INTEREST RATE CORRIDOR,LIQUIDITY MANAGEMENT,AND THE OVERNIGHT SPREAD

We analyze the determinants of the overnight spread (the spread between the Borsa Istanbul overnight repo interest rate and the average funding rate of the Central Bank of the Republic of Turkey [CBRT]) using data from both the conventional and the new monetary policy episodes. We empirically document that the overnight spread has recently been influenced by various factors that are directly or closely related to the liquidity policy of the CBRT. (JEL E43, E52, C24)     

The Evolving Shareholder Activist Landscape (How Companies Can Prepare for It)

Shareholder activists remain an important force in the boardroom. More than 60 activist campaigns were initiated against S&P 1500 companies in 2016. And although activist hedge funds have under‐performed the broad market since 2013, activists’ assets under management are still nearly double their level of four years ago, and announcements of their campaigns continue to be met with increases in the target companies’ stock prices. At the same time, shareholder activism continues to evolve in constructive ways. Most important is the growing support of mainstream investors, as reflected in the increased backing of activist proposals by traditional institutional asset managers and the falling number of openly confrontational campaigns. Activists have also had continued success in gaining board representation, particularly at the largest target companies. And more board seats are being gained by activists in early settlements, which have also been associated with higher stock returns than those campaigns that resulted in later settlements or ended in a proxy contest. During the period 2006–2016, over 40% of activist campaigns made public demands for specific strategic actions, such as selling assets, spinning off divisions, or seeking buyers for the companies. And activist investors have been remarkably effective in accomplishing such changes in that those activist targets urged to seek buyers were four times more likely to be acquired than the average company. At the same time, a growing number of campaigns have focused on operating efficiency, capital allocation, business strategy, and other changes that often require longterm engagement. Perhaps because of their longer‐term focus, such campaigns have also more been likely to result in board seats for the activists. The authors' findings contain a number of messages for corporate managements and boards: listen to your shareholders, and assess your strengths and vulnerabilities through an activist's eyes; build an effective board; articulate your strategy clearly; consider the possibility of activist intervention when planning M&A transactions; and engage early when approached by an activist.     

Understanding the Recent Growth in Consumer Loans and Credit Cards in Emerging Markets: Evidence from Turkey

In recent years, the surge in household indebtedness to historical heights has become a significant concern for developed economies. A similar trend has been witnessed in emerging market countries including Turkey. Our objective is to help further understand the dynamics of the recent growth in consumer loans and credit cards (CLCC) in Turkey. For this purpose, we investigate the long-term equilibrating relationships and short-term deviations from the equilibrium, and explore the determinants, directions, and strengths of causality relationships between CLCC and the selected macroeconomic variables, and analyze the dynamic interactions among the variables in the post-sample period by analyzing how CLCC responds to the shocks given to other macroeconomic variables and the contribution of each variable on the forecast variability of CLCC. We use monthly data for the period of January 2004—December 2013 of seven macroeconomic variables of money supply, interest rate, income, consumer confidence, inflation, stock market, and consumer goods imports. On empirical findings, we make suggestions about which policy tools should be used to influence, and if necessary to manage, the growth in CLCC.     

Goods and factors liberalization under increasing returns to scale

This paper develops a general equilibrium model with alternative forms of import restrictions, international capital mobility, and taxes on the rate of return on foreign capital in the context of a small open economy using an external increasing returns technology. Within this framework, this paper analyses the price and welfare effects of import liberalization in the presence of tax on foreign capital and of factor flows liberalization in the presence of alternative forms of import restrictions. It is shown, among other things, that, in contrast to the existing literature on constant returns to scale economy, the optimal policy towards foreign factors is possibly tax under each form of import restrictions.     

Willingness to Pay for Ancillary Benefits of Climate Change Mitigation

Assessing the Willingness to Pay (WTP) of the general public for climate change mitigation programmes enables governments to understand how much taxpayers are willing to support the implementation of such programs. This paper contributes to the literature on the WTP for climate change mitigation programmes by investigating, in addition to global benefits, the ancillary benefits of climate change mitigation. It does so by considering local and personal benefits arising from climate change policies. The Contingent Valuation Method is used to elicit the WTP for ancillary and global benefits of climate mitigation policies in the Basque Country, Spain. Results show that WTP estimates are 53–73% higher when ancillary benefits are considered.     

How an IPO Helps in M&A

An initial public offering (IPO) can often provide a powerful stimulus to private companies seeking to pursue an acquisition-driven growth strategy. Based on a comprehensive analysis of U.S. IPOs, the authors show that newly public companies are prolific acquirers. Over 30% of companies conducting an IPO make at least one acquisition in their IPO year, and the typical IPO firm makes about four acquisitions during its first five years as a public company. IPOs facilitate M&A not only by providing infusions of capital but also by creating ongoing access to equity and debt markets for cash-financed deals. In addition, IPOs create an acquisition currency that can prove valuable in stock-financed deals when the shares are attractively priced. The authors also argue that IPOs improve the ability of companies to conduct M&A by resolving some of the valuation uncertainty facing privately held companies.     

Discretionary disclosure in the presence of dual distribution channels

A prevailing view in the disclosure literature is that firms who learn favorable market information are reluctant to disclose it, fearing it will attract new rivals. In this paper, we demonstrate that the presence of dual distribution arrangements, wherein consumers can purchase products either from traditional retail firms or directly from suppliers, can notably alter disclosure incentives. As under prevailing views, a retailer disclosing positive news risks entry by competitors. However, entry shifts the incumbent supplier–retailer relationship: the presence of new competitors leads the supplier to treat its retailer more as a strategic partner, translating into lower wholesale prices. This, in turn, can lead the retailer to willingly share favorable news, since such disclosure invites entry precisely when the retailer stands to benefit most from price concessions. Our results suggest that as dual distribution continues to increase in prominence, firms may be more willing to voluntarily disclose sensitive financial information particularly that which points to high demand for its products.     

增长领先者制胜之道——以运营战略创造优势

对于许多公司而言．在当前竞争加剧的情况下保持盈利和持续性的增长，尤如海市蜃楼。尽管存在诸多障碍，实现持续增长仍然并不是难以企及的目标。但是，要实现这一目标．仅有脉络清楚的业务战略是远远不够的，采用强有力的运营战略至关重要。     

Impact of Sibship Size,Birth Order and Sex Composition on School Enrolment in Urban Turkey*

This paper investigates, in a unified framework, the effects of sibship size, birth order and sibling sex composition on children's school enrolment in urban Turkey. We utilize an instrumental variable estimation method to address parents’ joint fertility and schooling decisions using twin births as instruments. We find no causal impact of sibship size on school enrolment. However, there is evidence for a parabolic impact of birth order where middle‐born children fare worse. Sex composition of siblings matters only for female children. Our finding that birth order and sibling sex composition matter more for poorer households suggests that scarce financial resources play an important role in bringing about the sibling composition effects.     

Importing,Exporting, and Innovation in Developing Countries

This study shows the persistent differences in evolution of firms when they are grouped according to their trade orientation as: two‐way traders (both importing and exporting), “exporters‐only”, “importers‐only”, and nontraders. Extending the existing models of firm evolution into an open economy setup by incorporating the importing decision, a simple model is presented and it is empirically shown that: (i) globally engaged firms are larger, more productive, and grow faster than nontraders; (ii) two‐way traders are the fastest growing and most innovative group who are followed by exporter‐only firms; and (iii) estimating the export premium without controlling for import status is likely to overestimate the actual value by capturing the import premium. Robustness of the results is shown by providing evidence from the panel data constructed from the original dataset and controlling for variables that are likely to affect firm evolution.