Deposit Insurance, Moral Hazard and Market Monitoring
Reint E. Gropp, Jukka M. Vesala
Review of Finance,
Nr. 4,
2004
Abstract
The paper analyses the relationship between deposit insurance, debt-holder monitoring, and risk taking. In a stylised banking model we show that deposit insurance may reduce moral hazard, if deposit insurance credibly leaves out non-deposit creditors. Testing the model using EU bank level data yields evidence consistent with the model, suggesting that explicit deposit insurance may serve as a commitment device to limit the safety net and permit monitoring by uninsured subordinated debt holders. We further find that credible limits to the safety net reduce risk taking of smaller banks with low charter values and sizeable subordinated debt shares only. However, we also find that the introduction of explicit deposit insurance tends to increase the share of insured deposits in banks' liabilities.
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Cross-border bank mergers: What lures the rare animal?
Claudia M. Buch, G. DeLong
Journal of Banking and Finance,
Nr. 9,
2004
Abstract
Although domestic mergers and acquisitions (M&As) in the financial services industry have increased steadily over the past two decades, international M&As were until recently relatively rare. Moreover, the share of cross-border mergers in the banking industry is low compared with other industries. This paper uses a novel dataset of over 3000 mergers that took place between 1985 and 2001 to analyze the determinants of international bank mergers. We test the extent to which information costs and regulations hold back merger activity. Our results suggest that information costs significantly impede cross-border bank mergers. Regulations also influence cross-border bank merger activity. Hence, policy makers can create environments that encourage cross-border activity, but information cost barriers must be overcome even in (legally) integrated markets.
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Market Indicators, Bank Fragility, and Indirect Market Discipline
Reint E. Gropp, Jukka M. Vesala, Giuseppe Vulpes
Economic Policy Review,
Nr. 2,
2004
Abstract
A paper presented at the October 2003 conference “Beyond Pillar 3 in International Banking Regulation: Disclosure and Market Discipline of Financial Firms“ cosponsored by the Federal Reserve Bank of New York and the Jerome A. Chazen Institute of International Business at Columbia Business School.
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Bank Market Discipline and Indicators of Banking System Risk: The European Evidence
Reint E. Gropp
Market Discipline Across Countries and Industries,
2004
Abstract
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The Influence of a Heterogeneous Banking Sector on the Interbank Market Rate in the Euro Area
Ulrike Neyer, Jürgen Wiemers
Swiss Journal of Economics and Statistics,
2004
Abstract
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Standortfaktoren im Existenzgründerrating
Ulrich Blum, Werner Gleißner, A. Schaller
Existenzgründerrating,
2004
Abstract
Die Qualität eines Standorts stellt einen wesentlichen Erfolgsfaktor für ein Unternehmen dar. Wenn sich Gründer für einen Standort entscheiden, dann sollten sie daher die Eigenschaften des Orts, an dem soie sich niederlassen, sorgsam abwägen. Das moderne Rating, das zunächst aus Sicht der Banken die Fähigkeit eines Unternehmens bewertet, seinen Kapitaldienst zu leisten, und das starken Bezug auf Markt- und Wettbewerbskräfte nimmt bzw. nehmen sollte, wird hier um standörtliche Aspekte erweitert. Ein sukzessiver Filteransatz wird entwickelt, mit Hilfe dessen in der ersten Stufe die globalen Erfolgsfaktoren von Branchen herausgearbeitet werden, dann gefragt wird, welche Eigenschaften einer Wirtschaftsregion aus Sicht des Unternehmens erfolgswirksam sind und schließlich geprüft wird, welche Unternehmen oder Branchen für eine Region interessant sind. Daraus ergibt sich ein Portfolio von Möglichkeiten, das sowohl die Sicht des Unternehmens auf alternative Standorte, als auch die Sicht der Bank oder des Wirtschaftsförderers auf interessante Unternehmen schärft.
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Why do banks hold capital in excess of regulatory requirements? A functional approach
Diemo Dietrich, Uwe Vollmer
IWH Discussion Papers,
Nr. 192,
2004
Abstract
This paper provides an explanation for the observation that banks hold on average a capital ratio in excess of regulatory requirements. We use a functional approach to banking based on Diamond and Rajan (2001) to demonstrate that banks can use capital ratios as a strategic tool for renegotiating loans with borrowers. As capital ratios affect the ability of banks to collect loans in a nonmonotonic way, a bank may be forced to exceed capital requirements. Moreover, high capital ratios may also constrain the amount a banker can borrow from investors. Consequently, the size of the banking sector may shrink.
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Measurement of Contagion in Banks' Equity Prices
Reint E. Gropp, G. Moerman
Journal of International Money and Finance,
Nr. 3,
2004
Abstract
This paper uses the co-incidence of extreme shocks to banks’ risk to examine within-country and across country contagion among large EU banks. Banks’ risk is measured by the first difference of weekly distances to default and abnormal returns. Using Monte Carlo simulations, the paper examines whether the observed frequency of large shocks experienced by two or more banks simultaneously is consistent with the assumption of a multivariate normal or a student t distribution. Further, the paper proposes a simple metric, which is used to identify contagion from one bank to another and identify “systemically important” banks in the EU.
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Zum Stand der Entwicklung des ungarischen Bankensystems
Werner Gnoth
Osteuropa Wirtschaft,
Nr. 1,
2004
Abstract
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Technological capability of foreign and West German investors in East Germany
Jutta Günther
IWH Discussion Papers,
Nr. 189,
2004
Abstract
Foreign direct investment (FDI) plays an important role for countries or regions in the process of economic catching-up since it is assumed – among other things – that FDI brings in new production technology and knowledge. This paper gives an overview about the development of FDI in East Germany based on official data provided by the Federal Bank of Germany. The investigation also includes a comparison of FDI in East Germany to Central East European countries. But the main focus of the paper is an analysis of the technological capability comparing majority foreign and West German owned firms to majority East German owned firms. It shows that foreign and West German subsidiaries in East Germany are indeed characterized by superior technological capability with respect to all indicators looked at (product innovation, research & development, organizational changes etc.).
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