Gesetzgebung, Regulierung und Faktormärkte
Traditionell wird die Regulierung von Finanz- und Arbeitsmärkten isoliert analysiert. Die neue Abteilung „Gesetzgebung, Regulierung und Faktormärkte“ erforscht systematisch die Interaktion von Regulierungen der Finanz- und Arbeitsmärkte und deren Auswirkungen auf die langfristige realwirtschaftliche Entwicklung. Dies wird erreicht, indem wachstums- und strukturrelevante Aspekte der Rahmenbedingungen an Finanz- und Arbeitsmärkten gemeinsam erforscht werden. Das Alleinstellungsmerkmal der neuen Abteilung ist die Untersuchung der Interdependenz von staatlicher Regulierung im Bereich der Finanz- und Arbeitsmärkte und der realwirtschaftlichen Entwicklung.
Spillover Effects in Empirical Corporate Finance
in: Journal of Financial Economics, im Erscheinen
Despite their importance, the discussion of spillover effects in empirical research often misses the rigor dedicated to endogeneity concerns. We analyze a broad set of workhorse models of firm interactions and show that spillovers naturally arise in many corporate finance settings. This has important implications for the estimation of treatment effects: i) even with random treatment, spillovers lead to a complicated bias, ii) fixed effects can exacerbate the spillover-induced bias. We propose simple diagnostic tools for empirical researchers and illustrate our guidance in an application.
The Real Effects of Universal Banking: Does Access to the Public Debt Market Matter?
in: Journal of Financial Services Research, im Erscheinen
I analyze the impact of the formation of universal banks on corporate investment by looking at the gradual dismantling of the Glass-Steagall Act’s separation between commercial and investment banking. Using a sample of US firms and their relationship banks, I show that firms curtail debt issuance and investment after positive shocks to the underwriting capacity of their main bank. This result is driven by unrated firms and is strongest immediately after a shock. These findings suggest that universal banks may pay more attention to large firms providing more underwriting opportunities while exacerbating financial constraints of opaque firms, in line with a shift to a banking model based on transactional lending.
Bank Concentration and Product Market Competition
in: Review of Financial Studies, im Erscheinen
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.
Public Bank Guarantees and Allocative Efficiency
in: Journal of Monetary Economics, December 2020
A natural experiment and matched bank/firm data are used to identify the effects of bank guarantees on allocative efficiency. We find that with guarantees in place unproductive firms receive larger loans, invest more, and maintain higher rates of sales and wage growth. Moreover, firms produce less productively. Firms also survive longer in banks’ portfolios and those that enter guaranteed banks’ portfolios are less profitable and productive. Finally, we observe fewer economy-wide firm exits and bankruptcy filings in the presence of guarantees. Overall, the results are consistent with the idea that guaranteed banks keep unproductive firms in business for too long.
Executive Compensation, Macroeconomic Conditions, and Cash Flow Cyclicality
in: Finance Research Letters, November 2020
I model the joint effects of debt, macroeconomic conditions, and cash flow cyclicality on risk-shifting behavior and managerial wealth-for-performance sensitivity. The model shows that risk-shifting incentives rise during recessions and that the shareholders can eliminate such adverse incentives by reducing the equity-based compensation in managerial contracts. Moreover, this reduction should be larger in highly procyclical firms. These novel, testable predictions provide insights into optimal shareholder responses to agency costs of debt throughout the business cycle.
Supranational Rules, National Discretion: Increasing versus Inflating Regulatory Bank Capital?
in: Centre for Economic Policy Research, 2021
We study how higher capital requirements introduced at the supranational and implemented at the national level affect the regulatory capital of banks across countries. Using the 2011 EBA capital exercise as a quasi-natural experiment, we find that affected banks inflate their levels of regulatory capital without a commensurate increase in their book equity and without a reduction in bank risk. This observed regulatory capital inflation is more pronounced in countries where credit supply is expected to tighten. Our results suggest that national authorities forbear their domestic banks to meet supranational requirements, with a focus on short-term economic considerations.
Banking Deregulation and Household Consumption of Durables
in: IWH Discussion Papers, Nr. 18, 2020
We exploit the spatial and temporal variation of the staggered introduction of interstate banking deregulation across the U.S. to study the relationship between credit constraints and consumption of durables. Using the American Housing Survey from 1981 to 1993, we link the timing of these reforms with evidence of a credit expansion and household responses on many margins. We find robust evidence that households are more likely to purchase new appliances and invest in home renovations and modifications after the deregulation. These durable goods allowed households to consume less electricity and spend less time in domestic activities after the reforms.