Douglas Todd: Canada has abandoned middle class, says B C s former top civil servant vancouversun.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from vancouversun.com Daily Mail and Mail on Sunday newspapers.
Thorsten Beck
The Covid-19 pandemic will leave deep scars across the globe, particularly in the euro area. Given that the health of banking systems is inextricably tied to the performance of the underlying economies, the non-performing loans (NPLs) of banks are an important issue. What are the policy options to safeguard the integrity and functionality of the banking system? And what are the criteria defining the desired response? This column will address these questions in the context of the EU.
What makes the identification of a suitable policy response particularly difficult is the strong reliance on banks and the apparent ‘overbanking’ in Europe (Pagano et al. 2014). At the national level, banking markets are highly concentrated, and many institutions are considered too-big-to-fail. The structurally low profitability of European banking makes this even more of a concern.
Charles Goodhart, Dimitri Tsomocos, Xuan Wang
Around the world, the coronavirus pandemic is pushing many firms towards insolvency by dramatically changing consumption patterns and business operations. The first wave of liquidity-focused policy responses in many jurisdictions prevented or delayed more severe consequences for the corporate sector. While some liquidity support is still needed, the crucial issue that must be tackled now is that of corporate solvency.
The corporate solvency problem
A wave of corporate bankruptcies would mean the loss of potentially millions of jobs, accompanied by economic damage, inefficiencies, and spillovers that arise when a company shuts down. Further, the creation of ‘zombie companies’ that do not go bankrupt but are consumed by an excessively heavy debt burden would hamper economic growth, as it was the case in Japan’s infamous Lost Decade (Caballero et al. 2008, Acharya et al. 2009).
Corporate Distress Due to Impact of Covid-19: The G30 Urges Swift, Measured Policies Aimed at Restoring Corporate Health chron.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from chron.com Daily Mail and Mail on Sunday newspapers.