06.09.2018 • 17/2018
The Cyclical upswing in Germany continues, in spite of foreign demand losing momentum
In autumn 2018, the global economy continues to expand quite strongly. Whereas the cyclical upswing in the USA has gained even more strength, the economy in the Euro area has weakened somewhat. To a lesser extent, this also applies to the German economy. “According to this forecast, the growth rate of German real gross domestic product will be 1.8% in 2018 and 1.7% in 2019. The East German economy will expand by 1.5% this year and by 1.4% in 2019”, says Oliver Holtemöller, head of the Department Macroeconomics and vice president at IWH.
Read press release
Charts
Info Graphs Sometimes pictures say more than a thousand words. Therefore, we selected...
See page
Behaviour
The maths behind gut decisions First carefully weigh up the costs and benefits and then make a rational...
See page
Centre for Evidence-based Policy Advice
Centre for Evidence-based Policy Advice (IWH-CEP) ...
See page
Basel III Capital Requirements and Heterogeneous Banks
Carola Müller
IWH Discussion Papers,
No. 14,
2018
Abstract
I develop a theoretical model to investigate the effect of simultaneous regulation with a leverage ratio and a risk-weighted ratio on banks‘ risk taking and banking market structure. I extend a portfolio choice model by adding heterogeneity in productivity among banks. Regulators face a trade-off between the efficient allocation of resources and financial stability. In an oligopolistic market, risk-weighted requirements incentivise banks with high productivity to lend to low-risk firms. When a leverage ratio is introduced, these banks lose market shares to less productive competitors and react with risk-shifting into high-risk loans. While average productivity in the low-risk market falls, market shares in the high-risk market are dispersed across new entrants with high as well as low productivity.
Read article
Kommentar: 30 Jahre DAX
Reint E. Gropp
Wirtschaft im Wandel,
No. 3,
2018
Abstract
Gerade ist der Deutsche Aktienindex DAX 30 Jahre alt geworden, und es gibt viel zu feiern. Preisbereinigt hätte ein Investment von 1 000 Euro, angelegt am DAX-Eröffnungstag 1. Juli 1988, heute einen Wert von über 6 000 Euro, hätte sich also versechsfacht!
Read article
Banks Fearing the Drought? Liquidity Hoarding as a Response to Idiosyncratic Interbank Funding Dry-ups
Helge Littke, Matias Ossandon Busch
IWH Discussion Papers,
No. 12,
2018
Abstract
Since the global financial crisis, economic literature has highlighted banks’ inclination to bolster up their liquid asset positions once the aggregate interbank funding market experiences a dry-up. To this regard, we show that liquidity hoarding and its detrimental effects on credit can also be triggered by idiosyncratic, i.e. bankspecific, interbank funding shocks with implications for monetary policy. Combining a unique data set of the Brazilian banking sector with a novel identification strategy enables us to overcome previous limitations for studying this phenomenon as a bankspecific event. This strategy further helps us to analyse how disruptions in the bank headquarters’ interbank market can lead to liquidity and lending adjustments at the regional bank branch level. From the perspective of the policy maker, understanding this market-to-market spillover effect is important as local bank branch markets are characterised by market concentration and relationship lending.
Read article
Channeling the Iron Ore Super-cycle: The Role of Regional Bank Branch Networks in Emerging Markets
Helge Littke
IWH Discussion Papers,
No. 11,
2018
Abstract
The role of the financial system to absorb and to intermediate commodity boom induced windfall gains efficiently presents one of the most pressing issues for developing economies. Using an exogenous increase in iron ore prices in March 2005, I analyse the role of regional bank branch networks in Brazil in reallocating capital from affected to non-affected regions. For the period from March 2004 to March 2006, I find that branches directly exposed to this shock by their geographical location experience an increase in deposit growth in the post-shock period relative to non-affected branches. Given that these deposits are not reinvested locally, I further show that branches located in the non-affected region increase lending growth depending on their indirect exposure to the booming regions via their branch network. Even tough, these results provide evidence against a Dutch Disease type crowding out of the non-iron ore sector, further evidence suggests that this capital reallocation is far from being optimal.
Read article
Brown Bag Seminar
Brown Bag Seminar Financial Markets Department The seminar series "Brown...
See page
At a Glance
IWH at a Glance The Halle Institute for Economic Research (IWH) – Member of the...
See page
