Andrieș A.M., Chiperi A., Ongena S., Sprincean N., 2022, External Wealth of Nations and Systemic Risk, Journal of Financial Stability, 101192
External imbalances played a pivotal role leading to the global financial crisis and were an important cause of turmoil. While current account (flow) imbalances narrowed in the aftermath of the crisis, the net international investment position (NIIP) (stock) imbalances persisted. This study explores the implications of countries’ net foreign positions on systemic risk. Using a sample of 470 banks located in 49 advanced economies, emerging countries, and developing economies over 2000–2020, we find robust empirical evidence that banks can reduce their systemic risk exposure when the countries in which they are incorporated improve their NIIPs and maintain creditor status vis-à-vis the rest of the world. However, only the equity component of the NIIP is responsible for this outcome, whereas debt flows are not significant. Similarly, we find that the mitigating effect of an external balance sheet on systemic risk is derived from valuation gains rather than from the incremental net acquisition of assets or liabilities represented by the current account. Our findings are particularly relevant for policymakers seeking to improve banks’ resilience to adverse shocks and maintain financial stability.
Andrieș, A. M., Sprincean, N. (2023). ESG Performance and Banks’ Funding Costs. Finance Research Letters, 54: 103811.
In this study, we explore whether and to what extent Environmental, Social, and Governance (ESG) factors impact banks’ funding costs. Using a sample composed of 493 banks located in 39 advanced and emerging economies over the 2003-2020 period, we find that banks benefit from incorporating ESG practices into financial decisions, enjoying lower costs of raising interest-bearing liabilities (total cost of funds), as well as reduced costs of attracting deposits. All ESG dimensions are responsible for this outcome in the case of total cost of funds, whereas for the cost of deposits the Environmental pillar appears to have an insignificant impact, suggesting that depositors do not value banks' environmental commitments, but rather their social performance and corporate governance quality. Furthermore, the empirical evidence indicates that only large banks and those located in developed countries reap the benefits of increased ESG performance in terms of reduced financing costs.
Andrieș A.M., Walker, S. (2023) When the message hurts: The unintended impacts of nudges on saving. Journal of Comparative Economics, 51(2):439-456
We implement a field experiment in Romania to elucidate how informational nudges and goal setting impact saving. We find no evidence that text message reminders, either in the form of a general reminder or information about the saving goals of peers, encourage saving. Further, both types of messages discourage saving for participants who set a goal, particularly among high goal setters. We posit that informational nudges unintentionally increase the salience of unrealistic goals and engender boomerang effects that discourage high goal setters from saving. Among participants who received no messages, those who set goals save more, suggesting a tradeo between commitment devices and informational nudges in this context.
Andrieș A.M., Plopeanu A. Sprincean N. (2023) Institutional determinants of households’ financial investment behaviour across European countries. Economic Analysis and Policy , 77: 300-325
In this paper, we examine the influence exerted by formal and informal institutions on financial investment behaviour across households from 25 European countries. Our results reveal that people from former communist countries are less likely to make such financial decisions, while the same relationship holds for those who lived in countries that adopted either gradual or shock-therapy policies on the transition to capitalism. Our results reveal that institutional factors are associated with the propensity to invest in financial instruments. Specifically, our results show that the shorter the period of exposure individuals have had to a socialist system, the greater their intensity to invest in the stock market. Moreover, weak institutional frameworks and low quality of governance are generally linked to a lower likelihood that an individual will make financial investments in shares or stocks, with the effect being magnified in former communist countries. In addition, we find that households in Protestant countries are more likely to have investments in financial instruments compared to their Orthodox and Catholic peers, but the impact is diminished in former communist countries. Last but not least, different fractionalization indices affect the investment decisions differently, while different national cultural values and dimensions are significant variables that can shape these behaviours.
Aevoae G.M., Andrieş, A. M., Ongena, S., Sprincean, N. (2023) ESG and Systemic Risk, Applied Economics , 55(27): 3085-3109.
How do changes in Environmental, Social and Governance (ESG) scores influence banks’ systemic risk contribution? Using a dynamic panel model, we document a beneficial impact of the ESG Combined Score and Governance pillar on banks’ contribution to system-wide distress analysing a panel of 367 publicly listed banks from 47 countries over the period 2007-2020. Stakeholder theory and theory relating social performance to expected returns in which enhanced investments in corporate social responsibility mitigate bank specific risks explain our findings. However, only better corporate governance represents a tool in reducing bank interconnectedness and maintaining financial stability. The results are robust to alternative measures of systemic risk, both contribution and exposure, as well as when estimating a static model. Our findings stress the importance of integrating banks’ ESG disclosure into regulatory authorities’ supervisory mechanisms as qualitative information.
Andrieș A.M., Brodocianu M., Sprincean N. (2023) The Role of Institutional Investors in the Financial Development, Economic Change and Restructuring, 56: 345–378
During last decades, financial assets and trading volumes of institutional investors have increased worldwide at a rapid pace, influencing the structure of financial system, encouraging innovation and efficiency and enlarging economy’s financing possibilities. In this paper, we assess how institutional investors influence financial development using a dataset covering 34 countries members of Organisation for Economic Co-operation and Development (OECD) during 1995–2019 period. Our results suggest that the increased presence of institutional investors, especially investment funds, is beneficial for the financial system as a whole, a finding that is robust across different specifications and estimation techniques, both static and dynamic. We extend our analysis by examining the main components of financial development and document that the effect manifests primary for financial institutions, whereas the influence on financial markets is found to be statistically insignificant. Therefore, institutional investors can improve the access to long-term investments and financial services. Findings bear critical policy implications for policymakers that seek to promote financial development as creating propitious conditions, robust regulatory environment and greater flexibility in investment regulations, especially for pension funds and insurance companies, will contribute to better risk-adjusted returns and thus enhanced development of the financial system.
Chiper A.M. (2023) Financial risk optimisation methods: A survey, Review of Economic & Business Studies, 16(1): 153-165
An important part of the management activity is related to the management of financial risk management. It involves the assessment of financial risks in relation to a particular financial institution, situation or decision and the consistent development of management strategies and internal policies. The basic work of risk management is to measure risk. This paper examines the existing literature on financial risk measurement, pointing out the limitations in existing risk measurement indicators and what was done in terms of optimization of risk measures, good performance, easy calculation, and testing. In addition, the paper wants to explore future research ideas.
Andrieș A.M., Sprincean N. , Podpiera, A. (2022) Central Bank Independence and Systemic Risk. International Journal of Central banking 18(1), 81-150
We investigate the relationship of central bank independence and banks’ systemic risk measures. Our results support the case for central bank independence, revealing that central bank independence has a robust, negative, and significant impact on the contribution and exposure of a bank to systemic risk. Moreover, the impact of central bank independence is similar for the stand-alone risk of individual banks. Secondarily, we study how the central bank independence affects the impact of selected institutional, country and banking system indicators on these systemic measures. The results show that there might be trade-offs between central bank independence and a central bank’s financial stability mandate and that central bank independence may exacerbate the effect of a crisis on the contribution of banks to systemic risk, hence the need for a coordinated interaction between central banks and the governments. We also find that, an increase in central bank independence can ameliorate the effects of environments characterized by low level of financial freedom or high market power that, by themselves, enhance the systemic risk contribution of banks.
Andrieş, A. M., Ongena, S., Sprincean, N., & Tunaru, R. (2022). Risk spillovers and interconnectedness between systemically important institutions. Journal of Financial Stability, 58, 100963.
In this paper we gauge the degree of interconnectedness and quantify the linkages between global and other systemically important institutions, and the global financial system. We document that the two groups and the financial system become more interconnected during the global financial crisis when linkages across groups grow. In contrast, during tranquil times linkages within groups prevail. Global systemically important banks contribute most to system-wide distress, but are also most exposed. Other systemically important institutions bear more individual market risk. The two groups and the global financial system also co-vary for periods of up to 60 days. In sum, both groups perform in ways that defy any straightforward categorization.
Andrieș A.M., Balutel D., 2022, The impact of national culture on systemic risk, Economic systems, 46(2), 100972.
This study investigates the effects of national culture on systemic risk. Using a comprehensive dataset for the period 2003–2016, we document relations between power distance, collectivism femininity and exposure and contribution to systemic risk. Our results reveal that between national culture and systemic risk measures exists a statistically significant and nonlinear relationship driven by the duality information of national culture indexes, but also driven by the skewness of the systemic risk measures. Moreover, our results show that during the crisis when are recorded higher values of systemic risk, the impact of national culture is different from normal times.
Andrieș A.M., Lazăr S. (2022) Effective tax rates for bank entities across European Union. The role of loan loss provisions. Economic Research, 35:1, 1581-1603.
The paper investigates the impact of loan loss provisions (LLPs) on bank-specific effective tax rates using data of 2943 banks from European Union during 2007-2014. Distinguishing between two banking business models, respectively shareholders-value (commercial banks) and stakeholders-value banks (savings and cooperative banks), empirical findings indicate that provisions negatively affects the former (commercial banks) specific effective tax rates, whereas for the latter (savings and cooperative banks), no statistical significant effect was detected. As control variables we used size, equity, fixed assets and return on assets (ROA), while the specific country-year tax reforms were captured using Devereux-Griffith effective tax rates. The results prove robust to different model specifications, which suggests that LLPs act systematically towards the reduction of the bank entities’ corporate tax burden. From policy perspective, in the context of the switch from the incurred-loss model to the expected-loss model with respect to LLPs (IFRS 9), this may signal additional tax bill reduction for bank entities, if decision makers fail to react promptly. Finally, looking at types of banks investigated, the results show that among all three categories of banks, commercial banks manage to avoid the increase of tax bill driven by some bank-specific determinants (i.e. size and ROA), while maximizing the tax savings driven by others (i.e. capital intensity), thus suggesting more tax planning oriented behaviour as compared to savings and cooperative banks.
Andrieș A.M., Cazan S., Sprincean N. (2022) The Nexus between Bank M&As and Financial Development, Romanian Journal of Economic Forecasting , 25(2), 5-28
The financial system plays an important role in assuring the overall wellbeing of a nation, being fundamental in the growth mechanism of an economy. The consolidation and liberalization process from the past years has increased the scrutiny and the attention over the banking sector. Even if the mergers and acquisitions (M&As) are recognized as an important instrument of growth and power, little is still known about the implications over the economic evolution of the emerging markets. This article aims to investigate the link between banks M&As and the financial development of 16 countries from Central and Eastern Europe. From this perspective, a panel regression model has been conducted that employs data of 213 restructuring operations during 2000 and 2018. The empirical results show that there is a negative and significant connection between the pace of financial development and the dynamic of the banking system in the short-term, whereas we document a positive impact in the long-term, especially in the case of cross-border M&As. Thus, the materialization of a restructuring operation could affect the depth, access and efficiency of the banking system. Furthermore, the analysis provides evidence of the importance of cumulative cross-border transactions before and after the global financial crisis.
Sirbu, A.C., Brezuleanu, M-M., Tiganas, C.G., Asandului, M., Iacobuta-Mihaita, A-O. (2022), Determinants of Subjective Well-Being among European Union’s Older Adults, Transformations in Business & Economics, 21, 2A (56A), 42-59.
The worldwide demographic challenge of population ageing brings to the fore the need to analyse subjective well-being and its determinant factors among older adults. The relatively few studies in the field emphasize the changes which occur while getting old in terms of subjective well-being determinant factors’ perception and identification and further outline the specificity of this topic among the above-mentioned categories. This paper aims at identifying and analysing the micro- level determinants of subjective well-being among older adults in European Union countries. Our study is based on data from the Survey of Health, Ageing and Retirement in Europe. The sample consists of 41 490 older adults who were questioned about several aspects of their life in 2020, just before the start of the Coronavirus pandemic. Using the ordered logit regression, we estimated models to identify the main determinants of subjective well-being. The results show that good health, employment, social support and a level of income that enable households to make ends meet have a positive effect on subjective well-being while education negatively affects the subjective well-being of older adults.
Andrieș A.M., Ungureanu I. (2022), ERP and Performance of Companies in Romania, Journal of Risk and Financial Management 15(10):433
How does the implementation of ERP solutions influence the financial performance of companies? Using data for 406 of companies from Romania, we assessed the impact of the implementation of ERP solutions on the profitability and productivity of companies. We performed this analysis using companies’ financial data for the period between 1999 and 2000. The analysis of the influence of ERP implementation on the two indicators was carried out both from the perspective of users’ perception and from the perspective of the evolution over time of these financial indicators. Our results revealed a limited impact of the implementation of ERP systems on profitability and productivity, in line with the expectations of managers.
Tofan M. (2022), A Regulatory Perspective on the Actual Challenges for the European Deposit Insurance Scheme, Laws 11(5): 75
The European financial regulation is evolving with new and specific forms of cooperation for the member states, enhancing concepts and innovative rule of law, particularly featuring the actual level of harmonization. This paper investigates the European deposit insurance scheme, in the context of the European law development, in reply to the current economic and social challenges and in accordance with the principles of the free market. The methods of research include a theoretical investigation of the relevant literature, a comparison of the proposed regulation and regulation in force, synthesis, and deduction. The research results are based on the assessment of the progress of negotiation in building efficient mechanisms to stimulate money saving conduct for individuals and legal persons, globally and within the European Union. Acknowledging the status of the three pillars of the European banking union legislative package, the member states have unanimously agreed that the framework established by the Directive from 2014 needed a bracing approach, to ensure more protection and to support enhanced financial integration. The analysis carried out showed the importance of the European deposit insurance scheme in the context of the present global challenges. The money saving conduct was strongly influenced by the regulation for the deposit guarantee mechanism, while the tight estimated agenda for the final regulatory proposal asks for ingenious cooperation to reach a consensus within members states. The research showed the imperative to build common legislation for the member states and a future direction of investigation to evaluate the effects of the gap between the domestic regulation and milestone generated by the European directives in each state legal framework
Andrieș A.M., Cazan S., Sprincean N. (2021) Determinants of Bank M&As in Central and Eastern Europe Journal of Risk and Financial Management. 14(12):621.
This paper analyzes the determinants of bank mergers and acquisitions (M&As) from a bank-level perspective. The main objective of the study is to identify those mutual characteristics of all banking institutions from Central and Eastern Europe that are prone to be acquired versus acquirer, or national versus cross-border. Using a database of more than 200 M&As transactions between 2000 and 2018 within Central and Eastern Europe, we document the main characteristics that influence the decision of merging, including the size of the bank, profitability, lending activities, liquidity, bank concentration, banking system stability, government effectiveness, regulatory quality, and the level of inflation. Higher effective average tax rate, which is associated with reduced tax avoidance, influences banks in a positive manner to be involved in the M&A process, findings that hold for targeted banks and domestic transactions. Furthermore, the analysis highlights the changes the financial crisis has projected on investors’ behavior.
Tofan, M, (2021) The relation international taxation - international law: formal strains and jurisprudential effect Eastern Journal of European Studies. 12(2): 151-168.
The paper aims at presenting the influence of the fiscal harmonization on the international law, showing the current changes in the methods of fiscal cooperation among states, with direct influence on location of activity and indirect influence on investment and saving conduct. The international taxation globally has reached a point where unilateral regulation is not efficient anymore and the need for cooperation is present, in regional partnerships and in cooperation mechanisms, likewise. Tax law is one of the most representative division of the national law, considering the autonomous ability of the governments and of the national legislative actors to adopt the legal framework for fiscal liability. The paper addresses the challenges in tax regulation, in the context of the consequential influence of the international law developments on the domestic fiscal rules, including direct taxation for cross-border income and taxation of dividens, both from regulatory and jurisprudential perspective. The regulation formal strains and the influence of the jurisprudential approach on tax planning are analysed, pointing out the need for integrated regulatory framework
Andrieș A.M., Copaciu A., Popa R., Vlahu R. Recourse and (strategic) mortgage defaults: Evidence from changes in housing market laws
We study the impact of changes in recourse legislation on mortgage defaults. Using a large dataset of mortgage loans originated over the period 2003-2016, we provide evidence that limited lender recourse is an important driver for mortgage delinquency. We find that borrowers that are traditionally considered least likely to default may become increasingly risky when presented with the option of “walking away” by transferring the mortgage ownership to their lender without any deficiency judgments. Our findings highlight the costs associated with debtor-friendly recourse procedures that may create incentives for strategic default.
Andries A.M., Diaconașu D.E., Stoleriu I., Public pension and the household’s saving behaviour in CEE countries
There is no doubt about the privileged status of the philosophy of saving in the sustainable and harmonious development of an economy and society. The well-known problem of the demographic challenge of the aging population will lead European countries to reform their pension systems. Thus, the effect of changes in pension wealth on private wealth is vital information for assessing the welfare effects of pension reforms. So, among the determinants of saving, does the public pension hold a more special place? Does the public pension system stimulate or hinder the individual's propensity to save in emerging countries? In this regard, what are the similarities and differences between emerging countries that share a common legacy? The aim of this paper is to estimate to what extent European households offset pension wealth with private savings in Central and Eastern Europe. In other words, we want to answer the question does public pension change savings pattern? In this attempt we construct measures for both the present value of past and future earnings and pension wealth at the individual level. We use data from the Survey of Health, Ageing and Retirement in Europe. In addition, to characterize the saving behaviour in this perimeter, we use, from the microeconomic dataset, information related to wealth, education, health, social network and other demographic, social and economic variables. Specifically, we use data at the household level to conduct a crosscountry study – median/robust regression – which allows us to emphasize the similarities and differences that promote or discourage the saving spirit among the analysed countries. We present evidence for ten European countries: Bulgaria, Czech Republic, Croatia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, and Slovakia. Our results imply an estimated offset between 31,5% to 63.4%. According to our median/robust regression results, each currency unit of pension wealth is associated with a 31,5 – 63.4 cent decline in non-pension wealth. Understanding cross-country features related to what shapes the saving choices has relevant policy implications.
Andries A.M., Diaconașu D.E., Rezlescu C., Asteriou D., Juravle G. Money feels good: A Bayesian lasso approach to materialistic values in subjective wellbeing
Individual well-being is crucial for personal development and societal welfare. Here, we investigated the relationship between measures of material values and an individual’ssubjective well-being, during a period of significant inflation, in an emerging country. For this, a Bayesian LASSO estimation was conducted on an original dataset with 706 participants assessed on the significance of money, obsession with money, financial knowledge, financial and individual subjective well-being, and socio-economic characteristics. Results indicate that individuals’ perceived well-being is positively linked to factors such as taking pride in one's financial successes, current good money management, having income left at the end of the month, future financial freedom and security, and engaging in entrepreneurship. Conversely, socio-economic uncertainty determines significant costs with respect to an individual’s well-being, as this appears to be negatively influenced by working in the private sector and the act of sustained saving. Even more, a significant gender gap in financial knowledge is evident in our data. Taken together, the present study highlights subjective financial measures as powerful underlining features of individual quality of life and life satisfaction in the context of economic uncertainty. These findings are discussed with respect to current societal complexities, financial security, and economic behaviours.
Andrieș A.M., Cioban S., Mare C., Moldovan D. Evaluation of the space-time effects of Covid-19 on loans and savings in Romania
This article examines the effects of the Covid-19 crisis on the banking sector of Romania using a spatial panel dataset of 21 months, from April 2020 to December 2021 and 41 counties. The empirical setup exploits the spatial and time-series variations of the banking sector during the pandemic via means of exploratory data analysis, simple linear models for each month with spatial diagnosis, and spatial panel data models with fixed effects. County-level differences and particular disturbances in the trend of the banking services are highlighted against the turning points of the pandemic. We show that increasing Covid-19 infections result into higher loan and saving rates, with significant spatial interactions given by the neighbouring counties.
Popa R., Ichim S., Andries A.M., Alupoaiei A., Neagu F., Asymmetric effects of borrower-based measures on household access to finance
This paper aims to uncover the asymmetric effects in terms of access to finance determined by the implementation of macroprudential borrower-based measures, using a rich dataset which combines credit registry data with household income records. Based on microdata at debtor-level, our results reveal that the macroprudential tightening of LTV limit in November 2011 in Romania did not constrain access to finance for low-income debtors, while reducing the flow of new loans to high-income debtors and those with larger amounts at origination. Furthermore, the regulation was successful in supporting loan origination in domestic currency denominated loans. Concurrently, we analyze impact of a 5-year maturity cap that was implemented simultaneously for consumer loans, in order to counteract potential migration from mortgage to secured consumer credit.. We observe that loan issuance to higher income debtors, as well those who contracted larger loans, experienced a contraction, while origination of loans to low income debtors was unaffected. In addition, the maturity limit was efficient in complementing the LTV limit, avoiding unintended leakages from mortgage to secured consumer credit.
Tofan M. A Regulatory Perspective on the Actual Challenges for the European Deposit Insurance Scheme
Andrieș A.M., Plopeanu A. Covid 19 Pandemic impact on household saving behaviour
Tofan M. Capital taxation and household saving behaviour
Moldovan D. What "fair interest" should mean for the retail loan market?