Heterogeneity of technological regimes and banking efficiency in former socialist economies

Cost efficiency of banks in 20 former socialist emerging economies is analyzed using a latent class stochastic efficiency frontier model that explicitly accounts for unobserved differences in technological regimes due to the heterogeneity of economic environments in which the banks are operating. We find that banking systems in former socialist emerging economies are characterized by three distinct technological regimes. Based on the estimated efficiency scores we group the countries into three categories and provide an intuitive interpretation of these three regimes.     

Entrepreneurship: Origins and returns

We examine the origins and outcome of entrepreneurship on the basis of exceptionally comprehensive Norwegian matched worker-firm-owner data. In contrast to most existing studies, our notion of entrepreneurship not only comprises self-employment, but also employment in partly self-owned limited liability companies. Based on this extended entrepreneurship concept, we find that entrepreneurship tends to be profitable. It also raises income variability, but the most successful quartile gains much more than the least successful quartile loses. Key determinants of the decision to become an entrepreneur are occupational qualifications, family resources, gender, and work environments. Individual unemployment encourages, while aggregate unemployment discourages, entrepreneurship.     

Opportunity motivation and SME internationalisation in emerging countries: Evidence from entrepreneurs’ perception of institutions

Institutional studies based on cross-country comparisons and founded on a determinist perspective analyse the behaviour in emerging economies. The current research, in contrast, looks to neo-institutionalism and the literature on entrepreneurship to pose two research questions based on individuals’ discretion: (1) How does the entrepreneur’s perception of the institutional dimensions influence their decision to involve their SME in international operations? (2) What role does opportunity motivation play in the impact of those perceptions on the internationalisation decision? We analyse a sample of 296 entrepreneurs who had founded their businesses in Brazil (Federal State of Sergipe), and our results confirm that the individual’s perception of the normative and regulative aspects of institutions, the interaction between the two, and the interaction between the normative and cognitive aspects of institutions, explain the decision to embark on international operations. Opportunity motivation mediates the impact of the normative aspects of institutions on that decision.     

Political Tie Heterogeneity and the Impact of Adverse Shocks on Firm Value

Past research has recognized the contingent value of corporate political ties but largely neglects their heterogeneity. Drawing on the political embeddedness perspective and literature on emerging economy political institutions, we develop hypotheses regarding how political networks comprising managerial and government ownership ties may have different valuation effects in the face of adverse political shocks. Examining stock market responses to an unanticipated, high‐profile political event in China, we find a negative valuation effect of managerial ties to municipal government, but an insignificant effect of government ownership ties. Further, companies combining managerial and ownership ties experienced less post‐shock reduction in market value than those holding only managerial political ties. These findings shed light on the values of different configurations of corporate political ties and inform firms of potential ways to manage ubiquitous political hazards in emerging economies.     

Does entrepreneurial activity matter for economic growth in developing countries? The role of the institutional environment

The discussion on which institutions determine entrepreneurial activity – and the role of institutions in the aggregated output for developing countries – is as yet unresolved. The extant literature about entrepreneurship recognizes new ventures as potential mechanisms for long-term development. Yet, there is a consensus on the lack of evidence, particularly for these countries. Drawing on institutional economics, this article explores the interrelationships among institutional environment, entrepreneurial activity, and economic growth. To this end, we use simultaneous-equation panel data models for a sample of 14 developing countries (78 observations) over the period of 2004–2012. The main findings suggest a causal chain running from institutions to opportunity entrepreneurship, which is linked to the economic growth of emerging economies. In particular, we find that institutional factors – such as the number of procedures to start a new business, private credit coverage ,, and access to communication– influence entrepreneurial activity driven by opportunity. Policy implications for developing countries could be derived in order to enhance their economic performance through entrepreneurial activity.

     

Optimal design of trade institutions

We model an economy with social institutions that facilitate trade and induce three types of costs: establishment costs, access costs, and use costs. Use costs are specific transaction costs related to the use of these trade institutions. We assume that a trade institution is economically completely determined by the costs it imposes and by the effects on the trades it facilitates. We extend the Pareto efficiency concept to include various modes of organization of social institutions: the costs and benefits of these organizations are expressed in the trades they facilitate.Within this setting we discuss a valuation equilibrium concept, in which all agents use a common conjectural price system that assigns to every trade institution the price vector that would prevail under it. This feature of the equilibrium is important in securing the second welfare theorem, and is new to the analysis of economies with costly trade. Since the use costs can be nonlinear, there are non-convexities that prevent the second welfare theorem from obtaining in a finite economy, but we show it for large economies.Received: 3 April 2002, Accepted: 30 April 2003, JEL Classification: D59, D70, H49Robert P. Gilles: donewhile visiting the Center for Economic Research, Tilburg University, Tilburg, The Netherlands. Financial support from the Netherlands Organization for Scientific Research (NWO), grant B46-390, is gratefully acknowledged.Dimitrios Diamantaras: Part of this research wasSupport from Temple University via a Fuller research fellowship is gratefully acknowledged.The authors would like to thank Suzanne Scotchmer, Andreu Mas-Colell, Marcus Berliant, Shlomo Weber, Hans Haller, Dhanajay Gokhale, Julian Manning, and two anonymous referees for their valuable comments and discussions of previous drafts of this paper. A previous version of this paper was circulated as Equilibria of economies with costly trade.     

A Matter of Experience? Understanding the Decline in Group Lending

Group lending, often considered a key innovation driving the successful expansion of microcredit across the world, appears to be on the decline. Using MIX data on microfinance institutions (MFIs), we study this time trend, focusing on macroeconomic predictors of group lending and MFI experience. Results suggest that any movement away from group lending is better explained via MFIs gaining experience rather than a secular time trend. We also find that group lending is used more extensively in poorer and low‐growth economies. We argue that these findings can be understood within established views of group lending, and carry important implications for the historical and continuing importance of group lending.     

A Dutch disease approach into the premature deindustrialization

We explore the main causes and consequences of the premature deindustrialization phenomena. We argue that local currency overvaluations mainly associated with a surge in capital inflows into the emerging market economies following the deregulation of their capital accounts severely hurt the output share of manufacturing industry. Applying the second generation estimators allowing for cross-section dependency (Augmented Mean Group and Common Correlated Effects Mean Group), we run a panel data regression model based on a sample of 39 developing countries in Latin America, Sub-Saharan Africa, East Asia, North America, and Europe from 1960 to 2017. We show that the baseline regression results are robust to different data sets, alternative real exchange rate/deindustrialization measurements, and dynamic model specifications. We find that an overvaluation of 50% which corresponds approximately to one and half standard deviations is associated with a contraction of manufacturing output share as high as 1,25% over the five year period. Moreover, the evidence suggests that the manufacturing competencies which have been eroded by local currency overvaluations in real terms cannot simply be brought back during the undervaluation periods. Hence, the need for a comprehensive industrial policy along with a firm use of capital controls and macroprudential measures given a robust institutional framework comes out as the main policy implication of our results, and they are duly discussed in light of recent developments in the literature.     

The use of executive share-based compensation in Poland: investigating institutional and agency-based determinants in an emerging market

In this paper we investigate the under-researched topic of the use of executive share-based compensation in Poland, and we analyse empirically whether theoretical explanations developed and applied mainly in the context of developed countries also hold in this specific context. Building on agency and institutional theories we study the determinants of using executive share-based pay in 362 companies listed on the Warsaw Stock Exchange. As a result, we highlight the role of the state in Polish firms and the need to consider specifically principal–principal conflicts typical of emerging economies in post-state-socialist organisational research. Our findings not only reflect particularities of the institutional environment in the country studied but also highlight the limits of the traditional principal–agent lens applied in emerging economies.     

Emerging Multinationals from Mid‐Range Economies: The Influence of Institutions and Factor Markets

This paper revisits and extends our earlier work (in 2005) in the pages of this journal. We argue that there is a need for more fine‐grained understanding of the country context along two dimensions: (1) institutional development and (2) infrastructure and factor market development. Specifically, we propose an enriched typology of emerging economies with a focus on mid‐range emerging economies, which are positioned between traditional emerging economies and newly developed economies. Then we examine new multinationals from these mid‐range emerging economies that have internationalized both regionally and globally. We outline directions for further research based on this typology in terms of (1) government influence, (2) resource orchestration, (3) market entry, and (4) corporate governance regarding the internationalization strategy of these emerging multinationals from mid‐range economies.     

Relating economic infrastructure indexes to investor protection for selected emerging economies

This paper employs four indexes that capture economic infrastructure. Economic infrastructure refers to the quality of economic institutions that create an environment that may support productive activities and encourage capital accumulation. A second set of indicator variables used was related to investor protection, which includes rule of law, judicial efficiency, contract repudiation and expropriation risk. Multiple and single regressions were employed to find out whether economic infrastructure is associated with investor protection. The results are robust in that relationships hold well. Countries included for analysis were 17 market-oriented emerging economies.     

Entrepreneur location decisions across industries

In this paper we analyse whether entrepreneur location decisions differ across industries and identify the factors determining the choice of location between rural and urban environments. Firm location is based on a new taxonomy developed over the influential three dimensions of Hayter’s (1997) approach. The paper uses data from sample of one thousand Portuguese firms. We present a stylized theoretical model to determine how these new five dimensions influence firm’s location and test the model through a logistic regression. Our results show that that the location decisions depend on the sector of activity, type of area (urban vs. rural) and the characteristics of the entrepreneur. We find that companies engaged in knowledge intensive business services prefer to locate in urban areas. From an institutional point of view, firms prefer to locate in rural areas.     

Trilemma policy convergence patterns and output volatility

We examine the development of open macroeconomic policy choices among developing economies from the perspective of the powerful “trilemma” hypothesis. We construct an index of divergence of the three trilemma policy choices, and evaluate its patterns in recent decades. We find that the three dimensions of the trilemma configurations are converging toward a “middle ground” among emerging market economies, equipped with managed exchange rate flexibility, underpinned by sizable holdings of international reserves, and intermediate levels of monetary independence and financial integration. We also find emerging market economies with more converged policy choices tend to experience smaller output volatility in the last two decades. Emerging markets with relatively low international reserves/GDP could experience higher levels of output volatility when they choose a policy combination with a greater degree of policy divergence while this heightened output volatility effect does not apply to economies with relatively high international reserves/GDP holding.     

Understanding re-expatriation intentions among overseas returnees – an emerging economy perspective

This study investigates the reasons why returnees in an emerging economy, Vietnam, who have studied and/or worked abroad, and who have returned to their home country, intend to re-expatriate on their own initiative. We combine pull–push theory with the theory of planned behaviour (TPB) to explain the re-expatriation intentions of returnees. Using path analysis on a sample of 290 Vietnamese returnees, we find three pull–push factors associated with home and host countries that have a significant impact on returnees’ intention to re-expatriate: (1) dissatisfaction with career and life in their home country, (2) reverse culture shock and (3) expected career, family and quality-of-life outcomes from re-expatriation. For the TPB, we find that attitudes toward re-expatriation and subjective norms affect returnees’ intention to re-expatriate. Further, these factors either fully or partially mediate the role of pull–push factors on intention to re-expatriate. The study adds to the limited number of empirical studies on self-initiated re-expatriation and brain circulation of returnees in emerging economies.     

Globalization,political institutions,financial liberalization,and performance of the insurance industry

This paper investigates the impacts of globalization, political institutions, and financial liberalization on the performance and risk-taking of insurance firms covering 1324 individual firms in 30 selected OECD countries. We find that greater globalization and a stable political institution lead insurance companies to exhibit a better performance—i.e., insurers adjust their strategies while being aware of institutional changes. By contrast, financial liberalization has an inverse impact on insurance company performance. Thus, greater globalization and a stable political environment both drive less risk-taking for insurers. These findings are particularly important to insurance markets’ competitors and national policymakers.     

Large shareholders and corporate governance

The paper looks at the voluntary provision of governance to outside shareholders by an entrepreneur who takes his firm public but remains a large shareholder after the IPO. We find that the entrepreneur always puts in place an independent board which acts in the interests of the outside shareholders, but may put in place a friendly remuneration committee that ensures that CEO pay is structured to suit the entrepreneur in the cases where the retained equity stake is sufficiently large. When comparing this provision of governance to the provision preferred by a welfare maximizing regulator, we find that both voluntary overprovision and underprovision of governance can happen. Overprovision of governance happens in the cases where the entrepreneur commits to independence at the level of the remuneration committee when the regulator prefer a friendly remuneration committee. Underprovision of governance takes the form of establishing a friendly remuneration committee (with an independent board), when the regulator would prefer an independent remuneration committee (with a friendly board). We discuss the empirical predictions of the model.     

基于朴素贝叶斯的供应链金融信用风险预测分析

“供应链金融”是近年来金融机构针对供应链上下游企业提供的一种全新的金融服务．这项业务在金融机构方面也存在一定的风险。针对由贷款企业造成的信用风险,文章利用朴素贝叶斯技术预测申请贷款企业的还款风险．金融机构能据此识别不同企业,并针对不同还款能力的企业制定不同的金融政策以控制和规避金融风险。     

Income diversification and bank risk in Asia Pacific

This paper investigates the effect of income diversification on bank risk for a large sample of commercial banks in 14 Asia Pacific economies over the period 2011–2016. Using a dynamic panel data model with a system generalized methodof moments estimator, we find that banks with a higher level of income diversification are less risky in general. We further consider both developed and emerging economies according to the International Monetary Fund's classification of the level of economic development. Specifically, for emerging economies, the results indicate that banks with a higher level of income diversification face less risk. However, the diversification of commercial bank income has no significant impact on bank risk in developed Asia Pacific economies.     

The antecedents of SME innovativeness in an emerging transition economy

Understanding forces that contribute to the success of small and medium enterprises (SMEs) is very important, as these enterprises are vital for both developed and developing economies. Since innovativeness is among the most important means through which such businesses contribute to economic growth, numerous research studies were conducted to determine which factors positively impact SME's innovative efforts. This is an even more important issue for developing economies, where SMEs are often faced with inadequate infrastructure. Since there is a lack of studies on SME innovation in developing economies, often policy in such countries is based on findings from developed countries.In this paper, we explore factors that drive innovation activities in SMEs in a small emerging transition economy (Croatia), and compare it with findings from developed economies. In addition to factors used in most previous studies, we consider market scope, firm's market orientation and presence of strategic, managerial and marketing changes. We find that most factors that were found to be important in developed economies are important in developing economies as well. In addition to that, market scope was discovered to be a very important factor in both product and process innovation. Implementing corporate changes has positive impact on radical product innovation while implementing new organizational structures has positive effect on incremental innovation. When investigating determinants of product innovation, we distinguish new products of low novelty from new products of high novelty, and show that they need to be supported by different policies. To gain additional insight in innovation efforts, we examine obstacles to innovation. We find that firms that report facing obstacles are not less likely to innovate less, which suggests that innovators are able to work around obstacles without damaging effects to innovation. This study is based on a postal survey of 448 SMEs in Croatia, which was performed in 2004.     

To bail-out or to bail-in? Answers from an agent-based model

Since the beginning of the 2008 financial crisis almost half a trillion euros have been spent to financially assist EU member states in taxpayer-funded bail-outs. These crisis resolutions are often accompanied by austerity programs causing political and social friction on both domestic and international levels. The question of how to resolve failing financial institutions, and how this depends on economic preconditions, is therefore a pressing and controversial issue of vast political importance. In this work we employ an agent-based model to study the economic and financial ramifications of three highly relevant crisis resolution mechanisms. To establish the validity of the model we show that it reproduces a series of key stylized facts of the financial and real economy. The distressed institution can either be closed via a purchase & assumption transaction, it can be bailed-out using taxpayer money, or it may be bailed-in in a debt-to-equity conversion. We find that for an economy characterized by low unemployment and high productivity the optimal crisis resolution with respect to financial stability and economic productivity is to close the distressed institution. For economies in recession with high unemployment the bail-in tool provides the most efficient crisis resolution mechanism. Under no circumstances do taxpayer-funded bail-out schemes outperform bail-ins with private sector involvement.