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Efficiency of Regulation on Spanish Housing Market
Hejlová, Hana ; Hlaváček, Michal (advisor) ; Doležel, Pavel (referee)
Covering reciprocal and mutually reinforcing relations between business, housing and credit cycles, the thesis assesses the Spanish housing market in its wider circumstances. With use of several conceptual notes on demand for housing, dynamic path of the house prices in Spain may be explained based on the difference in how these structural components react on changes in financial and macroeconomic environment. As a result of controlling for match of demand and supply in both timely and spatial manner empirically, expectations were included to explain the subsequent volume of housing traded on the market and simple microeconomic decision making model taking into account taxes was derived to assess the role favourable incentives might have played on fuelling the house price cycle in Spain. Next, existence of the reciprocal relations suggested by the theory discussed was confirmed empirically only during the house price upturn and asymmetry in speed of downward adjustment was found in the opposite case, pointing out at the redistribution effect abrupt changes in house prices have in time. The results derived finally allowed to assess possibilities of better employment of anti cyclical regulatory tools towards eliminating mutually enforcing powers between the cycles and avoiding both financial and...
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Creation of provisions - Pro-cyclical behavior of banks
Matějovská, Anna ; Geršl, Adam (advisor) ; Gutiérrez Chvalkovská, Jana (referee)
In relation to the latest economic crisis much attention was paid to the bank capital requirements. Many papers discuss the pro-cyclical effect of these capital requirements and the options of how to stabilize the banking industry and financial system. In this thesis I researched another instrument which can cause the pro-cyclical effect - the loan loss provisions. In reaction to this issue the Spanish central bank has adopted the model of dynamic provisioning which acts counter-cyclically. This model is supposed to balance the amount of created provisions and banks' profit over the time. In this thesis I introduce a hypothetical situation in which the countries using the Euro currency adopted the model of dynamic provisioning and I examine the hypothesis that the adoption of this model would mitigate the latest economic crisis as the banks would achieve higher profits during the time of recession. Based on the conducted research I confirmed my hypothesis and conclude that the dynamic provisioning would balance the economic swings. However, the results also showed that the set-up of dynamic provisions model is crucial. In order to make the model efficient the model coefficients have to be precisely determined by central banks or individual banks and approved by independent supervisors. Keywords...
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Creation of provisions - Pro-cyclical behavior of banks
Matějovská, Anna ; Geršl, Adam (advisor) ; Gutiérrez Chvalkovská, Jana (referee)
In relation to the latest economic crisis much attention was paid to the bank capital requirements. Many papers discuss the pro-cyclical effect of these capital requirements and the options of how to stabilize the banking industry and financial system. In this thesis I researched another instrument which can cause the pro-cyclical effect - the loan loss provisions. In reaction to this issue the Spanish central bank has adopted the model of dynamic provisioning which acts counter-cyclically. This model is supposed to balance the amount of created provisions and banks' profit over the time. In this thesis I introduce a hypothetical situation in which the countries using the Euro currency adopted the model of dynamic provisioning and I examine the hypothesis that the adoption of this model would mitigate the latest economic crisis as the banks would achieve higher profits during the time of recession. Based on the conducted research I confirmed my hypothesis and conclude that the dynamic provisioning would balance the economic swings. However, the results also showed that the set-up of dynamic provisions model is crucial. In order to make the model efficient the model coefficients have to be precisely determined by central banks or individual banks and approved by independent supervisors. Keywords...
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Efficiency of Regulation on Spanish Housing Market
Hejlová, Hana ; Hlaváček, Michal (advisor) ; Doležel, Pavel (referee)
Covering reciprocal and mutually reinforcing relations between business, housing and credit cycles, the thesis assesses the Spanish housing market in its wider circumstances. With use of several conceptual notes on demand for housing, dynamic path of the house prices in Spain may be explained based on the difference in how these structural components react on changes in financial and macroeconomic environment. As a result of controlling for match of demand and supply in both timely and spatial manner empirically, expectations were included to explain the subsequent volume of housing traded on the market and simple microeconomic decision making model taking into account taxes was derived to assess the role favourable incentives might have played on fuelling the house price cycle in Spain. Next, existence of the reciprocal relations suggested by the theory discussed was confirmed empirically only during the house price upturn and asymmetry in speed of downward adjustment was found in the opposite case, pointing out at the redistribution effect abrupt changes in house prices have in time. The results derived finally allowed to assess possibilities of better employment of anti cyclical regulatory tools towards eliminating mutually enforcing powers between the cycles and avoiding both financial and...
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