banks' balance sheet management activities implying a regular end of month peak of the EONIA rate; and the liquidity situation in the case of substantive market tensions as in the days following the terrorist attacks of 11 September 2001. The need of the ECB's liquidity management to address the associated deviations from a model of perfect markets is discussed. [source] Is Reserve-ratio Arithmetic More Pleasant?ECONOMICA, Issue 279 2003Joydeep Bhattacharya Does it matter in a revenue-neutral setting if the government changes the inflation tax base or the inflation tax rate? We answer this question within the context of an overlapping-generations model in which government bonds, capital and cash reserves coexist. We consider experiments that parallel those studied in Sargent and Wallace's ,unpleasant monetarist arithmetic'; the government uses seigniorage to service its debt, choosing between changing either the money growth rate (the inflation tax rate) or the reserve-requirement ratio (the inflation tax base). In the former case we obtain standard unpleasant arithmetic; in the long run a permanent open market sale results in higher money growth, and higher long-run inflation. Somewhat surprisingly, it turns out that, for a given money growth rate, lower reserve requirements fund the government's interest expense. Associated with the lower reserve requirements is lower long-run inflation and higher welfare, compared with the money-growth case. The broad message is that reserve-ratio arithmetic can be pleasant even when money-growth arithmetic is not. [source] Incorporating power system security into market-clearing of day-ahead joint energy and reserves auctionsEUROPEAN TRANSACTIONS ON ELECTRICAL POWER, Issue 2 2010J. Aghaei Abstract This paper is intended to introduce a technique for incorporating system security into the clearing of day-ahead joint electricity markets, with particular emphasis on the voltage stability. A Multiobjective Mathematical Programming (MMP) formulation is implemented for provision of ancillary services (Automatic Generation Control or AGC, spinning, non-spinning, and operating reserves) as well as energy in simultaneous auctions by pool-based aggregated market scheme. In the proposed market-clearing structure, the security problem, as an important responsibility of ISO, is addressed and a nonlinear model is formulated and used as the extra objective functions of the optimization problem. Thus, in the MMP formulation of the market-clearing process, the objective functions (including augmented generation offer cost, overload index, voltage drop index, and loading margin) are optimized while meeting AC power flow constraints, system reserve requirements, and lost opportunity cost (LOC) considerations. The IEEE 24-bus Reliability Test System (RTS 24-bus) is used to demonstrate the performance of the proposed method. Copyright © 2008 John Wiley & Sons, Ltd. [source] Monetary Policy Implementation: Past, Present and Future , Will Electronic Money Lead to the Eventual Demise of Central Banking?INTERNATIONAL FINANCE, Issue 2 2000FreedmanArticle first published online: 16 DEC 200 This paper examines the ways in which central banks influence the very short-term interest rate in regimes with and without reserve requirements. It then examines the implications for monetary policy implementation of the spread of electronic money and the potential for other mechanisms to compete with settlement arrangements at central banks. It concludes that it is extremely unlikely that electronic money will displace bank notes or the settlement services that are offered by central banks in the foreseeable future. Moreover, even in the extremely unlikely case that the spread of stored-value cards leads to the elimination of bank notes and that the development of network money permits alternative settlement services to be offered that effectively competes with central bank services, central banks would very likely be able to continue to influence the very short-term rate of interest. They would therefore be able to maintain their influence over aggregate demand and inflation even in such circumstances. [source] Optimal auditing in the banking industryOPTIMAL CONTROL APPLICATIONS AND METHODS, Issue 2 2008T. Bosch Abstract As a result of the new regulatory prescripts for banks, known as the Basel II Capital Accord, there has been a heightened interest in the auditing process. Our paper considers this issue with a particular emphasis on the auditing of reserves, assets and capital in both a random and non-random framework. The analysis relies on the stochastic dynamic modeling of banking items such as loans, reserves, Treasuries, outstanding debts, bank capital and government subsidies. In this regard, one of the main novelties of our contribution is the establishment of optimal bank reserves and a rate of depository consumption that is of importance during an (random) audit of the reserve requirements. Here the specific choice of a power utility function is made in order to obtain an analytic solution in a Lévy process setting. Furthermore, we provide explicit formulas for the shareholder default and regulator closure rules, for the case of a Poisson-distributed random audit. A property of these rules is that they define the standard for minimum capital adequacy in an implicit way. In addition, we solve an optimal auditing time problem for the Basel II capital adequacy requirement by making use of Lévy process-based models. This result provides information about the optimal timing of an internal audit when the ambient value of the capital adequacy ratio is taken into account and the bank is able to choose the time at which the audit takes place. Finally, we discuss some of the economic issues arising from the analysis of the stochastic dynamic models of banking items and the optimization procedure related to the auditing process. Copyright © 2007 John Wiley & Sons, Ltd. [source] Reliability and competitive electricity marketsTHE RAND JOURNAL OF ECONOMICS, Issue 1 2007Paul Joskow We derive the optimal prices and investment program for an electric power system when there are price-insensitive retail consumers served by load serving entities that can choose any level of rationing contingent on real-time prices. We then examine the assumptions required for competitive electricity markets to achieve this optimal price and investment program and the implications of relaxing several of these assumptions. We analyze the interrelationships between regulator-imposed wholesale market price caps and generating capacity obligations. The implications of potential network collapses for operating reserve requirements and whether market prices yield generation investments consistent with these reserve requirements are examined. [source] | |||||||||||||