Volkswirtschaftliche Fakultät - Digitale Hochschulschriften der LMU

The ongoing globalisation has not stopped short of the banking sector. From a political point of view wide voiced concerns about the effect of such banking globalisation have arisen. From a scientific perspective, one of the open points left for dicussion, is the question which factors shape banks' internationalisation strategies.

Additionally, a large literature has recently started to discuss optimal entry modes into international markets in general.

This thesis offers four chapters for insight on each of these topics.

A case study on Bank Austria in Eastern Europe is presented, yielding insights on bank internationalisation strategies. One key finding is, that the optimal entry mode for banks seems to be closely tied to the banking segment (retail versus wholesale banking) the respective bank operates in.

Additionally the thesis offers a theoretical chapter on the optimal entry mode of firms into foreign markets in a world of sequential entry. The primary result of the model is, that Greenfield Investment is an undervalued mode of entry, because it reduces the likelihood of further sequential entry.

An open question on when banks follow their customers abroad is also discussed with the help of a theoretical model. I find that whether banks follow their customers abroad or not depends on the riskiness of respective customer loans, both from a customer cash flow point of view as well as a political risk of blocked repayment transfers by local governments abroad.

A wide-voiced concern that smaller enterprises suffer in their ability to source finance from banks as the banking sector consolidates is finally discussed. Such a threat is indeed found in a theoretical analysis, as increased layers of hierarchy in consolidated institutions lead to a likely stop of loan provision to smaller companies within the bank, while due to the relationship-based lending nature of small firm bank finance, the likelihood that another bank acts as a new lender to the small firm set free is low.

This dissertation contains four independent chapters. Chapter 1 analyzes the impact of vertical integration on quality provision. Chapter 2 seeks to explain the pervasiveness of uncoordinated corruption. Chapter 3 proposes a theory of political agency. Chapter 4 is an inquiry into the foundations of insurance regulation.

This thesis develops and applies three different frameworks to analyse monetary policy from a theoretical and empirical perspective within three self-contained chapters. Chapter 2 looks at optimal monetary policy in the modern micro-founded New Keynesian macroeconomic model, while chapter 3 offers an empirical investigation of monetary policy in the euro area. The final chapter 4 combines a microeconomic model of liquidity shocks on an asset market that includes features of market microstructure theory with a model of the goods market inspired by nominal rigidities as common in macroeconomic models. All three chapters are connected by the prominent role of different policy rules.

Chapter 1: Going Multinational: What are the effects on home market performance?

A number of recent studies find evidence for the existence of a persistent performance gap between multinational enterprises (MNE) and their domestic competitors. This chapter investigates to what extent MNEs have superior performance characteristics, both prior to and after they have switched from national to multinational activities. In the first case results are quite clear: Future multinationals outperform domestic firms. When comparing ex-post performance of firms an endogenous treatment model is applied to account for selectivity issues. The results suggest that after switching, both productivity and wage growth are higher for newly founded MNEs than for national firms. Employment growth is superior before switching but does not exhibit significantly higher ex-post growth rates. Moreover, capital intensities at multinationals evolve towards the use of capital.

Chapter 2: The Impact of FDI on the Skill Structure in German Manufacturing

This chapter tests whether foreign direct investment (FDI) of German manufacturing multinationals (MNE) has raised domestic skill intensity between 1996 and 2001. Using a sample of 1,557 firms, the results show that foreign activities of German manufacturing MNEs carry higher average wages on the home market. I interpret this as evidence indicating that part of the skill upgrading in German manufacturing is associated with the rising job export to foreign locations. Other things equal, an increase in overall affiliate employment relative to domestic employment by 10 percentage points raises skill intensity at the parent firm by 0.1\% to 0.3\%. When distinguishing between different host regions, I find investment in industrialised countries consistent with the horizontal FDI motive, whereas investment in developing countries is driven by vertical production strategies. In the case of transition countries results are inconclusive.

Chapter 3: Health and Wages -

Panel data estimates considering selection and endogeneity

This paper investigates the effects of health on wages by controlling for a number of problems: first, the unobservable genetic endowment may cause an omitted variable bias; second, using a self-reported health variable could induce measurement error; third, the issue of reverse causality arises; and fourth, panel attrition driven by the endogenous decision to participate in the labour market may result in inconsistent estimation. By using recently developed methods, I control for all of the above issues in one framework. The results show that good health raises wages for both women and men. I find the health variable to suffer from measurement error. For men, applying OLS or 2SLS, instead of methods accounting for selection and individual heterogeneity, causes an upward bias in the health coefficient. Selection tests indicate panel attrition to generate biased estimates in the male sample, while for females no selection correction is required.

This thesis analyzes three separate, controversially discussed socioeconomic and policy issues. The first chapter is concerned with the regulation of hospitals. It is shown that the informational problems hinder the regulator to set optimal prices in a prospective payment system. It is also shown that the mechanism that the literature typically recommends for finding best prices, namely yardstick competition, fails in the hospital market.

The second chapter analyzes the question whether general smoking bans in taverns can be welfare improving or whether they are an illegtimate market intervention. It is shown that owners of such establishments indeed do not necessarilly have an incentive to act in the consumers' interests. That is, it is possible that taverns do not prohibit smoking in their domain although it is in the social interest.

The third chapter offers an alternative theory of how noninformative advertising can influence consumer's behavior. The advantages of the approach are that, first, it can explain the effect of advertising without violating fundamental assumptions of micoreconomic theory and, second, that it allows for welfare analysis.

This thesis is about two major economic topics, trade policy and education choice. The first and the second essay analyze trade policy with special attention to tariff formation in intermediate-good sectors. The first essay explains tariff formation in intermediate-good sectors from a national perspective. I build a political economy model in which lobby groups try to influence the government, which is both concerned about social welfare and collecting contributions from the lobby groups. It turns out that in such a model the equilibrium tariffs on intermediate goods deviate systematically from the tariffs on final goods. The second essay analyzes the tariff formation in intermediate-good sectors from an international perspective. It shows in a strategic trade policy model that the consideration of intermediate goods has a strong effect on the government’s optimal policy towards final goods also. The third essay is about education choice. I introduce social preferences into a simple model of education choice. Social preferences mean that individuals are not only concerned about their material self interest, but also about their relative income in comparison to others. It is shown that the individuals with social preferences take a systematically different education choice than purely self-interested individuals. The results can explain empirical evidence concerning the educational success of students.