A Lesson Learned? Pre- and Post-Crisis Entry Decisions in Turkish Banking
H. Evren Damar
Contemporary Economic Policy,
No. 1,
2009
Abstract
This study looks at the determinants of entry by Turkish banks into local markets during the periods before and after the crisis of 2000–2001. Motivated by a theoretical model of entry, results of fixed-effects logit regressions suggest that there has been a change in the geographical diversification strategies of Turkish banks. It appears that the dominance of strategic concerns, such as competing with banks of similar size, has diminished, while economic concerns, such as incumbent characteristics and cost considerations, have become more important. Overall, the postcrisis restructuring policies seem to have led to improved decision making in the sector.
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The Euro and the Competitiveness of European Firms
Filippo di Mauro, Gianmarco Ottaviano, Daria Taglioni
Economic Policy,
No. 57,
2009
Abstract
Much attention has been paid to the impact of a single currency on actual trade volumes. Lower trade costs, however, matter over and beyond their effects on trade flows: as less productive firms are forced out of business by the tougher competitive conditions of international markets, economic integration fosters lower prices and higher average productivity. We assess the quantitative relevance of these effects calibrating a general equilibrium model using country, sector and firm-level empirical observations. The euro turns out to have increased the overall competitiveness of Eurozone firms, and the effects differ along interesting dimensions: they tend to be stronger for countries which are smaller or with better access to foreign markets, and for firms which specialize in sectors where international competition is fiercer and barriers to entry lower.— Gianmarco I.P. Ottaviano, Daria Taglioni and Filippo di Mauro
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Contestability, Technology and Banking
S. Corvoisier, Reint E. Gropp
ZEW Discussion Papers, No. 09-007,
No. 7,
2009
Abstract
We estimate the effect of internet penetration on retail bank margins in the euro area. Based on an adapted Baumol [1982] type contestability model, we argue that the internet has reduced sunk costs and therefore increased contestability in retail banking. We test this conjecture by estimating the model using semi-aggregated data for a panel of euro area countries. We utilise time series and cross-sectional variation in internet penetration. We find support for an increase in contestability in deposit markets, and no effect for loan markets. The paper suggests that for time and savings deposits, the presence of brick and mortar bank branches may no longer be of first order importance for the assessment of the competitive structure of the market.
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Globalisation and the Competitiveness of the Euro Area
Filippo di Mauro, Katrin Forster
ECB Occasional Paper Series,
No. 97,
2008
Abstract
Against the background of increasing competition and other significant structural changes implied by globalisation, maintaining and enhancing competitiveness has evolved into one of the prime concerns in most countries. Following up on previous work (see in particular ECB Occasional Papers No. 30 and No. 55), this Occasional Paper examines the latest developments and prospects for the competitiveness and trade performance of the euro area and the euro area countries. Starting from an analysis of most commonly used, traditional competitiveness indicators, the paper largely confirms the findings of previous studies that there have been substantial adjustments in euro area trade. Euro area firms have taken advantage of the new opportunities offered by globalisation, and have at the same time been increasingly challenged by emerging economies. This is primarily reflected in the loss of export market shares which have been recorded over the last decade. While these can partly be related to the losses in the euro area's price competitiveness, further adjustment also seems warranted with regard to the export specialisation. Compared with other advanced competitors, the euro area remains relatively more specialised in labour intensive categories of goods and has shown only a few signs of a stronger specialisation in research-intensive goods. Nevertheless, the paper generally calls for a more cautious approach when assessing the prospects for euro area competitiveness, as globalisation has made it increasingly difficult to define and measure competitiveness. Stressing the need to take a broader view on competitiveness, specifically with a stronger emphasis on productivity performance, the paper also introduces a more elaborate framework that takes into account the interactions between country-specific factors and firm-level productivity. It thus makes it possible to construct more broadly defined competitiveness measures. Pointing to four key factors determining the global competitiveness of euro area countries - market accessibility, market size, technological leadership of firms and institutional set-up - the analysis provides further arguments for continuing efforts to increase market integration and strengthen the competitive environment within Europe as a mean of enhancing resource allocation and coping with the challenges globalisation creates.
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Softening Competition by Inducing Switching in Credit Markets: A Correction
Jan Bouckaert, Hans Degryse, Jorge Fernández-Ruiz, Miguel García-Cestona
Journal of Industrial Economics,
No. 3,
2008
Abstract
In a recent article in this journal, Bouckaert and Degryse [2004] (denoted B&D) present a model in which banks strategically commit to disclosing borrower information. In this note, we point out an error in B&D and show that, although banks' information disclosure may indeed arise in equilibrium, it only does so if adverse selection is not too harsh.
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Monetary Policy and Financial (In)stability: An Integrated Micro–Macro Approach
Ferre De Graeve, Thomas Kick, Michael Koetter
Journal of Financial Stability,
No. 3,
2008
Abstract
Evidence on central banks’ twin objective, monetary and financial stability, is scarce. We suggest an integrated micro–macro approach with two core virtues. First, we measure financial stability directly at the bank level as the probability of distress. Second, we integrate a microeconomic hazard model for bank distress and a standard macroeconomic model. The advantage of this approach is to incorporate micro information, to allow for non-linearities and to permit general feedback effects between financial distress and the real economy. We base the analysis on German bank and macro data between 1995 and 2004. Our results confirm the existence of a trade-off between monetary and financial stability. An unexpected tightening of monetary policy increases the probability of distress. This effect disappears when neglecting microeffects and non-linearities, underlining their importance. Distress responses are largest for small cooperative banks, weak distress events, and at times when capitalization is low. An important policy implication is that the separation of financial supervision and monetary policy requires close collaboration among members in the European System of Central Banks and national bank supervisors.
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Parenting Benefit – A New Risk for Companies
Nicole Nulsch, Henry Dannenberg
Wirtschaft im Wandel,
No. 7,
2008
Abstract
Mit dem zum 1. Januar 2007 neu eingeführten Elterngeld verfolgt der Gesetzgeber unter anderem das Ziel, mehr Väter für eine Elternzeit zu begeistern. Bislang wurden die Auswirkungen des Elterngelds insbesondere aus familienpolitischer Perspektive betrachtet. Ziel dieses Beitrags ist es jedoch, die unternehmenspolitischen Folgen des Elterngelds zu untersuchen.
Die Entwicklung der Elterngeldanträge im Jahr 2007 deutet darauf hin, dass zunehmend mehr Väter von der Elternzeit Gebrauch machen. Dabei handelt es sich in mehr als der Hälfte der Fälle um berufstätige Väter. Konnten Unternehmen in der Vergangenheit das Risiko, dass eine wichtige Position im Unternehmen für einen längeren Zeitraum aufgrund der Geburt eines Kindes unbesetzt ist, verhältnismäßig einfach dadurch senken, indem ein Mann beschäftigt wurde, wird diese Strategie in Zukunft an Bedeutung verlieren. Es ist zu erwarten, dass dieses veränderte Risikoumfeld einerseits die Karrierechancen der Frauen verbessern und zu einer Verringerung der Lohnlücke zwischen den Geschlechtern beitragen kann. Es ist jedoch auch zu erwarten, dass sich die Risikosituation der Unternehmen insgesamt verschlechtert und bei gegebener Risikotragfähigkeit bisher tragbare Risiken zukünftig nicht mehr eingegangen werden können, was sich negativ auf die wirtschaftliche Entwicklung auswirken könnte.
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International Financial Integration and Stability: On the Causes of the International Banking Crisis 2007/08 and Some Preliminary Lessons.
Diemo Dietrich, Achim Hauck
Wirtschaft im Wandel,
No. 5,
2008
Abstract
Die gemeinhin als „Subprime-Krise“ bezeichneten Turbulenzen auf den internationalen Finanzmärkten beherrschen, seitdem sich im vergangenen Sommer ihre ersten Symptome aufzeigten, weltweit die wirtschaftspolitische Diskussion. Dabei stand zunächst die Frage im Vordergrund, ob und welche Maßnahmen kurzfristig erforderlich sind, um das internationale Finanzsystem zu stabilisieren und mögliche negative realwirtschaftliche Auswirkungen der Krise zu begrenzen. In jüngerer Zeit wird darüber hinausgehend verstärkt diskutiert, welche grundsätzlichen Lehren aus den Ereignissen gezogen werden können und welche Konsequenzen sich für die zukünftige Ausgestaltung nationaler und internationaler Rahmenbedingungen für die internationale Finanzintegration ergeben. In der bisherigen Diskussion wurde eine Vielzahl unterschiedlicher Einzelfaktoren als ursächlich für die Krise betrachtet und mehr oder weniger isoliert voneinander hinsichtlich ihrer möglichen wirtschaftspolitischen Implikationen untersucht. Die Frage nach der Existenz einer gemeinsamen Quelle für diese vielen mutmaßlichen Gründe ist mithin bislang noch nicht in hinreichendem Maß beantwortet, sodass aus der Krise noch keine über Teilaspekte hinausgehende grundsätzlichen Erkenntnisse für die Wirtschaftspolitik abgeleitet werden konnten.
Der vorliegende Beitrag befasst sich zum einen mit der Frage nach der Hauptursache der Krise. Es wird aufgezeigt, dass sie zu einem bedeutenden Teil auf die Integration vormals peripherer und institutionell schwach entwickelter Volkswirtschaften in die Weltwirtschaft und die damit verbundenen globalen Ungleichgewichte zurückgeführt werden kann. Entsprechend ist die Krise nicht nur in ihrer Wirkung, sondern vor allem in ihrer Ursache ein globales und kein vorrangig US-amerikanisches Phänomen. Auf der Grundlage dieses Befunds werden vorläufige Lehren aus der Subprime-Krise für eine stabilitätsorientierte Wirtschaftspolitik in einer integrierten Weltwirtschaft gezogen.
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Deeper, Wider and More Competitive? Monetary Integration, Eastern Enlargement and Competitiveness in the European Union
Gianmarco Ottaviano, Daria Taglioni, Filippo di Mauro
ECB Working Paper,
No. 847,
2008
Abstract
What determines a country’s ability to compete in international markets? What fosters the global competitiveness of its firms? And in the European context, have key elements of the EU strategy such as EMU and enlargement helped or hindered domestic firms’ competitiveness in local and global markets? We address these questions by calibrating and simulating a conceptual framework that, based on Melitz and Ottaviano (2005), predicts that tougher and more transparent international competition forces less productive firms out the market, thereby increasing average productivity as well as reducing average prices and mark-ups. The model also predicts a parallel reduction of price dispersion within sectors. Our conceptual framework allows us to disentangle the effects of technology and freeness of entry from those of accessibility. On the one hand, by controlling for the impact of trade frictions, we are able to construct an index of ‘revealed competitiveness’, which would drive the relative performance of countries in an ideal world in which all faced the same barriers to international transactions. On the other hand, by focusing on the role of accessibility while keeping ‘revealed competitiveness’ as given, we are able to evaluate the impacts of EMU and enlargement on the competitiveness of European firms. We find that EMU positively affects the competitiveness of firms located in participating economies. Enlargement has, instead, two contrasting effects. It improves the accessibility of EU members but it also increases substantially the relative importance of unproductive competitors from Eastern Europe. JEL Classification: F12, R13.
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Does Post-Crisis Restructuring Decrease the Availability of Banking Services? The Case of Turkey
H. Evren Damar
Journal of Banking and Finance,
No. 9,
2007
Abstract
This study examines the relationship between post-crisis bank consolidation and the number of bank branches in Turkey. Using a unique data set, the analysis addresses several issues related to the impact of market characteristics on branching behavior. The findings suggest that sales of failed institutions by the central authority lead to branch closures in small and uncompetitive markets where the buyer does not have a prior presence. Contrary to popular belief, mergers between healthy institutions do not always cause a decrease in the number of branches; rather, they are shown to increase the availability of banking services in concentrated markets.
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