Stefanie Kleimeier

Research Overview

New Publication


The Travels of a Bank Deposit in Turbulent Times: The Importance of Deposit Insurance Design for Cross-Border Deposits

In this paper in Economic Inquiry (2020), Shusen Qi (Xiamen University), Harald Sander (Cologne University of Applied Sciences) and I present our latest research on the effects of deposit insurance design on cross-border depositing.

In particular, we examine the impact of the existence on an explicit deposit insurance scheme and its design features on bilateral cross‐border deposits in a gravity model setting. We find that both the absolute quality of a country's deposit insurance and its relative quality vis‐à‐vis other countries'deposit insurance generally affect depositor behavior. This suggests that depositors are engaged in regulatory arbitrage. However, during systemic banking crises, cross‐border depositors primarily seek countries with the best deposit insurance schemes - suggesting that the search for save havens dominates regulatory arbitrage during unstable periods. Similarly, during the 2008–2009 great financial crisis, the emergency actions taken by the governments, which supply and maintain these safe havens, have led to substantial relocations of cross‐border deposits.

New Publication

Exporting Pollution: Where Do Multinational Firms Emit CO2?

Despite awareness of the detrimental impact of CO2 pollution on the world climate, countries vary widely in how they design and enforce environmental laws.

In this paper in Economic Policy (2021), Itzhak Ben-David (Ohio State University & NBER), Yeejin Jang (University of New South Wales), Michael Viehs (Federated Hermes International) and I explore how firms respond to environmental regulation.

Using novel microdata about multinational firms' CO2 emissions across countries, we document that firms headquartered in countries with strict environmental policies perform their polluting activities abroad in countries with relatively weaker policies. These effects are largely driven by tightened environmental policies in home countries that incentivize firms to pollute abroad rather than lenient foreign policies that attract those firms. Although firms headquartered in countries with strict domestic environmental policies are more likely to export pollution to foreign countries, they nevertheless emit somewhat less overall CO2 globally.

New Publication


Pricing Carbon Risk: Investor Preferences or Risk Mitigation?

To what extent does corporate environmental performance affect a company’s cost of capital?

Whilst institutional investors increasingly recognize that corporate environmental performance matters, there remains skepticism in how far sustainable business practices translate into immediate financial outcomes. This is, in part, driven by a lacking consensus in academic research on the relationship between corporate environmental perfor-mance and financial outcomes, including cost of capital.

In our paper "Pricing Carbon Risk: Investor Preferences or Risk Mitigation?" in Economics Letters, Michael Viehs (Federated Hermes International) and I find that companies with relatively higher carbon emissions pay higher loan spreads. Higher spreads are charged by all lenders suggesting an environmental risk premium rather than investor preferences. Risk premia are lower for companies with board-level environmental responsibility suggesting ways for companies to manage their cost of debt.

Our results have direct implications for regulators and policy makers. Our results suggest that there might be scope for a market-based solution Whether this market-based solution alone will ensure a sufficiently fast transition to a low-carbon economy, however, warrant further investigation.