Evaluating the Effect of Affinity Card Programs on Customer Profitability Using Propensity Score Matching

Affinity card programs have become popular in recent times and account for one fifth of all credit card accounts. There is no research that links affinity card programs to customer profitability. Moreover, little is known about what type of affinity card programs would lead to higher profit. Using a large proprietary dataset we answer the above questions. We also apply propensity score matching, a relatively new technique, to control for selection bias in addressing the above issues. Contrary to previous research and common belief, we show that affinity card customers are no more profitable than non-affinity card holders. We also show that sports-based affinity programs are the least profitable and surprisingly, alumni-based affinity programs also do poorly relative to other types of affinity. On the positive side, affinity card customers are lower risk and help to lower the average risk of the portfolio of customers.     

Wages, inflation, and mortgage design

By virtue of creating asset-liability mismatch, conventional long-term, fixed-rate mortgage loans inherently introduce excess interest risk to the financial systems. Considering that inflation is in part the reason for this excess interest risk, it seems natural to redesign mortgages in such a way that over time mortgage payments could, at least in part, reflect inflation. In this paper, I show that by allowing payments to adjust to inflation, particularly that of wages, by incorporating a prespecified growth rate into mortgage payments, mortgage loans become more affordable while bank interest spreads become less volatile, making the banking system less unstable.     

On uniform convergence of undiscounted optimal programs in the Mitra–Wan forestry model: The strictly concave case

In this paper, we show that the 1986 Mitra–Wan result establishing asymptotic convergence of maximal programs to the unique golden-rule forest in the case of undiscounted, strictly concave felicity functions can be strengthened, in the same setting, to the  uniform  asymptotic convergence of  optimal  programs to the unique golden-rule forest. We work with a notationally reformulated version of the model that may have independent interest.     

An examination of the relationship among consumer lifestyles,ethnocentrism, knowledge structures,attitudes and behavioural tendencies: a comparative study in two CIS states

The objective of this study is to investigate ethnocentric and/or regiocentric behaviour of Azeri and Kyrgyz consumers. In particular, the study focuses on how ethnocentrism explains consumers' attitudes, intentions and actual purchasing behaviour towards products from major sourcing countries. Data for the study were collected through personal interviews in four districts of Greater Bishkek: the capital city of Kyrgyz Republic, and Baku, the capital city of Azerbaijan. Survey findings lend greater support to earlier studies conducted in the USA, Western and Eastern Europe and Japan. Non-ethnocentric Kyrgyz and Azeri consumers have significantly more favourable belief structures, attitudes, intentions and the resultant purchasing behaviour regarding imported products compared to their ethnocentric Azeri and Kyrgyz consumer counterparts. The findings of the study offer important research, public policy and managerial implications for companies, government agencies and international donor agencies alike who are either operating in the region or contemplating an entry in the future. Foreign companies may use pan-regional marketing strategies and may be able to standardise their products and marketing strategies in the region, since consumers have identical and/or very similar use behaviour and uses for the products and services.     

Market reaction to the merger announcements of US banks: A non-parametric X-efficiency framework

This paper investigates the short-term market reaction of nine profit-efficiency, pre-classified merger deals of US banks over the time period from 1992 to 2003. The findings show that mergers combining low efficiency acquirers and targets create significant market returns following the merger event, while mergers combining the least efficient acquirers with moderately efficient targets diminish the acquirer's wealth more than any other type of merger. Furthermore, findings show that acquirers generally lose about 2.5% of their wealth upon the merger announcement while targets experience, on average, significant market returns of 15.5% following the merger announcement.The findings of the cross sectional analysis show that the CARs of acquirers are positively related to their technical efficiency and geographic diversification, while targets' CARs are negatively related to both target size and revenue efficiency.     

Institutional Quality and Public Debt Accumulation: An Empirical Analysis

The question of public debt management for both developed and developing economies has generated an enormous amount of political as well as academic interest. This study examines how governance affects public debt accumulation in the MENA countries during the 1996–2015 period. The six Worldwide Governance indicators (voice and accountability, political stability and the absence of violence/terrorism, government effectiveness, regulatory quality, rule of law and control of corruption) were used to measure the quality of governance in these countries. The results show that only three governance indicators support well the hypothesis that poor governance leads to higher accumulation of MENA public debt. Moreover, the estimates suggest a significant indirect impact of bad governance operating via decreased GDP growth. These findings have important implications for policy makers of these countries, which are currently facing major fiscal and external imbalances due to the high cost of war and terrorist attacks, low oil prices and a decline in trade. Sound public debt management represents an urgent task especially that public debt management problems often find their origins in the lack of attention paid by policymakers to the costs of bad governance and weak macroeconomic management.     

The business model and balanced scorecard in creative tourism: the ultimate strategy boosters

Despite the various studies on creative tourism, little managerial frameworks such as a business model and a balanced scorecard are investigated for this new phenomenon. The overall image that emerges from the literature is ambiguous and fuzzy. Also, many activities known as creative tourism experiences may provide new participative experiences but rarely include a creative process. This study covers a whole aspect in designing a feasibility test model for creative experiences based on balanced scorecard through qualitative content analysis and as the essence of that, a Business Model by content validity and clustering analysis. Analysis of data by the mentioned methods reveals that four perspectives and 13 critical success factors are essential for the feasibility of a creative tourism experience. In addition, 22 indicators in 3 main dimensions determine the success of a creative tourism business model. This study is part of a growing body of research focused on discovering hidden aspects of creative tourism.     

House Prices and Inflation

The present paper examines the long-run impact of inflation on homeowner equity by investigating the relationship between house prices and the prices of nonhousing goods and services, rather than return series and inflation rates as in previous empirical studies on the inflation hedging ability of real estate. There are two reasons for this methodological departure from prior practice: (1) while the total return on housing cannot be accurately measured, the total return on housing is fully reflected in housing prices, and (2) given that using returns or differencing a time series leads to a loss of long-run information contained in the series, valuable long-run information can be captured by using prices. Also, unlike previous related studies, we exclude housing costs from goods and services prices to avoid potential bias in estimating how inflation affects housing prices. Monthly data series are collected for existing and for new house prices as well as the consumer price index excluding housing costs for the period 1968–2000. Based on both autoregressive distributed lag (ARDL) models and recursive regressions, the empirical results yield estimated Fisher coefficients that are consistently greater than one over the sample period. Thus, we infer that house prices are a stable inflation hedge in the long run.