Cost efficiency and the effect of mergers on the Taiwanese banking industry

This study addresses the cost efficiency, economies of scale and scope of the Taiwanese banking industry, specifically focusing on how bank mergers affect cost efficiency. Adopting stochastic frontier analysis, we employ a translog cost function for efficiency estimation. Composite error terms are used to account for managerial inefficiency and environmental effects. Empirical results suggest that economies of scale and scope exist at small and medium-sized banks. Meanwhile, government-owned or -controlled banks are the most cost efficient. Non-performing loans increase the inefficiency of the banking sector by just under 10 per cent. Further analysis reveals that bank merger activity is positively related to cost efficiency. Mergers can enhance cost efficiency, even though the number of bank employees does not decline. The banks involved in mergers are generally small and were established after the banking sector was deregulated.     

Health,Education and Emergence from the Development Trap

Abstract: This paper studies the emergence of developing countries from a development trap. It shows that countries whose dynamics exhibits several growth peaks can be considered as cases of equilibrium jump. Applying this criterion to a sample of 65 countries that were initially very poor in 1950, it identifies 13 such countries, called ‘emerging economies’. Comparing emerging and non‐emerging economies in the 1950s and early 1960s, it shows that economic take‐offs starting in the 1960s can be related to health and education in the early 1950s, while other possible factors, such as savings, openness and democracy are not significant.     

The new public management and the UK Police Service

This article explores the impact of the introduction of the New Public Management (NPM) within the UK Police Service since the mid-1990s. A specific focus upon individual performance management (one of the central features of NPM) is examined from the perspective of the police sergeant who has primary responsibility for managing performance and ultimately the delivery of policing services within one of the UK's ‘essential’ public services. After a discussion of the literature on individual performance management within the context of the NPM, the article identifies four major research questions relating to: the job role demands of performance management; access to valid and reliable performance management information; the capacity to provide follow-up development and support; and the wider integration of performance management with organization strategy and service objectives. After reporting on interview data collected from role sets in which the sergeant is a focal member, the article concludes with a discussion of the constraints upon effective performance management within the NPM.     

Local Government Modernization: UK and Comparative Analysis from an Organizational Perspective

This article analyses three strands of local government modernization. The first takes an overview of the development of 'modernization' and 'improvement' of local government in the UK under the Labour government since 1997 and the overall programme of reform. We discuss both the shifts and the continuities with the previous decade and a half of the 'new public management' of Conservative administrations. We examine the implicit assumptions about how to achieve organizational and cultural change, arguing that much modernization is premised on a mechanistic metaphor of organizational change. The second section of the article examines other metaphors and theories of organizational change, arguing for the need to consider institutional and organizational perspectives in analysing local government modernization. The third section of the article then applies some organizational concepts to the comparative analysis of local government modernization.     

Sinking Ships? Liberal Theorists on the American Economy

In the Asia-Pacific region, the conditions and consequences of East Asian success have understandably attracted more attention than the causes and implications of North American failure. In the American case, any failure must be relative when the US remains a bloc-sized market and the only surviving superpower. Thus, for Asians the US figures economically as an export opportunity and socially, for puritans like Lee Kuan Yew, as a warning about decadence. The discussion among Americans is altogether more interesting. This article analyses the debate about national competitiveness among American liberal democrats like Magaziner, Reich, Tyson and Krugman and looks behind the differences of position that separate these protagonists, with two conclusions. First, as the old 1980s problem of national uncompetitivencss is jettisoned in the 1990s; all the liberals now agree that Americans are no longer in the same boat, that while some are becoming increasingly successful, others are sinking fast. Second; the protagonists have moved from an industrial policy fix in the 1980s to an end of policy era in the 1990s where the question for American liberals is whether and how the political system can absorb the stresses createted by increasing inequality.     

Product innovation and firms’ ownership

This paper explores (i) the incentives for an incumbent firm to acquire an entrant willing to sell a product innovation rather than openly competing with this entrant, and (ii) in case of acquisition, the incentives to sell simultaneously both the existing products and the new one rather than specializing on a single variant. We prove that, in some circumstances, an incumbent firm can find it profitable to make an acquisition proposal to the entrant. Nevertheless, in this acquisition scenario, a product proliferation strategy is never observed at equilibrium. Furthermore, while being available for sale, sometimes the innovation simply remains unexploited.     

Cue usage in financial statement fraud risk assessments: effects of technical knowledge and decision aid use

This paper investigates the effects of technical knowledge and decision aid use on financial statement fraud risk assessments made by directors and students. More extreme fraud risk assessments are made when participants identify and process larger (smaller) numbers of diagnostic (non‐diagnostic) factors, with technical knowledge driving diagnostic factor identification. Significant decision aid‐technical knowledge effects are also found; decision aid use has a detrimental effect on high‐knowledge directors while improving performance in inexperienced, low‐knowledge students. These results suggest that although decision aids can afford gains in performance in inexperienced users, they can have unintended and/or paradoxical behavioural effects on experienced users.     

Rating Cooperative and Commercial Bank Bonds: a comparative approach

Abstract ** :  The primary objective of this article is to find whether bonds issued by commercial and cooperative banks are rated similarly or not. We then compare the performance of two quantitative methods, namely seemingly unrelated regressions (SURE) and recursive partitioning algorithm (RPA), at explaining bond ratings based on the same set of quantitative indicators. Using the regression model, cooperative banks' credit risk is more sensitive to the quality and size of assets. For commercial banks, elements relative to debt more clearly stand out. In the RPA model, a subtree for the financial cooperatives is created which provides evidence of some differentiation in the rating process. Also, the RPA model outperforms the parametric method whether performance is measured by the percentage of correct classification or the size of the average rating prediction error.     

Retail electricity competition

We analyze a number of unstudied aspects of retail electricity competition. We first explore the implications of load profiling of consumers whose traditional meters do not permit the measurement of their real‐time consumption. The combination of retail competition and load profiling does not yield the second‐best prices given the non‐price‐responsiveness of retail consumers. We then examine the incentives that electricity retailers have to install each of two types of advanced metering equipment. Finally, we consider the implications of physical limitations on the ability of system operators to cut off individual consumers relying instead on “zonal” rationing of large groups of individual consumers     

Towards new laws for consumer protection: Proposals of the French reform commission

The French Reform Commission (Commission de refonte du droit de la consommation) which is headed by the author has made a set of proposals to the French government in order to improve and adapt French consumer law to modern protective standards and to EEC legislation. One of them, on consumer safety, has already been enacted.The author informs about certain proposals which might interest the foreign reader. They concern consumer information, the quality of goods and services, safety as far as compensation by means of product liability rules is concerned, unfair contract terms, and access to justice.

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Neue Gesetze zur Verbesserung des Verbraucherschutzes — Vorschläge der französischen Reformkommission

Zusammenfassung Die französische Reformkommission zum Verbraucherschutzrecht, deren Vorsitzende der Autor ist, hat umfangreiche Vorschläge zur Verbesserung des französischen Verbraucherschutzrechts erarbeitet, die einen Anschluß an moderne Schutzstandards under Berücksichtigung der EWG-Diskussion ermöglichen. Im Bereich der Regelung der Produktsicherheit sind die Vorschläge der Kommission zum großen Teil vom Gesetzgeber übernommen worden.Der Autor berichtet über zentrale Punkte der Vorschläge der Kommission: Für den Bereich der Verbraucherinformation wird die Verankerung einer allgemeinen Informationspflicht vorgeschlagen. Qualitätsregeln sollen insbesondere durch Erweiterung der gesetzlichen Verkäuferhaftung nach dem französischen Zivilrecht erfolgen. Flankierend zur Sicherheitsregelung ist die Produkthaftpflicht auf eine Gefährdungshaftung umzustellen. Allgemeine Geschäftsbedingungen sollen auf Mißbrauch nicht durch eine Behörde, sondern durch Verbandsklagen kontrolliert werden. Der Zugang zum Recht ist durch ein vereinfachendes Klageverfahren und durch Gruppenklagen zu verbessern.

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Jean Calais-Auloy is Professor of Law at the University of Montpellier, Faculté de Droit, F-43000 Montpellier, France.