Cross-Subsidization of Bad Credit in a Lending Crisis
Nikolaos Artavanis, Brian Lee, Stavros Panageas, Margarita Tsoutsoura
Review of Financial Studies,
Nr. 5,
2025
Abstract
We study the corporate-loan pricing decisions of a major, systemic bank during the Greek financial crisis. A unique aspect of our data set is that we observe both the actual interest rate and the “break-even rate” (BE rate) of each loan, as computed by the bank’s own loan-pricing department (in effect, the loan’s marginal cost). We document that low-BE-rate (safer) borrowers are charged significant markups, whereas high-BE-rate (riskier) borrowers are charged smaller and even negative markups. We rationalize this de facto cross-subsidization through the lens of a dynamic model featuring depressed collateral values, impaired capital-market access, and limit pricing.
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People Doctoral Students PhD Representatives Alumni Supervisors Lecturers Coordinators Doctoral Students Afroza Alam (Supervisor: Reint Gropp ) Annika Backes (Supervisors: Simon…
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DPE Course Programme Archive 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2025 Macroeconomics several lecturers summer 2025 Causal Machine Learning Martin…
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Research Profiles of the IWH Departments All doctoral students are allocated to one of the four research departments (Financial Markets – Laws, Regulations and Factor Markets –…
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Unsere Projekte 07.2022 ‐ 12.2026 Evaluierung des InvKG und des Bundesprogrammes STARK Bundesministerium für Wirtschaft und Klimaschutz (BMWK) Im Auftrag des Bundesministeriums…
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People Job Market Candidates Doctoral Students PhD Representatives Alumni Supervisors Lecturers Coordinators Job Market Candidates Tommaso Bighelli Job market paper: "The…
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DPE Course Programme Archive 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2023 Microeconomics several lecturers winter term 2023/2024 (IWH) Econometrics several…
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Research Profiles of the IWH Departments All doctoral students are allocated to one of the four research departments (Financial Markets – Laws, Regulations and Factor Markets –…
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Financial Linkages and Sectoral Business Cycle Synchronization: Evidence from Europe
Hannes Böhm, Julia Schaumburg, Lena Tonzer
IMF Economic Review,
December
2022
Abstract
We analyze whether financial integration leads to converging or diverging business cycles using a dynamic spatial model. Our model allows for contemporaneous spillovers of shocks to GDP growth between countries that are financially integrated and delivers a scalar measure of the spillover intensity at each point in time. For a financial network of ten European countries from 1996 to 2017, we find that the spillover effects are positive on average and much larger during periods of financial stress, pointing towards stronger business cycle synchronization. Dismantling GDP growth into value added growth of ten major industries, we observe that spillover intensities vary significantly. The findings are robust to a variety of alternative model specifications.
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Globalization, Productivity Growth, and Labor Compensation
Christian Dreger, Marius Fourné, Oliver Holtemöller
IWH Discussion Papers,
Nr. 7,
2022
Abstract
Since the onset of globalization, production activities have become increasingly fragmented and organized in global value chains, facilitating the trade of intermediaries across industries and countries. In this paper, we analyze the dynamic effect of increasing participation in global value chains on both productivity growth and the functional income distribution. To account for potential endogeneity, we construct a granular instrumental variable for international trade integration using detailed international input-output tables. Our findings show on the country-industry level, that both trade in intermediate inputs and trade in value-added significantly raise productivity in advanced countries, at the expense of the labor share of income. Moreover, labor shares decline more sharply in both manufacturing and services sectors, as well as in industries positioned closer to the final stages of the global value chain. Finally, our results show that a decline in international trade integration would have substantial negative effects on long-term productivity growth.
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