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We present new statistical indicators of the structure and performance of US banks from 1990 to today, geographically disaggregated at the level of individual counties. The constructed data set (20 indicators for some 3150 counties over 31 years, for a total of about 2 million data points) conveys a detailed picture of how the geography of US banking has evolved in the last three decades. We consider the data as a stepping stone to understand the role banks and banking policies may have played in mitigating, or exacerbating, the rise of poverty and inequality in certain US regions.
This paper was presented at the workshop “Goods, Languages, and Cultures along the Silk Road” at Goethe University Frankfurt am Main, October 18 and 19, 2019. While many contributions to the workshop focused on recent developments in China’s current “New Silk Road” politics, on forms of communication, and on contemporary exchange of goods and ideas across so-called Silk Road countries in the Caucasus and Central Asia and with China, this short essay focuses on the history of the so-called Silk Road as an important transport connection. Although what is now called the “Silk Road” was not a pure East-West binary in antiquity but rather developed into a network that also led to the South and North, the focus here will be on describing the East-West connection.
I will start with a few brief remarks on the origins of the connection referred to as the Silk Road and will then introduce the different great empires that shaped this connection between antiquity and the Middle Ages through military campaigns and by using it as a trading route and network. But the Silk Road was by no means only of economic and military importance. Its significance for the exchange and dissemination of religions should also be mentioned. This paper does not detail the importance of the numerous individual religions in the area of the Silk Road but discusses the phenomenon of the spread of religions and the loss of some of their own distinguishing characteristics in this spread, a phenomenon that could be described as a “unity of opposites” (coincidentia oppositorum). Finally, the essay asks who, in the face of the regular replacement of powers, held sovereignty over the transport connection: the subject (in the form of the empires) or the object (in the form of the road).
Who were the main protagonists of and along the Silk Road in the course of history? Who were the people who became the great powers of the ancient Silk Road, building up the material route, governing parts of it, and organizing trade and relationships from the far East to the extreme West of the Eurasian continent?
The merchant language of the Georgian Jews deserves scholarly attention for several reasons. The political and social developments of the last fifty years have caused the extinction of this very interesting form of communication, as most Georgian Jews have emigrated to Israel. In a natural interaction, the type of language described in this article can be found very rarely, if at all. Records of this communication have been preserved in various contexts and received different levels of scholarly attention. Our interest concerns the linguistic aspects as well as the classification.
In the following paper we argue that the specific merchant language of Georgian Jews belongs to the pragmatic phenomenon of “very indirect language.” The use of mostly Hebrew lexemes in Georgian conversation leads to an unfounded assumption that the speakers are equally competent in Hebrew and Georgian. It is reported that a high level of linguistic competence in Hebrew does not guarantee understanding of the Jewish merchant language. In the Georgian context, the decisive factors are membership in the professional interest group of merchants and residential membership in the Jewish community. These factors seem to be equivalent, because Jewish members of other professional groups (and those from outside the particular urban residential area) have difficulties in following the language that are similar to those of the Georgian majority. We describe the pragmatic structure of interactions conducted with the help of the merchant language and take into account the purpose of the language’s use or the intention of the speakers. Relevant linguistic examples are analysed and their sociocultural contexts explained.
Macroeconomic stabilisation and monetary policy effectiveness in a low-interest-rate environment
(2021)
The secular decline in the equilibrium real interest rate observed over the past decades has materially limited the room for policy-rate reductions in recessions, and has led to a marked increase in the incidence of episodes where policy rates are likely to be at, or near, the effective lower bound on nominal interest rates. Using the ECB's New Area-Wide Model, we show that, if unaddressed, the effective lower bound can cause substantial costs in terms of worsened macroeconomic performance, as rejected in negative biases in inflation and economic activity, as well as heightened macroeconomic volatility. These costs can be mitigated by the use of nonstandard instruments, notably the joint use of interest-rate forward guidance and large-scale asset purchases. When considering alternatives to inflation targeting, we find that make-up strategies such as price-level targeting and average-inflation targeting can, if they are well-understood by the private sector, largely undo the negative biases and heightened volatility induced by the effective lower bound.
Using loan-level data from Germany, we investigate how the introduction of model-based capital regulation affected banks’ ability to absorb shocks. The objective of this regulation was to enhance financial stability by making capital requirements responsive to asset risk. Our evidence suggests that banks ‘optimized’ model-based regulation to lower their capital requirements. Banks systematically underreported risk, with under reporting being more pronounced for banks with higher gains from it. Moreover, large banks benefitted from the regulation at the expense of smaller banks. Overall, our results suggest that sophisticated rules may have undesired effects if strategic misbehavior is difficult to detect.
In this study, we analyze the trading behavior of banks with lending relationships. We combine detailed German data on banks’ proprietary trading and market making with lending information from the credit register and then examine how banks trade stocks of their borrowers around important corporate events. We find that banks trade more frequently and also profitably ahead of events when they are the main lender (or relationship bank) for the borrower. Specifically, we show that relationship banks are more likely to build up positive (negative) trading positions in the two weeks before positive (negative) news events, and also that they unwind these positions shortly after the event. This trading pattern is more pronounced for unscheduled earnings events, M&A transactions, and after borrower obtain new bank loans. Our results suggest that lending relationships endow banks with important information, highlighting the potential for conflicts of interest in banking, which has been a prominent concern in the regulatory debate.
Increasing the diversity of policy committees has taken center stage worldwide, but whether and why diverse committees are more effective is still unclear. In a randomized control trial that varies the salience of female and minority representation on the Federal Reserve’s monetary policy committee, the FOMC, we test whether diversity affects how Fed information influences consumers’ subjective beliefs. Women and Black respondents form unemployment expectations more in line with FOMC forecasts and trust the Fed more after this intervention. Women are also more likely to acquire Fed-related information when associated with a female official. White men, who are overrepresented on the FOMC, do not react negatively. Heterogeneous taste for diversity can explain these patterns better than homophily. Our results suggest more diverse policy committees are better able to reach underrepresented groups without inducing negative reactions by others, thereby enhancing the effectiveness of policy communication and public trust in the institution.
We identify strong cross-border institutions as a driver for the globalization of in-novation. Using 67 million patents from over 100 patent offices, we introduce novel measures of innovation diffusion and collaboration. Exploiting staggered bilateral in-vestment treaties as shocks to cross-border property rights and contract enforcement, we show that signatory countries increase technology adoption and sourcing from each other. They also increase R&D collaborations. These interactions result in techno-logical convergence. The effects are particularly strong for process innovation, and for countries that are technological laggards or have weak domestic institutions. Increased inter-firm rather than intra-firm foreign investment is the key channel.
Using hand-collected data on CEO appointments during shareholder activism campaigns, this study examines whether shareholder involvement in CEO recruiting affects frictions in CEO hiring decisions. The results indicate that appointments of CEOs who are recruited with shareholder activist influence are followed by more favorable stock market reactions and stronger profitability improvements than CEO appointments that also occur during activism campaigns but without the influence of activists. I find little evidence that shareholder activists increase hiring frictions by facilitating the recruiting of CEOs who will implement myopic corporate policies. Analyses of recruiting process characteristics reveal that activist influence is associated with more resources being dedicated to the CEO search process and with a higher propensity to recruit CEOs from outside the firm. These findings contribute to the CEO labor market literature, which tends to focus on the decision to remove incumbent CEOs but provides limited insights into CEO recruiting.
This paper argues that the key mechanisms protecting retail investors’ financial stake in their portfolio investments are indirect. They do not rely on actions by the investors or by any private actor directly charged with looking after investors’ interests. Rather, they are provided by the ecosystem that investors (are legally forced to) inhabit, as a byproduct of the mostly self-interested, mutually and legally constrained behavior of third parties without a mandate to help the investors (e.g., speculators, activists). This elucidates key rules, resolves the mandatory vs. enabling tension in corporate/securities law, and exposes passive investing’s fragile reliance on others’ trading.