Professor Dr Andre Guettler

Professor Dr Andre Guettler
Current Position

since 6/16

Research Professor

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

since 4/13

Director of the Institute of Strategic Management and Finance

Ulm University

Research Interests

  • real implications of financial regulation
  • access to credit for small and medium sized firms

Andre Guettler joined the institute as a Research Professor in June 2016. His research focuses on financial intermediation with particular emphasis on the real effects of financial regulation, competition between banks, access to credit, and credit rating agencies.

Andre Guettler holds the position of Director of the Institute of Strategic Management and Finance at Ulm University.

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Professor Dr Andre Guettler
Professor Dr Andre Guettler
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Publications

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Financial Incentives and Loan Officer Behavior: Multitasking and Allocation of Effort under an Incomplete Contract

P. Behr A. H. Drexler Reint E. Gropp Andre Guettler

in: Journal of Financial and Quantitative Analysis, forthcoming

Abstract

In this paper we investigate the implications of providing loan officers with a compensation structure that rewards loan volume and penalizes poor performance versus a fixed wage unrelated to performance. We study detailed transaction information for more than 45,000 loans issued by 240 loan officers of a large commercial bank in Europe. We examine the three main activities that loan officers perform: monitoring, originating, and screening. We find that when the performance of their portfolio deteriorates, loan officers increase their effort to monitor existing borrowers, reduce loan origination, and approve a higher fraction of loan applications. These loans, however, are of above-average quality. Consistent with the theoretical literature on multitasking in incomplete contracts, we show that loan officers neglect activities that are not directly rewarded under the contract, but are in the interest of the bank. In addition, while the response by loan officers constitutes a rational response to a time allocation problem, their reaction to incentives appears myopic in other dimensions.

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Public Bank Guarantees and Allocative Efficiency

Reint E. Gropp Andre Guettler Vahid Saadi

in: Journal of Monetary Economics, forthcoming

Abstract

In the wake of the recent financial crisis, many governments extended public guarantees to banks. We take advantage of a natural experiment, in which long-standing public guarantees were removed for a set of German banks following a lawsuit, to identify the real effects of these guarantees on the allocation of credit (“allocative efficiency”). Using matched bank/firm data, we find that public guarantees reduce allocative efficiency. With guarantees in place, poorly performing firms invest more and maintain higher rates of sales growth. Moreover, firms produce less efficiently in the presence of public guarantees. Consistently, we show that guarantees reduce the likelihood that firms exit the market. These findings suggest that public guarantees hinder restructuring activities and prevent resources to flow to the most productive uses.

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The Case for a European Rating Agency: Evidence from the Eurozone Sovereign Debt Crisis

Marc Altdörfer Carlos A. De las Salas Vega Andre Guettler Gunter Löffler

in: Journal of International Financial Markets, Institutions and Money, 2019

Abstract

Politicians frequently voice that European bond issuers would benefit from the presence of a Europe-based rating agency. We take Fitch as a prototype for such an agency. With its ownership structure and a headquarter in London, Fitch is more European than Moody’s and S&P; during the Eurozone sovereign debt crisis, it also issued more favorable ratings. Fitch’s rating actions, however, were largely ignored by the bond market. Our results thus cast doubt on the benefits of a European credit rating agency.

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Working Papers

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Public Bank Guarantees and Allocative Efficiency

Reint E. Gropp Andre Guettler Vahid Saadi

in: IWH Discussion Papers, No. 7, 2015

Abstract

In the wake of the recent financial crisis, many governments extended public guarantees to banks. We take advantage of a natural experiment, in which long-standing public guarantees were removed for a set of German banks following a lawsuit, to identify the real effects of these guarantees on the allocation of credit (“allocative efficiency”). Using matched bank/firm data, we find that public guarantees reduce allocative efficiency. With guarantees in place, poorly performing firms invest more and maintain higher rates of sales growth. Moreover, firms produce less efficiently in the presence of public guarantees. Consistently, we show that guarantees reduce the likelihood that firms exit the market. These findings suggest that public guarantees hinder restructuring activities and prevent resources to flow to the most productive uses.

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