Teaching
Teaching Within the framework of its cooperations with both German and foreign universities IWH researchers are actively committed to teaching by offering academic courses. These…
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PhD Courses
PhD Courses IWH-DPE Courses DPE courses website CGDE website Course materials: see Intranet, P:\Projekte\Doktoranden\Doktorandenkurse Courses at other Institutions Bavarian…
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Loan Securitisation during the Transition to a Low-carbon Economy
Isabella Müller, Huyen Nguyen, Trang Nguyen
VoxEU CEPR,
May
2023
Abstract
Banks play a crucial role in the transition to a low-carbon economy, but they also expose themselves to climate transition risk. This column shows that banks use corporate loan securitisation to shift climate transition risk to less-regulated shadow banking entities. This behaviour affects carbon premia in loan contracts. When banks can use securitisation to manage transition risk, their climate policies that target only activities reflected in their books may not be as effective as bank regulators hope for.
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Natural Disasters and Bank Stability: Evidence from the U.S. Financial System
Felix Noth, Ulrich Schüwer
Journal of Environmental Economics and Management,
May
2023
Abstract
We show that weather-related natural disasters in the United States significantly weaken the financial stability of banks with business activities in affected regions. This is reflected in higher probabilities of default, lower z-scores, higher non-performing assets ratios, higher foreclosure ratios, lower returns on assets and lower equity ratios of affected banks in the years following a natural disaster. The effects are economically relevant and highlight the financial vulnerability of banks and their borrowers despite insurances and public aid programs.
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Short-Selling Threats and Bank Risk-Taking: Evidence from the Financial Crisis
Dien Giau Bui, Iftekhar Hasan, Chih-Yung Lin, Hong Thoa Nguyen
Journal of Banking and Finance,
May
2023
Abstract
The focus of this paper is whether the Securities and Exchange Commission's Regulation SHO strengthens or weakens the effect of short-selling threats on banks’ risk-taking. The evidence shows that pilot banks with looser constraints on short-selling increased their risk-taking during the financial crisis of 2007–2009. The reason is that short-selling threats improved the information environment and mitigated the agency problems of banks during the pilot program that led to greater risk-taking by pilot banks. Additionally, this effect is mainly driven by pilot banks with poor corporate governance, or high information asymmetry. Overall, our paper provides novel evidence that the disciplinary role of short-sellers had a positive effect on bank risk-taking during the financial crisis.
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IWH-Präsident: Silicon Valley Bank in Deutschland?
Reint E. Gropp
Einzelveröffentlichungen,
2023
Abstract
Nach dem Zusammenbruch der zahlungsunfähigen US-amerikanischen Silicon Valley Bank zieht Reint Gropp, Präsident des Leibniz-Instituts für Wirtschaftsforschung Halle (IWH), drei Lehren für die europäische Bankenaufsicht.
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Cultural Values of Parent Bank Board Members and Lending by Foreign Subsidiaries: The Moderating Role of Personal Traits
Iftekhar Hasan, Krzysztof Jackowicz, Oskar Kowalewski, Łukasz Kozłowski
Journal of International Financial Markets, Institutions and Money,
March
2023
Abstract
In this study, we investigate whether the cultural values of a parent bank’s board members affect lending by the bank’s foreign subsidiaries and how this influence is moderated by the board members’ personal traits. Using a new dataset on foreign-owned banks and their parent companies, we find that average individualism, uncertainty avoidance, and indulgence within parent bank boards significantly impact lending by foreign subsidiaries. We establish that different sensitivities of female and male directors modify the relevance of individual cultural dimensions in lending by foreign bank subsidiaries. Moreover, we show that parent bank directors’ cultural values have a stronger impact on lending by the bank’s foreign subsidiaries when those directors have enough time to fulfill their duties and possess higher ownership stakes in the parent companies.
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Monetary Policy in an Oil-dependent Economy in the Presence of Multiple Shocks
Andrej Drygalla
Review of World Economics,
February
2023
Abstract
Russian monetary policy has been challenged by large and continuous private capital outflows and a sharp drop in oil prices during 2014. Both contributed to significant depreciation pressures on the ruble and led the central bank to give up its exchange rate management strategy. Against this background, this work estimates a small open economy model for Russia, featuring an oil price sector and extended by a specification of the foreign exchange market to correctly account for systematic central bank interventions. We find that shocks to the oil price and private capital flows substantially affect domestic variables such as inflation and output. Simulations for the estimated actual strategy and alternative regimes suggest that the vulnerability of the Russian economy to external shocks can substantially be lowered by adopting some form of inflation targeting. Strategies to target the nominal exchange rate or the ruble price of oil prove to be inferior.
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14.02.2023 • 4/2023
Study on Europe's top bankers: Risky business despite bonus cap
Ten years ago, the EU Parliament decided to cap the flexible remuneration of bank managers. But the cap on bonuses misses its target: Managers of systemically important European banks take high risks without changes, shows a study by the Halle Institute for Economic Research (IWH).
Michael Koetter
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What Explains International Interest Rate Co-Movement?
Annika Camehl, Gregor von Schweinitz
IWH Discussion Papers,
No. 3,
2023
Abstract
We show that global supply and demand shocks are important drivers of interest rate co-movement across seven advanced economies. Beyond that, local structural shocks transmit internationally via aggregate demand channels, and central banks react predominantly to domestic macroeconomic developments: unexpected monetary policy tightening decreases most foreign interest rates, while expansionary local supply and demand shocks increase them. To disentangle determinants of international interest rate co-movement, we use a Bayesian structural panel vector autoregressive model accounting for latent global supply and demand shocks. We identify country-specific structural shocks via informative prior distributions based on a standard theoretical multi-country open economy model.
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