Béatrice Héricourt will assume the role of chief executive officer at La Redoute chairman of the Board of Directors of the Galeries Lafayette Group Héricourt brings over 25 years of experience in driving strategies and transformation for French companies in omnichannel retail her mission is to guide the company into a new growth cycle and to strengthen its positioning as an e-commerce player in the home and fashion sectors "We are confident that she possesses the strategic and operational skills necessary to guide the company's development and meet the challenges ahead in a turbulent economic context with the collaboration of all teams," said Houzé Héricourt is a graduate of Escem and began her career in 1997 as an auditor at Arthur Andersen where she spent nine years within the collections and purchasing department She then became director of Offer and Purchasing for the brand Tape à l'oeil where she spent three years before joining the Kiabi Group in 2011 she held several key positions before being appointed managing director in 2019 where she initiated a development strategy she became managing director of Electro Dépôt FashionUnited uses AI language tools to speed up translating (news) articles and proofread the translations to improve the end result This saves our human journalists time they can spend doing research and writing original articles Articles translated with the help of AI are checked and edited by a human desk editor prior to going online If you have questions or comments about this process email us at info@fashionunited.com A key takeaway is that the magnitude of this mechanism hinges on how much investment depends on the value of assets is influenced by a firm's capacity to self-finance versus its reliance on its holdings of assets eligible as collateral Evidently this dependency varies by firm: large firms are well-known to be much better at self-financing their investments through market finance or retained earnings It follows immediately that the distribution of firm sizes — or more broadly firms' ability to self-finance or to directly access financial markets — influences the extent to which aggregate investment (and therefore economic fluctuations) depends on asset prices firm size distributions vary greatly across countries there is extant heterogeneity in firm-level employment distributions across EU countries Firms in Italy or Portugal tend to be smaller on average compared to those in Denmark or Finland there are fundamental reasons why a shock affecting asset prices can lead to heterogeneous responses in business cycles across countries Such predictable heterogeneity is immediately relevant for policymakers whose decisions impact diverse regions Its monetary policy decisions affect countries with vastly different firm distributions which means a single monetary policy shock could lead to divergent business cycles among member countries thereby increasing the very cost of maintaining a single currency Figure 1 Employment share by employment category we explore the quantitative relevance of this mechanism Our objective is to create a methodology using detailed firm-level data from one country to assess how responsive aggregate investment is to financing constraints in other countries We want to achieve this using only summary characteristics of the firm size distribution and without detailed firm-level data in those countries We begin by estimating the response of investment to changes in collateral value at the firm level in France focusing on quantiles of French firms from 1994 to 2015 The quantiles are chosen to split the universe of French firms into categories with heterogeneous credit constraints The estimation results are then imputed to other countries where we have data on firm distributions but lack individual balance sheets We assume that firms in similar positions within their respective distributions exhibit comparable investment responses to changes in collateral values The assumption allows us to approximate the distribution of investment responses in countries without firm-level balance sheet data and to estimate the aggregate collateral channel There are several challenges to address before achieving this objective we need firm-level data on investment and collateral values in one country A common measure of collateral is the value of real estate assets listed companies are likely the least affected by financial constraints suggesting that those data provide a lower bound to the actual investment responses we combine the balance sheet data on the universe of French firms with information on local real estate prices there are well-known issues of simultaneity and endogeneity between investment and real estate prices Their approach was heavily criticised by Welch (2021) and we incorporate his comments in a battery of alternative specifications that ascertain the existence of a causal and heterogeneous relationship going from real estate prices to investment in the universe of French firms to impute the effects estimated from French data to other countries we need information on firm distributions in those countries we require the distribution of firms across the different quantiles used in the French data estimations We can impute the heterogeneous effects from the French data to other countries with similar financial systems particularly those with a comparable reliance on bank finance our analysis includes nine Western European countries (Belgium a former transition country where credit constraints are likely more severe than in Western Europe; Switzerland a Western European country outside the EU; and the UK known for its significant market finance sector the average sensitivity of investment to changes in real estate prices among French firms is approximately 0.2 the estimates vary considerably with firm size: the smallest firms are at least three times more responsive to changes in collateral value compared to the largest firms This heterogeneity is salient for a variety of measures of size we plot the elasticities estimated by firm employment classes These estimates are robust across various data sources and controls Although the estimated effects are smallest for large firms which are presumably the least credit constrained Figure 2 Investment sensitivity to changes in collateral value in France The distribution of firm sizes varies across countries The elasticity estimates vary along the firm size distribution These two sources of heterogeneity combine to create potentially significant differences in collateral channels at the aggregate level between countries This reasoning leads to our second main finding We identify significant cross-country heterogeneity in the estimated reactions to collateral shocks attributable to differences in firm distributions (see Figure 3) Because of substantial cross-country variation in firm distributions the sensitivity of aggregate investment to collateral shocks ranges from 0.16 in Switzerland to 0.25 in the Czech Republic the estimates range from 0.18 in Finland to 0.25 in Belgium These results are robust across various aggregation exercises using different proxies for firm size this means that an identical shock to real estate prices (e.g a monetary policy shock) elicits a 1.3 to 1.4 times greater investment response in Belgium or the Czech Republic compared to Finland or France Figure 3 Heterogeneity in the aggregate collateral channel in Europe One of the main sources of this heterogeneity is the significant role of small firms in determining the magnitude of the aggregate investment response to a collateral shock given the disproportionate influence of large firms on aggregate dynamics as highlighted in a growing body of literature pioneered by Gabaix (2011) Even though small firms have a relatively minor impact on aggregate dynamics they are crucial in determining the magnitude of the response of aggregate investment to collateral shocks The finding has interesting policy implications The pronounced heterogeneous effects of collateral shocks across firms should be a concern for national authorities The resulting heterogeneous effects of collateral shocks across countries should be a concern for international policymakers Aron, K and J Muellbauer (2022), “The global climate accelerator and the financial accelerator: Clarifying the commonalities, and implications from Putin’s war” “The collateral channel: How real estate shocks affect corporate investment” American Economic Review 102(6): 2381–2409 “The granular origins of aggregate fluctuations” Hericourt, J, J Imbs and L Patureau (2024), “The collateral channel within and between countries” Journal of Political Economy 105(2): 211–248 Sala, L, T Monacelli, A Rebucci and R Cardarelli (2008), “The changing housing cycle and its implications for monetary policy” “Spurious Inference Caused by Time-Series Variation in Scaling: Real Estate Shocks Did Not Affect Corporate Investment” M&S blocks remote workers and halts online sales following suspected ransomware breach Navigating tariff turbulence: How UK retailers are adapting to US trade policy shocks UK reviews low-value import scheme after retailers raise dumping concerns Screwfix speeds up delivery service to 20 minutes Etsy revamps platform with new digital tools Nike faces $5m lawsuit after NFT platform closure Marks & Spencer instructs warehouse agency staff to stay home as cyber incident impacts operations Co-op hit by attempted hack amidst M&S cyber incident Lidl to invest £500m in UK store expansion Asda co-owner Mohin Issa steps down from EG Group UK strikes deal with EU on post-Brexit financial services – report Paragon reveals expanded development finance portfolio Gunfire reported outside San Antonio police HQ FTSE chairman receives criticism after 3 of his companies fall into trouble ‘IHT gifting allowance update could cascade £82.6bn to lower generations’ - Old Mutual Wealth £500 employer-arranged pensions advice should be doubled – Aegon Budget confirms minimum investment for premium bonds to be reduced from £100 to £25 Chancellor likely to revert to ‘salami-slicing’ of pension tax relief Sam’s Club transforms retail media network Space NK owner launches £300m-plus beauty chain sale Harrods third British retailer hit by cyber incident in two weeks Digital ID services in the UK and US to be available through Google Wallet Skechers launches in-store AI retail assistant in Singapore Maplin first brands to join Deliveroo’s new virtual store service Amazon to invest $4bn in rural US delivery expansion Product lifecycles must become more efficient Poundland significantly reduces antisocial behaviour aggression and shoplifting with Motorola Solutions VT100 body cameras Decrease theft and grow your bottom line with new security tech Watson’s In-Store Connectivity Remains in Good Health with New Managed Service Contract From design ideas to customer checkout – why better creative workflows deliver better retail performance Connecting decision makers to a dynamic network of information Bloomberg quickly and accurately delivers business and financial information Mineworkers behind the security fence at the Gold One International Ltd More than 540 workers failed to leave the mine after their Sunday night shift ended with the company describing a “hostage situation” unfolding the following day The Association of Mineworkers and Construction Union maintained the action was a sit-in protest due to Gold One’s failure to recognize the labor group despite its claim of having a majority of employees as members About 540 workers at Gold One International Ltd.’s Modder East mine have been prevented from returning to the surface by labor-union members after a dispute over recognition Workers at the operation near Johannesburg were kept underground after the night shift ended by the Association of Mineworkers and Construction Union “Last night we heard AMCU members prevented workers from coming back up,” he said the company has identified the National Union of Mineworkers as the recognized labor group AMCU has claimed to meet the criteria needed to reach the status and threatened to strike in a court process that hasn’t been concluded Production is at a standstill as the company meets with labor and tries to gain access to the mine to help employees who have been injured in the dispute and website in this browser for the next time I comment Δdocument.getElementById( "ak_js_1" ).setAttribute( "value" Gruyere gold mine joint venture partners Gold Fields and Gold Road Resources reach agreement on a friendly deal to consolidate ownership. The initiative will be delivered through the regional joint venture established by Fleet Space Technologies and Tahreez. The US central bank is widely expected to hold rates steady in this meeting. Romania has major reserves of rare earths, gold and copper, which have attracted interest from Canadian and American firms. Thanks for signing up for our daily insight on the African economy We bring you daily editor picks from the best Business Insider news content so you can stay updated on the latest topics and conversations on the African market Also join us across all of our other channels - we love to be connected The creation of the euro in 1999 was expected to become a catalyst for real convergence in Europe real divergence increased as evidenced by low productivity growth in the ‘periphery’ of the euro area relative to ‘core’ countries This divergence was accompanied by massive capital flows from the euro area’s core ­– Germany The process left peripheral economies with financial and real estate bubbles – Spain being emblematic of the latter – together with a continuously weakening manufacturing sector while this same sector gained strength in Germany (Krugman 2013) Figure 1 provides a striking illustration of the divergence process at work in the euro area since the beginning of the 21stcentury It focuses on three countries emblematic of structural divergences within the euro area: Germany and Spain which is often described as occupying an ‘in-between’ position Spanish total factor productivity (TFP) stagnated while French TFP increased at half the pace of German TFP Note: This figure uses EU KLEMS data and measures TFP as a weighted average of sectoral TFP based on a classification with 33 sectors with value set to 0 in 2000) built using historical value-added shares by sector as weights European countries experienced heterogeneous real estate price dynamics which took the form These real estate booms occurred notably in Spain and France while price increases were more moderate in Germany particularly in the first decade of the sample (Figure 2) This column argues that real estate prices contributed to both the productivity divergence and the slowdown in the EU through a sectoral reallocation mechanism Note: Country-level real estate prices (index A recent literature studies the role of resource misallocations in explaining international differences in productivity by focusing on within-sector reallocations among firms (see e.g we show that reallocation between sectors is a strong candidate in explaining both the productivity slowdown observed in most EU countries and the divergence between them Based on a database of 33 sectors and 14 countries between 1995 and 2015 Figure 3 compares the actually observed TFP to a counterfactual aggregate TFP based on a weighted sum of sectoral TFP for which the share in value-added for each sector has been set to its 2000 level the TFP dynamics would not have been negative without these reallocations the difference between the cumulative growth of TFP for the initial sectoral structure and the observed growth of TFP is around 2% This disparity means that without sectoral reallocations The gap in cumulative TFP growth between France and Germany would also have been reduced from about 1.5 percentage points to 0.5 points The right panel shows the difference between the plain and the dashed lines for each of the three considered countries revealing the extent of the divergences in TFP dynamics fuelled by sectoral reallocations: whereas losses have been limited in Germany they have been significant in Spain (until a reversal in 2008) and continued increasing in France We report TFP losses due to sectoral reallocations for the 14 studied European countries TFP losses due to sectoral reallocations are largest in France Figure 3 TFP losses due to sectoral reallocations (b) TFP losses due to sectoral reallocations Note: Panel (a): ‘TFP’ is the country-level TFP (in log ‘TFP (initial weights)’ is the country-level TFP using initial value-added shares by sector as weights Panel (b): ‘TFP losses’ displays the gap between ‘TFP’ and ‘TFP (initial weights)’ Figure 4 compares the dynamics of real estate prices with those of TFP It is striking to see that the dynamics of TFP losses and real estate prices reflect each other closely and that periods of booming real estate prices generally coincide with sectoral reallocations detrimental to TFP This clearly suggests a relationship between the two phenomena Figure 4 Real estate prices versus TFP losses ‘TFP losses’ displays the gap between ‘TFP’ and ‘TFP (initial weights)’ real estate shocks lead to reallocations involving all sectors of the economy thus transforming the structure of the economy we use variations in (real estate) collateral at the country-sector level to identify the impact of real estate shocks on sectoral reallocations The collateral mechanism is linked to the ‘financial accelerator’ (Bernanke and Gertler 1989 Kiyotaki and Moore 1997): with imperfect financial markets financially constrained sectors (and firms within these sectors) will use their pledgeable assets as collateral to finance their investment (Chaney et al we expect that an increase in the value of the collateral will allow sectors to increase their investment the more so if the sector has relatively more collateral (which we measure through the amount of real estate capital owned by the sector) we identify exogenous shocks to domestic real estate prices through a combination of world demand shocks and country-level supply constraints on the real estate market This allows us to recover the causal impact of real estate price shocks on investment share of total value added (as a proxy for sectoral size) and TFP growth at the country-sector level Our results show that exogenous real estate price shocks increase sectoral investment and size: a 10-percentage point increase of real estate sectoral holdings brings an additional 0.8 percentage points in the ratio of investment to capital stock and an additional 6 percentage points to the ratio of gross value added to capital stock we find no significant impact on sectoral TFP real estate shocks may affect aggregate TFP exclusively through a sectoral reallocation mechanism we find that these productivity effects of real estate price shocks are not only quantitatively non-negligible but also point to a greater divergence between EU countries there is a group of countries where real estate shocks generate TFP losses including countries where real estate booms started early and were substantial there is another group of countries for which our mechanism generates TFP gains – including Germany where real estate prices grew later or at a slower pace These results fit well with recent work by Hau and Ouyang (2018) whose data for the Chinese manufacturing sector demonstrate that real estate booms exert a detrimental effect on other industries through the diversion of local savings into the real estate sector The lack of real convergence between countries is a major obstacle to the proper functioning of the euro area This column highlights the importance of a sectoral specialisation mechanism triggered by real estate cycles in feeding this lack of real convergence This explains Spain’s lag behind Germany before the Great Recession and partly explains France’s lag afterwards real estate shocks not only lead to reallocations towards the construction sector but also change the relative size of every sector and consequently the whole structure of economies we remain relatively agnostic about fundamental shocks that drive real estate prices Diverging financial or housing cycles – in particular between France and Spain on the one hand and Germany on the other – could be due to diverging demand shocks at the national level such as diverging fiscal policies institutions that want to promote the convergence of productivity in Europe should thus not only focus on supply-side policies but should also take into account the effects of diverging national demand shocks on the European productivity divergence Banerjee, B and F Coricelli (2017), “Misallocation in Europe during the global financial crisis: Some stylised facts” “Cross-country differences in productivity: The role of allocation and selection” International Economic Review 61(1): 383–416 Grjebine, T, J Héricourt and F Tripier (2022), “Sectoral Reallocations, Real-Estate Shocks, and Productivity Divergence in Europe” Hau, H and D Ouyang (2018), “Local capital scarcity and industrial decline caused by China’s real estate booms” NBER Macroeconomics Annual 27(1): 439­–448 From the breakdown of the Bretton-Woods Agreements to the recent charges of “currency war”1 against countries using unconventional monetary policies based on quantitative easing the instability and volatility of exchange rates have been recurring issues Governments tried a variety of strategies to handle the problem from multilateral arrangements such as the Louvre and Plaza agreements in the 1980s to fixed pegs the Eurozone appearing as an extreme case of the latter 73% of CEOs are concerned to some extent by exchange rate volatility macroeconomic evidence on the impact of exchange rate volatility on trade yielded either small or insignificant effect on aggregate outcomes Common explanations for this missing evidence refer to the existence of hedging instruments for exchange rate risk Recent works on countries with higher financial constraints (and consequently less hedging opportunities) support this argument whether at the macro level (Grier and Smallwood 2007) or the micro level (Héricourt and Poncet 2015) multi-destination firms – which account for the bulk of aggregate exports – reallocate exports across countries By transferring trade to less volatile destinations they leave exports mainly unchanged at the macro level Several mechanisms can generate a negative impact of exchange rate volatility on trade one may think of exchange rate risk as creating an uncertainty for the exporter’s earnings in her own currency which is similar to an increase in variable costs (2011) show that higher variable trade costs (e.g an increase in exchange rate volatility) lead to a decrease in all trade margins Exchange rate volatility may also increase the sunk costs of exports which can be seen as a form of investment in intangible capital How should firm performance impact this relationship between bilateral exchange volatility and exports Multi-destination firms straightforwardly face a larger risk compared to firms serving less destinations insofar as they are more exposed to changes in exchange rate in many countries Each supplementary destination in the portfolio of markets served by the firm adds a new source of exchange rate fluctuations Multi-destination firms are also potentially more able to handle exchange rate risks than smaller firms because of a better access to hedging instruments (Martin and Méjean 2012 a higher number of destinations served also means increased diversification possibilities Multi-destination firms have the ability to be more reactive to increased exchange rate volatility by reallocating exports away from more volatile destinations the elasticity of firm-destination exports to bilateral exchange rate volatility may be magnified by firm performance because of optimal reallocation across destinations we find support for this kind of mechanism using a panel of French firms (Héricourt and Nedoncelle 2016) Based on a yearly firm-level dataset containing country-specific trade data from the French Customs and balance-sheet information over the period 1995-2009 we identify the impact of exchange rate volatility on different measures of intensive and extensive margins Exchange rate volatility is defined as the yearly standard deviation of monthly growth rates in the real exchange rate the latter being the nominal exchange rate of the French currency with respect to the partner's currency multiplied with the ratio of partner's price level over French price level we find that a 10% increase in bilateral volatility reduces the value exported by 0.25% and entry to a given export market by 0.15% these average estimates hide a large heterogeneity across firms large firms tend to reduce exports towards the considered destination disproportionately more than small firms the effects are mostly concentrated at the intensive margin Ranking firm-country observations according to the number of destinations served our results show that a 10% increase in bilateral volatility decreases the value exported at the top 10% by 3.6% relative to the bottom 10% Similar computation for the differential effect between the top 1% and the bottom 1% gives a 6.2% decrease the net differential impacts are equal to -0.4% (top 10%; bottom 10%) and -0.6% (top 1%; bottom 1%) Results are strongly robust to the inclusion of proxies for natural (through imports) and financial hedging Even when one accounts for hedging strategies the negative impact of bilateral volatility keeps increasing with the number of destinations served We argue that this pattern can be explained by the reallocation of firm’s exports across destinations Figure 1 reports two types of exchange rate volatility faced by firms according to the number of destinations served The full line represents the average of the firm-level arithmetic mean of exchange rate volatilities over all destinations The dotted line represents the exports-weighted (by the share of each destination in all firm-year exports) average exchange rate volatility faced by firms the higher the average exchange rate volatility we find that the average exchange rate volatility increases less than if no reallocation choices were made by the firm Firms seem to choose their export destinations so as to get away Average exchange rate volatilities: Arithmetic mean and effective mean Source: Authors' computations from French Customs and IFS This descriptive evidence of a reallocation behaviour is supported by our econometric analysis We investigate how bilateral exports from a firm to a considered destination react to a measure of relative exchange rate volatility The latter is the ratio of bilateral exchange rate volatility over a measure of multilateral exchange rate volatility which is a weighted average of volatilities in other countries the firm could serve conditionally to her sector We find that multi-destinations firms take into account what happens in all relevant destinations When bilateral volatility increases relative to multilateral volatility exports towards the considered market are hampered We suggest a possible rationalisation of this behaviour through the lens of Markowitz portfolio theory For a given level of profitability on each market firms tend to reallocate exports away from destinations characterised by higher in order to hold the average risk level of their destinations portfolio constant This behaviour is exacerbated when the number of destinations actually served increases when the scope of possible reallocations is extended More destination-diversified firms are therefore better able to handle exchange rate risks We saw previously that the effect was especially strong for firms at the top 10% and top 1% of our sample these firms account for 91% and 63% of aggregate exports Heterogeneity in the possibility to reallocate exports across countries is therefore crucial multi-destination firms shape the way aggregate trade flows react to exchange volatility This is also consistent with evidence on 32 countries recently provided by Freund and Pierola (2015) that very large firms shape country export patterns We investigate these aggregate implications by studying how the reaction of sector-level bilateral exports to exchange rate volatility is impacted by the level of within-sector export concentration We find that the trade-deterring effect of exchange rate volatility at the sectoral level is dampened more when exports are concentrated in a few big firms exchange rate volatility does not impact exports at the sectoral level Our results help to reconcile the negligible aggregate trade elasticity to exchange rate volatility and the bilateral negative micro effect growing with the number of destinations served Multi-destination firms are able to reallocate exports across destinations so as to minimise the overall impact of exchange rate volatility on their total exports a large trade-deterring effect of exchange rate volatility in the firm-destination dimension is consistent with a small/zero trade elasticity to exchange rate volatility at the macro level our study implies that developed financial markets are not the only way to hedge against volatility multi-destination firms may use the diversification allowed by their portfolio of destinations as an additional shield promoting the development of big exporters may therefore appear as a way to offset the adverse consequences of low level of financial development regarding exchange rate volatility “Multiproduct Firms and Trade Liberalization” “Impact of Exchange Rate Movements on Exports: An Analysis of Indian Non-Financial Sector Firms” Journal of International Money and Finance “Currency war or international policy coordination?” “International Trade and the Forward Exchange market” “Uncertainty and Export Performance: Evidence from 18 Countries,” Journal of Money Héricourt, J and C Nedoncelle (2016), “How Multi-Destination Firms Shape the Effect of Exchange Rate Volatility on Trade: Micro Evidence and Aggregate Implications” Financial Constraints and Trade: Empirical Evidence from Chinese Firms” “Exchange Rate Exposure and Risk Management: The Case of Japanese Exporting Firms” the term seems to be originally due to Brazilian Finance Minister Guido Mantega in September 2010 questioning quantitative easing in the US (Eichengreen 2013) Collateral plays a central role in how we understand macroeconomic fluctuations Bernanke and Gertler (1989) famously lay out that changes in asset prices can affect wider economic conditions through a ‘financial accelerator’ mechanism when these assets are used as collateral rising asset prices increase collateral values and allow firms borrowing against this collateral to borrow more Increased borrowing by firms in turn boosts economic activity and further increases asset prices thus restarting the cycle by again increasing collateral values with falling asset prices restricting firms’ borrowing capacity and depressing wider economic activity this mechanism has played out most prominently via real estate markets during the global financial crisis and in a number of developed economies in the 1990s (see also Hericourt et al 2022 on implications for productivity during the pre-crisis boom) we examine how the commercial real estate downturn created by the Covid-19 pandemic (Mittal et al 2022) affected firms’ capacity to borrow from banks in the euro area We use a new credit registry dataset which provides information on all lending to firms by euro area banks Our study benefits from monthly collateral-level information on almost 5 million pieces of real estate collateral across the euro area which allows us to study – to our knowledge for the first time –  the banking system’s role in driving the financial accelerator mechanism this dataset allows us to directly examine banks’ revaluation of collateral during a market downturn and their willingness to lend against this collateral during crisis periods banks did not significantly lower the reported valuations of the real estate they held as collateral which would suggest that banks automatically revise collateral values downwards during a crisis when asset prices fall we break down the stock of real estate collateral held by euro area banks by the size of its revaluation over the course of the years 2019 Revaluation of real estate collateral by banks appears to have remained largely unchanged during the pandemic compared to 2019 Figure 1 Real estate collateral revaluation by euro area banks remained largely unchanged following the outbreak of the Covid-19 pandemic This suggests that the assumptions made about the role of the banking system in a simple version of the financial accelerator model may be somewhat simplistic Textbook assumptions may ignore certain factors which keep banks from simply mapping changes in market values onto collateral values revaluations may be costly to carry out or banks may wish to avoid revaluing collateral where a downward revaluation could have implications for factors such as their capital requirements or risk weights the share of collateral revalued each year varies widely across euro area countries suggesting that factors which disincentivise or incentivise revaluation may be quite different in each country (Figure 2) the approach taken to calculating collateral values could influence revaluation frequency with valuation techniques aiming to capture long-run values arguably requiring fewer updates than market value approaches This suggests that the same asset price drop could have markedly different implications for borrowing dynamics in different euro area countries This finding is particularly important in the current context of monetary tightening All euro area countries are subject to the same changes in interest rates but these could have different implications for lending across countries if banks incorporate them into collateral valuations in different ways or at different speeds Figure 2 Revaluation behaviour shows clear national trends with the share of collateral revalued in a given year varying dramatically across countries we examine how firms' use of real estate collateral and banks' treatment of it affected lending outcomes during the crisis As we don’t see a widespread downward revaluation of collateral following the outbreak of the crisis first we simply examine how firms' use of the real estate as collateral in general affected their capacity to borrow We find that lending relationships which had relied on real estate collateral prior to the pandemic received significantly less credit following the outbreak of the pandemic The share of loans to firms reliaton on real estate collateral dropped sharply from over 30% of quarterly new loans to less than 10% with the outbreak of the pandemic (Figure 3) Figure 3 Following the outbreak of the Covid-19 pandemic the share of new lending to firms reliant on real estate collateral dropped sharply it is entirely possible that firms which used real estate as collateral were particularly negatively affected by the Covid-19 pandemic more generally firms which owned shopping centres or office buildings that were directly affected by lockdowns may have seen a very sharp drop in revenue It is possible that this drop in revenue may have been the main driver of their borrowing dynamics the existing empirical literature consistently flags this as a source of bias which cannot be fully addressed (e.g the granularity of our dataset allows us to effectively account for this by applying the method laid out in Khwaja and Mian (2008) We focus on firms which have lending relationships with multiple banks We then measure how borrowing outcomes for a given firm varied depending on whether or not a banking relationship had relied on real estate collateral prior to Covid By doing this we can control for all firm characteristics which could potentially bias our results – such as the firm’s demand for loans or the revenue impact of the pandemic on that firm when a lending relationship had relied on real estate as collateral it received approximately one-third less credit following the outbreak of the pandemic we see if the revaluations which did take place had implications for firms’ capacity to borrow Again we apply the Khwaja and Mian (2008) method comparing outcomes for a given firm across their real estate collateralised lending relationships We find that a firm was 21% less likely to take out a new loan following a negative revaluation Where borrowers are highly leveraged this figure increases to 42% interest rate and maturity of new lending is less clear although we provide some evidence that downward revaluations were associated with smaller new loans Taken together our findings suggest that the collateral channel of the financial accelerator remains alive and well Our results confirm that real estate market dynamics can play a significant role in determining credit availability our results suggest that following the outbreak of a crisis banks may sharply reduce lending against affected types of collateral we also show that existing assumptions about the role of the banking system in driving this dynamic may be overly simplistic bank revaluation behaviour deviates substantially from a simple mapping of asset price dynamics onto collateral values which may be implied by a textbook understanding of the financial accelerator model Authors' note: The views expressed in this column are those of the authors and are not necessarily those held by the ECB “The Collateral Channel: How Real Estate Shocks Affect Corporate Investment” Henricot, D, J B Eymeoud, T Garcia and  A Bergeaud (2022), “Working from home and corporate real estate” Hericourt, J, F Tripier and T Grjebine (2022), “Real estate booms are behind Europe’s productivity divergence” Horan, A, B Jarmulska and E Ryan (2023), “Asset Prices, Collateral and Bank Lending – The Case of Covid-19 and Real Estate” “Tracing the Impact of Bank Liquidity Shocks: Evidence from An Emerging Market” Mittal, V,  S Van Nieuwerburgh and A Gupta (2022), “Work from home and the office real estate apocalypse” VoxEU.org Not Without You”: Babil Khan Remembers Irrfan in a Poem Full of Rainbows Pankaj Tripathi Returns as Madhav Mishra in Criminal Justice 4—But This Time Samarth Jurel Rings in His Birthday with a Glittering Star-Studded Bash Esha Deol Shares Vintage Love: A Throwback Tribute to Dharmendra And Hema Malini's Timeless Bond Salman Khan Spotted at Mumbai Airport Amid Tight Security Deepika Padukone And Karan Johar Reunite for an Unfiltered Chat at WAVES2025 Ramayana Goes Global: Namit Malhotra 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Raaj Kamal Films International Issues Warning Against Fake Casting Calls  About Us  Our Team  Contact Us  Disclaimer  Image Use Policy  Affiliate Disclosure  Terms & Conditions Copyright © 2023  |  All Rights Reserved A group of miners from an unregistered union allegedly held hundreds of their colleagues hostage since Monday morning Members of the Association of Mineworkers and Construction Union (AMCU) reportedly refused to let their co-workers head to the surface at the end of their Sunday night shift the CEO of the New Kleinfontein Gold Mine company which manages the Modder East mine outside the South African city of Johannesburg He believes 562 workers were trapped underground with up to 120 of them being AMCU supporters who likely used hammers shovels and other mining equipment as weapons About 107 have reportedly managed to escape on Wednesday morning after slipping through a shaft exit for machinery and trucks Some 15 miners have reportedly been injured in scuffles with one man sustaining a serious head injury Mr Hericourt said negotiators had secured an agreement for a paramedic and security officer to be sent down Police and mine officials are no longer in contact with anyone underground despite trying to reach them via mine telephones and two-way radios AMCU has disputed Mr Hericourt’s version of events saying that there was a sit-in protest by miners in support of the union also insisted its members were being held against their will and has called on law enforcement agencies to “intervene and go underground and arrest the hooligans” The South African Police Services said it was “on standby” Mr Hericourt said the dispute was over AMCU wanting to be the sole union representing the miners at Modder East Speaking about the 100 workers who managed to get out of the mine Gold One Group's head of legal Ziyaad Hassam said: “At this stage we are still investigating so that we get a sense of what is going on I’m not aware if the police negotiator played a role in them coming out It was a surprise to see them coming out." The longstanding rivalry between the two unions has existed since ACMU’s formation in 1998 Their feud was ongoing during the infamous Marikana Massacre in August 2012 when South African police opened fire on 34 striking mineworkers in one of the deadliest mass shootings the country has seen since the end of apartheid 'They are still preventing them from coming to the surface' South Africa — A group of miners from an unregistered rival union are holding hundreds of their colleagues underground for a second day at a gold mine in South Africa over a union dispute Some 15 miners have been injured in scuffles Details were sketchy and there were conflicting statements over what happened with the unregistered union asserting it represents the majority of employees at the mine and it wants to be formally recognized It said the workers underground were staging a protest and there was no hostage situation the incident erupted early Monday when miners from the AMCU union prevented hundreds of others from leaving after their night shift ended at the Modder East mine in Springs Hericourt said there were 562 mineworkers underground and the company had estimated that between 110 and 120 of them were AMCU supporters shovels and other mining equipment that could be used as weapons Police said the mineworkers had been underground since their night shift began late Sunday Mine officials were in talks with union representatives to resolve the issue and “police are on standby,” the South African Police Services said in a statement Police and mine officials were not currently in contact with anyone underground despite trying to reach them via mine telephones and two-way radios There had been some initial contact early Monday with the alleged hostage-takers At least one man had sustained a serious head injury in scuffles The mine sent a paramedic and a security officer to bring him out on Monday after an agreement that they could said its members were being held against their will “They are still preventing them from coming to the surface,” NUM representative Mlulameli Mweli said adding there were also female mine employees trapped “NUM calls for the law enforcement agencies in South Africa to intervene and go underground and arrest the hooligans.” saying they have demanded to be the sole union representing the miners at Modder East AMCU has disputed Hericourt’s version of events Rivalry between the NUM and AMCU unions was partly responsible for one of South Africa’s most horrific mining episodes when 34 striking mineworkers were shot and killed by police at a platinum mine in Marikana in the North West province in 2012 Six other mineworkers and two security officials were killed in days of violence that preceded one of the worst mass shootings by police in South Africa since the end of apartheid Home | Business According to the National Union of Mineworkers scores of mineworkers have surfaced at Gold One in Springs east of Johannesburg following almost three days of sit-in underground This after spending three days below the surface The workers are currently undergoing medical evaluations The union says the workers have informed them of a fighting incident that took place underground “I am informed that 100 workers have come to the surface.” The audio below is full interview with Mpho Phakedi The hostage-takers started fighting among themselves Gold One Mine CEO Jonathan Hericourt says they have mobilized resources to speed up the evacuation process and to ensure health facilities are on standby for those who might need medical attention He says more security personnel and three medical helicopters have been deployed on-site to assist with the operation The audio below is full interview with CEO Jonathan Hericourt: