Principles,problems and perspectives of Islamic banking

Since the late 1970s, financial institutions (banks, investment companies, insurance companies) have grown up in many countries in the Moslem world with the intention of conducting their business in accordance with Islamic, or Shariah, law. Above all else, this means business involving no interest payments. The following article explains the most important principles of Islamic banking and outlines some of the problems which appear to be most central to this sphere.     

Are twin currency and debt crises special?

In the literature on currency and banking crises it has become the standard procedure to distinguish pure currency crises, pure banking crises and combined (“twin”) currency and banking crises. We show theoretically and empirically that a similar differentiation should be chosen with regard to currency and debt crises. Twin currency and debt crises differ from both pure currency and pure debt crises in their determinants, course of events, and economic consequences. We find that each type of crises has a unique set of macroeconomic causes. We also identify internal contagion and selection bias effects, which may lead to biased empirical estimates if twin crises are not treated as a specific type of crises. Such a separation allows in significantly improving the efficiency of early warning systems especially for debt and twin crises.     

Pareto-improving bequest taxation

Altruistic parents may transfer resources to their offspring by providing education, and by leaving bequests. We show that in the presence of wage taxation, a small bequest tax may improve efficiency in an overlapping-generations framework with only intended bequests, by enhancing incentives of parents to invest in their children’s education. We also calculate an optimal mix of wage and bequest taxes with alternative parameter combinations. In all cases, the optimal wage tax rate is clearly higher than the optimal bequest tax rate, but the latter is generally positive when the required government revenue in the economy is sufficiently high. If educational investment is partly unobservable for the government, these results qualitatively hold also when allowing for education subsidies.     

The importance of equity finance for R&;D activity

This article analyzes the importance of equity finance for the R&D activity of small- and medium-sized enterprises. We use information on almost 6,000 German SMEs from a company survey. Using the intensity of banking competition at the district level as an instrument to control for endogeneity, we find that a higher equity ratio is conducive to a higher R&D intensity. Owners may only start R&D activities if they have the financial resources to sustain them until successful completion. We find a larger influence of the equity ratio for young companies. Equity may be more important for young companies which have to rely on the original equity investment of their owners since they have not yet accumulated retained earnings and can rely less on bank financing.     

Governing farmland conversion: Comparing China with the Netherlands and Germany

Farmland conversion has become an increasing concern in China and other parts of the world, including Europe and the USA. Be it for environmental or food security reasons, questions arise concerning how urbanization should be governed, i.e. what rules and regulations could enhance the efficiency and sustainability of land use. Taking a first step toward answering such questions, this paper describes different governance structures for farmland conversion in the Netherlands, Germany, and China. Secondly, it compares five identified differences between these countries in the realms of land property, land use planning, the role of the market, the role of government, and the performance of governance structures. The purpose of this paper is to develop an approach for comparing governance structures for land conversion that: (a) offers some opportunities for exchange of experience between the three countries and (b) provides a framework for further research on governance structures in farmland conversion.     

Decentralised Finance — wie die Tokenisierung die Finanzindustrie verändert

Wirtschaftsdienst - Die Distributed Ledger- bzw. Blockchain-Technologie führt zu einer zunehmenden Dezentralisierung von Finanzdienstleistungen, die weitgehend ohne die Einschaltung von...