Safe assets usually trade at a premium due to their high credit quality and deep liquidity. To understand the role of credit quality for such premia, we focus on Swiss Confederation bonds, which are extremely safe but not particularly liquid. We therefore refer to their premia as safety premia and quantify them using an arbitrage-free term structure model that accounts for time-varying premia in individual bond prices. The estimation results show that Swiss safety premia are large and exhibit long-lasting trends. Furthermore, our regression analysis suggests that they shifted upwards persistently following the launch of the euro but have been depressed in recent years by the asset purchases of the European Central Bank.
Many consumers use payment instruments to control their budget. Previously, such behavior has been associated with checking disposable cash ("pocket watching"). Based on recent survey data, we show that "digital watchers" have emerged, i.e., noncash payers who use digital applications to control their budget. Both watcher types have distinct characteristics. Pocket watchers tend to have lower incomes than other consumers, while digital watchers ascribe low security risk to payment cards. Watching behavior influences current and future payment behaviors. Pocket watchers use cash more intensively than nonwatching cash payers. Digital watchers expect to intensify their reliance on noncash payment instruments more strongly than nonwatching noncash payers.
This paper analyses the determinants of ﬁrm participation in the Swiss COVID-19 loan programme, which aims to bridge ﬁrms' liquidity shortfalls that have resulted from the pandemic. State guaranteed COVID-19 loans are widely used by Swiss ﬁrms, with 20% of all ﬁrms participating, resulting in a sizeable programme of 2.4% of GDP. We use a complete ﬁrm-level dataset to study the determinants of ﬁrm participation. Our results can be summarised as follows. First, participation was largely driven by the exposure of a ﬁrm to lockdown restrictions and to the intensity of the virus in the speciﬁc region. Second, we show that less liquid ﬁrms had a signiﬁcantly higher probability of participating in the programme. Third, we ﬁnd no clear evidence that ﬁrm indebtedness aﬀected participation in the programme and no evidence that pre-existing potential zombie ﬁrms participated more strongly in the loan programme. Fourth, we show that the programme reached younger and smaller ﬁrms, which could be ﬁnancially more vulnerable as they are less likely to obtain outside ﬁnance during a crisis. Overall, we conclude that given its objective, the programme appears to be successful.