We use focused interviews with bank managers to analyse how multinational banks use internal capital markets to control their subsidiaries. It is found that foreign bank affiliates are strongly influenced by the capital allocation and credit steering mechanisms of the parent bank. Parent banks...

The empirical application of the financing constraints paradigm supports the joint hypothesis that con-strained firms can be identified and display a stronger sensitivity of investment to cash flow. This paradigm is increasingly criticized, because some proxy variables used to identify...

When firms find that external finance is costly or rationed, they face financing constraints in their investment decisions. The financing constraints paradigm applies this idea empirically and supports the joint hypothesis that constrained firms can be identified and should display a stronger...

We study the implications of uncertainty for inflation targeting in a dynamic set-up. Using Svensson's inflation forecast targeting model, we compare the Brainard conservative principle to a more active monetary policy rule, derived from a two-step optimisation procedure. Our analysis points to...

This paper highlights the impact of credit supply and aggregate demand sensitivity on 91 US industries' stock performance during the 2007-2009 financial crisis. We account explicitly for changes in the market model and investigate, next to stock returns, the changes in systematic risk and...

Models which integrate various financial stability risks are still in an early stage of development. In this paper we use the Macrofinancial Risk model (MfRisk) to construct a measure for financial stability. MfRisk applies the Merton option model in a multi-sector framework. We argue that this...

In this paper we investigate how expected liquidation costs affect a firm's investment and financing decisions. We hypothesise that comovement of firm and industry sales measures such costs, which create a premium on external finance and make investment more sensitive to the availability of...

This paper investigates the determinants of commercial banks' own internal capital targets and potential sensitivity of these levels to the business cycle . World-wide results make clear that banks' own risk is only slightly dependent on the business cycle. Banks tend to hold substantial capital...

In the first part of this article we present a brief description of Dutch retail payment systems in terms of market structure and performance, usage of payment instruments, and corresponding tariff structures. Although it is con-cluded that the Dutch retail payment market as a whole showed...

This paper provides a survey on recent developments in the European banking industry. Traditional banking activities have contracted in relative terms, but banks remain the predomination players in the euro area financial system. Economic and monetary integration in the EU has strongly...