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Country Risk Report. Fourth Quarter 2017

December 6, 2017
Global risk aversion stabilizes at historically low levels. Despite recent geopolitical tensions, all indicators remain virtually unchanged. Continued decline in sovereign CDS over the past year has led many countries to reach new historical lows

Geo-World: Conflict & Social Unrest - November 2017 Update

December 5, 2017
ISIS continues losing territorial control in 2017, while US is increasing its military presence in the region. However, the risk regarding foreign fighters returning their home countries could continue. Saudi Arabia’s political noise and Riyadh-Tehran rift created uncertainties during the month. North Korea’s recent missile test increased tensions.

Deleveraging after the burst of a credit-bubble

December 5, 2017
We present the results of an empirical exercise in which we seek to explain the deleveraging process that follows the burst of a credit bubble following a systemic banking crisis. We have built up two new databases and have estimated a SUR regression model to jointly explain and predict how strong and how fast private leverage falls after the burst of a credit-bubble.

How Do the EM Central Bank Talk? A Big Data Approach to the Central Bank of Turkey

December 5, 2017
We apply the natural language processing or computational linguistics (NLP) to the analysis of the communication policy (i.e statements and minutes) of the Central Bank of Turkey (CBRT). While previous literature has focused on Developed countries, we extend the NLP analysis to the Central Banks of the Emerging Markets using the Dynamic Topic Modelling approach.

Mexico | Inflation, on a downward course for 2018

December 5, 2017
The most recent inflation figure, corresponding to the first half of November, surprised on the upside. After falling in September and October, headline inflation showed an upturn from 6.4% to 6.6%. This increases the likelihood that the Banco de México will increase its monetary policy rate as a preventive measure

Turkey: Inflation path deteriorates further

December 4, 2017
Annual consumer inflation hit 13% mostly due to the sizable pick-up in food inflation and also the jump in both energy and core prices in November. Recent events and rigidity in core prices signal that the range of the CBRT’s expected medium term disinflation path may not to be materialized, thus, monetary policy should be adjusted accordingly.

Causes of change in inequality of consumption

December 4, 2017
Inequality in Spanish household income has increased during the crisis. However, in terms of consumption, inequality decreased. Accordingly, while wealthier families reduced spending by 17.2% between 2007 and 2015, those economically disadvantaged reduced it only by 7.6%.

U.S. | Weekly podcast: Technology empowered consumers and employment

December 2, 2017
Weekly economic update focusing on the major economic indicators to be released the week of December 4, 2017. Special topic: technology, the consumer of the future, and the shaping of industries

U.S. | Interest Rates Chartbook. November 2017

December 2, 2017
A December Federal funds rate increase to the 1.25%-1.50% range is warranted given upbeat third quarter economic performance with the GDP annualized growth rate revised upward to 3.3% and unemployment at a 17 year low

Financial Regulation: Weekly Update. 1 December 2017

December 1, 2017
Highlights: FSB issued two consultations on bail-in execution and funding in resolution. EBA published report on risks for the banking system, and the transparency exercise. ECB issued consultation on the development of an unsecured overnight interest rate. Finally, EBA repealed its guideline on the identification of deposits subject to different outflows.

China: Vulnerability sentiment plateaus in November

December 1, 2017
Our China Vulnerability Sentiment Index (CVSI) held steady in November, remaining well within the positive territory although softer compared to its peak achieved during the 19th Chinese Party Congress. The past month saw authorities intensify efforts to curb risks to financial stability emanating from shadow banking, housing market and the SOEs.

Mexico | Lower production from local refineries contributed to widening the trade deficit

December 1, 2017
The trade balance posted a USD 2.1 billion deficit in October, a much higher number than the consensus expectation of USD 0.9 billion. This trade deficit is mostly explained by the oil trade deficit, which amounted to USD 1.8 billion

Banking Outlook. November 2017

November 30, 2017
The results of the system in the first half of the year were marked by the resolution and sale of Banco Popular. The losses of more than €12 billion posted by this bank in the half-year weighed down the accounts of the sector as a whole, which presented total losses of €6.18 billion for the first six months of the year.

The Mexican financial system has the capacity to face adverse events: Banxico

November 30, 2017
Banxico published its update of the Financial System Report 2017. The main risks identified for the country's financial stability are: i) an increase in inflation; ii) low economic growth; iii) lower oil revenues; and iv) the possibility of a sudden reversal of capital flows

Mexico | Improvement in bank deposits supported by the dynamism of demand deposits

November 30, 2017
In September 2017, the nominal annual growth rate of traditional bank deposits (demand + term) was 11.2%, that is, 1.3 percentage points higher than that observed in the previous month and 1.6 percentage points lower than the rate recorded in September 2016