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Front Cover -- Contents -- Executive Summary -- Glossary of Technical Terms -- Abbreviations -- Introduction -- PART I The AMC Toolkit -- Chapter 1 Why a Public AMC? Preconditions for Public AMCs -- Commitment to Comprehensive Reforms -- Systemic Crisis and Public Funds at Risk -- Solid Diagnostic and Critical Mass of Impaired Assets -- Tradition of Institutional Independence and Public Accountability -- Robust Legal Framework for Bank Resolution, Debt Recovery, and Creditors' Rights -- Note -- Chapter 2 The Design: Legal and Institutional Framework -- Mandate and Powers -- Scope

This paper draws upon findings from a secondary analysis of suspected financial abuse cases in files of the Guardianship and Administration Tribunal in Queensland, Australia. The paper explores the association between formal and semi‐formal asset management arrangements and suspected financial abuse cases. The role of families as formal asset managers is also considered.

The relative success of Australian and Canadian banks in weathering the Global Financial Crisis (GFC) has been noted by a number of commentators. Their earnings, capital levels and credit ratings have all been a source of envy for regulators of banks in Europe, America and the United Kingdom. The G-20 and the European Union have tried to identify the features of the Canadian and Australian financial systems which have underpinned this success in order to use them in shaping a revised international regulatory framework. Despite this perceived success, the impaired assets (also known as non-performing loans) of banks in both countries increased several fold over the GFC, and we investigate the determinants of this, using impaired assets as our measure of bank risk. Previous studies in other countries have tended to focus on the impact of bank specific factors, such as size and return on equity, in explaining bank risk. Our approach involves including those traditional variables, plus Distance to Default (DD), and a novel contagion variable, which is the effect of major global bank DD on Australian and Canadian banks. Using panel data regression over the period 1999-2008, we find that various balance sheet and income statement factors are not good explanatory variables for bank risk. In contrast, the contagion variable is significant in explaining Canadian and Australian bank risk, which suggests that prudential regulators should look to specifically allocate a portion of regulatory capital to deal with contagion effects.

Beginning with the proposal by Enria (2017), the paper discusses the scope for successful bank restructuring through a carveout of impaired assets and a transfer of these assets to a government-sponsored asset management company. The paper argues that the success of such an operation requires a use of public funds, either outright or through contingent commitments. Clawback provisions are problematic because they create contingent liabilities that merely shift risks from the assets side to the liabilities sides of banks' balance sheets. The paper distinguishes between asset impairments coming from considerations of prospective returns and asset impairments coming from frictions in the markets in which these assets are traded. It also distinguishes between threats to bank solvency and threats to bank funding/liquidity. In each case, the success of bank restructuring from asset carveouts depends on the extent to which threats to the bank's solvency is eliminated. If these threats concern bank funding and asset liquidations at depressed prices, public funds may eventually not be needed. If threats to bank solvency come from nonperforming loans, taxpayer support may be essential. The notion of "real economic value" as the price at which assets should be transferred is problematic and leaves ample room for hidden subsidies. The success of restructuring of the individual bank may itself come at a risk to financial stability as the preservation of existing capacities maintains competitive pressure and depresses bank profitability. Additional risks may come from the burden on the government's fiscal stance.

Intro -- THE GLOBAL CONTEXT AND INTERNATIONAL EFFECTS OF THE TROUBLED ASSET RELIEF PROGRAM (TARP) -- THE GLOBAL CONTEXT AND INTERNATIONAL EFFECTS OF THE TROUBLED ASSET RELIEF PROGRAM (TARP) -- CONTENTS -- PREFACE -- Chapter 1 THE GLOBAL CONTEXT AND INTERNATIONAL EFFECTS OF THE TARP: AUGUST OVERSIGHT REPORT -- Executive Summary -- Section One -- A. Overview -- B. Financial Integration and the Crisis -- 1. Globalization Prior to the Crisis -- 2. Globalization of the Crisis -- 3. Cross-Border Integration within Financial Institutions -- C. Description of the International Financial Crisis -- 1. How the Crisis Developed -- a. Timeline of Crisis -- b. Impact on Major Economies Outside the United States and Europe -- c. Financial Institutions Most Affected -- 2.The Ad Hoc Nature of Government Responses -- a. Capital Injections -- b. Nationalizations -- c. Expanded Deposit Insurance -- d. Central Bank Liquidity and other Programs -- e. Guarantees and Purchases of Impaired Assets -- f. Changes in Accounting Rules -- 3. International Organizations -- 4. The International Financial Landscape in the Aftermath of the Crisis -- 5. Winding Down Rescue Efforts -- D. International Impact of Rescue Funds -- 1. U.S. Rescue Funds that May Have Benefited Foreign Economies -- 2. International Rescue Funds that MAY Have Benefited the United States -- 3. The Largest, Systemically Significant Institutions and the International Flow of Rescue Funding -- E. Cooperation and Conflict in the Different Government Responses to the Crisis -- 1. International Coordination and Treasury's Role in Supporting Financial Stabilization Internationally -- a. Legal Authority -- b. Coordination Concerning the Creation of TARP-like Programs and Support for Banking Industry -- 2. Role of Central Banks at the Height of the Crisis -- a. Focus on Liquidity Pressure

Asset management companies have been used to address the overhang of bad debt in the financial system. There are two main types of asset management company: those set up to expedite corporate restructuring and those established for rapid disposal of assets. A review of seven asset management companies reveals a mixed record. In two of three cases, asset management companies for corporate restructuring did not achieve their narrow goal of expediting bank or corporate restructuring, suggesting that they are not good vehicles for expediting corporate restructuring. Only a Swedish asset management company successfully managed its portfolio, acting sometimes as lead agent in restructuring - and helped by the fact that the assets acquired had mostly to do with real estate, not manufacturing, which is harder to restructure, and represented a small fraction of the banking systems assets, which made it easier for the company to remain independent of political pressures and to sell assets back to the private sector. Asset management companies used to dispose of assets rapidly fared somewhat better. Two of four agencies (in Spain and the United States) achieved their objectives, suggesting that asset management companies can be used effectively for narrowly defined purposes of resolving insolvent and inviable financial institutions and selling off their assets. Achieving these objectives required an easily liquefiable asset - real estate - mostly professional management, political independence, adequate bankruptcy and foreclosure laws, appropriate funding, skilled resources, good information and management systems, and transparent operations and processes. The other two agencies (in Mexico and the Philippines) were doomed from the start, as governments transferred to them politically motivated loans or fraudulent assets, which were difficult for a government agency susceptible to political pressure and lacking independence to resolve or sell off.

A well-organized and efficient banking system is an essential pre-requisite for the economic growth of every country. Galloping levels of Non-performing assets (NPAs) is one of the biggest problems faced by the Indian banking industry. The "stressed balance-sheet and bad-loan accounts" that have been hidden till now, would keep the NPA levels rising spread over 3-5 years. As on March 2015, gross NPAs stood at 4.6% and 5.17% of advances, while the stressed assets (NPAs + restructured loans) were 13.2%. It is estimated that the total quantum of stressed assets is about Rs. 10,000 billion. Undoubtedly, mounting NPAs and bad loans in the banking sector have been the focus of media headlines, which is directly affecting their balance sheets (higher provisions), and impacting the economy as well. Concern about asset quality has been one of the biggest challenges for the Indian regulator too. The extent of the challenge for nationalized banks is that "non-action is no longer an option." In fact, India is seeing a regulatory upheaval in the way the Government and RBI are addressing the present crisis. The efforts are visible, but the results may be achieved only on a medium- to long-term basis. We feel there is an urgent need to solve the rising levels of NPAs and put a roadmap to control the reasons which lead to creation of such high NPAs. Some estimates suggest that around 35-40% of the stressed assets will require being written-off, and hence, banks need to recapitalize to that extent. This research paper explores an empirical approach to the analysis of NPA of public, private, and foreign sector banks in India. As part of this study, we have considered NPAs in Scheduled Commercial Banks, which includes 26 public-sector (nationalized) banks (PSBs), 5 private-sector scheduled banks (PVBs) and 10 scheduled foreign-banks (FBs), which are listed in the Second Schedule of the Reserve Bank of India Act, 1934. This study is based on data for sampled banks in India for a period of 5 years, from the FY ended 2010-2011 to FY ...

AbstractThe recent Maystadt report (2013) challenged the European Parliament to modify governance arrangements surrounding the design and endorsement of international financial reporting standards (IFRS) issued by the International Accounting Standards Board (IASB). In addition the Maystadt report constructs an argument that accounting information has the capacity to also modify behaviour and that this might not be conducive for the European public good, financial stability and economic development. In this paper we argue that IFRS need to be stress tested for their impact on firm-level financial stability in a financialized world. The financialized firm can revalue a range of assets to their market value crystalizing future earnings into current values but these valuations can become impaired. Asset value impairments will be charged to shareholder equity but this is being hollowed out because a higher proportion of earnings are being distributed to shareholders. Accounting disclosures are not only an information feed to users they inform the stewardship and control of a firm's resources and in the financialized firm the potential for financial instability is heightened and this can translate into a moral hazard for society.

1 Overview (Kunio Ito). Part 1 Earnings Attributes and Corporate Behavior -- 2 What do Smoothed Earnings Tell Us about the Future? (Yusuke Takasu and Makoto Nakano) -- 3 The Effect of Accounting Conservatism on Corporate Investment Behavior (Souhei Ishida and Kunio Ito) -- 4 Matching expenses with revenues around the world (Tetsuyuki Kagaya ) -- 5 Does Comprehensive Income Influence Dividends? Empirical Evidence from Japan (Kunio Ito and Takuma Kochiyama) -- 6 Accounting Policy Choice for Negative Goodwill (Yukari Takahashi) -- 7 Fair Value Accounting of Pension Liabilities and Discretionary Behavior (Shigeaki Sawada) -- 8 The Influence of Informal Institutions on Impaired Asset Write-offs: Securing Future and Current Pies for Payouts in Japan (Keishi Fujiyama) -- 9 Ex-post information value of risk disclosure (Kunio Ito, Tetsuyuki Kagaya, and Hyonok Kim). Part 2 Disclosure and Enforcement -- 10 The effects of risk disclosure on evaluation of management forecast revisions (Hyonok Kim) -- 11 The Effect of Continuous Disclosure of Environmental Report (Yuki Tanaka) -- 12 Analyst Herding around Management Forecasts (Mikiharu Noma) -- 13 Management Incentives to Publish Aggressive or Conservative Earnings Forecasts and Disclosure Policy Change (Tomohiro Suzuki) -- 14 Effects of Biased Earnings Forecasts: comparative study of earnings forecasts disclosures by US and Japanese firms (Shoichi Tsumuraya).

This article examines financial support (especially EU Structural Funds as the main tool of cohesion policy) for investments as a lever for the development of SME innovativeness in Poland. The European Commission strongly stresses the importance of their cohesion policy and support for SMEs. European enterprises have suffered significantly from the credit crunch, and the situation could worsen as banks engage in restructuring to eliminate impaired assets from their balance sheets. Supporting SMEs and promoting entrepreneurship is essential for economic development and competitiveness, especially in less developed regions. The main aim of this study is to establish the impact of financial support for investments, especially from EU Structural Funds, on SME competitiveness in Poland. We have analyzed empirically the data drawn from CATI carried out among 805 firms. We have learned how SMEs assess the financial support from different sources along with the resulting impact on the competitiveness of SMEs. The main statistical test for relationships and dependencies was the chi-square independence test and Cramer's V. The results of our research show that SMEs have not used financial support efficiently. Moreover, micro-enterprises were shown to be the least effective after receiving financial support from EU funds. This support often has a demand-driven effect, but it does not improve firm competitiveness. ; European Commission, EC

In the aftermath of the Global Financial Crisis (GFC), the Canadian and Australian banking systems have been singled out by some commentators as having performed better than many other banking systems, particularly those in Europe, America and the United Kingdom. Banks in both Canada and Australia, for instance, have continued to report enviable earnings, sound capital levels, and high credit ratings both before and during the GFC. The G-20 and the European Union have tried to identify the features of the Canadian and Australian financial systems which have underpinned this success in order to use them in shaping a revised international regulatory framework. One area of focus has been the regulations governing "quality of capital". Despite these apparent successes, there is some evidence that both Canadian and Australian banks experienced considerable deterioration in the market value of their assets during the GFC. In this paper we use the KMV / Merton structural methodology, which incorporates market asset values, to examine default probabilities of 9 listed Canadian banks and 13 Australian listed banks in both a pre-GFC period (2000-2006) and a GFC period (2007-2008). We also modify the model to incorporate conditional probability of default which measures extreme credit risk. This paper finds that bank risk was significantly similar for Australian and Canadian Banks during the GFC period. This includes an assessment of impaired assets, Value at Risk (VaR) and Distance to Default (DD), as well as the extreme measures of Conditional VaR (CVaR), and Conditional Distance to Default (CDD); metrics which confirm the two countries similarities in terms of a significant increase in credit risk between pre-GFC and GFC periods. The extent of this increase was, however, far more pronounced for Australia, which was coming off a lower base. Bank risk for both countries was found to be far lower than for global counterparts due to factors such as sound regulatory control and low levels of involvement in sub-prime lending. This could provide lessons for global banks on risk management. A key conclusion of the paper is that it is important that fluctuating market values, especially the extreme fluctuations which are measured by CVaR and CDD, are a key consideration when determining risk management criteria such as capital adequacy.

Abstract. The authors of the article have studied the problem of managing non-performing loans within loan portfolios. It has been substantiated that Ukraine as a developing country is in such socio-economic conditions of development that increase credit risks for banks. Numerous studies of the determinants for the formation of loans portfolios in countries with different levels of economic development demonstrate that developing countries are prone to negative consequences that lead to insolvency of debtors in case of a drop in the GDP, inflation, legal uncertainty, political crises, etc. The lack of long-term experience of banks in solving problems of increasing the share of non-performing loans in banks' portfolios demonstrates that minimization of such assets requires regulation at the level of the banking system, but not a separate bank. Based on statistical data, it has been demonstrated that the minimization of problem loans of banks gained significant positive dynamics only after the National Bank of Ukraine regulated the process of managing distressed assets by adopting a regulatory act. Detailing the process of legal regulation of managing distressed assets allowed banks to structure and organize the work of their divisions in accordance with the normatively defined life cycle of distressed asset in such a way that all measures taken by them affect the efficiency of their work. Using permits, prohibitions and obligations as legal means of regulating relations between banks and their debtors, those relations have become predictable, allowing banks to control the process of managing non-performing loans and make timely decisions on the use of tools to minimize the share of distressed assets of the bank. The wide choice and consistency of applying financial and legal instruments in the process of managing non-performing loans allows banks to maximize the contractual settlement of debt and address to the competent authorities for the application of state coercion to debtors. Direct prohibitions, which are provided in the procedure of writing-off impaired assets, prevent corruption manifestations in this process. However, the authors have argued that the practice of 2008—2019 in terms of managing non-performing loans of banks demonstrated that the effectiveness of this process directly depends on government regulation. If the economic preconditions for the formation of problem loans depend on various factors of objective and subjective nature, then the management of non-performing loans directly depends on the existing legal models in the state for solving this problem. The autonomy of banks and their right to independently determine their strategies for managing distressed assets does not provide the desired efficiency without the imperative intervention of the central bank. Thus, the state regulation of the life cycle of distressed assets has demonstrated its effectiveness, and thus confirmed the need for regulatory influence on the processes of minimizing non-performing loans in Ukrainian banks. Keywords: non-performing loans, distressed assets, agreement-based regulation, state influence, state coercion, legal regulation. GEL Classification G18, G21, G34, K12, K42 Formulas: 0; fig.: 2; tabl.: 0; bibl.: 12. ; Анотація. Досліджується проблема управління непрацюючими кредитами у кредитних портфелях банків. На основі аналізу детермінантів проблемних кредитів зроблено висновок, що Україна як держава з економікою, що розвивається, розв'язати цю проблему без нормативно-правового регулювання не може. На основі статистичних даних продемонстровано, що за допомогою дозволу, заборони і зобов'язання вітчизняна банківська система змогла істотно зменшити частку проблемних кредитів. Відстоюється думка проте, що нормативна деталізація процесу управління проблемними активами дозволила банкам відповідно до нормативно визначеного життєвого циклу проблемного активу структурувати і поліпшити організацію роботи своїх підрозділів. Обґрунтовується, що економічні передумови формування непрацюючих кредитів залежать від різних факторів об'єктивного і суб'єктивного характеру, а управління проблемними кредитами прямо залежить від наявних у державі правових моделей розв'язання цієї проблеми. Державне регулювання життєвого циклу проблемного активу показало свою ефективність і тим підтвердило необхідність нормативно-правового впливу на процеси мінімізації проблемних кредитів в банках України. Ключові слова: непрацюючі кредити, проблемні активи, договірне регулювання, державний вплив, державний примус, правове регулювання. Формул: 0; рис.: 2; табл.: 0; бібл.: 12.