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When, some two centuries ago, German Romantics turned their backs on modernity – industrialisation, urbanisation, commerce and secularisation – they turned to ancient India. For them, India exemplified the primordial unity of mankind with this and the afterworld. For sections of the emerging nationalist movement in Germany, found the deployment of India handy to question the cultural hegemony, and eventually break the political dominance, of France. They tried to surpass the French, who claimed the ancient Roman heritage, by claiming an even older heritage for the Germans. Friedrich Schlegel for example suggested that the German language, and not the French, stood in unbroken continuity with ancient Sanskrit. For Romantics such as he, Sanskrit, the oldest surviving Indo-European language, was closest to the language of original divine revelation. This lead Schlegel to romanticise India in a way that stood in marked contrast to the Orientalist clichés current in other parts of Europe at the time. For him, the link between Sanskrit and German made Germany the true oriental self of Europe. The importance of this particular representation of India for the German national movement is underlined by the great number of university chairs that sprang up in the course of the nineteenth century: twenty two in Germany as opposed to only three in the United Kingdom. This paper explores the particular kind of ‘inverse’ Orientalism of the Germans in the context of its recent post-colonial critique.
This paper studies the impact of the concentration of control, the type of controlling shareholder and the dividend tax preference of the controlling shareholder on dividend policy for a panel of 220 German firms over 1984-2005. While the concentration of control does not have an effect on the dividend payout, there is strong evidence that the type of controlling shareholder matters as family controlled firms have high dividend payouts whereas bank controlled firms have low dividend payouts. However, there is no evidence that the dividend preference of the large shareholder has an impact on the dividend decision. JEL Classification: G32, G35 Keywords: Dividend Policy, Payout Policy, Lintner Dividend Model, Tax Clientele Effects, Corporate Governance
All-over in Europe, unemployment became a growing problem from the mid 1980s to the mid 1990s. Nevertheless, the effects on the economical situation of the unemployed and the whole population are quite different in European countries. In this paper we first give a brief overview over the development of unemployment rates in eight member states of the European Union and over the different reactions to provide the social protection of the unemployed. Therefore we look at the social security expenditures, the level of income replacement for the unemployed and recent social policy reforms concerning them. In the second section of the paper, we examine the development of income distribution and poverty taking different poverty lines into consideration. There is no general pattern neither for the relationship of inequality among the unemployed to the whole economically active population nor for the development from the 80s to the 90s. But one can say that in countries with increasing income inequality also poverty is rising (especially in the UK) and that where inequality among the unemployed is less pronounced the proportions of the poor went down from the mid 80s to the mid 90s (France and Ireland). In nearly all countries the risk of being poor is ernormously high for the unemployed, Denmark is the only exception.
To sum up our findings we come to the following statements. - During the period from 1973 to 1993 inequality of the personal distribution of equivalent pre-government income increased to some extent, as was to be expected given the enormous rise in unemployment. - Inequality of post-government income also increased slightly, but was much lower than inequality of pre-government income due to the equalizing effect of the German tax and transfer system. - In 1993 inequality of pre-government income was higher, and inequality of post-government income was considerably lower in East Germany than in West Germany; the West German tax and transfer system that was transferred to East Germany after reunification - with some additional but temporary minimum regulations - seems to have had a stronger equalizing effect in the East than in the West. - A decomposition into three age groups, the young and the middle-aged group sub-divided further according to whether household members were affected by unemployment, showed that within-groups inequality explained by far more of overall inequality than between-groups inequality. - The relative positions of the two young groups as well as of the middle-aged group with unemployed members deteriorated with respect to their equivalent pre-government and post-government incomes. - During the first period with rising unemployment (1973 to 1978), the development of within-groups inequality and of between-groups inequality contributed to about the same extent to the increase of overall inequality of pre-government income. But this was fully compensated by the tax and transfer system as there were only a negligible change in inequality of equivalent net income and very slight effects of the (four) components of change which nearly compensated each other. - During the last period from 1988 to 1993 the equalizing effect of the German tax and transfer system seems to have weakened, at least in the western part of Germany. The increase in inequality of equivalent net income is mainly due to developments of within group inequalities.
This paper reconsiders the effect of investor sentiment on stock prices. Using survey-based sentiment indicators from Germany and the US we confirm previous findings of predictability at intermediate time horizons. The main contribution of our paper is that we also analyze the immediate price reaction to the publication of sentiment indicators. We find that the sign of the immediate price reaction is the same as that of the predictability at intermediate time horizons. This is consistent with sentiment being related to mispricing but is inconsistent with the alternative explanation that sentiment indicators provide information about future expected returns. JEL Classification: G12, G14 Keywords: Investor Sentiment , Event Study , Return Predictability
Revised version of a paper presented at the Conference "The Distribution of Economic Well-Being in the 1980s - an International Perspective", June 21 - 23, 1993, in Fiskebäckskil, Sweden. This paper sketches changes in the distribution of well-being during the period from 1972 to 1991 against the background of West Germany's economic and demographic development, and compares the distribution of well-being in East Germany before and after reunification. We rely on equivalent income of persons as the main indicator to measure well-being, but we also look at the distribution of gross wage income of workers and employees. Estimates of the Federal Statistical Office referring to the mesolevel of average equivalent income of socio-economic groups as well as various distributional measures computed by us at the micro-level are used to gauge changes of the distribution. The computations are based on two sets of micro-data available to us, the official Income and Consumption Surveys (1973, 1978 and 1983), and the German Socio-economic Panel (1983 to 1990 for West Germany, 1990, 1991 for East Germany). At the meso-level we find substantial changes in the relative welfare positions of the ten socio-economic groups distinguished, but a nearly constant ranking of the groups during the whole period under review. At the micro-level our computations indicate slight increases in the inequality of gross earnings during both decades. The distribution of well-being as measured by equivalent income of persons seems also to have become slightly more unequal during the whole period but the changes are very small, and partly reversed during subperiods. A decomposition of overall inequality by occupational status of the heads of household using the Theil measure shows that more than 80 percent of overall inequality is due to within-group inequality with rising tendency. This result is mitigated a little when dis aggregating the heterogeneous group of not gainfully employed with regard to the main income source of the household.
Did earnings inequality in the Federal Republic of Germany increase from the 1960s to the 1980s?
(1996)
This paper aims to provide a descriptive analysis of the changing patterns of labour market participation, non-participation and unemployment in Great Britain, Sweden and Germany. Since the mid 1970s, most European countries have experienced two parallel developments: on the one hand they have witnessed a huge growth in the proportion of women participating on the labour market. On the other however, they have experienced the return of mass unemployment and a growing insecurity of employment for those in work. In this paper, a typology of work histories is constructed using decade periods. Retrospective and panel data from Germany, Britain and Sweden are then used to compare the effects of different employment and welfare regimes on the proportions of respondents with different types of work histories and how these are combined with unemployment.
This paper fits within a broader research programme concerned with the processes that link labour market precarity and social exclusion. Labour market insecurity manifests itself most directly in the form of unemployment, and other elements in the programme seek to measure the impact of precarity, and unemployment in particular, on poverty and social exclusion in the eight countries covered. One of the principal concerns of the programme is however the extent to which institutional differences across countries with respect to the labour market and social protection are a significant factor mediating the relationship between labour market precarity and social exclusion. This paper focuses on the effectiveness of cash transfers, the central element of social protection systems, in alleviating the effects of unemployment on income poverty. The structures of social protection systems vary greatly across European Union member states, and in many cases have altered significantly in recent years in response to high unemployment (see Hauser et al, 1998). Using data from the mid-1980s and the mid-1990s for six member countries, the paper compares the effectiveness of different systems in lifting or keeping the unemployed out of poverty, and how this has been affected by the way systems have responded to the challenges produced by developments in the labour market in the past decade. The specific role of social insurance-based unemployment-linked transfers versus other cash transfers is also considered, to assess the extent to which social insurance has been able to cope with changes in the labour market over the period. The data come from a variety of national large-scale household surveys. The paper is structured as follows. Section 2 discusses the data and methods to be employed in measuring the impact of cash transfers on poverty risks for the unemployed. Section 3 looks at the overall risks of poverty for the unemployed before and after cash transfers, and how these changed between the mid-1980s and mid-1990s. Section 4 looks at the role of social insurance-based unemployment payments versus other cash transfers. Section 5 examines the extent to which the impact of transfers varies by gender and by duration of unemployment. Section 6 highlights the key patterns identified and what these tell us about the relationship between the type of welfare regime a country operates and effectiveness in alleviating poverty among the unemployed.
This paper analyzes loan pricing when there is multiple banking and borrower distress. Using a unique data set on SME lending collected from major German banks, we can instrument for effective coordination between lenders, carrying out a panel estimation. The analysis allows to distinguish between rents that accrue due to single bank lending, rents that accrue due to relationship lending, and rents that accrue due to the elimination of competition among multiple lenders. We find the relationship lending to have no discernible impact on loan spreads, while both single lending and coordinated multiple lending significantly increase the spread. Thus, contrary to predictions in the literature, multiple lending does not insure the borrower against hold-up. JEL Classification: D74, G21, G33, G34
Demographic change in industrialized nations has been a matter of common interest for some time. The financial implications of an ageing society are also increasingly discussed, particularly with regard to pension systems. The impact of this development on public finances is, however, only gradually being realized and the constitutional framework of public finances in Germany and the European Union just falls short of ignoring it entirely. This paper is a preliminary assessment of the burden of an ageing society under the fiscal law, specifically in respect of prospective entitlements to the public pension system. The first part analyses the provisions of the German constitution on finances (Finanzverfassungsrecht) to identify what rules, if any, exist addressing such (potential) expenditures, which lie in the immediate or very distant future. The second part of the paper analyses the fiscal requirements under European Union law. In the third and final part a few comments on the proposed national pact on stability and the recent moves to amend the German Federal Constitution are presented.
This paper investigates the impact of IT standardization on bank performance based on a panel of 457 German savings banks over the period from 1996 to 2006. We measure IT standardization as the fraction of IT expenses for centralized services over banks' total IT expenses. Bank efficiency, in turn, is measured by traditional accounting performance indicators as well as by cost and profit efficiencies that are estimated by a stochastic frontier approach. Our results suggest that IT standardization is conducive to cost efficiency. The relation is positive and robust for small and medium-sized banks but vanishes for very large banks. Furthermore, our study confirms the often cited computer paradox by showing that total IT expenditures negatively impact cost efficiency and have no influence on bank profits. To the best of our knowledge, this paper is first to empirically explore whether IT standardization enhances efficiency by employing genuine data of banks' IT expenditures. JEL Classification: C23, G21 Keywords: IT standardization, cost and profit efficiency, savings banks
In this paper, we analyze economies of scale for German mutual fund complexes. Using 2002-2005 data of 41 investment management companies, we specify a hedonic translog cost function. Applying a fixed effects regression on a one-way error component model there is clear evidence of significant overall economies of scale. On the level of individual mutual fund complexes we find significant economies of scale for all of the companies in our sample. With regard to cost efficiency, we find that the average mutual fund complexes in all size quartiles deviate considerably from the best practice cost frontier. JEL Classification: G2, L25 Keywords: mutual fund complex, investment management company, cost efficiency, economies of scale, hedonic translog cost function, fixed effects regression, one-way error component model
Der vorliegende Beitrag untersucht, ob der Mehrheitsaktionär einer Gesellschaft im Vorfeld eines Zwangsausschlusses von Minderheitsaktionären (sog. Squeeze-Out) versucht, die Kapitalmarkterwartungen negativ zu beeinflussen. Ein solches "manipulatives" Verhalten wird häufig in der juristischen wie betriebswirtschaftlichen Literatur unterstellt, da der Aktienkurs fü die Abfindungshöhe die Wertuntergrenze bildet. Unsere empirische Untersuchung der Bilanz- und Pressemitteilungspolitik von Squeeze-Out-Unternehmen im Vorfeld der Ankündigung einer solchen Maßnahme am deutschen Kapitalmarkt zeigt, dass in diesem Zeitraum tatsächlich ein signifikanter Anstieg (Rückgang) der im Ton pessimistischen (optimistischen) Pressemitteilungen feststellbar ist. Allerdings zeigt sich weiter, dass die Aktien der Squeeze-Out-Kandidaten bereits im Vorfeld und am Tag der Ankündigung so hohe positive Überrenditen erzielen, dass der von uns quantifizierte kumulierte Effekt der Informationspolitik auf die Börsenbewertung einen insgesamt nur sehr geringen Einfluss ausübt und von anderen Faktoren (z.B. Abfindungsspekulationen) dominiert wird. JEL: M41, M40, G14, K22
Venture capital exit rights
(2009)
Theorists argue that exit rights can mitigate hold-up problems in venture capital. Using a hand-collected data-set of venture capital contracts from Germany we show that exit rights are included more frequently in venture capital contracts when a hold-up problem associated with the venture capitalist's exit decision is likely. Examples include drag-along and tag-along rights. Additionally, we find that almost all exit rights are allocated to the venture capitalist rather than to the entrepreneur. In addition, we show that besides the basic hold-up mechanism there are other mechanisms such as ex-ante bargaining power and the degree of pledgeable income that drive the allocation of exit rights. JEL Classification: G24, G34, D80
We merge administrative information from a large German discount brokerage firm with regional data to examine if financial advisors improve portfolio performance. Our data track accounts of 32,751 randomly selected individual customers over 66 months and allow direct comparison of performance across self-managed accounts and accounts run by, or in consultation with, independent financial advisors. In contrast to the picture painted by simple descriptive statistics, econometric analysis that corrects for the endogeneity of the choice of having a financial advisor suggests that advisors are associated with lower total and excess account returns, higher portfolio risk and probabilities of losses, and higher trading frequency and portfolio turnover relative to what account owners of given characteristics tend to achieve on their own. Regression analysis of who uses an IFA suggests that IFAs are matched with richer, older investors rather than with poorer, younger ones.
Opting out of the great inflation: German monetary policy after the break down of Bretton Woods
(2009)
During the turbulent 1970s and 1980s the Bundesbank established an outstanding reputation in the world of central banking. Germany achieved a high degree of domestic stability and provided safe haven for investors in times of turmoil in the international financial system. Eventually the Bundesbank provided the role model for the European Central Bank. Hence, we examine an episode of lasting importance in European monetary history. The purpose of this paper is to highlight how the Bundesbank monetary policy strategy contributed to this success. We analyze the strategy as it was conceived, communicated and refined by the Bundesbank itself. We propose a theoretical framework (following Söderström, 2005) where monetary targeting is interpreted, first and foremost, as a commitment device. In our setting, a monetary target helps anchoring inflation and inflation expectations. We derive an interest rate rule and show empirically that it approximates the way the Bundesbank conducted monetary policy over the period 1975-1998. We compare the Bundesbank´s monetary policy rule with those of the FED and of the Bank of England. We find that the Bundesbank´s policy reaction function was characterized by strong persistence of policy rates as well as a strong response to deviations of inflation from target and to the activity growth gap. In contrast, the response to the level of the output gap was not significant. In our empirical analysis we use real-time data, as available to policy-makers at the time. JEL Classification: E31, E32, E41, E52, E58
In this paper, we examine the impact of mergers among German savings banks on the extent to which these savings banks engage in small business lending. The ongoing consolidation in the banking industry has sparked concerns about the continuous availability of credit to small businesses which has been further fueled by empirical studies that partly confirm a reduction in small business lending in the aftermath of mergers. However, using a proprietary data set of German savings banks we find strong evidence that in Germany merging savings banks do not significantly change the extent to which they lend to small businesses compared to prior to the merger or compared to the contemporaneous lending by non-merging banks. We investigate the merger related effects on small business lending in Germany from a bank-level perspective. Furthermore, we estimate small business lending and its continuous adjustment process simultaneously using recent General Method of Moments (GMM) techniques for panel data as proposed by Arellano and Bond (1991).
The impact of European integration on the German system of pharmaceutical product authorization
(2008)
The European Union has evolved since 1965 into an influential political player in the regulation of pharmaceutical safety standards. The objective of establishing a single European market for pharmaceuticals makes it necessary for member-states to adopt uniform safety standards and marketing authorization procedures. This article investigates the impact of the European integration process on the German marketing authorization system for pharmaceuticals. The analysis shows that the main focal points and objectives of European regulation of pharmaceutical safety have shifted since 1965. The initial phase saw the introduction of uniform European safety standards as a result of which Germany was obliged to undertake “catch-up” modernization. From the mid-1970s, these standards were extended and specified in greater detail. Since the mid-1990s, a process of reorientation has been under way. The formation of the European Agency for the Evaluation of Medicinal Products (EMEA) and the growing importance of the European authorization procedure, combined with intensified global competition on pharmaceutical markets, are exerting indirect pressure for EU member-states to adjust their medicines policies. Consequently, over the past few years Germany has been engaged in a competition-oriented reorganization of its pharmaceutical product authorization system the outcome of which will be to give higher priority to economic interests.