Browsing by Author "Radić, Nemanja"
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Item Open Access Competition and risk-taking in investment banking(Wiley, 2019-03-05) Degl'Innocenti, Marta; Fiordelisi, Franco; Girardone, Claudia; Radić, NemanjaHow does competition affect the investment banking business and the risks individual institutions are exposed to? Using a large sample of investment banks operating in seven developed economies over 1997-2014, we apply a panel VAR model to examine the relationships between competition and risk without assuming any a priori restrictions. Our main finding is that investment banks’ higher risk exposure, measured as a long-term capital-at-risk and return volatility, was facilitated by greater competitive pressures especially for full service investment banks but also for boutique investment banks. Overall, we find some evidence that more competition leads to more fragility before and during the recent financial crisis.Item Open Access Detecting zombie banks(Taylor and Francis, 2021-03-05) Fiordelisi, Franco; Radić, Nemanja; Weyman-Jones, ThomasCapital adequacy has become the main regulatory tool to achieve financial stability in the last twenty years. While most papers analysed the effect of capital adequacy on risk taking, there is a lack of evidence on the relationship between deleveraging and the return on equity capital. In this paper, we examine the evolution of the banking system in Japan over the period 2000–16, where the re-capitalization issue has already played a major role in policy making. Specifically, we estimate the shadow return on equity capital for both listed and unlisted banks by measuring the loans-funding-equity technology through the dual cost function, controlling for risk exposure and bad loans, and accounting for both the standard asset-based model of bank outputs, and income-based model. Such an approach is likely to be important if the central bank permits banks with unsustainable balance sheets to continue in existence, and we refer to this as zombie banking. Overall, our results show that deleveraging did reduce the shadow return on equity for the City banks. We also find that that the presence of ‘zombie’ banks was concentrated and large among the smaller less diversified Regional Banks.Item Open Access To tweet or not to tweet? the determinants of tweeting activity in initial coin offerings(Wiley, 2023-01-26) Moro, Andrea; Radić, Nemanja; Truong, VinhOur research explores the causes of Twitter activity in highly technological start-ups that finance their activities via initial coin offerings (ICOs). By relying on weekly data of 297 ICOs for the period 2015–2020 (35,459 observations), we examine how major exogenous events affect the number of tweets issued by the start-up. Then, we explore how the community of followers reacts to the tweets. We discover that events external to firms reduce ICOs’ tweeting activity. Moreover, our evidence indicates that the followers’ reaction is positively related to the tweets issued by the firm and negatively related to major events unrelated to the firm. Interestingly, followers’ reaction has an inverted U-shaped relation with the firm’s Twitter volume, suggesting that excessive Twitter activity can harm the further dissemination of tweets. Our results, robust to alternative estimation techniques, emphasize the important role of Twitter as an information disseminator, legitimizer, and endorser for highly opaque firms.Item Open Access When the rainy day is the worst hurricane ever: the effects of governmental policies on SMEs during COVID-19(Springer, 2021-05-18) Belghitar, Yacine; Moro, Andrea; Radić, NemanjaWe investigate the impact of COVID-19 on 42,401 UK SMEs and how government intervention affects their capability to survive the pandemic. The results show that, without governmental mitigation schemes, 59% of UK SMEs report negative earnings and that their residual life is reduced from 164 to 139 days. The analysis shows that government support scheme reduces the number of SMEs with negative earnings to 49% and allows extending the residual life for SMEs with negative earnings to 194 days. In addition, the support scheme reduces the number of jobs at risk in our sample by around 20%. However, our results suggest that weaker firms benefit more than strong ones. Besides, industries that are worst hit by COVID-19 are not those that benefit most from the government support scheme. We ascribe this result to the fact that the schemes do not discriminate between those firms that deserve support and those that do not deserve it.