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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Monopolistic Competition and Costs in the Health Care Sector
Ingmar Kumpmann
IWH Discussion Papers,
No. 17,
2009
Abstract
Competition among health insurers is widely considered to be a means of enhancing efficiency and containing costs in the health care system. In this paper, it is argued that this could be unsuccessful since health care providers hold a strong position on the market for health care services. Physicians exert a type of monopolistic power which can be described by Chamberlin’s model of monopolistic competition. If many health insurers compete with one another, they cannot counterbalance the strong bargaining position of the physicians. Thus, health care expenditure is higher, financing either extra profits for physicians or a higher number of them. In addition, health insurers do not have an incentive to contract selectively with health care providers as long as there are no price differences between physicians. A monopolistic health insurer is able to counterbalance the strong position of physicians and to achieve lower costs.
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Competition and Antitrust Policy in the Enlarged European Union: A Level Playing Field?
Jens Hölscher, Johannes Stephan
Journal of Common Market Studies,
2009
Abstract
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Organization and Financing of Innovation, and the Choice between Corporate and Independent Venture Capital
Paolo Fulghieri, Merih Sevilir
Journal of Financial and Quantitative Analysis,
No. 6,
2009
Abstract
This paper examines the impact of competition on the optimal organization and financing structures in innovation-intensive industries. We show that as an optimal response to competition, firms may choose external organization structures established in collaboration with specialized start-ups where they provide start-up financing from their own resources. As the intensity of the competition to innovate increases, firms move from internal to external organization of projects to increase the speed of product innovation and to obtain a competitive advantage with respect to rival firms in their industry. We also show that as the level of competition increases, firms provide a higher level of financing for externally organized projects in the form of corporate venture capital (CVC). Our results help explain the emergence of organization and financing arrangements such as CVC and strategic alliances, where large established firms organize their projects in collaboration with external specialized firms and provide financing for externally organized projects from their own internal resources.
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European Commission, Leibniz Association and IWH Discuss Innovation Related Policy in Transitions Regions
Björn Jindra, Katja Wilde
Wirtschaft im Wandel,
No. 7,
2009
Abstract
Im Februar 2009 führte das Institut für Wirtschaftsforschung Halle (IWH) gemeinsam mit der Leibniz-Gemeinschaft in Brüssel die Abschlusskonferenz des Projektes „Understanding the Relationship between Knowledge and Competitiveness in the Enlarging European Union“ (U-Know) durch. Bei diesem Projekt handelte es sich um ein dreijähriges Forschungsvorhaben, das im 6. Forschungsrahmenprogramm der Europäischen Union (EU) angesiedelt war. Das Projekt stellte auf die Untersuchung systemischer Aspekte von Innovation und Wissenstransfer sowie die Erarbeitung forschungs- und innovationspolitischer Handlungsoptionen ab. Ein besonderes Augenmerk galt dabei den Herausforderungen in den neuen EU-Mitgliedstaaten sowie Ostdeutschland. Aus dem Forschungsprojekt heraus entstanden insgesamt 54 referierte Publikationen sowie 33 Beiträge zu Sammelbänden. Ziel dieser Konferenz war es, die Forschungsergebnisse des U-Know-Projektes zu präsentieren und mit Vertretern aus Wissenschaft, Wirtschaft und der europäischen Politik zu diskutieren. Dazu wurden verschiedene Fachvorträge aus den vier Arbeitsbereichen des Projektes (Unternehmen und Märkte, Kooperationen zwischen Wirtschaft und Wissenschaft, Innovationssysteme und Governance sowie die Rolle von Institutionen) vorgestellt und von Vertretern der Europäischen Kommission im Hinblick auf politische Implikationen kommentiert. Abschließend unterstrichen alle Beteiligten die zunehmende strategische Bedeutung von Bildungs-, Forschungs- und Innovationspolitik, um zum einen die Wettbewerbsposition der EU-15-Länder weiter zu stärken und zum anderen den neuen EU-Mitgliedstaaten einen nachhaltigen Aufholprozess zu ermöglichen.
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Lending Technology, Bank Organization and Competition
Hans Degryse, Steven Ongena, Günseli Tümer-Alkan
Journal of Financial Transformation,
2009
Abstract
This paper reviews recent theoretical and empirical studies investigating how both bank technology and organization shape bank-borrower interactions. We refer to two related concepts for bank technology. First, the technologies banks employ in loan granting decisions and second, the advances in information technology linked to the bank's lending technology. We also summarize and interpret the theoretical and empirical work on bank organization and its influence on lending technologies. We show that the choice of lending technology and bank organization depend heavily on the availability of information, the technological progress in the collection of information, as well as the banking market structure and the legal environment. We draw important policy conclusions from the literature. Competition authorities and supervisors have to remain alert to the consequences of the introduction of any new technology because: (1) advances in technology do not necessarily lead to more intense banking competition, and (2) the impact of technological and financial innovation on financial efficiency and stability depends on the incentives of the entire „loan production chain.‟
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Investment (FDI) Policy for Azerbaijan, Final report
Jutta Günther, Björn Jindra
Einzelveröffentlichungen,
No. 4,
2009
Abstract
The report has been prepared on behalf of the Association for Technical Cooperation (GTZ) as integral part of the “Private Sector Development Program” run by the GTZ in Azerbaijan. A comprehensive investment policy is outlined with particular focus on the possibilities to attract foreign direct investment (FDI) in Azerbaijan’s manufacturing industry (non-oil sector). The report makes particular reference to the experiences with investment policy development in Central and East European transition economies. It touches legal and institutional framework conditions in Azerbaijan as well as possible investment incentives schemes including investment promotion. Major recommendations refer to trade integration within the region, introduction of tax incentives as well as further improvements in business climate. Furthermore, the importance of complementary policies, such as competition and education policy, is stressed.
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The Impact of Organizational Structure and Lending Technology on Banking Competition
Hans Degryse, Luc Laeven, Steven Ongena
Review of Finance,
No. 2,
2009
Abstract
We investigate how bank organization shapes banking competition. We show that a bank's geographical lending reach and loan pricing strategy is determined by its own and its rivals’ organizational structure. We estimate the impact of organization on the geographical reach and loan pricing of a large bank. We find that the reach of the bank is smaller when rival banks are large and hierarchically organized, have superior communication technology, have a narrower span of organization, and are closer to a decision unit with lending authority. Rival banks’ size and the number of layers to a decision unit soften spatial pricing.
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Why Do Payday Lenders Enter Local Markets? Evidence from Oregon
H. Evren Damar
Review of Industrial Organization,
No. 2,
2009
Abstract
This study analyzes payday lenders’ entry strategies in the state of Oregon in order to look for changes in the nature of the industry and its relationship to traditional financial institutions. The results of fixed-effects logit regressions suggest that payday lenders have started to enter areas already being served by banks. Furthermore, the presence of “incumbent advantage” in entry decisions may also have implications concerning the level of competition in the industry. Finally, since payday lenders also enter areas with large Hispanic populations, it is still possible that payday loans represent the sole source of credit for certain segments of the population.
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