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NEWSLETTER of June 28, 2019

 

The following content has been added at finexpert:


Studies > Performance

The Boston Consulting Group

GLOBAL WEALTH 2019: REIGNITING RADICAL GROWTH

The steady rise in global wealth growth came to a sharp halt in 2018. Gains in global personal financial wealth tumbled by more than 5 percentage points year on year, the weakest performance in the past half-decade. The fourth-quarter dip in major stock indexes pulled down equities and the large regional portfolios tied to them. High valuation levels, geopolitical risks, and the challenges of returning to normal interest rate levels also contributed to the decline. >more

Studies > Performance

Deutsche Bank Research

ARTIFICIAL INTELLIGENCE IN BANKING: A LEVER FOR PROFITABILITY WITH LIMITED IMPLEMENTATION TO DATE

Artificial intelligence (AI) is a significant step forward in the digitalisation and transformation of modern businesses. Investors are lining up to be part of the imminent change. AI attracted USD 24 bn in investments globally in 2018, a twelvefold increase since 2013. Within Europe, Germany, France and the UK are the frontrunners in experimentation and in the implementation of AI. Similar to earlier examples of information technology (IT) implementation in financial services, AI promises great efficiency gains and potential revenue increases and its potential contribution to bank profitability should not be underestimated. >more

Studies > Corporate Finance

Ernst & Young

WEM GEHÖRT DER DAX? ANALYSE DER AKTIONÄSSTRUKTUR DER DAX UNTERNEHMEN

German investors have little to gain from the DAX dividend record. Of the 36.5 billion euros distributed by DAX companies this year, only 12.5 billion euros will flow to German shareholders - a decline of 0.4 percent compared to the previous year. By contrast, the DAX groups transferred 19.8 billion euros to foreign investors - 4.8 percent more than in the previous year. For the remaining 4.2 billion euros, the nationality of the investors cannot be determined. The reason for the rising dividend payments to foreign investors: Foreign investors further increased their DAX exposure last year. >more

Studies > Macro

Deutsche Bank Research

HOME BUYERS ARE FINANCING EVEN MORE LONG-TERM

Mortgage loans in Germany have risen to EUR 1,240 bn in recent years (+29% since 2011) thanks to the strong economy and falling interest rates. To account for increased risks for the banks, supervisory authorities decided at the end of May to activate the countercyclical capital buffer for the first time. E.g., almost half of all new loans now have a rate fixation period of more than 10 years. Banks’ business with private households got off to a strong start in 2019. Net lending in the first quarter amounted to EUR 8.8 bn and deposits increased by EUR 21.8 bn, both record figures for the beginning of the year. Both mortgages and consumer loans grew strongly. >more


Research Papers > Corporate Governance

HOW MUCH DO DIRECTORS INFLUENCE FIRM VALUE?

Aaron Burt, Christopher M. Hrdlicka, and Jarrad Harford
2018
The value a director provides to a firm is empirically hard to establish. We estimate that value by exploiting the commonality in idiosyncratic returns of firms linked by a director and show that, on average, a single director's influence causes variation in firm value of almost 1% per year. The return commonality is not due to industry or other observable economic links. Variation in the availability of information on shared directors and a placebo test exploiting the timing of shared directors provide further identification. The results also imply that the directorial labor market does not fully assess directors in real time. >more

Research Papers > Corporate Finance

DO CREDIT DEFAULT SWAPS MITIGATE THE IMPACT OF CREDIT RATING DOWNGRADES?

Sudheer Chava, Rohan Ganduri, and Chayawat Ornthanalai
2018
We find that a firm's stock price reaction to its credit rating downgrade announcement is muted by 44--52% when credit default swaps (CDSs) trade on its debt. We explore the role of the CDS markets in providing information ex ante and relieving financing frictions ex post for downgraded firms. We find that the impact of CDS trading is more pronounced for firms whose debt financing is more dependent on credit ratings (e.g., those rated around the speculative-grade boundary, those with a higher number of rating-based covenants). Reductions in debt and investment, and the increase in financing costs are less severe for CDS firms than non-CDS firms following an identical credit rating downgrade. Our results suggest that CDSs mute the stock market reaction to a credit rating downgrade by alleviating the financing frictions faced by downgraded firms. >more