Granularity in Banking and Growth: Does Financial Openness Matter?
Franziska Bremus, Claudia M. Buch
CESifo Working Paper No. 4356, August,
2013
Abstract
We explore the impact of large banks and of financial openness for aggregate growth. Large banks matter because of granular effects: if markets are very concentrated in terms of the size distribution of banks, idiosyncratic shocks at the bank-level do not cancel out in the aggregate but can affect macroeconomic outcomes. Financial openness may affect GDP growth in and of itself, and it may also influence concentration in banking and thus the impact of bank-specific shocks for the aggregate economy. To test these relationships, we use different measures of de jure and de facto financial openness in a linked micro-macro panel dataset. Our research has three main findings: First, bank-level shocks significantly impact on GDP. Second, financial openness lowers GDP growth. Third, granular effects tend to be stronger in financially closed economies.
Artikel Lesen
Macroeconomic Factors and Micro-Level Bank Risk
Claudia M. Buch
Bundesbank Discussion Paper 20/2010,
2010
Abstract
The interplay between banks and the macroeconomy is of key importance for financial and economic stability. We analyze this link using a factor-augmented vector autoregressive model (FAVAR) which extends a standard VAR for the U.S. macroeconomy. The model includes GDP growth, inflation, the Federal Funds rate, house price inflation, and a set of factors summarizing conditions in the banking sector. We use data of more than 1,500 commercial banks from the U.S. call reports to address the following questions. How are macroeconomic shocks transmitted to bank risk and other banking variables? What are the sources of bank heterogeneity, and what explains differences in individual banks’ responses to macroeconomic shocks? Our paper has two main findings: (i) Average bank risk declines, and average bank lending increases following expansionary shocks. (ii) The heterogeneity of banks is characterized by idiosyncratic shocks and the asymmetric transmission of common shocks. Risk of about 1/3 of all banks rises in response to a monetary loosening. The lending response of small, illiquid, and domestic banks is relatively large, and risk of banks with a low degree of capitalization and a high exposure to real estate loans decreases relatively strongly after expansionary monetary policy shocks. Also, lending of larger banks increases less while risk of riskier and domestic banks reacts more in response to house price shocks.
Artikel Lesen
Aktuelle Trends: FuE-Ausgaben: Ostdeutschland holt auf, aber Strukturprobleme bleiben
Jutta Günther, Katja Guhr, Simone Lösel
Wirtschaft im Wandel,
Nr. 3,
2013
Abstract
Die Europäische Union (EU) hat sich das Ziel gesetzt, bis zum Jahr 2020 drei Prozent des Bruttoinlandsproduktes (BIP) in Forschung und Entwicklung (FuE) zu investieren. Zwar konnte die EU die FuE-Ausgaben von ca. 1,9% im Jahr 2007 auf ca. 2,1% im Jahr 2010 steigern, dennoch liegt sie hinter Ländern wie den USA und Japan deutlich zurück.
Artikel Lesen
18.06.2013 • 21/2013
FuE-Ausgaben: Ostdeutschland holt auf, aber Strukturprobleme bleiben
Die Europäische Union hat sich das Ziel gesetzt, bis zum Jahr 2020 drei Prozent des Bruttoinlandsproduktes in Forschung und Entwicklung (FuE) zu investieren. Zwar konnte die EU die FuE-Ausgaben von ca. 1,9% im Jahr 2007 auf ca. 2,1% im Jahr 2010 steigern, dennoch liegt sie hinter Ländern wie den USA und Japan deutlich zurück. In Deutschland wurden im Jahr 2010 Ausgaben für FuE in Höhe von rund 2,8% des BIP getätigt. Mehr als zwei Drittel entfielen, wie von der EU angestrebt, auf die Wirtschaft, der Rest auf die Hochschulen und staatlichen Forschungseinrichtungen. Bei einem Vergleich von Ost- und Westdeutschland werden jedoch deutliche Unterschiede sichtbar.
Pressemitteilung herunterladen
Hidden Gems and Borrowers with Dirty Little Secrets: Investment in Soft Information, Borrower Self-Selection and Competition
Reint E. Gropp, C. Gruendl, Andre Guettler
Abstract
This paper empirically examines the role of soft information in the competitive interaction between relationship and transaction banks. Soft information can be interpreted as a private signal about the quality of a firm that is observable to a relationship bank, but not to a transaction bank. We show that borrowers self-select to relationship banks depending on whether their privately observed soft information is positive or negative. Competition affects the investment in learning the private signal from firms by relationship banks and transaction banks asymmetrically. Relationship banks invest more; transaction banks invest less in soft information, exacerbating the selection effect. Finally, we show that firms where soft information was important in the lending decision were no more likely to default compared to firms where only financial information was used.
Artikel Lesen
Who Invests in Home Equity to Exempt Wealth from Bankruptcy?
S. Corradin, Reint E. Gropp, H. Huizinga, Luc Laeven
Abstract
Homestead exemptions to personal bankruptcy allow households to retain their home equity up to a limit determined at the state level. Households that may experience bankruptcy thus have an incentive to bias their portfolios towards home equity. Using US household data for the period 1996 to 2006, we find that household demand for real estate is relatively high if the marginal investment in home equity is covered by the exemption. The home equity bias is more pronounced for younger households that face more financial uncertainty and therefore have a higher ex ante probability of bankruptcy.
Artikel Lesen
Islamic Finance in Europe
Pierluigi Caristi, Stéphane Couderc, Angela di Maria, Filippo di Mauro, Beljeet Kaur Grewal, Lauren Ho, Sergio Masciantonio, Steven Ongena, Sajjad Zaher
ECB Occasional Paper,
Nr. 146,
2013
Abstract
Islamic finance is based on ethical principles in line with Islamic religious law. Despite its low share of the global financial market, Islamic finance has been one of this sector's fastest growing components over the last decades and has gained further momentum in the wake of the financial crisis. The paper examines the development of and possible prospects for Islamic finance, with a special focus on Europe. It compares Islamic and conventional finance, particularly as concerns risks associated with the operations of respective institutions, as well as corporate governance. The paper also analyses empirical evidence comparing Islamic and conventional financial institutions with regard to their: (i) efficiency and profitability; and (ii) stability and resilience. Finally, the paper considers the conduct of monetary policy in an Islamic banking context. This is not uncomplicated given the fact that interest rates - normally a cornerstone of monetary policy - are prohibited under Islamic finance. Liquidity management issues are thus discussed here, with particular reference to the euro area.
Artikel Lesen
Corporate Boards and Bank Loan Contracting
Bill Francis, Iftekhar Hasan, Michael Koetter, Qiang Wu
Journal of Financial Research,
Nr. 4,
2012
Abstract
We investigate the role of corporate boards in bank loan contracting. We find that when corporate boards are more independent, both price and nonprice loan terms (e.g., interest rates, collateral, covenants, and performance-pricing provisions) are more favorable, and syndicated loans comprise more lenders. In addition, board size, audit committee structure, and other board characteristics influence bank loan prices. However, they do not consistently affect all nonprice loan terms except for audit committee independence. Our study provides strong evidence that banks recognize the benefits of board monitoring in mitigating information risk ex ante and controlling agency risk ex post, and they reward higher quality boards with more favorable loan contract terms.
Artikel Lesen
Arbeitsmarktbilanz Ostdeutschland: Deutlicher Rückgang geförderter Beschäftigung
Hans-Ulrich Brautzsch
Wirtschaft im Wandel,
Nr. 11,
2012
Abstract
Die Zahl der staatlich subventionierten Beschäftigten ist deutlich zurückgegangen. Der Anteil der geförderten Beschäftigung an den Erwerbstätigen liegt jedoch immer noch deutlich über dem westdeutschen Wert. Dem Rückgang an geförderten Beschäftigungsverhältnissen steht eine kräftige Zunahme an nicht geförderter Erwerbstätigkeit gegenüber. Per saldo ist der Beschäftigungszuwachs jedoch schwach. Der Rückgang der Arbeitslosigkeit hat sich abgeflacht. Hierfür waren Sonderfaktoren verantwortlich, beispielsweise die verstärkte Zuwanderung aus den neuen Mitgliedstaaten der Europäischen Union und die Rückführung arbeitsmarktpolitischer Maßnahmen.
Im Prognosezeitraum wird sich die Lage auf dem ostdeutschen Arbeitsmarkt nur noch wenig verbessern. Die Zahl der Erwerbstätigen dürfte im Durchschnitt des Jahres 2012 um 0,2% und im Jahr 2013 um 0,1% über dem Vorjahreswert liegen. Die Zahl der geförderten Beschäftigungsverhältnisse dürfte weiter zurückgehen. Einfluss darauf haben auch die Neuregelungen zum effizienten Einsatz arbeits-marktpolitischer Instrumente. Die Entwicklung der registrierten Arbeitslosigkeit wird auch künftig vom schrumpfenden Arbeitsangebot beeinflusst. Die Arbeitslosenquote wird in diesem Jahr 10,4% und im kommenden Jahr 10,2% betragen.
Artikel Lesen
Stale Information, Shocks, and Volatility
Reint E. Gropp, A. Kadareja
Journal of Money, Credit and Banking,
Nr. 6,
2012
Abstract
We propose a new approach to measuring the effect of unobservable private information on volatility. Using intraday data, we estimate the effect of a well-identified shock on the volatility of stock returns of European banks as a function of the quality of public information available about the banks. We hypothesize that as publicly available information becomes stale, volatility effects and its persistence increase, as private information of investors becomes more important. We find strong support for this idea in the data. We further show that stock volatility is higher just before important announcements if information is stale.
Artikel Lesen
