Florian Heider's homepage

This is my private site and the views expressed in the material on these pages are my own and do not reflect those of the European Central Bank (my official webpage).

Research interests:

Published research in refereed journals:

Loan officers need to prospect for loans and transmit the soft information they obtain in the process. Competition worsens the bank's internal agency problem, reduces loan officers to salespeople with steep, volume-based incentives and lowers lending standards. 

• The determinants of bank capital structure, with Reint Gropp, Review of Finance, 14, 587-622, (2010).

Uses a corporate-finance empirical approach to examine the cross-sectional and time-series variation in the capital structure of large, publicly traded US and European banks. The findings are inconsistent with a first-order effect of capital regulation.

• The benefit and cost of winner-picking: redistribution vs. incentives, with Axel Gautier, Journal of Institutional and Theoretical Economics, 165, 622-649, (2009).

Introduces an agency cost of "winner-picking" in multi-divisional firms that can lead to a conglomerate discount even though the reallocation of resources is ex-post efficient. 

• Interbank Lending, Credit Risk Premia and Collateral, with Marie Hoerova, International Journal of Central Banking, 5, 1-39, (2009).

Explains the decoupling of secured and unsecured rates in the interbank market during the 2007-09 financial crisis and emphasizes the importance of the availability of collateral.

Working papers:

• Risk-sharing or risk-taking? Counterparty risk, incentives and margins, with Bruno Biais and Marie Hoerova, 2011 (new!)

Analyzes optimal hedging contracts between a protection buyer and protection sellers. Such contracts may turn into liabilities and undermine incentives of protection sellers not to take risks. Margins help to restore incentives.

• Liquidity hoarding and interbank market spreads: the role of counterparty risk, with Marie Hoerova and Cornelia Holthausen, 2010
  
• supplementary appendix

Asymmetric information about banks' illiquid assets leads to a malfunctioning of unsecured interbank markets where banks smooth idiosyncratic liquidity shocks.

• Market myopia and pay for long-term performance, with Riccardo Calcagno, 2008 (new version coming soon)

Short-termism in stock market leads to more stock-based CEO compensation, worse incentives and lower firm performance.

• Capital structure and volatility of risk, with Nikolay Halov and Kose John, 2008

Firms hold debt capacity when their asset volatility is stochastic.

• Capital structure, risk and asymmetric information, with Nikolay Halov, 2007

Firms that are uncertain about the risk of their operations issue equity to close their financing deficit.

• The role of risk in the adverse selection problem of external financing, 2006

Develops a theory of leverage based on asymmetric information about risk.

• Rationing despite screening: a motive based on price discrimination, 2004

Screening borrowers leads to rationing.

Policy publications (click here to find other material on the ECB website):

• Assessing the performance of financial systems, ECB Monthly Bulletin, October 2005
• The role of financial markets and innovation for productivity and growth in Europe, with Philipp Hartmann, Marco Lo Duca, Elias Papaioannou, ECB Occasional Paper 72, September 2007
• Bank capital in the US and the EU, ECB Financial Stability Review, December 2007
• Indicators of financial development, with Marco Lo Duca, ECB Report "Financial Integration in Europe", March 2008
• Liquidity hoarding and interbank market spreads, with Marie Hoerova, ECB Financial Stability Review, June 2009