strategic demand side response to wind power integration this paper explores the effects of allowing large price responsive consumers to provide reserves in a power system with significant penetration of wind energy a bilevel optimization model represents the utility maximization problem of a large consumer subject to a stochastic day ahead co optimization of energy and reserves that a system operator would solve to clear the market while considering wind power uncertainty an examination of the market outcomes from both an illustrative and a large scale study using this model allows analysis of a the effects of the type of behavior of the large consumer i e strategic vs competitive b limits on the amount of reserves it is allowed to provide and c variability and accuracy of characterization of wind power uncertainty

equilibrium loan pricing under the bank client relationship abstract we determine the loan interest rate policy of a lender who is better informed about a client than other potential lenders the informational advantage possessed by the informed lender derives from the durability of information acquired as a result of an extant relationship given heterogeneous potential loan rate offers to the client by competitive lenders and client search costs the incumbent lender s policy of loan interest rate offers is examined we show that the optimal loan rate will exceed the incumbent lender s cost of funds and will exceed the average offer of competing lenders the potential lenders will offer loan rates that are exceeded by their cost of funds implying immediate losses in order to attract the client and to thereby earn expected profits in the future finally we show that the expected remaining duration of a lender client relationship is decreasing in the existing length of the relationship thus clients that have been with a particular lender longer will be more likely to leave and establish a relationship with another lender

flight to quality in banking and economic activity abstract recent explanations of the transmission mechanism of monetary policy have emphasized that riskier lower net worth borrowers are more dependent on bank lending than larger less risky borrowers evidence from the federal reserve s survey on terms of bank lending indicates that the proportion of relatively high quality new loans safe moves countercyclically and granger causes gdp and inventory investment in the aftermath of a tightening of monetary policy the safe variable increases and in turn policy tends to relax once safe has risen

wind power investment a benders decomposition approach investment in wind power facilities involves a high level of uncertainty to properly model such uncertainty we consider a large number of scenarios and formulate this investment problem as a mathematical program with equilibrium constraints the target of this problem is to maximize the profit from wind power investment in a target year and it is subject to complementarity constraints describing a large number of market clearing conditions since the profit as a function of the investment variables has as sufficiently convex envelope the considered problem can be solved by benders decomposition thus we propose describe and analyze a benders decomposition algorithm to efficiently tackle the wind power investment problem

generation capacity expansion in energy markets using a two level game theoretic model with a significant number of states in the u s and countries around the world trading electricity in restructured markets a sizeable proportion of capacity expansion in the future will have to take place in market based environments however since a majority of the literature on capacity expansion is focused on regulated market structures there is a critical need for comprehensive capacity expansion models targeting restructured markets in this research we develop a two tier matrix game model and a novel solution algorithm that incorporates risk due to volatilities in profit via cvar intended for use by generators to make multi period multi player generation capacity expansion decisions we demonstrate the applicability of the model using a sample network from power world software and analyze the results

banking spreads in latin america i introduction financial intermediation in latin america is low by international standards financial systems in latin america are still largely bank based but after a short period of strong credit growth sparked by financial liberalization in the early 1990s bank lending has not yet recovered from the collapse following the banking crises of the mid 1990s as shown by singh et al 2005 as a result from figure 1 it is clear that bank lending as a percentage of gross domestic product gdp is low compared to industrialized countries and other emerging markets this lack of financial intermediation is seen as an important obstacle to growth there is a considerable body of evidence indicating that financial intermediation is not only correlated with growth but also a causal factor in explaining economic performance see e g levine 2004 the low levels of lending in latin america appear related to the prevalence of high intermediation costs in the region intermediation spreads in latin america are high compared to those in other banking markets this is true when measuring spreads as either ex ante bank spreads the difference between weighted averages of lending rates and bank funding costs figure 2 or ex post net interest margins defined as the bank s total interest income minus total interest expense divided by the sum of interest bearing assets figure 3 the high levels of spreads are not a recent phenomenon and unlikely to be a result of the ongoing process of bank consolidation as in other regions in the 1990s latin america saw a trend toward bank consolidation and concentration to a large extent as depicted in inter american development bank 2004 consolidation was driven by financial crises and subsequent regulatory tightening while this resulted in a marked reduction in the number of banks in most countries it does not seem to have yielded a decline in competition intensity partly because it was accompanied by a lowering of barriers of entry to foreign banks which is shown in gelos and roldos 2004 and inter american development bank 2004 in fact banking spreads have fallen somewhat over the past decade although the pace of the reduction has been slow figure 4 1 this paper takes a closer look at the determinants of bank interest margins in latin america using bank and country level data from 85 countries including 14 latin american economies we assess the role of bankand country specific factors in determining banking spreads using microdata from more than 2 200 banks taking an international perspective allows us to delineate the key dimensions in which latin america differs from other regions the paper differs from existing studies in further dimensions apart from the latin american specific focus in a cross country approach among other aspects we make use of new or expanded data sets including comprehensive information on reserve requirements and foreign ownership and investigate the relationship between competition and bank spreads using behavioral measures of bank competition suggested by the new industrial organization literature figure 1 omitted figure 2 omitted the results suggest that latin america has higher interest rate levels less efficient banks and larger reserve requirements than other regions and that these factors have a significant impact on spreads however latin american countries do not differ markedly from their peers in other aspects that are found important in determining the cost of financial intermediation such as inflation bank profit taxation average bank size or average equity as a percentage of total bank assets ii the determinants of spreads literature review the extensive literature on bank behavior suggests that at the country level the following factors are likely to influence the cost of credit creditor rights and the quality of the legal framework higher recovery rates and shorter times to repossess collateral in countries with better legal environments are expected to reduce bank spreads

two stage robust generation expansion planning a mixed integer linear programming model this paper presents a new uncertainty handling framework for optimal generation expansion planning gep amalgamating the notions of single stage and two stage robust optimization ro the proposed multiyear robust gep methodology as a tractable mixed integer linear programming optimization problem copes with the inherent planning uncertainties associated with forecasted electricity load demand as well as estimated investment and operation costs through distribution free bounded intervals producing polyhedral uncertainty sets the optimal generation expansion plan obtained from the proposed ro approach is immunized against worst case planning uncertainties considering the adopted degree of conservatism for each uncertainty set therefore the proposed methodology is capable of controlling the robustness of the optimal investment schedule regarding the enforced planning uncertainties simulation results demonstrate the efficacy and efficiency of the proposed ro framework throughout gep studies

banks as multioutput oligopolies an empirical evaluation of the retail and corporate banking markets the distinction between retail and corporate banking markets is of much importance in real life banking organizations the two markets differ with respect to concentration the importance of informational asymmetries and the extent of customer mobility within a standard conjectural variation model estimated on cost efficient banks as well as on the full sample of banks the authors empirically characterize the strategic behavior in each of these markets and also focus on cross market interactions to see whether initial moves in one market affect the equilibrium in the other market they compare their findings to the predictions that would follow from merely considering concentration ratios such as the herfindahl index

foreign entry and bank competition abstract foreign entry and bank competition are modeled as the interaction between asymmetrically informed principals the entrant uses collateral as a screening device to contest the incumbent s informational advantage both better information ex ante and stronger legal protection ex post are shown to facilitate the entry of low cost outside competitors into credit markets the entrant s success in gaining borrowers of higher quality by offering cheaper loans increases with its efficiency cost advantage this paper accounts for evidence suggesting that foreign banks tend to lend more to large firms thereby neglecting small and medium enterprises the results also explain why this observed bias is stronger in emerging markets

search frictions and market power in negotiated price markets we provide a framework for empirical analysis of negotiated price markets using mortgage market data and a search and negotiation model we characterize the welfare impact of search frictions and

financial system architecture this article builds a theory of financial system architecture we ask what is a financial market what is a bank and what determines the economic role of each starting with basic assumptions about primitives the types of agents and the nature of the informational asymmetries we provide a theory that explains which agents coalesce to form banks and which trade in the capital market it is shown that borrowers of higher observable qualities access the financial market moreover a financial system in its infancy will be bank dominated and increased financial market sophistication diminishes bank lending article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

the determinants and profitability of switching costs in chinese banking this article models the determinants of bank switching costs in china in terms of bank characteristics and non bank variables it also determines the contribution of switching costs to banks profits using a sample of 151 banks over the period 2003 2013 it reports a positive relationship between bank profitability and switching costs the main result is that bank size measured by total assets has a complex relationship with switching costs competition between small banks creates the incentive for lock in and increased switching costs whereas very large banks are less exercised by lock in and switching costs

the role of soft information in a dynamic contract setting evidence from the home equity credit market credit underwriting is a dynamic process involving multiple interactions between borrower and lender during this process lenders have the opportunity to obtain hard and soft information from the borrower we analyze more than 108 000 home equity loans and lines of credit applications to study the role of soft and hard information during underwriting our data set allows us to distinguish lender actions that are based strictly on hard information from decisions that involve the collection of soft information our analysis confirms the importance of soft information and suggests that its use can be effective in reducing overall portfolio credit losses ex post

relationship lending under asymmetric information a case of blocked entry abstract a national bank with a low cost of capital can choose to enter a two period credit market and compete with incumbent banks to supply relationship loans to de novo entrepreneurs under short term contracting the terms on loan contracts are determined by market competition in the current period in this setting we find that the second period competitive pressure the national bank exerts on the incumbent banks turns out to give the incumbent banks a first period advantage when trying to attract new clients as a result the low cost bank may be blocked from entering the market

strategic wind power investment this paper considers the problem of identifying the optimal investment of a strategic wind power investor that participates in both the day ahead da and the balancing markets this investor owns a number of wind power units that jointly with the newly built ones allow it to have a dominant position and to exercise market power in the da market behaving as a deviator in the balancing market in which the investor buys sells its production deviations the model is formulated as a stochastic complementarity model that can be recast as a mixed integer linear programming milp model a static approach is proposed focusing on a future target year whose uncertainties pertaining to demands wind power productions and balancing market prices are precisely described the proposed model is illustrated using a simple example and two case studies

testing the buchanan wagner hypothesis european evidence from panel unit root and cointegration tests according to the buchanan wagnerhypothesis public deficits reduce theperceived price of public goods to thecurrent generation of voters who in turn increase the demands for such socialservices several recent studies haveattempted to test this proposition in thispaper we apply modern time seriestechniques organized around panel unit rootand panel cointegration to draw sharperconclusions from the short time series thatare typically available we find that thereis a long run positive relationship betweengovernment spending and government deficitsfor each country individually as well asfor the panel as a whole this providessupport for the bw hypothesis we alsoanalyze the implications for the relativeproductivity performance of the public andprivate sector the existence of scaleeconomies in the provision of publicservices as well as the extent of crowdingout effects

credit quantity and credit quality bank competition and capital accumulation in this paper we show that bank competition has an intrinsically ambiguous impact on capital accumulation we further show that it is also responsible for the emergence of development traps in economies that otherwise would be characterized by unique equilibria these results explain the conflicting evidence emerging from the recent empirical studies of the effects of bank competition on economic growth we obtain them developing a dynamic general equilibrium model of capital accumulation where banks operate in a cournot oligopoly more banks lead to a higher quantity of credit available to entrepreneurs but also to diminished incentives to offer relationship services that improve the likelihood of success of investment projects we also show that conditioning on one key parameter resolves the theoretical ambiguity in economies where intrinsic market uncertainty is high low less more competition leads to higher capital accumulation

securitization and lending competition we study the eects of securitization on interbank lending competition when banks see private signals of local applicants repayment chances if banks cannot securitize the outcome is e cient they lend to their most creditworthy local applicants with securitization banks lend also to remote applicants with strong observables in order to lessen the lemons problem they face in selling their securities this reliance on observables is ine cient raises the mean default risk and may lead to a deceptive rise in credit scores

lending by example direct and indirect effects of foreign banks in emerging markets using a novel dataset that allows us to trace the bank relationships of a sample of mostly unlisted firms we explore which borrowers are able to benefit from foreign bank presence in emerging markets our results suggest that the limits to financial integration are less tight than the static picture of firm bank relationships implies even though foreign banks are more likely to engage large and foreign owned firms after an acquisition a bank is 20 less likely to terminate a relationship with a firm if the acquirer is foreign rather than domestic most importantly within a credit market firms appear to have the same access to financial loans and ability to invest whether they borrow from a foreign bank or not while foreign banks benefit all firms by indirectly enhancing credit access

the benefits of lending relationships evidence from small business data this paper empirically examines how ties between a firm and its creditors affect the availability and cost of funds to the firm we analyze data collected in a survey of small firms by the small business administration the primary benefit of building close ties with an institutional creditor is that the availability of financing increases we find smaller effects on the price of credit attempts to widen the circle of relationships by borrowing from multiple lenders increases the price and reduces the availability of credit in sum relationships are valuable and appear to operate more through quantities rather than prices

generation investment equilibria with strategic producers part i formulation the first of this two paper series proposes a methodology to characterize generation investment equilibria in a pool based network constrained electricity market where the producers behave strategically to this end the investment problem of each strategic producer is represented using a bilevel model whose upper level problem determines the optimal investment and the supply offering curves to maximize its profit and whose several lower level problems represent different market clearing scenarios this model is transformed into a mathematical program with equilibrium constraint mpec through replacing the lower level problems by their optimality conditions the joint consideration of all producer mpecs one per producer constitutes an equilibrium problem with equilibrium constraints epec to identify the solutions of this epec each mpec problem is replaced by its karush kuhn tucker kkt conditions which are in turn linearized the resulting mixed integer linear system of equalities and inequalities allows determining the epec equilibria through an auxiliary milp problem

strategic generation capacity expansion planning with incomplete information to study the competitive behavior among individual generating companies gencos an incomplete information game model is proposed in this paper in which each genco is modeled as an agent each agent makes strategic generation capacity expansion decisions based on its incomplete information on other gencos the formation of this game model falls into a bi level optimization problem the upper level of this problem is the gencos own decision on optimal planning strategies and energy reserve bidding strategies the lower level problem is the iso s market clearing problem that minimizes the cost to supply the load which yields price signals for gencos to calculate their own payoffs a co evolutionary algorithm combined with pattern search is proposed to optimize the search for the nash equilibrium of the competition game with incomplete information the nash equilibrium is obtained if all gencos reach their maximum expected payoff assuming the planning strategies of other gencos remain unchanged the physical withholding of capacity is considered in the energy market and the herfindahl hirschman index is utilized to measure the market concentration the competitive behaviors are analyzed in three policy scenarios based on different market rules for reserve procurement and compensation

financial development financial fragility and growth the authors study the apparent contradiction between two strands of the literature on the effects of financial intermediation on economic activity on the one hand the empirical growth literature finds a positive effect of financial depth as measured by for instance private domestic credit and liquid liabilities for example levine loayza and beck 2000 on the other hand the banking and currency crisis literature finds that monetary aggregates such as domestic credit are among the best predictors of crises and their related economic downturns for example kaminski and reinhart 1999 the authors account for these contrasting effects based on the distinction between the short and long run impacts of financial intermediation working with a panel of cross country and time series observations they estimate an encompassing model of short and long run effects using the pooled mean group estimator developed by pesaran shin and smith 1999 their conclusion from this analysis is that a positive long run relationship between financial intermediation and output growth coexists with a mostly negative short run relationship the authors further develop an explanation for these contrasting effects by relating them to recent theoretical models by linking the estimated short run effects to measures of financial fragility namely banking crises and financial volatility and by jointly analyzing the effects of financial depth and fragility in classic panel growth regressions

performance and governance in microfinance institutions accepted version of article published in the journal journal of banking finance published version available on science direct http dx doi org 10 1016 j jbankfin 2008 11 009

geographic attribution of an electricity system renewable energy target local economic social and environmental tradeoffs the 2014 intergovernmental panel on climate change ipcc report asserts that investment in low carbon electricity production will need to rise by several hundred billion dollars annually before 2030 in order to stabilize greenhouse gas concentrations in the atmosphere by 2100 in recognition of this urgent need to mitigate climate change many governments have already established policies to spur renewable energy investment in the electricity sector one such policy measure is a renewable energy target ret which sets a target percentage of electricity production to be generated from renewable sources by a specified date variations on this policy have been implemented around the world from the eu 20 20 20 to diverse renewable portfolio standards in u s states and municipalities this work analyzes economic environmental and social aspects of a geographic attribution i e isolated regional or country of an ret to gain insights on the associated tradeoffs in the case study of the azores islands portugal the regional geographic attribution of an ret captures the best of all three tradeoffs

does information sharing reduce the role of collateral as a screening device this is the authors accepted refereed and final manuscript to the article publisher s version available at http dx doi org 10 1016 j jbankfin 2014 02 010

information and bank credit allocation abstract private information obtained by lenders leads to borrower capture to the extent that such information cannot be communicated credibly to outsiders we analyze how this capture affects the loan portfolio allocation of informed lenders first we show that banks charge higher interest rates and finance relatively less creditworthy borrowers in market segments with greater information asymmetries second when faced with greater competition from outside lenders banks reallocate credit toward more captured borrowers flight to captivity third if borrower quality and captivity are sufficiently correlated an increase in the competitiveness of uninformed lenders can worsen the informed lender s overall loan portfolio the model explains observed consequences of financial liberalizations

dynamic pricing design for demand response integration in power distribution networks this paper presents optimal pricing design for demand response dr integration in the distribution network in particular we study the energy scheduling problem for a load serving entity lse that serves two types of loads namely inflexible and flexible loads inflexible loads are charged under a regular pricing tariff while flexible loads enjoy a dynamic pricing tariff that ensures cost saving for them moreover flexible loads are assumed to be aggregated by several dr aggregators the interaction between the lse and its customers is formulated as a bilevel optimization problem where the lse is the leader and dr aggregators are the followers the optimal solution of this problem corresponds to the optimal pricing tariff for flexible loads the key advantage of the proposed model is that it can be readily implemented thanks to its compatibility with existing pricing structures in the retail market extensive numerical results show that the proposed approach provides a win win solution for both the lse and its customers

asset restructuring strategies in bank acquisitions does distance between dealing partners matter abstract one of the most lively debated effects of banking acquisitions is the change in lending and asset allocation of the target bank in favour of transaction based products at the expense of small and informationally opaque borrowers these changes may be the result of two distinct restructuring strategies pursued by the acquirer with respect to the asset portfolio of the acquired bank a cleaning strategy cs in which the acquirer makes a clean sweep of all the negative net present value activities in the portfolio of the acquired bank and a portfolio strategy ps in which the acquiring bank permanently changes the portfolio allocation of the acquired bank in this paper we focus on italian bank acquisitions and test which asset restructuring strategy was predominantly pursued over the period 1997 2003 moreover we distinguish acquisitions according to their geographic diversifying character and to the physical and cultural distances that separate acquiring from acquired banks when we look at the mean value we do not find clear evidence of a primacy either of css or pss when we separate in market from out of market bank acquisitions however results show that the css prevail only in the former type of deals while in the latter the portfolio of acquired banks is subject to pss finally we find that differences in asset restructuring strategies can be explained by differences in corporate culture and the workplace environment of the dealing partners

do banks price discriminate spatially evidence from small business lending in local credit markets abstract in this paper we explore the effects of bank borrower physical proximity on price and non price aspects of small business lending in local credit markets along the price dimension our analysis reveals that interest rates increase with bank borrower distance and decrease with the distance between borrower and other competing banks along the quantity dimension we observe that more distant borrowers are more likely to experience binding credit limits we also show that the quantity effects of bank borrower distance are concentrated among less transparent firms our findings are consistent with pricing based on marginal costs that reflect information based factors and are in contrast to the established paradigm where banks adopt spatial discriminatory pricing rules when lending to small sized enterprises

financial globalization and the governance of domestic financial intermediaries we model a small open economy in which both domestic financial intermediaries and entrepreneurs face incentive constraints as in holmstrom and tirole 1997 to study the general equilibrium impact of various types of capital inflows on the efficiency and governance of domestic banks banks have an advantage in monitoring firms but the latter can collude with banks and offer side payments to reduce the intensity of monitoring opening up to international capital flows makes domestic banks capital scarcer relative to uninformed capital thus increasing the relative cost of monitoring we show that capital account liberalization has ambiguous effects on the governance of the domestic financial system by sometimes increasing firms incentives to collude with banks we characterize the conditions under which governance is more likely to deteriorate after opening up the capital account and discuss the effects on investment productivity and output we also analyze the effects of foreign direct investment in the corporate and banking sectors stylized facts are consistent with the predictions of the model

foreign banks and the dual effect of financial liberalization in emerging countries credit market liberalization is often motivated with the financial deepening generated by the entry of foreign financial institutions however there is a risk that liberalization may benefit internationally active export oriented businesses at the expense of domestically oriented ones this paper models a two sector economy in which foreign lenders are more efficient than local lenders at extracting value from internationally tradable collateral assets under some conditions the entry of foreign lenders eases entrepreneurs access to the credit market and raises asset prices and output but in other circumstances it reduces the depth of the credit market and depresses the price of nontradables and output liberalization can have a contractionary impact by inducing a reallocation of credit from the nontradables to the tradables sector

a game theoretic model for generation expansion planning problem formulation and numerical comparisons this paper presents an application of noncooperative game theory to generation expansion planning gep in a competitive electricity industry the authors apply the cournot model of oligopoly behavior to formulate a gep model that may characterize expansion planning in a competitive regime particularly in pool dominated generation supply industries numerical experiments are conducted on a test system to analyze generation investment and market participation decisions of candidate expansion units that vary in costs and forced outage rates the numerical results point to 1 greater industry expansion and system reliability under cournot competition than under centralized expansion planning and 2 higher probabilistic measures of reliability from multi player expansion than from expansion by a traditional monopolist with an equivalent reserve margin requirement furthermore the authors summarize analytical results involving a simplified version of the gep game

transmission expansion in an oligopoly considering generation investment equilibrium abstract transmission expansion planning tep is a sophisticated decision making problem especially in an oligopolistic electricity market in which a number of strategic price maker producers compete together a transmission system planner who is in charge of making tep decisions requires considering the future generation investment actions however in such an oligopolistic market each producer makes its own strategic generation investment decisions this motivates the transmission system planner to consider the generation investment decision making problem of all producers within its tep model the strategic generation investment problem of each producer can be represented by a complementarity bi level model the joint consideration of all bi level models one per producer characterizes the generation investment equilibrium that identifies the future evolution of generation investment in the market this paper proposes a tri level tep decision making model to be solved by the transmission system planner whose objective is to maximize the social welfare of the market minus the expansion costs and whose constraints are the transmission expansion limits as well as the generation investment equilibrium problem this model is then recast as a mixed integer linear programming problem and solved numerical results from an illustrative example and a case study based on the ieee 14 bus test system demonstrate the usefulness of the proposed approach

risk constrained multi stage wind power investment when deciding on wind power investments three major issues arise the production variability and uncertainty of wind facilities the eventual future decline in wind power investment costs and the significant financial risk involved in such investment decisions recognizing the above important issues this paper proposes a risk constrained multi stage stochastic programming model to make optimal investment decisions on wind power facilities along a multi stage horizon the proposed model is illustrated using a clarifying example and a case study

a tri level model of centralized transmission and decentralized generation expansion planning for an electricity market part ii we study a tri level integrated transmission and generation expansion planning problem in a deregulated power market environment the collection of bi level sub problems in the lower two levels is an equilibrium problem with equilibrium constraints epec that can be approached by either the diagonalization method dm or a complementarity problem cp reformulation this paper is a continuation of its part i in which a hybrid iterative algorithm is proposed to solve the tri level problem by iteratively applying the cp reformulation of the tri level problem to propose solutions and evaluating them in the epec sub problem by dm it focuses on the numerical results obtained by the hybrid algorithm for a 6 bus system a modified ieee 30 bus system and an ieee 118 bus system in the numerical instances the approximate nash equilibrium point for the sub problem can be verified by examining local concavity

organizational distance and use of collateral for business loans abstract this paper examines the effect of organizational distance i e distance between the headquarters of the bank that grants a loan and the location of the borrower on the use of collateral for business loans by spanish banks on the basis of the recent lender based theory of collateral inderst r mueller h m 2007 a lender based theory of collateral journal of financial economics 84 826 859 we find that for the average borrower the use of collateral is higher for loans granted by local lenders than by distant ones we also show that the difference in the likelihood of collateral in loans granted by local lenders relative to distant lenders is higher among older and larger firms than respectively younger and smaller firms we also find that banks use lending technologies that are different for near and for distant firms in response to organizational diseconomies

lock in effects in relationship lending evidence from dip loans do prior lending relationships result in pass through savings lower interest rates for borrowers or do they lock in higher costs for borrowers theoretical models suggest that when borrowers experience greater information asymmetry higher switching costs and limited access to capital markets they become locked into higher costs from their existing lenders firms in chapter 11 seeking debtor in possession dip financing often fit this profile we investigate the presence of lock in effects using a sample of 348 dip loans we account for endogeneity using the instrument variable iv approach and the heckman selection model and find consistent evidence that prior lending relationship is associated with higher interest costs and the effect is more severe for stronger existing relationships our study provides direct evidence that prior lending relationships do create a lock in effect under certain circumstances such as dip financing

bank concentration and financial constraints on firm level investment in europe abstract this study examines the effect of bank concentration on financing constraints of non financial firms in 14 european countries between 1992 and 2005 using firm level data we analyze financial constraints with the euler equation derived from the dynamic investment model we find that with a highly concentrated banking sector firms are less financially constrained this result is robust to consideration of firm opacity firm size and business cycle relaxation of financial constraint while greater for firms in less opaque industries also accrues for firms in more opaque industries greater bank concentration is associated with less tight financial constraint during both expansions and recessions results overall are consistent with an information based hypothesis that more market power increases banks incentives to produce information on potential borrowers findings are robust to consideration of country specific institutional factors

the effect of foreign bank presence on firm entry and exit in transition economies abstract this study investigates the impact of foreign bank penetration on firm entry in central and eastern europe acquisition of domestic banks by foreign investors has lowered rates of firm creation decreased the average size of entrants and increased firm exit in industries with greater informational opacity while entry of greenfield foreign banks appears to have spurred firm creation and exit we modify the view in earlier studies that informational opacity equates with firm size defining opacity in terms of technological characteristics for a given industry we find the economic significance of foreign bank entry is larger for opaque industries than industries with large shares of small firms the study provides evidence of increased credit constraints for start ups in central and eastern europe which is consistent with the theoretical proposition that the presence of foreign banks exacerbates informational asymmetries

did tarp distort competition among sound unsupported banks i introduction did the financial support of distressed u s banks by the capital purchase program cpp affect loan and funding rates as measures of price competition the cpp the largest single element of the troubled asset relief program tarp dispersed around 204 9 billion to 707 u s banks between q4 08 and q4 09 as of july 31 2014 the treasury recovered 225 9 billion of this cpp support in the form of repayments dividends and interest turning the program into a positive return for taxpayers timothy masad deputy secretary of the treasury in charge accordingly called tarp a success in the final hearing of the congressional oversight panel cop on march 4 2011 see http cop senate gov and liu et al 2013 agreed in their analysis of the substantial financial and return recovery of banks that received cpp funds however on an economic cost benefit basis it is not clear whether taxpayers had a net positive return calomiris and khan 2015 yet in its final assessment the cop 2011 paints a more nuanced picture although the cost of tarp was much lower than anticipated it might also have induced distortions of market mechanisms in the form of increased risk taking and reduced competition the former issue has received considerable attention in recent studies black and hazelwood 2013 dam and koetter 2012 duchin and sosyura 2014 gropp et al 2011 whereas evidence about competitive distortions due to tarp is rare bailout schemes can distort competition in two ways directly by subsidizing rescued banks and indirectly by inducing undesirable market conduct by unsupported banks specifically government bailouts directly distort banking competition because insurance schemes treat banks differently depending on the size of the subsidy beck et al 2010 which upsets any existing level playing field empirical evidence about the direct effect of bailouts on competition is mixed calderon and schaeck 2015 show with a sample of 46 banking crises in 138 countries that government support of troubled banks led to more banking competition and lower interest margins after a crisis the main benefits accrue to borrowers in already financially well provided segments in contrast berger and roman 2015b show that tarp supported u s banks exhibited higher lerner margins and market shares compared with unsupported banks in the period after q4 09 driven by banks that repaid early while suppliers of funds require lower risk premiums tarp capital infusions required a dividend yield of 5 in the first 5 years of support increasing to 9 thereafter in addition tarp infusions were tied to executive compensation caps bayazitova and shivdasani 2012 berger and roman 2015b conclude that the safety net benefits of tarp outweighed the cost disadvantages even if bailouts are allocated on perfectly equal terms to all banks the provided insurance creates socially undesirable additional risk taking keeley 1990 consistent with this view the congressional oversight panel 2011 voiced concerns that tarp equity provisions provided supported banks with a competitive advantage that could lead to consolidation and further concentration to the detriment of small or local community banks in particular in turn these subsidized survivors with their increased market power could invoke additional welfare losses by charging higher interest rates to borrowers that represent poor credit risks theoretically hakenes and schnabel 2010 emphasize the importance of indirect effects of government bailouts on unsupported peers too the increased protection of banks that anticipate bailouts reduces the margins and charter values of competing unsupported banks prospective bailouts also induce depositors to require lower default premiums such that the reduced funding costs imply more lending by protected banks which translates into increased competitive pressure on unsupported incumbents

government spending and budget deficits in the industrial economies fiscal policy nouriel roubini and jeffrey sachs this paper examines the evolution of the size of government and of budget deficits in oecd economies we highlight the rapid increase in government spending in the 1970s the sharp rise in budget deficits and public debt after 1973 and the reversal in these trends in the 1980s the increase in the size of government was associated in part with the slowdown in growth after 1973 but also reflected gradual adjustment of the ratio of spending to output towards a long run target which depends on political and institutional characteristics of the economy the political orientation of the government the degree of wage indexation and the degree of stability of the political system such factors also explain the size of budget deficits when faced with an adverse shock subsequent deficit reduction requires a measure of political consensus we note that such consensus is hard to achieve in multi party coalitions in consequence countries with such a political structure tended in consequence countries with such a political structure tended toin consequence countries with such a political structure tended to experience much more rapid increases in their debt gnp ratios

an investigation of the public deficts and government spending relationship evidence for greece this paper tests the validity of the buchanan wagner hypothesis for greece that increases in public spending are the result of the tolerance of large deficits over the period 1961 1994 to test this hypothesis three unit root pretests the dickey fuller phillips perron and kwiatkowski et al and maximum likelihood estimation techniques of cointegrating vectors and a vector error correction model are employed a long run relationship is found to exist among government spending deficit income wages and adult population and the importance of short run deviations are presented the empirical evidence suggests that buchanan and wagner hypothesis seems to find support for greece in the long run and the short run further productivity in the public sector is lower than in the private sector and the growth of income is not an important determinant of the increase in the relative size of public spending

a bilevel approach to transmission expansion planning within a market environment we present a bilevel model for transmission expansion planning within a market environment where producers and consumers trade freely electric energy through a pool the target of the transmission planner modeled through the upper level problem is to minimize network investment cost while facilitating energy trading this upper level problem is constrained by a collection of lower level market clearing problems representing pool trading and whose individual objective functions correspond to social welfare using the duality theory the proposed bilevel model is recast as a mixed integer linear programming problem which is solvable using branch and cut solvers detailed results from an illustrative example and a case study are presented and discussed finally some relevant conclusions are drawn

strategic generation investment under uncertainty via benders decomposition we address the generation investment problem faced by a strategic power producer and consider a detailed description of the uncertain parameters involved namely rival producer investment and market offering and demand growth to identify optimal investment decisions we consider a target year and propose a bilevel model whose upper level problem determines investment and offering decisions to maximize expected profit and whose many lower level problems represent market clearing conditions per demand block and scenario since the producer total expected profit is sufficiently convex with respect to investment decisions a benders decomposition approach is proposed that results in a tractable formulation even if hundred of scenarios are used to describe uncertain parameters extensive numerical simulations based on realistic case studies show the good performance of the proposed decomposition approach

banks and loan sales marketing nonmarketable assets theories of financial intermediation predict that bank loans should not be marketable because of moral hazard problems banks will not conduct credit risk analysis or monitor borrowers if they are not at risk for failing to perform these services throughout most of history bank loans have not in fact been marketable yet by the end of the 1980 s the amount of commercial and industrial loan sales outstanding had grown to over 250 billion from trivial amounts at the beginning of the decade to explain the opening of this loan sales market we present a model of incentive compatible loan sales that allows for implicit contractual features between loan sellers and loan buyers we then test for the presence of these features using a sample of over 800 recent loan sales

information sharing and lending market competition with switching costs and poaching abstract we analyze information sharing with repeated banking competition in the presence of switching costs we find that information sharing renders poaching more profitable in future rounds of competition since the poaching activities can be targeted towards more creditworthy borrowers we find that information sharing reduces relationship benefits and therefore relaxes competition for initial market shares information sharing introduces a welfare tradeoff by promoting equilibrium profits at the expense of talented entrepreneurs whenever market power persists in credit market whereas it is a matter of indifference without market power thus information sharing may induce exclusion of creditworthy borrowers from credit markets

how do changes in monetary policy affect bank lending an analysis of austrian bank data using a panel of austrian bank data we show that the lending decisions of the smallest banks are more sensitive to interest rate changes and that for all banks sensitivity changes over time we propose to estimate the groups of banks that display similar lending reactions by means of a group indicator which after estimation indicates each bank s classification additionally we estimate a state indicator that indicates the periods during which the lending reaction differs from what we normally observe bayesian methods are used for estimation a sensitivity analysis and a forecast evaluation confirm our model choice copyright 2006 john wiley sons ltd

can cost increases increase competition asymmetric information and equilibrium prices we present an analysis of competition under asymmetric information where prices react asymmetrically to changes in firms marginal costs when one firm has private information about some customers an increase in an uninformed firm s marginal cost leads to a price increase as usual however an increase in the informed firm s marginal cost causes the equilibrium price to fall by improving the distribution of customers served by the uninformed firm the model applies to settings where information asymmetries are important determinants of competition such as credit insurance labor markets or for the sale of goods where repeat business is important

credit rationing and relationship lending does firm size matter abstract using survey based data we investigate factors influencing credit rationing within a bank based financial system we show that rationing depends on various dimensions of the firm bank relationships and that the effects of relationship lending on rationing are not identical for different firm size groups multiple banking increases the probability of rationing for small and large firms debt concentration with the main bank affects positively smaller firms while the opposite is true for large companies the length of the relationship with the main bank decreases the probability of rationing for both groups but more so for large firms endowed with more bargaining power finally the firm bank spatial proximity measured by the headquarters vicinity does not affect the firm s access to credit

commercial lending and distance evidence from community reinvestment act data a number of large banking organizations have substantially broadened the distances at which they are willing to extend commercial loans but there is also evidence to suggest that this has occurred primarily at the high side of the distribution of lending distances in this paper we employ a new source of data to examine the relationship between lending decisions and distance between lender and borrower for that part of the distance distribution where arguably most of the competitive interactions among lenders still occur we report three basic findings 1 distance operates as a deterrent to lending even within areas traditionally defined as local markets 2 distance is more of a deterrent for small banks than for larger organizations even within these areas and 3 for those commercial loans made within areas currently treated by regulators as markets distance has not been declining in importance indeed a preponderance of the evidence suggests that it is becoming if anything more of a factor possible explanations and policy implications are discussed

level playing fields in international financial regulation we analyze the desirability of level playing fields in international financial regulation in general level playing fields impose the standards of the weakest regulator upon the best regulated economies however they may be desirable when capital is mobile because they counter a cherry picking effect that lowers the size and efficiency of banks in weaker economies hence while a laissez faire policy favors the better regulated economy level playing fields are good for weaker regulators we show that multinational banking mitigates the cherry picking effect and reduces the damage that a level playing field causes in the better regulated economy

exercise of market power on ramp rate in wind integrated power systems with an increasing penetration of wind power there is likely to be an increasing need for fast ramping generating units these generators ensure that no load is lost if supply drops due to the uncertainties in wind power generation however it is observed in practice that in a presence of network constraints fast ramping generating units are prone to act strategically and exercise market power by withholding their ramp rates in this paper we model this gaming behavior on ramp rates we assume a market operator who collects bids in form of marginal costs quantities and ramp rates he runs a ramp constrained economic dispatch given the generators bids forecasted demand and contingencies following the game theoretic concepts we set up a multi level optimization problem the lower level problem is the ramp constrained economic dispatch and the higher level represents the profit maximization problems solved by strategic generators the whole problem is formulated as an equilibrium problem with equilibrium constraints epec the outcome of the epec problem is a set of nash equilibria to tackle the multiple nash equilibria problem the concept of the extremal nash equilibria is defined and formulated we model the concept of extremal nash equilibria as a single stage mixed integer linear programming problem milp and demonstrate the application of this mathematical framework on an illustrative case and on a more realistic case study with tractable results

finding equilibria in the pool based electricity market with strategic wind power producers and network constraints this paper proposes a model to find the equilibria in the short term electricity market with large scale wind power penetration the behavior of each strategic player is modeled through a two stage mathematical problem with equilibrium constraints mpec where the upper level problem maximizes the profit of the strategic player and the lower level problem describes the clearing processes of the day ahead and real time markets while considering the network constraints the joint solution of all the mpecs constitutes an equilibrium problem with equilibrium constraints epec the uncertain wind power production and demand are represented by a set of plausible scenarios by using the duality theory and karush kuhn tucker condition each mpec is transferred into a mixed integer linear programing problem the nash equilibria of the electricity market are obtained by solving the epec using game theory and the diagonalization algorithm case studies are performed to show the effectiveness of the proposed model

strategic generation investment using a complementarity approach this paper provides a methodology to assist a strategic producer in making informed decisions on generation investment a single target year is considered with demand variations modeled through blocks the strategic behavior of the producer is represented through a bilevel model the upper level considers both investment decisions and strategic production actions and the lower level corresponds to market clearing prices are obtained as dual variables of power balance equations rival uncertainties on offering and investment are characterized through scenarios the resulting model is a large scale mixed integer lp problem solvable using currently available branch and cut techniques results pertaining to an illustrative example and a case study are reported and discussed

energy investment planning at a private company a mathematical programming based model and its application in turkey we consider a mid sized private electricity generating company that plans to enter the market that is partially regulated there is a cap and trade system in operation in the industry there are nine possible power plant types that the company considers to invest on through a planning horizon some of these plants may include a carbon capture and storage technology we develop a stochastic mixed integer linear program for this problem where the objective is to maximize the expected net present value of the profit obtained we include restrictions on the maximum and minimum possible amount of investment for every type of investment option we also enforce market share conditions such that the percentage of the total investments of the company over the total installed capacity of the country stay between upper and lower bounds moreover in order to distribute the investment risk the percentage of each type of power plant investment is restricted by some upper bound we tested the model for a hypothetical company operating in turkey the results show that the model is suitable to be used for determining the investment strategy of the company

foreign bank behavior during financial crises one of the persistent policy problems faced by governments contemplating financial liberalizations is the question of whether to allow foreign banks entry into the domestic economy this question has become ever more urgent in recent times due to rapid financial globalization coupled with the credit contractions experienced as a result of the 2007 08 financial crisis this paper examines the question of whether opening the financial sector to foreign participation is a good idea for developing countries using a unique bank level database of foreign ownership in particular the authors examine whether the credit supply of majority foreign owned financial institutions differ systematically conditional on a crisis event in their home economies they show that foreign banks that were exposed to crises in their home countries exhibit changes in lending patterns that are lower by between 13 and 42 percent than their non crisis counterparts

regional financial development and bank competition effects on firms growth fernandez de guevara j and maudos j regional financial development and bank competition effects on firms growth regional studies this paper analyses the effect of regional financial development and bank competition on firms growth using the spanish provinces as a testing ground the results show that firms in industries with a greater dependence on external finance grow faster in more financially developed provinces the results also show that bank monopoly power has an inverted u effect on firms growth suggesting that market power has its highest effect at intermediate values the effect is heterogeneous among firms according to the financial dependence of the industry to which they belong this result is consistent with the literature on relationship banking which argues that bank competition can have a negative effect on the availability of finance for more informationally opaque firms fernandez de guevara j et maudos j le developpement financier regional et la concurrence bancaire l imp

lending competition and credit availability for new firms empirical study with the price cost margin in regional loan markets abstract in this paper i present statistical evidence of the impact of lending competition on credit availability for new firms a discrete time duration analysis with respect to the years from the start up to the first loan approval by a commercial bank or a cooperative bank which is collected from survey data in japan shows that the higher price cost margin pcm of banks which reflects the existence of a quasi rent for a bank improves the credit availability for younger firms additional analysis to detect the regional determinants of the pcm of banks shows that the share of larger banks in each local credit market has a negative and significant impact on the pcm in light of the existing empirical finding that smaller banks are more likely to provide relationship banking these findings provide indirect evidence for the hypothesis that the intensity of relationship banking in each local credit market increases the pcm and this encourages banks to extend a loan to new firms so that they can pre empt the opportunity to establish lending relationships that are expected to yield such quasi rents

optimal investments in power generation under centralized and decentralized decision making this work presents a novel model for optimization of investments in new power generation under uncertainty the model can calculate optimal investment strategies under both centralized social welfare and decentralized profit objectives the power market is represented with linear supply and demand curves a stochastic dynamic programming algorithm is used to solve the investment problem where uncertainty in demand is represented as a discrete markov chain the stochastic dynamic model allows us to evaluate investment projects in new base and peak load power generation as real options and determine optimal timing of the investments in a case study we use the model to compare optimal investment strategies under centralized and decentralized decision making a number of interesting results follow by varying the assumptions about market structure and price response on the demand side

assessing the impact of incentive regulation for innovation on res integration investing in innovative smart grids sgs technology can reduce overall investments in distribution systems with unpredictable renewable energy sources res regulators should therefore decide what incentives are desirable and design a flexible economic regulatory framework able to encourage distribution system operators dnos to decide for innovation in the sgs an innovative method that can support the regulators in encouraging res exploitation by determining the right incentives to favor investments in innovation in an electrical distribution network is proposed in this paper the method allows stakeholders like regulators distribution companies and developers evaluating the long term economic effects of their decisions the effectiveness of the proposed method based on non dominated sorting genetic algorithm nsga ii and on multi period optimal power flow mp opf is verified on an 84 bus network

bank competition and firm creation we investigate the effects of competition in the financial sector on the creation of firms in the nonfinancial sector explicitly allowing for heterogeneous effects across borrowers characterized by different degrees of asymmetric information we find evidence of a bell shaped relationship between bank competition and firm creation in addition consistently with theories arguing that competition may reduce the availability of credit to informationally opaque firms we find that bank competition results less favorable to the emergence of new firms in industrial sectors where informational asymmetries are more important

capacity expansion equilibria in liberalized electricity markets an epec approach this paper presents a novel way to model the generation capacity expansion problem in a liberalized framework via a multi year bilevel equilibrium model in the upper level the competing generation companies maximize their individual profits while the lower level represents the market using a conjectured price response approach which allows us to vary the strategic spot market behavior to see how much the reigning competitive behavior impacts investment decisions the bilevel equilibrium model is formulated as an equilibrium problem with equilibrium constraints transformed into a mixed integer linear program and solved as such using diagonalization in order to verify equilibria we present a case study to apply this new modeling approach and to demonstrate that the proposed equilibrium problem with equilibrium constraints can have multiple solutions whose respective investments can vary

generation investment equilibria with strategic producers part ii case studies this paper analyzes numerically the approach reported in the companion paper for identifying generation investment equilibria in an electricity market where the producers behave strategically to this end a two node illustrative example and a large scale case study based on the ieee reliability test system rts are examined and the results obtained are reported and discussed

evaluation of lmp intervals considering wind uncertainty step changes in the curve of locational marginal prices lmp under load variation have been known characteristics given its present formulation identifying lmp intervals under wind uncertainty is important for market participants to assess and mitigate their risks when price forecast is needed this work proposes a bi level optimization model to calculate the lmp intervals under wind uncertainty without the repetitive monte carlo mc simulation the specific bus lmp maximization or minimization is the upper level problem while the iso s economic dispatch is the lower level problem case studies are presented to demonstrate the proposed methodology

credit market competition and capital regulation market discipline for financial institutions can be imposed not only from the liability side as has often been stressed in the literature on the use of subordinated debt but also from the asset side this will be particularly true if good lending opportunities are in short supply so that banks have to compete for projects in such a setting borrowers may demand that banks commit to monitoring by requiring that they use some of their own capital in lending thus creating an asset market based incentive for banks to hold capital borrowers can also provide banks with incentives to monitor by allowing them to reap some of the benefits from the loans which accrue only if the loans are in fact paid off since borrowers do not fully internalize the cost of raising capital to the banks the level of capital demanded by market participants may be above the one chosen by a regulator even when capital is a relatively costly source of funds this implies that capital requirements may not be binding as recent evidence seems to indicate

informational frictions and the credit crunch in this paper i estimate the magnitude of an informational friction limiting credit reallocation to firms during the 2007 to 2009 financial crisis because lenders rely on private information when deciding which relationship to end borrowers looking for a new lender are adversely selected i show how to separately identify private information from information common to all lenders but unobservable to the econometrician by using bank shocks within a discrete choice model of relationships quantitatively these informational frictions appear to be too small to explain the credit crunch in the u s syndicated corporate loan market

how foreign participation and market concentration impact bank spreads evidence from latin america increasing foreign participation and high concentration levels characterize the recent evolution of banking sectors market structures in developing countries the authors analyze the impact of these factors on latin american bank spreads during the late 1990s their results suggest that foreign banks were able to charge lower spreads relative to domestic banks this was more so for de novo foreign banks than for those that entered through acquisitions the overall level of foreign bank participation seemed to influence spreads indirectly primarily through its effect on administrative costs bank concentration was positively and directly related to both higher spreads and costs

exploiting old customers and attracting new ones the case of bank deposit pricing abstract recent theoretical contributions suggest that deposit interest rates should be higher in geographic areas characterized by greater in migration and lower for depositors at banks with greater shares of existing or so called locked in depositors these hypotheses are tested using a rich data set obtained for the spanish banking industry results confirm that all else equal banks offer higher deposit rates in territories characterized by greater in migration and also that they tend to offer lower rates the larger the number of their locked in depositors these findings confirm the existence of the trade off between exploiting old customers and attracting new ones

switching costs and relationship profits in bank lending abstract this paper studies how the cost of switching banks affects the profits available from relationship based lending when the relationship produces inside information lower switching cost compounds the adverse selection problem discouraging outsider banks to depress loan rates the adverse selection effect eases off along with higher switching cost leading to more aggressive bidding and thereby reduction in insider profits above a certain threshold however the adverse selection effect vanishes completely and the insider profits turn increasing in the switching cost the model predicts that the availability of relationship credit is non monotonously related to the magnitude of the switching cost

is financial inclusion good for bank stability international evidence abstract financial inclusion has become an important public policy priority following the recent global financial crisis yet we know very little of how it impacts soundness of the providers of financial services using an international sample of 2635 banks in 86 countries over the period 2004 12 we find that higher level of financial inclusion contributes to greater bank stability the positive association is particularly pronounced with those banks that have higher customer deposit funding share and lower marginal costs of providing banking services and also with those that operate in countries with stronger institutional quality the results are robust to instrumental variables analysis controlling for bank fixed effects alternative measures of financial inclusion among several other robustness tests our results highlight that the importance of ensuring inclusive financial system is not only a development goal but also an issue that should be prioritised by banks as such a policy drive is good for their stability

long lasting bank relationships and growth of firms a puzzling but consistent result in the empirical literature on banking is that firms with close bank ties do not grow faster than bank independent firms in this paper we reconsider the link between relationship lending and firm growth distinguishing firms by size and expansion contraction conditions the idea is that the beneficial effects of relationship lending on information asymmetries can be compensated by other negative capture risk and externality effects which make relational banks reluctant to support long term growth projects of client firms and that the strength of these compensating effects varies with firm size and health status we explore the influence of long lasting bank relationships on employment and asset growth of a large sample of italian firms the main finding is that relationship lending hampers the efforts of small firms to increase their size while it mitigates the negative growth of troubled medium large enterprises

generation capacity expansion in liberalized electricity markets a stochastic mpec approach this paper proposes a bilevel model to assist a generation company in making its long term generation capacity investment decisions considering uncertainty regarding the investments of the other generation companies the bilevel formulation allows for the uncoupling of investment and generation decisions as investment decisions of the single investing generation company are taken in the upper level with the objective to maximize expected profits and generation decisions by all companies are considered in the lower level the lower level represents the oligopolistic market equilibrium via a conjectured price response formulation which can capture various degrees of strategic market behavior like perfect competition the cournot oligopoly and intermediate cases

competing lending platforms endogenous reputation and fragility in microcredit markets this paper shows that market fragility and mass default can arise in microcredit markets as a result of the strategic interaction between a microlender using a reputation based mechanism and a traditional lender using physical collateral in our model borrowers solve a dynamic programming problem which induces an endogenous equilibrium distribution of reputational capital because the quality of each lender s pool of borrowers is affected by both lenders interest rates lender reaction curves are non monotonic and discontinuous this can result in knife edge equilibria and mass default on the microlender precipitated by minor parametric perturbations fragility is exacerbated by borrower screening and sovereign risk but ameliorated when microlenders have social welfare goals our results highlight the importance of studying the entire credit market rather than microfinance in isolation

how do bank competition regulation and institutions shape the real effect of banking crises international evidence abstract this paper studies the influence of bank competition on the real effect of 36 systemic banking crises in 30 countries over the 1980 2000 period and how this influence varies across countries depending on bank regulation and institutions we find that bank market power is not on average useful for mitigating the negative real effect of a systemic banking crisis market power promotes higher growth during normal times in industries that are more dependent on external finance but induces a bigger reduction in growth during systemic banking crises we also find a country specific effect depending on bank regulation and institutions stringent capital requirements and poor protection of creditor rights increase the benefits of bank market power for mitigating the negative real effect of a systemic banking crisis because bank market power has a positive effect on economic growth during both crisis and non crisis periods in these environments

public expenditure growth in greece and portugal wagner s law and beyond in the tradition of wagner s law this study examines the relationship between aggregate income and public expenditures in greece and portugal during the years 1958 85 unlike more conventional specifications our analysis focuses on the movement of different componenets of public expenditures permanent income relative prices stabilization policy and socio political factors emerge as thomain determinants of public expenditures while the results reveal significant difference in responses to these determinants across components of expenditures and between the two countries

transmission congestion and competition on power generation expansion generation expansion planning involves decisions on location and capacity of new generation which may lead to adding or relieving congestion in transmission lines and to increasing or reducing competition in deregulated markets generation expansion may encounter congestion in the transmission network by constrained single line flows as well as flowgate transfer capabilities in this paper a model to study the interaction between competition and transmission congestion on power generation expansion is proposed the generation expansion problem is modeled as a cournot competition game network transmission constraints are included in the optimal generation expansion problem to comply with power flow limits results from a five bus power network and the ieee 24 bus system are presented and discussed

foreign bank entry credit allocation and lending rates in emerging markets empirical evidence from poland abstract earlier studies have documented that foreign banks charge lower lending rates and interest spreads than domestic banks we hypothesize that this may stem from the superior efficiency of foreign entrants that they decide to pass onto borrowers performance hypothesis but could also reflect a different loan allocation with respect to borrower transparency loan maturity and currency portfolio composition hypothesis we are able to differentiate between the above hypotheses thanks to a novel dataset containing detailed bank specific information for the polish banking industry our findings demonstrate that banks differ significantly in terms of portfolio composition and we attest to the portfolio composition hypothesis by showing that having controlled for portfolio composition there are no differences in lending rates between banks

financial development and financial openness nexus the precondition of banking competition abstractwe examine the dynamic relationship between financial development and financial openness using the pooled mean group estimator developed by pesaran et al 1999 our results show that financial openness has a positive effect on financial development in the long run but may have a negative effect in the short run using estimates of country specific short run coefficients we also find that the adverse short run effects of financial openness are associated with a lower degree of banking competition the system gmm estimator also supports these findings suggesting that the financial development and financial openness nexus is contingent on the degree of banking competition a key policy implication is that a higher degree of banking competition is a precondition for financial openness to promote financial development