Bank Market Power, Factor Reallocation, and Aggregate Growth
R. Inklaar, Michael Koetter, Felix Noth
Journal of Financial Stability,
2015
Abstract
Using a unique firm-level sample of approximately 700,000 firm-year observations of German small and medium-sized enterprises (SMEs), this study seeks to identify the effect of bank market power on aggregate growth components. We test for a pre-crisis sample whether bank market power spurs or hinders the reallocation of resources across informationally opaque firms. Identification relies on the dependence on external finance in each industry and the regional demarcation of regional banking markets in Germany. The results show that bank markups spur aggregate SME growth, primarily through technical change and the reallocation of resources. Banks seem to need sufficient markups to generate the necessary private information to allocate financial funds efficiently.
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Metropolregionen als Schlüssel zum wirtschaftlichen Erfolg?: 5. „Halle Forum“ des IWH und der ARL am 11./12. Dezember 2014
A. Förtsch, Albrecht Kauffmann, Martin T. W. Rosenfeld
Nachrichten der ARL,
Nr. 2,
2015
Abstract
Seit 2006 findet am Institut für Wirtschaftsforschung Halle (IWH) in Halle an der Saale alle zwei Jahre das „Halle Forum on Urban Economic Growth“ statt. Ziel dieser Veranstaltungsreihe ist es, ein internationales und interdisziplinäres Forum für den Austausch aktueller Forschungsergebnisse zu Strategien und Verläufen der wirtschaftlichen Entwicklung von Städten zu bieten, mit einem Fokus auf altindustrielle Regionen und post-sozialistische Länder. Das nunmehr bereits fünfte „Halle Forum“ befasste sich schwerpunktmäßig mit der „richtigen“ Governance von Metropolregionen und den wirtschaftlichen Effekten von verschiedenen Formen der metropolitanen Governance. Zusätzlich wurden weitere zentrale Zukunftsthemen der Stadtentwicklung aufgegriffen.
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The Schumpeterian Growth Paradigm
Philippe Aghion, Ufuk Akcigit, Peter Howitt
Annual Review of Economics,
2015
Abstract
In this review, we argue that the Schumpeterian growth paradigm, which models growth as resulting from innovations involving creative destruction, sheds light on several aspects of the growth process that cannot be properly addressed by alternative theories. We focus on three important aspects for which Schumpeterian growth theory delivers predictions that distinguish it from other growth models, namely, (a) the role of competition and market structure, (b) firm dynamics, and (c) the relationship between growth and development.
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Public Bank Guarantees and Allocative Efficiency
Reint E. Gropp, Andre Guettler, Vahid Saadi
Abstract
In the wake of the recent financial crisis, many governments extended public guarantees to banks. We take advantage of a natural experiment, in which long-standing public guarantees were removed for a set of German banks following a lawsuit, to identify the real effects of these guarantees on the allocation of credit (“allocative efficiency”). Using matched bank/firm data, we find that public guarantees reduce allocative efficiency. With guarantees in place, poorly performing firms invest more and maintain higher rates of sales growth. Moreover, firms produce less efficiently in the presence of public guarantees. Consistently, we show that guarantees reduce the likelihood that firms exit the market. These findings suggest that public guarantees hinder restructuring activities and prevent resources to flow to the most productive uses.
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Assessing European Competitiveness: the Contribution of CompNet Research
Filippo di Mauro, Maddalena Ronchi
CompNet Report,
June
2015
Abstract
Restoring competitiveness is broadly acknowledged as the critical building block for achieving sustainable growth, but defining competitiveness, both in terms of tools as well as objectives, is a matter of debate. The Competitiveness Research Network (CompNet) adopts a pragmatic approach, defining “a competitive economy [as] one in which institutional and macroeconomic conditions allow productive firms to thrive… [thus supporting] the expansion of employment, investment and trade” (Draghi, 2012). This approach requires handling (i) firm-level features, most notably productivity, (ii) macroeconomic factors, and (iii) cross-border aspects related to the operation of global value chains (GVCs). While at first concentrating solely on the original mandate of explaining export competitiveness, the Network has extended the scope of its research to broader aspects related to productivity drivers.
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Lessons from Schumpeterian Growth Theory
Philippe Aghion, Ufuk Akcigit, Peter Howitt
American Economic Review,
Nr. 5,
2015
Abstract
By operationalizing the notion of creative destruction, Schumpeterian growth theory generates distinctive predictions on important microeconomic aspects of the growth process (competition, firm dynamics, firm size distribution, cross-firm and cross-sector reallocation) which can be confronted using rich micro data. In this process the theory helps reconcile growth with industrial organization and development economics.
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Die Institutionalisierung von Metropolregionen: Schlüssel zum wirtschaftlichen Erfolg von Städten? – Ein Bericht über das „5th Halle Forum on Urban Economic Growth“
A. Förtsch, Albrecht Kauffmann, Martin T. W. Rosenfeld
Wirtschaft im Wandel,
Nr. 2,
2015
Abstract
Seit den 1990er Jahren wird speziell in Deutschland versucht, mit Hilfe einer verstärkten Kooperation zwischen den wichtigsten Oberzentren und den Kommunen aus deren jeweiligem Umland so genannte „Metropolregionen“ zu etablieren. Damit werden die Ziele verfolgt, die internationale Sichtbarkeit der größten deutschen Städte zu verbessern und durch eine Bündelung der in ihnen sowie ihrem Umland vorhandenen Ressourcen und Kompetenzen zu einer Erhöhung der stadtregionalen Wirtschaftsleistung beizutragen. Es stellen sich allerdings die Fragen, ob diese Ziele tatsächlich erreicht werden, welche Hürden sich bei der Zielerreichung ergeben und wie diese Hürden ggf. überwunden werden können. Diese Fragen standen im Mittelpunkt des fünften „Halle Forum on Urban Economic Growth“, das am 11. und 12. Dezember 2014 in Kooperation mit der Akademie für Raumforschung und Landesplanung (ARL) – Leibniz-Forum für Raumwissenschaften am IWH durchgeführt wurde.
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Do Manufacturing Firms Benefit from Services FDI? – Evidence from Six New EU Member States
J. Damijan, Crt Kostevc, Philipp Marek, Matija Rojec
IWH Discussion Papers,
Nr. 5,
2015
Abstract
This paper focuses on the effect of foreign presence in the services sector on the productivity growth of downstream customers in the manufacturing sector in six EU new member countries in the course of their accession to the European Union. For this purpose, the analysis combines firm-level information, data on economic structures and annual national input-output tables. The findings suggest that services FDI may enhance productivity of manufacturing firms in Central and Eastern European (CEE) countries through vertical forward spillovers, and thereby contribute to their competitiveness. The consideration of firm characteristics shows that the magnitude of spillover effects depends on size, ownership structure, and initial productivity level of downstream firms as well as on the diverging technological intensity across sector on the supply and demand side. The results suggest that services FDI foster productivity of domestic rather than foreign controlled firms in the host economy. For the period between 2003 and 2008, the findings suggest that the increasing share of services provided by foreign affiliates enhanced the productivity growth of domestic firms in manufacturing by 0.16%. Furthermore, the firms’ absorptive capability and the size reduce the spillover effect of services FDI on the productivity of manufacturing firms. A sectoral distinction shows that firms at the end of the value chain experience a larger productivity growth through services FDI, whereas the aggregate positive effect seems to be driven by FDI in energy supply. This does not hold for science-based industries, which are spurred by foreign presence in knowledge-intensive business services.
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The Effect of Succession Taxes on Family Firm Investment: Evidence From a Natural Experiment
Margarita Tsoutsoura
Journal of Finance,
Nr. 2,
2015
Abstract
This paper provides causal evidence on the impact of succession taxes on firm investment decisions and transfer of control. Using a 2002 policy change in Greece that substantially reduced the tax on intrafamily transfers of businesses, I show that succession taxes lead to a more than 40% decline in investment around family successions, slow sales growth, and a depletion of cash reserves. Furthermore, succession taxes strongly affect the decision to sell or retain the firm within the family. I conclude by discussing implications of my findings for firms in the United States and Europe.
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