25 Years IWH

Professor Dr Felix Noth

Professor Dr Felix Noth
Current Position

since 10/16

Deputy Head of the Department of Financial Markets

Halle Institute for Economic Research (IWH) – Member of the Leibniz Association

since 3/14

Head of the Research Group Real and Financial Innovation

Halle Institute for Economic Research (IWH) – Member of the Leibniz Association

since 3/14

Assistant Professor for Banking and Financial Systems

Otto von Guericke University Magdeburg

Research Interests

  • banking markets and real sector growth
  • banking regulation and risk-taking of banks
  • natural disasters and consequences for banks and banking markets

Since March 1, 2014, Felix Noth is the coordinator of the Research Group "Real and Financial Innovation" at the Halle Institute for Economic Research (IWH) and is Assistant Professor for Banking and Financial Systems at Otto von Guericke University Magdeburg.

From 2003 to 2007, Felix Noth studied economics at Ludwig-Maximilians-University Munich before joining the faculty at Goethe-University Frankfurt am Main for his dissertation on "Financial Intermediation and its Consequences for the Real Economy". He finished his doctoral thesis in June 2011 and stayed as a PostDoc at Goethe-University till February 2014.

Your contact

Professor Dr Felix Noth
Professor Dr Felix Noth
Mitglied - Department Financial Markets
Send Message +49 345 7753-702

Publications

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Regional Banking Instability and FOMC Voting

Stefan Eichler Tom Lähner Felix Noth

in: Journal of Banking & Finance , 2018

Abstract

This study analyzes if regionally affiliated Federal Open Market Committee (FOMC) members take their districts’ regional banking sector instability into account when they vote. Considering the period 1979–2010, we find that a deterioration in a district's bank health increases the probability that this district's representative in the FOMC votes to ease interest rates. According to member-specific characteristics, the effect of regional banking sector instability on FOMC voting behavior is most pronounced for Bank presidents (as opposed to Governors) and FOMC members who have career backgrounds in the financial industry or who represent a district with a large banking sector.

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Structural Reforms in Banking: The Role of Trading

Jan Pieter Krahnen Felix Noth U. Schuewer

in: Journal of Financial Regulation , No. 1, 2017

Abstract

In the wake of the recent financial crisis, significant regulatory actions have been taken aimed at limiting risks emanating from banks’ trading activities. The goal of this article is to look at the alternative reforms in the US, the UK and the EU, specifically with respect to the role of proprietary trading. Our conclusions can be summarized as follows: First, the focus on a prohibition of proprietary trading, as reflected in the Volcker Rule in the US and in the current proposal of the European Commission (Barnier proposal), is inadequate. It does not necessarily reduce risk-taking and it is likely to crowd out desired trading activities, thereby possibly affecting financial stability negatively. Second, trading separation into legally distinct or ring-fenced entities within the existing banking organizations, as suggested under the Vickers proposal for the UK and the Liikanen proposal for the EU, is a more effective solution. Separation limits cross-subsidies between banking and proprietary trading and diminishes contagion risk, while still allowing for synergies and risk management across banking, non-proprietary trading, and proprietary trading.

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Bank Risk Proxies and the Crisis of 2007/09: A Comparison

Felix Noth Lena Tonzer

in: Applied Economics Letters , No. 7, 2017

Abstract

The global financial crisis has again shown that it is important to understand the emergence and measurement of risks in the banking sector. However, there is no consensus in the literature which risk proxy works best at the level of the individual bank. A commonly used measure in applied work is the Z-score, which might suffer from calculation issues given poor data quality. Motivated by the variety of bank risk proxies, our analysis reveals that nonperforming assets are a well-suited complement to the Z-score in studies of bank risk.

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Working Papers

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Predicting Earnings and Cash Flows: The Information Content of Losses and Tax Loss Carryforwards

Sandra Dreher Sebastian Eichfelder Felix Noth

in: IWH Discussion Papers , No. 30, 2017

Abstract

We analyse the relevance of losses, accounting information on tax loss carryforwards, and deferred taxes for the prediction of earnings and cash flows up to four years ahead. We use a unique hand-collected panel of German listed firms encompassing detailed information on tax loss carryforwards and deferred taxes from the tax footnote. Our out-of-sample predictions show that considering accounting information on tax loss carryforwards and deferred taxes does not enhance the accuracy of performance forecasts and can even worsen performance predictions. We find that common forecasting approaches that treat positive and negative performances equally or that use a dummy variable for negative performance can lead to biased performance forecasts, and we provide a simple empirical specification to account for that issue.

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Badly Hurt? Natural Disasters and Direct Firm Effects

Felix Noth Oliver Rehbein

in: IWH Discussion Papers , No. 25, 2017

Abstract

We investigate firm outcomes after a major flood in Germany in 2013. We robustly find that firms located in the disaster regions have significantly higher turnover, lower leverage, and higher cash in the period after 2013. We provide evidence that the effects stem from firms that already experienced a similar major disaster in 2002. Overall, our results document a positive net effect on firm performance in the direct aftermath of a natural disaster.

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Banking Globalization, Local Lending, and Labor Market Effects: Micro-level Evidence from Brazil

Felix Noth Matias Ossandon Busch

in: IWH Discussion Papers , No. 7, 2017

Abstract

This paper estimates the effect of a foreign funding shock to banks in Brazil after the collapse of Lehman Brothers in September 2008. Our robust results show that bank-specific shocks to Brazilian parent banks negatively affected lending by their individual branches and trigger real economic consequences in Brazilian municipalities: More affected regions face restrictions in aggregated credit and show weaker labor market performance in the aftermath which documents the transmission mechanism of the global financial crisis to local labor markets in emerging countries. The results represent relevant information for regulators concerned with the real effects of cross-border liquidity shocks.

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