Professor Michael Koetter, PhD

Professor Michael Koetter, PhD
Current Position

since 10/20

Vice President

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

since 9/16

Head of the Department of Financial Markets

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

since 9/16

Professor of Financial Economics

Otto von Guericke University Magdeburg

Research Interests

  • corporate investment allocation and aggregate growth
  • financial intermediation
  • financial stability and banking regulation
  • risk taking and competition
  • real implications of monetary and economic policy

Michael Koetter is a vice president of the institute and head of the Financial Markets department at IWH. He is Professor of Financial Economics at the Otto von Guericke University Magdeburg. The department is host to the annual FIN-FIRE conference on challenges to financial stability. His research concerns primarily empirical work on the interaction between financial institutions and systems, regulation, politics, and the real economy.

Michael Koetter obtained his PhD in economics from Utrecht University and his MSc in international economics from the University of Maastricht. Prior to joining IWH, he was a Professor at Frankfurt School of Finance & Management (2012-2016) and the University of Groningen (2006-2012). He currently serves as a member of the scientific advisory board of the Research Data and Service Center of Deutsche Bundesbank, an editor at the Economics of Transition and Institutional Change (ETIC), and as an Associate Editor of the Journal of Financial Stability. He consulted regularly central banks and served as the President of the IBEFA association.

Your contact

Professor Michael Koetter, PhD
Professor Michael Koetter, PhD
Leiter - Department Financial Markets
Send Message +49 345 7753-727 Personal page

Publications

cover_european-economic-review.jpg

Completing the European Banking Union: Capital Cost Consequences for Credit Providers and Corporate Borrowers

Michael Koetter Thomas Krause Eleonora Sfrappini Lena Tonzer

in: European Economic Review, September 2022

Abstract

The bank recovery and resolution directive (BRRD) regulates the bail-in hierarchy to resolve distressed banks in the European Union (EU). Using the staggered BRRD implementation across 15 member states, we identify banks’ capital cost responses and subsequent pass-through to borrowers towards surprise elements due to national transposition details. Average bank capital costs increase heterogeneously across countries with strongest funding cost hikes observed for banks located in GIIPS and non-EMU countries. Only banks in core E(M)U countries that exhibit higher funding costs increase credit spreads for corporate borrowers and contract credit supply. Tighter credit conditions are only passed on to more levered and less profitable firms. On balance, the national implementation of BRRD appears to have strengthened financial system resilience without a pervasive hike in borrowing costs.

read publication

cover_review-of-financial-studies.png

Political Cycles in Bank Lending to the Government

Michael Koetter Alexander Popov

in: Review of Financial Studies, No. 6, 2021

Abstract

We study how political party turnover after German state elections affects banks’ lending to the regional government. We find that between 1992 and 2018, party turnover at the state level leads to a sharp and substantial increase in lending by local savings banks to their home-state government. This effect is accompanied by an equivalent reduction in private lending. A statistical association between political party turnover and government lending is absent for comparable cooperative banks that exhibit a similar regional organization and business model. Our results suggest that political frictions may interfere with government-owned banks’ local development objectives.

read publication

cover_entrepreneurship-theory-and-practice.png

Equity Crowdfunding: High-quality or Low-quality Entrepreneurs?

Daniel Blaseg Douglas Cumming Michael Koetter

in: Entrepreneurship, Theory and Practice, No. 3, 2021

Abstract

Equity crowdfunding (ECF) has potential benefits that might be attractive to high-quality entrepreneurs, including fast access to a large pool of investors and obtaining feedback from the market. However, there are potential costs associated with ECF due to early public disclosure of entrepreneurial activities, communication costs with large pools of investors, and equity dilution that could discourage future equity investors; these costs suggest that ECF attracts low-quality entrepreneurs. In this paper, we hypothesize that entrepreneurs tied to more risky banks are more likely to be low-quality entrepreneurs and thus are more likely to use ECF. A large sample of ECF campaigns in Germany shows strong evidence that connections to distressed banks push entrepreneurs to use ECF. We find some evidence, albeit less robust, that entrepreneurs who can access other forms of equity are less likely to use ECF. Finally, the data indicate that entrepreneurs who access ECF are more likely to fail.

read publication

Working Papers

cover_DP_2022-26.jpg

Real Estate Transaction Taxes and Credit Supply

Michael Koetter Philipp Marek Antonios Mavropoulos

in: IWH Discussion Papers, No. 26, 2022

Abstract

We exploit staggered real estate transaction tax (RETT) hikes across German states to identify the effect of house price changes on mortgage credit supply. Based on approximately 33 million real estate online listings, we construct a quarterly hedonic house price index (HPI) between 2008:q1 and 2017:q4, which we instrument with state-specific RETT changes to isolate the effect on mortgage credit supply by all local German banks. First, a RETT hike by one percentage point reduces HPI by 1.2%. This effect is driven by listings in rural regions. Second, a 1% contraction of HPI induced by an increase in the RETT leads to a 1.4% decline in mortgage lending. This transmission of fiscal policy to mortgage credit supply is effective across almost the entire bank capitalization distribution.

read publication

cover_DP_2022-24.jpg

Firm Subsidies, Financial Intermediation, and Bank Stability

Aleksandr Kazakov Michael Koetter Mirko Titze Lena Tonzer

in: IWH Discussion Papers, No. 24, 2022

Abstract

We use granular project-level information for the largest regional economic development program in German history to study whether government subsidies to firms affect the quantity and quality of bank lending. We combine the universe of recipient firms under the Improvement of Regional Economic Structures program (GRW) with their local banks during 1998-2019. The modalities of GRW subsidies to firms are determined at the EU level. Therefore, we use it to identify bank outcomes. Banks with relationships to more subsidized firms exhibit higher lending volumes without any significant differences in bank stability. Subsidized firms, in turn, borrow more indicating that banks facilitate regional economic development policies.

read publication

Real Estate Transaction Taxes and Credit Supply

Michael Koetter Philipp Marek Antonios Mavropoulos

in: Deutsche Bundesbank Discussion Paper, No. 4, 2021

Abstract

We exploit staggered real estate transaction tax (RETT) hikes across German states to identify the effect of house price changes on mortgage credit supply. Based on approximately 33 million real estate online listings, we construct a quarterly hedonic house price index (HPI) between 2008:q1 and 2017:q4, which we instrument with state-specic RETT changes to isolate the effect on mortgage credit supply by all local German banks. First, a RETT hike by one percentage point reduces HPI by 1.2%. This effect is driven by listings in rural regions. Second, a 1% contraction of HPI induced by an increase in the RETT leads to a 1.4% decline in mortgage lending. This transmission of fiscal policy to mortgage credit supply is effective across almost the entire bank capitalization distribution.

read publication
Mitglied der Leibniz-Gemeinschaft LogoTotal-Equality-LogoWeltoffen Logo