The Political Economy of Financial Systems: Evidence from Suffrage Reforms in the Last Two Centuries
Hans Degryse, Thomas Lambert, Armin Schwienbacher
Economic Journal,
Nr. 611,
2018
Abstract
Voting rights were initially limited to wealthy elites providing political support for stock markets. The franchise expansion induces the median voter to provide political support for banking development, as this new electorate has lower financial holdings and benefits less from the riskiness and financial returns from stock markets. Our panel data evidence covering the years 1830–1999 shows that tighter restrictions on the voting franchise induce greater stock market development, whereas a broader voting franchise is more conducive to the banking sector, consistent with Perotti and von Thadden (2006). The results are robust to controlling for other institutional arrangements and endogeneity.
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Early-Stage Business Formation: An Analysis of Applications for Employer Identification Numbers
Kimberly Bayard, Emin Dinlersoz, Timothy Dunne, John Haltiwanger, Javier Miranda, John Stevens
NBER Working Paper,
Nr. 24364,
2018
Abstract
This paper reports on the development and analysis of a newly constructed dataset on the early stages of business formation. The data are based on applications for Employer Identification Numbers (EINs) submitted in the United States, known as IRS Form SS-4 filings. The goal of the research is to develop high-frequency indicators of business formation at the national, state, and local levels. The analysis indicates that EIN applications provide forward-looking and very timely information on business formation. The signal of business formation provided by counts of applications is improved by using the characteristics of the applications to model the likelihood that applicants become employer businesses. The results also suggest that EIN applications are related to economic activity at the local level. For example, application activity is higher in counties that experienced higher employment growth since the end of the Great Recession, and application counts grew more rapidly in counties engaged in shale oil and gas extraction. Finally, the paper provides a description of new public-use dataset, the “Business Formation Statistics (BFS),” that contains new data series on business applications and formation. The initial release of the BFS shows that the number of business applications in the 3rd quarter of 2017 that have relatively high likelihood of becoming job creators is still far below pre-Great Recession levels.
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"The Good News about Bad News": Information about Past Organisational Failure and its Impact on Worker Productivity
Sabrina Jeworrek, Vanessa Mertins, Michael Vlassopoulos
Abstract
Failure in organisations is a very common phenomenon. Little is known about whether past failure affects workers’ subsequent performance. We conduct a field experiment in which we follow up a failed mail campaign to attract new volunteers with a phone campaign pursuing the same goal. We recruit temporary workers to carry out the phone campaign and randomly assign them to either receive or not receive information about the previous failure and measure their performance. We find that informed workers perform better – in terms of both numbers dialed (about 14% improvement) and completed interviews (about 20% improvement) – regardless of whether they had previously worked on the failed mail campaign. Evidence from a second experiment with student volunteers asked to support a campaign to reduce food waste suggests that the mechanism behind our finding relates to contextual inference: Informing workers/volunteers that they are pursuing a goal that is hard to attain seems to add meaning to the work involved, leading them to exert more effort.
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The European Refugee Crisis and the Natural Rate of Output
Katja Heinisch, Klaus Wohlrabe
Applied Economics Letters,
Nr. 16,
2017
Abstract
The European Commission follows a harmonized approach for calculating structural (potential) output for EU member states that takes into account labour as an important ingredient. This article shows how the recent huge migrants’ inflow to Europe affects trend output. Due to the fact that the immigrants immediately increase the working population but effectively do not enter the labour market, we illustrate that the potential output is potentially upward biased without any corrections. Taking Germany as an example, we find that the average medium-term potential growth rate is lower if the migration flow is modelled adequately compared to results based on the unadjusted European Commission procedure.
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Who Benefits from GRW? Heterogeneous Employment Effects of Investment Subsidies in Saxony Anhalt
Eva Dettmann, Mirko Titze, Antje Weyh
IWH Discussion Papers,
Nr. 27,
2017
Abstract
The paper estimates the plant level employment effects of investment subsidies in one of the most strongly subsidized German Federal States. We analyze the treated plants as a whole, as well as the influence of heterogeneity in plant characteristics and the economic environment. Modifying the standard matching and difference-in-difference approach, we develop a new procedure that is particularly useful for the evaluation of funding programs with individual treatment phases within the funding period. Our data base combines treatment, employment and regional information from different sources. So, we can relate the absolute effects to the amount of the subsidy paid. The results suggest that investment subsidies have a positive influence on the employment development in absolute and standardized figures – with considerable effect heterogeneity.
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Bank Financing, Institutions and Regional Entrepreneurial Activities: Evidence from China
Iftekhar Hasan, Nada Kobeissi, Haizhi Wang, Mingming Zhou
International Review of Economics and Finance,
November
2017
Abstract
We investigate the effects of bank financing on regional entrepreneurial activities in China. We present contrasting findings on the role of quantity vs. quality of bank financing on small business formation in China: while we document a consistent, significantly positive relationship between the quality of bank financing and new venture formation, we find that the quantity of supplied credit is insignificant. We report that formal institutions are positively correlated to regional entrepreneurial activities, and informal institutions substitute formal institutions. Our findings also reveal that the institutional environment tends to supplement bank financing in promoting regional entrepreneurial activities.
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Do We Want These Two to Tango? On Zombie Firms and Stressed Banks in Europe
Manuela Storz, Michael Koetter, Ralph Setzer, Andreas Westphal
ECB Working Paper,
2017
Abstract
We show that the speed and type of corporate deleveraging depends on the interaction between corporate and financial sector health. Based on granular bank-firm data pertaining to small and medium-sized enterprises (SME) from five stressed and two non-stressed euro area economies, we show that “zombie” firms generally continued to lever up during the 2010–2014 period. Whereas relationships with stressed banks reduce SME leverage on average, we also show that zombie firms that are tied to weak banks in euro area periphery countries increase their indebtedness even further. Sustainable economic recovery therefore requires both: deleveraging of banks and firms.
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Relationship Banking and SME Financing: The Case of Wales
Kent Matthews, Hans Degryse, Tianshu Zhao
International Journal of Banking, Accounting and Finance,
Nr. 1,
2017
Abstract
Regional disparities in credit availability across the UK have been highlighted in a series of studies as a factor affecting both new firm starts and small firm growth prospects. This paper suggests that relationship banking might be an important means of attenuating differences in credit availability. The paper focuses on the value of relationship banking to SMEs in Wales in the period following the global banking crisis. The results show that SMEs that had developed a customer-loan relationship with their banks had a lower probability of experiencing a worsened credit outcome than those that did not. The implications of the findings for regional development and financial provision are discussed.
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Multidimensional Well-being and Regional Disparities in Europe
Jörg Döpke, Andreas Knabe, Cornelia Lang, Philip Maschke
Journal of Common Market Studies,
Nr. 5,
2017
Abstract
Using data from the OECD Regional Well-Being Index – a set of quality-of-life indicators measured at the sub-national level – we construct a set of composite well-being indices. We analyze the extent to which the choice of five alternative aggregation methods affects the well-being ranking of regions. We find that regional inequality in these composite measures is lower than regional inequality in real GDP per capita. For most aggregation methods, the rank correlation across regions appears to be quite high. It is also shown that using alternative indices instead of GDP per capita would only have a small effect on the set of regions eligible for aid from EU Structural Funds. The exception appears to be an aggregation based on how individual dimensions relate to average life satisfaction across regions, which would substantially change both the ranking of regions and which regions would be eligible for EU funds.
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