Browsing by Author "Schoors, Koen"

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  • Pyle, William; Schoors, Koen (2011)
    BOFIT Discussion Papers 33/2011
    Published in The Journal of Law & Economics, Vol. 58, No. 2 (May 2015), pp. 451-480 by Alexei Karas, William Pyle and Koen Schoors
    Russia's tremendous inter-regional variation in the pace of industrial land rights reform has meant that geography has helped determine the current tenure status of firms' production plots as much as any individual firm characteristics. By exploiting both this difference in the pace with which land reform has been carried out across Russia's federal subjects and a unique micro-level dataset, we present evidence strongly consistent with the proposition that more secure rights to land facilitate access to external financing. This finding is confirmed by other evidence from the survey that points to private land serving as an important source of collateral for Russian lenders and borrowers. JEL: 016, P25, P31, R14, R52 Keywords: industrial land, property rights, Russia, collateral
  • Karas, Alexei; Schoors, Koen; Weill, Laurent (2008)
    BOFIT Discussion Papers 3/2008
    Published in Economics of Transition Vol 18, Issue 1 (January 2010), pp. 123-141
    We study whether bank efficiency is related to bank ownership in Russia. We find that foreign banks are more efficient than domestic private banks and - surprisingly - that domes-tic private banks are not more efficient than domestic public banks. These results are not driven by the choice of production process, the bank's environment, management's risk preferences. the bank's activity mix or size, or the econometric approach. The evidence in fnicl suggests that domestic public banks arc more efficient than domestic private banks and that the efficiency gap between these two ownership types did not narrow after the introduction of deposit insurance in 2004. This may be due to increased switching costs or to the moral hazard effects of deposit insurance. The policy conclusion is that the efficiency of the Russian banking system may benefit more from increased levels of competition and greater access of foreign banks than from bank privatization. JEL classification: G21; P30; P34; P52 Keywords: Bank efficiency; state ownership; foreign ownership; Russia
  • Claeys, Sophie; Lanine, Gleb; Schoors, Koen (2005)
    BOFIT Discussion Papers 10/2005
    Published in Journal of Comparative Economics, September 2007, Vol. 35, No. 3, p. 630-657
    We focus on the con.ict between two central bank objectives individual bank stability and systemic stability.We study the licensing policy of the Central Bank of Russia (CBR) during 1999.2002.Banks in poorly banked regions, banks that are too big to be disciplined adequately, and banks that are active on the interbank market enjoy protection from license withdrawal, which suggests a tacit concern for systemic stability.The CBR is also found reluctant to with- draw licenses from banks that violate the individual's deposits-to-capital ratio as this conflicts with the tacit CBR objective to secure depositor confidence and systemic stability.Keywords: Bank supervision, bank crisis, Russia.JEL Classification : G2 N2 E5
  • Karas, Alexei; Pyle, William; Schoors, Koen (2019)
    BOFIT Discussion Papers 10/2019
    Using evidence from Russia, we explore the effect of the introduction of deposit insurance on bank risk. Drawing on within-bank variation in the ratio of firm deposits to total household and firm deposits, so as to capture the magnitude of the decrease in market discipline after the introduction of deposit insurance, we demonstrate for private, domestic banks that larger declines in market discipline generate larger increases in traditional measures of risk. These results hold in a difference-in-difference setting in which state and foreign-owned banks, whose deposit insurance regime does not change, serve as a control.
  • Schoors, Koen; Semenova, Maria; Zubanov, Andrey (2017)
    BOFIT Discussion Papers 1/2017
    We analyze whether a depositor’s familiarity with a bank affects depositor behavior during a financial crisis. Familiarity is measured by the presence of regional or local cues in the bank’s name, while depositor behavior is considered in terms of depositor sensitivity to observable bank risk (market discipline exerted by depositors). Using the 2001–2010 bank-level and region-level data for Russia, we show the evidence that depositors use quantity-based discipline on all banks in the sample. The evidence of a price-based discipline mechanism, however, is virtually absent. We find that depositors of familiar banks were less sensitive to bank risk after a financial crisis than depositors at unfamiliar banks. To assure the results are driven by familiarity bias and not implicit support of regional governments to banks with regional cues in their names, we interact the variables with measures of trust in local governments and regional affinity. We find a “flight to familiarity” effect strongly present in regions with strong regional affinity, while the effect is rejected in regions with greater trust in regional and local governments. This suggests that the results are driven by familiarity rather than implicit protection from trusted regional or local governments.
  • Berkowitz, Daniel; Hoekstra, Mark; Schoors, Koen (2012)
    BOFIT Discussion Papers 10/2012
    Published in Journal of Development Economics, Volume 110, September 2014, Pages 93–106 as Bank privatization, finance, and growth
    This paper examines the effect of banking on economic growth in modern Russia. To overcome simultaneity and selection, we exploit regional banking variation induced by the creation of ?specialized banks? (spetsbanks) in the last years of the Soviet Union (1988-1991). Consistent with the qualitative work of Joel Hellman [1993] and Juliet Johnson [2000], we show that these reforms generated an ideal natural experiment in that the concentration of spetsbanks is jointly uncorrelated with 15 predictors of future growth, including pre-banking income, education, anti-market sentiment, institutional quality, and government interference in the economy. Results indicate that while the presence of one additional spetsbank per million inhabitants increased total within-state lending to private firms and individuals by 14 to 26 percent in the early 2000s, it had no effect on investment or per capita income. In contrast, we find that spetsbanks increased employment. Additional results indicate that spetsbanks increased growth in regions in which they were less connected to government and were generally more similar to non-spetsbanks, as well as in regions that were better at protecting property rights. Our results thus strongly suggest that bank origins, political connections, and property rights are important determinants of effective finance. JEL: O4, F3, G2, P3 Keywords: finance, growth, banking, Russia
  • Merlevede, Bruno; Schoors, Koen; Spatareanu, Mariana (2013)
    BOFIT Discussion Papers 27/2013
    Published in World Development, Volume 56, April 2014, Pages 1-19.
    This study measures the effect of foreign direct investment (FDI) on the productivity of local firms. Unlike earlier studies, our empirical approach does not require that FDI manifests immediate or permanent effects. We find that foreign entry initially affects productivity of local competitors negatively, but is more than offset by a permanent positive effect on local competitors once majority-foreign-owned firms have been present for a while. The effect on the productivity of local suppliers, in contrast, is transient. The entry of majority-foreign-owned firms boosts productivity of local suppliers after a short adaption period, but then fades. The positive impact of minority-foreign-owned firms on local suppliers is immediate, but smaller and transient. Keywords: FDI, spillovers, dynamics, timing JEL Classification: F2
  • Karas, Alexei; Schoors, Koen; Lanine, Gleb (2008)
    BOFIT Discussion Papers 19/2008
    We suggest an additional transmission channel of contagion on the interbank market - the liquidity channel. Examining the Russian banking sector, we and that the liquidity channel contributes significantly to understanding and predicting interbank market crises. Interbank market stability Granger causes the interbank market structure, while the opposite causality is rejected. This bolsters the view that the interbank market structure is endogenous. The results corroborate the thesis that prudential regulation at the individual bank level is insufficient to prevent systemic crises. We demonstrate that liquidity injections of a classical lender of last resort can effectively mitigate coordination failures on the interbank market both in theory and practice. Apparently, liquidity does matter.
  • Merlevede, Bruno; Schoors, Koen (2005)
    BOFIT Discussion Papers 11/2005
    Published in Journal of Economic Policy Reform, 2007, Vol.10, No.1, pp. 29-50
    We analyse how the choice of reform speed and economic growth affect one another.We estimate a system of three equations where economic growth, economic reform and FDI are jointly determined. New reforms affect economic growth negatively, whereas the level of past reform leads to higher growth and attracts FDI.This means that the immediate adjustment cost of new reforms is counterbalanced by a future increase in FDI inflows and higher future growth through a higher level of past reform.Reform reversals contribute to lower growth.We use the model to simulate the impact of big bang reform and gradualist reform on economic growth.This is only meaningful in the presence of reform reversals, which requires aggregate uncertainty about the appropriate reform path.Using the coefficients from the empirical model, we find that even relatively small ex ante reversal probabilities suffice to tilt the balance in favour of gradualism. The case for gradualism gains strength if policymakers are short-sighted, but weakens if voters are myopic. JEL Classification: O57, P21, P26, and P27 Keywords: policy reform, gradualism, big bang, FDI, economic growth
  • Disli, Mustafa; Schoors, Koen; Meir, Jos (2013)
    BOFIT Discussion Papers 6/2013
    Published in Journal of Financial Stability, Vol. 9, No. 4, 2013, Pages 804–819
    We examine the effects of political connections on depositor discipline in a sample of Turkish banks. Banks with former members of parliament at the helm enjoy reduced depositor discipline, especially if the former politician's party is currently in power - less so if the former politician served as a minister. Banks with structural problems are more likely to appoint former politicians, but our results remain robust after controlling for selection effects. Ministers may reduce depositor discipline less because they signal severe problems and because the additional government deposits they bring to the bank during their term tend to leave with them. Keywords: Depositor discipline, political connections, banks JEL: G1, G2, D7
  • Fungáčová, Zuzana; Schoors, Koen; Solanko, Laura; Weill, Laurent (2020)
    BOFIT Discussion Papers 8/2020
    State-owned banks tend to increase lending before elections for the purpose of boosting the reelection odds of incumbent politicians. We employ monthly data on individual banks to study whether Russian banks increased their lending before presidential elections during 2004–2019, a period covering four presidential elections. In contrast to the literature, we find that both state-owned and private banks increased their lending before presidential elections. This result stands for all loans, as well as separately for firm and household loans. The pre-election lending surge is followed by a deterioration of loan quality the following year, indicating the lending increase was not driven by higher growth prospects or some positive economic shock. The effect is substantially greater for large banks and banks more involved in lending activities. Our main finding that all types of banks in Russia increase their lending before presidential elections supports the view that the authorities in an electoral autocracy like Russia can influence lending of both private and state-owned banks for political reasons.
  • Schoors, Koen; Weill, Laurent (2017)
    BOFIT Discussion Papers 17/2017
    We investigate whether lending by the dominant Russian state bank, Sberbank, contributed to Vladimir Putin’s ascent to power during the presidential elections of March 2000. Our hypothesis is that Sberbank corporate loans could have been used as incentives for managers at private firms to mobilize employees to vote for the incumbent regime. In line with our proposed voter mobilization mechanism, we find that the regional growth of Sberbank corporate loans in the months before the presidential election is related to the regional increase in votes for Putin and to the regional increase in voter turnout between the Duma election of December 1999 and the presidential election of March 2000. The effect of Sberbank firm lending on Putin votes was most pronounced in regions where the governor was affiliated with the regime and in regions with extensive private employment. The effect was less apparent in regions with many single-company towns, where voter intimidation is sufficient to get the required result. Additional robustness checks and placebo regressions confirm the main findings. Our results support the view that additional Sberbank corporate loans granted prior to the March 2000 presidential election facilitated Putin’s early electoral success.
  • Karas, Alexei; Pyle, William; Schoors, Koen (2006)
    BOFIT Discussion Papers 13/2006
    Published in Oxford Economic Papers, Volume 62, Issue 1, 2010: 36-61 as How do Russian depositors discipline their banks? Evidence of a backward bending deposit supply function.
    Using a database from post-communist, pre-deposit-insurance Russia, we demonstrate the presence of quantity-based sanctioning of weaker banks by both firms and households, particularly after the financial crisis of 1998.Evidence for the standard form of price discipline, however, is notably weak.We estimate the deposit supply function and show that, particularly for poorly capitalized banks, interest rate increases exhibit diminishing, and eventually negative, returns in terms of deposit attraction.These findings are consistent with depositors interpreting the deposit rate itself as a complementary proxy of otherwise unobserved bank-level risk. JEL Classifications: G21, O16, P2 Keywords: market discipline, deposit market, transition, Russia
  • Karas, Alexei; Pyle, William; Schoors, Koen (2010)
    BOFIT Discussion Papers 8/2010
    Published in Journal of Money, Credit and Banking, Volume 45, Issue 1, February 2013, Pages 179–200 as as Deposit insurance, banking crises, and market discipline: Evidence from a natural experiment on deposit flows and rates
    We explore how the introduction of explicit deposit insurance affects deposit flows into and out of banks of varying risk levels. Using evidence from a natural experiment in Russia, we employ a difference-in-difference estimator to isolate the change in the deposit flows of a newly insured group (households) relative to an uninsured control group (firms). This approach improves on earlier studies seeking to identify the effect of deposit insurance on market discipline. We find that the relative sensitivity of households to bank capitalization diminished markedly with the introduction of an insurance program covering their deposits. This was not true for firms, however. We then show the finding is not an artifact of the two groups responding differently to a minor banking crisis that arose at roughly the same time.