Voting under Debtor Distress
Jakub Grossmann, Štěpán Jurajda
CERGE-EI Working Paper,
No. 744,
2023
Abstract
There is growing evidence on the role of economic conditions in the recent successes of populist and extremist parties. However, little is known about the role of over-indebtedness, even though debtor distress has grown in Europe following the financial crisis. We study the unique case of the Czech Republic, where by 2017, nearly one in ten citizens had been served at least one debtor distress warrant even though the country consistently features low unemployment. Our municipality-level difference-in-differences analysis asks about the voting consequences of a rise in debtor distress following a 2001 deregulation of consumer-debt collection. We find that debtor distress has a positive effect on support for (new) extreme right and populist parties, but a negative effect on a (traditional) extreme-left party. The effects of debtor distress we uncover are robust to whether and how we control for economic hardship; the effects of debtor distress and economic hardship are of similar magnitude, but operate in opposing directions across the political spectrum.
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Banking Market Deregulation and Mortality Inequality
Iftekhar Hasan, Thomas Krause, Stefano Manfredonia, Felix Noth
Bank of Finland Research Discussion Papers,
No. 14,
2022
Abstract
This paper shows that local banking market conditions affect mortality rates in the United States. Exploiting the staggered relaxation of branching restrictions in the 1990s across states, we find that banking deregulation decreases local mortality rates. This effect is driven by a decrease in the mortality rate of black residents, implying a decrease in the black-white mortality gap. We further analyze the role of mortgage markets as a transmitter between banking deregulation and mortality and show that households' easier access to finance explains mortality dynamics. We do not find any evidence that our results can be explained by improved labor outcomes.
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The Real Effects of Universal Banking: Does Access to the Public Debt Market Matter?
Stefano Colonnello
Journal of Financial Services Research,
February
2022
Abstract
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.
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Banking Deregulation and Consumption of Home Durables
H. Evren Damar, Ian Lange, Caitlin McKennie, Mirko Moro
IWH Discussion Papers,
No. 4,
2022
Abstract
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 1989, we link the timing of these reforms with evidence of a credit expansion and household responses on many margins. We find evidence that low-income households are more likely to purchase new appliances after the deregulation. These durable goods allowed households to consume less natural gas and spend less time in domestic activities after the reforms.
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Banking Deregulation and Household Consumption of Durables
H. Evren Damar, Ian Lange, Caitlin McKennie, Mirko Moro
Abstract
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.
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What Drives Banks‘ Geographic Expansion? The Role of Locally Non-diversifiable Risk
Reint E. Gropp, Felix Noth, Ulrich Schüwer
IWH Discussion Papers,
No. 6,
2019
Abstract
We show that banks that are facing relatively high locally non-diversifiable risks in their home region expand more across states than banks that do not face such risks following branching deregulation in the 1990s and 2000s. These banks with high locally non-diversifiable risks also benefit relatively more from deregulation in terms of higher bank stability. Further, these banks expand more into counties where risks are relatively high and positively correlated with risks in their home region, suggesting that they do not only diversify but also build on their expertise in local risks when they expand into new regions.
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Enjoying the Quiet Life Under Deregulation? Evidence from Adjusted Lerner Indices for U.S. Banks
Michael Koetter, James W. Kolari, Laura Spierdijk
Review of Economics and Statistics,
No. 2,
2012
Abstract
The quiet life hypothesis posits that firms with market power incur inefficiencies rather than reap monopolistic rents. We propose a simple adjustment to Lerner indices to account for the possibility of foregone rents to test this hypothesis. For a large sample of U.S. commercial banks, we find that adjusted Lerner indices are significantly larger than conventional Lerner indices and trending upward over time. Instrumental variable regressions reject the quiet life hypothesis for cost inefficiencies. However, Lerner indices adjusted for profit inefficiencies reveal a quiet life among U.S. banks.
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Non-market Allocation in Transport: A Reassessment of its Justification and the Challenge of Institutional Transition
Ulrich Blum
50 Years of Transport Research: Experiences Gained and Major Challenges Ahead,
2005
Abstract
Economic theory knows two systems of coordination: through public choice or through the market principle. If the market is chosen, then it may either be regulated, or it may be fully competitive (or be in between these two extremes). This paper first inquires into the reasons for regulation, it analyses the reasons for the important role of government in the transportation sector, especially in the procurement of infrastructure. Historical reasons are seen as important reasons for bureaucratic objections to deregulation. Fundamental economic concepts are forwarded that suggest market failure and justify a regulatory environment. The reasons for regulation cited above, however, may be challenged; we forward theoretical concepts from industrial organization theory and from institutional economics which suggest that competition is even possible on the level of infrastructure. The transition from a strongly regulated to a competitive environment poses problems that have given lieu to numerous failures in privatization and deregulation. Structural inertia plays an important role, and the incentive-compatible management of infrastructure is seen as the key element of any liberal transportation policy. It requires that the setting of rules on the meta level satisfies both local and global efficiency ends. We conclude that, in market economies, competition and regulation should not be substitutes but complements. General rules, an "ethic of competition" have to be set that guarantee a level playing field to agents; it is complimented by institutions that provide arbitration in case of misconduct.
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Network Access Charges, Vertical Integration, and Property Rights Structure
Christian Growitsch, Thomas Wein
Energy Economics,
No. 2,
2005
Abstract
After the deregulation of the German electricity markets in 1998, the German government opted for a regulatory regime called negotiated third party access, which would be subject to ex post control by the federal cartel office. Network access charges for new competitors are based on contractual arrangements between energy producers and industrial consumers. As the electricity networks are incontestable natural monopolies, the local and regional network operators are able to set (monopolistic) charges at their own discretion, limited only by their concerns over possible interference by the federal cartel office (Bundeskartellamt). In this paper we analyse if there is evidence for varying charging behaviour depending on a supplier`s economic independence (structure of property rights) or its level of vertical integration. For this purpose we hypothesise that incorporated and vertically integrated suppliers set different charges than independent utility companies. Multivariate estimations show a relation between network access charges and the network operator’s economic independence as well as level of vertical integration. On the low voltage level, for an estimated annual consumption of 1700 kW/h, vertically integrated firms set – as predicted by our hypothesis - significantly lower access charges than vertically separated suppliers, whereas incorporated network operators charge significantly higher charges compared to independent suppliers. There is insufficient evidence available to confirm these results for other consumptions or voltage levels.
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