Recent Working Papers
I study mergers where each firm owns multiple shops across a country. The corresponding current practice of the European Commission prescribes the analysis of catchment areas of individual shops as isolated markets. Such an approach is internally inconsistent. Borrowing from the network theory, I show how to extend the European Commission’s approach to consistently take overlaps in catchment areas into account. I apply my network approach to an actual merger case and I find that neglecting overlaps in catchment areas can result in substantial biases. A revision of the European Commission’s practice is therefore recommended.
In this paper we investigate whether the targeted longer-term refinancing operations (TLTRO) and the asset purchase programme (APP) led to lower interest rates on new corporate credit, and whether the signalling channel and the capital relief channel played any role in the transmission of these ECB policies. We find that both APP and TLTRO contributed to lower long-term interest rates on new corporate credit and to flatter yield curves, with APP having a stronger effect. However, we find no support that either the signalling or the capital relief channel were conducive in this respect.
Governments, when designing support for venture capital financing, face a choice to either sponsor existing private VC funds or organize and manage their own public VC funds. There is emerging evidence that syndicated financing by private and publicly sponsored VC funds is correlated with better exit performance. At the same time little research has been done into the effectiveness of publicly managed VC funds. We show that syndicated financing by private and publicly managed VC funds leads to a 5.1 percentage points smaller chance of a successful exit compared to purely private financing. This finding is robust to reputation and culture/distance effects.
I revisit the definition of scale economies when various input vectors are associated with various levels of risk taking. This issue is most relevant for the empirical research on scale economies in the banking industry. I show how the commonly used definition only partially accounts for the price of risk-taking. Adopting a definition more aligned with social welfare might change the conclusions on whether banks are characterized by increasing economies of scale. Therefore, current empirical literature on banks’ scale economies should be taken with a grain of salt when used in policy discussions.