- Follow FBA’s activities from the below list as ‘SEMINAR’, ‘THESIS DEFENSE’ or ‘OTHER’
- Past seminars (between October 2010 & November 2017) are here
- Use below –Choose a date using calendar– option to filter a different interval (starts from December 2017)
“Designing Hydro Supply Chains for Energy, Food, and Flood”
by Kwon Gi Mun
Fairleigh Dickinson University
We identify the unique challenges and tradeoffs in hydro system development for developing countries and provide a supply chain perspective to expand these countries’ hydro networks for energy, irrigation, and flood control. The interconnected issues of water, energy, food, and flood are among the most formidable challenges faced by developing countries worldwide. The development of hydro systems has the potential to address all these issues simultaneously and thus has been prioritized in the international community to reduce poverty and promote sustainable economic development. We develop a new integrated and dynamic modeling framework to capture the conflicts of these issues, explore the synergy among different sectors and maximize overall benefits. The framework integrates hydro plant location and distribution decisions for both power and water; it endogenizes the budget and thus captures the dynamic interaction between water resource development and economic growth. We derive analytical results in stylized models to develop general insights on the key driving forces and build a decision support model to solve large-scale problems in practice. By applying the model to the case of Pakistan, we provide solutions that outperform common practices in all aspects of energy, irrigation, and flood control.
“From Lombard Street to Wall Street: Systemic Risk, Rescues, and Stability in Financial Networks”
by Zafer Kanık
Massachusetts Institute of Technology / Department of Economics
Banks’ obligations to each other involve counterparty risks. In case of a failure, the losses of counterparties of the failing bank are exacerbated by additional bankruptcy costs. By also taking the contagion risk into account, banks’ potential losses incentivize them to rescue each other whenever rescues are less costly than absorbing the losses. Endogenously arising rescues reverse the standard intuitions from the financial contagion literature: A system-wide contagion risk does not necessarily imply financial instability and, surprisingly, leads to greater stability in certain networks where banks more than undo the contagious failures and take actions against any potential failure. In a framework where capital transfers between banks are more efficient than government bailouts, I characterize welfare-maximizing networks and show that they are connected through i) intermediate levels of interbank liabilities per bank, and ii) no clustering of interbank exposures among any subset of banks. Consequently, financial stability is determined by the potential bankruptcy losses internalized by banks and the loss absorption capacity of the system (i.e., banks’ aggregate capital). The results provide additional insights into the historical debate on bank rescues and help us better understand the implications of current interbank regulations. The findings also offer plausible explanations for the selective rescues in the 2007-2009 period.
“Why Do Firms Borrow from Foreign Banks”
by Ümit Yılmaz
Universita della Svizzera Italiana
I examine U.S. firms’ motives for participating in cross-border syndicated loans with foreign banks. Firms borrowing from foreign lead arrangers pay higher interest rates on their loans compared to firms borrowing from local banks, controlling for firm and loan characteristics and using matched sample analyses. These firms experience an increase in foreign income and international M&A activity after the loan, which suggests that global expansion of operations is an important reason why a firm borrows beyond borders. I also find that loan spreads increase with the geographic and cultural distance between borrowers and foreign lenders, consistent with higher information acquisition and monitoring costs.
“Intraday Jump Dynamics: What Predicts Price Jumps?”
by Saad Ali Khan
This paper examines the relationship between liquidity fragmentation and price jumps. Unexpected changes in intraday liquidity fragmentation predict jumps and jump direction. A shock to ask (bid) side liquidity fragmentation increases the probability of positive (negative) jumps by 36%. Decomposing jumps into information and noise components we show that fragmented jumps are noisier. Our work suggests that liquidity suppliers predict jumps and actively manage their exposure to large order imbalances accompanying jumps by fragmenting liquidity. This makes jumps predictable as liquidity suppliers’ information is reflected in liquidity fragmentation, minutes before the arrival of a jump.
“The Elephant (or Donkey) Outside the Boardroom: Government Political Leniency and Executive Compensation”
by Bünyamin Önal
We examine the impact of governments on executive compensation based on their leniency on the left-right political spectrum. We find that left-leaning governments have a significant negative impact on CEO pay relative to their right-leaning counterparts. We further show that left restrains powerful CEOs from extracting rents, and this mitigates its overall negative impact on firm value. However, left also imposes limits on performance- and promotion-based incentives for top executives, and this exacerbates its negative value impact. Our results are robust to a battery of endogeneity corrections and robustness checks. We conclude that politics plays a value-influencing role in executive compensation.
Keywords: Executive compensation; Politics; Managerial Power; Efficient Contracting; Firm value
JEL Codes: G34, G39