Banks Fearing the Drought? Liquidity Hoarding as a Response to Idiosyncratic Interbank Funding Dry-ups
Helge Littke, Matias Ossandon Busch
IWH Discussion Papers,
No. 12,
2018
Abstract
Since the global financial crisis, economic literature has highlighted banks’ inclination to bolster up their liquid asset positions once the aggregate interbank funding market experiences a dry-up. To this regard, we show that liquidity hoarding and its detrimental effects on credit can also be triggered by idiosyncratic, i.e. bankspecific, interbank funding shocks with implications for monetary policy. Combining a unique data set of the Brazilian banking sector with a novel identification strategy enables us to overcome previous limitations for studying this phenomenon as a bankspecific event. This strategy further helps us to analyse how disruptions in the bank headquarters’ interbank market can lead to liquidity and lending adjustments at the regional bank branch level. From the perspective of the policy maker, understanding this market-to-market spillover effect is important as local bank branch markets are characterised by market concentration and relationship lending.
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Urban Occupational Structures as Information Networks: The Effect on Network Density of Increasing Number of Occupations
Shade T. Shutters, José Lobo, Rachata Muneepeerakul, Deborah Strumsky, Charlotta Mellander, Matthias Brachert, Teresa Farinha, Luis M. A. Bettencourt
Plos One,
forthcoming
Abstract
Urban economies are composed of diverse activities, embodied in labor occupations, which depend on one another to produce goods and services. Yet little is known about how the nature and intensity of these interdependences change as cities increase in population size and economic complexity. Understanding the relationship between occupational interdependencies and the number of occupations defining an urban economy is relevant because interdependence within a networked system has implications for system resilience and for how easily can the structure of the network be modified. Here, we represent the interdependencies among occupations in a city as a non-spatial information network, where the strengths of interdependence between pairs of occupations determine the strengths of the links in the network. Using those quantified link strengths we calculate a single metric of interdependence–or connectedness–which is equivalent to the density of a city’s weighted occupational network. We then examine urban systems in six industrialized countries, analyzing how the density of urban occupational networks changes with network size, measured as the number of unique occupations present in an urban workforce. We find that in all six countries, density, or economic interdependence, increases superlinearly with the number of distinct occupations. Because connections among occupations represent flows of information, we provide evidence that connectivity scales superlinearly with network size in information networks.
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Public Investment Subsidies and Firm Performance – Evidence from Germany
Matthias Brachert, Eva Dettmann, Mirko Titze
Jahrbücher für Nationalökonomie und Statistik,
No. 2,
2018
Abstract
This paper assesses firm-level effects of the single largest investment subsidy programme in Germany. The analysis considers grants allocated to firms in East German regions over the period 2007 to 2013 under the regional policy scheme Joint Task ‘Improving Regional Economic Structures’ (GRW). We apply a coarsened exact matching (CEM) in combination with a fixed effects difference-in-differences (FEDiD) estimator to identify the effects of programme participation on the treated firms. For the assessment, we use administrative data from the Federal Statistical Office and the Offices of the Länder to demonstrate that this administrative database offers a huge potential for evidence-based policy advice. The results suggest that investment subsidies have a positive impact on different dimensions of firm development, but do not affect overall firm competitiveness. We find positive short- and medium-run effects on firm employment. The effects on firm turnover remain significant and positive only in the medium-run. Gross fixed capital formation responses positively to GRW funding only during the mean implementation period of the projects but becomes insignificant afterwards. Finally, the effect of GRW-funding on labour productivity remains insignificant throughout the whole period of analysis.
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Early-Stage Business Formation: An Analysis of Applications for Employer Identification Numbers
Kimberly Bayard, Emin Dinlersoz, Timothy Dunne, John Haltiwanger, Javier Miranda, John Stevens
NBER Working Paper,
No. 24364,
2018
Abstract
This paper reports on the development and analysis of a newly constructed dataset on the early stages of business formation. The data are based on applications for Employer Identification Numbers (EINs) submitted in the United States, known as IRS Form SS-4 filings. The goal of the research is to develop high-frequency indicators of business formation at the national, state, and local levels. The analysis indicates that EIN applications provide forward-looking and very timely information on business formation. The signal of business formation provided by counts of applications is improved by using the characteristics of the applications to model the likelihood that applicants become employer businesses. The results also suggest that EIN applications are related to economic activity at the local level. For example, application activity is higher in counties that experienced higher employment growth since the end of the Great Recession, and application counts grew more rapidly in counties engaged in shale oil and gas extraction. Finally, the paper provides a description of new public-use dataset, the “Business Formation Statistics (BFS),” that contains new data series on business applications and formation. The initial release of the BFS shows that the number of business applications in the 3rd quarter of 2017 that have relatively high likelihood of becoming job creators is still far below pre-Great Recession levels.
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Does Administrative Status Matter for Urban Growth? – Evidence from Present and Former County Capitals in East Germany
Bastian Heider, Martin T. W. Rosenfeld, Albrecht Kauffmann
Growth and Change,
No. 1,
2018
Abstract
Public sector activities are often neglected in the economic approaches used to analyze the driving forces behind urban growth. The institutional status of a regional capital is a crucial aspect of public sector activities. This paper reports on a quasi-natural experiment on county towns in East Germany. Since 1990, cities in East Germany have demonstrated remarkable differences in population development. During this same period, many towns have lost their status as a county seat due to several administrative reforms. Using a difference-in-difference approach, the annual population development of former county capitals is compared to population change in towns that have successfully held on to their capital status throughout the observed period. The estimations show that maintaining county capital status has a statistically significant positive effect on annual changes in population. This effect is furthermore increasing over time after the implementation of the respective reforms.
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Evaluierung des Einsatzes von Fördermitteln im Rahmen der Gemeinschaftsaufgabe „Verbesserung der regionalen Wirtschaftsstruktur“ (GRW) in Thüringen für den Zeitraum 2011 – 2016
Matthias Brachert, Hans-Ulrich Brautzsch, Eva Dettmann, Alexander Giebler, Peter Haug, Gerhard Heimpold, Mirja Meyborg, Esther Schnabl, Lutz Schneider, Thomas Stahlecker, Mirko Titze, Andrea Zenker
IWH Online,
No. 1,
2018
Abstract
Die Investitionszuschüsse im Rahmen der Gemeinschaftsaufgabe „Verbesserung der regionalen Wirtschaftsstruktur“ (GRW) stellen nach wie vor das quantitativ bedeutendste Förderinstrument mit explizit regionaler Zielsetzung in Deutschland dar. Das Oberziel dieses Programms besteht in der Reduzierung regionaler Disparitäten. Es soll damit einen Beitrag zu dem im Grundgesetz Artikel 72(2) verankerten Ziel der Herstellung gleichwertiger Lebensverhältnisse im Bundesgebiet leisten. Auf der Mikroebene, d. h. der Ebene der Betriebe, zielt die GRW auf die Schaffung und Sicherung dauerhafter und hochwertiger Arbeitsplätze. Dadurch sollen – so das Ziel auf der Makroebene – strukturschwache Gebiete Anschluss an die allgemeine Wirtschaftsentwicklung in Deutschland halten und nicht dauerhaft zurückfallen.
Die Eckpunkte für den Einsatz dieses Programms legen der Bund und die Länder im GRW-Koordinierungsrahmen fest. Jedoch können die Länder weitere Eingrenzungen gegenüber diesen allgemeinen Regelungen vornehmen, um auf die regionalspezifischen Bedingungen vor Ort Rücksicht zu nehmen.
Mit dem Koalitionsvertrag für die 18. Legislaturperiode auf der Bundesebene wurde die Aufgabe einer Weiterentwicklung eines Systems der Förderung strukturschwacher Regionen festgelegt (vgl. CDU, CSU und SPD 2013). Die Weiterentwicklung des Fördersystems wird vor allem deshalb notwendig, weil sich die finanzpolitischen und beihilferechtlichen Rahmenbedingungen – insbesondere in den neuen Ländern – in naher Zukunft weiter verändern werden (Auslaufen der Sonderbedarfs-Bundesergänzungszuweisungen, Greifen der Schuldenbremse, Einschränkung der Fördermöglichkeiten durch das EU-Beihilferecht). Erste Überlegungen zur Anpassung des Fördersystems sehen im Kern eine reformierte GRW vor, die im Zusammenspiel mit wirtschaftsnahen Förderprogrammen (vornehmlich FuE- sowie KMU-Programme des Bundes) sowie nicht unmittelbar wirtschaftsnahen Förderprogrammen (bspw. Städtebauförderung) zum Einsatz kommen soll. Eine Empfehlung für die reformierte GRW lautet, die bisherigen Fördervoraussetzungen (insbesondere Primäreffekt, besondere Anstrengung, Begrenzung der Förderung pro Arbeitsplatz) auf den Prüfstand zu stellen und verstärkt Augenmerk auf Netzwerkbildung, Forschungs- und Innovationsförderung zu richten (vgl. GEFRA, RUFIS 2016).
In der jüngeren Vergangenheit ist das Bewusstsein bei den wirtschaftspolitischen Verantwortungsträgern dafür gewachsen, dass staatliche Eingriffe umfassenden Evaluationen unterzogen werden sollten (vgl. Brachert et al. 2015). Gegenstand ist die Beantwortung der Frage, ob ein Programm eine (kausale) Wirkung auf ex ante bestimmte ökonomische Zielvariablen entfaltet (Effektivität) und ob die Fördermittel tatsächlich in die beste Verwendung fließen (Effizienz). Das Programmmanagement der GRW nimmt diesbezüglich zweifelsohne eine Vorreiterrolle in Deutschland, ein, auch wenn viele Fragen noch nicht abschließend beantwortet sind (vgl. WissBeirat BMWi 2013 und 2015).
Von 1991-2016 setzte der Freistaat Thüringen GRW-Mittel im Umfang von ungefähr 9,5 Mrd. Euro ein. In den 1990er Jahren betrug das jährliche GRW-Volumen noch zwischen rund 300 und knapp 900 Mio. Euro. Seit Ende der 1990er Jahre – mit Ausnahme der Zeit der Wirtschafts- und Finanzkrise zwischen 2008 und 2013 – ist der Umfang der GRW-Mittel kontinuierlich abgeschmolzen. Im Jahr 2016 wurden „nur“ noch 157 Mio. Euro an GRW-Mitteln im Freistaat Thüringen eingesetzt. Dies bedeutet, dass die Höhe der Anreize, die heute mit der GRW gesetzt werden können, geringer ist.
Nach einem bedeutenden Anstieg der wirtschaftlichen Leistungsfähigkeit im Gefolge der Wiederherstellung der Deutschen Einheit ist der Aufholprozess Ostdeutschlands seit Mitte der 1990er Jahre ins Stocken geraten. Neuere Untersuchungen zur wirtschaftlichen Entwicklung in den neuen Ländern weisen darauf hin, dass der Aufbau eines modernen Kapitalstocks (welcher im Fokus der GRW steht) und die Reallokation von Ressourcen von weniger produktiven Bereichen in Bereiche mit höherer Produktivität – die den Aufholprozess in der ersten Phase maßgeblich getrieben haben – für den weiteren Angleichungsprozess nur wenig zusätzliche Impulse setzen können. Dagegen spielen in der nächsten Phase des Aufholprozesses Humankapital und Innovationen die entscheidende Rolle (vgl. Brautzsch et al. 2016).
Vor diesem Hintergrund ist die ausgeschriebene Studie angelegt. Sie zielt darauf ab, den Einsatz der GRW-Mittel ex post vor dem Hintergrund der wirtschaftlichen Entwicklung und der Zielsetzungen der GRW und der Förderpolitik des Thüringer Ministeriums für Wirtschaft, Wissenschaft und Digitale Gesellschaft (TMWWDG) zu analysieren, und konkrete Empfehlungen für die Weiterentwicklung und künftige Ausrichtung der Thüringer GRW-Förderung und der sie begleitenden Programme Thüringen-Invest sowie Thüringen-Dynamik zu geben. Die nächste bedeutende Änderung wird die Anpassung der Förderhöchstsätze der prä-definierten C-Fördergebiete an diejenigen der nicht prä-definierten (vornehmlich in Westdeutschland beheimateten) C-Fördergebiete sein (Absenkung der Förderhöchstsätze um 5 Prozentpunkte; vgl. Leitlinien für staatliche Beihilfen mit regionaler Zielsetzung 2014 – 2020 – Regionalleitlinien [RLL] [ABl. C 209 vom 23.7.2013, S. 1]).
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When Arm’s Length is too Far: Relationship Banking over the Credit Cycle
Thorsten Beck, Hans Degryse, Ralph De Haas, Neeltje van Horen
Journal of Financial Economics,
No. 1,
2018
Abstract
We conduct face-to-face interviews with bank CEOs to classify 397 banks across 21 countries as either relationship or transaction lenders. We then use the geographic coordinates of these banks’ branches and of 14,100 businesses to analyze how the lending techniques of banks in the vicinity of firms are related to credit constraints at two contrasting points of the credit cycle. We find that while relationship lending is not associated with credit constraints during a credit boom, it alleviates such constraints during a downturn. This positive role of relationship lending is stronger for small and opaque firms and in regions with a more severe economic downturn. Moreover, our evidence suggests that relationship lending mitigates the impact of a downturn on firm growth and does not constitute evergreening of loans.
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Economic Transition in Unified Germany and Implications for Korea
Hyung-Gon Jeong, Gerhard Heimpold
H.-G. Jeong and G. Heimpold (eds.): Economic Transition in Unified Germany and Implications for Korea. Policy References 17-13. Sejong: Korea Institute for International Economic Policy,
2017
Abstract
The reunification of Germany, which marked the end of the Cold War in the 20th century, is regarded as one of the most exemplary cases of social integration in human history. Nearly three decades after the German reunification, the economic and social shocks that occurred at the beginning of the reunification process have largely been resolved. Moreover, the unified Germany has grown into one of the most advanced economies in the world.
The unification process that Germany underwent may not necessarily be the way that the Republic of Korea would choose. However, the economic and social exchanges between East and West Germany prior to unification, and the cooperation in a myriad of policies based on these exchanges, served as the crucial foundation for unification. The case of Germany will surely help us find a better way for the re-unification of the Korean Peninsula.
In this context, this is the first edition of a joint research which provides diverse insights on social and economic issues during the process of unification. It consists of nine chapters whose main topics include policies on macroeconomic stabilization, the privatization of state-owned enterprises in East Germany, labor policies and the migration of labor, integration of the social safety nets of the North and South, and securing finances for reunification. To start with, the first part covers macroeconomic stabilization measures, which include policies implemented by the federal government of Germany to overcome macroeconomic shocks directly after the reunification. There was a temporary setback in the economy at the initial phase of reunification as the investment per GDP went down and the level of fiscal debt escalated, reverting to its original trend prior to the reunification. While it appears the momentum for growth was compromised by reunification from the perspective of growth rate of real GDP, this state did not last long and benefits have outpaced the costs since 2000.
In the section which examines the privatization of state-owned enterprises in East Germany, an analysis was conducted on the modernization of industrial infrastructure of East German firms. There was a surge in investment in East German area at the beginning stages but this was focused on a specific group of firms. Most of the firms were privatized through unofficial channels, with a third of these conducted in a management buy-out (MBO) process that was highly effective. Further analysis of a firm called Jenoptik, which was successfully bailed out, is incorporated as to draw implications of its accomplishments.
In the section on migration, we examine how the gap between the unemployment rates in the West and East have narrowed as the population flow shifted from the West to East. Consequently, there was no significant deviation in terms of the Gross Regional Domestic Product (GRDP) per capita in each state of East Germany. However, as the labor market stabilized in East Germany and population flows have weakened, the deviation will become larger. Meanwhile, if we make a prediction about the movement of population between the North and the South, which show a remarkable difference in their economic circumstances, a radical reunification process such as Germany’s case would force 7% of the population of the North to move towards the South. Upon reunification, the estimated unemployment rate in North Korea would remain at least 30% for the time being. In order to reduce the initial unemployment rate, it is crucial to design a program that trains the unemployed and to build a system that predicts changes in labor demand.
It seems nearly impossible to apply the social safety nets of the South to the North, as there is a systemic difference in ideologies. Taking steps toward integration would be the most suitable option in the case of the Koreas. We propose to build a sound groundwork for stabilizing the interest rates and exchange rates, maintain stable fiscal policies, raise momentum for economic growth and make sure people understand the means required to financially support the North in order to reduce the gap between the two.
This book was jointly organized and edited by Dr. Hyung-gon Jeong of the Korea Institute for International Economic Policy (KIEP) and Dr. Gerhard Heimpold of the Halle Institute for Economic Research (IWH). We believe that this report, which examines numerous social and economic agendas that emerged during the reunification of Germany, will provide truly important reference for both Koreas. It is also our view that it will serve as a stepping-stone to establish policies in regard to South-North exchanges across numerous sectors prior to discussions of reunification. KIEP will continue to work with IWH and contribute its expertise to the establishment of grounds for unification policies.
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