Market structure, screening activity and bank lending behaviour

In this paper we construct a theoretical model of spatial banking competition that considers the differential information among banks and potential borrowers in order to investigate how market structure affects the lending behavior of banks and their incentives to invest in screening technology. Consistent with the prevailing view in the relevant literature, our results reveal that competition reduces lending cost, which, in turn, encourages the entry of new customers in the loan market. Also, that the transportation cost that potential borrowers have to pay in order to reach the bank of their interest is decreased with the degree of competitiveness. Importantly, we demonstrate that market structure exerts a considerable positive effect on banks’ incentives to screen their loan applicants since banks are found to invest more in screening as competition in the market becomes higher. This is to say, banks resort to screening that serves as a buffer mechanism against bad credit which entails higher risk and which is more likely under competitive conditions. Overall, our findings provide support to a rather close link between the degree of competition, bank lending activity, and the investment of banks in screening technology

Spatial and Individual Influence on Commuting Behaviour in Germany

In regional planning literature it is often argued that regional deconcentration process and urban sprawl tend to increase the amount and distance of commuting (Vandersmissen et al. 2003). Supported by improved traffic infrastructure and falling transport costs the spatial division of labour and housing location extends the travel-to-work areas and allows to compensate for locational disadvantages of local labour markets (Moss et al. 2004). On the other hand, the contrary hypothesis is postulated, too. Since both working and living places are deconcentrating shorter commuting distances may happen because centre-orientated connections are substituted by intra-peripheral commuting patterns (Gordon; Richardson 1991: 419). The intention of the paper is to analyse the influence of spatial structure on commuting behaviour of employees: e.g. does commuting behaviour differ between type of regions and what are the reasons for these differences? There are several ways how the locational conditions of the living area may influence the commuting behaviour. Firstly, the more jobs are available, the less is c.p. the necessity for long-distance commuting. Thus, the lower the regional density of jobs the more frequent and longer commuting should be expected. In addition, the variety of local jobs should have an influence on the commuting behaviour. As in rural regions less varied jobs are available, there should be a pressure on the local residents to increase their job opportunities by extending their commuting distance. However, apart from regional influences, individual characteristics may effect commuting behaviour, too. For example, highly qualified employees are expected to commute to longer distances since they could be more interested in realizing their investment in human capital. Conversely, long-distance commuting should be c.p. less attractive for part-time employees because of the less favourable relation between work and commuting time. The empirical analysis consists of two parts: Firstly, regional differences in commuting behaviour are analyzed. The focus of investigation lies on regions and the relationship between the regional characteristics of living places and the regional amount of commuting. The second part includes individual influences. As they can only observed at the level of individuals, the focus of investigation changes from regions to individuals: In addition to regional effects the commuting behaviour of individuals is explained by individual characteristics such as education or occupation. The data base is given by the social security statistics. It covers all employees in the social security system and contains information about each individual. As data on both the living and the working places are available, the statistics allows a much greater regional differentiation than the frequently used surveys. The other information relate to some personal characteristics (like sex or education) as well as to the occupation such as full-/part-time or the sector of employment.

What lies behind the "Too-Small-To-Survive" banks

It is a common place that during financial crises, like the one started in 2007, authorities provide substantial financial support to some problem banks, whilst at the same time let several others to go bankrupt. Is this happening because some particular banks are considered important and big enough to save, whereas some others are perceived as being ‘Too-Small-To-Survive’? Is the size of banks the fundamental factor that makes authorities to treat them differently, or it is also that some banks perform poorly and are not capable of withstanding some considerable shocks whatsoever? Our study provides concrete answers to these questions thus filling part of the void in the existing literature. A short- and a long-run positive relationship between size and performance is documented regardless of the level of bank soundness (healthy vs. failed and assisted banks) under scrutiny. Importantly, we pose and lend support to the ‘Too-Small-To-Survive’ hypothesis according to which the impact of bank performance on failure probability strongly depends on size. Evidence shows that authorities tend not to save banks whose size is below some specific threshold

Ising nematic fluid phase of hard-core dimers on the square lattice

We present a model of classical hard-core dimers on the square lattice that contains an Ising nematic phase in its phase diagram. We consider a model with an attractive interaction for parallel dimers on a given plaquette of the square lattice and an attractive interaction for neighboring parallel dimers on the same row ({\it viz} column) of the lattice. By extensive Monte carlo simulations we find that with a finite density of holes the phase diagram has, with rising temperatures, a columnar crystalline phase, an Ising nematic liquid phase and a disordered fluid phase, separated by Ising continuous phase transitions. We present strong evidence for the Ising universality class of both transitions. The Ising nematic phase can be interpreted as either an intermediate classical thermodynamic phase (possibly of a strongly correlated antiferromagnet) or as a phase of a 2D quantum dimer model using the Rokhsar-Kivelson construction of exactly solvable quantum Hamiltonians.Comment: 13 pages, 24 figure

Growth Opportunities, Technology Shocks, and Asset Prices

We explore the impact of investment-specific technology (IST) shocks on the crosssection of stock returns. IST shocks reflect technological advances embodied in new capital goods. Using a structural model, we show that IST shocks have a differential effect on the two fundamental components of firm value, the value of assets in place and the value of growth opportunities. This differential sensitivity to IST shocks has two main implications. First, risk premia on firms with abundant growth opportunities are different from those on firms with limited growth opportunities. Second, firms with similar levels of growth opportunities comove with each other, giving rise to the value factor in stock returns. Our model replicates the failure of the conditional CAPM to capture the value premium. Our empirical tests confirm the model's predictions for asset returns and investment rates.

Nonlinear interactions between high-Q optical and acoustic modes in dielectric particles

The interaction between acoustic breathing modes and optical Mie resonances in a spherical particle made of a chalcogenide glass material is investigated by means of rigorous calculations, correct to any order in the acousto-optic coupling parameter. Our results reveal the occurrence of strong effects beyond the linear-response approximation, which lead to enhanced modulation of light by acoustic waves through multiphonon exchange mechanisms when both photons and phonons have a very long lifetime inside the particle