Rent Seeking in Elite Networks

We employ a unique dataset on members of an elite service club in Germany to investigate how social connections in elite networks affect the allocation of resources. Specifically, we investigate credit allocation decisions of banks to firms inside the network. Using a quasi-experimental research design, we document misallocation of bank credit inside the network, with bankers with weakly aligned incentives engaging most actively in crony lending. Our findings, thus, resonate with existing theories of elite networks as rent extractive coalitions that stifle economic prosperity

The limits of model-based regulation

Using loan-level data from Germany, we investigate how the introduction of model-based capital regulation affected banks’ ability to absorb shocks. The objective of this regulation was to enhance financial stability by making capital requirements responsive to asset risk. Our evidence suggests that banks ‘optimized’ model-based regulation to lower their capital requirements. Banks systematically underreported risk, with underreporting being more pronounced for banks with higher gains from it. Moreover, large banks benefitted from the regulation at the expense of smaller banks. Overall, our results suggest that sophisticated rules may have undesired effects if strategic misbehavior is difficult to detect

The Political Economy of Decentralization: Evidence from Bank Bailouts

In this paper, we examine whether decentralized decision making results in more efficient economic outcomes. In the German savings bank sector, distress events can be resolved either by a decentralized county-level politician or by a centralized state-level association. We document that decisions taken by the politicians at the decentralized level are distorted by personal considerations. While the occurrence of distress is not related to the electoral cycle, the probability of local politicians injecting taxpayers’ money into a bank in distress is 30 percent lower in the year directly preceding an election. Using the timing of the distress event in the electoral cycle as an instrument for who bails out the distressed bank, we show that decentralized bailouts result in inferior economic outcomes. These bailed-out banks perform more poorly and provision credit less efficiently when compared with more central-ized bailouts. We also observe a significantly worse real sector performance of localities that have undergone decentralized bailouts. Overall, our results highlight the political economy of decentralization – local politicians derive private benefits from controlling the bank at the expense of citizens at large

Government Ownership of Banks and Corporate Innovation

In this paper we analyze the impact of government and private ownership of banks on corporate innovation. We find that firms with more financing from government-owned banks are less (more) likely to initiate (exit) innovation. Among the innovators, firms that finance more through private banks have more innovative output. These findings could be driven by the selection of lending relationships based on firms' preferences to innovate or, alternatively, by the crowding out of innovation due to the presence of government-owned banks. To differentiate between these two explanations, we use the timing of government-owned bank distress events over the electoral cycle as an instrument. We show a remarkable increase in innovation following an exogenous decrease in government ownership of banks. Moreover, the allocation of credit is more responsive to the financing needs of future innovators among private banks, shedding light on the mechanism. Overall our results suggest that government involvement in the allocation of credit crowds out private banking and comes at the cost of lower corporate innovation

Topoisomer Differentiation of Molecular Knots by FTICR MS: Lessons from Class II Lasso Peptides

Lasso peptides constitute a class of bioactive peptides sharing a knotted structure where the C-terminal tail of the peptide is threaded through and trapped within an N-terminalmacrolactamring. The structural characterization of lasso structures and differentiation from their unthreaded topoisomers is not trivial and generally requires the use of complementary biochemical and spectroscopic methods. Here we investigated two antimicrobial peptides belonging to the class II lasso peptide family and their corresponding unthreaded topoisomers: microcin J25 (MccJ25), which is known to yield two-peptide product ions specific of the lasso structure under collisioninduced dissociation (CID), and capistruin, for which CID does not permit to unambiguously assign the lasso structure. The two pairs of topoisomers were analyzed by electrospray ionization Fourier transform ion cyclotron resonance mass spectrometry (ESI-FTICR MS) upon CID, infrared multiple photon dissociation (IRMPD), and electron capture dissociation (ECD). CID and ECDspectra clearly permitted to differentiate MccJ25 from its non-lasso topoisomer MccJ25-Icm, while for capistruin, only ECD was informative and showed different extent of hydrogen migration (formation of c\bullet/z from c/z\bullet) for the threaded and unthreaded topoisomers. The ECD spectra of the triply-charged MccJ25 and MccJ25-lcm showed a series of radical b-type product ions {\eth}b0In{\TH}. We proposed that these ions are specific of cyclic-branched peptides and result from a dual c/z\bullet and y/b dissociation, in the ring and in the tail, respectively. This work shows the potentiality of ECD for structural characterization of peptide topoisomers, as well as the effect of conformation on hydrogen migration subsequent to electron capture

Collateral Quality and Loan Default Risk: The Case of Vietnam

In the transition economy of Vietnam, financial market is dominated by banking sector but commercial banks heavily rely on collateral-based lending. While the relationship between collateral and implied credit risk is still in debate, this paper provides additional empirical evidence regarding the heterogeneous effects and transmission channels of collateral characteristics on loan delinquency. Applying instrumental variable probit analysis on a unique dataset of 2295 internal loan accounts in Vietnam, we find the significantly negative impact of collateral quality on the probability of default of consumer loans, supporting the dominance of borrower selection and risk-shifting over lender selection effects. The finding implies that high-quality collateral not only signals more credible borrower but also fosters good behavior in using loan, enabling bank to mitigate adverse selection and moral hazard problems

Treatment of non-small cell lung cancer with intensity-modulated radiation therapy in combination with cetuximab: the NEAR protocol (NCT00115518)

BACKGROUND: Even today, treatment of Stage III NSCLC still poses a serious challenge. So far, surgical resection is the treatment of choice. Patients whose tumour is not resectable or who are unfit to undergo surgery are usually referred to a combined radio-chemotherapy. However, combined radio-chemotherapeutic treatment is also associated with sometimes marked side effects but has been shown to be more efficient than radiation therapy alone. Nevertheless, there is a significant subset of patients whose overall condition does not permit administration of chemotherapy in a combined-modality treatment. It could be demonstrated though, that NSCLCs often exhibit over-expression of EGF-receptors hence providing an excellent target for the monoclonal EGFR-antagonist cetuximab (Erbitux(®)) which has already been shown to be effective in colorectal as well as head-and-neck tumours with comparatively mild side-effects. METHODS/DESIGN: The NEAR trial is a prospective phase II feasibility study combining a monoclonal EGF-receptor antibody with loco-regional irradiation in patients with stage III NSCLC. This trial aims at testing the combination's efficacy and rate of development of distant metastases with an accrual of 30 patients. Patients receive weekly infusions of cetuximab (Erbitux(®)) plus loco-regional radiation therapy as intensity-modulated radiation therapy. After conclusion of radiation treatment patients continue to receive weekly cetuximab for 13 more cycles. DISCUSSION: The primary objective of the NEAR trial is to evaluate toxicities and feasibility of the combined treatment with cetuximab (Erbitux(®)) and IMRT loco-regional irradiation. Secondary objectives are remission rates, 3-year-survival and local/systemic progression-free survival