|
on Corporate Finance |
| By: | Gong Cheng (European Stability Mechanism); Dirk Mevis (European Stability Mechanism) |
| Abstract: | This paper uses a newly constructed dataset including financial statement information of 310 banks in the euro area to analyse the evolution of bank profitability before and after the Global Financial Crisis and the subsequent European crisis. We first document the general trends in the changes in banks’ profitability with a particular focus on country and bank heterogeneity. We find that the profitability of banks in different parts of the monetary union was hit by multiple shocks of different nature. Based on this, we then propose an econometric analysis of the drivers behind the evolution of bank profitability by discriminating factors relative to macroeconomic conditions, bank funding and portfolio structures, and new banking regulations in the euro area. |
| Keywords: | Bank, profit, return on asset, bank regulation, bank business model |
| JEL: | G21 G28 G33 L25 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:stm:wpaper:5&r=cfn |
| By: | Schäfer, Dorothea (DIW Berlin and CeFEO at Jönköping International Business School); Stephan, Andreas (Jönköping International Business School and CESIS at KTH Stockholm); Mosquera, Jenniffer Solórzano (Jönköping International Business School) |
| Abstract: | Using the 2007 Mannheim innovation survey, we investigate whether family firms are more financially constrained than other firms and how this affects both innovation input as well as innovation outcomes such as market and firm novelties or process innovations. Based on the CDM framework, estimation of the recursive system of equations shows that family businesses are more likely to be constrained and have, on average, lower innovation input. Surprisingly, however, this does not reduce their innovation outcomes as, on average, family firms have the same level of innovation outcomes as nonfamily firms. |
| Keywords: | Innovation; Capability; Financing Constraints; Family Firms; CDM |
| JEL: | D30 G32 O32 |
| Date: | 2015–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0425&r=cfn |
| By: | Dorothea Schäfer; Andreas Stephan; Jenniffer Solórzano Mosquera |
| Abstract: | Using the 2007 Mannheim innovation survey, we investigate whether family firms are more financially constrained than other firms and how this affects both innovation input as well as innovation outcomes such as market and firm novelties or process innovations. Based on the CDM framework, estimation of the recursive system of equations shows that family businesses are more likely to be constrained and have, on average, lower innovation input. Surprisingly, however, this doesnot reduce their innovation outcomes as, on average, family firms have the same level of innovation outcomes as nonfamily firms. |
| Keywords: | Innovation, Capability, Financing Constraints, Family Firms, CDM |
| JEL: | G32 O32 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1536&r=cfn |
| By: | Marcelo Fernandes (Queen Mary University of London and Sao Paulo School of Economics, FGV); Walter Novaes (PUC-Rio) |
| Abstract: | The subprime crisis led to a wave of government interventions in the private sector that has been particularly strong in Europe and Latin America, where several governments are large shareholders in a variety of public firms. In a sense, the subprime crisis induced these governments to behave as active large shareholders. This paper uses a sample of public firms in Brazil to show that government activism lowers the value of minority shareholders' voting rights. While the corporate governance literature usually associates lower voting premia with stronger protection of minority shareholders, we provide evidence that the government-induced decline in the value of voting rights harmed minority shareholders in Brazil. |
| Keywords: | Interventionism, Monitoring, Private benefits, Voting premium |
| JEL: | G14 G18 G30 G38 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:wp772&r=cfn |
| By: | Marcelo Fernandes (Queen Mary University of London and Sao Paulo School of Economics, FGV); Deniz Igan; Marcelo Pinheiro (PCAOB) |
| Abstract: | Annual stress tests have become a regular part of the supervisors' toolkit following the global financial crisis. We investigate their capital market implications in the United States by looking at price and trade reactions, information asymmetry and uncertainty indicators, and bank activities. The evidence we present supports the notion that there is important new information in stress tests, especially at times of financial distress. Moreover, public disclosure seem to help reduce informational asymmetries. Importantly, public disclosure of stress test results (and methodology) does not seem to have reduced private incentives to generate information or to have led to distorted incentives. |
| Keywords: | Stress testing, Capital requirements, Public disclosure, Information |
| JEL: | G14 G28 G32 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:wp771&r=cfn |
| By: | David Yermack |
| Abstract: | Blockchains represent a novel application of cryptography and information technology to age-old problems of financial record-keeping, and they may lead to far-reaching changes in corporate governance. During 2015 many major players in the financial industry began to invest in this new technology, and stock exchanges have proposed using blockchains as a new method for trading corporate equities and tracking their ownership. This essay evaluates the potential implications of these changes for managers, institutional investors, small shareholders, auditors, and other parties involved in corporate governance. The lower cost, greater liquidity, more accurate record-keeping, and transparency of ownership offered by blockchains may significantly upend the balance of power among these cohorts. |
| JEL: | G20 G3 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21802&r=cfn |
| By: | De Marco, Filippo (Bocconi University); Wieladek, Tomasz (Bank of England) |
| Abstract: | We study the effect of changes to UK bank-specific capital requirements on small and medium-sized enterprises (SME) from 1999 to 2005. Following a 1% rise in capital requirements, SME asset growth (and investment) contracts by 3.5% to 6.9% (12%) in the first year of a new bank-firm relationship, but this effect declines over time. These results are robust to a number of different fixed effects specifications and measures of capital requirement changes that are orthogonal to balance sheet characteristics by construction. Banks with tight capital buffers are the most significant transmitters of this shock. Monetary policy only affects the asset growth of small bank borrowers, but has a similar impact on the same sectors as capital requirements. There is evidence that these instruments reinforce each other when tightened, but only for small banks. Firms that borrow from multiple banks and operate in sectors with alternative forms of finance are less (equally) affected by changes in capital requirements (monetary policy). |
| Keywords: | Capital requirements; firm-level data; SMEs; relationship lending; macroprudential and monetary policy |
| JEL: | G21 G28 |
| Date: | 2015–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:0573&r=cfn |