Multiple versus single banking relationships

We develop a theoretical model in which firms may choose multiple banking relationships to reduce the risk that financing will be denied by "relationship banks" should the latter experience liquidity problems and refuse to roll over lines of credit. The inability to refinance from relationship banks signals unfavorable information about the quality of the firm's project, which may also prevent the firm from obtaining credit from other banks. We show that if this "lemons" problem is severe, then it is optimal to establish a relationship with more than one bank in spite of higher transaction costs; if it is mild, a single banking relationship is optimal. We find that the severity of the lemons problem depends directly on the inefficiency of bankruptcy procedures and inversely on the "fragility" of the banking system. The paper concludes with a comparison of bank-firm relationships in Italy and the U.S., characterized respectively by multiple and single banking. We present evidence that bankruptcy costs are significantly higher and banks less fragile in Italy than in the U.S., suggesting that the factors identified by the theoretical model are relevant in practice

Multilocus sequence types of invasive Corynebacterium diphtheriae isolated in the Rio de Janeiro urban area, Brazil

Invasive infections caused by Corynebacterium diphtheriae in vaccinated and non-vaccinated individuals have been reported increasingly. In this study we used multilocus sequence typing (MLST) to study genetic relationships between six invasive strains of this bacterium isolated solely in the urban area of Rio de Janeiro, Brazil, during a 10-year period. Of note, all the strains rendered negative results in PCR reactions for the tox gene, and four strains presented an atypical sucrose-fermenting ability. Five strains represented new sequence types. MLST results did not support the hypothesis that invasive (sucrose-positive) strains of C. diphtheriae are part of a single clonal complex. Instead, one of the main findings of the study was that such strains can be normally found in clonal complexes with strains related to non-invasive disease. Comparative analyses with C. diphtheriae isolated in different countries provided further information on the geographical circulation of some sequence types

Economic Systems and Risk Preferences: Evidence from East and West Germany

For standard economic models it is typically assumed that preferences are given and stable. But do economic systems shape individuals' risk preferences? Using the reunification of East and West Germany as a natural experiment I evaluate differences in financial risk taking comparing Eastern and Western German households for almost two decades after the fall of the Berlin Wall. Controlling for a large set of socio-economic variables East Germans having been ``treated'' by a command economy were more prone to taking financial risk than West German citizens. The differences were quantitatively relevant after the fall of the Iron Curtain and almost vanished by 2008

Sex differences in mathematics and reading achievement are inversely related: within- and across-nation assessment of 10 years of PISA data

We analyzed one decade of data collected by the Programme for International Student Assessment (PISA), including the mathematics and reading performance of nearly 1.5 million 15 year olds in 75 countries. Across nations, boys scored higher than girls in mathematics, but lower than girls in reading. The sex difference in reading was three times as large as in mathematics. There was considerable variation in the extent of the sex differences between nations. There are countries without a sex difference in mathematics performance, and in some countries girls scored higher than boys. Boys scored lower in reading in all nations in all four PISA assessments (2000, 2003, 2006, 2009). Contrary to several previous studies, we found no evidence that the sex differences were related to nations’ gender equality indicators. Further, paradoxically, sex differences in mathematics were consistently and strongly inversely correlated with sex differences in reading: Countries with a smaller sex difference in mathematics had a larger sex difference in reading and vice versa. We demonstrate that this was not merely a between-nation, but also a within-nation effect. This effect is related to relative changes in these sex differences across the performance continuum: We did not find a sex difference in mathematics among the lowest performing students, but this is where the sex difference in reading was largest. In contrast, the sex difference in mathematics was largest among the higher performing students, and this is where the sex difference in reading was smallest. The implication is that if policy makers decide that changes in these sex differences are desired, different approaches will be needed to achieve this for reading and mathematics. Interventions that focus on high-achieving girls in mathematics and on low achieving boys in reading are likely to yield the strongest educational benefits

Social networks and labour productivity in Europe: An empirical investigation

This paper uses firm-level data recorded in the AMADEUS database to investigate the distribution of labour productivity in different European countries. We find that the upper tail of the empirical productivity distributions follows a decaying power-law, whose exponent $\alpha$ is obtained by a semi-parametric estimation technique recently developed by Clementi et al. (2006). The emergence of "fat tails" in productivity distribution has already been detected in Di Matteo et al. (2005) and explained by means of a model of social network. Here we show that this model is tested on a broader sample of countries having different patterns of social network structure. These different social attitudes, measured using a social capital indicator, reflect in the power-law exponent estimates, verifying in this way the existence of linkages among firms' productivity performance and social network.Comment: LaTeX2e; 18 pages with 3 figures; Journal of Economic Interaction and Coordination, in pres

Knowing is trusting? An experimental test of the role of information in advisory

The recent economic crisis still lingering in Europe has deeply affected the way individuals look at the investment market. Understanding the trust processes underlying the decision to invest with financial intermediaries is of particular importance both at managerial (product development and advertisement) and at normative level (how intermediaries are regulated). Using an online experiment, this paper investigates whether discrepancies in the financial literacy of investors and brokers can be used to explain the decision to trust – thus, to invest in the financial market. The results show that trust is affected by the information disclosure in somewhat unexpected ways

Warfare, Fiscal Capacity, and Performance

We exploit differences in casualties sustained in pre-modern wars to estimate the impact of fiscal capacity on economic performance. In the past, states fought different amounts of external conflicts, of various lengths and magnitudes. To raise the revenues to wage wars, states made fiscal innovations, which persisted and helped to shape current fiscal institutions. Economic historians claim that greater fiscal capacity was the key long-run institutional change brought about by historical conflicts. Using casualties sustained in pre-modern wars to instrument for current fiscal institutions, we estimate substantial impacts of fiscal capacity on GDP per worker. The results are robust to a broad range of specifications, controls, and sub-samples

US and European Household Debt and Credit Constraints

This paper uses micro data from four OECD countries (the United States, Spain, Italy, and the Netherlands), to assess the determinants of household debt holding and to investigate whether or not credit constraints are important for household debt holding. We extend the existing literature in important ways. First, we present comparative evidence for four countries at the micro level, where we rely on household panel data for two countries; we are thus able to control for unobserved heterogeneity via individual household effects and to track changes in household behaviour over time. Second, by making data across countries as comparable as possible, we can explore the importance of the differences in institutional settings for debt incidence, debt outstanding and credit constraints. We also explore the implications for debt holding from consumption models, including a numerically solved precautionary savings model. We find that inter-country differences are substantial and remain even after controlling for a host of observable characteristics. This points to institutional differences between the countries being important