Bank Bailouts and Moral Hazard: Evidence from Germany
Lammertjan Dam, Michael Koetter
Review of Financial Studies,
Nr. 8,
2012
Abstract
We use a structural econometric model to provide empirical evidence that safety nets in the banking industry lead to additional risk taking. To identify the moral hazard effect of bailout expectations on bank risk, we exploit the fact that regional political factors explain bank bailouts but not bank risk. The sample includes all observed capital preservation measures and distressed exits in the German banking industry during 1995–2006. A change of bailout expectations by two standard deviations increases the probability of official distress from 6.6% to 9.4%, which is economically significant.
Artikel Lesen
Determinants of Evolutionary Change Processes in Innovation Networks – Empirical Evidence from the German Laser Industry
Muhamed Kudic, Andreas Pyka, Jutta Günther
Abstract
We seek to understand the relationship between network change determinants, network change processes at the micro level and structural consequences at the overall network level. Our conceptual framework considers three groups of determinants – organizational, relational and contextual. Selected factors within these groups are assumed to cause network change processes at the micro level – tie formations and tie terminations – and to shape the structural network configuration at the overall network level. We apply a unique longitudinal event history dataset based on the full population of 233 German laser source manufacturers and 570 publicly-funded cooperation projects to answer the following research question: What kind of exogenous or endogenous determinants affect a firm’s propensity and timing to cooperate and enter the network? Estimation results from a non-parametric event history model indicate that young micro firms enter the network later than small-sized and large firms. An in-depth analysis of the size effects for medium-sized firms provides some unexpected yet quite interesting findings. The choice of cooperation type makes no significant difference for the firms’ timing to enter the network. Finally, the analysis of contextual determinants shows that cluster membership can, but do not necessarily, affect a firm’s timing to cooperate.
Artikel Lesen
The Structural Determinants of the US Competitiveness in the Last Decades: A 'Trade-Revealing' Analysis
Massimo Del Gatto, Filippo di Mauro, Joseph Gruber, Benjamin Mandel
ECB Working Paper,
Nr. 1443,
2012
Abstract
We analyze the decline in the U.S. share of world merchandise exports against the backdrop of a model-based measure of competitiveness. We preliminarily use constant market share analysis and gravity estimations to show that the majority of the decline in export shares can be associated with a declining share of world income, suggesting that the dismal performance of the U.S. market share is not a sufficient statistic for competitiveness. We then derive a computable measure of country-sector specific real marginal costs (i.e. competitiveness) which, insofar it is inferred from actual trade ows, is referred to as 'revealed'. Brought to the data, this measure reveals that most U.S. manufacturing industries are losing momentum relative to their main competitors, as we find U.S. revealed marginal costs to grow by more than 38% on average. At the sectoral level, the "Machinery" industry is the most critical.
Artikel Lesen
The Impact of Firm and Industry Characteristics on Small Firms’ Capital Structure
Hans Degryse, Peter de Goeij, Peter Kappert
Small Business Economics,
Nr. 4,
2012
Abstract
We study the impact of firm and industry characteristics on small firms’ capital structure, employing a proprietary database containing financial statements of Dutch small and medium-sized enterprises (SMEs) from 2003 to 2005. The firm characteristics suggest that the capital structure decision is consistent with the pecking-order theory: Dutch SMEs use profits to reduce their debt level, and growing firms increase their debt position since they need more funds. We further document that profits reduce in particular short-term debt, whereas growth increases long-term debt. We also find that inter- and intra-industry effects are important in explaining small firms’ capital structure. Industries exhibit different average debt levels, which is in line with the trade-off theory. Furthermore, there is substantial intra-industry heterogeneity, showing that the degree of industry competition, the degree of agency conflicts, and the heterogeneity in employed technology are also important drivers of capital structure.
Artikel Lesen
Climate Innovation - The Case of the Central German Chemical Industry
Wilfried Ehrenfeld
IWH Discussion Papers,
Nr. 2,
2012
Abstract
In this article, we describe the results of a multiple case study on the indirect corporate innovation impact of climate change in the Central German chemical industry. We investigate the demands imposed on enterprises in this context as well as the sources, outcomes and determining factors in the innovative process at the corporate level. We argue that climate change drives corporate innovations through various channels. A main finding is that rising energy prices were a key driver for incremental energy efficiency innovations in the enterprises’ production processes. For product innovation, customer requests were a main driver, though often these requests are not directly related to climate issues. The introduction or extension of environmental and energy management systems as well as the certification of these are the most common forms of organizational innovations. For marketing purposes, the topic of climate change was hardly utilized so far. As the most important determinants for corporate climate innovations, corporate structure and flexibility of the product portfolio, political asymmetry regarding environmental regulation and governmental funding were identified.
Artikel Lesen
Intellectual Property Rights Policy, Competition and Innovation
Daron Acemoglu, Ufuk Akcigit
Journal of the European Economic Association,
Nr. 1,
2012
Abstract
To what extent and in what form should the intellectual property rights (IPR) of innovators be protected? Should a company with a large technology lead over its rivals receive the same IPR protection as a company with a more limited advantage? In this paper, we develop a dynamic framework for the study of the interactions between IPR and competition, in particular to understand the impact of such policies on future incentives. The economy consists of many industries and firms engaged in cumulative (step-by-step) innovation. IPR policy regulates whether followers in an industry can copy the technology of the leader. We prove the existence of a steady-state equilibrium and characterize some of its properties. We then quantitatively investigate the implications of different types of IPR policy on the equilibrium growth rate and welfare. The most important result from this exercise is that full patent protection is not optimal; instead, optimal policy involves state-dependent IPR protection, providing greater protection to technology leaders that are further ahead than those that are close to their followers. This is because of a trickle-down effect: providing greater protection to firms that are further ahead of their followers than a certain threshold increases the R&D incentives also for all technology leaders that are less advanced than this threshold.
Artikel Lesen
International Trade Patterns and Labour Markets – An Empirical Analysis for EU Member States
Götz Zeddies
International Journal of Economics and Business Research,
2012
Abstract
During the last decades, international trade flows of the industrialized countries became more and more intra-industry. At the same time, employment perspectives particularly of the low-skilled by tendency deteriorated in these countries. This phenomenon is often traced back to the fact that intra-industry trade (IIT), which should theoretically involve low labour market adjustment, became increasingly vertical in nature. Against this background, the present paper investigates the relationship between international trade patterns and selected labour market indicators in European countries. As the results show, neither inter- nor vertical intra-industry trade (VIIT) do have a verifiable effect on wage spread in EU member states. As far as structural unemployment is concerned, the latter increases only with the degree of countries’ specialization on capital intensively manufactured products in inter-industry trade relations. Only for unemployment of the less-skilled, a slightly significant impact of superior VIIT seems to exist.
Artikel Lesen
The Impact of Psychic Distance on Subsidiary Autonomy - Theory and Evidence from Central and Eastern European Countries
Gjalt de Jong, D. van Vo, Philipp Marek
Journal of International Management,
2012
Abstract
The key objective of this study is to determine whether or not psychic distance between home and host countries influences the decision-making autonomy of subsidiaries. Theoretical arguments for the relationship between psychic distance and subsidiary autonomy go in both directions with some predicting a negative relationship and others predicting a positive one. We test these conflicting hypotheses with a unique multi-country and multi-industry database reporting survey evidence of 809 subsidiaries located in five Central and Eastern European countries that serve headquarters in 44 different nation states. Psychic distance is a multidimensional construct and measured in terms of linguistic, religious, economic, institutional and geographic distance. The empirical results of 103 country pairs suggest that psychic distance – in terms of religious and economic distance – is positively related to autonomy.
Artikel Lesen
Rules versus Discretion in Loan Rate Setting
Geraldo Cerqueiro, Hans Degryse, Steven Ongena
Journal of Financial Intermediation,
Nr. 4,
2011
Abstract
Loan rates for seemingly identical borrowers often exhibit substantial dispersion. This paper investigates the determinants of the dispersion in interest rates on loans granted by banks to small and medium sized enterprises. We associate this dispersion with the loan officers’ use of “discretion” in the loan rate setting process. We find that “discretion” is most important if: (i) loans are small and unsecured; (ii) firms are small and opaque; (iii) the firm operates in a large and highly concentrated banking market; and (iv) the firm is distantly located from the lender. Consistent with the proliferation of information-technologies in the banking industry, we find a decreasing role for “discretion” over time in the provision of small credits to opaque firms. While widely used in the pricing of loans, “discretion” plays only a minor role in the decisions to grant loans.
Artikel Lesen
Industrial Associations as a Channel of Business-Government Interactions in an Imperfect Institutional Environment: The Russian Case
A. Yakovlev, A. Govorun
IWH Discussion Papers,
Nr. 16,
2011
Abstract
International lessons from emerging economies suggest that business associations may provide an effective channel of communication between the government and the private sector. This function of business associations may become still more important in transition economies, where old mechanisms for coordinating enterprise activities have been destroyed, while the new ones have not been established yet. In this context, Russian experience is a matter of interest, because for a long time, Russia was regarded as a striking example of state failures and market failures. Consequently, the key point of our study was a description of the role and place of business associations in the presentday
Russian economy and their interaction with member companies and bodies of state
administration. Relying on the survey data of 957 manufacturing firms conducted in
2009, we found that business associations are more frequently joined by larger companies, firms located in regional capital cities, and firms active in investment and innovation. By contrast, business associations tend to be less frequently joined by business groups’ subsidiaries and firms that were non-responsive about their respective ownership structures. Our regression analysis has also confirmed that business associations are a component of what Frye (2002) calls an “elite exchange”– although only on regional and local levels. These “exchanges” imply that members of business associations, on the one hand, more actively assist regional and local authorities in social development of their regions, and on the other hand more often receive support from authorities. However, this effect is insignificant in terms of support from the federal government. In general, our results allow us to believe that at present, business associations (especially the
industry-wide and “leading” ones) consolidate the most active, advanced companies and act as collective representatives of their interests. For this reason, business associations can be regarded as interface units between the authorities and businesses and as a possible instrument for promotion of economic development.
Artikel Lesen
