Does Opaqueness Make Equity Capital Expensive for Banks?

Bank managers often claim that equity is expensive, which contradicts the Modigliani-Miller irrelevance theorem. An opaque bank must signal its solvency by paying high and stable dividends in order to keep depositors tranquil. This signalling may require costly liquidations if the return on assets has been poor, but not paying the dividend might trigger a run. A strongly capitalized bank should keep substantial amounts of risk-free yet non-productive currency because the number of shares is high, which is costly. The dividend is informative of the state of the bank; rational depositors react to it.

Joseph Banks.

Se hace un análisis tanto de la vida personal como de la trayectoria profesional e investigadora de este explorador y naturalista británico. El texto tiene distintos tipos de letra y de dificultad para motivar a los estudiantes a leer en un nivel más elevado. Tiene, además, cronología de su vida y de su época, glosario, bibliografía y direcciones web.

Eurozone as home country of banks. CEPS Commentary, 2 July 2012

The euro area summit has managed to surprise the markets once again. By moving banking supervision of the eurozone to the European Central Bank, a huge step towards a more federal banking model has been taken, explains CEPS CEO Karel Lannoo in this new Commentary. But will this move be enough to re-establish confidence, bolster the euro interbank market and further financial integration?

Central Banks in Times of Crisis: The FED vs. the ECB. CEPS Policy Brief No. 276, 11 July 2012,

Different economic and financial structures require different crisis responses. Different crises also require different tools and resources. The first ‘stage’ of the financial crisis (2007-09) was similar on both sides of the Atlantic, and the response was also quite similar. The second stage of the crisis is unique to the euro area. Increasing financial disintegration within the region has forced the ECB to become the central counterparty for the entire cross-border banking market and to intervene in the sovereign bond market of some stressed countries. The actions undertaken by the European Central Bank (ECB), however, have not always represented the best response, in terms of effectiveness, consistency and transparency. This is especially true for the Securities Markets Programme (SMP): by de facto imposing its absolute seniority during the Greek PSI (private sector involvement), the ECB has probably killed its future effectiveness.

Why high seed densities within buried mesh bags may overestimate depletion rates of soil seed banks

1. Estimates of seed bank depletion rates are essential for modelling and management of plant populations. The seed bag burial method is often used to measure seed mortality in the soil. However, the density of seeds within seed bags is higher than densities in natural seed banks, which may elevate levels of pathogens and influence seed mortality. The aim of this study was to quantify the effects of fungi and seed density within buried mesh bags on the mortality of seeds. Striga hermonthica was chosen as the study species because it has been widely studied but different methods for measuring seed mortality in the soil have yielded contradictory estimates. 2. Seed bags were buried in soil and exhumed at regular time intervals to monitor mortality of the seeds in three field experiments during two rainy seasons. The effect of fungal activity on seed mortality was evaluated in a fungi exclusion experiment. Differences in seed-to-seed interaction were obtained by using two and four densities within the seed bags in consecutive years. Densities were created by mixing 1000 seeds with 0, 10, 100 or 1000 g of coarse sand. 3. The mortality rate was significantly lower when fungi were excluded, indicating the possible role of pathogenic fungi. 4. Decreasing the density of seeds in bags significantly reduced seed mortality, most probably because of decreased seed-to-seed contamination by pathogenic fungi. 5. Synthesis and applications. Models of plant populations in general and annual weeds in particular often use values from the literature for seed bank depletion rates. These depletion rates have often been estimated by the seed bag burial method, yet seed density within seed bags may be unrealistically high. Consequently, estimates of seed mortality rates may be too high because of an overestimation of the effects of soil or seed-borne pathogens. Species that have been classified from such studies as having short-lived seed banks may need to be re-assessed using realistic densities either within seed bags or otherwise. Similarly, models of seed bank dynamics based on such overestimated depletion rates may lead to incorrect conclusions regarding the seed banks and, perhaps, the management of weeds and rare species.