Archive for June 17th, 2021

Specialization in Banking

June 17, 2021

Kristian S. Blickle, Cecilia Parlatore, and Anthony Saunders in this NY Fed paper:

Using highly detailed data on the loan portfolios of large U.S. banks, we document that these banks “specialize” by concentrating their lending disproportionately into one industry. This specialization improves a bank’s industry-specific knowledge and allows it to offer generous loan terms to borrowers, especially to firms with access to alternate sources of funding and during periods of greater nonbank lending. Superior industry-specific knowledge is further reflected in better loan and, ultimately, bank performance. Banks concentrate more on their primary industry in times of instability and relatively lower Tier 1 capital. Finally, specialization counteracts a well-documented trend in reduced lending by large banks to opaque small and medium-sized enterprises.

 

Capitalism after COVID: conversations with 21 economists

June 17, 2021

Luis Garicano in this voxeu piece points to this new edited book by him – Capitalism after COVID: Conversations with 21 Economists. The book emerged after discussions with leading economists:

 

A macroeconomic view of the shape of India’s sovereign yield curve

June 17, 2021

Michael Debabrata Patra, Harendra Behera and Joice John in this RBI Bulletin article look at one of the contentious issue facing Indian economy: steep yield curve.

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Swedish school lunch reform, nutrition, and lifetime income

June 17, 2021

Petter Lundborg and Dan-Olof Rooth in this voxeu research:

From BNP Paribas Archives: History of BNPA Paribas in India since 1860

June 17, 2021

EABH Podcast features Marie Laperdrix, Head of Archives and History at BNP Paribas. Marie informs about how the French Bank has been steadily building and digitizing BNP Paribas archives.

BNP Paribas group has emerged after a series of a mergers. The Comptoir d’Escompte de Paris merged with Banque Nationale pour le Commerce et l’Industrie (BNCI) in 1966 to become Banque Nationale de Paris (BNP). In 2000, BNP merged with Paribas to become BNP Paribas.

The digital archives are really impressive. A dig into the archives took me to this history of how BNP came to India in 1860!

In 1860 the Comptoir d’Escompte de Paris opened a branch in Calcutta. This was a pioneering move as, until then, rather than opening branches of their own abroad, the practice of French financial institutions had been to work through a network of correspondent banks. At that time Calcutta was the capital of India and a major trade centre.

Why did the Comptoir set up in India? As part of the bank’s general strategy of taking an active role in financing international trade, with the emphasis here on meeting the needs of French clients importing raw materials, especially cotton. In similar vein, the French demand for wool led the Comptoir to set up in Australia in 1881.

A second branch opened in 1862 in Bombay (now known as Mumbai) as this major cotton and trading centre was experiencing a boom during the American Civil War. In 1903, due to the difficult political and economic climate, the Calcutta branch was closed.

The outbreak of the Second World War cut the Bombay branch’s ties to its Paris headquarters and it came under the control of the London office, which was in Allied territory. The branch managed to maintain profitability by financing cotton exports and engaging in precious metals trading.

The history of foreign banks in India has a history of its own. Absolutely worth exploring…


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