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    <title>EconStor Collection: Discussion Papers, Deutsche Bundesbank</title>
    <link>http://hdl.handle.net/10419/56040</link>
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      <title>Repo funding and internal capital markets in the financial crisis</title>
      <link>http://hdl.handle.net/10419/73660</link>
      <description>Title: Repo funding and internal capital markets in the financial crisis
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&lt;br/&gt;Authors: Düwel, Cornelia
&lt;br/&gt;
&lt;br/&gt;Abstract: This paper examines how the exposure of German parent banks to the disruptions on sale and repurchase markets (repo markets) during the financial crisis has affected their provision of funds to their foreign branches and subsidiaries via bank-internal capital markets. The collapse of the subprime market, the rescue of Bear Stearns and the bankruptcy of Lehman Brothers are analyzed with regard to their role as amplifiers of uncertainty about the value of collateral used in repo transactions and mistrust among market participants. The results show that parent banks which were more exposed to these disruptions were more likely to withdraw bank-internal funds from their branches and subsidiaries located abroad. Among the three events, the rescue of Bear Stearns triggered the largest contraction on internal capital markets from the part of the parent bank, possibly because this event demonstrated for the first time the fragility of even very large financial institutions. After the subprime market collapse, branches were briefly more protected as core investment locations, while subsidiaries were used as core funding locations up to the Lehman Brothers bankruptcy. All in all, funding via repo markets is found to be one channel that transmitted shocks primarily related to the US financial system abroad.</description>
      <pubDate>Mon, 29 Oct 2012 22:58:59 GMT</pubDate>
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      <title>Is local bias a cross-border phenomenon? Evidence from individual investors' international asset allocation</title>
      <link>http://hdl.handle.net/10419/73659</link>
      <description>Title: Is local bias a cross-border phenomenon? Evidence from individual investors' international asset allocation
&lt;br/&gt;
&lt;br/&gt;Authors: Baltzer, Markus; Stolper, Oscar; Walter, Andreas
&lt;br/&gt;
&lt;br/&gt;Abstract: Extant literature consistently documents that investors tilt their domestic equity portfolios towards regionally close stocks (local bias). We hypothesize that individual investors' local bias is not limited to the domestic sphere but instead also determines their international investment decisions. Our results confirm the presence of a cross-border local bias. Specifically, we show (i) that the stockholdings of individual investors living within regional proximity to a foreign country display a significantly lower foreign investment bias towards investment opportunities in that country and (ii) that this drop in foreign investment bias levels is disproportionately driven by investments in regionally close neighborcountry companies. The impact of cross-border local bias on investors' bilateral foreign equity investments is economically significant and holds even after controlling for previously identified explanations of international asset allocation.</description>
      <pubDate>Mon, 29 Oct 2012 22:58:59 GMT</pubDate>
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      <title>Structural and cyclical effects of tax progression</title>
      <link>http://hdl.handle.net/10419/73658</link>
      <description>Title: Structural and cyclical effects of tax progression
&lt;br/&gt;
&lt;br/&gt;Authors: Kremer, Jana; Stähler, Nikolai
&lt;br/&gt;
&lt;br/&gt;Abstract: In a real business cycle model with labor market frictions, we find that a more progressive tax schedule reduces structural unemployment as it fosters long-run incentives for job creation. Because there exists an optimal level of unemployment in a matching environment ('Hosios condition'), tax progression improves steadystate welfare up to a certain threshold and harms it beyond that. However, tax progression increases the costs of business cycles for those consumers who can save and borrow, while it reduces the business cycle costs for households with limited asset market participation ('rule-of-thumb' consumers). Our analysis suggests that business cycle effects dominate steady-state effects. On the aggregate level, tax progression is welfare-enhancing up to a certain threshold and always shifts relative utility from optimizing to rule-of-thumb consumers. These findings are quite robust to alternative calibrations of our model.</description>
      <pubDate>Mon, 29 Oct 2012 22:58:59 GMT</pubDate>
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      <title>Banking across borders</title>
      <link>http://hdl.handle.net/10419/73657</link>
      <description>Title: Banking across borders
&lt;br/&gt;
&lt;br/&gt;Authors: Niepmann, Friederike
&lt;br/&gt;
&lt;br/&gt;Abstract: Banking across borders has risen substantially over the past two decades. Yet there is significant heterogeneity in the international and global activities of banks across countries. This paper develops and tests a theoretical model that explains this variation from an international trade theory perspective. In the model, banking across borders arises from differences in factor endowments and differences in banking sector efficiencies between countries. The paper shows how these differences determine banks' foreign asset and liability holdings as well as foreign direct investment in the banking sector. It highlights the differential effects of capital account and banking sector liberalization on banks' foreign positions and international capital flows. The model is consistent with major stylized facts on cross-border banking. The data strongly support its cross-sectional predictions.</description>
      <pubDate>Mon, 29 Oct 2012 22:58:59 GMT</pubDate>
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