Regulation of International Financial Markets and International Banking
This research group analyses causes and consequences of banks' international activities and the regulatory framework they operate in.
Internationally active banks can facilitate an efficient international allocation of capital and provide channels for international risk sharing. But they can also be a source of financial instabilities themselves, thus contributing to international contagion and risk-shifting. This is one reason for the current re-regulation of international banking.
The research group contributes to the literature in three ways. First, the group empirically analyses the channels through which shocks are transmitted by internationally active banks. Second, the group analyses the build-up of aggregate imbalances in integrated banking markets and resulting consequences for the real economy. Third, the group analyses the impact of changes in banking supervision and regulation on (inter)national activities of banks, with a special focus on the European integration process.
IWH Data Project: International Banking Library
Research ClusterFinancial Stability and Regulation
07.2017 ‐ 12.2022
The Political Economy of the European Banking Union
European Social Fund (ESF)
Causes of national differences in the implementation of the Banking Union and the resulting impact on financial stability.
01.2015 ‐ 12.2017
Dynamic Interactions between Banks and the Real Economy
German Research Foundation (DFG)
Gender, Credit, and Firm Outcomes
in: Journal of Financial and Quantitative Analysis, No. 1, 2022
Small and micro enterprises are usually majority-owned by entrepreneurs. Using a unique sample of loan applications from such firms, we study the role of owners’ gender in bank credit decisions and post-credit-decision firm outcomes. We find that, ceteris paribus, female entrepreneurs are more prudent loan applicants than are males, since they are less likely to apply for credit or to default after loan origination. The relatively more aggressive behavior of male applicants pays off, however, in terms of higher average firm performance after loan origination.
Monetary Policy through Exchange Rate Pegs: The Removal of the Swiss Franc‐Euro Floor and Stock Price Reactions
in: International Review of Finance, No. 4, 2021
The Swiss National Bank abolished the exchange rate floor versus the Euro in January 2015. Using a synthetic matching framework, we analyze the impact of this unexpected (and therefore exogenous) policy change on the stock market. The results reveal a significant level shift (decline) in asset prices following the discontinuation of the minimum exchange rate. As a novel finding in the literature, we document that the exchange‐rate elasticity of Swiss asset prices is around −0.75. Differentiating between sectors of the Swiss economy, we find that the industrial, financial and consumer goods sectors are most strongly affected by the abolition of the minimum exchange rate.
Macroprudential Policy and Intra-Group Dynamics: The Effects of Reserve Requirements in Brazil
in: Journal of Corporate Finance, December 2021
We examine whether liquidity dynamics within banking groups matter for the transmission of macroprudential policy. Using matched bank headquarters-branch data for identification, we find a lending channel of reserve requirements for municipal branches whose headquarters are more exposed to the policy tool. The result is driven by the 2008–2009 crisis and is stronger for state-owned branches, especially when being less profitable and liquidity constrained. These findings suggest the presence of cross-regional distributional effects of macroprudential policies operating via internal capital markets.
Global Syndicated Lending during the COVID-19 Pandemic
in: Journal of Banking and Finance, December 2021
This paper examines the pricing of global syndicated loans during the COVID-19 pandemic. We find that loan spreads rise by over 11 basis points in response to a one standard deviation increase in the lender's exposure to COVID-19 and over 5 basis points for an equivalent increase in the borrower's exposure. This implies excess interestof about USD 5.16 million and USD 2.37 million respectively for a loan of average size and duration. The aggravating effect of the pandemic is exacerbated with the level of government restrictions to tackle the virus's spread, with firms’ financial constraints and reliance on debt financing, whereas it is mitigated for relationship borrowers, borrowers listed in multiple exchanges or headquartered in countries that can attract institutional investors.
Does Gender Affect Innovation? Evidence from Female Chief Technology Officers
in: Research Policy, No. 9, 2021
In this paper, we examine the impact of female Chief Technology Officers (CTOs) on corporate innovation. We find that firms with female CTOs are more innovative (as captured by both patent counts and patent citations) than firms with male CTOs. This effect is more pronounced for firms with a stronger innovation-supportive culture, firms with female CEOs, and when female CTOs are more powerful. Using mediation analyses, we further validate that female CTOs’ transformational leadership style is a plausible mechanism through which they affect innovation positively.
Explaining Regional Disparities in Housing Prices across German Districts
in: IZA Institute of Labor Economics, March 2022
Over the last decade, German housing prices have increased unprecedentedly. Drawing on quality-adjusted housing price data at the district level, we document large and increasing regional disparities: growth rates were higher in 1) the largest seven cities, 2) districts located in the south, and 3) districts with higher initial price levels. Indications of price bubbles are concentrated in the largest cities and in the purchasing market. Prices seem to be driven by the demand side: increasing population density, higher shares of academically educated employees and increasing purchasing power explain our findings, while supply remained relatively constrained in the short term.