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Professor Dr Sascha Steffen

Professor Dr Sascha Steffen
Current Position

since 11/14

Research Professor

Halle Institute for Economic Research (IWH) – Member of the Leibniz Association

since 8/17

Professor of Finance

Frankfurt School of Finance & Management

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Research Interests
  • financial intermediation
  • banking

Sascha Steffen joined the institute as a Research Professor in November 2014. His research focuses on banking, corporate finance, and financial intermediation.

Sascha Steffen holds the position of Professor of Finance at Frankfurt School of Finance & Management. Prior to that, he was Professor of Financial Markets at the University of Mannheim.

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Professor Dr Sascha Steffen
Professor Dr Sascha Steffen
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Publications

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A Capital Structure Channel of Monetary Policy

Benjamin Grosse-Rueschkamp Sascha Steffen Daniel Streitz

in: Journal of Financial Economics, No. 2, 2019

Abstract

We study the transmission channels from central banks’ quantitative easing programs via the banking sector when central banks start purchasing corporate bonds. We find evidence consistent with a “capital structure channel” of monetary policy. The announcement of central bank purchases reduces the bond yields of firms whose bonds are eligible for central bank purchases. These firms substitute bank term loans with bond debt, thereby relaxing banks’ lending constraints: banks with low tier-1 ratios and high nonperforming loans increase lending to private (and profitable) firms, which experience a growth in investment. The credit reallocation increases banks’ risk-taking in corporate credit.

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Mind the Gap: The Difference Between U.S. and European Loan Rates

Tobias Berg Anthony Saunders Sascha Steffen Daniel Streitz

in: Review of Financial Studies, No. 3, 2017

Abstract

We analyze pricing differences between U.S. and European syndicated loans over the 1992–2014 period. We explicitly distinguish credit lines from term loans. For credit lines, U.S. borrowers pay significantly higher spreads, but lower fees, resulting in similar total costs of borrowing in both markets. Credit line usage is more cyclical in the United States, which provides a rationale for the pricing structure difference. For term loans, we analyze the channels of the cross-country loan price differential and document the importance of: the composition of term loan borrowers and the loan supply by institutional investors and foreign banks.

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Working Papers

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Corporate Loan Spreads and Economic Activity

Anthony Saunders Alessandro Spina Sascha Steffen Daniel Streitz

in: SSRN Working Paper, 2021

Abstract

We use secondary corporate loan-market prices to construct a novel loan-market-based credit spread. This measure has considerable predictive power for economic activity across macroeconomic outcomes in both the U.S. and Europe and captures unique information not contained in public market credit spreads. Loan-market borrowers are compositionally different and particularly sensitive to supply-side frictions as well as financial frictions that emanate from their own balance sheets. This evidence highlights the joint role of financial intermediary and borrower balance-sheet frictions in understanding macroeconomic developments and enriches our understanding of which type of financial frictions matter for the economy.

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Capital Misallocation and Innovation

Christian Schmidt Yannik Schneider Sascha Steffen Daniel Streitz

in: SSRN Solutions Research Paper Series, 2020

Abstract

This paper documents that "zombie" lending by undercapitalized banks distorts competition and impedes corporate innovation. This misallocation of capital prevents both the exit of zombie and entry of healthy firms in affected industries adversely impacting output and competition. Worse, capital misallocation depresses patent applications, particularly in high technology- and R&D-intensive sectors, and industries with neck- and-neck competition. We strengthen our results using an IV approach to address reverse causality and innovation survey data from the European Commission. Overall, our results are consistent with externalities imposed on healthy firms through the misallocation of capital.

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