What happened to profitability? Shocks,challenges and perspectives for euro area banks

This paper analyses the evolution of bank profitability from 2005 to 2016, with a focus on the period covering both the global financial crisis and the euro area crisis. To accomplish this, we constructed a dataset that includes financial statement information from 310 euro area banks. Using a dual approach – a ‘bottom-up’ approach as applied by bank analysts and macroeconomists' ‘top-down’ approach, we find that the profitability of euro area banks was hit by two shocks of different nature. The Lehman Brothers collapse affected mostly big banks with diversified portfolios via losses in their securities investment. The subsequent euro area debt crisis and economic recession hit more traditional banks specialising in retail lending activities, mainly through increasing impairment costs. If the first shock had a one-off impact on bank profitability, the second shock is far more long-lasting and is still depressing the profitability of banks in peripheral Europe.     

Destabilisierende Spekulation als Rechtfertigung eines Europäischen Stabilisierungsmechanismus?

Im Zusammenhang mit der Zuspitzung der Staatsschuldenkrise für einzelne Euromitglieder wird immer wieder der Vorwurf einer destabilisierenden Spekulation laut. Der Beitrag gibt eine begriffliche Abgrenzung, stellt die verschiedenen Funktionen der Spekulation dar und zeigt die mikro?konomischen Zusammenh?nge stabilisierender und destabilisierender Aktivit?ten auf. Dabei wird die besondere Bedeutung von Kreditsicherungsderivaten (CDS) für die Anleihem?rkte gekl?rt und empirischen Hinweisen auf eine destabilisierende Spekulation nachgegangen.     

R&;D investment and financing constraints of small and medium-sized firms

This study tests for financial constraints on R&D investment and how they differ from capital investment. To identify constraints in the access to external capital, we employ a credit rating index. Our models show that internal constraints, measured by mark-ups, are more decisive for R&D than for capital investment. For external constraints, we find a monotonic relationship between the level of constriction and firm size for both types of investment. Thus, external constraints turn out to be more binding with decreasing firm size. On the contrary, we do not find such monotonic relationships for internal constraints. Differentiation by firms’ age does not support lower constraints for older firms.     

A Closer Look at Cross‐Functional Collaboration and Product Innovativeness: Contingency Effects of Structural and Relational Context

This study applies a contingency perspective to examine how the intra‐organizational context influences the relationship between cross‐functional collaboration and product innovativeness. It focuses on the role of (1) formal, structural factors directly controllable by top management decisions and (2) more intangible, relational factors as potential enhancements of the firm's ability to convert cross‐functional collaboration into product innovativeness. A study of 232 firms confirms the hypotheses, finding that the relationship between cross‐functional collaboration and product innovativeness is stronger for higher levels of decision autonomy and shared responsibility (structural context) and social interaction, trust, and goal congruence (relational context). In addition, a post‐hoc analysis using a configurational approach to organizational contingencies reveals that organizations' relational context is more potent than their structural context for converting cross‐functional collaboration into product innovativeness. The study's implications and future research directions are discussed.     

International Climate Finance and Its Influence on Fairness and Policy

Besides costs and benefits, fairness aspects tend to influence negotiating parties’ willingness to join an international agreement on climate change mitigation. Fairness is largely considered to improve the prospects of success of international negotiations and hence measures raising fairness perception might – in turn – help to bring about effective cooperative international climate change mitigation. We consider the influences present international support of climate policy in developing countries exerts on fairness perception and how this again might affect international negotiations. In doing so we distinguish between fairness perception that is based on historical experiences and perception that is based on conjectures about opponents’ intentions. By identifying beneficial components of current support schemes lessons can be learnt for designing new schemes like the Green Climate Fund.     

APPROACHES TO INEQUALITY OF OPPORTUNITY: PRINCIPLES,MEASURES AND EVIDENCE

We put together the different conceptual issues involved in measuring inequality of opportunity, discuss how these concepts have been translated into computable measures, and point out the problems and choices researchers face when implementing these measures. Our analysis identifies and suggests several new possibilities to measure inequality of opportunity. The relevance of the conceptual issues and modelling choices are illustrated with findings from the empirical literature on income inequality of opportunity.     

Livelihoods and farm efficiency in rural Georgia

This study contributes to the literature on the role of livelihood strategies in rural growth and poverty reduction. It distinguishes between livelihood diversity strategies that contribute to sustainable growth in household incomes, and those that mainly have a ‘coping’ function. It suggests that typically, the contribution of livelihood diversity to growing household income is through relaxing dependence on credit for access to capital. In this scenario, livelihood diversity would lead to higher technical efficiency in agriculture via investment and thereby to higher household incomes. Survey data from Georgia are introduced and used to test these hypotheses using a Bayesian stochastic frontier approach. The findings are relevant to defining more clearly the scope and aims of policies to stimulate the rural non-farm economy in developing and transition countries.