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Europe > Norway

You are looking at 1 - 10 of 14 items for :

  • Type: Journal Issue x
  • Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill x
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Cover IMF Working Papers
Firms’ Response to Climate Regulations-Empirical Investigations Based on the European Emissions Trading System
Fotios Kalantzis
,
Salma Khalid
,
Alexandra Solovyeva
, and
Marcin Wolski
Using a novel cross-country dataset, which merges firm-level financials with information on firms’ participation in the European Unions’ Emissions Trading System (ETS), we investigate how firm performance is affected by tightening of environmental policies that put a price on pollution. We find that more stringent policies do not have a strong negative impact on the profitability of ETS-regulated or non-ETS firms. While firms report an increase in their input costs during periods of high carbon prices, their reported turnover is also higher. Among ETS-regulated firms which must purchase emission certificates under the EU ETS, tightening of climate policies in periods of high carbon prices results in increased investment, particularly in intangible assets. We establish robustness of our results using a quantile regression analysis, ensuring our key findings are not driven by distributional irregularities. Our findings provide support for the benefits of EU ETS on accelerating firms’ climate transition, while keeping firm-level financial costs at bay.
Keywords:
climate finance; climate change; decarbonization; firm-level analysis; Emissions Trading System (ETS); ETS firm; climate transition; EU Emissions Trading System; ETS-regulated firm; IMF working paper No. 24/135; Emissions trading; Climate policy; Environmental policy; Greenhouse gas emissions; Global
Cover IMF Working Papers
Micro-Assessment of Macroprudential Borrower-Based Measures in Lithuania
Mantas Dirma
and
Jaunius Karmelavičius
Despite having introduced borrower-based measures (BBM), Lithuania's housing and mortgage markets were booming during the low-interest-rate period, casting doubt on the macroprudential toolkit's ability to contain excessive mortgage growth. This paper assesses the adequacy of BBMs’ parametrization in Lithuania. We do so by building a novel lifetime expected credit loss framework that is founded on actual loan-level default and household income data. We show that the BBM package effectively contains mortgage credit risk and that housing loans are more resilient to stress than in the preregulatory era. Our BBM limit calibration exercise reveals that (1) in the low-rate environment, income-based measures could have been tighter; and (2) borrowers taking out secondary mortgages rightly are and should be required to pledge a higher down payment.
Keywords:
macroprudential policy; borrower-based measures; LTV; mortgage credit risk; lifetime expected loss; probability of default.; calibration exercise; BBM package; modeling mortgage risk; Lithuania's housing market; Mortgages; Loans; Credit risk; Housing prices; Macroprudential policy instruments; Europe; Baltics; Global
Cover IMF Working Papers
Climate-Related Stress Testing: Transition Risk in Colombia
Can Sever
and
Manuel Perez-Archila
This paper builds a framework to quantify the financial stability implications of climate-related transition risk in Colombia. We explore risks imposed on the banking system based on scenarios of an increase in the domestic carbon tax by using bank- and firm-level data. Focusing on the deterioration of firms’ balance sheets and the exposure of banks to different sectors, we assess the extent to which such policy shock would transmit from nonfinancial firms to the banking system. We observe that sectors are affected unevenly by a higher carbon tax. Agriculture, manufacturing, electricity, wholesale and retail trade, and transportation sectors appear to be the most important in the transmission of the risk to the banking system. Results also suggest that a large increase in the carbon tax can generate significant but likely manageable financial stability risks, and that a gradual increase in the carbon tax to meet a higher target over several years could be preferable in terms of financial risks. A gradual increase would also have the benefit of allowing for a smoother adjustment to higher carbon tax for stakeholders.
Keywords:
Climate crisis; climate change; transition risk; carbon emission; carbon tax; green economy; environmental taxes; banking stress; stress testing; financial stability; Colombia; D. banking data; risk to the banking system; nonfinancial firm; Carbon tax; Greenhouse gas emissions; Commercial banks; Loans; Global; Caribbean
Cover IMF Working Papers
Climate-Related Stress Testing: Transition Risks in Norway
Pierpaolo Grippa
and
Samuel Mann
This paper explores three possible transmission channels for transition risk shocks to the financial system in Norway. First, we estimate the direct firm-level impact of a substantial increase in domestic carbon prices under severe assumptions. Second, we map the impact of a drastic increase in global carbon prices on the domestic economy via the Norwegian oil sector. Third, we model the impact of a forced reduction in Norwegian oil firms’ output on shareholder portfolios. Results show that such a sharp increase in carbon prices would have a significant but manageable impact on banks. Finally, the paper discusses ways to advance the still evolving field of transition risk stress testing.
Keywords:
Climate change; transition risk; carbon emissions; carbon price; environmental policy; asset pricing; financial stability; WP; balance sheet approach; emissions data; low-carbon economy; enterprise value; Carbon tax; Oil sector; Oil; gas and mining taxes; Oil prices; Greenhouse gas emissions; Global
Cover IMF Staff Country Reports
Norway: Financial Sector Assessment Program-Technical Note-Cybersecurity Risk Supervision and Oversight
International Monetary Fund. Monetary and Capital Markets Department
The Norwegian financial system has a long history of incorporating new technology. Norway is at the forefront of digitization and has tight interdependencies within its financial system, making it particularly vulnerable to evolving cyber threats. Norway is increasingly a cashless society, with surveys and data collection suggesting that only 10 percent of point-of-sale and person-to-person transactions in 2019 were made using cash.1 Most payments made in Norway are digital (e.g., 475 card transactions per capita per annum)2 and there is an increase in new market entrants providing a broad range of services. Thus, good cybersecurity is a prerequisite for financial stability in Norway.
Keywords:
ISCR; CR; cybersecurity incident; cybersecurity risk; incident report; NSM cybersecurity principle; FSA plan; incident information; information sharing; risk management; cybersecurity risk supervision; oversight function; Cyber risk; Financial sector; Financial stability assessment; PFM information systems; Securities; Global
Cover IMF Staff Country Reports
Norway: Financial Sector Assessment Program-Technical Note-Banking Regulation and Supervision
International Monetary Fund. Monetary and Capital Markets Department
This note presents a targeted review of selected aspects in the regulation and supervision of banks in Norway. The review is carried out as part of the 2020 Norway Financial Sector Assessment Program (FSAP) and the findings and recommendations are based on the regulatory framework in place and the supervisory practices employed at end-October 2019. The note focuses on the powers and responsibilities, independence, and resourcing of Finanstilsynet (FSA); its supervisory approach and enforcement powers and practices; key aspects of the prudential framework; and mechanisms to prevent abuse of financial services.
Keywords:
ISCR; CR; risk assessment; FSA budget; FSA decision; FSA expectation; FSA power; supervisory guidance; FSA onsite; FSA control; FSA approach; due diligence; FSA staff; FSA plan; Financial stability assessment; Anti-money laundering and combating the financing of terrorism (AML/CFT); Credit risk; Capital adequacy requirements; Operational risk; Global
Cover IMF Working Papers
Swing Pricing and Fragility in Open-end Mutual Funds
Dunhong Jin
,
Marcin Kacperczyk
,
Bige Kahraman
, and
Felix Suntheim
How to prevent runs on open-end mutual funds? In recent years, markets have observed an innovation that changed the way open-end funds are priced. Alternative pricing rules (known as swing pricing) adjust funds’ net asset values to pass on funds’ trading costs to transacting shareholders. Using unique data on investor transactions in U.K. corporate bond funds, we show that swing pricing eliminates the first-mover advantage arising from the traditional pricing rule and significantly reduces redemptions during stress periods. The positive impact of alternative pricing rules on fund flows reverses in calm periods when costs associated with higher tracking error dominate the pricing effect.
Keywords:
WP; swing pricing; pricing rule; fund investor; adjustment factor; liquidity mismatch; fund runs; fragility; strategic complementarity; pricing mechanism; Liquidity risk; Flow of funds; Mutual funds; Corporate bonds; Price structures; Global
Cover IMF Working Papers
Commodity-based Sovereign Wealth Funds: Managing Financial Flows in the Context of the Sovereign Balance Sheet
Abdullah Al-Hassan
,
Sue Brake
,
Mr. Michael G. Papaioannou
, and
Martin Skancke
Commodity-based sovereign wealth funds (SWFs) have been at a crossroads following the recent fall in commodity prices. This paper provides a framework for commodity-based SWF management, focusing on stabilization and savings funds, by (i) examining macrofiscal linkages for SWFs; (ii) presenting an integrated sovereign asset and liability management (SALM) approach to SWF management; and (iii) applying this framework to a scenario where assets are being accumulated and to a scenario where the SWF is drawn on to cover a financing gap due to lower commodity prices.
Keywords:
WP; asset; price; financial asset; liquidity; commodity; sovereign wealth funds; sovereign asset and liability management; financing gap; investment management; risk management; macroeconomic coordination; SWF assets; SWF management; investment strategy; asset accumulation; net asset position; SWF balance sheet; asset allocation perspective; negative carry; SWF inflow; SWF performance; SWF owner country; opportunity cost; Financial statements; Government debt management; Government asset and liability management; Global
Cover IMF Staff Country Reports
Norway: Financial Sector Assessment Program-Technical Note-Oversight and Supervision of Financial Market Infrastructure, and Selected Issues in the Payment System
International Monetary Fund. Monetary and Capital Markets Department
This Technical Note reviews the oversight and supervisory framework for systemically important Financial Market Infrastructure (FMI) in Norway. Norway has a modern and stable FMI. The assessment results suggest an effective supervision and oversight framework supported by a strong legal basis, adequate oversight resources, and good domestic and foreign cooperation between authorities. All Norwegian FMIs have completed assessments against the new international standards and are in the process of improving observance where needed. The authorities could consider strengthening their cooperation to address the risks from outsourced critical infrastructures and tighter interdependencies across FMIs. The authorities could also consider additional measures to strengthen the operational resiliency of payment systems.
Keywords:
ISCR; CR; Enhance Norges Bank-FSA cooperation agreement; securities settlement system VPS; FMI policy; FSA oversight; RAV Report; settlement system; payment system; NBO operation; NBO oversight; cooperation agreement; multiples FMIs; assessment result; ITBET section; PFM information systems; Payment systems; Financial stability assessment; Financial market infrastructure; Operational risk; Europe
Cover IMF Staff Country Reports
Norway: Financial Sector Assessment Program-Technical Note- Stress Testing the Banking Sector
International Monetary Fund. Monetary and Capital Markets Department
This Technical Note discusses results of banking sector stress tests on Norway. The Norwegian banking sector is generally well prepared to cope with possible external shocks, but imbalances have built up in recent years and could pose challenges. The stress-testing exercise included a comprehensive analysis of solvency and liquidity risks in the banking sector. The stress test results show that while the banking sector is highly resilient, it could experience challenges in case of severe macroeconomic shocks, as assumed in the adverse scenarios. The stress tests also illustrate that the banking system remains vulnerable to liquidity risks, due in part to scarce liquidity buffers in Norwegian krone.
Keywords:
ISCR; CR; aggregate banking sector assets; IRB model; bank loss; FX liquidity position; mortgage company; credit risk; liquidity stress tests; FSAP team; asset haircut; liquidity risk; asset portfolio; Stress testing; Credit risk; Financial stability assessment; Credit; Financial Sector Assessment Program; Global