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I am an Assistant Professor of Finance at the University of Bonn. My research interests include banking, corporate finance and financial history.
 

Contact information

 

Institute for Finance and Statistics

University of Bonn

Adenauerallee 24-42, A28

53113 Bonn, Germany

Phone    +49 (0) 228 73 9229 

 

Curriculum Vitae

 

CV

 

Working papers

 

"Do changes in monetary policy induce bank risk taking? Evidence from an exogenous shock"

 
I investigate the effects of the monetary rate, the interest rate set by the Central Bank, on bank risk taking by examining a sample of loan contracts secured by shares and extended by the North and South Wales Bank between 1881 and 1894. Collateralization by shares allows me to construct a measure of ex ante risk taking for each loan: the collateral value to loan amount ratio. Exploiting the fact that Britain was on the Gold Standard at that period in time allows me to address possible endogeneity issues. I use the number of gold rushes in a year as an instrumental variable for the monetary rate, by arguing that an unexpected windfall in the gold supply serves as an exogenous shock to the money supply, translating to a cut in the monetary rate. Results are consistent with theories indicating that low Central Bank interest rates can induce bank loan risk taking in the search for yields, as I find that collateral value to loan ratios are lowered following a cut in the monetary rate. I also find that low monetary rates corresponded with, on average, lower loan prices.
 

"Nothing Special about Banks: Competition and Bank Lending in Britain,1885-1925", joint with Fabio Braggion and Lyndon Moore ( forthcoming Review of Financial Studies, 2017)

 

We investigate the impact of increasing bank concentration on bank loan contracts in a lightly regulated environment. This environment allows us to abstract from possible confounding effects of regulation to focus on the “pure” effects of competition on bank lending. We study over 30,000 British bank loans over the period 1885 to 1925. Borrowers in counties with high bank concentration received smaller loans and posted more collateral than borrowers in low concentration counties. In high concentration counties, the quality of loan applicants had improved, which suggests that banks restricted credit, rather than that the quality of loan applicants had worsened.


 

Book Chapters

 

"Increasing Market Concentration in British Banking, 1885 to 1925", joint with Fabio Braggion and Lyndon Moore, book chapter in "Institutions, Innovation, and Industrialization: Essays in Economic History and Development", John Nye, Avner Greif and Lynne Kiesling (eds.), Princeton University Press, 2015.

"The bank lending channel of Monetary Policy: A review of the literature and an agenda for future research", joint with Mintra Dwarkasing and Steven Ongena, book chapter in "Palgrave Handbook of European Banking", Thorsten Beck and Barbara Casu (eds.), Palgrave Macmillan, forthcoming.
 

Work in progress

 

"Monetary policy and asset prices in 19th Century Britain", joint with Mintra Dwarkasing


We investigate the effect of monetary policy, as measured by the interest rate set by the Central Bank, on asset prices by studying the reaction of a market index of British shares over the period 1885-1925 to changes in this interest rate. Britain at the time was on the Gold Standard which provides a suitable setting to address possible endogeneity issues.
We rely on the number of gold rushes in a year as an instrumental variable for the monetary rate, by arguing that an unexpected windfall in the gold supply serves as an exogenous shock to the money supply, translating to a cut in the monetary rate in line with Dwarkasing (2015). Results are suggestive of the fact that low Central Bank interest rates yield higher asset prices, due to a decrease of the discount factor which is consistent with earlier findings.



"From competition to cartel: Bank mergers in the uk 1885 to 1925", joint with Fabio Braggion and Lyndon Moore


 We study the wealth effects created by bank mergers and acquisitions in the U.K. bank merger wave from 1885 to 1925. Due to the confidential nature of merger negotiations this setting allows us to precisely measure the wealth effects of M&As in a laissez-faire environment, avoiding measurement error caused by the timing of information release or possible regulatory intervention. In addition, since over 99% of all announcements resulted in a completed merger we are able to avoid the truncation dilemma. We find positive wealth effects for bidders (0.7%-1%) and targets (6.7%-8%) over the announcement month.