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Social and Behavioral Sciences Commons™
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- Keyword
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- Banking integration (1)
- Credit constraints (1)
- Domestic bank dependence (1)
- Financial development; financial integration; Japan; Great Recession; Lost Decade; banking integration; regional business cycles; transmission of financial shocks; misallocation of credit; trade credit; export finance; silk industry (1)
- Global imbalances (1)
Articles 1 - 3 of 3
Full-Text Articles in Social and Behavioral Sciences
Holes In The Dike: The Global Savings Glut, U.S. House Prices And The Long Shadow Of Banking Deregulation, Mathias Hoffmann, Iryna Stewen
Holes In The Dike: The Global Savings Glut, U.S. House Prices And The Long Shadow Of Banking Deregulation, Mathias Hoffmann, Iryna Stewen
Mathias Hoffmann
We show how capital inflows into and financial deregulation within the United States interacted in driving the recent boom and bust in U.S. housing prices. Interstate banking deregulation during the 1980s cast a long shadow: in states that opened their banking markets to out-of-state banks earlier, house prices were more sensitive to aggregate U.S. capital inflows during 1990-2012. Capital inflows relaxed the value-at-risk constraints of geographically diversified (‘integrated’) U.S. banks more than those of local banks. Therefore, integrated banks absorbed a larger share of capital inflows and expanded mortgage lending more. This drove up housing prices.
Small Firms And Domestic Bank Dependence In Europe's Great Recession, Mathias Hoffmann, Bent E. Sorensen
Small Firms And Domestic Bank Dependence In Europe's Great Recession, Mathias Hoffmann, Bent E. Sorensen
Mathias Hoffmann
The paper studies the role of small businesses (SME) in the transmission of the Eurozone crisis to member countries and whether regions or countries with many SMEs were less able to share risk. Our analysis draws attention to domestic bank dependence---defined as the share of domestic private credit originated by domestic banks---as a key variable modulated the impact of shocks on bank-dependent SMEs and thus on the real economy. We argue that Eurozone banking integration in the years after the creation of the single currency was lopsided in the sense that, until 2008, cross-border lending between banks increased markedly while …
‘By A Silken Thread’: Regional Banking Integration And Pathways To Financial Development In Japan’S Great Recession, Mathias Hoffmann, Toshihiro Okubo
‘By A Silken Thread’: Regional Banking Integration And Pathways To Financial Development In Japan’S Great Recession, Mathias Hoffmann, Toshihiro Okubo
Mathias Hoffmann
Regional differences in banking integration and bank dependence interacted in spreading Japan’s Great Recession after 1990. Nationwide banks were generally more exposed to the crisis than regional ones, but their internal capital markets also substantially dampened the impact of the crisis in prefectures with many bank-dependent small firms. We instrument for modern-day banking inte- gration using the prefecture-level importance of the late-19th-century silk industry: export finance for the silk industry relied on local, cooperative banks. These local banks preserved their comparative advantage in relationship lending to small firms for a century, effectively segmenting regional banking markets during Japan’s lost decade.