House price dynamics and bank herding: European empirical evidence

This paper investigates the behavior of residential property and examines the linkages between house price dynamics and bank herding behavior. The analysis presents evidence that irrational behaviour may have played a significant role in several countries, including; United Kingdom, Spain, Denmark, Sweden and Ireland. In addition, we also provide evidence indicative of herding behaviour in the European residential mortgage loan market. Granger Causality tests indicate that non-fundamentally justified prices dynamics contributed to herding by lenders and that this behaviour was a response by the banks as a group to common information on residential property assets. In contrast, in Germany, Portugal and Austria, residential property prices were largely explained by fundamentals. Furthermore, these countries show no evidence of either irrational price bubbles or herd behaviour in the mortgage market. Granger Causality tests indicate that both variables are independent.

Bank integration and co-movements across housing markets

This paper investigates whether bank integration measured by cross-border bank flows can capture the co-movements across housing markets in developed countries by using a spatial dynamic panel model. The transmission can occur through a global banking channel in which global banks intermediate wholesale funding to local banks. Changes in financial conditions are passed across borders through the banks’ balance-sheet exposure to credit, currency, maturity, and funding risks resulting in house price spillovers. While controlling for country-level and global factors, we find significant co-movement across housing markets of countries with proportionally high bank integration. Bank integration can better capture house price co-movements than other measures of economic integration. Once we account for bank exposure, other spatial linkages traditionally used to account for return co-movements across region – such as trade, foreign direct investment, portfolio investment, geographic proximity, etc. – become insignificant. Moreover, we find that the co-movement across housing markets decreases for countries with less developed mortgage markets characterized by fixed mortgage rate contracts, low limits of loan-to-value ratios and no mortgage equity withdrawal.

The new localism, anti-political development machines, and the role of planning consultants: lessons from London's South Bank

This paper draws on a study of the politics of development planning in London’s South Bank to examine wider trends in the governance of contemporary cities. It assesses the impacts and outcomes of so-called new localist reforms and argues that we are witnessing two principal trends. First, governance processes are increasingly dominated by anti-democratic development machines, characterized by new assemblages of public- and private-sector experts. These machines reflect and reproduce a type of development politics in which there is a greater emphasis on a pragmatic realism and a politics of delivery. Second, the presence of these machines is having a significant impact on the politics of planning. Democratic engagement is not seen as the basis for new forms of localism and community control. Instead, it is presented as a potentially disruptive force that needs to be managed by a new breed of skilled private-sector consultant. The paper examines these wider shifts in urban politics before focusing on the connections between emerging development machines and local residential and business communities. It ends by highlighting some of the wider implications of change for democratic modes of engagement and nodes of resistance in urban politics.

Prediction of metabolisable energy concentrations of fresh cut grass using digestibility data measured with non-pregnant non-lactating cows

Pasture-based ruminant production systems are common in certain areas of the world, but energy evaluation in grazing cattle is performed with equations developed, in their majority, with sheep or cattle fed total mixed rations. The aim of the current study was to develop predictions of metabolisable energy (ME) concentrations in fresh-cut grass offered to non-pregnant non-lactating cows at maintenance energy level, which may be more suitable for grazing cattle. Data were collected from three digestibility trials performed over consecutive grazing seasons. In order to cover a range of commercial conditions and data availability in pasture-based systems, thirty-eight equations for the prediction of energy concentrations and ratios were developed. An internal validation was performed for all equations and also for existing predictions of grass ME. Prediction error for ME using nutrient digestibility was lowest when gross energy (GE) or organic matter digestibilities were used as sole predictors, while the addition of grass nutrient contents reduced the difference between predicted and actual values, and explained more variation. Addition of N, GE and diethyl ether extract (EE) contents improved accuracy when digestible organic matter in DM was the primary predictor. When digestible energy was the primary explanatory variable, prediction error was relatively low, but addition of water-soluble carbohydrates, EE and acid-detergent fibre contents of grass decreased prediction error. Equations developed in the current study showed lower prediction errors when compared with those of existing equations, and may thus allow for an improved prediction of ME in practice, which is critical for the sustainability of pasture-based systems.

Evaluating nitrogen utilization efficiency of nonpregnant dry cows offered solely fresh cut grass at maintenance levels

The present study aimed to identify key parameters influencing N utilization and develop prediction equations for manure N output (MN), feces N output (FN), and urine N output (UN). Data were obtained under a series of digestibility trials with nonpregnant dry cows fed fresh grass at maintenance level. Grass was cut from 8 different ryegrass swards measured from early to late maturity in 2007 and 2008 (2 primary growth, 3 first regrowth, and 3 second regrowth) and from 2 primary growth early maturity swards in 2009. Each grass was offered to a group of 4 cows and 2 groups were used in each of the 8 swards in 2007 and 2008 for daily measurements over 6 wk; the first group (first 3 wk) and the second group (last 3 wk) assessed early and late maturity grass, respectively. Average values of continuous 3-d data of N intake (NI) and output for individual cows ( = 464) and grass nutrient contents ( = 116) were used in the statistical analysis. Grass N content was positively related to GE and ME contents but negatively related to grass water-soluble carbohydrates (WSC), NDF, and ADF contents ( < 0.01), indicating that accounting for nutrient interrelations is a crucial aspect of N mitigation. Significantly greater ratios of UN:FN, UN:MN, and UN:NI were found with increased grass WSC contents and ratios of N:WSC, N:digestible OM in total DM (DOMD), and N:ME ( < 0.01). Greater NI, animal BW, and grass N contents and lower grass WSC, NDF, ADF, DOMD, and ME concentrations were significantly associated with greater MN, FN, and UN ( < 0.05). The present study highlighted that using grass lower in N and greater in fermentable energy in animals fed solely fresh grass at maintenance level can improve N utilization, reduce N outputs, and shift part of N excretion toward feces rather than urine. These outcomes are highly desirable in mitigation strategies to reduce nitrous oxide emissions from livestock. Equations predicting N output from BW and grass N content explained a similar amount of variability as using NI and grass chemical composition (excluding DOMD and ME), implying that parameters easily measurable in practice could be used for estimating N outputs. In a research environment, where grass DOMD and ME are likely to be available, their use to predict N outputs is highly recommended because they strongly improved of the equations in the current study.

The use and impacts of bank support on UK small and medium-sized enterprises

This article examines an under-investigated area in relationship banking, i.e. the use of bank advice and support and its impacts on the financial conditions of small and medium-sized enterprises (SMEs). The findings indicate that the characteristics of businesses and entrepreneurs, among other factors, have determinant effects on the use of bank support by SMEs when they make financial decisions. SMEs can alleviate the severity of their financial problems significantly by using bank support more fully, through developing long-term relationships with banks as primary network partners. The article further recognises the value of advice from banks as a substitute for entrepreneurial human capital, especially when bankers use private information to determine the nature and level of financial and non-financial assistance that they are prepared to supply to their clients.

Bank regulation and the process of internationalisation: a study of Japanese bank entry into London

The paper provides a theoretical insight into bank regulation and the process of internationalisation by examining the concepts of regulatory push and market pull within the context of Japanese bank entry into London during the 1980s. Rugman and Verbeke's [(1998). Corporate strategy and international environmental policy. Journal of International Business Studies, 29(4), 819–833] Consistency of Home and Host Government Goals model is utilised to structure the discussion, which centres on a situation where there is a conflict of goals between multinational enterprises (MNEs) and the home government but goal alignment between MNEs and the host government. As such the paper examines a relatively under-researched aspect of internationalisation and concludes that in certain circumstances internationalisation can occur despite great ‘psychic distance’. The paper also argues that although bank regulation can lead to a conflict situation it can also be conducive to the development of a strong home base and the development of firm specific advantages.

Bank market concentration, relationship banking and small business liquidity

This paper examines two contrasting interpretations of how bank market concentration (Market Power Hypothesis) and banking relationships (Information Hypothesis) affect three sources of small firm liquidity (cash, lines of credit and trade credit). Supportive of a market power interpretation, we find that in a highly concentrated banking market, small firms hold less cash, have less access to lines of credit, and are more likely to be financially constrained, use greater amounts of more expensive trade credit and face higher penalties for trade credit late payment. We also find support for the information hypothesis: relationship banking improves small business liquidity, particularly in a concentrated banking market, thereby mitigating the adverse effects of bank market concentration derived from market power. Our results are robust to different cash, lines of credit and trade credit measures and to alternative empirical approaches.

Comparison of terrain following and cut cell grids using a non-hydrostatic model

Terrain following coordinates are widely used in operational models but the cut cell method has been proposed as an alternative that can more accurately represent atmospheric dynamics over steep orography. Because the type of grid is usually chosen during model implementation, it becomes necessary to use different models to compare the accuracy of different grids. In contrast, here a C-grid finite volume model enables a like-for-like comparison of terrain following and cut cell grids. A series of standard two-dimensional tests using idealised terrain are performed: tracer advection in a prescribed horizontal velocity field, a test starting from resting initial conditions, and orographically induced gravity waves described by nonhydrostatic dynamics. In addition, three new tests are formulated: a more challenging resting atmosphere case, and two new advection tests having a velocity field that is everywhere tangential to the terrain following coordinate surfaces. These new tests present a challenge on cut cell grids. The results of the advection tests demonstrate that accuracy depends primarily upon alignment of the flow with the grid rather than grid orthogonality. A resting atmosphere is well-maintained on all grids. In the gravity waves test, results on all grids are in good agreement with existing results from the literature, although terrain following velocity fields lead to errors on cut cell grids. Due to semi-implicit timestepping and an upwind-biased, explicit advection scheme, there are no timestep restrictions associated with small cut cells. We do not find the significant advantages of cut cells or smoothed coordinates that other authors find.

Bank loan terms and conditions: is there a macro effect?

We examine whether macroeconomic factors contain significant information for bank loan contracting terms and conditions (T&Cs), over and above that of standard firm-specific or country-level institutional factors. Our estimation is based on a seemingly unrelated mixed-processes methodology that accommodates two salient data properties: (i) the fact that loan contract terms are determined jointly as a single lending contract, and (ii) the fact that the elements of loan T&Cs are generated by different distributional formats. Our findings indicate that cross-country variation accounts for a significant portion of observed variation in loan T&Cs. In addition, macroeconomic fundamentals significantly explain the “package” of loan T&Cs offered to corporate borrowers, with this effect being distinct from any influence that T&Cs receive from firm-specific factors, and also from country-specific institutional factors.

State ownership, bank loans, and corporate investment

We study the effect of bank loans on Chinese publicly listed firms' investment decisions based on the underinvestment and overinvestment theories of leverage. Evidence from China is of particular importance because China is the world's largest emerging and transitional economy. At first we show that there is a negative relationship between bank loan ratios and investment for Chinese publicly listed firms. And this negative relationship is much stronger for firms with low growth than firms with high growth. Secondly, we find that both short-term and long-term loan ratios are negatively correlated with investment. However, the higher the long-term loan ratios are, the weaker the negative relationship between long-term loan ratios and investment is. Thirdly, firm ownership only matters to the effect of short-term bank loans on investment in our sample. That is, the negative relationship between short-term loan ratios and investment is weaker for SOEs than for non-SOEs. Lastly, we show that the reform of China's banking system in 2003 has not strengthened the negative relationship between bank loans and investment. Our findings suggest that although Chinese state-owned banks are severely intervened by government policies, they still have a disciplining role on firms' investment, especially in firms with low growth.

The option market reaction to bank loan announcements

In this study, we examine the options market reaction to bank loan announcements for the population of US firms with traded options and loan announcements during 1996-2010. We get evidence on a significant options market reaction to bank loan announcements in terms of levels and changes in short-term implied volatility and its term structure, and observe significant decreases in short-term implied volatility, and significant increases in the slope of its term structure as a result of loan announcements. Our findings appear to be more pronounced for firms with more information asymmetry, lower credit ratings and loans with longer maturities and higher spreads. Evidence is consistent with loan announcements providing reassurance for investors in the short-term, however, over longer time horizons, the increase in the TSIV slope indicates that investors become increasingly unsure over the potential risks of loan repayment or uses of the proceeds.