Brown Bag Seminar
The Finance Brown Bag Seminar is held jointly with the Vienna Graduate School of Finance (VGSF) and serves as a presentation platform for PhD students, faculty members, and visitors. It usually takes place on Wednesdays from 12:00 to 13:00 (location tba). For further information, please contact email@example.com
Winter Term 2018
December 12th, 2018, 11:00-12:15, D4.4.008
Paul Pelzl (VU Amsterdam & Tinbergen Institute)
Title: "Capital Regulations and Credit Line Management during Crisis Times"
Abstract: Credit line drawdowns by firms reduce a bank’s regulatory capital ratio. Using the Austrian Credit Register we provide novel evidence that during the 2008-09 financial crisis, banks with a distressed capital position managed this concern by substantially cutting little-used credit lines. Controlling for a bank’s capital position, we also find that greater liquidity problems induced banks to considerably cut little-used credit lines over 2008-09. These results suggest that banks actively manage both capital and liquidity risk caused by undrawn credit lines in periods of financial distress, but thereby reduce liquidity provision to firms exactly when they need it most.
December 4th, 2018, 12:00-13:00, D4.0.136
Olga Kuzmina (New Economic School)
Title: "Innovation and the Structure of Employment Contracts"
Abstract: We exploit the appealing institutional setting of the Spanish labor market to show that the use of more flexible (shorter and cheaper-to-terminate) contracts with labor increases firm's innovation. We distinguish between different types of innovation (frontier vs adoptive, domestic vs imported technology) to shed light on the mechanism behind the effect. The evidence is consistent with both flexible labor contracts reducing financial constraints of the firm, but at the expense of lower human capital investment. We build the identification strategy on the exogenous inter-temporal and cross-regional variation in government programs, which aimed at an increase in worker job security, and discouraged firms from using the more flexible ("fixed-term") contracts. This setting, akin to a natural experiment, allows us to identify the effects of interest in the instrumental variables framework, also controlling for unobserved heterogeneity.
November 28th, 2018, 14:00-15:00, D3.0.218
Aleksandra Rzeznik (WU Vienna)
Title: "Informed Trading and Co-Illiquidity" (with Søren Hvidkjær and Massimo Massa)
Abstract: We study the link between informed trading and co-movement in liquidity. We argue that investors concerned with liquidity and fire sale shocks respond to an increase in informed trading by shifting their portfolios away from stocks with high information asymmetry. Their rebalancing results in a substitution in ownership away from the very same investors that induce financial fragility and co-movement in liquidity. This reduces co-illiquidity of the a affected stocks. We exploit a unique natural experiment that increases the incentives of informed traders to trade. Our results suggest that informed traders reduce the exposure to co-movement in liquidity: one of the major problems during the latest global financial crisis.
October 23rd, 2018, 15:00-16:00, D4.4.008
Peter Zweifel (ETH Zurich)
Title: "Long-term care insurance: joint contracts for mitigating relational moral hazard"
Abstract: Recently, joint long-term care (LTC) insurance policies covering two related individuals have become available. This contribution purports to find out whether they have the potential of mitigating relational moral hazard (RMH) effects. For decades, intra-family moral hazard has been suspected of being responsible for the sluggish development of private LTC insurance. The parent, anticipating the informal care provided by the child that has the effect of lowering expenditure on formal LTC, is tempted to buy less LTC coverage. The child (or more generally, the partner of a senior person), knowing that the bequest is protected by LTC insurance, has less incentive to provide informal care. Moreover, the amount of LTC coverage bought by the partner is found to fall in response to that of the senior person. Since a joint LTC policy makes senior and partner decide simultaneously rather than sequentially, it may lead to a partial internalization of RMH by turning the amounts of LTC coverage into strategic complements, the amount of coverage whereas the two amount of coverage purchased by the senior and opf informal care provided by the junior continue to be strategic substitutes.
August 27th, 2018, 12:00-13:00, D4.0.019
Carlos Ramirez (Board of Governors of the Federal Reserve System)
Title: "Regulating Complex Financial Networks "
Abstract: This paper argues that the complexity of modern financial systems can greatly reduce the ability of policymakers to improve investors' welfare. Under some conditions, policymakers may be incapable of preventing large cascading failures. In other cases, they can significantly improve investors' welfare by imposing restrictions on a small set of institutions. Importantly, the size of that set is jointly determined by the costs of restricting institutions, investors' attitudes towards risk and ambiguity, and the knowledge available to policymakers about the underlying structure of such systems.