Bank Capital and Lending: Evidence from Syndicated Loans

2018 ◽  
Vol 54 (2) ◽  
pp. 667-694 ◽  
Author(s):  
Yongqiang Chu ◽  
Donghang Zhang ◽  
Yijia (Eddie) Zhao
Keyword(s):  
Causal Effect ◽  
Syndicated Loans ◽  
Bank Capital ◽  
Demand Side ◽  
Troubled Asset Relief Program ◽  
The Cost ◽  
Relief Program ◽  
The Impact ◽  
New Evidence ◽  
Positive Effect

Using within-loan estimations to remove the impact of demand-side factors, we find that the capital levels of banks participating in the same syndicated loan are positively associated with the banks’ contributions to the loan. Consistent with the argument that higher capital reduces the cost of uninsured debt, the positive effect of bank capital on lending is stronger among banks that rely more on wholesale funding. Furthermore, we find that banks increase their contributions to syndicated loans after receiving Troubled Asset Relief Program (TARP) funding. Taken together, we provide new evidence on the importance and causal effect of bank capital on lending.

Do small public grants boost tourism firms’ performance?

2021 ◽  
pp. 135481662199443
Author(s):  
Stjepan Srhoj ◽  
Vanja Vitezić ◽  
Janette Walde
Keyword(s):  
Cost Benefit Analysis ◽  
Causal Effect ◽  
Value Added ◽  
Cost Benefit ◽  
Tourism Demand ◽  
The One ◽  
Grant Scheme ◽  
The Impact ◽  
New Evidence ◽  
Positive Effect

This study provides new evidence on the impact of tourism grants for service-standard improvement on tourism firm performance. Small matching grants provided to firms in two economically different regions are considered. We study additionality caused by the grants in the performance indicators of firms while taking into account regional heterogeneity and differing tourism demand. In the context of tourism firms in Croatia, we estimate the causal effect via a matching difference-in-differences estimator. We find a positive effect on tourism firm sales, value-added, capital, and labor in the region with higher tourism demand but not in the one with lower tourism demand. A cost–benefit analysis suggests that, in more developed regions, the benefits of the grant scheme for tourism outweigh the grant’s direct costs.

Impact of Government Bailout on Banks’ Cost of Equity: Additional Evidence from the Financial Bailout of 2008–2009

2021 ◽  
Vol 24 (01) ◽  
pp. 2150003
Author(s):  
Daphne Wang ◽  
Robert Houmes ◽  
Thanh Ngo ◽  
Omar Esqueda
Keyword(s):  
Institutional Ownership ◽  
The United States ◽  
Matched Sample ◽  
Cost Of Equity ◽  
Troubled Asset Relief Program ◽  
Low Concentrations ◽  
The Government ◽  
The Cost ◽  
Relief Program ◽  
Robust Evidence

The Capital Purchase Program (CPP) was the first and most significant program under the Troubled Asset Relief Program (TARP) during 2008–2009 financial crisis. This study evaluates the effect of the CPP during this period on the cost of equity of 170 publicly listed banks in the United States that received funding. To control for the potential effects of endogeneity on our results, we use a propensity score matched sample of non-CPP banks. Using this approach, we document robust evidence that the liquidity provided by the government bailout reduced the cost of equity for recipient banks, especially for those banks that repaid their bailout funds in full. This decrease in the cost of equity is particularly significant for banks with high market-to-book ratios, low concentrations of institutional ownership, and those banks with at least one large blockholder. Our findings have important implications for the assessment of government bailout programs and the future regulation of financial institutions.

The Impact of Military Spending on Economic Development

2018 ◽  
pp. 182-191
Author(s):  
Saptarshi Chakraborty
Keyword(s):  
Economic Growth ◽  
Causal Effect ◽  
Large Fraction ◽  
Military Spending ◽  
Military Expenditure ◽  
Policy Debate ◽  
External Threats ◽  
The Cost ◽  
The Military ◽  
The Impact

Some countries spend a relatively large percentage of GDP on their militaries in order to preserve or secure their status as global powers. Others do so because they are ruled by military governments or aggressive regimes that pose a military threat to their neighbors or their own populations. It is debatable whether there is a causal relationship between military spending and economic growth in the economy. It is again a policy debate how much to allocate funds for civilian and how much for military expenditure. Under these puzzling results of the impact of military expenditure on economic growth which is frequently found to be non-significant or negative, yet most countries spend a large fraction of their GDP on defense and the military. The chapter tries to investigate the relationship between military spending and economic growth in India. It also sees whether external threats, corruption, and other relevant controls have any causal effect. This chapter obtains that additional expenditure on Indian military in the presence of additional threat is significantly detrimental to growth implying that India cannot afford to fight or demonstrate power at the cost of its development.

Endogenous democracy: causal evidence from the potato productivity shock in the old world

2020 ◽  
pp. 1-8
Author(s):  
Joan Barceló ◽  
Guillermo Rosas
Keyword(s):  
Economic Development ◽  
Causal Effect ◽  
Transition To Democracy ◽  
Sensitivity Analyses ◽  
Old World ◽  
Omitted Variable Bias ◽  
Productivity Shock ◽  
Variable Bias ◽  
The Impact ◽  
New Evidence

Abstract Despite a high cross-country correlation between development and democracy, it is difficult to gauge the impact of economic development on the probability that autocracies will transition to democracy because of endogeneity, especially due to reverse causation and omitted variable bias. Hence, whether development causes democracy remains a contested issue. We exploit exogeneity in the regional variation of potato cultivation along with the timing of the introduction of potatoes to the Old World (i.e., a potato productivity shock) to identify a causal effect of urbanization, a proxy for economic development, on democratization. Our results, which hold under sensitivity analyses that question the validity of the exclusion restriction, present new evidence of the existence of a causal effect of economic development on democracy.

Corporate social responsibility and financial stability: evidence from the Troubled Asset Relief Program

2019 ◽  
Vol 45 (8) ◽  
pp. 1111-1128 ◽  
Author(s):  
Elizabeth Cooper ◽  
Christopher Henderson ◽  
Andrew Kish
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Financial Institutions ◽  
Financial Stability ◽  
Banking Industry ◽  
Content Type ◽  
Troubled Asset Relief Program ◽  
Corporate Social ◽  
Relief Program ◽  
The Impact

Purpose The purpose of this paper is to test the impact of corporate social responsibility (CSR) in the banking industry using Troubled Asset Relief Program (TARP) as an experimental backdrop. Design/methodology/approach The authors match banks that received TARP with CSR data on publicly available firms. Using this data set, the authors are able to perform both univariate and multivariate analyses to determine the impact of CSR on bank management behavior. Findings The authors find evidence that supports stakeholder theory as applied to a sample of large financial institutions. The authors show that banks increased their CSR involvement and intensity following TARP, evidence that CSR is not merely transitory in nature but structural and an important aspect of firm value. The authors also find that capital ratios increase to a greater degree in banks whose CSR ratings were stronger prior to TARP. Finally, while all banks in the sample repaid Treasury, it took strong CSR banks a longer time to repay than banks with weaker CSR. The authors show how CEO compensation played a role in this relationship. Research limitations/implications The findings are limited to large banks. Practical implications Practically speaking, this study helps to discern the motivations and actions of large financial institutions. This is especially important from a regulator perspective, whose function is to maintain overall national financial stability. Originality/value This is the first study to link TARP and CSR literatures. Overall, there are a limited number of studies on CSR in the banking industry, and this paper adds to this burgeoning area. It is important and valuable to managers and policymakers to understand implications of CSR in the financial sector.

Does environmental information disclosure affect the performance of energy-intensive firms’ borrowing ability? Evidence from China

2018 ◽  
Vol 29 (5) ◽  
pp. 685-705 ◽  
Author(s):  
Haiqing Hu ◽  
Chun-Ping Chang ◽  
Minyi Dong ◽  
Wei-Na Meng ◽  
Yu Hao
Keyword(s):  
Capital Market ◽  
Information Disclosure ◽  
Cost Of Capital ◽  
Environmental Information ◽  
Influential Factors ◽  
Environmental Information Disclosure ◽  
Loan Size ◽  
The Cost ◽  
The Impact ◽  
Positive Effect

In recent years, a growing strand of China’s listed companies chose to disclose environmental information, which may potentially affect their financial performance then further influence its performance of financial supports. To quantitatively investigate the impact of enterprise’s environmental information disclosure on the ability of firms’ borrowing in China, this paper divides the measurements of information disclosure into five categories and evaluates firms’ performance in capital market through its availability of a loan and the cost of capital. In total, 97 listed energy-intensive companies in China are selected and their data covering the period of 2000–2014 are utilized for empirical study. The empirical results indicate that enterprise’s environmental information disclosure appears to have a significantly positive effect on the loan size available, while the cost of capital is less sensitive to environmental information disclosure. The empirical evidence also suggests that, among the five aspects of information disclosure measurements, the future plan and monetary information are the most influential factors of the cost of capital.

scholarly journals The Impact of Market Discipline on Banks’ Capital Adequacy: Evidence From an Emerging Economy

2015 ◽  
Vol 4 (1) ◽  
pp. 61-73 ◽  
Author(s):  
Ayesha Afzal
Keyword(s):  
Perceived Risk ◽  
Banking System ◽  
Empirical Support ◽  
Market Discipline ◽  
Capital Adequacy ◽  
Risk Level ◽  
Bank Capital ◽  
The Cost ◽  
The Impact

This study presents empirical support for the role of market discipline in augmenting bank capital ratios in a competitive banking environment. Using a panel dataset on domestic commercial banks in Pakistan from 2009 to 2014, the study determines if the market penalized banks for any increase in their risk profile through a rise in the cost of raising funds. The results point to a significant relationship between capital adequacy and other risk factors, with the cost of deposits demonstrating how depositors align the required return to the perceived risk level of the bank. These findings have important implications for policymakers as market discipline could complement the role of regulators, which would eventually lower the cost of supervision. Moreover, the focus of international reforms as seen through the implementation of Basel III should continue to be on developing a more competitive and transparent banking system.

Ex-post evaluation of the R&D tax incentive law in Chile

2020 ◽  
Vol 33 (3/4) ◽  
pp. 337-359 ◽  
Author(s):  
Cristian Mardones ◽  
Natalia Madrid Becerra
Keyword(s):  
Tax Credits ◽  
Control Group ◽  
Wide Margin ◽  
Content Type ◽  
Tax Incentive ◽  
Post Evaluation ◽  
Ex Post ◽  
The Impact ◽  
New Evidence ◽  
Positive Effect

PurposeThis study carries out an ex - post evaluation of the Research and Development (R&D) Tax Incentive Law in Chile.Design/methodology/approachA subset of data from the 9th Innovation Survey is chosen, specifically those that were available for the years 2013 and 2014. Then, differences in differences (DID) and matching with differences in differences (MDID) techniques are used to identify the impact of this policy.FindingsThe results obtained allow us to affirm that the use of the R&D Tax Incentive Law had some positive but very low effects on some components of expenditure for innovation. Also, the positive effect of the tax credits on the total expenditure for innovation identified with MDID disappears when only firms that know the R&D Tax Incentive Law are used as a control group.Originality/valueThis work provides new evidence to evaluate innovation policies in Latin America, focusing on tax credits that have been much less studied than subsidy programs. Specifically, it is concluded that there is still a wide margin to improve and reformulate the R&D Tax Incentive Law in Chile.

The Socioeconomic Return to Primary Schooling in Victorian England

2006 ◽  
Vol 66 (4) ◽  
pp. 1026-1053 ◽  
Author(s):  
JASON LONG
Keyword(s):  
School Attendance ◽  
Occupational Class ◽  
Victorian England ◽  
Market Outcomes ◽  
Primary Schooling ◽  
Micro Level ◽  
The Cost ◽  
The Impact ◽  
Positive Effect ◽  
Level Analysis

In this article I provide a micro-level analysis of primary schooling in Victorian England. Using a new dataset of school-age males linked between the 1851 and 1881 population censuses, I examine the determinants of childhood school attendance and the impact of attendance on adult labor market outcomes. I find that schooling had a positive effect on adult occupational class and that the associated wage gains were likely to have outweighed the cost of schooling. However, this effect was small relative to father's class, and the effect of education on earnings appears to have been small relative to modern results.

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