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Europe > Switzerland

You are looking at 1 - 3 of 3 items for :

  • Type: Journal Issue x
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Cover IMF Working Papers
Firm Leverage and Boom-Bust Cycles
Can Sever
This paper explores the dynamic relationship between firm debt and real outcomes using data from 24 European economies over the period of 2000-2018. Based on macro data, it shows that a rise in credit to firms is associated with an increase in employment growth in the short-term, but employment growth declines in the medium-term. This pattern remains similar, even when the changes in credit to households are accounted for. Next, using data from a large sample of firms, it shows that firm leverage buildups predict similar boom-bust growth cycles in firm employment: Firms with a larger increase in leverage experience a boost in employment growth in the short-term, but employment growth decreases in the medium-term. Relatedly, the volatility of employment growth increases in the aftermath of firm leverage buildups. Finally, this paper provides suggestive evidence on the role of a financial channel in the relationship between firm leverage buildups and employment growth. The results show that a rise in firm leverage is associated with a persistently higher debt service ratio, pointing the drag on finances. Consistently, boom-bust growth cycles in the aftermath of firm leverage buildups are not limited to employment growth, but are also pronounced for investment. Moreover, the medium-term decline in firm employment growth as predicted by leverage buildups becomes even larger if aggregate financial conditions tighten. The findings are in favor of “lean against the wind” approach in policy making.
Keywords:
Firm leverage; firm debt; household debt; leverage cycles; employment; investment; boom-bust cycles; ORBIS; leverage buildup; employment growth; leverage cycle; growth cycle; cycles in the aftermath; Business cycles; Credit; Consumer credit; Credit booms; Europe; Global
Cover IMF Working Papers
Where Have All the Profits Gone? European Bank Profitability Over the Financial Cycle
Ms. Enrica Detragiache
,
Mr. Thierry Tressel
, and
Ms. Rima A Turk
The paper investigates EU banks’ profitability through the recent financial cycle using banklevel balance sheet and income statement data. We find that banks that were more successful at protecting their profits had a less pronounced deterioration in loan quality and a larger improvement in cost efficiency. They also downsized their assets more aggressively during the crisis, and reduced reliance on wholesale funding more markedly post-crisis. Net interest margins remained broadly stable over the financial cycle, including post-crisis, and there is no clear evidence that aspects of bank business model, such as higher reliance on fees and commission income, were associated with better profitability post-crisis.
Keywords:
WP; bank; EU bank; profitability; Financial Cycle; Bank Profitability; Financial Crisis; bank characteristic; bank leverage; bank asset; return on equity; profit growth; bank performance; Bank soundness; Financial cycles; Personal income; Nonperforming loans; Global systemically important banks; Global
Cover IMF Staff Country Reports
Switzerland: 2002 Article IV Consultation—Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Switzerland
International Monetary Fund
This 2002 Article IV Consultation highlights that the economy of Switzerland cooled in 2001 as business investment fell and exports were hit by the global slowdown and an appreciation of the Swiss franc. Real GDP growth dropped to 1.3 percent, unemployment edged up, and the external current account surplus declined to 10 percent of GDP. The IMF staff projects that real GDP will grow by just under 1 percent in 2002 on the back of a global recovery in the second half of the year and effects of the monetary easing in 2001.
Keywords:
ISCR; CR; authority; IMF staff project real GDP; monetary policy; FSAP exercise; IMF staff projection; inflation outlook; exchange rate appreciation; debt brake; insurance supervision legislation; monetary policy stance; Exchange rates; Inflation; Financial Sector Assessment Program; Financial sector; Global; Europe