Relationship Banking and Competition under Differentiated Asymmetric Information

While competition constrains the ability of banks to extract informational rents from lending relationships, their informational monopoly also curtails competition through the threat of adverse selection. To analyze an intermediary's optimal strategic response to these opposing effects we specify a model where the severity of asymmetric information between banks and borrowers increases with informational distance. Intermediaries acquire expertise in a specific sector and exert effort in building lending relationship beyond their core business. They then compete with each other in transaction and relationship loan markets where they differentiate their loan offers in terms of informational location. As increased competition endogenously erodes informational rents intermediaries shift more resources to building relationships in their core markets. This retrenchment from peripheral loan segments permits banks to fend off the competitive threat to their captive market. Outside their core segment they offer transactional loans. In equilibrium, both forms of debt compete with each other but intermediaries specialize in a core market with relationship banking.

Stakeholder capitalism, corporate governance and firm value

We consider the advantages and disadvantages of stakeholder-oriented firms that are concerned with employees and suppliers as well as shareholders compared to shareholder-oriented firms. Societies with stakeholder-oriented firms have higher prices, lower output, and can have greater firm value than shareholder-oriented societies. In some circumstances, firms may voluntarily choose to be stakeholder-oriented because this increases their value. Consumers that prefer to buy from stakeholder firms can also enforce a stakeholder society. With globalization entry by stakeholder firms is relatively more attractive than entry by shareholder firms for all societies. JEL Classification: D02, D21, G34, L13, L2

Credit market competition and capital regulation

Market discipline for financial institutions can be imposed not only from the liability side, as has often been stressed in the literature on the use of subordinated debt, but also from the asset side. This will be particularly true if good lending opportunities are in short supply, so that banks have to compete for projects. In such a setting, borrowers may demand that banks commit to monitoring by requiring that they use some of their own capital in lending, thus creating an asset market-based incentive for banks to hold capital. Borrowers can also provide banks with incentives to monitor by allowing them to reap some of the benefits from the loans, which accrue only if the loans are in fact paid o.. Since borrowers do not fully internalize the cost of raising capital to the banks, the level of capital demanded by market participants may be above the one chosen by a regulator, even when capital is a relatively costly source of funds. This implies that capital requirements may not be binding, as recent evidence seems to indicate. JEL Classification: G21, G3

Credit Market Competition and Capital Regulation.

It is commonly believed that equity finance for banks is more costly than deposits. This suggests that banks should economize on the use of equity and regulatory constraints on capital should be binding. Empirical evidence suggests that in fact this is not the case. Banks in many countries hold capital well in excess of regulatory minimums and do not change their holdings in response to regulatory changes. We present a simple model of bank moral hazard that is consistent with this observation. In perfectly competitive markets, banks can find it optimal to use costly capital rather than the interest rate on the loan to guarantee monitoring because it allows higher borrower surplus.credit market competition, monitoring, loan rates, capital, bank monitoring

Stakeholder Capitalism, Corporate Governance and Firm Value

In countries such as Germany, the legal system is such that firms are necessarily stakeholder oriented. In others like Japan social convention achieves a similar effect. We analyze the advantages and disadvantages of stakeholder-oriented firms that are concerned with employees and suppliers compared to pure shareholder-oriented firms. We show that in a context of imperfect competition stakeholder firms have higher prices and lower output than shareholder-oriented firms. Surprisingly, we also find that firms can be more valuable in a stakeholder society than in a shareholder society. With globalization stakeholder firms and shareholder firms often compete. We identify the circumstances where stakeholder firms are more valuable than shareholder firms, and compare these asymmetric equilibria with symmetric equilibria with stakeholder and shareholder firms. Finally, we show that, in some circumstances, firms may voluntarily choose to be stakeholder-oriented because this increases their value.stakeholder-oriented firms, shareholder-oriented firms, firm value, globalization

Credit Market Competition and Capital Regulation

Market discipline for financial institutions can be imposed not only from the liability side, as has often been stressed in the literature on the use of subordinated debt, but also from the asset side. This will be particularly true if good lending opportunities are in short supply, so that banks have to compete for projects. In such a setting, borrowers may demand that banks commit to monitoring by requiring that they use some of their own capital in lending, thus creating an asset market-based incentive for banks to hold capital. Borrowers can also provide banks with incentives to monitor by allowing them to reap some of the benefits from the loans, which accrue only if the loans are in fact paid o.. Since borrowers do not fully internalize the cost of raising capital to the banks, the level of capital demanded by market participants may be above the one chosen by a regulator, even when capital is a relatively costly source of funds. This implies that capital requirements may not be binding, as recent evidence seems to indicate.Banking, Costly Capital, Asset Side Market Discipline

Unstable Reading of Accelerometers in Cryogenic Service

Case Study− RasGas operates over 100 pieces of cryogenic submersible equipment. Approximately 80 % are on pumping service and the rest on expansion service. − These units use two vibration transducers to provide protection and diagnostic capability. The signal from the accelerometer is conveyed to the external signal conditioner (inside field junction box) them to a monitoring system − Since commissioning vibration signals tend to be spiky (that is, random in nature) they may OEM recommended alert limits. This may mask potential real problems to the machine

Targeting target shareholders

We integrate heterogeneity and uncertainty in investor valuations into a model of takeovers. Investors have dispersed valuations, holding shares in firms they value more highly, and a successful offer must win approval from the median target shareholder. We derive the consequences for an acquiring firm's takeover offer -- its size and cash/equity structure -- and implications for takeover premia and firm returns. Cash offers are best for the acquirer when the acquirer's own valuation exceeds the median target shareholder's. Equity offers are best given the reverse. The acquirer's share price always rises following cash acquisitions, but can fall following equity offers. The combined target-acquirer return is always higher after cash acquisitions than equity acquisitions (which can be negative). We characterize how synergies and uncertainty about target shareholder valuations affect the optimal offer and probability a takeover succeeds

Development and Testing of an Actively Adjustable Stiffness Mechanism

This study presents the comparison of the theoretical and experimental results of the performance of an adjustable stiffness mechanism. In particular, the use of redundant actuation is emphasized in the design of a one degree-of-freedom Watt II mechanism capable of independently controlling the effective stiffness without a change in equilibrium position. This approach is in contrast to spring mechanism designs unable to actively control the spring rate independent of deflection, and with potential applications in various types of suspension and assembly systems. Results indicate that two direct drive brush-type direct current motors are required to drive the redundantly actuated mechanism and create a system that behaves as an adjustable stiffness spring

In-Orbit SAR Performance of TerraSAR-X

TerraSAR-X is the first German Radar satellite for scientific and commercial applications. The project is a public-private partnership between DLR and EADS Astrium GmbH. TerraSAR-X consists of a high resolution Synthetic Aperture Radar at X-Band. The radar antenna is based on active phased array technology that allows the control of many different instrument parameters and operational modes (Stripmap, ScanSAR and Spotlight) with various polarizations. Following the TerraSAR-X launch, scheduled for February 2007, it is planned a six month Commissioning Phase covering the characterization and verification of the SAR mission. Within this phase, the Overall SAR System Performance (OSSP) takes care of the correct working and interaction of all SAR system elements essential for obtaining an optimum SAR Performance. The paper covers the first in-orbit characterization and verification results of the SAR system performance for TerraSAR-X operational and experimental modes. This characterization is divided into four phases: Initial Characterization, Scene Characterization –both mostly based on basic and experimental products-, and Verification of TS-X Instrument Command Generation. The different optimization strategies and performance trade-offs are discussed and presented in the paper, including very first TerraSAR-X images. The result of the real SAR data analysis determines the final system baseline and thus the final image quality, e.g. Temperature compensation, Total Zero Doppler Steering, Up/down chirp toggling, transmitted bandwidth, timing interferences, etc. The first section of the paper introduces the activities carried out during the Commissioning Phase for the TerraSAR-X SAR system performance characterization/verification. In the second section, the strategies for the performance optimization and characterization are presented. Finally, the in-orbit SAR performance results are given in section three