Research

Recent Submissions

  • Barseghyan, Gayane (2019)
    BOFIT Discussion Papers 24/2019
    Taking the multilateral sanctions program launched against Russia in 2014 as a case study, this paper investigates the economic effects of sanctions and counter-sanctions on a target economy. A synthetic control method for comparative case studies is employed to construct counterfactuals. The estimation results demonstrate that in Russia following sanctions and counter-sanctions real GDP per capita, FDI net in flows and income inequality fell, while the ban on agricultural and food imports introduced by Russia boosted the domestic agricultural sector, resulting in higher agricultural productivity and farm worker incomes. Various placebo studies confirm the significance of obtained estimates. Results are robust to random donor samples.
  • Funke, Michael; Li, Xiang; Tsang, Andrew (2019)
    BOFIT Discussion Papers 23/2019
    This paper studies monetary policy transmission in China’s peer-to-peer lending market. Using spectral measures of causality, we explore the impacts of Chinese monetary policy shocks on China’s P2P market interest rates and lending amounts. The estimation results indicate significant spectral Granger causality from monetary policy surprises to P2P lending rates for borrowers, but not the reverse. Unlike the lending channel for traditional banks, monetary policy shocks do not Granger-cause the credit amount in the P2P lending market.
  • Caglayan, Mustafa; Talavera, Oleksandr; Zhang, Wei (2019)
    BOFIT Discussion Papers 22/2019
    We explore individual lender behaviour on Renrendai.com, a leading Chinese peer-to-peer (P2P) crowdlending platform. Using a sample of roughly 5 million investor-loan-hour observations and applying a high-dimension fixed effect estimator, we establish evidence of herding behaviour: the investors in our sample tend to prefer assets that had attracted strong interest in previous periods. The herding behaviour relates to both the experience of the investor and the length of time of each investment session. The results show that herding happens mostly in the first or final hour of long sessions. Herding behaviour is further confirmed by estimates at the listing-hour data.
  • Fungáčová, Zuzana; Kerola, Eeva; Weill, Laurent (2019)
    BOFIT Discussion Papers 21/2019
    This paper investigates how past experience with banking crises influences an individual’s trust in banks. We combine data on banking crises for the period 1970–2014 with individual data on trust in banks for 52 countries. We find that experiencing a banking crisis diminishes a person’s trust in banks, and that high exposure to banking crises is negatively related to trust in banks. An individual’s age at the time of the crisis is important, and significant for individuals between 41 and 60 years of age at the time of the banking crisis. Both severe and mild crises diminish trust in banks, but a severe banking crisis hits also young people’s trust, while less severe banking crises mainly degrade trust of more mature people. The detrimental effect for trust in banks seems to be connected specifically to systemic banking crises. Other types of financial crises incur a less significant effect. Overall, our results indicate that banking crises generate previously unrecognized costs for the economy in the form of a lasting reduction of trust in banks.
  • Mehrotra, Aaron; Moessner, Richhild; Shu, Chang (2019)
    BOFIT Discussion Papers 20/2019
    We analyse how movements in the components of sovereign bond yields in the United States affect long-term rates in 10 advanced and 21 emerging economies. The paper documents significant global spillovers from both the expectations and term premia components of long-term rates in the United States. We find that spillovers to domestic long-term rates in emerging economies from the US expectations components tend to be more sizeable than those from the US term premia. Finally, spillovers from US term premia are larger when an emerging economy displays greater macro-financial vulnerabilities.