This paper elaborates on the link between financial market volatility and real economic activity. Using monthly data for Germany from 1968 to 1998, we specify GARCH models to capture the variability of stock market prices, of the real exchange rate, and of a long-term and of a short-term rate of...

This paper discusses the link between financial development and macroeconomic volatility by exploring some of the ways through which financial development may affect business cycle fluctuations. To be specific, we examine whether stock market development exerts an unambiguous effect on...

This paper analyses structural and cyclical determinants of banking profitability in 16 Western European countries. We find that financial structure matters, particularly through the beneficial effect of the capital market orientation in the respective national financial system. Furthermore,...

The contribution of financial and non-financial risks to the overall level of risk in the system depends on the current state of the EU banking system (which, in the aggregate and compared with banking sectors in other major advanced economies, cannot be characterised as strong) and how...

This paper offers a new framework for the assessment of financial market liquidity and identifies two types: search liquidity and systemic liquidity. Search liquidity, i.e. liquidity in “normal” times, is driven by search costs required for a trader to find a willing buyer for an asset...

The extended period of limited growth experienced until recently in many European countries raises the issue as to which policies could be most effective in improving their economic performance. This paper argues that further financial sector reforms may be a valuable complement to ongoing...

A combination of cyclical and structural factors has lead to a situation which could threaten financial stability worldwide. As the current financial turmoil is unfolding it becomes clearer that the effects of the initial sub-prime crisis, which originated in the US, are spreading across other...

Ausgehend von der Krise im Finanzsektor analysiert der ehemalige Investmentbanker Enno Balz, wie es zu der weltweiten Wirtschaftskrise kam, die mit dem Zusammenbruch der Investmentbank Lehman Brothers 2008 begann. Sein Fazit: Schuldeninduziertes Wachstum gepaart mit fehlender Regulierung waren...

The paper analyses whether communication and actual interventions in FX markets are successful in moving exchange rates over the medium- to long-run. It compares empirical evidence based on time-series analysis with that obtained from an eventstudy approach. Both the time-series approach based...