Financial Deregulation and the Role of Statecraft: Lessons from Britain’s 1971 Competition and Credit Control Measures

Within the financialisation literature, a number of approaches identify the coexistence of financial expansion and productive stagnation. Yet there is no consensus on which direction causality operates between these two phenomena. This impasse has been widened by the lack of attention paid to the role of statecraft strategies in mediating possible causal mechanisms. This article contributes to rectifying this shortcoming by focusing on the governance advantages granted to states through financial deregulation. By presenting archival evidence on Britain’s 1971 Competition and Credit Control deregulation, this article lends support to financialisation accounts that argue that weaknesses in the productive economy spurred financial expansion, yet it also indicates that the state’s desire for depoliticised forms of governance played a crucial role in mediating this relationship. This further suggests that International Political Economy should focus on the strategic manner in which states relate to markets.     

Credit market segmentation,essentiality of commodities,and supermodularity

We consider incomplete market economies where agents are subject to price-dependent trading constraints compatible with credit market segmentation. Equilibrium existence is guaranteed when either commodities are essential, i.e, indifference curves through individuals’ endowments do not intersect the boundary of the consumption set, or utility functions are concave and supermodular. The smoothness of mappings representing preferences, financial promises, or trading constraints is not required. Hence, we may include in our framework economies where ambiguity is allowed and agents maximize the minimum expected utility over a set of priors, or where markets include non-recourse collateralized loans.     

Political uncertainty and a firm's credit risk: Evidence from the international CDS market

Using a large sample of firms with single-name credit default swap (CDS) contracts in 30 countries, we document the evidence that political uncertainty, proxied by national election dummy, is positively related to firm-level credit risk. Specifically, this positive relation is more pronounced for the firms that have no political connection or poor international diversification, and in the countries with higher political uncertainty and lower investor protections. Further, by using a difference-in-differences approach, we find evidence to support idiosyncratic volatility and debt rollover channels through which political uncertainty affects the credit risk of individual firm.     

Is ex-post credit risk affected by the cycles? The case of Italian banks

The objective of this research is to empirically examine if both credit and business cycle affect the ex-post credit risk (i.e. non-performing loans) in the banking system of Italy for the period 1995Q1–2014Q1. The increase in NPLs post-2008 has put into question the robustness of many European banks and the stability of the whole sector. It still remains a serious challenge, especially in Italy which is one of the countries that hit by the financial crisis. By employing fixed and random effects and a dynamic GMM estimation as econometric methodologies I find results that underline common causes for NPLs. Higher NPLs in Italy are mostly due to worse macroeconomic conditions (i.e. bad phase of business cycle) and due to excess credit. Through a Granger causality test, my arguments found even more support. Such findings can be helpful when designing macro-prudential as well as NPL resolution policies.     

Impossibilities for strategy-proof committee selection mechanisms with vetoers

When a group of voters selects a committee out of a set of candidates, it is common and often desirable to endow these voters with some veto power. I present impossibility results showing that even limited veto power makes many mechanisms of interest manipulable. This applies in particular (i) to mechanisms the range of which contains a degenerate lottery in which a committee is chosen for sure and (ii) to mechanisms that are constructed from extensive game forms with a finite number of strategies. These impossibilities hold on a large set of domains including the domain of additive preferences, and even when probabilistic mechanisms are allowed and voters can report cardinal preferences.     

国铁企业市场化经营机制建设探讨

建立市场化经营机制是深化铁路改革的重要方向,也是提升企业核心竞争力的迫切需要。在分析国铁企业市场化经营现状及面临问题的基础上,提出国铁企业建立市场化经营机制的总体思路,即理顺国铁企业与政府部门、国铁企业与市场、国铁集团与所属企业3个方面的关系,从进一步落实国铁企业市场主体地位、建立铁路公益性运输补贴机制、加强铁路基础设施网络建设、提升铁路运输服务质量和水平、推进铁路客货运价市场化改革、着力提升国铁资本运作能力、推进国铁资本授权经营体制改革、完善国铁现代企业制度建设等方面阐述国铁企业建立市场化经营机制的重点任务,为深化铁路改革提供参考。     

Reputation,risk-taking,and macroprudential policy

This paper examines the role of macroprudential capital requirements in preventing inefficient credit booms in a model with reputational externalities. In our model, unprofitable banks have strong incentives to invest in risky assets when macroeconomic fundamentals are good in order to avoid the stigma of being assessed as low ability by the market. We show that across-the-system countercyclical capital requirements that deter such gambling are constrained optimal when fundamentals are neither extremely weak nor extremely strong.     

Write-down bonds,credit risk and imperfect information

A structural model of pricing Write-Down (hereafter WD) bonds under imperfect information has been developed to investigate the effect of WD bonds issuance on credit risk. Information is not only delayed but also asymmetrically distributed between managers and outside investors. We derive analytical solutions for corporate securities prices and find the issuance of WD bonds could significantly improve firm value via reducing bankruptcy cost. Our numerical results further demonstrate that the WD bonds issuance increases corporate risk tolerance and reduces the risk of bankruptcy and credit spreads under imperfect information.     

Flight to liquidity and the Great Recession

This paper argues that counter-cyclical liquidity hoarding by financial intermediaries may strongly amplify business cycles. It develops a dynamic stochastic general equilibrium model in which banks operate subject to agency problems and funding liquidity risk in their intermediation activity. Importantly, the amount of liquidity reserves held in the financial sector is determined endogenously: Balance sheet constraints force banks to trade off insurance against funding outflows with loan scale. A financial crisis, simulated as an abrupt decline in the collateral value of bank assets, triggers a flight to liquidity, which strongly amplifies the initial shock and induces credit crunch dynamics sharing key features with the Great Recession. The paper thus develops a new balance sheet channel of shock transmission that works through the composition of banks’ asset portfolios.     

我国小企业的紧融资约束

紧融资约束是我国大多数小企业进一步发展所面临的瓶颈问题。其直接原因是信贷配给制下国有银行的自利性歧视,如企业规模歧视、治理结构歧视、所有权歧视、资金需求歧视和交易费用歧视等。其根本原因是我国的金融抑制和金融发展的水平偏低。重要的是,金融抑制往往是金融不发达的重要原因。因此,解决的办法主要有加强信用评价与管理、发展信用担保业、加强对国有银行贷款行为的规制、放松对民间融资的规制和在银行业中引入私人小银行等。其中,第三条措施是根源于国有银行的企业性质的,也是可以立即执行并在短期内见效的解决办法。