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DIW Discussion Papers 637 / 2006
Our study investigates the link between bank lending behavior and macroeconomic uncertainty. We develop a dynamic model of a bank's value maximization that results in a negative relationship between loan to capital ratio and macroeconomic uncertainty. This proposition is tested using a panel of Ukrainian banks collected from NBU and covering the period 2003q1-2005q3. The results indicate that banks ...
2006| Oleksandr Talavera, Andriy Tsapin, Oleksandr Zholud
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DIW Discussion Papers 636 / 2006
In this paper we investigate whether small-scale businesses face financial constraints that affect their survival. We develop a model of moral hazard in which financial constraints arise endogenously. The model predicts that higher private assets relax financial constraints and have a positive effect on the firm's probability of survival. We test this proposition using German Socio-Economic Panel (GSOEP) ...
2006| Dorothea Schäfer, Oleksandr Talavera
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DIW Discussion Papers 635 / 2006
Using data from Germany this paper examines the direct effect of non-financial firms' use of short-term versus long-term liabilities. We develop a structural model of a firm's value maximization problem that predicts that profitability of the firm will change if firms alter their use of short-term versus long-term liabilities. We find that firms that rely more heavily on short-term liabilities are ...
2006| Christopher F. Baum, Dorothea Schäfer, Oleksandr Talavera
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DIW Discussion Papers 634 / 2006
In this paper we investigate the analytical and empirical linkages between firms' capital investment behavior and financial frictions arising from asymmetric information, proxied by firms' liquidity and degree of uncertainty. Measures of intrinsic and extrinsic uncertainty are derived from firms' daily stock returns and S&P 500 index returns along with a CAPM-based risk measure. We employ a panel of ...
2006| Christopher F. Baum, Mustafa Caglayan, Oleksandr Talavera
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DIW Discussion Papers 633 / 2006
This paper investigates the link between the optimal level of non-financial firms' liquid assets and uncertainty. We develop a partial equilibrium model of precautionary demand for liquid assets showing that firms alter their liquidity ratio in response to changes in either macroeconomic or idiosyncratic uncertainty. We test this hypothesis using a panel of non-financial US firms drawn from the COMPUSTAT ...
2006| Christopher F. Baum, Mustafa Caglayan, Andreas Stephan, Oleksandr Talavera
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DIW Discussion Papers 594 / 2006
We investigate the effects of regional and industry-wide foreign presence and foreign direct investment (FDI) on export volumes of Ukrainian manufacturing firms using unpublished panel data from 1996-2000. Foreign presence through FDI may have negative competition effects on domestic firms' performance while, at the same time, domestic firms' productivity may be increased by technology transfer or ...
2006| Stefan Lutz, Oleksandr Talavera, Sang-Min Park
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DIW Discussion Papers 591 / 2006
The traditional approach to measuring allocative efficiency is based on input prices, which are rarely known at the firm level. This paper proposes a new approach to measure allocative efficiency which is based on the output-oriented distance to the frontier in a profit - technical efficiency space - and which does not require information on input prices. To validate the new approach, we perform a ...
2006| Oleg Badunenko, Michael Fritsch, Andreas Stephan
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DIW Discussion Papers 590 / 2006
Using a unique, large panel of German firms, we examine whether participation in business groups reduces the sensitivity of investment to cash flow. The main finding is that the reduction in the sensitivity is small for small firms and negligible for medium and large firms. We argue that by virtue of the continental business model, gains from business groups should be in better contract enforcement ...
2006| Dorothea Schäfer, Yuriy Gorodnichenko, Oleksandr Talavera
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DIW Discussion Papers 559 / 2006
This paper analyzes a modified yardstick competition mechanism (MYC), where the yardstick employed consists of a tariff basket and total costs. This mechanism has a significant information advantage: the regulator "only" needs to observe total costs and output of all firms. The modified yardstick competition mechanism can ensure a socially optimal outcome when allowing for spatial and second degree ...
2006| Georg Meran, Christian von Hirschhausen
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DIW Discussion Papers 549 / 2006
Informed capital is a crucial ingredient to a well-functioning market for start-up finance, especially in times of difficult market conditions. For bank-based systems, the question regarding which investors actually supply informed capital has not yet been answered. To fill this gap, we conduct a survey among German suppliers of start-up finance. We find significant differences between the investors ...
2006| Dorothea Schäfer, Dirk Schilder