Documents de travail Faculté des sciences économiques et de gestionPôle européen de gestion et d'économie (PEGE)

We investigate the network structure of bank lending markets and evaluate the impact of lenders' network centrality, considered a measure of their experience and reputation, on borrowing costs. We show that the French market for syndicated bank loans is a 'small world' characterized by large local density and short social distances between lenders. Such a network structure allows for better information and resources flows between banks thus enhancing their social captial. We then show that lenders' experience and reputation play a significant role in reducing loan spreads and thus increasing borrower's wealth.

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Innovation is a source of increasing productivity, but it is also a source of stress. Psychological research shows that moderate stress increases the productivity of an actor, but above a certain level, additional stress decreases productivity. Stress is reduced by coping behaviour of the actor, and in addition it is buffered by social relations. However, high levels of stress negatively affect social relations, causing social erosion. In a formal model including inter-agent dynamics, we show that the variables moderating stress levels are of crucial importance for identifying the overall effects of different rates of innovation on productivity. The model shows among other things that the existece and nature of relationships of people determine the extent to which a certain rate of innovation effectively results in increasing productivity. In addition, it shows the possibility of multiple equilibria -under some parameter values both high-and low-stress steady states exist; and the dynamics exhibit hysteresis. At very high levels of stress, innovation can result in a dissolution of social relations, and has a negative relationship with the rate of economic growth. AbstractInnovation is a source of increasing productivity, but it is also a source of stress. Psychological research shows that moderate stress increases the productivity of an actor, but above a certain level, additional stress decreases productivity. Stress is reduced by coping behaviour of the actor, and in addition it is buffered by social relations. However, high levels of stress negatively affect social relations, causing social erosion. In a formal model including inter-agent dynamics, we show that the variables moderating stress levels are of crucial importance for identifying the overall effects of different rates of innovation on productivity. The model shows among other things that the existence and nature of relationships of people determine the extent to which a certain rate of innovation effectively results in increasing productivity. In addition, it shows the possibility of multiple equilibria -under some parameter values both high-and low-stress steady states exist; and the dynamics exhibit hysteresis. At very high levels of stress, innovation can result in a dissolution of social relations, and has a negative relationship with the rate of economic growth. * We are grateful to participants of Behavioural and Experimental Economics (BEE) seminar at Maastricht University and "Policies for Happiness" conference (Siena, June 2007) for their useful comments and suggestions. The responsibility for any mistake or omission remains ours.