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The Financial System in a Post COVID-19 World
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The Financial System in a Post COVID-19 World

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Financial Markets".

Deadline for manuscript submissions: closed (15 August 2022) | Viewed by 6653

Special Issue Editors

Prof. Dr. Harald Benink

E-Mail Website
Guest Editor
School of Economics and Management, Department of Public Governance, Tilburg University, 5037 GC Tilburg, The Netherlands
Interests: banking and financial services; financial regulation; financial fragility and stability
Prof. Dr. Christian Wolff

E-Mail Website
Guest Editor
Department Finance, University of Luxembourg, 4365 Esch-sur-Alzette, Luxembourg
Interests: financial stability; risk management; credit risk; contingent capital

Special Issue Information

Dear Colleagues,

The COVID-19 crisis is not only an unprecedented health crisis with a large loss of human lives, but also a crisis with huge economic and financial costs. Central banks have continued to provide massive quantitative easing and governments have borrowed huge amounts in order to support their economies. As a consequence, debt ratios are rising significantly.

Before the COVID-19 crisis, global debt ratios, combining private and public sector debt, as a percentage of global GDP were already at very high levels. Even since the 2008 financial crisis, they have continued to rise. Now, as a result of the COVID-19 crisis, they are increasing further, thereby raising serious questions about the fragility and stability of the financial system at large.

For this Special Issue, we are seeking papers, both theoretical and empirical, that address challenges to the financial system after the COVID-19 crisis. To what extent can we expect problems with respect to nonperforming loans (NPLs) in the banking system, notably in Europe and the US? Are we heading towards a new sovereign debt crisis, especially in the eurozone? Are high valuations on global equity markets sustainable, or are we heading towards a stock market crash? Do we observe underpricing of risk on financial markets? What are the consequences of accelerating digitalization due to COVID-19 for the competitive landscape of financial services and securities markets? How does artificial intelligence play a role in this process?

Prof. Dr. Harald Benink
Prof. Dr. Christian Wolff
Guest Editors

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • Banking and financial services
  • Financial markets
  • Financial regulation
  • Financial fragility and stability
  • Risk management
  • Financial asset pricing

Published Papers (3 papers)

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Research

13 pages, 995 KiB  
Article
Can EU Bonds Serve as Euro-Denominated Safe Assets?
by Tilman Bletzinger, William Greif and Bernd Schwaab
J. Risk Financial Manag. 2022, 15(11), 530; https://doi.org/10.3390/jrfm15110530 - 14 Nov 2022
Cited by 2 | Viewed by 1770
Abstract
A safe asset is of high credit quality, retains its value in difficult times, and is traded in liquid markets. We show that bonds issued by the European Union (EU) are widely considered to be of high credit quality, and that their yield [...] Read more.
A safe asset is of high credit quality, retains its value in difficult times, and is traded in liquid markets. We show that bonds issued by the European Union (EU) are widely considered to be of high credit quality, and that their yield spread over German Bunds remained contained during the 2020 COVID-19 pandemic recession. Recent issuances and taps under the EU’s SURE and NGEU initiatives helped improve EU bonds’ market liquidity from previously low levels, while also reducing liquidity risk premia. Eurosystem purchases and holdings of EU bonds did not impair market liquidity. Currently, an obstacle to EU bonds achieving a genuine euro-denominated safe asset status, approaching that of Bunds, lies in the one-off, time-limited nature of the EU’s COVID-19-related policy responses. Full article
(This article belongs to the Special Issue The Financial System in a Post COVID-19 World)
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17 pages, 2106 KiB  
Article
What Problem Is Post-Crisis QE Trying to Solve?
by Paul Atkinson and Adrian Blundell-Wignall
J. Risk Financial Manag. 2022, 15(2), 40; https://0-doi-org.brum.beds.ac.uk/10.3390/jrfm15020040 - 18 Jan 2022
Viewed by 2430
Abstract
What problem the Fed and other central banks are solving by printing money and letting interest rates fall to zero is the focus of this paper. This activity does not appear to affect nominal GDP or inflation prior to COVID, and yet central [...] Read more.
What problem the Fed and other central banks are solving by printing money and letting interest rates fall to zero is the focus of this paper. This activity does not appear to affect nominal GDP or inflation prior to COVID, and yet central bank liabilities have continued to rise. This suggests the presence of rising cash demand that has prevented excess cash and inflation pressures from emerging. While there was some hope that quantitative easing would be a new instrument in addition to interest rates as far as monetary policy goals were concerned, this has not proved to be the case. Instead, banking system demand for central bank liabilities keeps rising as an endogenous response to the changed business models of banks forced on them by post-crisis re-regulation and extremely low interest rates. These ideas were tested with cointegration and error correction econometric techniques. Examples of the growing risk of leverage and counterparty risks in this disequilibrium process are provided. Full article
(This article belongs to the Special Issue The Financial System in a Post COVID-19 World)
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12 pages, 1877 KiB  
Article
Political Stress and the Sustainability of Funded Pension Schemes: Introduction of a Financial Theory
by Ishay Wolf
J. Risk Financial Manag. 2021, 14(11), 525; https://0-doi-org.brum.beds.ac.uk/10.3390/jrfm14110525 - 03 Nov 2021
Cited by 3 | Viewed by 1731
Abstract
This study introduces multiplayer game in the modern pension market. Particularly, this study claims that low earners and high earners have different interests when playing in funded pension market scheme. This differentiating is enabled by avoiding the entire society as a single earning [...] Read more.
This study introduces multiplayer game in the modern pension market. Particularly, this study claims that low earners and high earners have different interests when playing in funded pension market scheme. This differentiating is enabled by avoiding the entire society as a single earning cohort. This study using financial position, demonstrates a socio-economic anomaly in the funded pension system, which is in favor of high-earning cohorts at the expense of low-earning cohorts. This anomaly is realized by a lack of insurance and exposure to financial and systemic risks. Furthermore, the anomaly could lead to a pension re-reform back to an unfunded scheme system, due mostly to political pressure. This study found that a minimum pension guarantee is a rebalance mechanism for this anomaly, which increases the probability of a sustainable pension scheme. Nowadays when countries try to balance between social expenses and awaking financial markets, one may find this theory highly relevant. It is obviously one of the cases where social targets meat financial equilibrium and here they are in the same side. Specifically, it is argued that implementing the guarantee with an intra-generational, risk-sharing mechanism is the most efficient way to reduce the effect of this abnormality. Full article
(This article belongs to the Special Issue The Financial System in a Post COVID-19 World)
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