The Impact of Bank Consolidation on Commercial Borrower Welfare

We estimate the impact of bank merger announcements on borrowers' stock prices for publicly-traded Norwegian firms.In addition, we analyze how bank mergers influence borrower relationship termination behavior and relate the propensity to terminate to borrower abnormal returns.We obtain four main results.First, on average borrowers lose about one percent in equity value when their bank is announced as a merger target.Small borrowers of target banks are especially hurt in large bank mergers, where they lose an average of about three percent.Second, bank mergers lead to higher relationship exit rates for three years after a bank merger, and small bank mergers lead to larger increases in exit rates than large mergers.Third, target borrower abnormal returns are positively related to pre-merger exit rates, indicating that firms that find it easier to switch banks are less harmed when their bank merges.Fourth, we find weak evidence that target borrowers with large merger-induced increases in exit rates are more negatively affected by bank merger announcements, suggesting that target borrowers are forced out of relationships and suffer welfare losses as a result of bank mergers.banks;mergers;bank lending

Hazardous Times for Monetary Policy: What do Twenty-three Million Bank Loans Say about the Effects of Monetary Policy on Credit Risk?

We investigate the impact of the stance and path of monetary policy on the level of credit risk of individual bank loans and on lending standards. We employ the Credit Register of the Bank of Spain that contains detailed monthly information on virtually all loans granted by all credit institutions operating in Spain during the last twenty-two years – generating almost twenty-three million bank loan records in total. Spanish monetary conditions were exogenously determined during the entire sample period. Using a variety of duration models we find that lower short-term interest rates prior to loan origination result in banks granting more risky new loans. Banks also soften their lending standards – they lend more to borrowers with a bad credit history and with high uncertainty. Lower interest rates, by contrast, reduce the credit risk of outstanding loans. Loan credit risk is maximized when both interest rates are very low prior to loan origination and interest rates are very high over the life of the loan. Our results suggest that low interest rates increase bank risk-taking, reduce credit risk in banks in the very short run but worsen it in the medium run. Risk-taking is not equal for all type of banks: Small banks, banks with fewer lending opportunities, banks with less sophisticated depositors, and savings or cooperative banks take on more extra risk than other banks when interest rates are lower. Higher GDP growth reduces credit risk on both new and outstanding loans, in stark contrast to the differential effects of monetary policy.monetary policy;low interest rates;financial stability;lending standards;credit risk;risk-taking;business cycle;bank organization;duration analysis

Credit Supply versus Demand: Bank and Firm Balance-Sheet Channels in Good and Crisis Times

Abstract: Banking crises involve periods of persistently low credit and economic growth. Banks’ balance sheets are then weak but so are those of non-financial corporate borrowers. Hence, a crucial question is whether credit growth is low due to supply or to demand factors. However convincing identification has been elusive due to a lack of detailed loan application-, bank-, and firm-level data. Access to a dataset of loan applications in Spain that is matched with complete bank and firm balance-sheet data covering the period from 2002 to 2010 allows us to identify bank and firm balancesheet channels. We find robust evidence showing that bank balance-sheet strength determines the success of loan applications and the granting of loans in crisis times. The heterogeneity in firm balance-sheet strength determines loan granting in both good and crisis times, although the potency of this firm balance-sheet channel is the largest in the latter period. Our findings therefore hold important implications for both theory and policy.bank lending channel;credit supply;business cycle;credit crunch;capital;liquidity

Neon radiation efficiency for different confinement regimes in TEXTOR-94

For neon seeded discharges the quantity [DeltaP(rad)/DeltaZ(eff)(0)]/)over bar>(2)(e0), which depends linearly on the effective neon cooling rates and which can be taken as a measure of the radiation efficiency of neon, is not a constant for a given machine. When, according to the mode of operation, [[DeltaP(rad)/DeltaZ(eff)(0)]/)over bar>(2)(e0) is high, radiative power exhaust can be efficiently achieved at low Z(eff) The value of this ratio, which we refer to as the quality of neon cooling, is found to be correlated not only with the plasma edge temperature but also, and even more strongly, with the confinement properties of the discharges. Two different high confinement radiative regimes in TEXTOR-94 have been compared: radiative improved (RI) mode (highest confinement) and gas puff/pure radiofrequency mode (slightly lower confinement). Although the electron temperature profile is similar in the two regimes, due to feedback control of the input power level, it has been found experimentally that the quality of neon cooling is lower for the RI mode than for the gas puff/pure radiofrequency one. Similar behaviour has been observed for the quality of cooling of the residual intrinsic carbon, determined with independent diagnostics and methods. Simulations with the self-consistent RITM code confirm that particle transport, in particular the perpendicular diffusivity at the edge, is a key parameter to determine the level of the power radiated at the edge for a given impurity concentration in the plasma core

Minority and mode conversion heating in (3He)-H JET plasma

Radio frequency (RF) heating experiments have recently been conducted in JET (He-3)-H plasmas. This type of plasmas will be used in ITER's non-activated operation phase. Whereas a companion paper in this same PPCF issue will discuss the RF heating scenario's at half the nominal magnetic field, this paper documents the heating performance in (He-3)-H plasmas at full field, with fundamental cyclotron heating of He-3 as the only possible ion heating scheme in view of the foreseen ITER antenna frequency bandwidth. Dominant electron heating with global heating efficiencies between 30% and 70% depending on the He-3 concentration were observed and mode conversion (MC) heating proved to be as efficient as He-3 minority heating. The unwanted presence of both He-4 and D in the discharges gave rise to 2 MC layers rather than a single one. This together with the fact that the location of the high-field side fast wave (FW) cutoff is a sensitive function of the parallel wave number and that one of the locations of the wave confluences critically depends on the He-3 concentration made the interpretation of the results, although more complex, very interesting: three regimes could be distinguished as a function of X[He-3]: (i) a regime at low concentration (X[He-3] < 1.8%) at which ion cyclotron resonance frequency (ICRF) heating is efficient, (ii) a regime at intermediate concentrations (1.8 < X[He-3] < 5%) in which the RF performance is degrading and ultimately becoming very poor, and finally (iii) a good heating regime at He-3 concentrations beyond 6%. In this latter regime, the heating efficiency did not critically depend on the actual concentration while at lower concentrations (X[He-3] < 4%) a bigger excursion in heating efficiency is observed and the estimates differ somewhat from shot to shot, also depending on whether local or global signals are chosen for the analysis. The different dynamics at the various concentrations can be traced back to the presence of 2 MC layers and their associated FW cutoffs residing inside the plasma at low He-3 concentration. One of these layers is approaching and crossing the low-field side plasma edge when 1.8 < X[He-3] < 5%. Adopting a minimization procedure to correlate the MC positions with the plasma composition reveals that the different behaviors observed are due to contamination of the plasma. Wave modeling not only supports this interpretation but also shows that moderate concentrations of D-like species significantly alter the overall wave behavior in He-3-H plasmas. Whereas numerical modeling yields quantitative information on the heating efficiency, analytical work gives a good description of the dominant underlying wave interaction physics

Business experience and start-up size: buying more lottery tickets next time around?

This paper explores the determinants of start-up size by focusing on a cohort of 6247 businesses that started trading in 2004, using a unique dataset on customer records at Barclays Bank. Quantile regressions show that prior business experience is significantly related with start-up size, as are a number of other variables such as age, education and bank account activity. Quantile treatment effects (QTE) estimates show similar results, with the effect of business experience on (log) start-up size being roughly constant across the quantiles. Prior personal business experience leads to an increase in expected start-up size of about 50%. Instrumental variable QTE estimates are even higher, although there are concerns about the validity of the instrument