Government Banking in Russia: Magnitude and New Features
Andrei Vernikov
IWH Discussion Papers,
No. 13,
2011
Abstract
State-controlled banks are currently at the core of financial intermediation in Russia. This paper aims to assess the magnitude of government banking, and to reveal some of its special features and arrangements. We distinguish between directly and indirectly state-controlled banks and construct a set of bank-level statistical data covering the period between 2000 and 2011. By January 2011 the market share of state-controlled banks reached almost 54 percent of all bank assets, putting Russia in the same league with China and India and widening the gap from typical European emerging markets. We show that direct state ownership is gradually substituted by indirect ownership and control. It tends to be organized in corporate pyramids that dilute public property, take control away from government bodies, and underpin managerial opportunism. Statecontrolled
banks blur the borderline between commercial banking and development
banking. Dominance of public banks has a bearing on empirical studies whose results might suggest state-owned banks’ greater (or lesser) efficiency or competitiveness compared to other forms of ownership. We tend to interpret such results as influenced by the choice of indicator, period of observations, sample selection, etc., in the absence of an equal playing field for all groups of players. We suggest that the government’s planned retreat from the banking sector will involve non-core assets mainly, whereas control over core institutions will just become more subtle.
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Stock Market Firm-Level Information and Real Economic Activity
Filippo di Mauro, Fabio Fornari, Dario Mannucci
ECB Working Paper,
No. 1366,
2011
Abstract
We provide evidence that changes in the equity price and volatility of individual firms (measures that approximate the definition of 'granular shock' given in Gabaix, 2010) are key to improve the predictability of aggregate business cycle fluctuations in a number of countries. Specifically, adding the return and the volatility of firm-level equity prices to aggregate financial information leads to a significant improvement in forecasting business cycle developments in four economic areas, at various horizons. Importantly, not only domestic firms but also foreign firms improve business cycle predictability for a given economic area. This is not immediately visible when one takes an unconditional standpoint (i.e. an average across the sample). However, conditioning on the business cycle position of the domestic economy, the relative importance of the two sets of firms - foreign and domestic - exhibits noticeable swings across time. Analogously, the sectoral classification of the firms that in a given month retain the highest predictive power for future IP changes also varies significantly over time as a function of the business cycle position of the domestic economy. Limited to the United States, predictive ability is found to be related to selected balance sheet items, suggesting that structural features differentiate the firms that can anticipate aggregate fluctuations from those that do not help to this aim. Beyond the purely forecasting application, this finding may enhance our understanding of the underlying origins of aggregate fluctuations. We also propose to use the cross sectional stock market information to macro-prudential aims through an economic Value at Risk.
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Firm level determinants of innovation: small firms with high potential in East Germany
Jutta Günther, Philipp Marek
Wirtschaft im Wandel,
No. 7,
2011
Abstract
Innovationen in Form neuer Produkte und Produktionsprozesse sind in fortgeschrittenen Volkswirtschaften der entscheidende Treiber der wirtschaftlichen Entwicklung. Nach Abschluss der massiven technologischen Erneuerung
in Ostdeutschland, die sich bis Ende der 1990er Jahre in deutlich höheren Quoten innovierender Betriebe als in Westdeutschland niederschlug, müssen sich die Betriebe in den Neuen Ländern im Innovationswettbewerb behaupten.
Der Beitrag skizziert die Innovationstätigkeit der Betriebe in Ost- und Westdeutschland und geht im Rahmen einer multivariaten Analyse den Bestimmungsfaktoren von Produkt- und Prozessinnovationen nach.
Die empirischen Untersuchungen unter Verwendung des IAB-Betriebspanels zeigen, dass sich die Betriebe des Verarbeitenden Gewerbes in Ostdeutschland im Jahr 2008 durch eine rege Innovationsbeteiligung auszeichnen. Gemessen am Anteil der Betriebe mit Innovationen bestehen zwischen Ost- und Westdeutschland keine wesentlichen Unterschiede. Die regressionsanalytische Untersuchung zeigt, dass eigene betriebliche Forschung und Entwicklung (FuE) eine wichtige Einflussgröße für Innovationen in Ost- und Westdeutschland darstellt. Auch den betrieblichen Weiterbildungsaktivitäten kann ein positiver Einfluss bescheinigt werden. Ein wesentlicher Unterschied zwischen Ost- und Westdeutschland besteht darin, dass eine zunehmende Betriebsgröße in Ostdeutschland – anders als in Westdeutschland – keinen Einfluss auf die Innovationsneigung ausübt. In Ostdeutschland zeigen die kleinen Betriebe (10 bis 49 Beschäftigte) eine starke Innovationsneigung bei den besonders wichtigen Produktinnovationen im Sinne
von Marktneuheiten.
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University Cities: Including Universities and Research Institutes into Strategies for Urban Growth
Peter Franz
International Journal of Knowledge-Based Development,
2011
Abstract
The topic of this special issue refers to the observation that many larger and middle-sized cities dispose of a considerable potential of institutions creating and disseminating knowledge. This kind of endowment seems to be especially valuable in an upcoming knowledge-based economy. Recent strategic concepts and inter-city competitions referring to ‘knowledge-based urban development’, ‘knowledge city’, ‘creative city’, ‘science city’ or ‘entrepreneurial university’ indicate that urban planners and politicians are beginning to search for strategies to take advantage and to make use of this potential. The papers in this special issue a) present case studies of cities trying to activate their knowledge resources for local economic growth, b) deal with regulatory barriers and problems for cities applying ‘knowledge city’ strategies, c) analyze the university support for entrepreneurial activities, and d) discuss some implications of ‘knowledge city’ strategies for architecture and urban planning.
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ICT Adoption and Heterogeneity in Production Technologies: Evidence for Chilean Retailers
Gaaitzen J. de Vries, Michael Koetter
Oxford Bulletin of Economics and Statistics,
No. 4,
2011
Abstract
The adoption of information and communication technology (ICT) can have far-reaching effects on the nature of production technologies. Because ICT adoption is incomplete, especially in developing countries, different groups of firms will have different production technologies. We estimate a latent class stochastic frontier model, which allows us to test for the existence of multiple production technologies across firms and consider the associated implications for efficiency measures. We use a unique data set of Chilean retailers, which includes detailed information on ICT adoption. We find three distinct production technologies. The probability of membership in a more productive group is positively related to ICT use.
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What Might Central Banks Lose or Gain in Case of Euro Adoption – A GARCH-Analysis of Money Market Rates for Sweden, Denmark and the UK
Herbert S. Buscher, Hubert Gabrisch
IWH Discussion Papers,
No. 9,
2011
Abstract
This study deals with the question whether the central banks of Sweden, Denmark and the UK can really influence short-term money markets and thus, would lose this influence in case of Euro adoption. We use a GARCH-M-GED model with daily money market rates. The model reveals the co-movement between the Euribor and the shortterm interest rates in these three countries. A high degree of co-movement might be seen as an argument for a weak impact of the central bank on its money markets. But this argument might only hold for tranquil times. Our approach reveals, in addition, whether there is a specific reaction of the money markets in turbulent times. Our finding is that the policy of the European Central Bank (ECB) has indeed a significant impact on the three money market rates, and there is no specific benefit for these countries to stay outside the Euro area. However, the GARCH-M-GED model further reveals risk divergence and unstable volatilities of risk in the case of adverse monetary shocks to the economy for Sweden and Denmark, compared to the Euro area. We conclude that the danger of adverse monetary developments cannot be addressed by a common monetary
policy for these both countries, and this can be seen as an argument to stay outside the Euro area.
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Mergers, Spinoffs, and Employee Incentives
Paolo Fulghieri, Merih Sevilir
Review of Financial Studies,
No. 7,
2011
Abstract
This article studies mergers between competing firms and shows that while such mergers reduce the level of product market competition, they may have an adverse effect on employee incentives to innovate. In industries where value creation depends on innovation and development of new products, mergers are likely to be inefficient even though they increase the market power of the post-merger firm. In such industries, a stand-alone structure where independent firms compete both in the product market and in the market for employee human capital leads to a greater profitability. Furthermore, our analysis shows that multidivisional firms can improve employee incentives and increase firm value by reducing firm size through a spinoff transaction, although doing so eliminates the economies of scale advantage of being a larger firm and the benefits of operating an internal capital market within the firm. Finally, our article suggests that established firms can benefit from creating their own competition in the product and labor markets by accommodating new firm entry, and the desire to do so is greater at the intermediate stages of industry/product development.
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MNE’s Regional Location Choice - A Comparative Perspective on East Germany, the Czech Republic and Poland
Andrea Gauselmann, Philipp Marek, J. P. Angenendt
IWH Discussion Papers,
No. 8,
2011
published in: Empirica
Abstract
The focus of this article is the empirical identification of factors influencing Foreign Direct Investment (FDI) in transition economies on a regional level (NUTS 2). The analysis is designed as benchmark between three neighboring post-communist regions, i.e. East Germany, the Czech Republic and Poland. Their different transition paths have not only resulted in economic differences. We can also observe today that the importance of pull factors for FDI varies significantly across the regions. This analysis shows that in comparison with Poland and the Czech Republic, East Germany’s major benefit is its purchasing power, its geographical proximity to West European markets, and its modern infrastructure. Furthermore, the analysis suggests that intra-industry linkages such as specialization and agglomeration economies are relevant factors for the location decision of foreign investors. This result can help to explain the regional divergence of FDI streams in transition economies.
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Africa and the Global Financial Crisis - Impact on Economic Reform Processes
R. Adelou Alabi, J. Alemazung, Achim Gutowski, Robert Kappel, Tobias Knedlik, O. Osnachi Uzor, Karl Wohlmuth, Hans H. Bass
African Development Perspectives Yearbook, Vol. 15,
2011
Abstract
In volume XV of the African Development Perspectives Yearbook, the Research Group on African Development Perspectives investigates the impact of the GFC on economic reform processes in Africa. The analysis is structured in such a way so as to reflect the opportunities and dangers of policy reversals in the face of the GFC. The impact of the crisis on different types and forms of governance in the region is considered. The first question is therefore which macro-economic policy instruments have to be applied in order to overcome the crisis and to continue with sustainable development. The second question is how the GFC has affected Africa's external economic relations and if the path of opening up to the world markets is continued. The third question raised is how the crisis has affected social cohesion, impacted on poverty alleviation strategies and the achievement of Millennium Development Goals (MDGs). All these questions are discussed in the various contributions which comprise general studies and country case studies. The authors also looked into the role of international financial institutions during and after the crisis. The volume XV of the African Development Perspectives Yearbook is structured into three Units. Unit 1 addresses general issues regarding the impact of the GFC on reform processes in Africa. Unit 2 presents case studies from countries and sub-regions. Unit 3 presents reviews and book notes of current literature focusing on issues of African development perspectives.
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Incubating an Illusion? Long-term Incubator Firm Performance after Graduation
Michael Schwartz
Growth and Change,
No. 4,
2011
Abstract
Local economic development policies worldwide perceive business incubation as an effective measure to promote regional growth through the support of young and innovative ventures. The common assumption is that incubation promotes firm growth, in particular after these firms graduated from their incubator organizations. This article investigates the long-term performance of 324 graduate firms from five German business incubators (incubated between 1990 and 2006) after they have (successfully) completed their incubation. The present study does not suffer from a survivor bias, meaning that performance data of non-surviving firms is also included. Using employment and sales measures as performance indicators, this study contributes to our knowledge with regard to long-term incubator firm performance after graduation. While in the first years after graduation there is significant growth of formerly incubated firms, further results do not support the presumption of continuous firm growth beyond incubation. A minority of graduate firms exhibits a strong increase in performance, but the majority of firms do not experience considerable growth.
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