52 research outputs found
The transparency of the banking system and the efficiency of information-based bank runs
No full text
The Controlling Shareholder's Personal Stock Loan and Firm Performance
No full textThis paper studies companies that have a controlling shareholder. In particular, it
examines the relationship between firm performance and its controlling shareholder’s
personal loan. We present a model to identify two effects of a personal loan that is
secured by stocks. The loan can be beneficial ex ante, because it relaxes the wealth
constraint of controlling shareholders and allows firms to invest in good projects.
The loan can also be harmful ex post, because it will create an incentive for
controlling shareholders to pursue risky projects. We use a sample of listed
companies in Taiwan to test our hypotheses and find consistent evidence
Subordinated debt, market discipline, and bank risk
Get PDFThis paper demonstrates that subordinated debt (‘subdebt’ thereafter) regulation can be an effective mechanism for disciplining banks. Under our proposal, investors buy the subdebt of a bank only if they receive favourable information about the bank, and the bank is subject to a regulatory examination if it fails to issue subdebt. By forcing banks to be examined when they are likely weak, subdebt regulation not only reduces the chance that managers of distressed banks can take value-destroying actions to benefit themselves, but may also encourage banks to lower asset risk. It shows that subdebt regulation and bank capital requirements can be complements for alleviating the banks’ moral hazard problems. It also suggests that to make subdebt regulation effective, regulators may need impose ceilings on the interest rates of subdebt, prohibit collusion between banks and subdebt investors, and require the subdebt to convert into the issuing bank’s equity when the government takes over or provides open assistance to the bank.subordinated debt regulation; bank capital regulation; market discipline; moral hazard; contingent capital certificate
Replication Data for: "The misruling elites: the state, local elites, and the social geography of the Chinese revolution"
No full textReplication data and code for the manuscript, Xiaohong Xu, Ivan Png, Junhong Chu, Yehning Chen, "The misruling elites: the state, local elites, and the social geography of the Chinese revolution", Theory and Society, 2024
Why do bank runs look like panic? A new explanation
Get PDFThis paper demonstrates that, even if depositors are fully rational and always choose the Pareto dominant equilibrium when there are multiple equilibria, a bank run may still occur when depositors’ expectations of the bank’s fundamentals do not change. More specifically, a bank run may occur when depositors learn that noisy bank-specific information is revealed, or when they learn that precise bank-specific information is not revealed. The results in this paper are consistent with empirical evidence about bank runs. It also implies that suspension of convertibility can improve the efficiency of bank runs.bank run; banking panic; suspension of convertibility
The transparency of the banking industry and the efficiency of information-based bank runs
Get PDFIn this paper, we investigate the relationship between the transparency of banks and the fragility of the banking system. We show that information-based bank runs may be inefficient because the deposit con-tract designed to provide liquidity induces depositors to have excessive incentives to withdraw. An im-provement in transparency of a bank may reduce depositor welfare through increasing the chance of an inefficient contagious bank run on other banks. A deposit insurance system in which some depositors are fully insured and the others are partially insured can ameliorate this inefficiency. Under such a system, bank runs can serve as an efficient mechanism for disciplining banks. We also consider bank managers’ control over the timing of information disclosure, and find that they may lack the incentive to reveal in-formation about their banks.bank run; contagion; transparency; market discipline; deposit insurance
Does Copyright Enforcement Encourage Piracy?
Get PDFMore intensive copyright enforcement reduces piracy, raises prices, and lowers consumer surplus. We show that these results do not hold regarding the extent rather than intensity of enforcement. When enforcement is targeted at high-value buyers such as corporate and government users, the copyright holder has an incentive to charge super-monopoly prices, thereby encouraging piracy among low-value buyers. Extending enforcement down the demand curve broadens the copyright holder’s captive market, leading to lower prices and higher sales that can increase both profits and consumer surplus. The standard tradeoff between the incentive to generate intellectual property and the cost of monopoly power is therefore avoided. Private enforcement by copyright holders may be insuciently extensive since consumers can also benefit from more extensive enforcement. Similarly, new technologies which lead to stronger control over illicit use can paradoxically benefit consumers.piracy; internet; intellectual property; copyright protection; super-monopoly pricing
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