Browsing by Subject "L11"

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  • Xu, Bing; Wang, Honglin; Rixtel, Adrian van (2016)
    BOFIT Discussion Papers 5/2016
    ​This paper investigates if relationship lending and bank market concentration permit informational rent extraction through collateral. We use equity IPOs as informational shocks that erode rent seeking opportunities. Using unique loan data from China, we find collateral incidence increases with relationship intensity and bank market concentration for pre-IPO loans, while these effects are moderated post-IPO. We further discover after an IPO, rent extraction is moderated for safe firms but intensified for risky firms. These results are not driven by differences or changes in financial risks. Ours is the first investigation on collateral determinants for China with loan-level data.
  • Fungáčová, Zuzana; Shamshur, Anastasiya; Weill, Laurent (2016)
    BOFIT Discussion Papers 6/2016
    Published in Journal of Banking and Finance, 83, October, 2017, 104–120
    Despite the extensive debate on the effects of bank competition, only a handful of single-country studies deal with the impact of bank competition on the cost of credit. We contribute to the literature by investigating the impact of bank competition on the cost of credit in a cross-country setting. Using a panel of firms from 20 European countries covering the period 2001–2011, we consider a broad set of measures of bank competition, including two structural measures (Herfindahl-Hirschman index and CR5), and two non-structural indicators (Lerner index and H-statistic). We find that bank competition increases the cost of credit and observe that the positive influence of bank competition is stronger for smaller companies. Our findings accord with the information hypothesis, whereby a lack of competition incentivizes banks to invest in soft information and conversely increased competition raises the cost of credit. This positive impact of bank competition is however influenced by the institutional and economic framework, as well as by the crisis.
  • Fungáčová Zuzana; Shamshur, Anastasiya; Weill, Laurent (2017)
    Journal of Banking and Finance October
    BOFIT Discussion Papers 6/2016
    Despite the extensive debate on the effects of bank competition on economic welfare and growth, only a handful of single-country studies deal with the impact of bank competition on the cost of credit. We contribute to the literature by investigating the impact of bank competition on the cost of credit in a cross-country setting. Using a panel of firms from 20 European countries covering the period 2001–2011, we consider a broad set of measures of bank competition, including two structural measures (Herfindahl–Hirschman index and CR5), and two non-structural indicators (Lerner index and H-statistic). We find that bank competition increases the cost of credit and observe that the positive influence of bank competition is stronger for smaller companies. Our findings accord with the information hypothesis, whereby a lack of competition incentivizes banks to invest in soft information and conversely increased competition raises the cost of credit. This positive impact of bank competition is however influenced by the institutional and economic framework, as well as by the crisis.
  • Kauppi, Heikki; Koskela, Erkki; Stenbacka, Rune (2004)
    Suomen Pankin keskustelualoitteita 11/2004
    The study looks at the implications of product market competition and investment for price setting, wage bargaining and thereby for equilibrium unemployment in an economy with product and labour market imperfections.We show that intensified product market competition will reduce equilibrium unemployment, whereas the effect of increased capital intensity is more complex.Higher capital intensity will decrease the equilibrium unemployment when the elasticity of substitution between capital and labour is less than one, while the reverse happens when this elasticity is higher than one, but smaller than the elasticity of substitution between products.Finally, we demonstrate how labour and product market imperfections, characterised by the wage and price setting mark-ups, affect the optimal capital stock.Our findings raise important questions for future empirical research.Key words: equilibrium unemployment, product market imperfections, investment, wage bargaining JEL classification numbers: E22, E24, J51, L11
  • Molnár, József (2008)
    Bank of Finland Research Discussion Papers 4/2008
    This paper tests market power in the banking industry. Price-cost margins predicted by different oligopoly models are calculated using discrete-choice demand estimates of own-price and cross-price elasticities. These predicted price-cost margins are then compared with price-cost margins computed using observed interest rates and estimates of marginal costs. This paper This among the first to. apply this methodology on a detailed, bank-level dataset from the retail banking sector. It extends on previous papers and illustrates the advantages of structural modelling by simulating a counterfactual merger experiment with a number of mergers, each of which involves two major banks, and studying the unilateral effect of the mergers on interest rates. This provides more evidence that concentration measures (such as the Herfindahl index) could be very misleading indicators of market power. Keywords: demand, discrete choice, product differentiation, banking, market power, merger simulation JEL classification numbers: G21, L11, L13
  • Gregg, Amanda; Nafziger, Steven (2020)
    BOFIT Discussion Papers 26/2020
    Enterprise creation, destruction, and evolution support the transition to modern economic growth, yet these processes are poorly understood in industrializing contexts. We investigate Imperial Russia’s industrial development at the firm-level by examining entry, exit, and persistence of corporations. Relying on newly developed balance sheet panel data from every active Russian corporation (N > 2500) between 1899 and 1914, we examine the characteristics of entering and exiting corporations, how new entrants evolved, and the impact of founder identity on subsequent outcomes. Russian corporations operated flexibly and competitively, conditional on overcoming distortionary institutional barriers to entry that slowed the emergence of these leading firms in the Imperial economy.