Financial stability

Post n°201

An identifier to characterize groups’ global expansion strategies

Published on 01/27/2021

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By Dominique Durant, Kevin Parra Ramirez, Geneviève Toubol

The descriptive data associated with large enterprise identifiers (LEIs) provide up-to-date information on groups’ ownership structure, as well as on the legal form and location of their operations, including those in off-shore financial centres (OFCs). Extending the obligation to have an LEI would thus help to make global financial transactions more transparent.

Chart 1: Distribution of locations of foreign subsidiaries, by parent company nationality
Chart 1: Distribution of locations of foreign subsidiaries, by parent company nationality
Updated on 01/27/2021 16:57
Post n°196

Bank stress-tests at the time of Covid-19- Episode 2

Published on 12/24/2020

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By Valère Fourel, Julien Idier, Valerio Scalone and Aurore Schilte

Unlike the fictitious scenarios used in standard prudential stress test exercises (see post "Bank stress tests: tools for prudential analysis – Episode 1"), the Covid-19 crisis represents an unprecedented adverse scenario. This is an opportunity to draw the first lessons from it: (i) on the resilience of the banking system, as observed for the time being, and (ii) on the improvement of stress-test tools in the light of this experience.

Chart 1: Loss of GDP in the stress tests and during recent crises (pp)
Chart 1: Loss of GDP in the stress tests and during recent crises (pp)
Updated on 12/24/2020 15:06
Post n°195

Bank stress tests: tools for prudential analysis – Episode 1

Published on 12/22/2020

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By Valère Fourel, Julien Idier, Valerio Scalone and Aurore Schilte

In order to protect banks from macroeconomic and financial shocks, prudential authorities use a range of risk analysis tools, among them stress tests. What are they? What purpose do they serve? This blog post answers these questions and is accompanied by a second post on the “real-life” stress placed on banks by the Covid-19 crisis.

Chart 1: Steps in a bottom-up bank stress-test exercise.
Chart 1: Steps in a bottom-up bank stress-test exercise.
Updated on 12/22/2020 16:24
Post n°193

Fed’s financial stability concerns and monetary policy

Published on 12/15/2020

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By Klodiana Istrefi, Florens Odendahl and Giulia Sestieri

Even though the Fed does not have an explicit financial stability objective extending beyond its supervisory responsibilities, the public speeches of Fed officials reveal that there is a relationship between the higher proportion of speaking time on financial stability topics and more accommodative monetary policy. Financial stability became a topic of concern in Fed speeches especially around the global financial crisis.

Chart 1. Main topics covered in Fed speeches
Chart 1. Main topics covered in Fed speeches Source: Istrefi, Odendahl, Sestieri (2020). The chart shows the proportion of six topics extracted from the Fed speeches for the period 1997 to 2018. The topic proportions displayed are annual averages.
Updated on 12/15/2020 18:46
Post n°188

Who has purchased euro area debt since the start of the health crisis?

Published on 11/20/2020

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By Olivier Sirello

The coronavirus crisis and decline in economic activity have led to a steep rise in the need for financing. As a result, net issuance of public and private debt securities in the euro area has increased to unprecedented levels. The main buyers are central banks and banking institutions, and, to a lesser extent, non-euro area residents.

Chart 1: Public and private debt issuance has reached record levels in the euro area (Seasonally adjusted data, EUR billions)
Chart 1: Public and private debt issuance has reached record levels in the euro area (Seasonally adjusted data, EUR billions) Source: European Central Bank (author’ s calculations).
Updated on 11/20/2020 15:36
Post n°175

Credit mediation for businesses during the Covid crisis

Published on 07/31/2020

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By Raymond de Pastor

The health crisis has left a significant number of businesses in urgent need of cash. In response, public authorities have put in place various support mechanisms, including a scheme to provide State-Guaranteed Loans (SGLs). The credit mediation system is currently helping businesses that have received an initial refusal from a bank in response to their SGL request.

Number of requests for credit mediation from businesses (monthly average)
Chart 1: Number of requests for credit mediation from businesses (monthly average) Source: Banque de France, Credit Mediation Scheme for Businesses
Updated on 07/31/2020 08:54
Post n°173

Bank solvency, liquidity and financial crisis: what relationship?

Published on 07/24/2020

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By Olivier de Bandt, Sandrine Lecarpentier and Cyril Pouvelle

Bank solvency and liquidity risks mutually interact. Using a model that simultaneously estimates the solvency and liquidity ratios of French banks, it is possible to incorporate them jointly into a stress scenario. It shows that the financial environment has a significant impact, but only in times of crisis, and that solvency has an impact on liquidity, not vice versa.

Chart 1: Solvency ratio and liquidity ratio of French banks since 1993
Chart 1: Solvency ratio and liquidity ratio of French banks since 1993 Sources: ACPR, authors’ calculations.
Updated on 07/24/2020 14:47
Post n°167

Banks’ climate commitment and lending to brown industries

Published on 06/25/2020

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By Jean-Stéphane Mésonnier

We assess the link between banks' commitments to take climate issues seriously, measured by a climate performance rating based on their declarations, and the changes in their lending in France to greenhouse gas emitting industries between 2010 and 2017. A higher score appears to be associated with lower growth in lending to large enterprises in the five most carbon-intensive industries. However, lending to SMEs is not affected.

Chart 1: Banks’ pro-climate commitments and share of loans to firms in the most carbon-intensive industries in France.
Chart 1: Banks’ pro-climate commitments and share of loans to firms in the most carbon-intensive industries in France. Source: Banque de France, authors’ calculations.
Updated on 06/25/2020 14:32
Post n°155

What if large firms were to go bust?

Published on 03/12/2020

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By Sarah Mouabbi

What would the economic cost of a systemic firm going bust be? This post addresses this question by assessing the recessionary effect of a systemic default. Within two years, such an event is expected to be followed by a 3% decrease in aggregate consumption and by three more systemic defaults.

Source: Gourieroux, Monfort, Mouabbi and Renne (2019)
Figure 1: Euro area probability of consumption dropping by more than 10% or 20% (horizon= 12 months) Source: Gourieroux, Monfort, Mouabbi and Renne (2019)
Updated on 03/12/2020 16:49
Post n°152

Responsible investment labels in France: taking stock

Published on 02/13/2020

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By Emilie Candus and Jean-Luc Le Goff

2019 saw very significant growth in labelled funds. With subscription rates higher than the industry average and broadly comparable levels of performance, the label is proving to be a factor of attractiveness for investors. However, the success of the labels is uneven and their penetration in the landscape of French collective investment management remains limited. Further educational and promotional efforts are still needed to step up the distribution of these products among savers.

Chart 1. Labelled funds accounted for only 7% of the French collective investment management market in 2019
Chart 1. Labelled funds accounted for only 7% of the French collective investment management market in 2019 Sources: Association française de la gestion financière (AFG – the French Asset Management Association), Banque de France and the French Ministries for the Economy and for Ecological Transition. Note: Estimate of the responsible investment collective man
Updated on 02/13/2020 14:55

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