Stockholm School of Economics

About: Stockholm School of Economics is a education organization based out in Stockholm, Sweden. It is known for research contribution in the topics: Population & Entrepreneurship. The organization has 1186 authors who have published 4891 publications receiving 285543 citations. The organization is also known as: Stockholm Business School & Handelshögskolan i Stockholm.

Do Cultural Differences Between Contracting Parties Matter? Evidence from Syndicated Bank Loans

Abstract: We investigate whether cultural differences between professional decision makers affect financial contracts in a large data set of international syndicated bank loans. We find that more culturally distant lead banks offer borrowers smaller loans at a higher interest rate and are more likely to require third-party guarantees. These effects do not disappear following repeated interaction between borrower and lender and are economically sizable: A one-standard-deviation increase in cultural distance, approximately the distance between Canada and the United States or between Japan and South Korea, is associated with a 6.5 basis point higher loan spread; the loan spread increases by about 23 basis points if the bank-firm match involves culturally more distant parties, for example, from Japan and the United States. We also find that cultural differences not only affect the relation between borrower and lender, but also hamper risk sharing between participant banks and culturally distant lead banks. This paper was accepted by Brad Barber, Teck Ho, and Terrance Odean, special issue editors.

On the power and interpretation of panel unit root tests

Abstract: We demonstrate that panel unit root tests can have high power when a small fraction of the series are stationary and may lack power when a large fraction is stationary. The acceptance or rejection of the null is thus not sufficient evidence to conclude that all series have a unit root or that all are stationary.

Genetic Variation in Financial Decision Making

Abstract: Individuals differ in how they compose their investment portfolios, yet empirical models of portfolio risk typically only account for a small portion of the cross-sectional variance. This paper asks if genetic variation can explain some of these individual differences. Following a major pension reform Swedish adults had to compose a portfolio from a large menu of funds. We match data on these investment decisions with the Swedish Twin Registry and find that approximately 25% of individual variation in portfolio risk is due to genetic variation. We also show that these results extend to several other aspects of financial decision-making.

Measuring the Security of External Energy Supply in the European Union

Abstract: The security of energy supply is one of the main objectives of EU energy policy. In this paper, we introduce an index designed to evaluate the short-term risks associated with the external supply of energy to the EU Member States. It combines measures of energy import diversification, political risks of the supplying country, risk associated with energy transit, and the economic impact of a supply disruption. We construct separate indexes for three primary energy types, oil, gas and coal, and demonstrate that Member States’ levels of supply risk exposure differ across energies. Most other studies of this kind provide aggregate indexes combining different types of energy. Our results suggest that an aggregate approach could be misleading, at least for discussions of the short-term response to risks. We discuss the implications of our findings for the common energy policy.

What price depression? The cost of depression and the cost-effectiveness of pharmacological treatment.

Abstract: The purpose of this study was twofold: to measure the overall direct costs of depression for 1990 in the UK, and to develop a model to illustrate issues in the evaluation of the relative cost-effectiveness of the pharmacological treatment of depression. We compared a tricyclic antidepressant, imipramine, with paroxetine, a newer antidepressant. For assessing the cost of illness, we used a top-down approach. We calculated direct but not indirect costs. Cost-effectiveness was evaluated by developing a simulation model based on the theory of clinical decision analysis to compare the costs and outcome of each treatment. From this we estimated the expected cost per patient and the cost per successfully treated patient. The total cost to the nation of depressive illness was estimated to be 222 pounds million. The expected costs per patient were found to be similar for paroxetine and imipramine (430 pounds v. 424 pounds). The costs per successfully treated patient were found to be lower for paroxetine (824 pounds) than for imipramine (1024 pounds). The results were stable when a sensitivity analysis was applied to the variables employed in the model. The most sensitive variable was the cost of treatment failure. Our model thus reveals that medication that appears expensive in terms of cost per day may not be so when patient compliance and the total costs of treatment are taken into account.