The German bank–growth nexus revisited: savings banks and economic growth in Prussia†

This article provides evidence that smaller, regional public financial intermediaries contributed to Germany's industrial development, using a new dataset of the foundation year and location of Prussian savings banks. This extends the bank–growth nexus beyond its traditional focus on large universal banks. Since savings banks were public financial intermediaries, our results further suggest that state intervention can be successful in the financial sector, particularly at the early stages of industrial development when capital requirements are manageable, and access to international capital markets is limited.     

Multilevel dual approach for pricing American style derivatives

In this article we propose a novel approach to reduce the computational complexity of the dual method for pricing American options. We consider a sequence of martingales that converges to a given target martingale and decompose the original dual representation into a sum of representations that correspond to different levels of approximation to the target martingale. By next replacing in each representation true conditional expectations with their Monte Carlo estimates, we arrive at what one may call a multilevel dual Monte Carlo algorithm. The analysis of this algorithm reveals that the computational complexity of getting the corresponding target upper bound, due to the target martingale, can be significantly reduced. In particular, it turns out that using our new approach, we may construct a multilevel version of the well-known nested Monte Carlo algorithm of Andersen and Broadie (Manag. Sci. 50:1222–1234, 2004) that is, regarding complexity, virtually equivalent to a non-nested algorithm. The performance of this multilevel algorithm is illustrated by a numerical example.     

Determinants and consequences of soft budget constraintsAn empirical analysis using enterprise‐level data in transition countries1

This paper presents empirical work grounded in the soft budget constraint (SBC) literature. A loan is soft when a bank cannot commit the enterprise to hold to a fixed initial budget and/or the timing of repayment. Using data collected by the European Bank for Reconstruction and Development (EBRD) (Business Environment and Enterprise Performance Survey (BEEPS), 2002) in 26 transition economies, we analyze the determinants of managers’ expectations of having a soft loan. In particular, we find that managers’ expectations are lower when the initial financing requires collateral, and higher for larger firms and when firms had recently experienced financial distress. We also provide evidence that managers’ expectations influence their price responsiveness.     

Design and regulation of balancing power auctions: an integrated market model approach

Journal of Regulatory Economics - We present an integrated market model which considers the dependencies between the wholesale market and the highly regulated balancing power markets. This fosters...     

Heavily regulated,but promising prospects: Entry in the German Express Coach Market

Domestic express coach services in Germany have long been heavily restricted by regulation, although offerings comparable to countries like, for example, Great Britain or Sweden bear substantial opportunities for competition, the environment, and mobility. In this paper, we motivate market entry in the German express coach market for local public and integrated transport companies by high profitability rates in other countries and the availability of bus facilities and skills. This is followed by the evaluation of supply and demand. Supply is represented by an analysis of external and internal costs showing that express coaches have significant cost advantages that are intensified by the possible internalization of external costs. Demand is represented by a survey of customers that is evaluated with a conjoint analysis. Our results suggest a market share for express coach services in Germany of at least 5.3%.     

Crop Insurance as a Strategy for Adapting to Climate Change

Financial insurance for extreme events can play an important role in hedging against the implications of climate change. This paper combines a comprehensive estimation strategy and a unique panel dataset to study the role of financial insurance in farmers' welfare under uncertainty. Data are drawn from a large Italian farm panel dataset. We find that (i) demand for insurance products is likely to increase in response to climatic conditions, and (ii) that the use of insurance reduces the extent of risk exposure. We also find that farms growing more crops are less likely to adopt the insurance scheme. This confirms what is found in the theoretical literature. Crop diversification can be a substitute for financial insurance in hedging against the impact of risk exposure on welfare.     

Examining the relationship between customer and entrepreneurial orientation on nascent firms’ marketing strategy

Is entrepreneurial marketing (EM) a ??one type fits all?? approach? Research suggests that EM is especially suitable for small firms. However, it is obvious that??despite their size??small firms show a myriad of different characteristics. In this paper, it is argued that different firm characteristics can be seen in different business orientations, namely customer orientation (CO) and entrepreneurial orientation (EO). In turn, different amounts of EO and CO lead to different forms of EM strategy. The Panel Study of Entrepreneurial Dynamics (PSED) serves as source to investigate relationships between EO, CO, and respective marketing strategies among nascent firms. The study suggests that innovativeness is strongly related to the importance of several marketing strategies, such as developing new or advanced product or process technologies. However, other strategies, such as lower prices or convenient location, are not related to either significant levels of CO or EO. The paper offers two main implications. Firstly, small business founders have to be aware of the fact that certain strategies cannot come ??out of nowhere??. This paper shows that running proactive marketing strategies that aim for ongoing innovativeness require the existence of an underlying EO. Secondly, there are different forms of ??small firm EM??; a finding that requires further research in the future.     

Risk and Crisis Management in the Reformed European Agricultural Policy

Currently there is ample discussion among EU Institutions (European Commission, European Parliament, and Member States' governments) on the opportunity for setting up a comprehensive EU‐wide framework on risk and crises in agriculture. In the meantime, within the limits of the WTO rules on agriculture, national governments are allowed to intervene through direct compensation to farmers in case of exceptional events that cause damages to farming operations and through subsidies to crop insurance programs. Such schemes are quite expensive for domestic budgets and some Member States are trying to switch some of their cost to the Community's budget, although an expansion of financial resources devoted to agriculture in Europe is rather unlikely. Moving from the recently emanated proposal of the European Commission, this paper discusses the main issues related to public intervention for risk and crises management in agriculture. Actuellement, les institutions européennes (Commission européenne, Parlement européen et gouvernements des pays membres) discutent intensément de l'opportunité d'élaborer un cadre général pour l'ensemble de l'Union européenne sur les crises et les risques dans le secteur agricole. Entre‐temps, selon les règles de l'OMC sur l'agriculture, les gouvernements nationaux peuvent intervenir en accordant des compensations financières directes aux agriculteurs en cas de circonstances exceptionnelles causant des dommages aux exploitations agricoles ainsi que des subventions aux programmes d'assurance récolte. Ces interventions amputent considérablement les budgets nationaux, et certains pays membres tentent de transférer une partie de leurs coûts au budget de l'Union européenne, bien qu'il soit peu probable que les ressources financières consacrées à l'agriculture en Europe augmentent. A la lumière de la récente proposition de la Commission européenne, le présent article traite des principaux thèmes liés à l'intervention publique dans la gestion des risques et des crises dans le secteur agricole.