State Aid and Guarantees in Europe
Reint E. Gropp, Lena Tonzer
T. Beck, B. Casu (eds): The Palgrave Handbook of European Banking, London,
2016
Abstract
During the recent financial crisis, governments massively intervened in the banking sector by providing liquidity assistance and capital support to banks in distress. This helped stabilize the financial system in the short run. However, public bailouts also bear the risk of longer-term distortions, for example, by affecting bailout expectations of banks. In this chapter, the authors first provide an overview of state aid interventions during the recent crisis episode. The third section then analyzes the effects of state aid on financial stability from a theoretical view. This is followed by the description of results obtained from empirical studies. The link between the provision of state aid and politics is discussed in the section “Institutional Design and Policy Implications”. Finally, in the section “The European Banking Union” the authors describe the elements of the European Banking Union meant to resolve and restructure banks in distress and to lower the need for public intervention. Based on the preceding analysis, conclusions are drawn regarding the new design.
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Support for Public Research Spin-offs by the Parent Organizations and the Speed of Commercialization
D. Göktepe-Hultén, Viktor Slavtchev
Journal of Technology Transfer,
No. 6,
2016
Abstract
We empirically analyze whether support by the parent organization in the early (nascent and seed) stage speeds up the process of commercialization and helps spin-offs from public research organizations generate first revenues sooner. To identify the impact of support by the parent organization, we apply multivariate regression techniques as well as an instrumental variable approach. Our results show that support in the early stage by the parent organization can speed up commercialization. Moreover, we identify two distinct channels—the help in developing a business plan and in acquiring external capital—through which support by the parent organization can enable spin-offs to generate first revenues sooner.
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18.10.2016 • 46/2016
No Sign of Price Distortions – Lack of Evidence for Effects of US Bank Bailouts
There has been much political and public controversy surrounding the very large rescue packages offered to the banking sector in the course of the financial crisis of 2007 to 2009. The aim of the packages was to stabilise the financial sector and, therefore, the development of the real economy. The downsides of these bailouts were the enormous financial cost to the taxpayer, increased assumption of risk by the government and possible distortive effects on competition in the banking market – since not all banks were given financial support. Researchers at the Halle Institute for Economic Research (IWH) – Member of the Leibniz Association led by Professor Felix Noth have now studied the long-term, indirect and possible market-distorting effects of the US rescue packages.
Felix Noth
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Does Administrative Status Matter for Urban Growth? Evidence from Present and Former County Capitals in East Germany
Bastian Heider, Albrecht Kauffmann, Martin T. W. Rosenfeld
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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03.05.2016 • 20/2016
Are Lacking Structural Reforms in the Financial Sector the Underlying Reason for the German Criticism of the ECB?
The major reason for the intense criticism of the European Central Bank’s (ECB’s) low-interest-rate policy may be the lack of structural reforms in the German banking system. The resulting persistent fragmentation increases the banking sector’s vulnerability to the low-interest-rate environment. Hence, parts of the banking sector, due to their strong ties to politicians, appear to have successfully influenced public opinion against the ECB.
Reint E. Gropp
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Support for Public Research Spin-offs by the Parent Organizations and the Speed of Commercialization
Viktor Slavtchev, D. Göktepe-Hultén
Abstract
We empirically analyze whether support by the parent organization in the early (nascent and seed) stage speeds up the process of commercialization and helps spin-offs from public research organizations generate first revenues sooner. To identify the impact of support by the parent organization, we apply multivariate regression techniques as well as an instrumental variable approach. Our results show that support in the early stage by the parent organization can speed up commercialization. Moreover, we identify two distinct channels - the help in developing a business plan and in acquiring external capital - through which support by the parent organization can enable spin-offs to generate first revenues sooner.
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Returns to Skills around the World: Evidence from PIAAC
Eric A. Hanushek, Guido Schwerdt, Simon Wiederhold, Ludger Woessmann
European Economic Review,
January
2015
Abstract
Existing estimates of the labor-market returns to human capital give a distorted picture of the role of skills across different economies. International comparisons of earnings analyses rely almost exclusively on school attainment measures of human capital, and evidence incorporating direct measures of cognitive skills is mostly restricted to early-career workers in the United States. Analysis of the new PIAAC survey of adult skills over the full lifecycle in 23 countries shows that the focus on early-career earnings leads to underestimating the lifetime returns to skills by about one quarter. On average, a one-standard-deviation increase in numeracy skills is associated with an 18 percent wage increase among prime-age workers. But this masks considerable heterogeneity across countries. Eight countries, including all Nordic countries, have returns between 12 and 15 percent, while six are above 21 percent with the largest return being 28 percent in the United States. Estimates are remarkably robust to different earnings and skill measures, additional controls, and various subgroups. Instrumental-variable models that use skill variation stemming from school attainment, parental education, or compulsory-schooling laws provide even higher estimates. Intriguingly, returns to skills are systematically lower in countries with higher union density, stricter employment protection, and larger public-sector shares.
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A Control Group Study of Incubators’ Impact to Promote Firm Survival
Michael Schwartz
Journal of Technology Transfer,
No. 3,
2013
Abstract
It is widely unclear as to whether start-up firms supported by publicly-initiated incubator initiatives have higher survival rates than comparable start-up firms that have not received support by such initiatives. This paper contributes to the underlying discussion by performing a large-scale matched-pairs analysis of the long-term survival of 371 incubator firms (after their graduation) from five German incubators and a control group of 371 comparable non-incubated firms. The analysis covers a 10-year time span. To account for the problem of selection bias, a non-parametric matching approach is applied to identify an appropriate control group. For neither of the five incubator locations, we find statistically significant higher survival probabilities for firms located in incubators compared to firms located outside those incubator organizations. For three incubator locations the analysis reveals statistically significant lower chances of survival for those start-ups receiving support by an incubator. The empirical results, therefore, raise some doubts regarding the impacts of incubation on long-term firm survival.
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