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Buybacks to Bailouts: Firm Behavior and Implications for Financial Instability
Curran, Kevin ; Baxa, Jaromír (advisor) ; Dědek, Oldřich (referee)
Share repurchases reached a decade-high level in 2019, just as US equity indices reached a historical zenith, a move in tandem that supports more than merely a correlative relation. However, this relationship moves beyond that of just a close tandem move in indices alongside share repurchases, but to the behavior of firms which began to leverage themselves in order to promote the evermore profitable strategy of large buyback programs. Those repurchases indicate an idiosyncratic and procyclical leveraging that, while much smaller in scope and less combustible by lack of derivative amplification, led to the gorging on unsustainable debt described by Hyman Minsky and experienced in the Great Financial Crisis in the banking industry. In this case, the 'Minsky moment' that may have inevitably popped the self-promotion bubble came in the form of the 'black swan' event of the coronavirus outbreak. This paper aims to historically frame the issues, with delimitation of the effect of buybacks from 2009 to early 2020 with scant reference to historical factors influencing the increased usage of share repurchase programs. The analysis within this historical scope will reflect empirical measures on the market-wide level of share buybacks and debt levels alongside the concurrent equity index acceleration....
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Three Essays on Empirical Analysis of Economic Policy
Baxa, Jaromír ; Vošvrda, Miloslav (advisor) ; Vašíček, Osvald (referee) ; Hančlová, Jana (referee) ; Slačálek, Jiří (referee)
This dissertation thesis is focused on the empirical analysis of monetary and fiscal policy using nonlinear models. In the first part, I examine the evolution of monetary policy rules in a group of inflation targeting countries. I apply a moment-based estimator in a time-varying parameter model with endogenous regressors. The main findings are twofold. First, with adoption of inflation targeting, coefficients in the monetary policy rules changed rather gradually. Second, the response of interest rates to inflation is particularly strong during periods when central bankers want to break a record of high inflation. Contrary to common view, the response of interest rates to inflation becomes less aggressive after the adoption of inflation targeting, suggesting a positive anchoring effect of this regime on inflation expectations. The second part discusses whether and how the selected central banks responded to episodes of financial stress over the last three decades. The time-varying monetary policy rule is extended for an indicator of financial stress, in order to show the departures of policy rules under financial instability. The findings suggest that central banks often decrease policy rates in the face of high financial stress. However, the size of the policy response varies substantially over time as well...
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Measuring Financial Instability: A Survey
Urbánková, Jana ; Baxa, Jaromír (advisor) ; Kolouchová, Petra (referee)
This thesis aims to analyze how various theoretical definitions describe and assess financial stability, and how these definitions are actually being reflected in the measurement methods used to evaluate financial stability. The first section lists different theoretical approaches to defining financial stability, extrapolates main components that characterize these approaches, and compares these approaches based on the components. The thesis continues with a description and critical assessment of financial stability measurement methods. Special attention is paid to financial conditions and financial stress indexes, which are compared based on actual data for the United States. The last section explores to what extent these components are compatible with financial stability measurement methods listed in the previous section. This thesis also points out that most methods measure financial instability, as opposed to financial stability, perhaps because instability is less abstract and, thus, more convenient for an effective measurement. The thesis concludes that recent quantitative assessments of financial stability are real time assessments rather than strong predictive indicators of financial (in)stability and, thus, they do not offer policymakers enough time and information for timely policy...
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Financial instability in the USA in years 2007 - 2008: Implications for future economic development, regulation and financial sector supervision
Růžička, Jan ; Stuchlíková, Zuzana (advisor) ; Popovová, Marie (referee)
The aim of my bachelor's work is to highlight the reasons and causes of the origin of mortgage crisis, its effects and to propose possible solutions. The first part of my work analyses the economic development of the USA since 2000 to 2008 as well as factors and subjects contributing to the current financial instability. Among them are ranked the "subprime lending", securitization process, rating agencies and off-balance sheet accounting. The second part is deeply concerning with American authorities for regulation and financial market supervision. Primarily are analyzed The U. S. Securities and Exchange Commission and their, in connection with financial crisis, taken measures. The final part of my papers is devoted to the future economic development of the USA and already taken measures for boosting the economy by the US Government. At the very last end of my work I suggest some solutions in the economic policy area.
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