Technical Optimum of Bank Liquidity Creation
Iftekhar Hasan, Jean-Loup Soula
Revue Economique,
Nr. 3,
2022
Abstract
This paper generates a technical optimum of bank liquidity creation benchmark by tracing an efficient frontier in liquidity creation (bank intermediation) and questions why some banks are more efficient than others in such activities. Evidence reveals that medium size banks are most correlated to efficient frontier. Small (large) banks—focused on traditional banking activities—are found to be the most (least) efficient in creating liquidity in on-balance sheet items whereas large banks—involved in non-traditional activities—are found to be most efficient in off-balance sheet liquidity creation. Additionally, the liquidity efficiency of small banks is more resilient during the 2007-2008 financial crisis relative to other banks.
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Entwicklung der öffentlichen Gesundheitsausgaben
Götz Zeddies
Wirtschaftsdienst,
Nr. 6,
2023
Abstract
Die sozialen Sicherungssysteme in Deutschland basieren auf dem Umlageverfahren, bei dem die Ausgaben der Sozialversicherungen in der laufenden Periode durch Einnahmen aus Beiträgen, die auf die Einkommen der abhängig Beschäftigten erhoben werden, gedeckt werden. Vor dem Hintergrund des demografischen Wandels, der in den kommenden Jahren immer stärker zum Tragen kommen wird, wird häufig die Nachhaltigkeit der umlagefinanzierten sozialen Sicherungssysteme hinterfragt, weil sich das Verhältnis von Beitragszahlern und Leistungsempfängern ändern wird. Dies dürfte sich zwar vor allem bei der gesetzlichen Rentenversicherung auswirken, aber auch bei der gesetzlichen Kranken- und der Pflegeversicherung.
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Bank Concentration and Product Market Competition
Farzad Saidi, Daniel Streitz
Review of Financial Studies,
Nr. 10,
2021
Abstract
This paper documents a link between bank concentration and markups in nonfinancial sectors. We exploit concentration-increasing bank mergers and variation in banks’ market shares across industries and show that higher credit concentration is associated with higher markups and that high-market-share lenders charge lower loan rates. We argue that this is due to the greater incidence of competing firms sharing common lenders that induce less aggressive product market behavior among their borrowers, thereby internalizing potential adverse effects of higher rates. Consistent with our conjecture, the effect is stronger in industries with competition in strategic substitutes where negative product market externalities are greatest.
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Borrowers Under Water! Rare Disasters, Regional Banks, and Recovery Lending
Michael Koetter, Felix Noth, Oliver Rehbein
Journal of Financial Intermediation,
July
2020
Abstract
We show that local banks provide corporate recovery lending to firms affected by adverse regional macro shocks. Banks that reside in counties unaffected by the natural disaster that we specify as macro shock increase lending to firms inside affected counties by 3%. Firms domiciled in flooded counties, in turn, increase corporate borrowing by 16% if they are connected to banks in unaffected counties. We find no indication that recovery lending entails excessive risk-taking or rent-seeking. However, within the group of shock-exposed banks, those without access to geographically more diversified interbank markets exhibit more credit risk and less equity capital.
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Toward a Taylor Rule for Fiscal Policy
Martin Kliem, Alexander Kriwoluzky
Review of Economic Dynamics,
Nr. 2,
2014
Abstract
In DSGE models, fiscal policy is typically described by simple rules in which tax rates respond to the level of output. We show that there is only weak empirical evidence in favor of such specifications in US data. Instead, the cyclical movements of labor and capital income tax rates are better described by a contemporaneous response to hours worked and investment, respectively. We show that conditioning on these variables is also desirable from a normative perspective as it significantly improves welfare relative to output-based rules.
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Completing the European Banking Union: Capital Cost Consequences for Credit Providers and Corporate Borrowers
Michael Koetter, Thomas Krause, Eleonora Sfrappini, Lena Tonzer
Abstract
The bank recovery and resolution directive (BRRD) regulates the bail-in hierarchy to resolve distressed banks without burdening tax payers. We exploit the staggered implementation of the BRRD across 15 European Union (EU) member states to identify banks’ capital cost and capital structure responses. In a first stage, we show that average capital costs of banks increased. WACC hikes are lowest in the core countries of the European Monetary Union (EMU) compared to formerly stressed EMU and non-EMU countries. This pattern is driven by changes in the relative WACC weight of equity in response to the BRRD, which indicates enhanced financial system resilience. In a second stage, we document asymmetric transmission patterns of banks’ capital cost changes on to corporates’ borrowing terms. Only EMU banks located in core countries that exhibit higher WACC are those that also increase firms’ borrowing cost and contract credit supply. Hence, the BRRD had unintended consequences for selected segments of the real economy.
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Deposit Competition and Securitization
Danny McGowan, Huyen Nguyen, Klaus Schaeck
IWH Discussion Papers,
Nr. 6,
2021
Abstract
We provide novel evidence that deposit competition incentivizes banks to securitize loans. Exploiting the state-specific removal of deposit market caps across the U.S. as an exogenous source of competition, we document a 7.1 percentage point increase in the probability that banks securitize their assets. This result is driven by an 11 basis point increase in costs of deposits and a corresponding decrease in banks’ deposit growth. Our results are strongest among small and single state incumbent banks that rely more on deposit funding. These findings highlight an unintended regulatory cause that motivates banks to adopt the originate-to-distribute model.
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The Impact of Delay: Evidence from Formal Out-of-Court Restructuring
Randall K. Filer, Dejan Kovač, Jacob N. Shapiro, Stjepan Srhoj
Abstract
Bankruptcy restructuring procedures are used in most legal systems to decide the fate of businesses facing financial hardship. We study how bargaining failures in such procedures impact the economic performance of participating firms in the context of Croatia, which introduced a „pre-bankruptcy settlement“ (PBS) process in the wake of the Great Recession of 2007 - 2009. Local institutions left over from the communist era provide annual financial statements for both sides of more than 180,000 debtor-creditor pairs, enabling us to address selection into failed negotiations by matching a rich set of creditor and debtor characteristics. Failures to settle at the PBS stage due to idiosyncratic bargaining problems, which effectively delays entry into the standard bankruptcy procedure, leads to a lower rate of survival among debtors as well as reduced employment, revenue, and profits. We also track how bargaining failures diffuse through the network of creditors, finding a significant negative effect on small creditors, but not others. Our results highlight the impact of delay and the importance of structuring bankruptcy procedures to rapidly resolve uncertainty about firms‘ future prospects.
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