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SAFE Financial History Data Projects

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SAFE Financial History Data Projects SAFE Financial History Data Projects Dr. Stéphanie Collet Research Center SAFE Goethe University Frankfurt IBF-Workshop 2018: Das Bankarchiv als Datenressource II Datenprojekte / datenbasierte finanzhistoriche Forschung Financial History Data Project @SAFE 1. German Stock Database in the Interwar Period Paper : „The Berlin Stock Exchange in the ´Great Disorder´ ” With Caroline Fohlin (Emory University) 2. German Firm-Level Database in the Interwar Period Paper: „Firms in Troubled Times: What does it Take to Survive?“ With Dennis Gram (SAFE Research Center, Goethe University) Other SAFE Paper: „Capital Structure in the Interwar Period: The Impact of Economic Crises on Managerial Risk-Taking” Marius Liebald and Uwe Walz 20/09/18 2 The Berlin Stock Exchange in the “Great Disorder” Stephanie Collet Research Center SAFE, Goethe University Caroline Fohlin Emory University Research Question Were German financial markets still functioning during the “Great Disorder”? How much are financial market able to bear? This paper provides: - First ever comprehensive daily stock price series for Germany 1920’s - First paper on the German stock market using information on the trades This paper is part of a project entitled “Financial History Database” which is funded by Research Center SAFE. The project and paper started mid 2017. 20/09/18 4 Stock Database in Germany Before WWI • GESIS: 16 historical studies based on stocks data • Some main sources: Donner (1934), Eube (1998), Fohlin (2000), Ronge (2002), Gelman and Burhop (2008) • Period covers: 1870-1914 with monthly data but also daily data on a limited number of stocks Interwar period • New SAFE project: Collet and Fohlin (2018) on daily or weekly data for all stocks traded in Berlin (1920-1930, we hope 1930-1940 in the future). It includes order book information. After WWII • Richard Stehle : monthly returns on German stocks from 1954 until 2013 as well as a yearly return of DAX stocks from 1948 until 2011. (Frankfurt Stock Exchange) • Karlsruhe capital markets database (KKMDB) 20/09/18 provides daily prices of all shares back from 19745 Stock Database in Germany Use the “Kurszettel” from the Berliner Boersenzeitung • Daily over 10 years - from January 1921 through December 1930 • Provides trading price or standing bid/ask quotation for all stocks with activity for a given day - 2,505,953 observations - 2,066,572 had a quoted price - 1,544,901 were actual trades • Indicates order imbalance - Trading happened - Clearing price • Indicates market direction - Indicates excess buy/sell orders - Bid/Ask Price 20/09/18 6 The Hyperinflation Median Share Price and C&F100 During the Peak Hyperinfla?on, OctoBer 1922-December 1923 (Daily) Median 1000000000.00 C&F100 100000000.00 10000000.00 1000000.00 15. Nov. 1923 100000.00 Percent of par value 10000.00 27. Aug. 1923 1000.00 2. Nov. 1923 100.00 Date End of hyperinfltion-- introduction of Rentenmark 20/09/18 7 Late 20’s “Bubble” Median Share Price and C&F100 in the late 20s, 1926-30 (Daily) Median C&F100 • Mai 12: Reichsbank 220.00 constraint on margin lending 200.00 • Mai 13: „Black Friday" crash Okt. 24: Back Thursday in NYSE Okt. 29:Back Tuesday in NYSE 180.00 Young Plan submitted 160.00 Election: Nazis (NSDAP): 107 140.00 seats and 18.3% of the votes. 120.00 Percent of par value 100.00 Election: Nazis (NSDAP): 12 seats and 2.6% of the 80.00 vote 60.00 Date Political Event Economic/Reparations Event Financial/Monetary Event 20/09/18 8 Market Direction Excess Demand = excess buy orders “Geld” Excess Supply= excess sell orders “Brief” Demand exceeded supply most days Especially strong during end of hyperinflation 20/09/18 9 Order Imbalance 20/09/18 10 Firms in Troubled Times What does it Take to Survive? Evidence From Germany 1920-1940 Stephanie Collet Research Center SAFE, Goethe University Dennis Gram Research Center SAFE, Goethe University Research Question Firms in Troubled Times - What does it take to survive? - Is a “relatively high” equity level enough to survive? - Does the sector of the firm matter? - Does banking connection matter? - What are the characteristics of firms which survive “troubled times”? Troubled Times? Germany 1920-1940 is an excellent case! - Hyper Inflation - 1927 and 1929 Crash - Great Depression This paper is part of a project entitled “Financial History Database” which is funded by Research Center SAFE. The project started mid 2017 and this paper started in January 2018. 20/09/18 12 Data Data: German firm-level data yearly from 1920 to 1940 - All German “Aktien - Gesellschaften”, ~165.000 pages - Firm data: Balance Sheet, Profit and Loss, Quoted (or not), Trading Places, Stock Price, Dividend, Management Board, Advisory Board, Voting Rights. 20/09/18 13 Database Building 20/09/18 14 Further research And finally, what could be of great value to us for further research: - Annual Reports of Firms - Details on labor inputs and costs (production workers, salaried employees, working proprietors, total wage bill, number of employees,…) during the interwar period - Microdata on savings accounts during the interwar period 20/09/18 15 .
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