Political Influence, Bank Capital, and Credit Allocation

Political influence on bank credit allocation is often viewed as being necessary to address social problems like income inequality. We hypothesize that such influence elicits bank capital responses. Our hypothesis yields three testable predictions for which we find supporting evidence. First, when banks observe election outcomes that suggest greater impending political credit-allocation influence, they reduce capital to increase fragility and deter political influence. Second, banks subject to greater political influence nonetheless increase lending that politicians favor, and household consumption consequently increases. Third, these banks exhibit poorer post-lending performance. Our study has implications for the interaction between politics, household consumption, and bank risk through a specific channel—the interplay between credit-allocation regulation and bank capital structure.This paper was accepted by Victoria Ivashina, finance.Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.04056

The financing of Italian firms and the credit crunch: findings and exit strategies

The aim of the paper is to analyse how credit crunch has modified the traditional bank-firm relationship with a particular attention to the Italian situation. Our analysis reinforces the finding that in Italy, the credit available to the real economy is insufficient in terms not only of quantity but also of quality. The subsequent step is to identify and discuss possible exit strategies for eliminating the credit crunch and to overcome serious intrinsic shortcomings in terms of alternative instruments, markets and intermediaries. In fact, if on the one hand the crisis has revealed the underdevelopment of the Italian financial market, the insufficient role of institutional investors, the embryonic state of the corporate bond markets and the virtual non-existence of commercial paper markets; on the other hand, it could finally provide the opportunity for the development of these channels. The changing role of banks in the new scenario is also analysed as well as the characteristics firms will require to benefit from it

Reduction of systemic risk by means of Pigouvian taxation

We analyze the possibility of reduction of systemic risk in financial markets through Pigouvian taxation of financial institutions, which is used to support the rescue fund. We introduce the concept of the cascade risk with a clear operational definition as a subclass and a network related measure of the systemic risk. Using financial networks constructed from real Italian money market data and using realistic parameters, we show that the cascade risk can be substantially reduced by a small rate of taxation and by means of a simple strategy of the money transfer from the rescue fund to interbanking market subjects. Furthermore, we show that while negative effects on the return on investment (ROI) are direct and certain, an overall positive effect on risk adjusted return on investments (ROIRA) is visible. Please note that the taxation is introduced as a monetary/regulatory, not as a _scal measure, as the term could suggest. The rescue fund is implemented in a form of a common reserve fund

Facilitating arrhythmia simulation: the method of quantitative cellular automata modeling and parallel running

BACKGROUND: Many arrhythmias are triggered by abnormal electrical activity at the ionic channel and cell level, and then evolve spatio-temporally within the heart. To understand arrhythmias better and to diagnose them more precisely by their ECG waveforms, a whole-heart model is required to explore the association between the massively parallel activities at the channel/cell level and the integrative electrophysiological phenomena at organ level. METHODS: We have developed a method to build large-scale electrophysiological models by using extended cellular automata, and to run such models on a cluster of shared memory machines. We describe here the method, including the extension of a language-based cellular automaton to implement quantitative computing, the building of a whole-heart model with Visible Human Project data, the parallelization of the model on a cluster of shared memory computers with OpenMP and MPI hybrid programming, and a simulation algorithm that links cellular activity with the ECG. RESULTS: We demonstrate that electrical activities at channel, cell, and organ levels can be traced and captured conveniently in our extended cellular automaton system. Examples of some ECG waveforms simulated with a 2-D slice are given to support the ECG simulation algorithm. A performance evaluation of the 3-D model on a four-node cluster is also given. CONCLUSIONS: Quantitative multicellular modeling with extended cellular automata is a highly efficient and widely applicable method to weave experimental data at different levels into computational models. This process can be used to investigate complex and collective biological activities that can be described neither by their governing differentiation equations nor by discrete parallel computation. Transparent cluster computing is a convenient and effective method to make time-consuming simulation feasible. Arrhythmias, as a typical case, can be effectively simulated with the methods described

Pricing of Loan Commitments for Facilitating Stochastic Liquidity Needs

Pricing of bank loan commitments, Liquidity needs, Bank liquidity reserve holding, G12, G21,

The Financing of Italian Firms and the Credit Crunch: Findings and Exit Strategies

The aim of the paper is to analyse how the credit crunch has modified the traditional bank-firm relationship with a particular focus on the Italian situation. Our analysis reinforces the finding that in Italy, the credit available to the real economy is insufficient in terms not only of quantity but also of quality. The next step is to identify and discuss possible exit strategies for eliminating the credit crunch and overcoming serious intrinsic shortcomings in terms of alternative instruments, markets and intermediaries. In fact, while on the one hand the crisis has revealed the underdevelopment of the Italian financial market, the insufficient role of institutional investors, the embryonic state of the corporate bond markets and the virtual non-existence of commercial paper markets, on the other hand it could finally provide the opportunity for the development of these channels. The changing role of banks in the new scenario is also analysed as well as the characteristics firms will require to benefit from i