I build a small open economy version of the Calvo-type staggered price-setting model with limited asset market participation, and I show that the inverted aggregate demand logic is less likely to apply to small open economies. The equilibrium dynamics of the model are reduced to a representation...

The literature has documented a positive effect of foreign ownership on firm performance. But is this effect due to a one-time knowledge transfer or does it rely on continuous injections of knowledge? To shed light on this question we focus on divestments, that is, foreign affiliates that are...

We examine which variables are robust in explaining cross-country differences in the real impact of systemic banking crises. Based on a meta-analysis, we identify 21 variables frequently used as determinants of the severity of crises. Employing nine proxies for crisis severity, we find that...

We examine whether Fitch support ratings of US banks depend on bank size. Using quarterly data for the period 2004:Q4 to 2012:Q4 and controlling for several factors that make large and small banks different, we find that bank size is positively related to support ratings. However, the effect is...

The great financial crisis of 2007-2009 again illustrated the enormous costs of financial imbalances. Since the crisis, advanced economies have suffered a cumulative output loss of 33% relative to its pre-crisis, an increase in public debt amounting to 21% of GDP and direct fiscal costs...

This study examines the emergence of financial stability as a key police objective. It discusses the underlying trends in the financial system, as well as the role of finance in relation to money, the real economy and public policy. Financial stability is defined in terms of its ability to help...

The capital rules that banks have to comply with have become much more stringent since the financial crisis. The financial crisis brought home the fact that the capital buffers of banks were too small to absorb shocks. Financial aid from the state was required on a white scale to avoid more...

Confidence in banknotes is entirely based on trust in the currency, the organisation behind it and the authenticity of the note. The authenticity may be verified by an authenticity check, one of the four main user functions of a banknote; the others are value recognition, handling and...

The overall costs of the payment system to society are considerable. These costs depend on the relative usage of the available payment instruments, which differ in the costs that each entails to market participants in the payment chain. In the Netherlands, debit card payments have become less...

The literature on the effectiveness of macroprudential policy tools is still in its infancy and has so far provided only limited guidance for policy decisions. In recent years, however, increasing efforts have been made to fill this gap. Progress has been made in embedding macroprudential policy...