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Volume VI(1) - July 2017

In this issue, results of Bachelor and Master theses are presented by T. Klingelhöller, A. Krywjak, M. Reuter and K. Roohnikan.

Volume VI(1) - July 2017

How to obtain the issue? A free digital copy of The Bonn Journal of Economics is accessible online. In addition, all theses and contributions are available separately. Please refer to the list of articles below for the corresponding links.

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The effects of capital requirements on shadow banking - A theoretical analysis

Thorsten Klingelhöller. This article aims to provide insights on the considerations prompting banks to sell some of their risky assets to other less regulated entities and how their decision is influenced by regulatory risk-adjusted leverage ratios. Based on a framework by Guillaume Plantin, these aspects are discussed in a regime with mandatory asset ratings and compared to a state without these regulations. It will be shown that asset ratings might have a dichotomous effect on welfare.

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Team incentives and inequity aversion

Adrian Krywjak. In this Bachelor thesis, the behavior of inequity averse people is analyzed based on (Rey-Biel, 2008). Using an adjusted Fehr Schmidt utility function, an optimal contract for all kinds of inequity aversion can be derived. The main result is that employers prefer hiring inequity averse workers, as they always demand lower compensation in comparison with standard preference agents. The formal derivation of the results presented here can be found in the original Bachelor thesis.

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The Effects of Bail Ins on Interconnected Banks

Marco Reuter. As a result of the 2008 financial crisis and the immense costs for saving banks that took place on a global scale, banking regulation has changed from „bail out“ to „bail in“. The scientific discussion regarding implications of these new regulations is far from concluded. To add to this discussion, the thesis connects the topic of financial contagion and stability to the status quo in banking regulation. A theoretical model is developed which recognizes inter bank TLAC holdings as a channel for contagion and a possible threat to financial stability, as recognized in the most recent update of banking regulation by the Basel Committee on Banking Supervision.

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An Empirical Analysis of Market Manipulation in the USA

Kevin Roohnikan. In modern times, copious famous cases of market manipulation emerges, however the academic literature lacks on empirical studies on market manipulation. This thesis tries to investigate the eects of market manipulation on stock prices. It is shown that there are common problems while analyzing market manipulation, such as partial anticipation and incompleteness of disclosing market manipulation. The main focus lies on an event study, testing abnormal returns on signicance. Additionally, further regression analysis is supplied to deepen the results of the event study.

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