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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European Bank Efficiency and Performance: The Effects of Supranational Versus National Bank Supervision
Rients Galema, Michael Koetter
T. Beck, B. Casu (eds): The Palgrave Handbook of European Banking, London,
2016
Abstract
This chapter explores European bank efficiency and performance. First, the authors provide an overview of the key estimation methods for efficiency and discuss selected applications to the European banking sector. Second, they apply stochastic frontier analysis to investigate the extent to which the reallocation of supervisory powers is associated with efficiency differences between European banks. In doing so, the discussion focuses particularly on whether direct supervision by the Single Supervisory Mechanism (SSM) as opposed to national competent authority (NCA) is related to cost and profit efficiency.
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Borrowers Under Water! Rare Disasters, Regional Banks, and Recovery Lending
Michael Koetter, Felix Noth, Oliver Rehbein
Abstract
We show that local banks provide corporate recovery lending to firms affected by ad-verse regional macro shocks. Banks that reside in counties unaffected by the natural disaster that we specify as macro shock increase lending to firms inside affected counties by 3%. Firms domiciled in flooded counties, in turn, increase corporate borrowing by 16% if they are connected to banks in unaffected counties. We find no indication that recovery lending entails excessive risk-taking or rent-seeking. However, within the group of shock-exposed banks, those without access to geographically more diversified interbank markets exhibit more credit risk and less equity capital.
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Mortgage Companies and Regulatory Arbitrage
Yuliya Demyanyk, Elena Loutskina
Journal of Financial Economics,
Nr. 2,
2016
Abstract
Mortgage companies (MCs) do not fall under the strict regulatory regime of depository institutions. We empirically show that this gap resulted in regulatory arbitrage and allowed bank holding companies (BHCs) to circumvent consumer compliance regulations, mitigate capital requirements, and reduce exposure to loan-related losses. Compared to bank subsidiaries, MC subsidiaries of BHCs originated riskier mortgages to borrowers with lower credit scores, lower incomes, higher loan-to-income ratios, and higher default rates. Our results imply that precrisis regulations had the capacity to mitigate the deterioration of lending standards if consistently applied and enforced for all types of intermediaries.
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Foreign Funding Shocks and the Lending Channel: Do Foreign Banks Adjust Differently?
Felix Noth, Matias Ossandon Busch
Finance Research Letters,
November
2016
Abstract
We document for a set of Latin American emerging countries that the different nature of foreign funding accessed by foreign and local banks affected their lending performance after September 2008. We show that lending growth was weaker for shock-affected foreign banks compared to shock-affected local banks. This evidence represents valuable policy information for regulators concerned with the stability and well-functioning of banking sectors.
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Taxing Banks: An Evaluation of the German Bank Levy
Claudia M. Buch, Björn Hilberg, Lena Tonzer
Journal of Banking and Finance,
November
2016
Abstract
Bank distress can have severe negative consequences for the stability of the financial system. Regimes for the restructuring and resolution of banks, financed by bank levies, aim at reducing these costs. This paper evaluates the German bank levy, which has been implemented since 2011. Our analysis offers three main insights. First, revenues raised through the levy were lower than expected. Second, the bulk of the payments were contributed by large commercial banks and by the central institutions of savings banks and credit unions. Third, for those banks, which were affected by the levy, we find evidence for a reduction in lending and higher deposit rates.
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National Politics and Bank Default Risk in the Eurozone
Stefan Eichler, Karol Sobanski
Journal of Financial Stability,
October
2016
Abstract
We study the impact of national politics on default risk of eurozone banks as measured by the stock market-based Distance to Default. We find that national electoral cycles, the power of the government as well as the government’s party ideological alignment significantly affect the stability of banks in the eurozone member countries. Moreover, we show that the impact of national politics on bank default risk is more pronounced for large as well as weakly capitalized banks.
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18.10.2016 • 46/2016
Preisverzerrungen Fehlanzeige – Keine Hinweise für Effekte der Bankenrettung in den USA
Die immensen Rettungsprogramme für den Bankensektor im Zuge der Finanzkrise der Jahre 2007 bis 2009 wurden in Politik und Öffentlichkeit kontrovers diskutiert. Die Programme hatten zum Ziel, den Finanzsektor und damit auch die realwirtschaftliche Entwicklung zu stabilisieren. Die Schattenseite: Enorme finanzielle Kosten zu Lasten des Steuerzahlers, erhöhte Risikoübernahmen durch den Staat und mögliche verzerrende Wirkungen auf den Wettbewerb am Bankenmarkt – denn nicht alle Banken wurden finanziell unterstützt. Forscher und Forscherinnen um Felix Noth untersuchten am Leibniz-Institut für Wirtschaftsforschung Halle (IWH) nun die langfristigen indirekten und möglichen marktverzerrenden Effekte der Notrettungsprogramme in den USA.
Felix Noth
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Preisverzerrungen Fehlanzeige – Keine Hinweise für Effekte der Bankenrettung in den USA
Felix Noth, Karolin Vogt
Wirtschaft im Wandel,
Nr. 4,
2016
Abstract
Im Zuge der Finanzkrise der Jahre 2007 bis 2009 rückte die Kontroverse um staatliche Notrettungsprogramme für den Bankensektor verstärkt ins Blickfeld. Diese Programme haben das Ziel, den Finanzsektor und somit auch realwirtschaftliche Entwicklungen zu stabilisieren. Dem stehen die finanziellen Kosten zu Lasten des Steuerzahlers, erhöhte Risikoübernahmen durch den Staat sowie mögliche verzerrende Wirkungen auf die Marktstruktur gegenüber. Dieser Artikel diskutiert mögliche Preisverzerrungen durch das Troubled Asset Relief Program (TARP) in den USA aus dem Jahr 2008 vor dem Hintergrund eines aktuellen Forschungsbeitrags, der die langfristigen indirekten Effekte des Programms innerhalb der Gruppe der nicht unterstützten Banken untersucht. Hierbei zeigen sich keine Hinweise dafür, dass das Programm zur Bankenrettung zu nachhaltigen Unterschieden im Bankenwettbewerb nach 2010 geführt hat. Die Zinsmargen von Banken mit einer höheren Rettungswahrscheinlichkeit stiegen nur in der direkten Folgezeit von TARP, d. h. im Jahr 2010 an. Ein signifikanter Anstieg des Kredit- und Depotwachstum der Banken für den Zeitraum von 2010 bis 2013 kann nicht verzeichnet werden.
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