G21 - Banks; Depository Institutions; Micro Finance Institutions; MortgagesReturn

Today's modern society is technically and technologically advanced, but it must face increased vulnerability and volatility. In this context, it is important in economics to try to more effectively include the consequences of phenomena with ambiguous or uncertain results in decision-making processes. Therefore, it is necessary to conduct a discussion on the definition of the term risk, including the related concepts of uncertainty and uncertainty.

The article discusses the redefinition of the insurance category from the point of view of the contribution of behavioralists, empirical economist and cognitive psychologist N.N. Taleb and D. Kahneman, motives for insurance, influence on the economy of the insurance industry.

The article evaluates the necessary economic changes that took place during the nineties with their positive aspects and shortcomings. He is critical of individual approaches to the privatization process. It defines the effect of the transformational changes that have taken place on the current structure in the banking and insurance industry.

The article deals with the analysis and evaluation of the application of macroprudential policy in the Czech Republic after five years of experience in identifying sub macroprudential objectives and selecting appropriate tools. It compares the recommended methodology of the European Systemic Risk Board with the methodology applied by the Czech National Bank. Selected sources of instability and corresponding tools for analysis are divided into two groups. The first group consists of tools that its significance and impact are subject to great discussion. It is a countercyclical capital reserve and risk management of retail loans secured by residential real estate. The second group of instruments represents a capital reserve to cover systemic risk and capital reserve for systemically important banks, methods for reducing the concentration of sovereign exposures and safety capital reserve.

This article discusses the impact of the implementation of IFRS 9 on the banking sector in the Czech Republic, focusing primarily on observable data from the financial statements of banking institutions. The analysis included data from 33 banking institutions that hold more than 98% of the value of banking assets in the Czech Republic. The analysis results can be summarized so that implementation of IFRS 9 led to impairment "only" about 0.08%. Institutions reporting under Czech accounting rules have created significantly fewer provisions for assets than institutions reporting under IFRS. The impact on the reclassification of financial assets was considered to be the least significant, with only minor changes in the structure of held financial assets.

The aim of this paper is to summarize results of modern investigation of Basel III impact. In order to do so, the author has analyze methodology of more than thirty studies focused on the impact of increased capital adequacy, adopted under Basel III framework, on the lending activity of commercial bank. The paper presents main methodology within both macro and microeconomic approach. Complex macroeconomic models simulate impact of increased bank's equity on profit function of the bank considering at the same time changes of total risk weigheted assets or banks' balance structure. Within the microeconomic approach, the paper puts emphasis on CAPM, as a most widely established methodology, and assumptions formed about the real M-M effect for banks. As a result, the paper brings an evidence of consensus about mainly marginal efect of increased equity of commercial banks on lending spreads within vast majority of existing studies. The important factor to consider is the lenght of the implementation period. In the long-term there is expected no significant effect of increased equity on loans pricing. Somewhat bigger differences remains as for impact of higher equity on loan volume. Differences between estimated impact on loan volume roots mainly in different assumptions about elasticities of loan demand and cost of access to new equity considered within scenarious adopted by the studies.

The author analyzes the development of the Czech banking sector over the past ten years, focusing on selected assets and liabilities to assess the liquidity and solvency situation and development. Banks did not have any more serious problems even in the years of economic downturn 2009 and 2012-2013, they did not need assistance from the central bank or from the state. A potential and paradoxical problem may be the high level of free reserves at the central bank. It is a risk-free and highly liquid asset, but also a low-yielding asset. This also leads to virtually nil state of bank lending from the central bank. The main reason for the dramatic growth of reserves was foreign exchange intervention against the koruna. Banks as a whole are also solvent, the average capital adequacy considerably exceeds the level of minimum requirements. Severe financial crises are not connected with the Czech banking system in the analyzed period.

This paper deals with developments in the sector of credit unions in the Czech Republic. The first part of the paper describes the history of the sector and the factors that influence it. The second part deals with the development of credit unions in recent years. The indicators of financial analysis describe the development of the sector and show the influence of individual events, e.g. withdrawal of authorization to operate as a credit union or transformation to the bank. Major emphasis is devoted to the amendment to Act No. 87/1995 Coll., which regulated the obligations of members of credit unions and imposed their greater participation in the credit union itself. In the paper, there is also described an effect of low interest rates on the development of profitability and return on equity. At the end of the paper there is prediction of future development regarding the changes of the regulation and market environment.

The article deals with theoretical and practical dimension of the third generation of Basel regulatory standards. The implementation proves more complex than previously supposed. Modern bank regulation theory focus mainly on four areas: factors that lies beyond bank equity pricing, transmission channels of banking crisis on the international level, optimal design of the safety net, well-balanced intensity of regulatory restrictions. Unfortunately, in the real world, bank regulation standards do not often follow the recommendations of economic theory. The rules remain to be subject of policy influence of diverse advocacy groups including banks themselves. The aim of this article is to outline the main ways of actual economic research and the challenges that lie ahead. Special attention is paid to such issues as capital adequacy, moral hazard and tax distorsion of debt financing. The influence of increased capital adequacy requirements, actual income tax policy and deregulation on the stability of commercial banks is being questioned within the study.

On 23 July 2014, European Parliament and Council Directive 2014/92/EU on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features (hereinafter the "Directive") was published in the Official Journal. The transposition of the Directive into national laws and regulations of member states should result in the improvement of the harmonization of legal environment in the field of retail banking. The main aim of this paper is to characterize the Directive and determine through the methods of deduction and analysis, whether the selected banks in the Czech Republic are already prepared to apply the part of Directive that deals with services related to the management of account with basic features. From the view of the author will be assessed if this will actually result in wider available of the provided payment services in relation to the risks related to this activity with regard to the entities acting as service providers. At the same time, hypothesis expressed by the following statement that will either be confirmed or refuted by the author can also be defined: "The services required by the Directive for accounts with basic features are already provided by selected credit institutions, and the implementation of the Directive in this area will thus be smooth."

The article is focused on insurance products related to the indebtedness of Czech households in the area of consumer loans. The aim of this paper is, with the help of defined assumptions, to analyse the product payment protection insurance, its benefit to the final client and identify its appropriate use in the event of an economically rationally behaving entity. The authors analyse insurance conditions and define the pros and cons of insurance for supply-side and demand-side, and also focuses on information asymmetry. For completeness, the text is supplemented also in terms of cost of insurance, through the APR and development of acquisition costs for insurance contracts. Results of the analysis indicate not suitably configured product for clients, as evidenced by the low long-term value of loss ratio indicator, and information superiority on the supply side.

The paper analyses the relationship between excessive credit growth and the development of systemic risk, which subsequently materializes into losses of banking sector credit portfolios. The systemic risk indicator captures the time dimension of systemic risk, and hence represents the function of an indicator of the development of endogenous risk and imbalances in the system. The systemic risk indicator is thus a suitable leading indicator for the identification of the materialization of the risk of financial stress. In the paper, the credit to GDP gap for the domestic as well as the foreign component is chosen as the most suitable variable for the indicator. The results for each country confirm that the indicator is able to identify two to three years in advance the development of systemic risk and of systemic imbalances. Moreover, the results confirm the regional character of the systemic risk, when all of the countries realized an excessive growth mainly of the credit to households and mortgages, which moreover coincided in time.

The globalization of the economy during the last two decades was characterised by the growth of international trade volume and changed the pattern of its territorial structure. This development has been supported by the increasing role of global supply chains, by the implementation of modern IT technologies and was reflected in trade finance. The shift from traditional banking instruments to open account trade was in the long term obvious. The economic environment of the last financial and economic crises brought the necessity of more effective cash management, payment risk mitigation and reduction of operating costs. The BPO represents a resilient instrument based on electronic data exchange which can address the trade finance needs of both traders and financial institutions.

The article is searching for an appropriate indicator of customer profitability in corporate banking. It points out the advantages and disadvantages of the most common indicator - RAROC. Basel III regulation increases capital requirements which push banks to reassess their approach to profitability measurement. This may make the indicator based on regulatory capital approach (resp. based on risk weighted assets) superior to standard RAROC. Nevertheless, the most relevant disadvantage of RAROC is that all the costs are allocated to the customer regardless of the cause-and-effect allocation principle. It leads to a bias of such indicator and possibly also to improper management decision about customers. This issue can be solved by a modification of RAROC which measures profitability on the level of margin instead of net profit.

The objective of this contribution is not only to explain the position of financial derivatives on global financial markets, but also evaluate their impact on the operation of financial systems. The core of this contribution is dedicated to the OTC derivatives instruments that in the period before the outbreak of global financial crisis were not subjected to almost any regulation, except for some dishonest practices. Institutional response to the global financial crisis however changed significantly the regulatory-supervisory approach also to the OTC derivatives markets. The global regulatory approach introduced quite promptly regulation of important OTC instruments and increases powers of supervisory authorities

This paper deals with the definition of the content and objectives of the European banking union. It discusses the mutual relations between the various banking union's elements. Although banking union is a logical continuation of the European integration, the author does not recommend current implementing of banking union. If European banking union was implemented, the Czech Republic should try to negotiate the terms of eliminating the risk for the Czech banking sector and of ensuring equal status in comparison with the euro area countries, but should not remain outside the banking union. The current stability of the Czech banking system may not be permanent and the associated risks for us as a non-member banking union may be much greater than the possible negative impacts that may arise for us if we became the part of the banking union.

The article addresses contractual savings for housing, which form in terms of volume of funds a significant part of the financial market in the Czech Republic. Building savings in the Czech Republic are based on an institutional scheme with government support. It constitutes a closed system with respect to deposits and loans. The key parameter is the government support, which has a major influence on the high attractiveness of building savings as a mean of deposit. Lower attractiveness due to forthcoming changes and the related loss of short term deposits, could lead to an increased liquidity risk stemming from maturity mismatch between assets and liabilities of building societies.

This article treats the possibilities of including of risk into appraisal of complex gain of customers and the way which the banks use. It shows the calculation of expected loss and economic capital. It points out their usage in the financial management of the bank and the ways of preliminary and quasi-final profitability measurement using RAROC ratio. In the last section there is the case-study that shows its calculation and the impact of real changes of important parameters as rating or utilization of the facility.

This paper strives to address the issue of distribution costs budgeting, encountered by commercial banks whose business plans presume the sale of saving accounts using third-party distribution networks. A rather intricate problem arises, jointly requiring the design of a commercially viable commission schedule and estimating its impacts on the bank's financial results, where traditional methods fail. An annotated case study illustrates an expedient and practical solution using statistical simulation.

This article is dealing with the questions concerning in the stability of financial system. It considers systemic risk as a basic economic concept for the understanding the economic crises. This article is also dealing with the relationship between the systemic risk and liquidity risk. It notes close link between the financial stability and the ability of the financial institutions to response to economic cycle. It concerns the regulatory conception Basel II as a subject of intense debate. We describe the discussions about the procyclicity of capital regulation and we suppose, every regulation based on capital buffer is procyclical.

Social Responsible Investing (SRI) means way how to invest money to firms which are not interested in profit only but they think about ecology, ethics a and social things etc. These firms use Corporate Social Responsibility in their strategic management. SRI is more used in abroad financial markets but in the Czech Republic can be used by investors too. ČSOB a. s. is one leader of SRI in the Czech financial market. ČSOB a. s. offers more then five SEE funds. This article is interested in theoretical definitions of SRI, SEE funds. Next part is interested in options at abroad and the Czech financial market in SRI.

The article disputes against analysis of R. W. Bostic and K. O. Lee concentrated on federal homeownership strategy for building among low- and moderate-income families in the U.S.A. Authors find out emergency which is coming from new and more sophisticated mortgages However, in conclusion, they built on support from Fannie Mae and Freddie Mac. Both these institutions were put under the conservatorship on September, 2008.

The article is dealing with the description of the Czech institutions engaged in the export credit risk mitigation. The analyzed institutions are Export Guarantee and Insurance Corporation and Czech Export Bank. The activities of these institutions described in this article are placed in the general context of the international framework of export credit and insurance and in the context of the export strategy of the Czech Republic for the years 2006- 2010.

This paper aims at comprehension of fundamental economic category - money in its actual mode - electronic money. It is the great challenge of recent economy to explain its substance and forms of its functions. Perhaps we can assume the idea that money ought to be considered as a flow of information. Thus this paper is also describing the basic methods of regulation of electronic money using by the Czech National Bank. It was not the goal of this article to discuss the security of electronic money (as e.g. digital signatures, public key cryptography) due to its technical nature.

The article dealed about finding suitable model market conformal governing on czech financial market. Current organization of CNB as supervisory body in Czech republic are discussed. Futher the study of World bank about corporate governance in insurance branch and by care of consumers on financial market is commented. Authors meaning is not to increase the governing measure on financial markets.