Lending relationships and credit rationing: the impact of securitization

Do lending relationships mitigate credit rationing? Does securitization influence the impact of lending relationships on credit rationing? If so, is its impact differently in normal periods versus crisis periods? This paper combines several unique data sets to address these questions. Employing a disequilibrium model to identify credit rationing, we find that more intense lending relationships, measured through their length and lower number, considerable improve credit supply and reduce the degree of credit rationing. In general, we find that a relationship with a bank that is more involved in securitization activities relaxes credit constraints in normal periods; however, it also increases credit rationing during crisis periods. Finally, we study the impact of different types of securitization – covered bonds and mortgage-backed securities (MBS) – on credit rationing. While both types of securitization reduce credit rationing in normal periods, the issuance of MBS by a firm’s main bank aggravates these firm’s credit rationing in crisis periods.lending relationships;financial crisis;securitization

Sustainable growth in complex networks

Based on the empirical analysis of the dependency network in 18 Java projects, we develop a novel model of network growth which considers both: an attachment mechanism and the addition of new nodes with a heterogeneous distribution of their initial degree, $k_0$. Empirically we find that the cumulative degree distributions of initial degrees and of the final network, follow power-law behaviors: $P(k_{0}) \propto k_{0}^{1-\alpha}$, and $P(k)\propto k^{1-\gamma}$, respectively. For the total number of links as a function of the network size, we find empirically $K(N)\propto N^{\beta}$, where $\beta$ is (at the beginning of the network evolution) between 1.25 and 2, while converging to $\sim 1$ for large $N$. This indicates a transition from a growth regime with increasing network density towards a sustainable regime, which revents a collapse because of ever increasing dependencies. Our theoretical framework is able to predict relations between the exponents $\alpha$, $\beta$, $\gamma$, which also link issues of software engineering and developer activity. These relations are verified by means of computer simulations and empirical investigations. They indicate that the growth of real Open Source Software networks occurs on the edge between two regimes, which are either dominated by the initial degree distribution of added nodes, or by the preferential attachment mechanism. Hence, the heterogeneous degree distribution of newly added nodes, found empirically, is essential to describe the laws of sustainable growth in networks.Comment: 5 pages, 2 figures, 1 tabl

The role of interchange fees in two-sided markets: An empirical investigation on payment cards

We study the impact of reductions in interchange fees on payment card services. We find that consumer and merchant acceptance and transaction volumes increased when interchange fees were reduced. Our results suggest that a 10 percent reduction in the rate of decline per quarter in the average interchange fee by an acquirer resulted in a rate of increase in merchant acceptance per quarter of up to 1.4 percent. Additionally, a 10 percent increase in the rate of interaction of merchant acceptance and the total number of cards increased the rate of quarterly issuer transaction volumes up to 1.7 percent

Modeling of the general circulation with the LMD-AOPP-IAA GCM: Update on model design and comparison with observations

The LMD-AOPP GCM is developed conjointly by LMD in Paris and AOPP in Oxford, with the collaboration of IAA in Granada for the physical processes specific to the upper atmosphere. The collaboration between the two teams is based on the use of two different dynamical core (gridpoint at LMD, spectral at AOPP), which allow us to estimate the likely uncertainty arising from certain types of modeling errors. Similarly, we use different schemes to compute tracer transport, etc. The work has benefited from support from ESA (since 1995) and CNES (since 2000). Within that context, the GCMs are used to produce a Martian climate 'database' which is used by more than 30 teams around the world for mission design and scientific studies (see Bingham et al., this issue and Lewis et al., 1999). The baseline version of the GCM is described in detail in Forget et al. (1999). Here we describe the recent improvement and design changes since this publication. Compared to this previous version, the new GCM covers a wider range of altitude, from 0 to 120km in the vertical, it uses improved topography and thermal inertia surface maps from Mars Global Surveyor (MGS), and includes a new 'dust scenario' to describe the distribution of airborne dust in the atmosphere

The diffusion pattern of non-cash payments: evidence from China

Exploiting an original dataset of non-cash payments during the period between 1996 and 2005, this study analyses the diffusion patterns of non-cash payments in China. Based on both exponential and Gompertz curves, the point of sale (POS) terminal has shown a higher diffusion rate than that of automatic teller machines (ATMs). This result is also robust when a time trend is interacted with rivals' precedence, network effects and market concentration. The diffusion rates of both ATM and POS terminals have accelerated after 2002, when UnionPay was established in China. The diffusion rate of ATMs is found to be mainly driven by rivals' adoption of them. Market concentration boosts the diffusion of POS terminals. In spite of the rising number of POS terminals and merchants, the volume of POS transactions is low. The diffusion rate of POS is, however, negatively affected by interchange fees

Trade credit, the Financial Crisis and Firms Access to Finance

We analyse for the first time whether trade credit provided an alternative source of external finance to SMEs during the credit crisis. Using firm level panel data on over 40,000 Spanish SMEs we find that credit constrained SMEs depend on trade credit, but not bank loans, to finance capital expenditures and that the intensity of this dependence increased during the financial crisis. Unconstrained firms, in contrast, are dependent on banks loans not trade credit. Overall, this suggests substitution between bank loans and trade credit that is conditional on the level of financing constraints and is more intense during the crisi

Hole burning in a nanomechanical resonator coupled to a Cooper pair box

We propose a scheme to create holes in the statistical distribution of excitations of a nanomechanical resonator. It employs a controllable coupling between this system and a Cooper pair box. The success probability and the fidelity are calculated and compared with those obtained in the atom-field system via distinct schemes. As an application we show how to use the hole-burning scheme to prepare (low excited) Fock states.Comment: 7 pages, 10 figure

Modeling the martian atmosphere with the LMD global climate model

Introduction: For several years we have been developing a 3D Global Climate Model (GCM) for Mars derived from the models used on Earth for weather forecasting or climate changes studies [1]. The purpose of such a project is ambitious: we wish to build a 'Mars simulator' based only on physical equations, with no tailor-made forcing, but able to reproduce all the available observations of the Martian climate (temperatures, winds, but also clouds, dust, ices, chemical species, etc...). The GCM is constantly evolving, thanks to a contnuous collaboration between several teams based in France (LMD, SA), the UK (The Open University, University of Oxford) and Spain (Instituto de Astrofisica de Andalucia), and with the support of ESA and CNES. We are currently working on an improved version of the model. Several new parametrisation are included in the heart of the model (radiative transfer, surface and subsurface processes, dynamics) and the applications of the GCM are in contnuous development (Water, dust, CO2, radon cycles, photochemistry, thermosphere, ionosphere, etc...

The latest (version 4.3) Mars Climate Database

Introduction: The Mars Climate Database (MCD) is a database of meteorological fields derived from General Circulation Model (GCM) numerical simulations of the Martian atmosphere and validated using available observational data. The MCD includes complementary post-processing schemes such as high spatial resolution interpolation of environmental data and means of reconstructing the variability thereof. The GCM is developed at Laboratoire de Météorologie Dynamique du CNRS (Paris, France) [1,2] in collaboration with the Open University (UK), the Oxford University (UK) and the Instituto de Astrofisica de Andalucia (Spain) with support from the European Space Agency (ESA) and the Centre National d'Etudes Spatiales (CNES)