bank stability and managerial compensation abstract we investigate the relationship between insolvency risk and executive compensation for bhcs over the 1992 2008 period we employ ceo compensation sensitivity to risk vega and pay share inequality between the ceo and other executives as measures of compensation and employ a system model to account for the endogeneity problem between vega and risk five main results are obtained first ceo compensation sensitivity to risk of bhcs has risen in response to deregulation to resemble those of the industrial firms second higher vegas lead to greater bank instability third the association between bank stability and managerial compensation is bi directional higher vegas induce greater risk and vice versa fourth bhcs in the next to the largest size group increase ceo vegas the most and have the strongest potential to create instability fifth increased pay share inequality has effects opposite to those of the increase in vega greater pay share inequality is associated with greater stability

determinants of donations in private nonprofit markets abstract we estimate the responsiveness of donations to a number of economic variables including price advertising and the availability of revenue from such other sources as government grants and program service sales utilizing a set of irs data on individual nonprofit organizations in each of seven industries including hospitals and higher education for the years 1982 1994 we find distinct overall patterns as well as notable variation across industries a nonprofit organization s fundraising expenditures are estimated to exert two countervailing effects on donations the direct advertising and information effect augments donations while the indirect effect on the price of donating has a negative effect we do not find evidence that fundraising is carried to the profit maximizing levels in some industries fundraising is substantially short of that level while in other industries it is excessive implying that the marginal return to fundraising is exceeded by the cost focusing on whether revenue from other sources affects donations to a nonprofit organization we find evidence that revenue from either government grants or from the organization s own program sales activity generally does not crowd out private donations to the contrary in most industries there are significant positive effects

effects of the price of charitable giving evidence from an online crowdfunding platform abstract a long literature has examined the effects of the price of giving that is the amount an individual must give for one dollar to accrue to the charitable activity itself on donative behavior we use data from donorschoose org an online platform linking teachers with prospective donors that are uniquely suited to addressing this question due to exogenous variation in overhead costs an increased price of giving results in a lower likelihood of a project being funded we also calculate the price elasticity of giving finding estimates between 0 8 and 2 finally we examine the effect of competition on giving and find that increased competition reduces the likelihood of a project being funded these results provide insight into the workings of the market for charitable gifts

are church and state substitutes evidence from the 1996 welfare reform abstract churches provide community services similar to those provided by the government but there has been no convincing analysis of the extent to which church activity can substitute for government activity to address this important issue this paper uses a new panel data set of presbyterian church usa congregations to regress both church member donations and a church s community spending on a number of variables including government welfare expenditures a provision of the 1996 welfare law that decreased the availability and use of welfare services by non citizens serves as an instrument to identify the causal effect of government spending on church activity the results show that church activities substitute for government activities extrapolating the findings to all denominations the estimated crowd out effect lies between 20 and 38 cents on the dollar the results are subjected to a number of robustness tests

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

what is the effect of unconventional monetary policy on bank performance this paper examines the relationship between unconventional monetary policy and the us banking performance unconventional monetary policy is captured through the central bank s assets and excess reserves results show that unconventional monetary policy has a negative relationship with bank performance further analysis shows that the negative association between unconventional monetary policy and performance is mitigated for banks with a high level of asset diversification and low deposit funding we also find that the negative relationship between unconventional monetary policy and performance subdues for deposit insured financial institutions finally we use dynamic panel threshold analysis which reveals that the negative association between unconventional monetary policy and bank performance is particularly pronounced above the reported threshold value

sustainability limited substitutability and non constant social discount rates abstract the paper shows how limited substitutability in consumption between different classes of goods affects the magnitude and time development of social discount rates it decomposes the discount rates into an absolute growth and a relative growth or substitutability effect the paper relates between good and intertemporal substitutability to the notions of weak and strong sustainability it analyzes under which circumstances low as opposed to high between good substitutability increases the weights given to long run environmental services

demand for charity donations in private non profit markets the case of the u k abstract this paper presents estimates of the demand for donations for u k charities in 1985 these estimates make demand depend upon price fund raising expenditure a quality index and alternative revenue sources the price elasticity of donations found here shows for the most part an elastic response and is consistent with previous studies using u s data our empirical results suggest that non profits in the u k unlike their counterparts in the u s are net revenue maximisers we discovered no significant evidence that public donations crowded out private donations in our sample of 300 charities

the long term role of non traditional banking in profitability and risk profiles evidence from a panel of u s banking institutions abstract the goal of this empirical study is to identify empirically and on a panel basis how non traditional bank activities affect directly the profitability and risk profiles of the financial institutions involved in such activities through a dataset that covers 1725 u s financial institutions involved in non traditional bank activities spanning the period 2000 2013 and the methodology of panel cointegration the empirical findings document that non traditional bank activities exert a positive effect on both the profitability and the insolvency risk the results could be important for regulators given they could serve as a pre warning signal that sends a clear message to regulators about the potential systemic risk that exists within the financial markets

charter value risk taking and systemic risk in banking before and after the global financial crisis of 2007 2008 we investigate how bank charter value affects risk for a sample of oecd banks by using standalone and systemic risk measures before during and after the global financial crisis of 2007 2008 prio

why do people give testing pure and impure altruism abstract researchers measure crowd out around one level of charity output to identify whether giving is motivated by altruism and or warm glow however crowd out depends on output implying first that the power to reject pure altruism varies and second that a single measurement of incomplete crowd out can be rationalized by many different preferences by instead measuring crowd out at different output levels we allow both for identification and for a novel and direct test of impure altruism using a new experimental design we present the first empirical evidence that consistent with impure altruism crowd out decreases with output jel d64 l31

regulations and productivity growth in banking evidence from transition economies this paper examines the relationship between the regulatory and supervision framework and the productivity of banks in 22 countries over the period 1999 2009 we follow a semiparametric two step approach that combines malmquist index estimates with bootstrap regressions the results indicate that regulations and incentives that promote private monitoring pmon have a positive impact on productivity restrictions on banks activities relating to their involvement in securities insurance real estate and ownership of nonfinancial firms also have a positive impact regulations relating to the first and second pillars of basel ii namely capital requirements capr and official supervisory power spr do not have in general a statistically significant impact on productivity over the study period although they appear to gain in importance following the onset of the financial crisis in 2007 the latter finding indicates that stringent capital and supervisory standards have positive productivity effects when financial pressures peak our results are robust when controlling for various country specific features and alternative estimation approaches

demand for collective goods in private nonprofit markets can fundraising expenditures help overcome free rider behavior abstract economic theory ascribes the primary role in the provision of public goods to government this emphasis on government overlooks the role of the not for profit sector in providing collective type goods in this paper we seek to determine the factors influencing charitable contributions to private nonprofit organizations by estimating a demand function for the output of these collective good providers specifically we test the hypothesis that voluntary giving is responsive to conventional market variables such as advertising expenditures price and quality overall the results are strongly supportive

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

how do banks respond to shocks a dynamic model of deposit taking institutions abstract this paper proposes a dynamic model of the optimal choices of a bank that benefits from market power and takes into account the impact of the deposit generation process interbank lending borrowing emerges as a buffer that assists the bank in smoothing intertemporal adjustments in interdependent loan and deposit choices the bank smooths the impact of interest rates shocks on its customers to minimize the adjustments over time of the stocks of deposits and loans it does not however provide insurance against negative shocks of real origin that increase its expected default costs the predictions of the model help to shed light on the available empirical evidence and to analyze some recent developments of the banking industry

board composition and nonprofit conduct evidence from hospitals abstract this study uses data from hospitals to test the hypothesis that management representation on nonprofit boards leads to excessive ceo pay defined as compensation that exceeds the level predicted by a market wage model we document a relatively small but statistically significant positive association between ceo pay and insider boards that include the ceo and other employees as members additional tests confirm that this result is not driven by endogenous board structure and that excess pay is greater in the absence of competition from for profit hospitals we then examine whether management board representation is associated with larger underlying agency concerns that lead to reduced donations our tests do not support this hypothesis but do however reveal a negative correlation between donations and physician representation on the board suggesting a potential conflict between the interests of donors and non employee physicians our overall evidence provides empirical support for modeling nonprofit organizations as consisting of competing stakeholders

determinants of income diversification evidence from chinese banks this article presents an analysis of the determinants of chinese commercial banks income diversification decisions using a panel dataset comprising 88 chinese domestic banks from 2003 to 2010 we

faith based charity and crowd out during the great depression abstract interest in religious organizations as providers of social services has increased dramatically in recent years churches in the u s were a crucial provider of social services through the early part of the twentieth century but their role shrank dramatically with the expansion in government spending under the new deal in this paper we investigate the extent to which the new deal crowded out church charitable spending in the 1930s we do so using a new nationwide data set of charitable spending for six large christian denominations matched to data on local new deal spending we instrument for new deal spending using measures of the political strength of a state s congressional delegation and confirm our findings using a different instrument based on institutional constraints on state relief spending with both instruments we find that higher government spending leads to lower church charitable activity crowd out was small as a share of total new deal spending 3 but large as a share of church spending our estimates suggest that benevolent church spending fell by 30 in response to the new deal and that government relief spending can explain virtually all of the decline in charitable church activity observed between 1933 and 1939

the hazards of expert control chief risk officers and risky derivatives at the turn of the century regulators introduced policies to control bank risk taking many banks appointed chief risk officers cros yet bank holdings of new complex and untested financial derivatives subsequently soared why did banks expand use of new derivatives we suggest that cros encouraged the rise of new derivatives in two ways first we build on institutional arguments about the expert construction of compliance suggesting that risk experts arrived with an agenda of maximizing risk adjusted returns which led them to favor the derivatives second we build on moral licensing arguments to suggest that bank appointment of cros induced organizational licensing leading trading desk managers to reduce policing of their own risky behavior we further argue that ceos and fund managers bolstered or restrained derivatives use depending on their financial interests we predict that ceos favored new derivatives when their compensation rewarded risk taking but that both ceos and fund managers op

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

breaking the bank a probabilistic assessment of euro area bank profitability this paper explores the determinants of profitability across large euro area banks using an approach based on conditional profitability distributions the most reliable determinants of bank profitability are real gdp growth and the nonperforming loan npl ratio the estimated conditional distributions reveal that while higher growth would raise profits on average a large swath of banks would most likely continue to struggle even amid a strong economic recovery therefore for some banks a determined reduction in npls combined with cost efficiency improvements and customized changes to their business models appears to be the most promising strategy for durably raising profitability

financial reporting quality and price competition among nonprofit firms donors increasingly rely on financial information reported by internal revenue service irs form 990 to allocate donations among nonprofit firms however competition among nonprofits creates an incentive for managers to under report management and fund raising expenditures to make their firms appear relatively efficient increasingly researchers suspect that information provided in the form 990 may not accurately portray the true financial condition of nonprofit firms inaccurate price information weakens the ability of donors to promote efficiency and discipline excess among nonprofit managers this article examines the reaction of donors to variation in form 990 reporting quality we find that donors reward nonprofit firms for investments in more accurate financial reporting additionally higher quality financial information sharpens the ability of donor markets to discipline nonprofit firms by increasing price sensitivity the primary implication of this study is that regulatory improvements in rep

the relationship between size growth and profitability of commercial banks using a dynamic panel model for more than 15 000 banks from 148 countries from 1988 to 2010 we investigate the interaction between size growth and profitability of banks for our total sample we cannot reject the hypotheses that the variability of bank profitability and the level and variability of bank growth are independent of bank size however in high income organization for economic cooperation and development oecd countries bigger banks grow slower but are more profitable than small banks while bank growth is not persistent bank profitability is persistent finally we find that bank growth and bank profitability are independent of each other

fee or free checking noninterest checking account fees competition and multimarket banking abstractthis article analyses noninterest checking nic account fees using a unique data set covering 11 875 observations on 1880 banks from 2008 to 2012 these data identify whether the bank has free or fee checking on nic accounts and where relevant the fee and minimum balance to avoid the fee appealing to shrouded equilibrium theory we hypothesize that banks and particularly small banks will avoid drawing the attention of myopic low income types by having stable policies or will attempt to confuse depositors with contradictory policy shifts in the fee and minimum balance requirements competition and small bank size should favour consumers but the meaning of favour is complicated by large depositors and the banks subsidizing small depositors with nic accounts the results support the avoid attention hypothesis particularly for single market banks and weakly support the confuse depositors hypothesis the largest banks including three too big to fail banks are most responsive to competitio

how giving affects giving a long term analysis of donations social preferences theories suggest that at least some people show altruistic behaviour however this philanthropic behaviour ranges from pure altruistic preferences to reluctant altruists the fa

using nonprofit organization level financial data to infer managers fund raising strategies abstract using irs data from 1982 to 1994 this study finds the typical fund raising elasticities in seven categories of nonprofit organizations to be between zero and one these results are consistent with most nonprofit managers following intermediate strategies between pure program service maximization and pure organization size maximization however the distribution of fund raising elasticities contains extreme observations that can disproportionately affect mean elasticities and standard deviations as a result prior researchers tests of the difference of mean elasticities from zero may not properly characterize the behavior of typical nonprofit organizations

kids or cash exploring charter school responses to declining government revenues while the literature is extensive on school districts revenue sources less research has been done on the impact of donations on school district funds in this paper we extend the theoretical literature on crowding out of private donations by government grants for one type of nonprofit firm namely charter schools the theoretical model leads us to focus on the key relationships among fundraising effort enrollment which is tied to federal and state funding and donations using a dataset on texas charter schools we adopt a two stage approach to examine the empirical relationship between changes in nondonor revenues and the donations received by charter schools like the extensive empirical estimates of the effects of government grants on donations for other types of nonprofit firms we find evidence of crowding out with respect to our sample of charter schools we also find a significant positive effect of fundraising on donations with a 1 increase in fundraising associated to a 0 58 increase in donations a pattern consistent with overinvestment in fundraising enrollments exhibit a robust inverse relationship to changes in nondonor revenues jel h00 h32 h50

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

return dependence and the limits of product diversification in financial firms copula garch models indicate dependence between bank returns and those to insurance underwriting securities brokerage and mortgage finance increased during the recent crisis in contrast dependence between banks and the broader market was little changed the crisis related jump in return dependence within the financial services sector was greatest for banks that had previously appeared the most independent larger banks were also especially prone to increased dependence these findings raise doubts about the ability of financial conglomerates to diversify effectively and highlight the need for policy progress in methods for resolving such institutions should they become illiquid or insolvent

accounting for india s forest wealth in this paper we account for forest wealth in india changes in the timber and carbon wealth embodied in these forests are related to important green national accounting aggregates such as genuine saving and the change in wealth per capita important accounting issues include the timing of carbon releases that occur when forests are disturbed as well as the valuation of these releases our empirical findings suggest that while india s forest wealth is substantial net changes in this wealth are arguably not so large at least in relation to gnp however when viewed in the context of the wealth diluting effects of population growth this implies a far larger additional savings effort is required to cover the net loss in forest values than otherwise appears to be the case finally we examine ways in which the accounting approach that we adopt can be reconciled with approaches which stress conserving forest wealth

managerial rewards and the behavior of for profit governmental and nonprofit organizations evidence from the hospital industry abstract studies of mixed industries frequently focus on differential behavior between for profit and either nonprofit or governmental producers substantially less is known about differences among governmental religious nonprofit and secular nonprofit organizations we examine the compensation of hospital ceos to assess the extent to which these three organizational forms pursue similar objectives compensation levels the use of salaries versus bonuses as proxies for weak versus strong incentives and the criteria organizations use to determine bonuses are analyzed we conclude that the ceo incentive contracts at religious nonprofit secular nonprofit and governmental hospitals imply substantive differences in the behavior of these organizations

assessing the economic viability of alternative water resources in water scarce regions combining economic valuation cost benefit analysis and discounting abstract this paper demonstrates a comprehensive methodology for assessing the viability of an environmental management plan that has long run economic and ecological impacts the case study under consideration is the implementation of a water resource management plan in a water scarce region of the world namely cyprus specifically this plan proposes to replenish a depleting aquifer with treated wastewater the proposed methodology first identifies the key stakeholder groups farmers and the general public who are hypothesized to derive economic values benefits from implementation of this plan and then uses stated preference methods to capture the total economic value of these benefits benefits are aggregated over the relevant populations of these stakeholder groups and weighed against the total costs of implementing the plan in a long run cost benefit analysis cba an econometrically estimated time declining trajectory of discount rates is used for the cba in order to assess the long run sustainability of the plan the results reveal that the net benefit trajectory estimated with the time declining discount rate takes one and a half to three times as long to come to a plateau compared to the constant discount rates of 3 5 and 6 emphasizing the importance of using declining discount rates and capturing the entirety of the benefits generated by such plans this methodology is particularly recommended for providing much needed information to support the implementation of the eu water framework directive which advocates the use of cba with consideration of the notion of sustainability for achieving the good water status for all european waters

a portfolio view of banking with interest and noninterest activities this paper uses a portfolio framework to evaluate the impact of increased noninterest income on equity market measures of return and risk of u s bank holding companies from 1997 to 2004 the results indicate that the banks most reliant on activities that generate noninterest income do not earn higher average equity returns but are much more risky as measured by return volatility both total and idiosyncratic and market betas this suggests that the pervasive shift toward noninterest income has not improved the risk return outcomes of u s banks in recent years

the impact of off balance sheet activities on banks returns an application of the arch m to canadian data abstract this paper revisits the impact of off balance sheet obs activities on banks risk return trade off recent studies e g stiroh and rumble 2006 show that increasing obs activities does not necessarily yield straightforward diversification benefits for banks however introducing a risk premium in the standard banks returns models and resorting to an arch m procedure canadian data suggest that banks risk return trade off displays a structural break around 1997 in the second subperiod of our sample 1997 2007 we find that the noninterest income generated by obs activities no longer impacts banks returns negatively while during the first period 1988 1996 the volatility variable is not significant in any returns equations a risk premium eventually emerges pricing the risk associated to obs activities

winners and losers from financial derivatives use evidence from community banks this article provides empirical evidence on how profitability of small community banks was affected by derivatives use before and after the 2008 crisis we use an endogenous switching regressions m

agency problems and unrelated business income of non profit organizations an empirical analysis nonprofit organizations are traditionally assumed to dislike commercial activities in the usa they are however allowed to engage in commercial activities but the income they derive from these activities is then subject to the so called unrelated business income tax if npos do indeed dislike commercial income then why do they engage in these activities using a data set of 2103 us npos this study suggests that the presence of agency problems inside the organization can at least provide an explanation for the occurrence of unrelated business income

competition and risk in south east asian commercial banking this article investigates the effects of competition on bank risk taking behaviour in four south east asian countries indonesia malaysia philippines and vietnam our main finding is that competition does not increase bank risk taking behaviour and the results appear robust to different model specifications estimation approaches and variable construction we also find that concentration is inversely related to bank risk whereas regulatory restrictions positively influence bank risk taking

the deposits channel of monetary policy we propose and test a new channel for the transmission of monetary policy we show that when the fed funds rate increases banks widen the interest spreads they charge on deposits and deposits ow out of the banking system we present a model in which imperfect competition among banks gives rise to these relationships an increase in the nominal interest rate increases banks market power inducing them to increase deposit spreads and hence restrict deposit supply households respond to the increase in deposit prices by substituting from deposits into less liquid but higheryielding assets consequently changes in the nominal interest rate aect banks cost of capital and lending using branch level data on the universe of u s banks we show that following an increase in the fed funds rate deposit spreads increase by more and supply falls more in areas with less deposit competition we control for changes in banks lending opportunities by comparing branches of the same bank we control for changes in macroeconomic conditions by showing that deposit spreads widen immediately after a rate change and even if this change is fully anticipated our results imply that monetary policy has a signicant impact on how the nancial system is funded on the quantity of safe and liquid assets it produces and on its provision of loans to the real economy

charity donations in the uk new evidence based on panel data abstract this paper presents a set of panel data estimates for 159 of the most prominent uk charities for the period 1983 1990 in evaluating alternative specifications we settle on a fixed effects estimation social welfare charities are shown to fund raise short of the point at which net revenues are maximized whereas health and overseas charities are found to net revenue maximize religious charities maximize total revenues estimates of price and fund raising elasticities are presented for charities overall and for four cohorts for alternative income sources no evidence of crowding out is found

has regulation of charitable foundations thrown the baby out with the bath water abstract regulations to curb tax avoidance and evasion through charitable foundations have been in place since the tax reform act of 1969 newly compiled longitudinal data makes it possible to estimate the effects of these regulations by comparing affected and unaffected foundations before and after the reform donations and entry dropped precipitously proxy variables suggest significant deterrence of abuses but half of the decline in donations can be explained by the increased cost of running a foundation the results highlight the potential for large reductions in the benefits of regulation when the cost of compliance affects externality producing actions such as charitable giving

the robustness of kingma s crowd out estimate evidence from new data on contributions to public radio we revisit kingma s kingma 1989 journal of political economy 97 1197 1207 widely cited study of charitable contributions to public radio kingma s estimate of partial but statistically significant crowd out remains a benchmark in the literature because he was able to match household level contributions data with station level data on revenue including revenue from government grants to the best of our knowledge no comparable data have become available until now we replicate kingma s estimates with the original data and then apply the same methodology to very similar data from 1996 kingma s estimates are not robust to the use of the newer data

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

the impact of underwriting and dealing on bank returns and risks abstract this study uses portfolio theory to investigate empirically the potential for diversification gains from expanded bank securities powers diversification potential is examined using microeconomic data on returns to existing bank securities and non securities activities over 1976 through 1985 both the mean and standard deviation of returns to securities activities are found to be greater than those of non securities activities some potential for diversification gains is found although this appears to be quite limited experiments designed to estimate the effect of using industry and time aggregated data are performed

bank systemic risk and macroeconomic shocks canadian and u s evidence abstract this paper investigates how banks as a group react to macroeconomic risk and uncertainty more specifically it examines the relationship between bank systemic risk and changes and disruptions in economic conditions adopting the methodology of beaudry et al 2001 we introduce a new estimation procedure based on egarch to refine the framework developed by baum et al 2002 baum et al 2004 baum et al 2009 and quagliariello 2007 quagliariello 2009 and we analyze the relationship in the current industry context i e in the context of market based banking our results confirm that banks tend to behave more homogeneously vis a vis macroeconomic uncertainty in particular we find that both the cross sectional dispersion of loans to assets and the cross sectional dispersion of non interest income share shrink during slow growth episodes and particularly during financial crises when the resilience of the banking system is at its lowest more importantly our main findings indicate that the cross sectional dispersion of loans to assets has increased in the last decade whereas the cross sectional dispersion of non interest income share appears to be more volatile and sensitive to macroeconomic shocks

private donations government grants commercial activities and fundraising cointegration and causality for ngos in international development cooperation ngos could help scale up foreign aid efforts by mobilizing private donations however fundraising activities do not necessarily result in higher donations and substitution effects between different sources of revenue may diminish the overall pool of ngos resources this paper examines the determinants of private donations to us based ngos engaged in international development cooperation we employ panel cointegration and causality techniques to analyze the interactions between private donations government grants commercial revenues and fundraising expenditures according to our results a marginal dollar spent on fundraising yields almost five dollars in new donations in the long run government grants crowd in private donations in the long run whereas commercial revenues crowd out donations in the long run moreover our panel vector error correction model reveals complex short run dynamics

how do asset encumbrance and debt regulations affect bank capital and bond risk abstract we study how optimal bank capital and bond risk are influenced by asset encumbrance depositor preference and bail in resolution frameworks due to changes in optimal capital structure the net effect on bond debt risk and valuation is small the effects on shareholder value and public sector liability value are significant a gap between optimal and required capital represents a cost to shareholders and increases the risk of regulatory arbitrage the features of bank debt financing we analyze here may explain the stable cross sectional variation in bank capital documented in literature based on a small sample of european banks we find support for the central model predictions

simple banking profitability and the yield curve how does bank profitability vary with interest rates we present a model of a monopolistically competitive bank subject to repricing frictions and test the model s predictions using a unique panel data set on uk banks we find evidence that large banks retain a residual exposure to interest rates even after accounting for hedging activity operating through the trading book in the long run both level and slope of the yield curve contribute positively to profitability in the short run however increases in market rates compress interest margins consistent with the presence of nonnegligible loan pricing frictions

interest rate derivatives at commercial banks an empirical investigation abstract i analyze the effects of bank characteristics and macroeconomic shocks on interest rate risk management behavior of commercial banks my findings are consistent with hedging theories based on cost of financial distress and costly external financing banks with higher probability of financial distress manage their interest rate risk more aggressively both by means of on balance sheet and off balance sheet instruments as compared to the derivative users the derivative non user banks adopt conservative asset liability management policies in tighter monetary policy regimes finally i show that the derivative non user bank s lending volume declines significantly with the contraction in the money supply derivative users on the other hand remain immune to the monetary policy shocks my findings suggest that a potential benefit of derivatives usage is to minimize the effect of external shocks on a firm s operating policies

do tax incentives affect charitable contributions evidence from public charities reported revenues this paper estimates the effect of the charitable contribution tax deduction on charities donation revenue from charities tax filings a one percent increase in the tax cost of giving causes charitable receipts to fall by about four percent an effect three times larger the consensus in the literature further analysis reveals substantial heterogeneity in the tax response by subsector health care and home care are more tax sensitive than other charities while higher education and arts are less tax sensitive the results are consistent with substantial tax response heterogeneity within the sample and between sampled and unsampled charities implying that the mean tax elasticity of charitable contributions is a poor predictor of tax incentive effects for individual charities

balance sheet insolvency and contribution revenue in public charities abstract using form 990 data reported by public charities we document significant bunching of nonprofits at near zero net assets the threshold for insolvency bunching occurs despite the fact that creditors cannot force insolvent nonprofits into involuntary bankruptcy we show that the extent of bunching is greater among organizations that rely more heavily on contribution revenue and that by inflating their net assets bunching organizations are able to increase their contribution revenue relative to firms that report negative net assets charitable donors appear to use the net assets threshold as a heuristic for a charity s financial health nonprofit managers in turn respond to the preferences of their donors

on the implications of market power in banking evidence from developing countries abstract this paper investigates how different degrees of market power affect bank efficiency and stability in the context of developing economies it sheds light on the competition stability nexus by documenting and analyzing the complex interactions between a tripod of variables that are central for regulators the degree of market power bank cost and profit efficiency and overall firm stability the results show that an increase in the degree of market power leads to greater bank stability and enhanced profit efficiency despite significant cost efficiency losses the findings lend empirical justification to the traditional view that increased competition may undermine bank stability and may bear significant implications for stressed banking systems in developing economies

the risk of financial intermediaries this paper reconsiders the formal estimation of bank risk using the variability of the profit function in our model point estimates of the variability of profits are derived from a model where this variability is endogenous to other bank characteristics such as capital and liquidity we estimate the new model on the entire panel of us banks spanning the period 1985q1 2012q4 the findings show that bank risk was fairly stable up to 2001 and accelerated quickly thereafter up to 2007 we also establish that the risk of the relatively large banks and banks that failed in the subprime crisis is higher than the industry s average thus we provide a new leading indicator which is able to forecast future solvency problems of banks

size and earnings volatility of us bank holding companies abstract we examine whether bank earnings volatility depends on bank size using quarterly data for bank holding companies in the united states for the period 1995q1 2010q3 and controlling for the quality of management leverage and diversification we find that bank size reduces return volatility however the effect is non linear when bank size exceeds a certain threshold about us 5 billion size is positively related to earnings volatility the recent financial crisis decreased the threshold beyond which the impact of size on volatility turns positive

partners in giving the crowding in effects of uk government grants abstract this study examines the determinants of voluntary donations to uk charities using empirical specifications that combine error component and simultaneous equations methods in a series of tests we identify the one way fixed effects endogenous representation for government grants as the best empirical model when this endogeneity is taken into account government grants cause significant crowding in for the full sample and the two largest cohorts price coefficients are negative and fund raising coefficients are positive religion charities are net revenue maximizers whereas other charity cohorts fund raise short of net revenue maximization

impure altruism in dictators giving abstract we design an experiment to test whether incomplete crowding out in dictator games can be rationalized by the impurely altruistic preferences by giving the recipients an endowment of varying levels we create an environment in which crowding out may occur we find that the behavior of 66 of the dictators can be rationalized by the impurely altruistic utility function

on the riskiness of universal banking evidence from banks in the investment banking business pre and post glba we explore whether an economically significant differential exists in market based risk measures between universal banks and traditional banks using a three asset portfolio regression model we find that between 1990 and 2007 a period of gradual deregulation culminating in passage of the gramm leach bliley act glba of 1999 an increased participation in investment banking was associated with higher total and unsystematic risks and no significant change in systematic risk small risk reduction benefits emerged in the post glba era but such benefits were likely the result of the particular sample period rather than a fundamental change in bank structure following the glba our results cannot justify the glba on risk reduction grounds though the act may be defensible for other reasons

does negative advertising affect giving behavior evidence from campaign contributions abstract this paper contributes to a growing literature that explains why individuals contribute to political campaigns we build a panel dataset that follows contributors from primary to general elections to quantify the persistence of giving in political contests those who gave to winning candidates in the primary were most likely to contribute again in the general election next we use an instrumental variable strategy to document that within party negative advertising decreases the probability that individuals contribute to their preferred party in the general election regardless of whether they initially contributed to a winning or losing primary candidate

how do nonprofit hospitals manage earnings abstract we hypothesize that unlike for profit firms nonprofit hospitals have incentives to manage earnings to a range just above zero we consider two ways managers can achieve this they can adjust discretionary spending hoerger t j 1991 profit variability in for profit and not for profit hospitals journal of health economics 10 259 289 and or they can adjust accounting accruals using the flexibility inherent in generally accepted accounting principles gaap to test our hypothesis we use regressions as well as tests of the distribution of earnings by burgstahler and dichev burgstahler d dichev i 1997 earnings management to avoid earnings decreases and losses journal of accounting and economics 24 99 126 on a sample of 1 204 hospitals and 8 179 hospital year observations our tests support the use of discretionary spending and accounting accrual management like hoerger 1991 we find evidence that nonprofit hospitals adjust discretionary spending to manage earnings however we also find significant use of discretionary accruals e g adjustments to the third party allowance and allowance for doubtful accounts to meet earnings objectives these findings have two important implications first the previous evidence by hoerger that nonprofit hospitals show less variation in income may at least partly be explained by an accounting phenomenon second our findings provide guidance to users of these financial statements in predicting the direction of likely bias in reported earnings

nonprofits with distributional objectives price discrimination and corner solutions abstract we characterize the patterns of pricing and rationing when paternalistic nonprofit organizations either private or governmental care about the level and distribution of consumer surplus provided to their clients equilibrium depends upon marginal cost the organization s distributional weights exogenous income levels and cream skimming by competing for profit firms in equilibrium some consumers pay their reservation price or a lower price above marginal cost some pay less than marginal cost some obtain the good for free and some are not permitted to buy the good at any acceptable price comparative statics here differs from that for output or profit maximizers with discontinuous price schedules shifting abruptly when exogenous income changes

unconventional monetary policy and bank risk taking abstract we analyze the presence of bank risk taking associated with unconventional monetary policy in the united states between 2008 and 2015 using corporate syndicated loan data at the bank firm level we measure monetary policy using the identification through heteroskedasticity approach with a var model to identify the risk taking channel we control for time varying heterogeneity in credit demand and supply our results indicate that accommodating monetary conditions are associated with overall lower loan spreads however the spread reduction is lower for riskier firms suggesting that there is no risk taking behavior in the syndicated loan market during the ump period

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

financial consumption and the cost of finance measuring financial efficiency in europe 1950 2007 this paper proposes to assess financial intermediation efficiency in germany france the uk and europe more broadly over the past 60 years i rely on philippon s 2012 methodology which calculates the unit cost of financial intermediation through the ratio of financial consumption measured by financial income to financial output approximated by the sum of outstanding assets intermediated the contribution of this paper is threefold first because financial industry va ignores banks capital income capital gains dividends and interest on securities it is an imperfect measure of the consumption of financial intermediation so long as capital income generates wages and profits to financial intermediaries it is akin to an implicit consumption of financial services using banking income instead of banking va to measure the consumption of banking services i show that the gdp share of finance has increased continuously in germany france the uk and europe as a whole second the unit cost of financial intermediation increased over the past 40 years except in france where overall it stagnated in addition the european unit cost matches the us unit cost calculated by philippon 2012 finally because financial intermediaries deal with nominal stocks and ows and because the unit cost increases during periods of monetary troubles i focus here on nominal rates of interest to explain the evolution of unit cost i show that a rise in nominal rates of interest increases the spread of bank interest so that 1970s and 1980s high unit costs are statistically explained by increases in short term interest rates on the other hand post 1990s high unit cost seems to coincide with the development of new market based activities

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

valuation of diversified banks new evidence abstract this paper reconsiders the effect of diversification on bank valuation our objective is to provide new evidence based on a unified estimation framework that places particular emphasis on separating the effects of diversification specialised banks vs diversified banks from those of bank type investment banks vs commercial banks consistent with prior studies we find a significant diversification discount at the end of the 1990s our main finding is that it decreases over time and practically vanishes after the financial crisis we do not find support for the hypothesis that the diversification effect is influenced by geographical or regulatory factors the valuation impact of bank characteristics varies over time particularly in the financial crisis but this structural break does not explain the observed decrease of the diversification discount we show that the pre crisis discount is considerably smaller in a robust regression which in part is driven by banks with a large share of non interest income

bank sovereign risk spillovers in the european debt crisis this paper investigates contagion between bank risk and sovereign risk in europe over the period 2006 2011 since this period covers various stages of the banking and sovereign crisis it oers a fertile ground to analyze bank sovereign risk spillovers we de ne contagion as excess correlation i e correlation between banks and sovereigns over and above what is explained by common factors using cds spreads at the bank and at the sovereign level moreover we investigate the determinants of contagion by analyzing bank speci c as well as country speci c variables and their interaction we provide empirical evidence that various contagion channels are at work including a strong home bias in bank bond portfolios using the eba s disclosure of sovereign exposures of banks we nd that banks with a weak capital and or funding position are particularly vulnerable to risk spillovers at the country level the debt ratio is the most important driver of contagion

goodwill bazaar ngo competition and giving to development this paper builds a model of competition through fundraising between horizontally differentiated ngos ngos allocate their time resource between working on the project and fundraising which attracts private donations if the market size is fixed the fundraising levels increase with the number of ngos and the free entry equilibrium number of ngos can be larger or smaller than the socially optimal number depending on the efficiency of the fundraising technology if the market size is endogenous and ngos cooperate in attracting new donors fundraising levels decrease with the number of ngos and the free entry equilibrium number of ngos is smaller than the one that maximizes the welfare of donors and beneficiaries if ngos can divert funds for private use multiple equilibria with high diversion and no diversion of funds appear

profit strategy of greek banks cross subsidization and diversification versus complementarity abstractthis study analyses the profit strategy employed by banks in greece using dynamic panel data techniques and a data set which includes proprietary supervisory data covering the whole greek commercial banking system from 2004 to 2011 we provide evidence that banks use interest and non interest income non ii as substitutes rather than complements with non ii representing an indirect competition instrument by the more efficient banks used in place of direct competition with their peers through prices on loans and deposits this behaviour is explained by further decomposing the non ii into the relatively stable fees component and the volatile trading income moreover we provide evidence that the net interest income is primarily affected by the banks market power and their operating costs while more efficient banks exploit their core deposit base to lever their non ii finally macroeconomic developments affect both income components which are found to be procyclical with respect to economic ac

the relationship between net interest margin and noninterest income using a system estimation approach abstract this paper examines the determinants of bank net interest margin nim and non traditional banking activities nii a system estimation approach is employed to control for the simultaneity between nim and nii for commercial banks in a group of 28 financially liberalized countries during the period between 1997 and 2004 we find a statistically significant negative relationship between nim and nii for the period between 1997 and 2002 a generally positive but statistically insignificant association between nim and nii is found for the subsequent period 2003 2004 banks increasing involvement in non traditional activities is negatively correlated with risk adjusted profitability measures in the former subperiod suggesting no obvious diversification benefits however the share of noninterest income is positively related to the return on assets roa and the return on equity roe for the latter subsample

does uniqueness in banking matter abstract we investigate whether and how the uniqueness of banking activities affects the performance and systemic risk of u s banks we find that banks performing more unique activities exhibit higher profitability and lower risk controlling for size diversification and other key characteristics we further find that banks sensitivity to systemic risk displays an inversely u shaped relation with activity uniqueness we interpret the impact of uniqueness in analogy to recent theories showing that systemic diversity promotes financial stability our study highlights the role of uniqueness in banking and has important implications for policy makers and banking regulators

why have negative nominal interest rates had such a small effect on bank performance cross country evidence abstract we explore the impact of negative policy rates on banks using data on 5200 banks from 27 advanced european and asian countries 2010 2017 our cross country panel specification allows us to condition on global shocks and bank specific fixed effects banks offset interest income losses under negative rates with lower deposit expenses and gains in non interest income including fees and capital gains small and low deposit ratio banks drive most results banks respond to negative rates by increasing lending activity and raising their share of deposit funding overall our results indicate benign implications of negative rates to date for bank profitability

social discounting under uncertainty a cross country comparison recent research suggests that social cost benefit analysis should be conducted with a declining discount rate for instance newell and pizer discounting the distant future how much do uncertain rates increase valuations j environ econ manage 46 2003 52 71 show that the us certainty equivalent discount rate declines through time using a simple autoregressive model of us interest rates this paper extends that line of research estimating both autoregressive and regime switching models of real interest rates to determine certainty equivalent discount rates in australia canada germany and the uk it is found that the regime switching model is a better model of past interest rate behavior for all four countries this model tends to produce a more rapid decline in certainty equivalent discount rates the paper provides applications to the economics of climate change and nuclear power

banks non traditional activities under regulatory changes impact on risk performance and capital adequacy using the big six canadian chartered banks quarterly financial statements and daily stock market data from 1982 to 2018 we examine the impact of non interest income on canadian banks risk perfor