NEWSLETTER of July 21, 2023

The following content has been added at finexpert:

IWH
IWH-INSOLVENZTREND: ZAHL DER INSOLVENZEN SO HOCH WIE SEIT SIEBEN JAHREN NICHT MEHR
According to the IWH Insolvency Trend, the number of insolvencies of partnerships and corporations in Germany was 1,050 in June. This is 16% more than in May and 48% more than in June of the previous year. This means that the number of insolvencies in June was 11% higher than the average figure for the month of June in the years 2016 to 2019. The last time the number of partnerships and corporations recorded in the IWH Insolvency Trend was higher was in June 2016. >more

Allen & Overy
GLOBAL M&A INSIGHTS: INNOVATION THRIVES AMID CHALLENGING CONDITIONS
Research shows that confident deal-making in turbulent times can deliver outsize returns, and we are seeing corporates and financial sponsors deploying novel tactics to manage heightened execution risk. Our latest edition of M&A Insights explores how this creative structuring is helping them gain a competitive advantage. Our report looks at key trends including the increased influence of Middle Eastern sovereign wealth funds and their role in reshaping global deal terms, the impact of sweeping changes to the U.S. merger control filing process, a shift in approach to tech M&A among traditional companies pursuing technological transformation, the prospects for M&A activism in a major European market, and how ground-breaking U.S. energy policies have sparked a wave of innovative deal-making. >more

Bank for International Settlements
THE CRYPTO ECOSYSTEM: KEY ELEMENTS AND RISKS
This report reviews the key elements of the crypto ecosystem and assesses their structural flaws. There are three main takeaways. First, due to underlying economic incentives, the crypto ecosystem is characterised by congestion and high fees, which lead to fragmentation. Second, despite an original ethos of decentralisation, crypto and decentralised finance (DeFi) often feature substantial de-facto centralisation, which introduces various risks. Third, while DeFi mostly replicates services offered by the traditional financial system, it amplifies known risks. Moreover, as DeFi does not finance activity in the real economy, its growth is driven by the speculative influx of new users, with substantial risks to investors. The report outlines policy options to mitigate the multiple risks crypto poses to investors, the traditional financial system and the economy at large. >more

Deutsche Bank Research
EUROPÄISCHE AUTONOMIE IM ZAHLUNGSVERKEHR: DER DIGITALE EURO IST NICHT DIE EINZIGE OPTION
In order to strengthen its strategic autonomy, the EU is pushing for a European offering for retail payment traffic. One private-sector and one public-sector project are currently being driven forward. While the European Payments Initiative (EPI) builds on the existing infrastructure for real-time payments and its digital wallet is scheduled to be launched early next year, the legal and technical foundations for the digital euro are still being developed. As both solutions could easily cannibalize each other, Europe would benefit from better coordination. >more

CORPORATE PENSION RISK-TAKING IN A LOW INTEREST RATE ENVIRONMENT
Vasso Ioannidou, Roberto Pinto, and Zexi Wang
2023
We study the effect interest rates have on the funding pressure and risk-taking behavior of defined-benefit US corporate pension plans. In the low-interest-rate environment following the financial crisis, many pension plans became severely underfunded. Using a difference-in-differences analysis and a regulatory shock, we show that exogenous changes in interest rates, which release funding pressure, decrease the incentives of underfunded plans to invest in riskier asset classes and shift risk to employees through pension freezes. However, pension contributions of sponsor firms are also reduced. >more

GENDER, PERFORMANCE, AND PROMOTION IN THE LABOR MARKET FOR COMMERCIAL BANKERS
Marco Ceccarelli, Christoph Herpfer, and Steven Ongena
2023
Using data from the US syndicated loan market, we find women to be underrepresented among senior commercial bankers. This gap persists due to unequal promotion rates for men and women at the same institution in the same year, and cannot be explained by different individual or managerial performance. The gap is influenced more by individuals than by institutions, with senior bankers showing assortative matching when changing jobs, and perpetuating the gender gap from their previous workplace. Our findings suggest that the gender gap may be partially attributable to women taking on more family care responsibilities. Hard credentials or female leadership at the top of banks do not alleviate the gender gap, but targeted gender discrimination lawsuits and female leadership on the local level result in increased promotion of women. >more