Foreign direct investment in OECD countries: a special focus in the case of Greece

Foreign Direct Investment (FDI) is considered as an important instrument for economic development all over the world. As a result, a growing competition for FDI among the majority of all countries has reached to high level. The aim of this paper is to examine the FDI inflows determinants for 24 OECD countries i.e. Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Korea, Mexico, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Turkey, United Kingdom and United States. To this end we employ annual data from 1980 to 2012 for a series of potential FDI determinants that have been identified as the most important by the relevant literature. Our empirical strategy employs both the standard fixed effects panel as well as a dynamic panel approach. The empirical findings highlight the importance of market size, trade openness, unit labor cost, schooling, taxation, gross capital formation, institutional variables, and ROA/ROE as significant FDI determinants. In the case of the dynamic panel model those FDI inflows determinants are not uniform for all country groups. Additionally, the results indicate that corporate tax rates clearly affect FDI attractiveness. This finding is robust when testing different countries subgroups. The present study has important policy implications indicating the factors that host economies should place emphasis on in order to attract FDI inflows. Policy makers should not only pay attention to the corporate tax rate level but they should also design a simple, stable and transparent taxation system that minimizes the relevant business risk

Essays in Efficiency and Stability of the Banking Sector

This thesis contributes via the concept of efficiency in four distinct fields of the fi nancial economics and banking literature: technological heterogeneity, liquidity creation, profitability, and stability of banks. In Chapter 1 we motivate the analysis by presenting the main developments that have been taking place in the banking sector as far as these four elds are concerned and highlight their importance to the appropriate functioning of the nancial system and of the economy overall. In Chapter 2 we address the issue that conventional surveys on bank efficiency draw conclusions based on the assumption that all banks in a sample use the same production technology. However, efficiency estimates can be severely distorted if the existence of unobserved differences in technological regimes is not taken into consideration. We estimate the unobserved heterogeneity in banking technologies using a latent class stochastic frontier model. In order to arrive at a policy implication that is valid across time and markets, we present two applications of the model using separately data from the UK and Greek banking sector over the periods 1987-2011 and 1993-2011 respectively. To increase the precision of our inferences, we adopt two distinct empirical methodologies: a panel data method and a pooled cross-section modelling strategy. Our results reveal that bank-heterogeneity in both banking sectors can be controlled for two technological regimes. We find a trade-o¤ between the level of sophistication within a fi nancial system and its level of aggregate efficiency. Consistency among the results is established under both methodologies. Further, we propose a methodology with regard to M&As activity of UK and Greek banks within a latent class context. We examine numerous potential M&A scenarios among banks that belong to different technological regimes, and we test whether there is a transition of the new banks to a more efficient technological class resulting from this M&A activity. We find strong evidence that new financial institutions can be better equipped to withstand potential adverse economic conditions. Finally, we cast doubt on what the true motivation for M&A activity is and we extract important policy inferences in terms of social welfare. In Chapter 3 we introduce the "Cost Efficiency - Liquidity Creation Hypothesis" (CELCH) according to which a rise in a bank s cost efficiency level increases its level of liquidity creation. By employing a novel stress test scenario under a PVAR methodology, we test the CELCH and the direction of causality among liquidity creation and cost efficiency variables in the UK and Greek banking sector. Moreover using new measures of liquidity creation (Berger and Bouwman, 2009) we address the question of whether potential M&As can enhance liquidity creation and create additional credit channels in the economy. We evaluate and compare the robustness of potential consolidation scenarios by employing half - life measures (Chortareas and Kapetanios 2013). We show a positive impact of cost efficiency on liquidity creation in line with CELCH. The empirical evidence further suggests that potential consolidation activity can enhance the ow of credit in the economy. Bank shocks seem to be the most persistent on both liquidity creation and cost efficiency and the UK banking system is found to withstand more effectively adverse economic conditions. Finally, we cast doubts on the strategy followed by policy authorities regarding the recent wave of M&As in the Greek banking sector. In Chapter 4, we attempt to shed light on the trade-o¤ between fi nancial stability and efficiency. We highlight that current tests of banking efficiency do not take into account whether banks managers are taking too much or too little risk relative to the value maximising amount. We assume that moving from an intermediary bank type balance sheet to an investment bank type not only changes the risk-return combination of the balance sheet but also increases the banks degree of instability, that is the probability of insolvency when adverse effects occur. To this extent, we propose a new efficiency measure which incorporates all the aforementioned ambiguous points. An empirical investigation of US commercial banks between 2003-2012 suggests that our proposed risk-adjusted index has superior explanatory power with respect to banks profi tability and gives better predictions compared to conventional banking efficiency measures. This holds after various robustness checks. Chapter 5 summarizes the main findings of all three distinct studies and concludes by highlighting the importance and the contributing points of the thesis in the banking and financial economics literature

Senior-subordinated structure: Buffer or signal in securitisation?

By exploiting a unique and proprietary dataset comprising granular deal- and tranche-level data on a global portfolio of securitisation deals, we empirically test the buffer vs the signalling hypothesis of credit enhancements in securitisation. We do so by focusing on one internal credit enhancement associated with the design of financial securities in securitisation, i.e., subordination. This study provides novel evidence on the role played by subordination in securitisation, suggesting that a real dichotomy between the buffer and signalling effects does not hold. Our findings indeed highlight that subordination serves both as a buffer against observable risk and as a signal of unobservable credit quality to third-party investors in the market; moreover, our results are robust to a wide battery of robustness tests. Our findings, of international relevance, contribute to the literature on information asymmetries between originators and investor and offer new policy insights in light of the recent agreement reached by European lawmakers with national governments to revive the European securitisation market

Efficiency and Financial Risk Management Practices of Microfinance Institutions

Microfinance institutions (MFIs) have evolved in different and complex ways to solve various market frictions, with some of them providing a wide range of financial products and using different lending technologies to reach poor and underserved populations. As a result, some MFIs are more efficient than others, but are efficiency gains aligned with risk management practices? The specific characteristics of the microfinance industry make the answer to this question less obvious than that of commercial banks. This paper tries to shed light on these issues by analysing the efficiency and risk management of MFIs and describing the potential implications of these relationships for the microfinance industry. After considering several measures of financial risk management ratios commonly used in the microfinance literature, our results show that cost efficiency improves asset quality and solvency of MFIs, but also reduces the need for holding idle cash or liquid assets. The results of this paper can help academics, policymakers, and regulators to better understand the impact of cost efficiency on financial risks management practices in the microfinance industry

Alternative Finance after Natural Disasters

In this paper, we show that alternative finance (e.g. private equity, crowdfunding and venture capital) is a key source of funding for firms that are affected by natural disasters. Using data on a large sample of US companies from 2010 to 2019, we provide robust empirical evidence that private funding increases within 3 months after the occurrence of a natural disaster. Panel data analysis at state level shows that extreme events cause at least an average increase of funding from alternative finance by 47% relative to firms in non-affected states. We also find that size, reliance on physical assets and age improve access to alternative finance after adverse natural events. Our empirical evidence highlights the key role of private lenders in providing financial resources to affected firms after extreme exogenous events

The use of digital technologies by small and medium enterprises during COVID-19: Implications for theory and practice

Scholars have highlighted the role of Digital Technologies (DT) in enhancing productivity and performance in Small and Medium Enterprises (SMEs). However, there is limited evidence on the use of DT for dealing with the consequences of extreme events, such as COVID-19. We discuss this gap by (i) outlining potential research avenues and (ii) reflecting on the managerial implications of using DT within SMEs to deal with the repercussions of COVID-19 and securing business continuity

Liquidity creation through efficient M&As: A viable solution for vulnerable banking systems? Evidence from a stress test under a panel VAR methodology

According to the “cost efficiency - liquidity creation” hypothesis (CELCH), introduced in this paper, a rise in a bank’s cost efficiency level increases its liquidity creation. By employing a novel stress test scenario under a panel VAR methodology, the CELCH and the direction of causality between liquidity creation and cost efficiency are tested. Moreover, using new measures of liquidity creation (Berger and Bouwman, 2009), the question of whether potential bank mergers and acquisitions (M&As) can enhance liquidity creation and generate additional credit channels in the economy is addressed. The robustness of potential consolidation scenarios are evaluated and compared through the use of new “half-life” measures (Chortareas and Kapetanios, 2013). In line with CELCH, the positive impact of cost efficiency on liquidity creation is shown. The empirical evidence further suggests that potential consolidation activity can enhance the flow of credit in the economy. Bank shocks seem to have the most persistent effect on both liquidity creation and cost efficiency. Finally, doubts are cast on the strategies followed by policy authorities regarding the recent wave of M&As in the banking sector

Computed Tomography-Guided Interstitial High-Dose-Rate Brachytherapy in the Local Treatment of Primary and Secondary Intrathoracic Malignancies

Introduction:Image-guided interstitial (IRT) brachytherapy (BRT) is an effective treatment option as part of a multimodal approach to the treatment of isolated lung tumors. In this study, we report our results of computed tomography-guided IRT high-dose-rate (HDR) BRT in the local treatment of inoperable primary and secondary intrathoracic malignancies.Methods:Between 1997 and 2007, 55 patients underwent a total of 68 interventional procedures for a total of 60 lung lesions. The median tumor volume was 160 cm3 (range, 24–583 cm3). Thirty-seven patients were men and 18 were women, with a median age of 64 years (range, 31–93 years). The IRT-HDR-BRT delivered a median dose of 25.0 Gy (range, 10.0–32.0 Gy) in twice-daily fractions of 4.0 to 15.0 Gy in 27 patients and 10.0 Gy (range, 7.0–32.0 Gy) in once-daily fractions of 4.0 to 20.0 Gy in 28 patients.Results:The median follow-up was 14 months (range, 1–49 months). The overall survival rate was 63% at 1 year, 26% at 2 years, and 7% at 3 years. The local control rate for metastatic tumors was 93%, 82%, and 82% and for primary intrathoracic cancers 86%, 79%, and 73% at 1, 2, and 3 years, respectively. Pneumothoraces occurred in 11.7% of interventional procedures, necessitating postprocedural drainage in one (1.8%) patient.Conclusions:In patients with inoperable intrathoracic malignancies, computed tomography-guided IRT-HDR-BRT is a safe and effective alternative to other locally ablative techniques

Re-examining the income - CO₂ emissions nexus using the new kink regression model: does the Kuznets curve exist in G7 countries?

More countries have made carbon neutral or net zero emission commitments since 2019. Within this context, re-examining the environmental Kuznets curve (EKC) hypothesis plays an essential role in sizing up the global economic development situation and realizing the global carbon emission reduction target. A methodological challenge in testing the EKC hypothesis, which states that increasing income makes CO₂ emissions begin to decline beyond a turning point, lies in determining if this benchmark point exists. The EKC hypothesis between income and CO₂ emissions is reassessed by applying a new kink regression model for the G7 countries from 1890 to 2015. Results reveal the inverted U-shaped nexus does not exist for US, Germany, Italy, Canada and Japan. For these five countries, the EKC curve has a turning point, but the positive impact of incomes on CO₂ emissions becomes significantly smaller after the turning point. We describe this relationship as a pseudo-EKC. K.U.K. and France are the only exceptions, fitting the EKC hypothesis. Further analysis indicates that the relationship between income and SO2 emissions presents an inverted U-shaped curve. Moreover, we observe that the turning point occurs at different points in time for the different G7 countries. Therefore, environmental policies targeting pollutant emission reduction should consider the different characteristics of different pollutants and regions

The nexus between bank efficiency and leverage.

In this paper we shed light on the impact of leverage on efficiency by introducing a new banking efficiency indicator that includes efficiency and stability conditions. This indicator relies on the leverage as a proxy of a bank's risk and stability. Banks' leverage played an important role in the last Önancial crash as well as in the Basel III regulatory rules. The results of the econometric investigation using a large sample of American commercial banks show that profit efficiency indicators including leverage are better predictors of future profits than current indicators, including other measures of bank risk. This is particularly evident for the period during the 2007 - 2009 Financial crisis. Our findings have important policy implications, particularly in light of the recently implemented optimal leverage ratio