8,157 research outputs found
In Lands of Foreign Currency Credit, Bank Lending Channels Run Through?
No full textJournal of International Economics, In Lands of Foreign Currency Credit, Bank Lending Channels Run Through?, Ongena, Schindele, Vonna
The economic impact of merger control legislation
No full textWe investigate the impact of legislative reforms in merger control legislation in nineteen industrial countries between 1987 and 2004. We find that strengthening merger control decreases the stock prices of non-financial firms, while increasing those of banks. Cross sectional regressions show that the discretion embedded in the supervisory control of bank mergers is a major determinant of the positive bank stock returns. One explanation is that merger control introduces “checks and balances” that mitigates the potential abuse and wasteful enforcement of supervisory control in the banking sector
Working with women, do men get all the credit?
Full text linksponsorship: The authors would like to thank two anonymous referees, Yangming Bao, Jia He, Mingming Jiang, Da Ke, Esteban Lafuente (Editor), Jakob Madsen, and participants at Australasian Finance & Banking Conference, China International Conference in Finance (Tianjin), Great China Area Finance Conference (Xiamen), Nankai University Young Scholars in Finance Conference (Tianjin), 11th International Conference of Methods in International Finance Network (Ji'nan), and Dongbei University of Finance and Economics Workshop (Dalian) for useful comments. Shusen Qi acknowledges financial support from the National Natural Science Foundation of China (71903164, 71790601) and Social Science Foundation of Fujian Province (FJ2019B140). Steven Ongena acknowledges financial support from ERC ADG 2016-GA 740272 lending. (National Natural Science Foundation of China|71903164, National Natural Science Foundation of China|71790601, Social Science Foundation of Fujian Province|FJ2019B140, ERC|ADG 2016-GA 740272)status: Publishe
Credit Supply and Demand in Unconventional Times
Full text linksponsorship: Ongena acknowledges financial support from ERC ADG 2016-GA 740272 lending. (ERC ADG|2016-GA 740272)status: Publishe
Leverage Ratio, Risk-Based Capital Requirements, and Risk-taking in the United Kingdom
Full text linkWe assess the impact of the leverage ratio capital requirements on the risk-taking behaviour of banks both theoretically and empirically. We use a difference-in-differences (DiD) setup to compare the behaviour of UK banks subject to the leverage ratio requirements (LR banks) to otherwise similar banks (non-LR banks). Conceptually, introducing binding leverage ratio requirements into a regulatory framework with risk-based capital requirements induces banks to re-optimise, shifting from safer to riskier assets (higher asset risk). Yet, this shift would not be one-for-one due to risk-weight differences, meaning the shift would be associated with a lower level of leverage (lower insolvency-risk). The interaction of these two changes determines the impact on the aggregate level of risk. Empirically, we show that LR banks did not increase asset risk, and slightly reduced leverage levels, compared to the control group after the introduction of leverage ratio in the UK. As expected, these two changes lead to a lower aggregate level of risk. Our results show that credit default swap spreads on the 5-year subordinated debt of LR banks fell relative to non-LR banks post leverage ratio introduction
Investment efficiency of private and public firms
No full textWe document that private firms are more efficient in investment than public firms. Exploiting the Sarbanes-Oxley Act that reduces agency problems of public firms but raises their compliance costs, we find that public firms, especially those with more complex operations, become more inefficient after SOX. Private firms that are likely more financially constrained exhibit greater investment efficiency. Furthermore, during periods of heightened uncertainty and when operating within industries characterized by increased environmental activism, consumer focus, and greater labor expenditure, public firms tend to exhibit higher levels of inefficiency. Mediation tests show that the more efficient investment of private firms translates into future profitability gains. Overall, the investment inefficiency of public firms does not stem from higher agency costs but rather from the inherent difficulty and costs of managing a complex organization
Investment warning for big businesses: rising complexity often undermines a company's ability to make efficient investment decisions
No full textInvestment is the lifeblood of businesses. It is how they grow, innovate and stay competitive. Yet not all investment is productive. Companies can underinvest in valuable opportunities or overspend on poor ones. The result is inefficiency: wasted capital, missed growth and weaker long-term performance. Our recent research, Firm complexity and investment inefficiency, sheds light on a subtle but powerful driver of these inefficiencies: corporate complexity. As businesses grow, diversify and expand across markets, they inevitably become more complex. But our evidence shows that rising complexity often undermines a company’s ability to make efficient investment decisions
Steven Johnson Author Talk Poster
No full textK-State Book NetworkA poster advertising an author talk by Steven Johnson at Kansas State University on September 3, 2014. Steven Johnson's book "The Ghost Map" was the 2014-2015 common book
Leverage ratio and risk-taking: theory and practice
No full textWe assess the impact of the leverage ratio capital requirements on the risk‐taking behaviour of banks both theoretically and empirically. We use a difference‐in‐differences (DiD) setup to compare the behaviour of UK banks subject to the leverage ratio requirements (LR banks) to otherwise similar banks (non‐LR banks). Conceptually, introducing binding leverage ratio requirements into a regulatory framework with risk-based capital requirements induces banks to reoptimise, shifting from safer to riskier assets (higher asset risk). Yet, this shift would not be one‐for‐one due to risk‐weight differences, meaning the shift would be associated with a lower level of leverage (lower insolvency risk). The interaction of these two changes determines the impact on the aggregate level of risk. Empirically, we show that LR banks did not increase asset risk, and slightly reduced leverage levels, compared to the control group after the introduction of leverage ratio in the UK. As expected, these two changes lead to a lower aggregate level of risk. Our results show that credit default swap spreads on the five‐year subordinated debt of LR banks dropped relative to non‐LR banks post leverage ratio introduction
Quantitative easing and the functioning of the gilt repo market
No full textWe assess the impact of quantitative easing (QE) on the provisioning of liquidity and the pricing in the UK gilt repo market. We compare the behaviour of banks that received reserves injections via QE operations to other similar banks in terms of the amounts lent and pricing. We also investigate whether leverage ratio capital requirements affected the amounts of liquidity supplied by broker-dealers and the spreads they charged. We find that QE interventions can improve liquidity provision, and that their size determines how this is attained. QE can also reduce the cost of borrowing in the repo market unless it was associated with spikes in demand for liquidity. Our findings further indicate that the leverage ratio supports the provision of liquidity during stress, as it prompts banks to become less leveraged. However, the larger capital charge repo transactions attract under the leverage ratio requirement is reflected in their spreads
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