Banking →
- 15 Feb 2007
- Research & Ideas
Helping Low-Income Families Save More
Marketers are quite efficient at targeting potential customers when they have money—that is, at tax-refund time. Professor Peter Tufano thinks tax time could also be perfect for helping low-income families save more. Closed for comment; 0 Comments.
- 03 Jan 2007
- Working Paper Summaries
Banking Deregulation, Financing Constraints and Entrepreneurship
What effect does an increase in banking competition have on the entry of start-ups? In particular, does an increase in banking competition have a differential effect on the entry of start-ups relative to the opening of new establishments by existing firms? The U.S. branch banking deregulations provide a useful laboratory for studying how banking competition affects small businesses. Prior to 1970, all but twelve states had stringent restrictions on the ability of banks to open new branches or to acquire the branches of other banks within the state; beginning in the 1970s and until 1994, all but two states removed these restrictions. In this research, Kerr and Nanda studied the entry of newly incorporated businesses between 1976 and 1999 using detailed data collected by the U.S. Census Bureau. Their findings matter for understanding how reforms that affect the financing environment may improve the real economy through the reallocation of resources in the non-financial sectors. Key concepts include: Interstate branch banking deregulations had a positive effect on both the entry rates and entry sizes of start-ups relative to the facility expansions of existing firms. These beneficial effects were evident in multiple sectors of the economy and stronger in more financially dependent industries. While greater banking competition may hurt entrepreneurs through a decline in relationship banking or loan subsidization, the positive net effects point to substantial increases in credit provision to start-ups. The impact of financial market reforms on product market entry is an important micro-foundation for understanding and fostering economic growth. Closed for comment; 0 Comments.
- 11 Oct 2006
- Research & Ideas
The Success of Reverse Leveraged Buyouts
RLBOs have a bad rap, but Josh Lerner says the reputation is not deserved. Studying almost 500 private equity-led IPOs over a 22-year period, Lerner and co-researcher Jerry Cao conclude that reverse leveraged buyouts in general outperformed other IPOs and the market as a whole. Quick flips, however, are another story. Key concepts include: RLBOs have outperformed other types of IPOs, perhaps because private equity groups prepare their portfolio companies to perform as public companies. RLBOs have performed well across many market cycles. The most successful performances were associated with larger RLBOs, as well as offerings by larger groups. So-called quick flips generally have underperformed the market. Closed for comment; 0 Comments.
- 05 Jul 2006
- Research & Ideas
Reinventing the Dowdy Savings Bond
Families with low and moderate incomes have difficulty saving money—many can't even open bank accounts. To help these families plan for the future, professor Peter Tufano proposes minor changes to the U.S. savings bonds program. Key concepts include: Encourage savings by offering the option to invest tax refunds in U.S. savings bonds. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
Bankers, Industrialists, and Their Cliques: Elite Networks in Mexico and Brazil During Early Industrialization
Mexico and Brazil had different institutional structures in the early 20th century. Did entrepreneurs in these two countries organize their business networks differently to deal with the different institutional settings? And, how can we compare the impact of the institutional structure of Mexico and Brazil on the networks of entrepreneurial finance and entrepreneurship in general? In this research, Musacchio and Read look at the networks of interlocking boards of directors of major joint stock companies in two large Latin American societies in 1909. Key concepts include: Business networks were more important for entrepreneurs, bankers, and politicians in Mexico, supplanting formal institutions to the great benefit of connected Mexican elite. In Mexico, informal monitoring and enforcement provided by the network compensated for the relatively weak rule of law. The Mexican network successfully substituted for formal institutions because it included many politicians. In Brazil, politicians were uncommon in the network because of the stronger formal institutions. At low levels of development, there is no significant difference in how a country grows, either through strong formal institutions or by substituting networks for some of those institutions. Closed for comment; 0 Comments.
- 05 May 2003
- Research & Ideas
How Bank of America Turned Branches into Service-Development Laboratories
In this Harvard Business Review excerpt, HBS professor Stefan Thomke describes how Bank of America applies a systematic R&D process to create services. Closed for comment; 0 Comments.
- 23 Dec 2002
- Research & Ideas
Setting the Stage: A Young Scholar at HBS
Rohit Daniel Wadhwani, the Harvard-Newcomen Fellow in Business History for the 2002-03 academic year, discusses his research work and his experiences as a Fellow at Harvard Business School in this interview with Laura Linard. Closed for comment; 0 Comments.
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3 Steps to Reduce Financial System Risk
By using complex derivative products, banks are better able to manage risk. But this "credit risk transfer" technology is transferring risk to a new set of investors inexperienced in this arena and posing exposure problems for the international financial system as a whole, argues Harvard Business School professor Mohamed El-Erian. Here's how to fix the problem. Key concepts include: Regulatory authorities must address 2 challenges to contain a new source of systemic risk in international finance: the increasing migration of complex market activities to unqualified supervisory bodies, and the growing threat of politically motivated changes to regulatory regimes. If left unchecked, systemic risk in the international financial system will increase and much of the initial beneficial impact of credit risk transfer technology may be negated. 3 steps can mitigate this new component of systemic risk: greater cooperation among supervisory bodies; encouragement of rating agencies to improve their modeling of derivative products; and inducement of new investors to evaluate the ratings issued by the agencies against improved internal risk management capabilities. Closed for comment; 0 Comments.