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Can Internet Banking Affect Households’ Participation in Financial Markets and Financial Awareness?
Abstract
We are in a digital era and more and more banks have begun to offer Internet banking. The availability of this new channel can reduce households' cost of acquiring information and the time spent on financial transactions; therefore, it could also impact on households' decisions to start investing in financial markets. Using an instrumental variable approach, we find that the adoption of Internet banking induces households to participate in financial markets and, in particular, to hold short-term assets with a low risk/return profile. Over time, the adoption of Internet banking also drives a better understanding of basic financial concepts.
Oil Shocks, External Adjustment, and Country Portfolio
Abstract
This study examines the intertemporal nature of countries’ external adjustment by using two oil income shocks with different timings: giant oil discovery news shocks and contemporaneous oil revenue shocks from international oil price changes. Empirical estimates using a large panel of countries support the intertemporal theory. Net foreign assets hike immediately upon oil revenue shocks, but decline for the first 5 years after oil discoveries and rebound subsequently. These adjustments are largely through the current account but partially stabilized by valuation effects for oil revenue shocks. Oil discoveries attract FDI inflows, while oil revenue shocks increase foreign debt assets holdings.
CFO facial beauty and bank loan contracting
Abstract
We examine whether the facial attractiveness of borrower firms' chief financial officers (CFOs) influences bank loan contracting terms. Using a machine learning-based algorithm to measure facial attractiveness, we document that firms led by CFOs with greater facial attractiveness receive more favourable loan contracts from their banks. We further show that the relation between CFO facial attractiveness and bank loan contracting terms is significantly influenced by the characteristics of both the borrower and the lender. Collectively, our results suggest that loan contracting is not an entirely rational process, as the ‘beauty premium’ is at least partly driven by taste-based discrimination.
Wage leadership in U.S. labour markets between alternative levels of industry and governments
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Housing Boom‐Bust Cycles and Asymmetric Macroprudential Policy
Abstract
In this paper, I argue that occasionally binding borrowing constraints are a source of nonlinearity that warrant an appropriate nonlinear macroprudential policy response. Nonlinear policy responses likely better capture the spirit of macroprudential policy. I show that an asymmetric macroprudential policy rule, which lowers the borrowing limit more aggressively during credit booms, obtains better economic outcomes compared to an optimized symmetric rule that is typically studied in the literature. An asymmetric policy response reduces output and inflation tail risks, generating not only better economic stabilization but also positive externalities to monetary policy.
Monetary and Macroprudential Policy and Welfare in an Estimated Four‐Agent New Keynesian Model
Abstract
We examine the social and agent-specific welfare effects of monetary and macroprudential policy in a four-agent estimated macro-economic model comprising “banked simple households,” “underbanked simple households,” “firm owners,” and “bank owners.” Optimal capital requirement and loan loss provisions ratios improve all agent-specific and social welfare, but imply smaller gains for simple households and firm owners that rely on credit. Countercyclical capital buffers support firm owners and bank owners with smaller gains for the two simple households, while countercyclical loan loss provisions improve social welfare only for specific shocks. Coordination between monetary and macroprudential policies yields higher social welfare than no coordination.
R&D, Market Power, and the Cyclicality of Employment
Abstract
This paper provides a first look into the joint effects of research and development (R&D) and market power on the cyclicality of employment. It presents a theoretical model with R&D and monopolistically competitive firms which shows that firms smooth their R&D activities when they face large R&D adjustment costs. This smoothing behavior comes at the expense of higher labor volatility, and it is stronger for firms with high R&D intensity and low market power. Firm-level data support these predictions. Dynamic panel estimations reveal that employment at competitive firms engaging in a high level of R&D is more procyclical.
The Asymmetric Effect of Credit Supply on Firm‐Level Productivity Growth
Abstract
We study the impact of bank credit on firm productivity. We exploit a matched firm-bank database, covering all the credit relationships of Italian corporations, to measure idiosyncratic supply-side shocks to credit availability and estimate a production model augmented with financial frictions. We find the effect of credit supply to be asymmetric: contractions harm TFP growth, halting productivity-enhancing activities; positive credit supply shocks have limited effects. This points toward a role of financial stability in preserving productivity growth.
Small and medium enterprises, law and business: uncertainty and justice
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