For example, Canada did not have a wage adjustment during the first historical period, but it experienced one during the second period. We refer to the latter as the second episode of wage adjustment in Canada. Peak years are country-specific; hence they are not the same in all countries. This means that the first wage adjustment episode, including the peak years, may have lasted, for example, 7 years in Italy, 8 years in Germany and France, 9 years in US, 20 years in Korea or 28 years (and counting) in Japan. Of the 35 countries analysed, 21 countries experienced the first historical episode of wage adjustments, 33 countries experienced the second historical episode of wage adjustments and only 2 countries experienced the third historical episode of wage adjustments. This is why the total number of observations is much higher for the second wage adjustment episode, compared against the first wage adjustment episode. In the case of the third wage adjustment episode, the total number of observations is much lower. And now we move to the juicy part. We present the graphical representation of our results for all OECD countries which experienced wage adjustments (21 countries for the first wage adjustment episode and 33 countries for the second wage adjustment episode). The results are statistically significant and with the expected sign for the first two adjustment episodes. For the third adjustment episode, the sign of the relationship is as predicted, but the number of observations is too limited to have statistical significance.
Financial conditions might be adversely affected were there to be a sudden reversal in this process, in particular if that reversal were to bring about sharp price corrections, especially in less liquid market segments. Second, there are also worries about low profitability. The comprehensive assessment deemed solvency to be comfortably acceptable, but profitability in the banking industry remains prone to downside pressures, particularly in a macroeconomic setting that is worse than was expected some months back. Low returns hamper organic capital accumulation and raise doubts over the medium-term sustainability of banking activities. Banks will have to adapt their strategies and business models to enhance their profitability in a sustained fashion. Finally, I would highlight the risk of concerns re-emerging over the sustainability of sovereign debt, especially against a background of low nominal growth. This risk has not fully abated and might rear up again in the event of a substantial macroeconomic downturn. These three risks are not mutually exclusive. Indeed, a common denominator they share is the current weakness of euro area economic growth. But, irrespective of the transmission channels through which sluggish economic growth may translate into financial instability, it is precisely this weakness in nominal growth in the European economy that is the main risk to the area at present. The Spanish banking industry The Spanish banking industry is not immune to these risks.