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The ongoing world financial crisis, now in phase two mainly affecting the loan books of banks, is forcing financial institutions to reflect or modify their business models. A review of the last full credit cycle shows opportunities to identify the relevant drivers of value that are measured in terms of both return on equity and risk. On this basis we analyzed the balance sheets and P&L accounts of about 65 European banking groups over the last cycle (2000 to 1H 2008). Five drivers define the long-term success of a bank's business model: the dynamics of growth, the asset mix, the size, the cost-to-income ratio and the relative market share compared to the banks top three country peers. As we show in detail, based on these five drivers managers are able to define their management agenda inside a consistent empirical framework. The key to success in defining a strategy is to knowing one's relative position within the competitive risk-return arena.

This study analyses the geographic integration of electricity wholesale markets with a focus on Germany and its neighbouring countries. We employ various indicators based on publically available data and find that electricity markets have become more integrated since the sector inquiry undertaken by the European Commission in the years preceeding 2006. However, European markets are not yet fully integrated. The results also suggest that stronger (and costly) integration towards certain countries may have only little or adverse effects on electricity wholesale prices in Germany. Finally, in the past, German electricity wholesale prices have appeared too low so as to trigger investments into new generation capacity. To that end prices do not appear inflated.

In this paper, we explore the possible consequences that pricing and reimbursement regulation may have on pharmaceutical innovation. We first investigate qualitatively how a pharmaceutical firm is likely to strategically respond in its R&D activities to pricing and reimbursement regulation. We then quantitatively evaluate these effects in the context of a calibrated decision-theoretic model of drug development in which a pharmaceutical firm is forward-looking and takes future pricing regulation into account in making current development decisions. Our findings indicate that, in designing optimal pharmaceutical pricing and reimbursement regulation, the benefits of more affordable or cost-effective drugs must be traded against the costs of less pharmaceutical innovation, with fewer projects being developed in general and in particular in low-margin therapeutic areas and with little potential of being considered highly innovative at the time of market launch.