Margins of international banking: is there a productivity pecking order in banking, too?

Modern trade theory emphasizes firm-level productivity differentials to explain the cross-border activities of non-financial firms. This study tests whether a productivity pecking order also determines international banking activities. Using a novel dataset that contains all German banks' international activities, we estimate the ordered probability of a presence abroad (extensive margin) and the volume of international assets (intensive margin). Methodologically, we enrich the conventional Heckman selection model to account for the self-selection of banks into different modes of foreign activities using an ordered probit. Four main findings emerge. First, similar to results for non-financial firms, a productivity pecking order drives bank internationalization. Second, only a few non-financial firms engage in international trade, but many banks hold nternational assets, and only a few large banks engage in foreign direct investment. Third, in addition to productivity, risk factors matter for international banking. Fourth, gravity-type variables have an important impact on international banking activities. --International banking,extensive and intensive margin,productivity pecking order,ordered probit,selection models

Компромісні вирішення політичних питань в сучасній Україні

Розглядаються компромісні тенденції вирішення політичних питань, що сьогодні пронизують політичне життя сучасної України. Розкривається суть таких понять як «консенсус», «компроміс», підкреслюючи, що при аналізі стратегії компромісу слід спиратися на механізми досягнення консенсусу в реальній практиці. Ключові слова: компроміс, консенсус, стратегія, конфлікт, демократія, політична діяльність, політичне рішення, режим.Рассматриваются компромиссные тенденции решения политических вопросов, которые сегодня пронизывают политическую жизнь современной Украины. Раскрывается сущность таких понятий как «консенсус», «компромисс», подчеркивая, что при анализе стратегии компромисса следует опираться на механизмы достижения консенсуса в реальной практике. Ключевые слова: компромисс, консенсус, стратегия, конфликт, демократия, политическая деятельность, политическое решение, режим.The article considers the compromise tendencies of resolving the political issues. The author determines the essence of such as consensus», compromise». The special attention should pay to mechanism of reaching consensus in the compromise strategy. Key words: compromise, consensus, strategy, conflict, democracy, political decision, regime

Crises, rescues, and policy transmission through international banks

The World Financial Crisis has shaken the fundamentals of international banking and triggered a downward spiral of asset prices. To prevent a further meltdown of markets, governments have intervened massively through rescues measures aimed at recapitalizing banks and through liquidity support. We use a detailed, banklevel dataset for German banks to analyze how the lending and borrowing of their foreign affiliates has responded to domestic (German) and to US crisis support schemes. We analyze how these policy interventions have spilled over into foreign markets. We identify loan supply shocks by exploiting that not all banks have received policy support and that the timing of receiving support measures has differed across banks. We find that banks covered by rescue measures of the German government have increased their foreign activities after these policy interventions, but they have not expanded relative to banks not receiving support. Banks claiming liquidity support under the Term Auction Facility (TAF) program have withdrawn from foreign markets outside the US, but they have expanded relative to affiliates of other German banks. --Cross-border banking,financial crisis,government support,Term Auction Facility

Handling losses in translog profit models

In this paper, we compare standard approaches used to handle losses in logarithmic stochastic profit frontier models with a simple novel approach. We discuss discriminatory power, rank stability and precision of profit efficiency scores. Our new method enhances rank stability and discriminatory power, and improves the precision of profit efficiency scores

The vanishing ideal of a finite set of points with multiplicity structures

Given a finite set of arbitrarily distributed points in affine space with arbitrary multiplicity structures, we present an algorithm to compute the reduced Groebner basis of the vanishing ideal under the lexicographic ordering. Our method discloses the essential geometric connection between the relative position of the points with multiplicity structures and the quotient basis of the vanishing ideal, so we will explicitly know the set of leading terms of elements of I. We split the problem into several smaller ones which can be solved by induction over variables and then use our new algorithm for intersection of ideals to compute the result of the original problem. The new algorithm for intersection of ideals is mainly based on the Extended Euclidean Algorithm.Comment: 12 pages,12 figures,ASCM 201