KREDIT und KAPITAL - Issue 4/2006


Policy Issues

Koetter, Michael and Nestmann, Thorsten and Stolz, Stéphanie and Wedow, Michael
Still Overbanked and Unprofitable? Two Decades of German Banking


Behr, Patrick and Sebastian, Steffen
Risikoexposure deutscher Universal- und Hypothekenbanken gegenüber makroökonomischen Schocks

Kempa, Bernd and Holtrup, Hans-Jürgen und Hendricks, Torben
A Differential View on the Credit Channel of Monetary Policy Transmission

Meincke, Sven and Nekat, Kai and Nippel, Peter
Aktienrückkauf, Kapitalverwässerung und die Bedeutung von Transferable Put Rights

Thießen, Friedrich
Entscheidungsprobleme bei Kleinkrediten am Beispiel des Pfandkredits


Tillmann, Peter
Konstanz Seminar on Monetary Theory and Policy 2006

Book Reviews

Bernholz, Peter
Monetary Regimes and Inflation: History, Economic and Political Relationships (Hans-Hermann Francke)

Dichtl, Hubert and Kleeberg, Jochen M. and Schlenger, Christian
Handbuch Hedge Funds - Chancen, Risiken und Einsatz in der Asset Allocation
(Roland Füss)

Bessler, Wolfgang (Hrsg.)
Börsen, Banken und Kapitalmärkte - Festschrift für Hartmut Schmidt
(Martin Wallmeier)


Koetter, Michael and Nestmann, Thorsten and Stolz, Stéphanie and Wedow, Michael
“Still Overbanked and Unprofitable? Two Decades of German Banking”

We analyze by means of descriptive evidence the widely held claims that Germany is overbanked and that German banks perform badly in an international comparison. We find that, despite a major merger wave, Germany continues to be more densely bank-populated than France, Italy, and the US. Measured by cost-income ratios, non-interest income, and return on assets, German bank performance deteriorated continuously being particularly affected by the economic slowdown in the very beginning of this century. This relatively poor performance is not driven by one particular banking pillar alone. Instead, all pillars perform badly in international comparison. At the same time, however, Germany’s three-pillar system exhibits considerable heterogeneity with regard to market structure and performance not only across commercial, savings and cooperative banking sectors but also within each respective pillar. (JEL G21)


Behr, Patrick and Sebastian, Steffen
„Exposure of Germany Universal and Mortgage Banks to Macroeconomic Shock Risks“

The present study analyses the implication of six macroeconomic variables for risk premiums relating to bank shares in Germany between February 1973 and December 2003. Separate analyses of universal and of mortgage banks deserve to be given special importance. The results of the study confirm the initial hypothesis that the returns on universal bank shares are subject to influencing factors that are different from those valid for mortgage bank shares. Moreover, employing a dynamic regression model has also helped identify substantial fluctuations of the influence of macroeconomic factors over time. In this context, almost all variations show that the variance of risk premiums on account of macroeconomic factors can be explained insofar as even market factor could, when included, not be expected to improve the model.


Kempa, Bernd and Holtrup, Hans-Jürgen and Hendricks, Torben
“A Differential View on the Credit Channel of Monetary Policy Transmission”

This paper analyzes the effectiveness of the credit channel as a transmission mechanism of monetary policy by applying a Markov switching approach on the default premium of U.S. corporate bond portfolios. Beside the stance of monetary policy and the state of the business cycle, we identify a latent factor determining the quality spread of the bond portfolios and the strength of the credit channel. In particular, the credit channel appears to be active only in periods of financial distress, such as the Latin American debt crisis of the early 1980s, the savings and loan debacle, as well as the events surrounding the 9/11 terror attacks and the subsequent accounting scandals. (JEL C22, E51)


Meincke, Sven and Nekat, Kai and Nippel, Peter
„Stock repurchase, Capital Dilution and the Importance of Transferable Put Rights“

We examine Transferable Put Rights (TPRs) which can be issued as part of a fixed price tender offer to repurchase shares. In general, TPRs are the mirror image of the rights issue in a seasoned equity offering. We start our analysis by showing how to value TPRs and what impact they have on shareholders’ wealth in a very general framework, highlighting the analogy to a rights issue. Moreover we show that under the German tax code repurchasing shares by an issue of TPRs always leads to a Pareto improvement. At least some shareholders gain, compared to repurchasing shares by a fixed price tender offer without TPRs. Therefore, companies planning a share repurchase by means of a fixed price tender offer should seriously consider the usage of TPRs for the repurchase.


Thießen, Friedrich
„Decision-making Problems in Small-scale Lendings for Personal Use Demonstrated by the Example of Pawn Credit - Should Loans for Personal Use not be Subject to Consumer Credit Protection Rules? The Special Decision-making Logic Inherent in Small-scale Lendings for Personal Use such as Pawn Credits“

As a result of EU activities aimed at modifying rules on consumer protection in the field of lending (modification of Consumer Credit Directive) and of sub-prime lending on an increasing scale in a number of industrial countries, the question has arisen about the considerations playing a role when decisions are made on small-scale lendings for personal use. It has been a tradition of many countries to exempt small-scale lendings for personal use from the scope of application of consumer credit regulations, because risks are deemed to be “manageable in terms of amount” and obligations to be “foreseeable”, inter alia. Empirical evidence has shown, however, that individuals seeking to obtain small-scale loans often make decisions resulting in extremely high financial burdens in both relative and absolute terms. Pawn credits have been used a s an example in order for showing the dimensions such loans may potentially have a s well as the quality of the reasons guiding decision-making. It has turned out that pawn credits have properties of derivative instruments that are difficult to assess. In connection with behavioural norms know from the science of behavioural finance it is possible to explain borrowers’ modes of behaviour. These considerations may also be applied to other types of credit.