infonet-economy

The financial system performs vital functions for the world economy. Very often one of more aspect of this system can be described by means of a complex graph. In this chapter under the generic name of financial networks we indicate several different systems all related to the world of finance.

This chapter combines recent findings from the empirical banking literature with established insights from studies of banking competition and regulation. It starts with a concise overview and assessment of the different methodological approaches taken to address banking competition. While market structure indicators are readily available, they may not be overly informative about the…

We discuss risk measures representing the minimum amount of capital a financial institution needs to raise and invest in a pre-specified eligible asset to ensure it is adequately capitalized. Most of the literature has focused on cash-additive risk measures, for which the eligible asset is a risk-free bond, on the grounds that the general case can be reduced to the cash-additive case…

A large number of empirical studies find evidence for systematic deviations from the CAPM. The CAPM tends to understate the returns on low-beta stocks and overstate the returns on high-beta stocks, which means that the security market line is too steep. Other well-documented anomalies are the size premium and the value premium. The CAPM is a special case of the consumption-based CAPM…

Cooper and Nyborg (2008) derive a tax-adjusted discount rate formula under a constant proportion leverage policy, investor taxes and risky debt. However, their analysis assumes zero recovery in default. We extend their framework to allow for positive recovery rates. We also allow for differences in bankruptcy codes with respect to the order of priority of interest payments versus…

Die Privatisierung von Gewinnen und die Sozialisierung von Verlusten der "Too big to fail"-Banken widersprechen den Grundprinzipien des Liberalismus.

In this paper technology adoption behaviour under (regulatory) no-anticipation of new technology, and imperfect competition in a tradable permits scheme (rents market) is investigated. The inter-dependence between the incentive to adopt a new technology and the allowance price is explicitly modelled. A firm's longterm incentives to adopt a new technology depend on the future…

In this paper the decisions of a firm's manager, in terms of exposure to a profitable but risky technology, distribution of dividends and (costly) re-injection of cash to ward off bankruptcy are studied. The analysis of the manager's optimal choices is done via a value function whose state variable is the firm's current level of reserves. Contingent on whether…