NEWSLETTER of April 3, 2020

The following content has been added at finexpert:

Strategy&

COVID-19 CRISIS AND THE EUROPEAN BANKING SECTOR

As the COVID-19 crisis hits the financial sector, European and German banks in particular have already been facing several challenges before and, hence, might be more vulnerable than international peers. This does not only refer to weak profitability levels, but also to high corporate leverage and loosening covenant requirements which have made CROs worry already for some time with some banks taking more caution in underwriting new business in 2019. >more

Deutsche Bank Research

COST OF NEGATIVE INTEREST RATES TO GERMAN HOUSEHOLDS

We identify the impact of negative rates on household portfolios in Germany. Real returns on cash and deposits stood at -1.2% in Q1 2019. Due to that, Germans lost around EUR 150 in real terms in 2019 per person, compared to the 1991-2014 average. The aggregate loss including claims on insurance for a representative household was roughly EUR 540 per year. >more

Roland Berger

"SICHERES HOCHFAHREN" IN DER CORONA-KRISE

At present, politics and society in this country are still completely under the spell of the current crisis. The well-being and health of each and every one of us is the highest priority. This is an imperative of human dignity and therefore has no alternative. Nevertheless, the economic consequences of the Corona crisis must also be kept in mind. It would be fatal if, in a few weeks' time, we had averted the worst health hazards, but then our national economy would be on the ground. In dealing with the corona crisis, health and economic considerations must therefore be kept in balance. >more

EY

HOW DO YOU FIND CLARITY IN THE MIDST OF A CRISIS?

Despite unprecedented social and economic paralysis, many global companies continue to plan major transformation programs. More than half (56%) of executives globally are opting to transform through transaction and plan an acquisition in the next 12 months, according to our Capital Confidence Barometer survey of more than 2,900 C-suite executives globally. >more

POLITICAL CONNECTIONS AND THE INFORMATIVENESS OF INSIDER TRADES

Alan D. Jagolinzer, David F. Larcker, Gaizka Ormazabal, and Daniel J. Taylor
2020
We analyze the trading of corporate insiders at leading financial institutions during the 2007 to 2009 financial crisis. We find strong evidence of a relation between political connections and informed trading during the period in which TARP funds were disbursed, and that the relation is most pronounced among corporate insiders with recent direct connections. Notably, we find evidence of abnormal trading by politically connected insiders 30 days in advance of TARP infusions, and that these trades anticipate the market reaction to the infusion. Our results suggest that political connections can facilitate opportunistic behavior by corporate insiders. >more

DETERMINANTS OF INTERNATIONAL BUYOUT INVESTMENTS

Serdar Aldatmaz, Gregory W. Brown, and Asli Demirgüç-Kunt
2020
Using a comprehensive and proprietary data set on international private equity activity, this paper studies the determinants of buyout investments across 61 countries and 19 industries over 1990-2017. The study finds evidence that macroeconomic conditions, development of stock and credit markets, and the regulatory environment in a country are important drivers of international buyout capital flows. The paper shows that countries with low unemployment, more active stock and credit markets, and better rule of law receive more buyout capital. A difference-in-differences approach is used to explore the regulatory reforms some countries have adopted over the sample period. The findings are that countries receive significantly more buyout capital following investor protection and contract enforcement reforms. The impact of regulatory reform is more pronounced in countries with better corporate governance standards and education. Buyout investment responds to these factors more so than foreign direct investment and gross domestic fixed investment. >more