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

Felix Noth is a member of the Department of Financial Markets at IWH and Assistant Professor for Banking and Financial Systems at Otto von Guericke University Magdeburg since March 2014. His research focuses on empirical banking and finance.

Felix Noth earned a diploma from LMU Munich and received his PhD from Goethe University Frankfurt. Prior to joining IWH, he held the position of PostDoc at Goethe University Frankfurt.

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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Borrowers Under Water! Rare Disasters, Regional Banks, and Recovery Lending

Michael Koetter Felix Noth Oliver Rehbein

in: Journal of Financial Intermediation, forthcoming

Abstract

We show that local banks provide corporate recovery lending to firms affected by adverse regional macro shocks. Banks that reside in counties unaffected by the natural disaster that we specify as macro shock increase lending to firms inside affected counties by 3%. Firms domiciled in flooded counties, in turn, increase corporate borrowing by 16% if they are connected to banks in unaffected counties. We find no indication that recovery lending entails excessive risk-taking or rent-seeking. However, within the group of shock-exposed banks, those without access to geographically more diversified interbank markets exhibit more credit risk and less equity capital.

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Badly Hurt? Natural Disasters and Direct Firm Effects

Felix Noth Oliver Rehbein

in: Finance Research Letters, forthcoming

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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How Do Banks React to Catastrophic Events? Evidence from Hurricane Katrina

Claudia Lambert Felix Noth U. Schuewer

in: Review of Finance, No. 1, 2019

Abstract

This paper explores how banks react to an exogenous shock caused by Hurricane Katrina in 2005, and how the structure of the banking system affects economic development following the shock. Independent banks based in the disaster areas increase their risk-based capital ratios after the hurricane, while those that are part of a bank holding company on average do not. The effect on independent banks mainly comes from the subgroup of highly capitalized banks. These independent and highly capitalized banks increase their holdings in government securities and reduce their total loan exposures to non-financial firms, while also increasing new lending to these firms. With regard to local economic development, affected counties with a relatively large share of independent banks and relatively high average bank capital ratios show higher economic growth than other affected counties following the catastrophic event.

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Working Papers

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‘And Forgive Us Our Debts’: Do Christian Moralities Influence Over-indebtedness of Individuals?

Iftekhar Hasan Konstantin Kiesel Felix Noth

in: IWH Discussion Papers, No. 8, 2019

Abstract

This paper analyses whether Christian moralities and rules formed differently by Catholics and Protestants impact the likelihood of households to become overindebted. We find that over-indebtedness is lower in regions in which Catholics outweigh Protestants, indicating that Catholics‘ forgiveness culture and a stricter enforcement of rules by Protestants serve as explanations for our results. Our results provide evidence that religion affects the financial situations of individuals and show that even 500 years after the split between Catholics and Protestants, the differences in the mind-sets of both denominations play an important role for situations of severe financial conditions.

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What Drives Banks‘ Geographic Expansion? The Role of Locally Non-diversifiable Risk

Reint E. Gropp Felix Noth Ulrich Schüwer

in: IWH Discussion Papers, No. 6, 2019

Abstract

We show that banks that are facing relatively high locally non-diversifiable risks in their home region expand more across states than banks that do not face such risks following branching deregulation in the 1990s and 2000s. These banks with high locally non-diversifiable risks also benefit relatively more from deregulation in terms of higher bank stability. Further, these banks expand more into counties where risks are relatively high and positively correlated with risks in their home region, suggesting that they do not only diversify but also build on their expertise in local risks when they expand into new regions.

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May the Force Be with You: Exit Barriers, Governance Shocks, and Profitability Sclerosis in Banking

Michael Koetter Carola Müller Felix Noth Benedikt Fritz

in: Deutsche Bundesbank Discussion Paper, No. 49, 2018

Abstract

We test whether limited market discipline imposes exit barriers and poor profitability in banking. We exploit an exogenous shock to the governance of government-owned banks: the unification of counties. County mergers lead to enforced government-owned bank mergers. We compare forced to voluntary bank exits and show that the former cause better bank profitability and efficiency at the expense of riskier financial profiles. Regarding real effects, firms exposed to forced bank mergers borrow more at lower cost, increase investment, and exhibit higher employment. Thus, reduced exit frictions in banking seem to unleash the economic potential of both banks and firms.

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