Bank-Firm Relationships and International Banking Markets
Hans Degryse, Steven Ongena
International Journal of the Economics of Business,
No. 3,
2002
Abstract
This paper reviews how long-term relationships between firms and banks shape the structure and integration of banking markets worldwide. Bank relationships arise to span informational asymmetries that are endemic in financial markets. Firm-bank relationships not only entail specific benefits and costs for both the engaged firms and banks, but also directly affect the structure of banking markets. In particular, the sunk cost of screening and monitoring activities and the 'informational capital' collected by the incumbent banks may act as a barrier to entry. The intensity of the existing firm-bank relationships will determine the height of this barrier and shape the structure of international banking markets. For example, in Scandinavia where firms maintain few and strong relationships, foreign banks may only be able to enter successfully through mergers and acquisitions. On the other hand, Southern European firms maintain many bank relationships. Therefore, banks may consider entering Southern European banking markets through direct investment.
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Are the Central and Eastern European Transition Countries still vullnerable to an Financial Crisis? Results from the Signals Approach
Axel Brüggemann, Thomas Linne
IWH Discussion Papers,
No. 157,
2002
Abstract
The aim of the paper is to analyse the vulnerability of the Central and Eastern European accession countries to the EU as well as that of Turkey and Russia to a financial crisis. Our methodology is an extension of the signals approach. We develop a composite indicator to measure the evolution of the risk potential in each country. Our findings show that crises in Central and Eastern Europe are caused by much the usual suspects as in others emerging markets. In particular an overvalued exchange rate, weak exports and dwindling currency reserves have good predictive power for assessing crisis vulnerabilities.
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Financial fragility and exchange rate arrangements of EU candidate countries
Hubert Gabrisch
IWH Discussion Papers,
No. 156,
2002
Abstract
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Analysing UDROP: An instrument for stabilizing the international financial architecture
Axel Lindner
International Finance,
No. 1,
2001
Abstract
This paper analyses implications of a proposal, called UDROP, to reform the standards of international debt contracts. The idea is to give borrowers a roll-over option at maturity for a specified length of time. Using recently developed models of financial crises, the paper shows for which type of crisis UDROP is beneficial. Moral hazard of the borrower is one of the problems UDROP faces which can be addressed by appropriately designing the debt contract.
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Rating Agency Actions and the Pricing of Debt and Equity of European Banks: What Can we Infer About Private Sector Monitoring of Bank Soundness?
Reint E. Gropp, A. J. Richards
Economic Notes,
No. 3,
2001
Abstract
The recent consultative papers by the Basel Committee on Banking Supervision has raised the possibility of an explicit role for external rating agencies in the assessment of the credit risk of banks’ assets, including interbank claims. Any judgement on the merits of this proposal calls for an assessment of the information contained in credit ratings and its relationship to other publicly available information on the financial health of banks and borrowers. We assess this issue via an event study of rating change announcements by leading international rating agencies, focusing on rating changes for European banks for which data on bond and equity prices are available. We find little evidence of announcement effects on bond prices, which may reflect the lack of liquidity in bond markets in Europe during much of our sample period. For equity prices, we find strong effects of ratings changes, although some of our results may suffer from contamination by contemporaneous news events. We also test for pre-announcement and post-announcement effects, but find little evidence of either. Overall, our results suggest that ratings agencies may perform a useful role in summarizing and obtaining non-public information on banks and that monitoring of banks’ risk through bond holders appears to be relatively limited in Europe. The relatively weak monitoring by bondholders casts some doubt on the effectiveness of a subordinated debt requirement as a supervisory tool in the European context, at least until bond markets are more developed.
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System change in statutory pension insurance does not solve the intergenerational distribution conflict
Olaf Fuchs
Wirtschaft im Wandel,
No. 16,
2000
Abstract
Der Mechanismus eines Umlageverfahren wird modelltheoretisch analysiert und mit dem des Kapitaldeckungsverfahrens verglichen. Es wird gezeigt, dass der wesentliche Unterschied des Umlageverfahrens eine Subventionierung der ersten Generationen auf Kosten später geborener Generationen ist. Der Übergang von einem Umlageverfahren zu einem Kapitaldeckungsverfahren kann daher die nachfolgenden Generationen nicht entlasten.
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Pension Reform in Hungary
Peter Gedeon
IWH-Sonderhefte,
No. 5,
2000
Abstract
In Hungary social policy reforms in general and the pension reform in particular followed the introduction of the institutions of market economy with a considerable time lag, if at all. Although it was clear from the outset that the communist welfare state could not be sustained, comprehensive institutional reforms in the pension or health care systems were not introduced in the first six years of the postsocialist transition. This uneasiness to reform the social security systems has to do with the contradicting constraints decision makers have to face in the process of systemic change.
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Financial crisis and problems yet to solve - Conference proceedings
IWH-Sonderhefte,
No. 6,
2000
Abstract
Since the beginning of 1997, a currency and/or banking crisis broke out in several transition countries (Bulgaria, Romania, the Czech Republic, Russia, Ukraine). In 1995, Hungary avoided a financial crisis by adjusting properly her macroeconomic policies. Financial markets in transition countries are still small. They gain, however, more and more importance for the entire economy. Part of the countries mentioned are candidates for EU membership. They have to show their ability to stabilize their exchange rates and financial sectors. The fact that overcoming the financial crisis in Asia and Latin America required international assistance (e.g. IMF) underlines the political importance of strategies of preventing such crises in the EU's immediate neighborhood.
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Labor market policy efficiency in the New Länder – An assessment of the past and approaches for future reforms -
Hilmar Schneider, Olaf Fuchs, Wolfram Kempe, Jürgen Kolb, Birgit Schultz, Annette Bergemann, Martin T. W. Rosenfeld
IWH-Sonderhefte,
No. 3,
2000
Abstract
Im Juli 1999 hat das Bundesministerium der Finanzen dem IWH den Auftrag erteilt, eine Studie unter dem Titel „Steigerung der Effizienz und Effektivität der Arbeitsmarktpolitik in den neuen Ländern“ zu erstellen. Fast zehn Jahre nach der Wiedervereinigung erschien es an der Zeit, die Rolle der Arbeitsmarktpolitik im Prozess des Wiederaufbaus einer kritischen Würdigung zu unterziehen, mögliche Schwachstellen zu lokalisieren und darauf aufbauend über künftige konzeptionelle Schwerpunktsetzungen nachzudenken.
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Die Region Halle-Leipzig im Wandel vom Industriestandort zum modernen Dienstleistungsstandort
Martin T. W. Rosenfeld
Wirtschaftsstandort Halle,
2000
Abstract
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