We investigate the impact of bank competition on the use of collateral in loan contracts. We analyze asymmetric information about the borrowers’ type in a Salop model in which banks choose between screening the borrower and asking for collateral. We show that the presence of collateral is more...

Politicians should spend money as efficiently as possible. But what is the best method of granting state aid to firms? We use a theoretical model with firms that differ in their success probabilities and compare different types of direct subsidies with indirect subsidies through bank loans. We...

During the financial crisis asymmetric information in credit markets became moresevere. Did relationship banking help firms to avoid impaired credit financing andwhich credit financing problems did relationship banking help to circumvent? We usesurvey data for 1,139 German firms to analyze how...

We analyze the determinants of interest rate spreads of different loan categories in the Czech Republic during 2004–2011. We employ a detailed bank supervisory dataset that allows us to construct the actual spreads for four loan categories, namely small and large corporate loans, consumer...

Do Empires affect human values and behavior long after their demise? In several Eastern European countries, communities on both sides of the long-gone border of the Habsburg Empire have been sharing common formal institutions for 90 years now. We exploit this geographic discontinuity in a...

Many parts of Europe were ruled by large empires in the past. After their dissolution did these empires leave behind a legacy of governmental institutions? Sascha O. Becker, University of Warwick, Katrin Boeckh, Regensburg Eastern Europe Institute, Christa Hainz and Ludger Woessmann examine how...

Nicht zuletzt der Mangel an wirksamer Offenlegung von Informationen und irreführende Werbung auf Seiten der Anbieter sowie mangelndes Verständnis bezüglich Finanzprodukten auf Seiten der Konsumenten trugen dazu bei, dass der Markt für Subprime-Hypotheken in den USA zusammenbrach. Eine...

Banking regulations often differ between countries: Some regulators require banks to document their evaluation of firms’ creditworthiness, which determines the banks’ choice of lending technology. In a theoretical model, we study how differences in regulation influence competition between...