Loose (Interview)
Als es in Halle noch kaum Wohnungen gab ... Brigitte Loose über die Gründung und Entwicklungen des IWH When there were almost no flats in Halle yet ... Brigitte Loose about IWH's…
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Research Departments
Research Departments Research at IWH is organised in a matrix. As the primary organisational units, the research departments have been established on a medium to long-term basis.…
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Projects
Our Projects 07.2022 ‐ 12.2026 Evaluation of the InvKG and the federal STARK programme On behalf of the Federal Ministry of Economics and Climate Protection, the IWH and the RWI…
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Internships
Internship at Halle Institute for Economic Research (IWH) Interested in gaining an authentic insight in the interesting daily business and the variable tasks of an institute for…
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Research Groups
Our Research Groups Banking, Regulation, and Incentive Structures Data Science in Financial Economics Econometric Tools for Macroeconomic Forecasting and Simulation Education,…
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IWH-DPE Call for Applications – Fall 2020 Intake
Vacancy The Halle Institute for Economic Research (IWH) is one of Germany’s leading economic research institutes. The IWH focuses on research in macroeconomics, financial…
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The Impact of Lowering Carbon Emissions on Corporate Labour Investment: A Quasi-Natural Experiment
June Cao, Iftekhar Hasan, Wenwen Li
Energy Economics,
May
2023
Abstract
We examine the impact of low-carbon city (LCC) initiatives on labour investment decisions (quantity, quality, and well-being). Using a time-varying difference-in-differences approach based on staggered implementations of such a pilot program, we report an inefficient outcome - absolute deviation of labour investment from the optimal net hiring – especially for firms in labour-intensive industries and firms with high financial slack or adjustment costs. We, however, observe increased investments in highly skilled personnel and compensated with employee stock ownership, especially by firms under intense pressure to reduce carbon emissions. Such initiatives are also closely associated with the significant enhancement of workplace safety. Overall, LCC helps to upgrade the corporate labour structure by hiring more skilled employees through reduced agency problems and heightened green innovation.
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The Impact of Delay: Evidence from Formal out-of-Court Restructuring
Stjepan Srhoj, Dejan Kovač, Jacob N. Shapiro, Randall K. Filer
Journal of Corporate Finance,
February
2023
Abstract
Different types of bankruptcy restructuring procedures are used in most legal systems to decide the fate of businesses facing financial hardship. We study how bargaining failures in an under-researched type of restructuring procedure, a formal out-of-the court procedure impacts the economic performance of participating firms. Croatia introduced a “pre-bankruptcy settlement” (PBS) process in the wake of the Great Recession of 2007–2009. A novel dataset provides us with annual financial statements for both sides of more than 180,000 debtor–creditor pairs, enabling us to address selection into failed negotiations by matching a rich set of creditor and debtor characteristics. Failures to settle at the PBS stage due to idiosyncratic bargaining problems, which effectively delay entry into the standard bankruptcy procedure, lead to a lower rate of survival among debtors as well as reduced employment, revenue, and profits. We are the first study to track how bargaining failures diffuse through the network of creditors, finding a significant negative effect on small creditors, but not others. Our results highlight the impact of delay and the importance of structuring bankruptcy procedures, to rapidly resolve uncertainty about firms’ future prospects.
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Correlation Scenarios and Correlation Stress Testing
Natalie Packham, Fabian Wöbbeking
Journal of Economic Behavior and Organization,
January
2023
Abstract
We develop a general approach for stress testing correlations of financial asset portfolios. The correlation matrix of asset returns is specified in a parametric form, where correlations are represented as a function of risk factors, such as country and industry factors. A sparse factor structure linking assets and risk factors is built using Bayesian variable selection methods. Regular calibration yields a joint distribution of economically meaningful stress scenarios of the factors. As such, the method also lends itself as a reverse stress testing framework: using the Mahalanobis distance or Highest Density Regions (HDR) on the joint risk factor distribution allows to infer worst-case correlation scenarios. We give examples of stress tests on a large portfolio of European and North American stocks.
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Surges and Instability: The Maturity Shortening Channel
Xiang Li, Dan Su
Journal of International Economics,
November
2022
Abstract
Capital inflow surges destabilize the economy through a maturity shortening mechanism. The underlying reason is that firms have incentives to redeem their debt on demand to accommodate the potential liquidity needs of global investors, which makes international borrowing endogenously fragile. Based on a theoretical model and empirical evidence at both the firm and macro levels, our main findings are twofold. First, a significant association exists between surges and shortened corporate debt maturity, especially for firms with foreign bank relationships and higher redeployability. Second, the probability of a crisis following surges with a flattened yield curve is significantly higher than that following surges without one. Our study suggests that debt maturity is the key to understand the financial instability consequences of capital inflow bonanzas.
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