Strategic Communication among Banks
Christian Bittner, Falko Fecht, Melissa Pala, Farzad Saidi
Journal of Financial Economics,
forthcoming
Abstract
Do economic incentives govern information diffusion in markets? Using international banks’ advisory activities in corporate takeovers as their source of private information, we show in supervisory data that banks with closer ties to the target, but not the acquirer, advisor trade profitably in the target’s stock prior to the deal announcement. This trading behavior is associated with a higher premium paid by the acquirer without compromising the deal success. As the incentives of informed traders are aligned only with those of the target shareholders, which are represented by the target advisor, our evidence suggests strategic information transmission among these banks.
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Facts or Feelings? The Role of Relatable Narratives in Shaping Inflation Expectations
Melina Ludolph, Giang Nghiem, Lena Tonzer
IWH Discussion Papers,
No. 10,
2026
Abstract
We examine whether combining factual information on inflation levels and forecasts with a narrative can persistently shape consumers’ inflation expectations. In a preregistered randomized controlled trial with a representative sample of 3,000 German consumers, participants received either numerical or textual information about inflation rates, with or without an accompanying narrative. All treatments immediately lower inflation expectations, with numerical information eliciting stronger adjustments. Adding a narrative produces no additional immediate effect, confirming that it conveys no new information. However, only the combination of numerical information with a narrative yields a lasting reduction in inflation expectations and forecast uncertainty still observable after four weeks. Our results suggest that combining precise information with a narrative enhances information retention and can lead to more persistent shifts in consumers’ beliefs. The effects are strongest when respondents perceive the narrative as relatable and emotionally engaging, and among those with low financial literacy and limited knowledge of inflation.
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01.04.2026 • 10/2026
Economic growth in East Germany slightly higher than in the West – Implications of the Joint Economic Forecast Spring 2026 and of new data for the East German economy
In 2025, the East German economy expanded by 0.4%, somewhat more than Germany as a whole (0.2%). For 2026, the Halle Institute for Economic Research (IWH) expects growth of 0.7% for East Germany (Germany: 0.6%). The unemployment rate is likely to amount to 7.9% in the current year, after 7.8% in 2025.
Oliver Holtemöller
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