How corruption affects bank lending in Russia

The aim of this study is to investigate the impact of corruption on bank lending in Russia. This issue is of major interest in order to understand the causes of financial underdevelopment and the effects of corruption in Russia. We use regional measures of corruption and bank-level data to perform this investigation. Our main estimations show that corruption hampers bank lending in Russia. We investigate whether this negative role of corruption is influenced by the degree of bank risk aversion, but find no effect. The detrimental effect of corruption is only observed for loans to households and firms, in opposition to loans to government. Additional controls confirm the detrimental impact of corruption on bank lending. Therefore, our results provide motivations to fight corruption to favor bank lending in Russia.corruption; bank; Russia; financial development; economic transition

On the Backwardness in Macroeconomic Performance of European Socialist Economies

This paper aims to compare the macroeconomic performance of three European socialist economies (Hungary, Poland, Yugoslavia) with developing and developed countries during the eighties. Using panel data for 87 countries, we measure macroeconomic performance with two frontier efficiency techniques: the stochastic frontier approach, and the time-varying WITHIN model proposed by Cornwell, Schmidt and Sickles (1990). We conclude in favor of the underperformance of socialist countries in relation to developed countries but also to developing countries, which may be explained by the features of the socialist economic system.Productivity analysis, socialist system, stochastic frontier approach, growth.

Do Islamic banks have greater market power?

The aim of this paper is to investigate whether Islamic banks have greater market power than con-ventional banks. An Islamic bank, for example, might enjoy enhanced market power if a captive clientele adhering to religious principles permits it to charge higher prices. To measure market power, we compute Lerner indices for a sample of banks from 17 countries where Islamic and conventional banks coexist. Comparison of Lerner indices shows no significant difference between Islamic banks and conventional banks over the period 2000-2007. When including control variables, regression of Lerner indices even suggests that Islamic banks have less market power than conventional banks. A robustness check with the Rosse-Panzar model confirms that Islamic banks are no less competitive than conventional banks. Thus, any reduced market power of Islamic banks can be attributed to differences in norms and incentives.Islamic banks; Lerner index; bank competition

Radius and profile of random planar maps with faces of arbitrary degrees

We prove some asymptotic results for the radius and the profile of large random rooted planar maps with faces of arbitrary degrees. Using a bijection due to Bouttier, Di Francesco and Guitter between rooted planar maps and certain four-type trees with positive labels, we derive our results from a conditional limit theorem for four-type spatial Galton-Watson trees.Comment: 25 pages, 2 figure

Measuring Excessive Risk-Taking in Banking

In this paper we propose a new approach to the assessment of excessive risk-taking by a banking sector. We use the portfolio approach to assess the optimal risk-return combination of a bank’s portfolio, based on data for 32 categories of loans. It provides a benchmark for the optimality of the bank’s portfolio. We apply this method on an exhaustive sample of Czech banks for the period January 2005–-February 2008. We observe an average excess of risk-taking of 33% of the optimal risk (excessive risk-taking thus measures the percentage reduction in the risk of the portfolio that the banking sector could have exhibited had the portfolio been efficient) and a reduction of this excess risk over the analysed period.Bank, financial stability, risk-taking, transition countries.

Why Do Banks Ask for Collateral and Which Ones ?

This paper aims at testing empirically the three major theoretical reasons why banks resort to collateral: reduction of loan loss in the event of default, adverse selection, and moral hazard. This investigation is performed by testing whether the reasons vary according to the type of collateral. We use a unique dataset of bank loans granted to French distressed firms, which contains the full information on debt contract characteristics, including the cause of default, the type and the value of all collaterals. Our work suggests that information asymmetries are not of prime importance in the decision of the bank to secure a loan, as no type of collateral helps to solve adverse selection and moral hazard problems. The reduction of the loan loss and the observed-risk hypothesis may however explain the use of collateral.Collateral, Bank, Credit Risk.

The Effects of Concentration on Competition and Efficiency : Some Evidence from the French Audit Market

This paper aims at investigating the effects of concentration on competition and cost efficiency of the French audit market. Competition is measured with the Rosse-Panzar model, while cost efficiency is estimated with stochastic frontier approach. Cost efficiency levels are estimated at around 75% with greater efficiency for Big-Four firms, while the nature of competition appears to be monopolistic competition. Dynamic analysis shows a reduction in competition, and a decrease in cost efficiency for Big-Four and non-Big-Four firms between 1999 and 2003. We therefore provide support to a negative impact of concentration on competition and cost efficiency.Auditing, audit market, competition, efficiency.

Conditioned Brownian trees

We consider a Brownian tree consisting of a collection of one-dimensional Brownian paths started from the origin, whose genealogical structure is given by the Continuum Random Tree (CRT). This Brownian tree may be generated from the Brownian snake driven by a normalized Brownian excursion, and thus yields a convenient representation of the so-called Integrated Super-Brownian Excursion (ISE), which can be viewed as the uniform probability measure on the tree of paths. We discuss different approaches that lead to the definition of the Brownian tree conditioned to stay on the positive half-line. We also establish a Verwaat-like theorem showing that this conditioned Brownian tree can be obtained by re-rooting the unconditioned one at the vertex corresponding to the minimal spatial position. In terms of ISE, this theorem yields the following fact: Conditioning ISE to put no mass on $]-\infty,-\epsilon[$ and letting $\epsilon$ go to 0 is equivalent to shifting the unconditioned ISE to the right so that the left-most point of its support becomes the origin. We derive a number of explicit estimates and formulas for our conditioned Brownian trees. In particular, the probability that ISE puts no mass on $]-\infty,-\epsilon[$ is shown to behave like $2\epsilon^4/21$ when $\epsilon$ goes to 0. Finally, for the conditioned Brownian tree with a fixed height $h$, we obtain a decomposition involving a spine whose distribution is absolutely continuous with respect to that of a nine-dimensional Bessel process on the time interval $[0,h]$, and Poisson processes of subtrees originating from this spine.Comment: 42 page