Browsing by Author "Hyytinen, Ari"

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  • Hyytinen, Ari; Takalo, Tuomas (2008)
    Bank of Finland Research Discussion Papers 2/2008
    Published in Review of Network Economics, Volume 8, Issue 2, 2009: 164-188
    In the market for payment media, some consumers use only one medium when paying for their point-of-sale transactions, while others use many. This pattern reflects the diffusion of new payment media, because a payment method innovation is typically first used simultaneously with the established methods. We study the use of multiple payment media by employing data on young Finnish consumers. We find that the use of multiple payment media is directly related to consumer awareness and that not controlling for the endogeneity of awareness can bias its effect downwards. These results suggest that increasing consumer awareness may have been underlying the rise of debit card use around the world. It could also speed up the adoption of new means of payment, such electronic money and mobile payments. To the extent that antitrust concerns in the market for payment media stem from the lack of information, improving consumer awareness could be a remedy. Keywords: payment media, consumer awareness, adoption of financial technology JEL classification numbers: G200, E590
  • Hyytinen, Ari; Takalo, Tuomas (2000)
    Suomen Pankin keskustelualoitteita 10/2000
    Transparency regulation aims at reducing financial fragility by strengthening market discipline.There are however two elementary properties of banking that may render such regulation inefficient at best and detrimental at worst.First, an extensive financial safety net may eliminate the disciplinary effect of transparency regulation.Second, achieving transparency is costly for banks, as it dilutes their charter values, and hence it also reduces their private costs of risk-taking.We consider both the direct costs of complying with disclosure requirements and the indirect transparency costs stemming from imperfect property rights governing information and specify the conditions under which transparency regulation can (and cannot) reduce financial fragility. Key words: information disclosure, market discpline, bank transparency, deposit insurance, financial safety net
  • Hyytinen, Ari; Lahtonen, Jukka; Pajarinen, Mika (2012)
    Bank of Finland Research Discussion Papers 20/2012
    This paper uses entrepreneurs´ survival expectations around the time of market entry and subsequent venture exits to study entrepreneurial optimism. Using data on a large number of nascent entrepreneurs in the US and start-ups in Finland, we find that new entrepreneurs´ survival beliefs are on average optimistic but heterogeneous: Some are excessively optimistic, whereas a small subset holds unbiased beliefs. Entrepreneurial optimism is increasing in the relative (interpersonal) optimism and de- creasing in entrepreneurs´ level of education and industry experience in both countries. At least in Finland, those holding optimistic views are more likely to transit into entrepreneurship. JEL: D21, L20 Key words: entrepreneurship, survival, optimism, overestimation
  • Hyytinen, Ari; Putkuri, Hanna (2012)
    Bank of Finland Research Discussion Papers 21/2012
    Published in Journal of Money, Credit and Banking, Vol 50, Issue 1, February 2018: 55-76 ; https://dx.doi.org/10.1111/jmcb.12453
    A unique Finnish household-level data from 1994 to 2009 allow us to measure how households financial expectations are related to the sub- sequent outcomes. We use the difference between the two to measure forecast errors and household optimism and link the errors to households´ borrowing behaviour. We find that households making greatest optimistic forecast errors carry greater levels of debt and are most likely to suffer from excessive debt loads (overindebtedness). They also are less attentive to forecast errors than their pessimistic counterparts when forming their expectations for a subsequent period JEL: D21, L20 Key words: forecast errors, ex ante optimism, borrowing
  • Hyytinen, Ari; Putkuri, Hanna (2018)
    Journal of Money, Credit and Banking 1; February 2018
    Published in Bank of Finland Research Discussion Papers 21/2012.
    We use Finnish household-level data from 1994 to 2013 to measure how often and what kind of forecast errors households make and how the errors are linked to the households' borrowing behavior and overindebtedness. We find that those households that make the largest optimistic forecast errors have greater debt-to-income ratios. They also are more likely to report that they suffer from excessive debt loads and have problems in coping with their bills. There are no such systematic effects for the households that make pessimistic forecast errors.
  • Hyytinen, Ari; Takalo, Tuomas (2003)
    Suomen Pankin keskustelualoitteita 17/2003
    Published in International Review Of Law And Economics, 28 , pp. 113-122
    We study the effects of investor protection on the availability of external finance, entrepreneurship, and creation of new firms in an equilibrium search model of private capital markets.In addition to search frictions, we examine contract frictions, specifically interim and ex post moral hazard problems stemming from entrepreneurs' possibilities to expropriate financiers.In our model, the government chooses the level of investor protection that determines the transferability of match surplus between entrepreneurs and financiers.The results indicate that anything that increases (decreases) entrepreneurship also increases (decreases) the creation of start-ups.The effect of investor protection on the creation of start-ups thus hinges on the relative importance of various search and contract frictions.Only when investor protection has a sufficiently large impact on the ex post moral hazard problem relative to the interim moral hazard does strengthening investor protection enhance start-up creation.We also find that search frictions dilute the beneficial effect of investor protection and that contract frictions modify the standard Hosios condition for efficiency. Key words: investor protection, start-up financing, private equity market, entrepreneurship, corporate finance JEL classification numbers: E50, G21, G24
  • Hyytinen, Ari; Kuosa, Iikka; Takalo, Tuomas (2002)
    Suomen Pankin keskustelualoitteita; Bank of Finland. Discussion papers 8/2002
    Published in European Journal of Law and Economics, 16, 2003: 59-89
    Although it is widely acknowledged that the benefits of corporate governance reform could be substantial, systematic evidence on such reforms is scant.We both document and evaluate a contemporary corporate governance reform by constructing 18 measures of shareholder and creditor protection for Finland for the period 1980-2000.The measures reveal that shareholder protection has been strengthened whereas creditor protection has been weakened.We also demonstrate how the reform is consistent with a reorganisation of the Finnish financial market in which a bank-centred financial system shifted from relationship-based debt finance towards increasing dominance by the stock market.We find evidence that the development of shareholder protection has been a driver of the reorganisation, whereas the changes in creditor protection have mirrored market developments. Key words: corporate finance, financial intermediation, corporate governance JEL classification numbers: E50, G2 1, G24, G32
  • Hyytinen, Ari; Toivanen, Otto (2000)
    Suomen Pankin keskustelualoitteita 9/2000
    Whether or not banks are engaged in ex ante monitoring of customers may have important consequences for the whole economy.We approach this question via a model in which banks can invest in either information acquisition or market power (product differentiation). The two alternatives generate different predictions, which are tested using panel data on Finnish local banks.We find evidence that banks' investments in branch networks and human capital (personnel) contribute to information acquisition but not to market power.We also find that managing customers' money transactions enhances banks ability to control their lending risks.
  • Hyytinen, Ari; Takalo, Tuomas (2004)
    Suomen Pankin keskustelualoitteita 25/2004
    In the market for payment media, some consumers use only one medium when paying for their point-of-sale transactions, while others multihome and use many.As this pattern reflects the diffusion of new payment media, we take a look at the determinants of the adoption of new payment media through the window of multihoming. Using data on young Finnish consumers, we find that one key determinant of multihoming behaviour is consumer awareness.Our instrumental variable estimates indicate that the better informed use 1.2-1.3 times more payment media than the less informed. Because many payment method innovations are typically first used simultaneously with established methods, our results suggest that increasing consumer awareness could significantly speed up the adoption of new means of payment, such electronic money and mobile payments.Key words: payment media, multihoming, consumer awareness, adoption of financial technology JEL classification numbers: G200, E590
  • Takalo, Tuomas; Hyytinen, Ari; Stevenson, Alexis (2021)
    Kansantaloudellinen aikakauskirja 3
    Tässä kirjoituksessa tehdään katsaus patenttien taloustieteellisiin arvottamismenetelmiin ja niistä johdettuihin arvioihin patenttien arvosta. Sen lisäksi raportoidaan uusia tuloksia suomalaisten yritysten (ja eräiden muiden organisaatioiden) patenttien arvosta ja verrataan niitä aiemmin Suomesta saatuihin tuloksiin. Eri arvottamismenetelmillä saadaan laadullisesti samansuuntaisia tuloksia patenttien arvojakauman muodosta ja toimialaeroista arvojen välillä. Eri menetelmät tuottavat kuitenkin erisuuruisia estimaatteja patenttien arvosta johtuen mm. eroista menetelmien vastafaktuaaleissa ja siitä, kuinka hyvin eri menetelmät pystyvät erottelemaan patenttien ja niiden suojaamien keksintöjen arvoa toisistaan. Suomalaisella aineistoilla saadut tulokset ovat samansuuntaisia kuin muista maista saadut tulokset. Tässä kirjoituksessa raportoidut uudet tulokset viittaavat siihen, että suomalaisten yritysten (ja muiden organisaatioiden) patenttien yksityinen arvo on ollut nousussa.
  • Hyytinen, Ari; Takalo, Tuomas (2003)
    Suomen Pankin keskustelualoitteita 25/2003
    Published in Economic Notes, 33, 2004: 257-273
    The banking system is known to be vulnerable to self-fulfilling crises that are caused by depositors coordination failure.We show that transparency regulation may prevent certain types of systemic crises by eliminating the possibility of the coordination failure. Key words: bank transparency, financial stability, disclosure regulation JEL classification numbers: G21, G28
  • Andersén, Atso; Hyytinen, Ari; Snellman, Jussi (2000)
    Suomen Pankin keskustelualoitteita 15/2000
    In this paper we discuss recent developments in the Finnish banking sector.Our specific aim is to examine whether and to what extent recent developments in Finland are broadly in line with the trends common to banking sectors in Europe and also worldwide. We focus on developments in banks' profit and loss accounts, balance sheets and the market structure of the banking sector.In addition, technological developments are surveyed.As regards consolidation, the Finnish banking sector is a trendsetter.The emphasis in structural development has moved to cross-border banking and bankassurance.On the other hand, it turns out that it is quite hard to track some of the trends that are believed to characterize European banking sectors using Finnish data.For instance, disintermediation has thus far been moderate in Finland, as the role of banks as providers of financing to households and companies is still significant and generally shows no signs of diminishing.Tougher competition in lending does not seem to have reduced Finnish banks' profitability, which was at a record high in 1999 and in the first half of 2000. The Finnish banks have fully recovered from the banking crisis of the early 1990s.Improved profitability is largely due to enhanced efficiency as well as recent favourable economic performance.The banking sector has experienced a rapid process of consolidation during the 1990s and currently banks are in the middle of a period of intensive launching of new technology-based products.It can be argued that as a result of developments in the 1990s, the Finnish banking sector is among the most profitable and efficient in Europe. Key words: Banks, financial system, stability
  • Hyytinen, Ari (1999)
    Suomen Pankin keskustelualoitteita 19/1999
    This paper investigates the evolution of the (conditional) volatility of returns on three Scandinavian markets (Finland, Norway and Sweden) over the turbulent period of the past decade, namely the overlapping periods of financial liberalisation, drastically changing macroeconomic conditions and banking crisis. We find that even over this relatively turbulent period volatility is in most cases successfully captured by past volatility and shocks to past volatility, ie by a (symmetric) GARCH process.In each country banking crisis has induced regime shifts in (unconditional) volatility.We also find evidence for cross-country volatility spillovers during the banking crisis episodes.The estimated volatility patterns suggest that even though the volatility of returns was of very high magnitude during the years of banking crisis, developments within the banking industry were not reflected in market uncertainty until all the damage had been done and the severe problems afflicting banks began to be realised in full. Key words: GARCH, conditional volatility, banking crisis, volatility spillovers