Our paper Channels of Risk Sharing in the Eurozone: What Can Banking and Capital Market Union Achieve? (with Egor Maslov, Iryna Stewen and Bent E. Sorensen) is now forthcoming in the IMF Economic Review. In the paper, we argue that the interplay of equity market and banking integration is of first-order importance for risk sharing in the EMU. While EMU created an integrated interbank market, “direct” banking integration (in terms of direct cross-border bank-to-real sector flows or cross-border banking-consolidation) and equity market integration remained limited. We find that direct banking integration is associated with more risk sharing, while interbank integration is not. Further, interbank integration proved to be highly procyclical, which contributed to the freeze in risk sharing after 2008. Based on this evidence, and a stylized DSGE model, we discuss implications for banking union. Our results show that real […]
Our paper ” Holes in the Dike: The Global Savings Glut, U.S. House Prices and the Long Shadow of Banking Deregulation” (with Iryna Stewen) has now been accepted for publication in the Journal of the European Economic Association. In the paper, we argue that capital inflows into the U.S. greatly contributed to the housing boom in the years prior to the financial crisis. States that liberalized their banking markets earlier saw bigger run-ups in house prices (and larger busts). The reason for this was the treacherous assumption, that geographically diversified banks should be allowed higher leverage (as would be implied by Value-at-risk models of bank risk management). States that liberalized their banking markets earlier had a stronger presence of geographically diversified banks by the time the savings glut started to hit the U.S. from the mid-1990s onwards. As we show, […]
I firmly believe that using open source software is an important prerequisite for reproducible and accessible research. We cannot expect others (think e.g. students or researchers in developing countries) to buy super-expensive software to reproduce research. We should also make sure that the code we use, including the applications we run the code on, are free and transparent. Equally, I believe that we as academics have a special responsibility to teach our students to become free and independent digital citizens. That entails keeping a healthy distance to the closed eco-systems of commercial operating systems such as Windows or MacOS (not to speak of Android or iOS) which collect ever more data about everything we do on our computers and online. GNU/Linux operating systems are an open-source alternative where we can actually decide freely how much information about ourselves we share […]
In a new column on VoxEU entitled Banking integration in the EMU — let’s get real Mathias Hoffmann, Egor Masolv, Bent Sorensen and Iryna Stewen argue that dependence on domestic banks reduces risk-sharing in a crisis, reducing GDP growth in affected country-sectors. Benefits from banking integration are only robust to global shocks if banking integration takes the form of cross-border lending to firms and households.
Mathias Hoffmann is the Scientific Director of a new research network “Globalization of Real Estate Markets” (GREN) at the UZH Center for Urban and Real Estate Management. The objective of the network is to provide an international forum for economic research that examines how the forces of globalization shape housing markets around the world. To this end, the network collects and aggregates data on international real estate markets and organizes academic conferences, summer schools and policy events.
On Nov 29th, I gave a public lecture on China’s role in the origins and the handling of the financial crisis as part of a lecture series commemorating the 10th anniversary of the global financial crisis. Building on my research with Iryna Stewen and Yi Huang, I argue that global imbalances were an important factor in the run-up of the crisis. But the crisis was ultimately caused by U.S.specific factors (lax supervision, political pressure to increase home ownership, weak incentives for proper screening). During the crisis, China reacted with a massive fiscal expansion. This contributed to stabilizing global demand but it also exacerbated the misallocation of capital within China. The lecture slides are available here (password protected — send me an e-mail for access)
Mathias Hoffmann gave an interview to Swiss Television on the threats to emerging market economies from a strengthening dollar.
On May 9th Mathias Hoffmann talked to Swiss Economic Newspaper “Handelszeitung” about the economic implications of the election of Emmanuel Macron to the French presidency. Read the full interview here
Mathias Hoffmann has been appointed a visiting scholar at Norges Bank, the Norwegian Central bank, for the year 2017. During his visits he will work on a project with André Anundsen and Erling Roed-Larsen about the role of household leverage for housing demand.