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Zombie Bank
A zombie bank is a financial institution that has an economic net worth of less than zero but continues to operate because its ability to repay its debts is shored up by implicit or explicit government credit support. The term was first used by Edward Kane in a 1987 article titled ''Dangers of Capital Forbearance: The Case of the F.S.L.I.C and ‘Zombie S&L’s'' to explain the dangers of tolerating a large number of insolvent savings and loan associations and applied to the emerging Lost Decade (Japan), Japanese crisis in 1993. A zombie bank can continue to operate and even grow as long as creditors remain confident in the relevant government's ability to extract the funds needed to back up its promises from current or future taxpayers. However, when this ability seems doubtful, zombie institutions face bank run, runs by uninsured depositors and margin calls from counterparties in Derivative (finance), derivatives transactions. Background In an article published in the March/ ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Financial Institution
A financial institution, sometimes called a banking institution, is a business entity that provides service as an intermediary for different types of financial monetary transactions. Broadly speaking, there are three major types of financial institution: # Depository institution – deposit (finance), deposit-taking institution that accepts and manages deposits and makes loans, including bank, building society, credit union, trust company, and mortgage broker; # Contractual institution – insurance company and pension fund # Investment institution – investment banking, investment bank, underwriter, and other different types of financial entities managing investments. Financial institutions can be distinguished broadly into two categories according to ownership structure: * commercial bank * cooperative banking, cooperative bank Some experts see a trend toward homogenisation of financial institutions, meaning a tendency to invest in similar areas and have similar business str ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
The New York Times
''The New York Times'' (''NYT'') is an American daily newspaper based in New York City. ''The New York Times'' covers domestic, national, and international news, and publishes opinion pieces, investigative reports, and reviews. As one of the longest-running newspapers in the United States, the ''Times'' serves as one of the country's Newspaper of record, newspapers of record. , ''The New York Times'' had 9.13 million total and 8.83 million online subscribers, both by significant margins the List of newspapers in the United States, highest numbers for any newspaper in the United States; the total also included 296,330 print subscribers, making the ''Times'' the second-largest newspaper by print circulation in the United States, following ''The Wall Street Journal'', also based in New York City. ''The New York Times'' is published by the New York Times Company; since 1896, the company has been chaired by the Ochs-Sulzberger family, whose current chairman and the paper's publ ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Yalman Onaran
Yalman Onaran is a Turkish-born American financial journalist. He is currently a senior finance writer for Bloomberg News, focusing on global and national banking, Onaran covers global banking, regulation and the politics of finance, writing feature articles about banking issues worldwide, and comparing the problems of European banks to their U.S. counterparts, as well as analysing the effectiveness of new bank regulations. Life and career Onaran was born in Istanbul and moved to the United States in 1987 to attend the College of College of Wooster from which he graduated in 1991. Onaran earned graduate degrees from the Columbia University Graduate School of Journalism and from the Columbia University School of International and Public Affairs. Onaran taught in schools before he became a full-time correspondent for the Associated Press, and moved back to Ankara, Turkey in 1995 to cover wars and politics. Onaran found himself covering the war zones first, then switched to financ ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Zombie Company
In political economy, a zombie company is a company that needs bailouts in order to operate, or an indebted company that is able to repay the interest on its debts but not repay the principal. Description Zombie companies are indebted businesses that, although generating cash, after covering running costs, and fixed costs (wages, rates, rent) only have enough funds to service the interest on their loans, but not the debt itself. As such, they are generally dependent on the refinancing of maturing debt for their continued existence and may face solvency risks should interest rates rise or investors withdraw from further financing. History The term "zombie company" was applied to Japanese firms supported by Japanese banks during the period known as the " Lost Decade" after the collapse of the Japanese asset price bubble in c.1990. Japanese banks continued to support weak or failing firms. The retailer Daiei is an example of a large company that expanded greatly during the period ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bridge Bank
A bridge bank is an institution created by a national regulator or central bank to operate a failed bank until a buyer can be found. While national laws vary, the bridge bank is usually established by a publicly backed deposit insurance organisation or financial regulator and may be instituted to avoid systemic risk and provide an orderly transition avoiding negative effects such as bank runs. Typically, the tasks of a bridge bank are to ensure seamless continuity of banking operations by: * Assuming the deposits of and honouring the commitments of the failed bank, so that service to retail clients is not disrupted * Servicing adequately secured existing loans to avoid their premature interruption or termination * Assuming other existing assets, liabilities or functions of the defunct bank at the discretion of the regulator These tasks are carried out on a temporary basis (usually for no more than two or three years) to provide time to find a buyer for the bank as a going conc ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bad Bank
A bad bank is a corporate structure which isolates illiquid and high risk assets (typically non-performing loans) held by a bank or a financial organisation, or perhaps a group of banks or financial organisations. A bank may accumulate a large portfolio of debts or other financial instruments which unexpectedly become at risk of partial or full default. A large volume of non-performing assets usually make it difficult for the bank to raise capital, for example through sales of bonds. In these circumstances, the bank may wish to segregate its good assets from its bad assets through the creation of a bad bank. The goal of the segregation is to allow investors to assess the bank's financial health with greater certainty. A bad bank might be established by one bank or financial institution as part of a strategy to deal with a difficult financial situation, or by a government or some other official institution as part of an official response to financial problems across a number of i ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Non-performing Asset
A non-performing loan (NPL) is a bank loan that is subject to late repayment or is unlikely to be repaid by the borrower in full. Non-performing loans represent a major challenge for the banking sector, as they reduce profitability. They are often claimed to prevent banks from lending more to businesses and consumers, which in turn slows economic growth, although this theory is disputed. In the European Union, the management of the NPLs resulting from the 2008 financial crisis has become a politically sensitive topic, culminating in 2017 with the decision by the European Council to task the European Commission to launch an action plan to tackle NPLs. The action plan supports the fostering of a secondary market for NPLs and the creation of Asset Management Companies (aka bad banks). In December 2020, this action plan was revised in the wake of the COVID-19 pandemic crisis. Definition Non-performing loans are generally recognised as per the following criteria: * Payments of inter ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Moral Hazard
In economics, a moral hazard is a situation where an economic actor has an incentive to increase its exposure to risk because it does not bear the full costs associated with that risk, should things go wrong. For example, when a corporation is insured, it may take on higher risk knowing that its insurance will pay the associated costs. A moral hazard may occur where the actions of the risk-taking party change to the detriment of the cost-bearing party after a financial transaction has taken place. Moral hazard can occur under a type of information asymmetry where the risk-taking party to a transaction knows more about its intentions than the party paying the consequences of the risk and has a tendency or incentive to take on too much risk from the perspective of the party with less information. One example is a principal–agent approach (also called agency theory), where one party, called an agent, acts on behalf of another party, called the principal. However, a principa ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Zombie Company
In political economy, a zombie company is a company that needs bailouts in order to operate, or an indebted company that is able to repay the interest on its debts but not repay the principal. Description Zombie companies are indebted businesses that, although generating cash, after covering running costs, and fixed costs (wages, rates, rent) only have enough funds to service the interest on their loans, but not the debt itself. As such, they are generally dependent on the refinancing of maturing debt for their continued existence and may face solvency risks should interest rates rise or investors withdraw from further financing. History The term "zombie company" was applied to Japanese firms supported by Japanese banks during the period known as the " Lost Decade" after the collapse of the Japanese asset price bubble in c.1990. Japanese banks continued to support weak or failing firms. The retailer Daiei is an example of a large company that expanded greatly during the period ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Outright Monetary Transactions
Outright Monetary Transactions (OMT) is a program of the European Central Bank under which the bank makes purchases ("outright transactions") in secondary, sovereign bond markets, under certain conditions, of bonds issued by Eurozone member-states. The program was presented by its supporters as a principal manifestation of Mario Draghi's (July 2012) commitment to do "whatever it takes" to preserve the euro. OMT is considered by the European Central Bank once a Eurozone government asks for financial assistance. The Eurozone has established the European Stability Mechanism and the European Financial Stability Facility bailout funds in order to meet the challenges of the European debt crisis. From these funds and through OMT, the Eurozone's central bank can, henceforth, buy government-issued bonds that mature in 1 to 3 years, provided the bond-issuing countries agree to certain domestic economic measures – the latter being the so-called term of "conditionality". The aim of the pr ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Mario Draghi
Mario Draghi (; born 3 September 1947) is an Italian politician, economist, academic, banker, statesman, and civil servant, who served as the prime minister of Italy from 13 February 2021 to 22 October 2022. Prior to his appointment as prime minister, he served as the president of the European Central Bank (ECB) between 2011 and 2019. Draghi was also the chair of the Financial Stability Board between 2009 and 2011, and governor of the Bank of Italy between 2006 and 2011. After a lengthy career as an academic economist in Italy, Draghi worked for the World Bank in Washington, D.C., throughout the 1980s, and in 1991 returned to Rome to become director general of the Italian Treasury. He left that role after a decade to join Goldman Sachs, where he remained until his appointment as governor of the Bank of Italy in 2006. His tenure as Governor coincided with the 2008 Great Recession, and in the midst of this he was selected to become the first chair of the Financial Stability Boa ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
2008 Financial Crisis
The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners and financial institutions that led to the 2000s United States housing bubble, exacerbated by predatory lending for subprime mortgages and deficiencies in regulation. Cash out refinancings had fueled an increase in consumption that could no longer be sustained when home prices declined. The first phase of the crisis was the subprime mortgage crisis, which began in early 2007, as mortgage-backed securities (MBS) tied to U.S. real estate, and a vast web of Derivative (finance), derivatives linked to those MBS, collapsed in value. A liquidity crisis spread to global institutions by mid-2007 and climaxed with the bankruptcy of Lehman Brothers in September 2008, which triggered a stock market crash and bank runs in several countries. The crisis ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
