a real options approach to bankruptcy costs evidence from failed commercial banks during the 1990s literature identifies three main aspects of liquidation costs firm size asset specificity and industry concentration this paper unifies the theory behind these aspects of bankruptcy costs by treating them as components of a broader option valuation problem faced by the liquidating trustee testing the hypothesized asset price relationships on fdic failed bank liquidation data yields the appropriate results furthermore it appears that liquidation time alone can be used as an effective second order proxy for asset value growth where market value estimates are unavailable

rationality testing under asymmetric loss abstract this paper shows that if agents have an asymmetric loss function standard empirical tests for the rationality of their expectations are in general invalid we further show that under a popular class of asymmetric loss functions the linex family a valid test can be carried out by estimating an appropriate arch in mean model the contrast between the standard test and our arch m test is illustrated using the goldsmith nagan forecasts of us treasury bill yields

fundamentals panics and bank distress during the depression we assemble bank level and other data for fed member banks to model determinants of bank failure fundamentals explain bank failure risk well the first two friedman schwartz crises are not associated with positive unexplained residual failure risk or increased importance of bank illiquidity for forecasting failure the third friedman schwartz crisis is more ambiguous but increased residual failure risk is small in the aggregate the final crisis early 1933 saw a large unexplained increase in bank failure risk local contagion and illiquidity may have played a role in pre 1933 bank failures even though those effects were not large in their aggregate impact

the effects of business models on bank risk before during and after financial crisis evidence from china using chinese data from 2004 to 2016 we investigate the effects of business models on bank risk before during and after financial crisis three main results emerge first insolvency risk and roa

the non linear dynamics of output and unemployment in the u s this paper studies the joint dynamics of u s output and unemployment rate in a nonlinear var model the nonlinearity is introduced through a feedback variable that endogenously augments the output lags of the var in recessionary phases sufficient conditions for the ergodicity of the model potentially applying to a larger class of threshold models are provided the linear specification is severely rejected in favor of our threshold var however in the estimation the feedback is found to be statistically significant only on unemployment while it transmits to output through its cross correlation this feedback effect from recessions generates important asymmetries in the propagation of shocks a possible key to interpret the divergence in the measures of persistence existing in the literature the regime dependent persistence also explains the finding that the feedback from recession exerts a positive effect on the long run growth rate of the economy an empirical validation for the schumpeterian macroeconomic theories

the diversification and financial performance of us credit unions abstract for us credit unions revenue from non interest sources has increased significantly in recent years we investigate the impact of revenue diversification on financial performance for the period 1993 2004 the impact of a change in strategy that alters the share of non interest income is decomposed into a direct exposure effect reflecting the difference between interest and non interest bearing activities and an indirect exposure effect which reflects the effect of the institution s own degree of diversification on both risk adjusted and unadjusted returns measures a positive direct exposure effect is outweighed by a negative indirect exposure effect for all but the largest credit unions this may imply that similar diversification strategies are not appropriate for large and small credit unions small credit unions should eschew diversification and continue to operate as simple savings and loan institutions while large credit unions should be encouraged to exploit new product opportunities around their core expertise

data envelopment analysis truncated regression and double bootstrap for panel data with application to chinese banking we investigate the impact of earning asset diversification on chinese bank efficiency from 2006 to 2011 we do this by adapting the current two stage data envelopment analysis approach to a panel data setting so that we can account for technology change over time our monte carlo experiments illustrate the advantages and disadvantages of the proposed new algorithm over the conventional approach when applied to chinese banking data the regression results reveal that increasing the asset share of other earning assets including securities and derivatives is positively associated with bank efficiency decreasing the share of nonearning assets in total assets or increasing total equity has a similar impact our results also suggest that financial reforms currently being undertaken in china including removing the regulatory requirement concerning the ratio of loans to deposits a draft amendment to the existing commercial banking law and interest rate liberalization a proposed draft amendment are likely to have a positive effect on bank efficiency in china

reflections on northern rock the bank run that heralded the global financial crisis in september 2007 television viewers and newspaper readers around the world saw pictures of what looked like an old fashioned bank run that is depositors waiting in line outside the branch offices of a united kingdom bank called northern rock to withdraw their money the previous u k bank run before northern rock was in 1866 at overend gurney a london bank that overreached itself in the railway and docks boom of the 1860s bank runs were not uncommon in the united states up through the 1930s but they have been rare since the start of deposit insurance backed by the federal deposit insurance corporation in contrast deposit insurance in the united kingdom was a partial affair funded by the banking industry itself and insuring only a part of the deposits at the time of the run u k bank deposits were fully insured only up to 2 000 pounds and then only 90 percent of the deposits up to an upper limit of 35 000 pounds when faced with a run the incentive to withdraw one s deposits from a u k bank was therefore very strong for economists the run on northern rock at first seemed to offer a rare opportunity to study at close quarters all the elements involved in their theoretical models of bank runs the futility of public statements of reassurance the mutually reinforcing anxiety of depositors as well as the power of the media in galvanizing and channeling that anxiety through the power of television images however the storyline of the northern rock bank run does not fit the conventional narrative on september 13 2007 the bbc s evening television news broadcast first broke the news that northern rock had sought the bank of england s support the next morning the bank of england announced that it would provide emergency liquidity support it was only after that announcement that is after the

do banks have a future abstract are banks special intermediaries do they play any unique role in the economy and if so will they retain their specialness in the ever faster changing world of finance the rapid evolution of finance over the last two decades and the breathtaking e age revolution have persuaded many that eventually banks will be indistinguishable from other financial intermediaries since all their functions can at least as efficiently be carried out by nonbanks this study re explores the issue of the specialness of banks in light of the large existing literature on the subject and presents an approach which identifies the banks specialness with their unique capacity to lend out claims on their own debt which the public accepts and uses as money the study discusses various structural and policy implications deriving from the approach and draws on it to point to the continuing relevance of banking in a world where nonbanks are taking business away from banks lending to production has become relatively less important and the use of e money may soon be dominating financial transactions

the effects of reform on china s bank structure and performance abstract this paper investigates the relationship between market structure and performance in china s banking system from 1985 to 2002 a period when this sector was subject to gradual but notable reform using panel data estimation techniques both the market power and efficient structure hypotheses are tested in addition the model is extended to consider issues such as the impact of bank size ownership and whether the big four banks enjoy a quiet life on average x efficiency declined significantly and most banks were operating below scale efficient levels estimation of the structure performance models lends some support to the relative market power hypothesis in the early period the reforms had little impact on the structure of china s banking sector though the joint stock banks became relatively more x efficient there was no evidence to support the quiet life hypothesis probably because strict interest rate controls prevented the state banks from earning monopoly profits thus the ongoing liberalisation of interest rates should be accompanied by reduced concentration overall to improve competitive structure new policies should be directed at encouraging market entry and increasing the market share of the most efficient banks

uninsured deposits as a monitoring device their impact on bond yields of banks abstract we empirically analyze the impact of uninsured deposits on a bank s cost of public debt uninsured depositors can exert market discipline over a bank and potentially reduce its agency cost of debt through informed monitoring we use a sample of public bond issues by u s bank holding companies from 1994 to 2013 and find statistically strong evidence that banks with more uninsured deposits relative to their assets issue bonds with a lower interest rate findings suggest a one standard deviation increase in uninsured deposits is associated with a 46 64 basis point decrease in bond yield in addition we find that bonds issued by banks with higher default risk or lower reputation benefit more from uninsured savers our paper contributes to the literature that explores market discipline and provides evidence that banks can benefit from it through a lower borrowing cost

the role of demandable debt in structuring optimal banking arrangements demandable debt finance by banks warrants explanation because it entails costs of bank suspension liquidation and idle reserve holdings an explanation is developed in which demandable debt provides incentive compatible intermediation where the banker has comparative advantage in allocating investment funds but may act against the interests of uninformed depositors demandable debt attracts funds by giving depositors an option to force liquidation its usefulness in transacting follows from information sharing between monitors and nonmonitors copyright 1991 by american economic association

bank capitalization and cost evidence of scale economies in risk management and signaling we amend the standard cost model to account for the role of financial capital in banking the cost function is conditioned on the level of capital but we model the demand for financial capital so that it can serve as a cushion against insolvency for potentially risk averse managers and as a signal of risk for less informed outsiders scale economies are then computed without assuming that the bank chooses a level of capitalization that minimizes cost we find evidence of substantial scale economies and that bank managers are risk averse and use the level of financial capital to signal the level of risk

building an incentive compatible safety net abstract bank safety nets originally proposed as a means of stabilizing financial systems have become an important destabilizing influence government protection of bank debts encourages banks to undertake excessive risk particularly in response to adverse shocks to asset values reforms that would remove the destabilizing moral hazard consequences of government protection are considered both from the perspective of economic desirability and political feasibility requiring banks to maintain a minimal proportion of subordinated debt finance and restricting the means by which government recapitalization of insolvent banks occurs are the central features of promising reforms to the safety net

explaining bank failures deposit insurance regulation and efficiency this paper uses micro level historical data to examine the causes of bank failure for state chartered kansas banks during 1910 28 time to failure is explicitly modeled using a proportional hazards framework in addition to standard financial ratios this study includes membership in the voluntary state deposit insurance system and a measure of technical efficiency to explain bank failure the results indicate that deposit insurance system membership increased the probability of failure and technically inefficient banks were more likely to fail than technically efficient banks copyright 1995 by mit press

hidden impact household saving in response to a poor area development project abstract the possibility that poor households may prefer to save the income gains from a development project raises concerns about how well standard evaluation methods using data collected over relatively short periods can capture the true welfare impacts by the widely used difference in difference method the southwest china poverty reduction project had little current impact on the proportion of people in beneficiary villages consuming less than us 1 day despite a public outlay of us 400 million however the program had much larger impacts on incomes than consumptions uncertainty about the project s future impact probably made it hard for participants to infer the gain in permanent income so they saved a high proportion of the current income gains

banking panics information and rational expectations equilibrium this paper shows that bank runs can be modeled as an equilibrium phenomenon we demonstrate that some aspects of the intuitive story that bank runs start with fears of insolvency of banks can be rigorously modeled if individuals observe long lines at the bank they correctly infer that there is a possibility that the bank is about to fail and precipitate a bank run however bank runs occur even when no one has any adverse information extra market constraints such as suspension of convertibility can prevent bank runs and result in superior allocations banking panics were a recurrent phenomenon in the united states until the 1930s they have re emerged as a source of public concern and much theoretical research recently in this paper we provide an information theoretic rationale for bank runs the traditional story is that contagion is an important aspect of bank runs the idea seems to be that when the general public observes large withdrawals from the banking system fears of insolvency grow resulting in even larger withdrawals of deposits in our model some individuals withdraw because they get information that future returns are likely to be low uninformed individuals observing this also have an incentive to liquidate their investments in addition some individuals need to withdraw deposits for other than informationally based reasons thus if the random realization of such a group of individuals is unusually large then the uninformed individuals will be misled and will precipitate a run on the bank the technology is such that a large volume of withdrawals involves liquidation costs consequently runs on the bank do impose social costs a mechanism that may reduce these costs in our model is to suspend convertibility if withdrawals are high however those individuals who need to withdraw their assets for liquidity reasons are worse off ex post our model provides a rationalization for restrictions in demand deposits that were widespread prior to 1929 friedman and schwartz 7 suggest that restrictions of payments ensured

ceo compensation and bank efficiency an application of conditional nonparametric frontiers the paper investigates in a dynamic context the effect of chief executive officer ceo bonus and salary payments on banks technical efficiency levels our methodological framework incorporates the latest developments on the probabilistic approach of efficiency measurement as introduced by b din et al 2012 we apply time dependent conditional efficiency estimates to analyse a sample of 37 us banks for the period from 2003 to 2012 the empirical evidence reveals a non linear relationship between ceo bonus and salary payments and banks efficiency levels more specifically it is reported that salary and bonus payments affect differently banks technological change and technological catch up levels finally the empirical evidence suggests that higher salary and bonus payments are not always aligned with higher technical efficiency levels

deposit insurance and money market freezes in the presence of deposit insurance a rise in counterparty risk may cause a freeze in interbank money markets we show this in a general equilibrium model with regionally segmented bank based retail financial markets in which money markets facilitate the reallocation of funds across banks from different regions counterparty risk creates an asymmetry between banks in savings rich regions which remain marginally financed by the abundant regional insured deposits and in savings poor regions which have to pay large spreads in money markets this asymmetry distorts the aggregate allocation of credit and in the presence of demand externalities can cause large output losses

diversification in banking is noninterest income the answer this paper assesses potential diversification benefits in the u s banking industry from the steady shift toward activities that generate fee income trading revenue and other types of noninterest income in the aggregate declining volatility of net operating revenue reflects reduced volatility of net interest income not diversification benefits from noninterest income which is quite volatile and increasingly correlated with net interest income at the bank level greater reliance on noninterest income particularly trading revenue is associated with lower risk adjusted profits and higher risk this suggests few obvious diversification benefits from the ongoing shift toward noninterest income

foreign bank diversification and efficiency prior to and during the financial crisis does one business model fit all diversified and focused business models may affect foreign bank efficiency differently we investigate whether there is an optimal business model along three business dimensions assets funding and income and which business model is optimal for foreign banks in a financial center we apply recently developed non parametric methods with bootstrap to estimate group efficiency to test for differences across groups and finally to analyze the link between bank efficiency and diversification measures using luxembourg bank data that include the financial crisis we find that there is no unique business model the most efficient business model appears to be a focused asset funding and income strategy banks organizational forms play a role branches may be preferable to subsidiaries prior to the financial crisis whereas bank subsidiaries perform better than branches during the financial crisis however branches diversified in assets funding and income exploit efficiency advantages during the financial crisis

the impact of contingent liability on commercial bank risk taking abstract from 1863 1935 regulators imposed contingent liability on bank shareholders to discourage risk taking using data from 1900 to 1915 i find that banks subject to stricter liability rules have lower equity and asset volatility hold a lower proportion of risky assets and are less likely to increase their investment in risky assets when their net worth declines consistent with the hypothesis that stricter liability discourages commercial bank risk taking these findings provide lessons for current bank regulatory policy and show that the shape of the residual claimant s payoff function has a significant impact on managerial incentives and firm performance

garbage recycling and illicit burning or dumping abstract with garbage and recycling as the only two disposal options we confirm prior results that the optimal curbside fee for garbage collection equals the direct resource cost plus external environment cost when illicit burning or dumping is a third disposal option that cannot be taxed directly the optimal curbside tax on garbage changes sign the optimal fee structure is a deposit refund system a tax on all output plus a rebate on proper disposal through either recycling or garbage collection the output tax helps achieve the first best allocation even though it affects the choice between consumption and untaxed leisure

distinguishing panics and information based bank runs welfare and policy implications in this paper we contrast panics and information based bank runs in an effort to provide a robust and empirically plausible model of how bank runs are triggered the model of information based runs is characterized by two sided asymmetric information the bank cannot observe the true liquidity needs of the depositors while depositors are asymmetrically informed about bank asset quality we also examine the relative degrees of risk sharing provided by bank deposit contracts and traded equity contracts we show that the choice of deposit or equity depends on the attributes of and information about the underlying investment returns

is the business cycle characterized by deterministic chaos abstract tests are conducted on u s macroeconomic data for the presence of low dimensional deterministic chaos where deterministic chaos is defined as in grandmont s 1985 walras bowley lecture or in brock 1986 the idea is to test for evidence of endogenous instability causing the business cycle low order autoregressions are hard to reject with our methods evidence of chaos is weak but our tests may be too weak to detect it evidence of nonlinearity is present in employment 1950 i to 1983 iv unemployment 1949 i to 1982 iv monthly post war industrial production and pig iron production 1877 1937

measuring asymmetry and persistence in conditional volatility in real output evidence from three east asian tigers using a multivariate garch approach we search for evidence of conditional volatility in the quarterly real gross domestic product gdp growth rates of three east asian tigers singapore hong kong and taiwan the widely accepted exponential generalized autoregressive conditional heteroscedasticity egarch type model is used to capture the existence of asymmetric volatility and the potential structural break points in the volatility we find evidence of asymmetry and persistence in the volatility of gdp growth rates it is noted that the structural breakpoints of volatility correspond reasonably well to the historical economic and political events in these economies policy implications from our findings are discussed

testing for volatility changes in u s macroeconomic time series we test for a change in the volatility of 214 u s macroeconomic time series over the period 1959 1999 we find that approximately 80 of these series have experienced a break in unconditional volatility during this period even though more than half of the series experienced a break in conditional mean most of the reduction in volatility appears to be due to changes in conditional volatility our results are robust to controlling for business cycle nonlinearity in both mean and variance volatility changes are more appropriately characterized as instantaneous breaks than as gradual changes nominal variables such as inflation and interest rates experienced multiple volatility breaks and witnessed temporary increases in volatility during the 1970s on this evidence we conclude that the increased stability of economic fluctuations is widespread

what factors drive systemic risk during international financial crises abstract we analyze the determinants of the contribution of international banks to both global and local systemic risk during prominent financial crises we find no empirical evidence supporting conjectures that bank size leverage non interest income or the quality of the bank s credit portfolio are persistent determinants of systemic risk across financial crises in contrast our results show that global systemic risk in particular is predominantly driven by characteristics of the regulatory regime we also confirm for the subprime crisis that the banks contribution to moderately bad tail events in the past predicts the financial sector s crash risk

financial intermediation and delegated monitoring this paper develops a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders it presents a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary diversification within an intermediary serves to reduce these costs even in a risk neutral economy the paper presents some more general analysis of the effect of diversification on resolving incentive problems in the environment assumed in the model debt contracts with costly bankruptcy are shown to be optimal the analysis has implications for the portfolio structure and capital structure of intermediaries

the shadow costs of repos and bank liability structure making use of a structural model that allows for optimal liquidity management we study the role that repos play in a bank s financing structure in our model the bank s assets consist of illiquid loans and liquid reserves and are financed by a combination of repos long term debt deposits and equity repos are a cheap source of funding but they are subject to an exogenous rollover risk we show that the use of repos inflicts two types of indirect shadow costs on the bank s shareholders first it induces the bank to maintain higher liquid reserves in order to alleviate the additional default risk second it adds to the cost of long term debt financing these shadow costs limit the bank s appetite for cheap but unstable repo funding this effect is however weakened under poor returns on risky assets access to deposit funding and the depositor preference rule we also analyze the impact of a liquidity coverage ratio payout restrictions and a leverage ratio on the bank s financing choices and show that all these tools are able to curb the bank s reliance on repos

on the dynamic properties of asymmetric models of real gnp there is now a substantial body of evidence that suggests business cycles are asymmetric however the evidence has been accumulated using a wide array of statistical techniques and consequently is based on various definitions of asymmetry this paper examines several parametric models that have been used to study asymmetries in real gnp although these models capture asymmetries in very different ways their dynamic properties are remarkably similar

intertemporal diversification in financial intermediation abstract this paper examines the incentive problem between a bank and depositors or deposit insurer limited liability makes risk shifting lucrative we show how intertemporal diversification of lending decisions i e bank s loan portfolio consists of overlapping long term loans and is thus gradually renewed may solve the incentive problem of risk shifting a new or expanding bank sets a high equity level and acquires depositors confidence subsequently it can allow its equity to depreciate to a permanently lower level depositors can control the bank by monitoring equity and realized credit losses ex post they do not have to monitor bank s lending choices ex ante maturity mismatch illiquidity of long term loans and liquidity of deposits is optimal the analysis can be extended more generally to the borrower lender relationship

cyclical patterns in the variance of economic activity this article models the conditional mean and variance of real gross national product gnp and its components using asymmetric exponential generalized autoregressive conditional hetero scedasticity a model previously applied only to financial variables the results imply that the variance of real gnp is higher following negative innovations than positive innovations and that this asymmetry arises in the cyclically sensitive sectors further evidence links this asymmetry to the phase of the business cycle the conditional variance appears to be largest around business cycle troughs in addition shocks to the conditional variance of gnp and its components typically persist for long periods the evidence of asymmetry in conditional variance is robust to a variety of alternative specifications

the role of interbank markets in monetary policy a model with rationing the empirical research on monetary transmission has reported a number of puzzles challenging extant theoretical models of the transmission mechanism in this paper we argue that asymmetric information in the interbank market may be important to have a better understanding of the mechanisms at work in the transmission process we show that asymmetric information may induce an equilibrium with rationing this in turn has two major implications first it reconciles the apparent irresponsiveness of business investment to the user cost of capital with the large impact of monetary policy magnitude puzzle and second it shows that this impact will not be limited to short term credit supply but will also affect long term lending even if the corresponding interest rate is unaffected composition puzzle

mnes and industrial structure in host countries a portfolio analysis of irish manufacturing ireland has been very successful in attracting foreign mnes in high technology sectors although these sectors exhibit faster growth than the traditional low technology sectors populated primarily by indigenous firms the high technology sectors are also more volatile we use portfolio theory to show that ireland s fdi strategy has led to a more diversified manufacturing sector that exhibits higher growth without a commensurate increase in volatility and risk

who borrows from the lender of last resort understanding why banks borrow from the lender of last resort lolr during a nancial crisis is crucial to understanding the macroeconomic impact of such largescale interventions we document a strong divergence among banks take up of lolr assistance during the nancial crisis in the euro area as banks which borrowed heavily also used increasingly risky collateral we propose four explanations for this divergence

are higher levels of inflation less predictable a state dependent conditional heteroscedasticity approach milton friedman proposed that there is a positive relationship between inflation and uncertainty about the future path of inflation in contrast to previous studies of this hypothesis we find strong statistical evidence that higher levels of inflation are less predictable although innovations in inflation are somewhat better predictors of future volatility than the actual level of inflation we argue that previous failures to find an inflation uncertainty relationship are due to two factors first none of the previous work directly tested friedman s hypothesis by including the level of inflation in the model of the conditional variance second these studies also used symmetric models which appears inconsistent with friedman s hypothesis our results are robust to different sample periods and to assumptions about the presence of a unit root in inflation to test the inflation uncertainty hypothesis we use state dependent models sdm s of conditional moments to estimate the time varying conditional v

conditional asymmetries in real gnp a seminonparametric approach two critical assumptions are often made in empirical research regarding the relationship between economic variables and economic disturbances linearity and gaussianity together these two assumptions place strong restrictions on the time series behavior of a model most important these restrictions imply conditional symmetry using seminonparametric snp techniques this article presents evidence that real gross national product growth displays conditional asymmetry although these results confirm related results of brock and sayers sichel and hamilton the snp approach is novel in that it emphasizes the relationship between common modeling assumptions and the restrictions that these assumptions place on data

further evidence on the asymmetric behavior of economic time series over the business cycle evidence has recently been presented by salih neftci to support the hypothesis that recessions in economic activity tend to be steeper and more short lived than recoveries in economic activity that evidence however was confined to the behavior of the unemployment rate in the united states in this paper it is shown that when neftci s methods are applied to analyze the behavior of real gross national product investment and productivity in the united states or when they are used to analyze industrial production abroad the asymmetry hypothesis seems to be less compelling

foreign bank entry deregulation and bank efficiency lessons from the australian experience abstract this study considers the impact of foreign bank entry on banking efficiency in australia during the post deregulation period 1988 2001 using data envelopment analysis malmquist indices and stochastic frontier analysis we find foreign banks more efficient than domestic banks which however did not result in superior profits major australian banks have used size as a barrier to entry to new entrants furthermore bank efficiency has increased post deregulation and the competition resulting from diversity in bank types was important to prompt efficiency improvements finally the recession of the early 1990s resulted in a distinct shift in the process of efficiency changes

income diversification and risk does ownership matter an empirical examination of indian banks abstract we examine the impact of ownership on income diversification and risk for indian banks over the period 2001 2009 we investigate both the determinants of non interest income and the impact of diversification on various profitability and insolvency risk measures for public sector private domestic and foreign banks we document that ownership does matter in the pursuit of non interest income relative to private domestic banks public sector banks earn significantly less fee income while foreign banks report higher fee income public sector banks with higher levels of governmental ownership are significantly less likely to pursue non interest income sources fee based income significantly reduces risk measured by profitability variables for public sector banks default risk is also reduced for these banks from a regulatory perspective it appears that diversification benefits india s public sector banks our research has implications for the changes in the risk profile for banks in emerging banking markets pursuing non interest revenue sources

is the investment uncertainty relationship nonlinear an empirical analysis for the netherlands we examine the investment uncertainty relationship for a panel of dutch non financial firms the system generalized method of moments gmm estimates suggest that the effect of uncertainty on investment is nonlinear for low levels of uncertainty an increase in uncertainty has a positive effect on investment while for high levels of uncertainty an increase in uncertainty lowers investment this result is in line with a number of theoretical studies but has never been documented empirically

recycling in multifamily dwellings does convenience matter factors that decrease the the cost of recycling have significant positive correlations with recycling rates in multifamily dwellings mfds waste management experts have previously used anecdotes to infer a link between convenience and waste diversion rates in mfd recycling programs this article confirms and quantifies that link by applying probit and double censored to bit analysis to survey data from 214 households in urbana illinois we find a strong connection between recycling rates and the perceived presence of adequate interior space for processing recyclables and distance to recycling bins affects container recycling intensity the results have implications for cost effective design of mfd recycling programs jel di q2 i introduction statistics from the u s environmental protection agency epa show that from 1960 to 1997 u s recycling rates rose from 6 4 to 28 and 9 000 curbside recycling programs were established epa 1998 such programs have traditionally been geared toward single family dwellings sfds conventional doctrine has been that recycling activity is likely to be limited in multifamily dwellings mfds however as residential recycling rates for sfds plateau in the united states solid waste managers and policy makers are becoming increasingly interested in mfd recycling programs by now at least half of all mfds may have access to a curbside recycling program epa 2001 stevens 1999 and the epa 1999 2001 show that waste diversion rates the fraction of a household s waste that is recycled instead of discarded as refuse tend to be slightly lower in mfds than in sfds but some mfd recycling programs have yielded diversion rates as high as 60 what factors influence the recycling rates chosen by residents of mfds in a detailed nationwide study the epa 2001 found that successful 20 or higher diversion rate mfd recycling programs tended to have large and numerous containers provided by the recycling service waste management experts emphasize the importance of convenience in yielding high waste diversion rates in mfd recycling programs with some record setting programs using strategies like doorstep pickup of recyclables in high rise apartment buildings epa 1999 such anecdotes are intriguing however although much work has studied sfd recycling behavior little has been done to explore mfd recycling in a rigorous statistical fashion a number of economists have studied the sensitivity of recycling behavior to pricing policies that alter the costs and benefits of recycling relative to disposal 1 another body of work has investigated the influence of nonpecuniary policies and variables on recycling in sfds work by vining and ebreo 1990 and ebreo and vining 2000 supports the notion that convenience may increase the number of people that identify themselves as recyclers however their data are strictly qualitative the earlier study dates from a time when only community drop off recycling was available and the later study is focused on public attitudes toward and expectations regarding changes in recycling policy jakus et al 1996 1997 use economic models and rigorous empirical analysis to study the influence on actual recycling behavior of recycling promotional campaigns and policies to alter the time cost of recycling they find evidence that recycling participation is not a function of home ownership or renting status per se however these articles do not delve into the details of mfd recycling because the data were collected in the context of rural drop off recycling a few studies have turned their attention to mfd recycling stevens 1999 finds that programs with high aggregate diversion rates are likely to have a relatively large ratio of collection bins to households mcquaid and murdoch 1996 conduct a qualitative analysis of mfd recycling in edinburgh that suggests that housing characteristics such as floor level presence of an elevator and household size may influence recycling rates

scar effects of unemployment an assessment of institutional complementarities this article uses panel data from the survey of income and program participation sipp and the european community household panel echp for a comparative analysis of workers post unemployment earnings trajectories in the united states and 12 western european countries across the study sample of industrialized countries results of difference in difference propensity score matching show post unemployment earnings losses to be largely permanent and particularly significant for high wage and older workers as well as for women the analyses also show that negative effects of unemployment on workers subsequent earnings are mitigated through either generous unemployment benefit systems or strict labor market regulation these effects stem partly from favorable behavioral responses that prevent downward occupational and industrial mobility and partly from changes in the overall structure of labor markets favoring the transferability of worker skills between jobs these positive effects materialize despite t

the fragile capital structure of hedge funds and the limits to arbitrage abstract during a financial crisis when investors are most in need of liquidity and accurate prices hedge funds cut their arbitrage positions and hoard cash the paper explains this phenomenon we argue that the fragile nature of the capital structure of hedge funds combined with low market liquidity creates a risk of coordination in redemptions among hedge fund investors that severely limits hedge funds arbitrage capabilities we present a model of hedge funds optimal asset allocation in the presence of coordination risk among investors we show that hedge fund managers behave conservatively and even abstain from participating in the market once coordination risk is factored into their investment decisions the model suggests a new source of limits to arbitrage

are business cycles asymmetric a correction neftci 1984 proposed a nonparametric test procedure for determining whether business cycles are asymmetric in the sense that contractions are steeper than expansions he found evidence of this type of asymmetry in postwar quarterly u s unemployment variables this comment identifies a probable error in neftci s empirical work that reverses the significance of his results for the unemployment rate and it suggests that this test may have low power and be sensitive to measurement error

privatization matters bank efficiency in transition countries abstract to investigate the impact of bank privatization in transition countries we take the largest banks in six relatively advanced countries namely bulgaria the czech republic croatia hungary poland and romania income and balance sheet characteristics and efficiency measures computed from stochastic frontiers are compared across four bank ownership types our empirical results support the hypotheses that foreign owned banks are most efficient and government owned banks are least efficient in addition the importance of attracting a strategic foreign owner in the privatization process is confirmed however counter to the conjecture that foreign banks cherry pick the most profitable opportunities we find that domestic banks have a local advantage in pursuing fee for service business finally we show that both the method and the timing of privatization matter to performance specifically voucher privatization does not lead to increased efficiency and early privatized banks are more efficient than later privatized banks even though we find no evidence of a selection effect

curbside recycling in the presence of alternatives we measure the extent to which curbside access affects quantity recycled we use novel data to distinguish between new recycling and material diverted from other recycling modes we find that the marginal impact of expanding curbside programs on total recycled quantities is small in part because curbside programs significantly cannibalize returns from drop off recycling centers failure to account for cannibalization from other modes may substantially over estimate the benefits of curbside programs we conclude with simple cost effectiveness comparisons results suggest that incremental expansion of curbside access may not be cost effective

are mergers beneficial to consumers evidence from the market for bank deposits the general conclusion of the empirical literature is that in market consolidation generates adverse price changes harming consumers previous studies however look only at the short run pricing impact of consolidation ignoring effects that take longer to materialize using a database that includes detailed information on the deposit rates of individual banks in local markets for different categories of depositors we investigate the long run price effects of mergers we find strong evidence that although consolidation does generate adverse price changes these are temporary in the long run efficiency gains dominate over the market power effect leading to more favorable prices for consumers jel g21 g34 l1

do recessions permanently change output abstract this paper examines whether negative innovations to gnp are more or less persistent than positive innovations we find that once we allow for the impulse response of gnp to be asymmetric negative innovations to gnp are observed to be much less persistent than positive ones in particular the effect of a recession on the forecast of output is found to be negligible after only eight to twelve quarters while the effect of a positive shock is estimated to be persistent and amplified over time our results may therefore help reconcile two antagonistic views about the nature of business cycle fluctuations

free banking and information asymmetry a traditional argument against free banking is that it will collapse because of information externalities it is impossible for depositors to tell whether a high deposit rate offered by a bank is due to its high efficiency or risky lending strategy this paper shows that in a separating equilibrium a higher quality bank offers a lower deposit rate and holds a smaller proportion of risky loans than a lower quality bank to signal its underlying quality hence free banking is not inherently unstable the empirical results for the hong kong banking system during 1964 65 are consistent with the hypothesis of a separating equilibrium

garbage and recycling with endogenous local policy abstract this paper estimates the impact of garbage fees and curbside recycling programs on garbage and recycling amounts without correction for endogenous policy a price per bag of garbage has a negative effect on garbage and a positive cross price effect on recycling correction for endogenous local policy increases the effect of the user fee on garbage and the effect of curbside recycling collection on recycling introducing a fee of 1 per bag is estimated to reduce garbage by 412 pounds per person per year 44 but to increase recycling by only 30 pounds per person per year

bank income structure and risk an empirical analysis of european banks the purpose of this paper is to investigate the relationship between bank risk and product diversification in the changing structure of the european banking industry based on a broad set of european banks for the period 1996 2002 our study first shows that banks expanding into non interest income activities present higher risk and higher insolvency risk than banks which mainly supply loans however considering size effects and splitting non interest activities into both trading activities and commission and fee activities we show that the positive link with risk is mostly accurate for small banks and essentially driven by commission and fee activities a higher share of trading activities is never associated with higher risk and for small banks it implies in some cases lower asset and default risks

does growth vary over the business cycle some evidence from the g7 countries in this paper we analyse the dynamics of business cycles in the g7 countries our aim is to answer the question of whether growth varies in an absolute sense over the business cycle and hence to examine whether the simple two phase characterization downturn upturn is an appropriate description of the business cycle to study growth over the cycle we estimate single country equations and then a pooled regression that takes into account the important interactions of international business cycles the results confirm the steepness asymmetry of the growth cycles and show that growth varies systematically within upturns and downturns these are consistent with the notion of deepness asymmetry which implies that contractions are more pronounced in the later stages of a downturn whereas expansions are stronger immediately after troughs

strategic loan defaults and coordination an experimental analysis this paper experimentally studies the impact of bank and borrower fundamentals on loan repayment we find that solvent borrowers are more likely to default strategically when the bank s expected strength is low although loan repayment is a pareto dominant nash equilibrium borrowers are also less likely to repay when other borrowers expected repayment capacity is low regardless of banks fundamentals we show that changes in expectations about bank and borrower fundamentals change the risk dominance properties of the borrowers coordination problem and that these changes subsequently explain strategic defaults for the individual borrower loss aversion and negative past experiences reduce repayment suggesting that bank failure can be contagious in times of distress

world financial crisis and efficiency of chinese commercial banks the us credit crunch generated substantial turmoil in the global financial markets and directly caused the collapse of several world banking giants nonetheless chinese commercial banks decoupled from the rest of the world achieved remarkable results because of their risk averse nature and banking reform during the past 10 years to improve corporate governance and efficiency the latest reform was focused on ownership transformation via foreign participation and stock listing employing data of 14 listed chinese banks during the period 1999 2008 this paper tests whether ipo was an effective way to enhance banks efficiency using two frontier approaches data envelopment analysis and sfa the results confirm our hypothesis and suggest that restructuring banks into shareholding companies improves both technical efficiency and scale economies this conclusion is further confirmed by the technical inefficiency effects model which found that efficiency rating of listed banks was about 5 per cent higher than their prior ipo level facing tougher economic condition and increased competition banks not only need to broaden income sources cut expenditures but more importantly to strengthen their risk management to become more resistant to a volatile business environment

the evolving landscape of banking the structure of the financial services industry is in flux liberalization deregulation and advances in information technology have changed the financial landscape dramatically interbank competition has heated up and banks face increasing competition from nonbanking financial institutions and the financial markets the predictability of the industry with low levels of financial innovation little innovation in distribution channels and well defined and rigid institutional structures is gone product innovations new distribution channels and emerging new competitors are in abundance moreover the subprime crisis that has hit the financial sector in 2007 2008 appears to have a major impact on the structure of the industry this article emphasizes the importance of understanding the economics of banking for assessing the changes in the industry in particular we point at relationship banking as a prime source of the banks comparative advantage the proliferation of transaction oriented banking trading and financial market activities does however seriously challenge relationship banking in order to focus on these issues in a rigorous way we will evaluate the key insights from the relationship banking literature including the potential complementarities and conflicts of interest between intermediated relationship banking activities and financial market underwriting securitization etc activities we also address the issue of the optimal conglomeration of bank activities including the empirical evidence on scope and scale economies we analyze the strategic positioning of banks in the currently highly uncertain competitive arena and link this to the theory of the firm and particularly firm boundaries and learning

modelling business cycle nonlinearity in conditional mean and conditional variance some international and sectoral evidence this paper tests for the presence of output mean and variance nonlinearities in international industrial production and uk and us sectoral production growth rates using armagqarch bilinear bl and joint bl gqarch models arma gqarch models confirm the presence of asymmetric variance effects in italian uk and us industrial production and in all sectors other than us nondurables and such that the conditional variance of output is increased following negative shocks bl models are identified for german italian and us industrial production and us manufacturing while bl gqarch models of joint nonlinearity in both conditional mean and conditional variance are also found to hold for us industrial production and manufacturing moreover with the exception of italy all bl and bl qarch models provide superior out of sample mean forecasts relative to forecasts from both naive models and models of the arma gqarch class

the effects of foreign strategic investors on business models in china s commercial banks does ownership structure matter abstractintroducing foreign strategic investors fsis is a vital step in the ownership reforms of china s banking industry using china s data from 1995 to 2014 we employ propensity score matching and difference in differences approaches to investigate the effects of fsis on the business models of chinese banks including income structure and funding structure we find that fsis significantly influence income structure the bank s non interest income nii share significantly rises after introducing fsis the higher ownership shares of fsis are associated with the higher nii share and the nii share has been increased when fsis assign directors or senior managers to chinese banks we also report that the effects of fsis on income structure are weaker in state owned banks than those in other banks and ownership concentration weakens the links between fsis and income structure finally this article shows that fsis have no significant influence on funding structure these findings will be informative and

statistical inference for aggregates of farrell type efficiencies in this study we merge results of two recent directions in efficiency analysis research aggregation and bootstrap applied as an example to one of the most popular point estimators of individual efficiency the data envelopment analysis dea estimator a natural context of the methodology developed here is a study of efficiency of a particular economic system e g an industry as a whole or a comparison of efficiencies of distinct groups within such a system e g regulated vs non regulated firms or private vs public firms our methodology is justified by the neoclassical economic theory and is supported by carefully adapted statistical methods copyright 2007 john wiley sons ltd

contagion and banking crisis international evidence for 2007 2009 abstract policy makers aim to avoid banking crises and although they can to some extent control domestic conditions internationally transmitted crises are difficult to tackle this paper identifies international contagion in banking during the 2007 2009 crisis for 54 economies we identify three channels of contagion systematic idiosyncratic and volatility and find evidence for these in 45 countries banking crises are overwhelmingly associated with the presence of both systematic and idiosyncratic contagion the results reveal that crisis shocks transmitted from a foreign jurisdiction via idiosyncratic contagion increase the likelihood of a systemic crisis in the domestic banking system by almost 37 percent whereas increased exposure via systematic contagion does not necessarily destabilize the domestic banking system thus while policy makers and regulatory authorities are rightly concerned with the systematic transmission of banking crises reducing the potential for idiosyncratic contagion can importantly reduce the consequences for the domestic economy

lender screening and the role of securitization evidence from prime and subprime mortgage markets this article examines the link between mortgage securitization and lender screening during the boom and bust of the u s housing market using comprehensive data on both prime and subprime securitized and bank held loans we provide evidence that securitization affected lenders screening decisions in the subprime market for low documentation loans through two channels the securitization rate and the time it takes to securitize a loan the change in decision making by subprime lenders occurs on dimensions that are unreported to investors examining the time series evolution of the securitization market further reinforces these findings we exploit heterogeneity across subprime and prime markets to illustrate that the potential for moral hazard may be reduced with greater collection of hard information and increased monitoring of lenders our results suggest that the policy debate regarding securitization and lenders underwriting standards should separately evaluate the agency and non agency markets with special attention toward the extent of soft information in assets being securitized the author 2012 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oup com oxford university press

assessing the causal effect of curbside collection on recycling behavior in a non randomized experiment with self reported outcome this paper aims at identifying the causal effect of reducing behavioral costs of participation in household waste recycling through curbside collection using propensity score matching and differences in differences estimation with individual level panel data we estimate the effect of curbside collection its variation between types of recyclables and sociodemographic background variables and its elasticity with regard to the distance to collection containers in the bring scheme condition we argue that in a quasi experimental setting dd may be systematically upward biased due to the outcome variable being self reported while ddd may be systematically downward biased in the presence of spillover effects accordingly both estimators can be combined to derive upper and lower bounds of the true effect we find that a curbside scheme has no effect on paper recycling but increases recycling participation by between 10 and 25 points for plastic and packaging moreover we find systematic treatment effect heterogeneity with regard to pre treatment distance to collection sites and individual environmental attitudes but not by socio demography the results of our analysis therefore have important implications for effective and cost efficient implementation of environmental protection policies in urban areas

bank ownership privatization and performance evidence from a transition country abstract this paper combines the static effect of ownership and the dynamic effect of privatization on bank performance in china over 1995 2010 reporting a significantly higher performance by private intermediaries joint stock commercial banks and city commercial banks relative to state owned commercial banks however publicly traded banks subject to multiple monitoring and vetting in capital markets perform better regardless of ownership status the privatization of banks has improved performance with respect to revenue inflow and efficiency gains in the short or long run initial public offerings the positive long run effect is more relevant and significant for banking institutions with minority foreign ownership moreover this paper innovatively estimates interest income efficiency and non interest income efficiency at the same time the results suggest that chinese banks are much more efficient in generating interest income than raising non interest revenue although the latter aspect has improved significantly during the sample period

financial regulation and securitization evidence from subprime mortgage loans we examine the consequences of existing regulations on the quality of mortgage loans originations in the originate to distribute otd market the information asymmetries in the otd market can lead to moral hazard problems on the part of lenders we find using a plausibly exogenous source of variation in the ease of securitization that the quality of loan origination varies inversely with the amount of regulation more regulated lenders originate loans of worse quality we interpret this result as a possible evidence that the fragility of lightly regulated originators capital structure can mitigate moral hazard in addition we find that incentives which require mortgage brokers to have skin in the game and stronger risk management departments inside the bank partially alleviate the moral hazard problem in this setting finally having more lenders inside a mortgage pool is associated with higher quality loans suggesting that sharper relative performance evaluation made possible by more competition among contributing lenders can also mitigate the moral hazard problem to some extent overall our evidence suggests that market forces rather than regulation may have been more effective in mitigating moral hazard in the otd market the findings caution against policies that impose stricter lender regulations which fail to align lenders incentives with the investors of mortgage backed securities 2009 elsevier b v all rights reserved

the performance of universal banks evidence from switzerland abstract this paper examines the performance of swiss banks from 1996 to 1999 using a broad definition of bank output we find evidence of large relative cost and profit inefficiencies in swiss banks a more narrow definition that focuses on only traditional activities leads to efficiency estimates that are even lower we also find evidence of economies of scale for small and mid size banks but little evidence that significant scale economies remain for the very largest banks finally evidence on scope economies is weak for the largest banks that are involved in a wide variety of financial activities taken together these results suggest few obvious benefits from the trend toward larger universal banks in switzerland

are economic time series asymmetric over the business cycle it has long been argued that major cyclical variables such as the unemployment rate display an asymmetric behavior over various phases of the business cycle the paper provides a statistical test for this hypothesis using the framework of finite state markov processes i implement a test to see if the behavior of the unemployment rate is characterized by sudden jumps and slower drops it is argued that the framework provided in the paper can also be used to test other sample path properties of economic time series

delegated monitors large and small germany s banking system 1800 1914 banks play a greater role in the german financial system than in those of the united states or britain germany s large universal banks are admired by those who advocate bank deregulation in the united states others admire the universal banks for their supposed role in corporate governance and industrial finance many discussions distort the german banking system by overstressing one of several types of banks and ignore the competition and cooperation between the famous universal banks and other banking groups tracing the historical development of the german banking system from the early nineteenth century places the large universal banks in context

characterizing nonlinearities in business cycles using smooth transition autoregressive models during the past few years investigators have found evidence indicating that various time series representing business cycles such as production and unemployment may be nonlinear in this paper it is assumed that if the time series is nonlinear then it can be adequately described by a smooth transition autoregressive star model the paper describes the application of these models to quarterly logarithmic production indices for 13 countries and europe tests reject linearity for most of these series and estimated star models indicate that the nonlinearity is needed mainly to describe the responses of production to large negative shocks such as oil price shocks

household responses to pricing garbage by the bag this paper estimates household reaction to the implementation of unit pricing for the collection of residential garbage we gather original data on weight and volume of weekly garbage and recycling of 75 households in charlottesville virginia both before and after the start of a program that requires an eighty cent sticker on each bag of garbage this data set is the first of its kind we estimate household demands for the collection of garbage and recyclable material the effect on density of household garbage and the amount of illegal dumping by households we also estimate the probability that a household chooses each method available to reduce its garbage in response to the implementation of this unit pricing program we find that households 1 reduced the weight of their garbage by 14 2 reduced the volume of garbage by 37 and 3 increased the weight of their recyclable materials by 16 we estimate that additional illegal or at least suspicious disposal accounts for 0 42 pounds per person per week or 28 of the reduction in garbage observed at the curb this abstract was borrowed from another version of this item

environmental regulation of households an empirical review of economic and psychological factors abstract the literature on sustainable consumption and environmental regulation of household behavior is dominated by conceptual and normative approaches as a result many suggestions lack a firm empirical basis to overcome this deficiency econometric studies in three areas of environmentally relevant activities of households are reviewed residential use of energy generation of solid waste and recycling and residential use of water next to price and income elasticities attention is devoted to individual socio economic features and psychological factors such as attitudes knowledge perceptions and values potential psychological determinants and related insights are further examined by discussing a range of representative and illustrative statistical psychological studies of environmental behavior one important general finding is that there are very few empirical studies that systematically combine socio economic and psychological determinants a range of insights for environmental policy is derived and research recommendations are offered

manufacturing stocks expectations risk and co integration the modelling of firms inventory behaviour has been plagued by structural instability and despite a great deal of research effort over recent years little headway has yet been made in producing a structurally stable model of stock levels wallis et al i987 surveyed the main uk models of inventory behaviour and concluded that the tests of predictive failure are particularly powerful when conducted over periods in which data characteristics change and over half the equations we consider are rejected on the basis of their predictive performance in the early i980s this is a surprising result since the poor performance of their predecessors over this period was a prime motivation for the research that has led to the current specifications the similarity in turning points in the forecast errors both for the aggregate stockbuilding equations and for the different categories of stocks suggests the omission of some factor s common to all specifications wallis et al i987 p 144 their analysis was conducted using within sample stability tests and more recent data would undoubtedly find an even higher rejection rate accordingly this paper seeks to identify important omitted components or misspecification in the existing models of inventory behaviour in response to the suggestion in the last sentence of the wallis et al quotation we take as our point of departure a number of recent papers on company sector behaviour which have focused on intertemporal optimisation under rational expectations the seminal work of sargent 1978 on the demand for labour has been followed by a number of studies which seek to treat the firms expectations of future variables in an explicit way this work includes nickell 1 984 and henry and wren lewis i 984 on the labour market and hall et al i986 on the determination of stock levels one common finding amongst these and many other papers is that of a root in the dynamic process under consideration which is close to unity this means that the long run solution for the model is poorly determined and this finding is a cause for some concern recently with the growth of the literature on cointegration see engle and granger 1987 hall i986 this finding takes on an even more serious aspect since a symptom of non cointegration is the lack of a well defined long run solution so the finding of a near unit root may be indicative that earlier researchers were in fact working with sets of variables which failed to cointegrate which would inevitably lead to spurious regression problems in the sense of granger and newbold i 974

what precludes the development of noninterest activities in chinese commercial banks from the perspective of the price of interest activities noninterest activities of chinese commercial banks remain sluggish this article examines the price of interest activities and noninterest activities of chinese commercial banks over 2000 2010 based on ols and 2sls regression we find that the price of interest activities has a significant negative effect on the noninterest activities it appears that controlled interest rate is the main hindrance of the development of noninterest activities and the result is consistent with political view we also find that among state owned commercial banks and nonstate owned ones the relationships of interest activities and noninterest activities are differential the link between the price of interest activities and noninterest activities in state owned commercial banks is stronger than that in nonstate owned commercial banks that is the result of different government intervention degree

how loan portfolio diversification affects risk efficiency and capitalization a managerial behavior model for austrian banks abstract the aim of this paper is to analyze how diversification of banks across size and industry affects risk cost and profit efficiency and bank capitalization for large austrian commercial banks over the years 1997 2003 employing a unique dataset provided by the austrian central bank we test for several different types of managerial hypotheses formalized according to a modified version of the berger and deyoung model berger a n deyoung r 1997 problem loans and cost efficiency in commercial banks journal of banking and finance 21 849 870 we find that although diversification negatively affects cost efficiency it increases profit efficiency and reduces banks realized risk finally diversification seems to have a positive impact on banks capitalization

some evidence concerning macroeconomic chaos abstract an empirical assessment of a linear stochastic perspective for canadian macroeconomic time series is presented the methods used are based on the mathematics of chaos present evidence suggests that low order deterministic chaos does not provide a satisfactory characterization of the data the absence of significant nonlinear structure for the investment and unemployment series is of particular note in light of past findings with american data the degree to which the use of a time trend can impose a pseudo structure on the data is illustrated

characteristics determining the efficiency of foreign banks in australia abstract the factors determining foreign bank efficiency are investigated using a three stage research method it is found that host market incumbency reduces efficiency of foreign banks in australia resulting in over use of inputs factors underlying the limited global advantage hypothesis of berger et al berger allen n deyoung robert genay hesna udell gregory f 2000 globalisation of financial institutions evidence from cross border banking performance brookings wharton papers on financial service 3 23 120 are identified in that nationality specific factors represented by dummy variables are not significant once other relevant effects are controlled for parent profitability is not found to result in increased host nation efficiency while parent credit rating effects are mixed some evidence is presented that banks from more financially sophisticated nations are more efficient the implications of these results are explored from the perspectives of bank management and bank regulators

the life cycle of a microfinance institution the irish loan funds abstract ireland s loan funds were a long lived self sustaining large scale microfinance organization that made millions of loans without collateral to the poor during the first 100 years of their life cycle a period of growth ending in the 1840s they adapted constantly and obtained improvements to their legal structure because they were complementary to the banking system and seen as effective in relieving poverty in their 2nd century they became ossified in part because of competition with commercial banks the loan funds provide an example of sustainable microfinance under harsh economic conditions and illustrate how organizations change incrementally and when successful alter their institutional framework

bank runs deposit insurance and capital requirements diamond and dybvig provide a model of intermediation in which deposit insurance can avoid socially undesirable bank runs we extend the diamond dybvig model to evaluate the costs and benefits of deposit insurance in the presence of moral hazard by banks and monitoring by depositors we find that complete deposit insurance alone will not support the first best outcome depositors will not have adequate incentives for monitoring and banks will invest in excessively risky projects however an additional capital requirement for banks can restore the first best allocation

business cycle asymmetry a deeper look this paper distinguishes two types of asymmetry in business cycles deepness and steepness deepness is defined as the characteristic that troughs are further below trend than peaks are above most previous research has focused exclusively on steepness which refers to cycles in which contractions are steeper than expansions a test for deepness is proposed and applied to u s post war quarterly unemployment real gnp and industrial production evidence of deepness is found for unemployment and industrial production while the evidence for real gnp is weaker previous evidence of steepness in unemployment is confirmed

plant level nonconvex output adjustment and aggregate fluctuations in most manufacturing industries plant level output is adjusted along three margins of capacity utilization shiftwork weekend work and closing temporarily down due to the discrete and lumpy nature of these margins only a fraction of plants adjust output in response to shocks in a business cycle model calibrated to establishment level observations these nonconvexities make aggregate output less volatile than when plants can adjust smoothly further the mass of adjusting plants is larger in downturns than in upturns leading to counter cyclical volatility of aggregate output and government policy being slightly more effective in recessions than in expansions