Finance has seen a spectacular growth in innovation and internationalization during the 20th century (Lane and Milesi-Ferretti, 2008; Shiller, 2013), resulting in a complex and highly interconnected network of financial entities spanning across jurisdictions (Allen and Gale, 1994; Popov and Udell, 2012). Meanwhile the challenges grow for policymakers to provide a framework which allows for the operation of a stable finan- cial system within their jurisdiction (Merton, 1995; Allen and Gale, 2000; Morrison and White, 2009; Ongena et al., 2013). The global financial crisis highlights that se- vere disruptions in the financial sector spread across jurisdictions (Wiggins and Met- rick, 2015) and can have large negative effects on the real economy (Chodorow-Reich, 2013). To contain systemic risk and contagion in the globalized financial system, sev- eral changes have been applied to the regulatory framework of international financial markets (G20, 2009). Regulatory efforts encompass among others the implementa- tion of macroprudential policies and the introduction of mandatory central clearing of derivatives. This thesis aims to contribute to the understanding of differential effects of financial policy reforms depending on the characteristics of the regulated financial entities and networks.

The German government launched an unprecedented range of support programmes to mitigate the economic fallout from the Covid-19 pandemic for employees, self-employed, and firms. Fiscal transfers and guarantees amount to approximately €1.2 billion by now and are supplemented by similarly impressive measures taken at the European level. We argue in this note that the pandemic poses, however, also important challenges to financial stability in general and bank resilience in particular. A stable banking system is, in turn, crucial to ensure that support measures are transmitted to the real economy and that credit markets function seamlessly. Our analysis shows that banks are exposed rather differently to deteriorated business outlooks due to marked differences in their lending specialisation to different economic sectors. Moreover, a number of the banks that were hit hardest by bleak growth prospects of their borrowers were already relatively thinly capitalised at the outset of the pandemic. This coincidence can impair the ability and willingness of selected banks to continue lending to their mostly small and medium sized entrepreneurial customers. Therefore, ensuring financial stability is an important pre-requisite to also ensure the effectiveness of fiscal support measures. We estimate that contracting business prospects during the first quarter of 2020 could lead to an additional volume of non-performing loans (NPL) among the 40 most stressed banks ‒ mostly small, regional relationship lenders ‒ on the order of around €200 million. Given an initial stock of NPL of €650 million, this estimate thus suggests a potential level of NPL at year-end of €1.45 billion for this fairly small group of banks already. We further show that 17 regional banking markets are particularly exposed to an undesirable coincidence of starkly deteriorating borrower prospects and weakly capitalised local banks. Since these regions are home to around 6.8% of total employment in Germany, we argue that ensuring financial stability in the form of healthy bank balance sheets should be an important element of the policy strategy to contain the adverse real economic effects of the pandemic.

The present study examines the consequences of the planned coal phase-out in Germany according to various phase-out pathways that differ in the ordering of power plant closures. Soft-linking an energy system model with an input-output model and a regional macroeconomic model simulates the socio-economic effects of the phase-out in the lignite regions, as well as in the rest of Germany. The combination of two economic models offers the advantage of considering the phase-out from different perspectives and thus assessing the robustness of the results. The model results show that the lignite coal regions will exhibit losses in output, income and population, but a faster phase-out would lead to a quicker recovery. Migration to other areas in Germany and demographic changes will partially compensate for increasing unemployment, but support from federal policy is also necessary to support structural change in these regions.

Many observers, and many investors, believe that young people are especially likely to produce the most successful new firms. Integrating administrative data on firms, workers, and owners, we study start-ups systematically in the United States and find that successful entrepreneurs are middle-aged, not young. The mean age at founding for the 1-in-1,000 fastest growing new ventures is 45.0. The findings are similar when considering high-technology sectors, entrepreneurial hubs, and successful firm exits. Prior experience in the specific industry predicts much greater rates of entrepreneurial success. These findings strongly reject common hypotheses that emphasize youth as a key trait of successful entrepreneurs.

Public innovation subsidies in a regional environment are expected to unfold a positive economic impact over time. The focus of this paper is on an assessment of the long-run impact of innovation and innovation subsidies in German regions. This is scrutinized by an estimation approach combining panel model and time-series characteristics and using regional data for the years 1980–2014. The results show that innovation and innovation subsidies in the long run have a positive impact on the economic development of regions in Germany. This supports a long-term strategy for regional and innovation policy.

With the establishment of the Banking Union, the European Central Bank has been granted the power to impose stricter regulations than the national regulator if systemic risks are not adequately addressed at the national level. We ask whether there is a cross-border externality in the sense that a bank’s systemic risk differs when applying a national versus a European perspective. On average, banks’ contribution to systemic risk is similar at the two regional levels, and so is the ranking of banks. Generally, larger banks and banks with a lower share of loans are more systemically important. The effects of these variables are qualitatively but not quantitatively similar at the national versus the European level.

Die Frage, ob in Ostdeutschland politisch „die Uhren anders gehen“, hat Politik und Politikwissenschaft seit der Wiedervereinigung beschäftigt. Wie die Beantwortung der Frage ausfällt, hängt vom zyklischen Verlauf des Wahlverhaltens und dem dadurch ausgelösten dynamischen Wandel des Parteiensystems auf nationaler wie regionaler Ebene wesentlich ab. Schien ein besonderer „Ostfaktor“ in Gestalt der PDS und der ihr Erbe antretenden Partei Die Linke als ostdeutsche Regional-und Interessenpartei gut 25 Jahre lang im gesamtdeutschen Parteiensystem als eine berechenbare politische Größe auf-gehoben, so zeigt das Ergebnis der Bundestagswahl von 2017 ein wieder deutlicher zwischen beiden Landesteilen ́gespaltenes` Wahlverhalten.