The Tying of Lending and Equity Underwriting

This article examines the practice of tying,' which occurs when an underwriter lends to an issuer around the time of a public securities offering. We examine whether there are efficiencies from tying lending and underwriting which lead to benefits for issuers and underwriters. We find evidence consistent with tying occurring for issues when there are informational economies of scope from combining lending and underwriting. Firms benefit from tying through lower financing costs, as tied issuers receive lower underwriter fees on seasoned equity offerings and discounted loan yield spreads. These financing costs are significantly reduced for non-investment grade issuers, where informational economies of scope from combining lending with underwriting are likely to be large. These results are robust to matching methodology developed by Heckman, Ichimura, and Todd (1997, 1998). For underwriters, tying helps build relationships that augment an underwriter's expected revenues by increasing the probability of receiving both current and future business. Both commercial banks and investment banks tie lending and underwriting and offer price discounts, albeit in different ways, with commercial banks discounting loan yield spreads and investment banks offering reduced underwriter spreads.

Optimism and Economic Choice

This paper presents some of the first large-scale survey evidence linking optimism to major economic choices. We create a novel measure of optimism using the Survey of Consumer Finance by comparing a person's self-reported life expectancy to that implied by statistical tables. Optimists are more likely to believe that future economic conditions will improve. Self-employed respondents are more optimistic than regular wage earners. In general, more optimistic people work harder and anticipate longer age-adjusted work careers. They are more likely to remarry, conditional on divorce. In addition, they tilt their investment portfolios more toward individual stocks.

On the fundamental role of venture capital

The venture capital industry experienced its biggest decline ever in 2001. The National Venture Capital Association reports that, in the fourth quarter of 2001, investments by venture capital firms were at approximately a third of the level the year before and the amount of money raised by these firms had dropped 80 percent. Many people question whether this trend signals the eventual demise of venture capital. ; However, according to the authors of this article, it is important to put these numbers in perspective. In terms of total dollars invested, 2001 ranks as the venture capital industry's third-best year, and the developments of 2001 are simply an anomaly in an otherwise exceptional growth curve. The article examines the significance of this difference between short- and long-term performance. ; Using the findings from the Stanford Project on Emerging Companies, an interdisciplinary research project that analyzed 170 technology start-up firms, the authors discuss the effects of venture capital on both the market position of the start-up and on internal operational issues. Their research supports the conclusion that venture capitalists provide value-added services that enhance the value of their portfolio companies. The article concludes with some thoughts on the evolution of the venture capital industry in the nineties.Venture capital ; Productivity ; Technology ; Economic development

On the importance of prior relationships in bank loans to retail customers

This paper analyzes the importance of retail consumers’ banking relationships for loan defaults using a unique, comprehensive dataset of over one million loans by savings banks in Germany. We find that loans of retail customers, who have a relationship with their savings bank prior to applying for a loan, default significantly less than customers with no prior relationship. We find relationships matter in different forms, scope, and depth. Importantly, though, even the simplest forms of relationships such as transaction accounts are economically meaningful in reducing defaults, even after controlling for other borrower characteristics as well as internal and external credit scores. Our results suggest that relationships of all kinds have inherent private information and are valuable in screening, in monitoring, and in reducing consumers’ incentives to default. JEL Classification: G20, G21default rates, monitoring, relationships, Retail banking, screening

Institutional Allocation In Initial Public Offerings: Empirical Evidence

We analyze institutional allocation in initial public offerings (IPOs) using a new dataset of US offerings between 1997 and 1998. We document a positive relationship between institutional allocation and day one IPO returns. This is partly explained by the practice of giving institutions more shares in IPOs with strong pre-market demand, consistent with book-building theories. However, institutional allocation also contains private information about first-day IPO returns not reflected in pre-market demand and other public information. Our evidence supports book-building theories of IPO underpricing, but suggests that institutional allocation in underpriced issues is in excess of that explained by book-building alone.

On the Lifecycle Dynamics of Venture-Capital- and Non-Venture-Capital-Financed Firms

We use a new data set that tracks U.S. firms from their birth over two decades to understand the life cycle dynamics and outcomes (both successes and failures) of VC- and non-VC financed firms. We first ask to what market-wide and firm-level characteristics venture capitalists respond in choosing to make their investments and how this differs for firms financed solely by non-VC sources of entrepreneurial capital. We then ask what are the eventual differences in outcomes for firms that receive VC financing relative to non-VC-financed firms. Our findings suggest that VCs follow public market signals similar to other investors and typically invest largely in young firms, with potential for large scale being an important criterion. The main way that VC financed firms differ from matched non-VC financed firms, is they demonstrate remarkably larger scale both for successful and failed firms, at every point of the firms' life cycle. They grow more rapidly, but we see little difference in profitability measures at times of exit. We further examine a number of hypotheses relating to VC-financed firms' failure. We find that VC-financed firms' cumulative failure rates are lower than non-VC-financed firms but the story is nuanced. VC appears initially "patient" in that VC-financed firms are less likely to fail in the first five years but conditional on surviving past this point become more likely to fail relative to non-VC-financed firms. We perform a number of robustness checks and find that VC does not appear to have more stringent survival thresholds nor do VC-financed firm failures appear to be disguised as acquisitions nor do particular kinds of VC firms seem to be driving our results. Overall, our analysis supports the view that VC is "patient" capital relative to other non-VC sources of entrepreneurial capital in the early part of firms' lifecycles and that an important criterion for receiving VC investment is potential for large scale, rather than level of profitability, prior to exit.

Understanding Bank Runs: The Importance of Depositor-Bank Relationships and Networks

We use a unique, new, database to examine micro depositor level data for a bank that faced a run. We use minute-by-minute depositor withdrawal data to understand the effectiveness of deposit insurance, the role of social networks, and the importance of bank-depositor relationships in influencing depositor propensity to run. We employ methods from the epidemiology literature which examine how diseases spread to estimate transmission probabilities of depositors running, and the significant underlying factors. We find that deposit insurance is only partially effective in preventing bank runs. Further, our results suggest that social network effects are important but are mitigated by other factors, in particular the length and depth of the bank-depositor relationship. Depositors with longer relationships and those who have availed of loans from a bank are less likely to run during a crisis, suggesting that cross-selling acts not just as a revenue generator but also as a complementary insurance mechanism for the bank. Finally, we find there are long term effects of a solvent bank run in that depositors who run do not return back to the bank. Our results help understand the underlying dynamics of bank runs and hold important policy implications.

Bank Borrowers and Loan Sales: New Evidence on the Uniqueness of Bank Loans

This paper examines the information content of the announcement of the sale of a borrower’s loan by its bank. A large body of research has documented the positive impact on a firm’s stock price around the announcement of formation and renewal of bank lending relationships. In light of these findings it would seem natural that when a bank chooses to sell off its loans, the stock returns of the borrower would be adversely affected. Our paper is the first study to test this hypothesis. We find that the stock returns of these borrowers are significantly negatively impacted on average for the period surrounding the announcement of a loan sale. The post-loan sale period is also marked by a large incidence of bankruptcy filings by the borrowers whose loans are sold. Overall, the evidence supports the hypothesis that the news of a bank loan sale has a negative certification impact, which is validated by the subsequent performance of the firm whose loan is sold. We conduct similar event study tests for those banks that engage in loan sales and find that the stock returns of the selling banks are not significantly impacted on average. Cross-sectional tests reveal that loan sales were made by banks that emphasized trading income and had relatively large Commercial and Industrial loan portfolios. For our sample period, a bank’s capital adequacy position did not appear to have a material effect on a bank’s decision to sell its loans

Diagnóstico de fallas en computación móvil usando TwinSVM

Introduction: Mobile computing systems (MCS) comes up with the challenge of low communication bandwidth and energy due to the mobile nature of the network. These features sometimes may come up with the undesirable behaviour of the system that eventually affects the efficiency of the system. Problem: Fault tolerance in MCS will increase the efficiency of the system even in the presence of faults. Objective: The main objective of this work is the development of the Monitoring Framework and Fault Detection and Classification. Methodology: For the Node Monitoring and for the detection and classification of faults in the system a neighbourhood comparison-based technique has been proposed. The proposed framework uses Twin Support Vector Machine (TWSVM) algorithm has been applied to build classifier for fault classification in the mobile network. Results: The proposed system has been compared with the existing techniques and has been evaluated towards calculating the detection accuracy, latency, energy consumption, packet delivery ratio, false classification rate and false positive rate. Conclusion: The proposed framework performs better in terms of all the selected parameters.Introducción: este artículo es el resultado de la investigación “Diagnóstico de fallas en la computación móvil usando TwinSVM” desarrollada en la Universidad Técnica I.K Gujral Punjab en Punjab, India en 2021.Problema: dado que los recursos en los sistemas informáticos móviles son limitados y un sistema tiene un ancho de banda, energía y movilidad de nodos limitados, el comportamiento deseado de la red puede cambiar si hay fallas.Objetivo: para lograr la tolerancia a fallas, de modo que un sistema móvil pueda operar incluso en presencia de fallas, se implementó un enfoque de dos temporizadores en el marco de detección, que luego se mejoró y perfeccionó con el uso del clasificador TwinSVM. Este clasificador ayuda a identificar nodos atípicos, lo que hace que el enfoque sea más tolerante a fallas.Metodología: el marco de monitoreo clasifica el nodo detectado como normal, defectuoso o parcialmente de-fectuoso, iniciando un temporizador de verificación de latidos y otro temporizador de verificación de relevancia en caso de que el nodo no responda al primer temporizador, que se prueba más usando TwinSVM, que mejora su eficiencia mediante la detección de valores atípicos.Resultados: el marco propuesto funciona mejor en términos de precisión de detección, consumo de energía, latencia y relación de caída de paquetes, todos los cuales han sido mejorados.Conclusión: el diagnóstico de fallas que utiliza el clasificador de aprendizaje automático TwinSVM funciona mejor en términos de falsas alarmas y tasas de falsos positivos y es adecuado para proporcionar tolerancia a fallas en sistemas informáticos móviles.Originalidad: a través de esta investigación, se ha desarrollado una versión única de detección de fallas en computación móvil utilizando un enfoque basado en clasificadores.Limitaciones: la falta de otras técnicas de detección de fallas cae dentro de la clasificación de fallas