Reform of IMF Lending Facilities Increases Stability in Emerging Market Economies
J. John, Tobias Knedlik
Wirtschaft im Wandel,
No. 3,
2010
Abstract
Following the current international financial and economic crisis the IMF reformed its lending facilities. Two new instruments are of particular importance: the Flexible Credit Line (FCL) and the High Access Precautionary Arrangements (HAPA). The major innovation of the new facilities is that the traditional ex-post conditionality is replaced by an ex-ante qualification process. An ex-ante qualification process leads to a short-term availability of funds during the emergence of crises and avoids long negotiation processes during a crisis. Additionally, the FCL is high powered, amounting to 900 to 1000% of the quota. It can therefore be expected that the programs have preventive effects. In difference to previous attempts to implement precautionary credit lines, the FCL and HAPA successfully created demand. First empirical observations show, that a stigmatization, which could have been expected from experience, did not take place. Countries who qualified for the FCL did rather well during the current crisis and did not face shrinking confidence due to expected crises. To be more efficient, the new lending facilities should be complemented be an international regulatory framework, which limits moral-hazard-induced higher risk taking. Additionally more members should be encouraged to demand the new instruments to increase its systemic importance.
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20 years of innovation policy in East Germany – from a pure “survival support” to high-tech subsidy
Jutta Günther, Nicole Nulsch, Katja Wilde
Wirtschaft im Wandel,
20 Jahre Deutsche Einheit - Teil 2 -
2010
Abstract
The article uses the occasion of “20 years German re-unification” in order to provide an overview of the range of innovation policy schemes in East Germany with the intention to identify changing patterns or paradigms in its philosophy and priorities over time. In general, innovation policy schemes aim at increasing research and development (R&D) activities of companies in order to strengthen their competitiveness as market incentives for R&D are usually too low (problem of market failure). However, in East Germany in the early 1990s the situation was different. At the very beginning, the transformation process in East Germany was accompanied by innovation policy schemes that aimed at the pure maintenance of industrial research and the stock of R&D personnel since the potential for innovation was at a risk to be eliminated completely. In the late 1990s the intention of innovation policies changed. Instead of financial support primarily for human resources, innovation policy schemes since then focused on the support of cooperation projects between different research entities (companies and scientific organizations) and, later on, also the setup of networks in order to close the economic differences between East and West Germany.
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Stochastic Income Statement Planning and Emissions Trading
Henry Dannenberg, Wilfried Ehrenfeld
Abstract
Since the introduction of the European CO2 emissions trading system (EU ETS), the
development of CO2 allowance prices is a new risk factor for enterprises taking part in this system. In this paper, we analyze how risk emerging from emissions trading can be considered in the stochastic profit and loss planning of corporations. Therefore we explore which planned figures are affected by emissions trading. Moreover, we show a way to model these positions in a planned profit and loss account accounting for uncertainties and dependencies. Consequently, this model provides a basis for risk assessment and investment decisions in the uncertain environment of CO2 emissions trading.
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Human Capital and Fertility in Germany after 1990: Evidence from a Multi-Spell Model
Marco Sunder
IWH Discussion Papers,
No. 22,
2009
Abstract
We analyze the timing of birth of the first three children based on German panel
data (GSOEP) within a hazard rate framework. A random effects estimator is
used to accommodate correlation across spells. We consider the role of human
capital – approximated by a Mincer-type regression – and its gender-specific
effects on postponement of parenthood and possible recuperation at higherorder
births. An advantage of the use of panel data in this context consists in
its prospective nature, so that determinants of fertility can be measured when
at risk rather than ex-post, thus helping to reduce the risk of reverse causality.
The analysis finds evidence for strong recuperation effects, i.e., women with
greater human capital endowments follow, on average, a different birth history
trajectory, but with negligible curtailment of completed fertility.
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Deriving the Term Structure of Banking Crisis Risk with a Compound Option Approach: The Case of Kazakhstan
Stefan Eichler, Alexander Karmann, Dominik Maltritz
Discussion paper, Series 2: Banking and financial studies, No. 01/2010,
No. 1,
2010
Abstract
We use a compound option-based structural credit risk model to infer a term structure of banking crisis risk from market data on bank stocks in daily frequency. Considering debt service payments with different maturities this term structure assigns a separate estimator for short- and long-term default risk to each maturity. Applying the Duan (1994) maximum likelihood approach, we find for Kazakhstan that the overall crisis probability was mainly driven by short-term risk, which increased from 25% in March 2007 to 80% in December 2008. Concurrently, the long-term default risk increased from 20% to only 25% during the same period.
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Bank Credit Standards, Demand, Pro-cyclicality and the Business Cycle: A Comment
Á. Maddaloni, J. L. Peydró Alcalde, J. Suárez, Reint E. Gropp
Moneda y crédito,
No. 230,
2010
Abstract
We analyze the determinants fo standards and demand for loans to firms and house-holds over the last business cycle using the comprehensive and confidential Bank Lending Survery from the Euro area. There is significant variation of standards and demand over the cycle. Standards for business loans vary more during the business cycle than the lending standards for households, whereas credit demand from households varies more than demand from firms. Lending standards vary mainly due to charges in perception of borrower risk, bank balance sheet positions and competitive pressures. In particular, we find that higher GDP growth softens lending standards for all loans, i. e. lending standards are pro-cyclical. However, we also find pro-cyclicality in credit demand.
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Market Concentration and Innovation in Transnational Corporations: Evidence from Foreign Affiliates in Central and Eastern Europe
Liviu Voinea, Johannes Stephan
Research on Knowledge, Innovation and Internationalization (Progress in International Business Research, Volume 4),
2009
Abstract
Purpose – The main research question of this contribution is whether local market concentration influences R&D and innovation activities of foreign affiliates of transnational companies.
Methodology/approach – We focus on transition economies and use discriminant function analysis to investigate differences in the innovation activity of foreign affiliates operating in concentrated markets, compared to firms operating in nonconcentrated markets. The database consists of the results of a questionnaire administered to a representative sample of foreign affiliates in a selection of five transition economies.
Findings – We find that foreign affiliates in more concentrated markets, when compared to foreign affiliates in less concentrated markets, export more to their own foreign investor's network, do more basic and applied research, use more of the existing technology already incorporated in the products of their own foreign investor's network, do less process innovation, and acquire less knowledge from abroad.
Research limitations/implications – The results may be specific to transition economies only.
Practical implications – The main implications of these results are that host country market concentration stimulates intranetwork knowledge diffusion (with a risk of transfer pricing), while more intense competition stimulates knowledge creation (at least as far as process innovation is concerned) and knowledge absorption from outside the affiliates' own network. Policy makers should focus their support policies on companies in more competitive sectors, as they are more likely to transfer new technologies.
Originality/value – It contributes to the literature on the relationship between market concentration and innovation, based on a unique survey database of foreign affiliates of transnational corporations operating in Eastern Europe.
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CO2-Navigator – ein Softwaretool zur Unterstützung von Investitionsoptionen zur Emissionsreduktion und zum Management von Klimarisiken
Edeltraud Günther, G. Weber, M. Nowack, Wilfried Ehrenfeld
Klimaschutz und Anpassung an die Klimafolgen: Strategien, Maßnahmen und Anwendungsbeispiele,
2009
Abstract
Global warming and increased climate policies are associated with risks for many companies, but also with opportunities.The chair of Business Administration, esp. Environmental Management at the TU Dresden and the Halle Institute for Economic Research studied the question of how companies can deal with these challenges funded by the BMBF project “Corporate Management under the Constraints of Climate Change Policy (CO2 Navigator)“.Specific concern of the project network was to provide companies assistance to develop a) potential emission reduction strategies and medium-term adjustments to changing environmental conditions, b) assess the economic impact and c) derive decisions for practical use on this basis.The core elements of the research, risk management and assessment of adaptation strategies with the real option approach and the CO2-Navigator software resulting from the project are described in this article.
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Margins of international banking: Is there a productivity pecking order in banking, too?
Claudia M. Buch
Bundesbank Discussion Paper 12/2009,
2009
Abstract
Modern trade theory emphasizes firm-level productivity differentials to explain
the cross-border activities of non-financial firms. This study tests whether a
productivity pecking order also determines international banking activities. Using
a novel dataset that contains all German banks’ international activities, we
estimate the ordered probability of a presence abroad (extensive margin) and the
volume of international assets (intensive margin). Methodologically, we enrich the
conventional Heckman selection model to account for the self-selection of banks
into different modes of foreign activities using an ordered probit. Four main
findings emerge. First, similar to results for non-financial firms, a productivity
pecking order drives bank internationalization. Second, only a few non-financial
firms engage in international trade, but many banks hold international assets, and
only a few large banks engage in foreign direct investment. Third, in addition to
productivity, risk factors matter for international banking. Fourth, gravity-type
variables have an important impact on international banking activities.
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Book Review on: Ahmed Bahagat, Fostering the use of Financial Risk Management Products in Developing Countries, 2002, Economic Research Papers No. 69, Abidjan: African Development Bank
Tobias Knedlik
African Development Perspectives Yearbook: Private and Public Sectors: Towards a Balance,
2004
Abstract
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