At a Glance
IWH at a Glance The Halle Institute for Economic Research (IWH) – Member of the...
The Income Elasticity of Mortgage Loan Demand
Financial Markets, Institutions & Instruments,
Special Issue: 2016 Portsmouth – Fordham Conferenc
One explanation for the emergence of the housing market bubble and the subprime crisis is that increases in individuals’ income led to higher increases in the amount of mortgage loans demanded, especially for the middle class. This hypothesis translates to an increase in the income elasticity of mortgage loan demand before 2007. Using applicant‐level data, we test this hypothesis and find that the income elasticity of mortgage loan demand in fact declines in the years before 2007, especially for the mid‐ and lower‐middle income groups. Our finding implies that increases in house prices were not matched by increases in loan applicants’ income.
Enforcement of Banking Regulation and the Cost of Borrowing
Journal of Banking & Finance,
We show that borrowing firms benefit substantially from important enforcement actions issued on U.S. banks for safety and soundness reasons. Using hand-collected data on such actions from the main three U.S. regulators and syndicated loan deals over the years 1997–2014, we find that enforcement actions decrease the total cost of borrowing by approximately 22 basis points (or $4.6 million interest for the average loan). We attribute our finding to a competition-reputation effect that works over and above the lower risk of punished banks post-enforcement and survives in a number of sensitivity tests. We also find that this effect persists for approximately four years post-enforcement.
IWH FDI Micro Database
IWH FDI Micro Database The IWH FDI Micro Database (FDI = Foreign Direct...
18.12.2018 • 22/2018
IWH leads large scale EU research project on productivity
Is productivity growth slowing in industrialised countries? And if so, why? From the start of 2019, the Halle Institute for Economic Research (IWH) will be addressing these questions as the coordinator of a new EU project. Economists and statistics experts from nine European partners will collaborate on the three-year project, entitled MICROPROD. With a total budget of just under three million euros, it is the IWH’s largest EU project to date.
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Data Protection Policy ...
Innovation, Reallocation, and Growth
American Economic Review,
We build a model of firm-level innovation, productivity growth, and reallocation featuring endogenous entry and exit. A new and central economic force is the selection between high- and low-type firms, which differ in terms of their innovative capacity. We estimate the parameters of the model using US Census microdata on firm-level output, R&D, and patenting. The model provides a good fit to the dynamics of firm entry and exit, output, and R&D. Taxing the continued operation of incumbents can lead to sizable gains (of the order of 1.4 percent improvement in welfare) by encouraging exit of less productive firms and freeing up skilled labor to be used for R&D by high-type incumbents. Subsidies to the R&D of incumbents do not achieve this objective because they encourage the survival and expansion of low-type firms.
15.02.2018 • 1/2018
Presseeinladung: „Von der Transformation zur Europäischen Integration: Optimieren durch Evaluieren – Wirtschaftsförderung im Qualitätscheck“
Unter dem Titel „Von der Transformation zur Europäischen Integration: Optimieren durch Evaluieren – Wirtschafts-förderung im Qualitätscheck“ präsentiert das Leibniz-Institut für Wirtschaftsforschung Halle (IWH) am Mittwoch, dem 21. Februar 2018 gemeinsam mit Wissenschaftlerinnen und Wissenschaftlern anderer Forschungsinstitute sowie Universitäten Forschungsergebnisse zu verschiedenen Aspekten der Evaluation von Wirtschaftsfördermaßnahmen.
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Does It Pay to Get Connected? An Examination of Bank Alliance Network and Bond Spread
Journal of Economics and Business,
This paper examines the effects of bank alliance network on bonds issued by European banks during the period 1990–2009. We construct six measures capturing different dimensions of banks’ network characteristics. In opposition to the results obtained for non-financial firms, our findings indicate that being part of a network does not create value for bank’s bondholders, indicating a dark side effect of strategic alliances in the banking sector. While being part of a network is perceived as a risk-increasing event by market participants, this negative perception is significantly lower for the larger banks, and, to a lesser extent, for the more profitable banks. Moreover, during crisis times, the positive impact on bond spread of a bank’s higher centrality or of a bank’s higher connectedness in the network is stronger, indicating that market participants may fear spillover effects within the network during periods of banks’ heightened financial fragility.