Prof. Dr. Günter Lang


Adjunct Professor of Economics


Journal Articles (Peer-Reviewed)

DOI: 10.3790/ccm.52.2.191 

Abstract: Governments worldwide reacted swiftly to the global financial crisis by tougher regulations. This paper investigates the impacts of the regulatory environment on operating costs using panel data of 2,200 German banks over the timeframe from 1999 to 2014. We estimate cost functions with and without proxies for regulation and analyze the results with respect to period, bank size, and group affiliation. Our results show that regulatory costs were peaking in 2001, 2008, and lately since 2012. Most interesting, however, is the asymmetry of regulation: Whereas the cost effects were symmetric for all banks until 2003, the last ten years were different. Larger institutions and savings banks could neutralize the impacts of increasing regulation on operating costs. In contrast, smaller banks, especially if they are cooperative banks, were facing significant cost increases. We therefore expect unintended structural shifts like a reduction in the diversity of banks, which are negative for competition, service quality, and for the stability of the financial system.

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Open reference in new window "Credit and Capital Markets – Kredit und Kapital: Volume 52, Issue 2"

DOI: 10.1515/rmeef-2014-0037 

Abstract: This study contributes to the banking efficiency literature by using a three input–five output stochastic frontier translog cost function specification to investigate cost efficiency, scale economies, and technological progress in the Egyptian banking sector. The study analyzes the efficiency of Egyptian banks in the period 2000–2006 which witnessed major regulatory and structural changes. The analysis is based on a panel data of 34 commercial banks representing about 75% of the banking sector in Egypt. The results show that the banks suffer significantly from internal X-inefficiency with an average cost reduction potential of 12%. Increasing economies of scale are found to exist up to a bank size of about EGP30 bn, implying that all but the four largest banks in Egypt could reduce their average costs by growth. Surprisingly, Egyptian commercial banks did not benefit from technological change; instead they faced a negative dynamics of the cost frontier. Further regression analysis conducted to explain the different efficiency levels of the banks revealed a positive impact of size, growth, and merger activities on efficiency, which implies bigger is better for Egyptian Banks.

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Open reference in new window "Is Bigger Better for Egyptian Banks? An Efficiency Analysis of the Egyptian Banks during a Period of Reform 2000-2006"

DOI: 10.1515/rmeef-2012-0004 

Abstract: This paper estimates the Beveridge curve of Egypt for the period from 2004 to 2010, using quarterly data for both the private sector and the public sector. Our results confirm the negative relationship between unemployment and private job offers for the Egyptian labor market. The Beveridge curve has shifted inwards during the observation period, indicating an improved matching process between labor supply and private labor demand. However, the results for the public sector are poor, showing the Beveridge curve relation cannot be used to explain the relationship between government sector vacancy rates and the unemployment rate.

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Open reference in new window "Estimating the Beveridge Curve for Egypt: An Econometric Study for the Period 2004 to 2010"

DOI: 10.1007/s10584-007-9277-9 

Abstract: Motivated by the high abatement costs of the Kyoto Protocol for Germany, this paper is estimating the economic impact of global warming on agriculture in that country. The hedonic approach is used as theoretical background. Stating that land prices are – among others – determined by climatic factors, this approach can consequently be used to value global warming. To avoid a priori restrictions stemming from functional forms, the land price function is modeled as quadratic Box–Cox function that nests a wide range of specifications. In a second step, the estimated results are used to forecast the impact of climate change. The results indicate that German farmers will be winners of climate change in the short run, with maximum gains occurring at a temperature increase of +0.6°C against current levels. In the long run, there may be losses from global warming. However, the net present value from climate change is under the most probable scenarios positive.

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Open reference in new window "Where are Germany’s Gains from Kyoto? Estimating the Effects of Global Warming on Agriculture"

DOI: 10.1016/j.respol.2009.07.008 

Abstract: Motivated by recent statistics that show significant growth in labor productivity, this paper seeks to analyze the long-term relationship between domestic R&D, knowledge stock and productivity dynamics. Time series data of the German manufacturing industry is used to estimate a variable cost function with the stock of knowledge being dependent upon current and past R&D spending. The estimates indicate that 50% of the effects of R&D on the knowledge stock appear within 4 years. However, the rate of return on R&D are shown to be drastically declining; recent rates of return on R&D are estimated to have reached an all-time low spanning the last 45 years. Current yields of R&D are only one third compared to the sixties. In conclusion, though the productivity slowdown of the seventies seems to have been overcome, this is not attributed to R&D investments.

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Open reference in new window "Measuring the Returns of R&D – An Empirical Study of the German Manufacturing Sector over 45 Years "

DOI: 10.1007/s10888-004-7581-4 

Abstract: Immigrants in Germany have poor earnings performance relative to natives. Claiming that human-capital endowments determine earnings potentials rather than actual earnings, a stochastic earnings frontier is estimated and used to seek systematic differences between natives and migrants for GSOEP data for the year 2000. While empirical results clearly support the frontier assumption, natives and immigrants are surprisingly about the same with respect to the frontier. Assuming a halfnormal distribution of the wage gap, on average, both groups transform a modest 84% share of their potential income into market earnings. This implies wage inequality can be attributed to humancapital differentials alone. The human-capital endowments of immigrants are largely determined by the very low percentage who have college degrees, their slow assimilation and zero-return on imported experience. The paper also tries to explain individual wage gaps, which are significantly decreased in married subjects raising families, but increased in employees in small- or medium-sized relative to larger firms. However, these variables only make minor contributions to the variance.

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Open reference in new window "The difference between wages and wage potentials: Earnings disadvantages of immigrants in Germany"

Abstract: Die Krise der Medienindustrie ist im wesentlichen eine Krise des Werbemarktes. Angesichts eines Beitrages der Werbung in Höhe von zwei Dritteln zum Umsatzaufkommen der Massenmedien überrascht dies nicht,wird aber durch das vorliegende Zahlenmaterial noch einmal bestätigt. Dieser Beitrag geht der Frage nach, ob der beobachtete Einbruch die historischen Zyklen der Werbebranche bestätigt, oder ob ein Strukturbruch und damit ein Zerfall der bisherigen Zyklusmuster stattgefunden hat. Hierzu werden in einem ersten Schritt mit Hilfe der Spektralanalyse die in der Vergangenheit dominierenden Zyklen identifiziert. Als Datenmaterial stehen die Werbeausgaben von 1960 bis 2003 auf Jahresbasis zur Verfügung, wobei die Werbeausgaben nach vier Mediengattungen differenziert sind. In einem zweiten Schritt werden die identifizierten Zyklen als erklärende Variable in ein Regressionsmodell eingefügt, um deren Erklärungsbeitrag zu den historisch beobachteten Veränderungsraten des Werbemarktes zu bestimmen. Es zeigt sich, dass die beobachteten Veränderungsraten relativ gut durch das gemessene Zyklusgefüge mit sich überlagernden Einzelzyklen erklärt werden kann. Der Test auf Strukturbruch wird verworfen – zumindest bislang kann somit davon ausgegangen werden, dass die Krise des Werbemarktes das historische Zyklusmuster eher bestätigt als zerstört.

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Open reference in new window "Der deutsche Werbemarkt: Konjunkturkrise oder Strukturbruch?"

DOI: 10.1023/A:1011178931639 

Abstract: This study uses the concept of shadow prices for measuring the impacts of climate change. By estimating a restricted profit function rather than a cost or a production function the explanatory power of the model is increased because of an endogenous output structure. Using low aggregated panel data on Western German farmers, the results imply that the agricultural production process is significantly influenced by climate conditions. Simulation results using a 2 CO2 climate scenario show positive impacts for all regions in Germany. Interestingly, the spatial distribution of the gains is indicating no advantage for those regions, which currently suffer from insufficient temperature. Finally, the importance of an endogenous output structure is confirmed by the finding that the desired product mix will drastically change.

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Open reference in new window "Global Warming and German Agriculture: Impact Estimations Using a Restricted Profit Function"

DOI: 10.1023/A:1008130918565 

Abstract: Based on an unbalanced panel of all Bavarian cooperative banks for the years of 1989--97, which includes information on 283 mergers, we analyze motives and cost effects of small-scale mergers in German banking. Estimating a frontier cost function with a time-variable stochastic efficiency term, we show that positive scale and scope effects from a merger arise only if the merged unit closes part of the former branch network. When we compare actual mergers to a simulation of hypothetical mergers, size effects of observed mergers turn out to be slightly more favorable than for all possible mergers. Banks taken over by others are less efficient than the average bank in the same size class, but exhibit, on average, the same efficiency as the acquiring firms. For the post-merger phase, our empirical results provide no evidence for efficiency gains from merging, but point instead to a leveling off of differences among the merging units.

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Open reference in new window "Mergers Among German Cooperative Banks: A Panel-based Stochastic Frontier Analysis"

DOI: 10.1023/A:1018346332447 

Abstract: Using 1992 data of 1490 banks covering about 40% of German banking, we specify a multi-product translog cost function and follow the “thick frontier”-approach to control for cost inefficiency when evaluating the technology of banking. Scale economies are found to exist up to a size of about 5 billion DM of total assets, with diseconomies being caused by non-operating costs. There is hardly any evidence of economies of scope. Compared to cost inefficiency external factors play a surprisingly strong role in explaining cost differences between high-cost and low-cost banks. Smaller banks turn out to be more responsive to input prices.

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Open reference in new window "Technology and Cost Efficiency in Universal Banking A “Thick Frontier”-Analysis of the German Banking Industry"

DOI: 10.2307/20714861 

Abstract: This article applies a modern empirical test of conduct to assess competitive conditions in the German banking sector. The elasticity of total revenues with respect to changes in input prices is calculated, using the intermediation approach as model of the banking firm. The functional form of the revenue equation is specified as a Translog function. The empirical basis consists of a panel of 1432 German universal banks with an observation period of at least four years for each of them. To account for potential consequences of the distinct regulatory environment and average bank size, the estimations are run separately for the three subgroups „cooperative banks”, „savings banks” and „credit banks”. The empirical results are consistent with the behavior of monopolistic competition, rejecting significantly the hypotheses of both monopoly and perfect competition. Differences between the subgroups turned out to be small, rejecting a causality from market share on market behavior.

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Open reference in new window "Wettbewerbsverhalten deutscher Banken: Eine Panelanalyse auf Basis der Rosse-Panzar Statistik"

DOI: 10.1016/0378-4266(95)00040-2 

Abstract: Using 1989–1992 individual data of 757 German cooperative banks and applying the intermediation approach we specify a multi-product translog cost function for this part of the German banking industry. For all size classes moderate economies of scale can be identified. There is also evidence of economies of scope which supports the notion of universal banking. As for cost efficiency, we find that the average banks in all size classes deviate considerably from the best practice cost frontier. All banks enjoy growth of total factor productivity, which is higher for the smaller banks in the sample.

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Open reference in new window "Efficiency and technical progress in banking: Empirical results for a panel of German cooperative banks"

Abstract: Im Mittelpunkt dieser Studie steht die Fragestellung, in welchem Ausmaß Gewinnunterschiede und Marktanteilsveränderungen auf Effizienzunterschiede zwischen den Unternehmen zurückzuführen sind. Hierzu wird in einem ersten Schritt mit Hilfe des Fixed-Effects- sowie des Stochastic-Frontier-Ansatzes die unternehmensspezifische Kosteneffizienz bestimmt. In einem zweiten Schritt wird dann der Zusammenhang zwischen Kosteneffizienz einerseits und den Marktergebnisvariablen Profitabilität sowie Marktanteilsveränderung andererseits untersucht. Dieser Zusammenhang ist um so enger, je wettbewerblicher das Unternhemnsverhalten ist. Für den deutschen Bankensektor, repräsentiert durch Paneldaten von 1425 deutschen Universalbanken, deuten die Berechnungen auf sigifikante Unterschiede zwischen den Bankengruppen hin. Während die Gewinne von Genossenschaftsinstituten relativ stark von der Kosteneffizienz beeinflußt werden, ist dies bei Sparkassen sowie Kreditbanken kaum der Fall. Untersucht man dagegen die Beziehung zwischen Marktanteilsentwicklung und Effizienz, dann ist der Erklärungsgehalt für den Sparkassensektor größer als für die beiden anderen Bankengruppen.

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Open reference in new window "Efficiency, profitability and competition : empirical analysis for a panel of German Universal Banks"

Abstract: Discussions among politicians and farmers about a reform of the EC's Common Agricultural Policy ignored one important aspect: Is there an interdependence between outputlevels and factor productivity? The paper provides an empirical answer to this question by estimating a non-homothetic flexible functional form with four inputs (labour, capital, land, material) for the West-German agricultural sector. As a main result, the traditional measure of the Total Factor Productivity, the Solow-residual, overestimates the isolated technical progress by about 1% because of scale economies. If lower product prices and higher direct payments to the farmers lead to output reductions, this will also induce a less efficient production.

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Open reference in new window "Faktorproduktivität in der Landwirtschaft und EG-Agrarreform"

Abstract: New empirical evidence on the factual as opposed to the formal independence of the Deutsche Bundesbank is presented. Estimating monetary reaction functions for the Federal Republic of Germany we try to identify a direct influence of electoral cycles and an indirect influence of government deficits on monetary policy. Whereas there are clear indications for the indirect mechanism, the data does not show a direct influence as long as the model is specified with Nordhaus-cycles. Using the more recent rational partisan theory, however, yields evidence for a relationship between election dates, election outcomes, and money supply changes.

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Open reference in new window "Budgetdefizite, Wahlzyklen und Geldpolitik: Empirische Ergebnisse für die Bundesrepublik Deutschland 1962 - 1989"

Journal Articles (Professional)


Book Chapters