Do exchange rate arrangements and capital controls influence international capital flows and housing prices in Asia?

This paper investigates the influence of international capital flows on housing prices in eight Asian countries, including China. We focus on determining whether exchange rate arrangements and capital regulations influence capital inflows and housing prices. Our results show that an arrangement to restrain the fluctuation of the exchange rate and capital controls has the potential to raise housing prices in Asia. The strong prospect of the Chinese yuan's appreciation also pushed up housing prices in China. Another expected reason for the increase in capital inflows into Asian markets is the expansion of global liquidity. Such capital flows often have a sensitive reaction to market sentiment, and an increase in asset market volatility caused by the liquidity squeeze decreases Asian housing prices. These results suggest the need to review capital controls and future exchange rate system options for Asian countries.     

Game on: Engaging customers and employees through gamification

Managers are frequently tasked with increasing the engagement levels of key stakeholders, such as customers and employees. Gamification—defined as the application of game design principles to change behavior in non-gaming contexts—is a tool that, if crafted and implemented properly, can increase engagement. In this article we discuss how gamification can aid customer and employee engagement, and delineate between four different types of customers and employees who act as ‘players’ in gamified experiences. We include illustrative examples of gamification and conclude by presenting five lessons for managers who wish to utilize gamification.     

Effect of social support on customer satisfaction and citizenship behavior in online brand communities: The moderating role of support source

Customers often join online brand communities to seek support from others when they encounter product problems. Some customers who receive good social support exhibit customer citizenship behavior. This study develops a theoretical model to investigate how social support influences customer citizenship behavior through customer satisfaction with firms in online brand communities. Moreover, the moderating role of support source (i.e., firms vs. other customers) is measured. The research model is tested by using the Partial Least Squares technique. The results show that informational and emotional support significantly affects the customer citizenship behavior of providing feedback to the firm, recommendations, and helping other customers through customer satisfaction in online brand communities. Moreover, informational and emotional support from firms and other customers exert different effects on customer satisfaction.     

The odd notion of “reversible investment”

Irreversible investment and the attendant concept of real-option value have been well discussed. Complete reversibility has been frequently invoked but less studied, especially for the case of lumpy investment typically considered in capital budgeting. We examine a simple lumpy investment problem for the full range, from complete irreversibility to completely reversibility, with a focus on the latter. The optimal stopping rules under complete reversibility are to invest when the project generates enough net cash flow to cover Jorgenson’s opportunity cost of investment and to disinvest when it does not. Given the static nature of these rules, net present value as a timing criterion under reversibility is not pertinent. Investments that are partially reversible have much in common with completely irreversible investments but nothing in common with completely reversible investments. The case of reversible investment provides a foil for understanding that the distinguishing feature of investment as treated in corporate finance is that it entails at least some irreversibility.     

Interbank market failure and macro-prudential policies

This paper analyses the effects of several macro-prudential policy measures on the banking sector and its linkages to the macroeconomy. We employ a dynamic general equilibrium model with sticky prices, in which banks trade excess funds in the interbank lending market. We find that an increase in the liquidity requirement effectively reduces the impact of an interbank shock on the real and financial sector, while an increased capital requirement propagates only through nominal variables as inflation and interest rates. We conclude that stricter liquidity measures which limit inside money creation, dampen the severity of a breakdown in interbank lending. Targeting interbank financing directly through liquidity measures along with a moderate capital requirement generates lower welfare losses. We thereby provide a comprehensive rationale in favor of the regulatory measures in Basel III.     

Why do banks choose to finance with equity?

A majority of U.S. banks between 1973 and 2012 held equity capital significantly beyond the required minimum. We study the risk-return tradeoff in connection with a bank’s capital structure, and identify several new significant market factors that drive the level of equity capital in banks. During normal growth periods, bank leverage is negatively related to a level of competition and loan portfolio diversification, while high bank leverage is associated with low past liquidity. During recessions and expansions, the roles of those factors change following distortions in risk-return tradeoff. In distress, when banks approach regulatory capital requirements, market determinants of book leverage lose their significance; however, leverage does not decrease until a bank is within 1% of the minimal capital threshold.     

The missing link in building customer brand identification: The role of brand attractiveness

The brand management literature has long acknowledged the strategic importance of managing brand identity. However, prior empirical research has largely ignored brand attractiveness in building such identity in the eyes of consumers. Focusing on the airline industry, this study investigates the role of brand attractiveness in fostering customer brand identification. The empirical testing of the conceptual model suggests that brand prestige, brand distinctiveness, and memorable brand experiences have a significant indirect effect on customer brand identification through brand attractiveness, while brand social benefits contributes directly to such identification. The results also challenge prior empirical findings by providing strong support for the need to include brand attractiveness in cultivating identification. When brand attractiveness is incorporated in the model, the effects of brand prestige, brand distinctiveness, and memorable brand experiences became non-significant in predicting customer brand identification. The findings highlight the importance of projecting a brand identity that is attractive to target consumers in order to achieve customer brand identification.     

Workplace ostracism and proactive customer service performance: A conservation of resources perspective

This study tests the impact of workplace ostracism on hospitality employees’ proactive customer service performance (PCSP). Drawing upon the conservation of resources theory, we investigate the effects of two sequential mediators (i.e. job tension and customer orientation) and the moderating effect of need for affiliation. Using a time-lagged research design and the data from 16 hotels in China, we find that workplace ostracism positively influences job tension; job tension decreases customer orientation, which in turn undermines employees’ PCSP. Moreover, we find that need for affiliation exacerbates the effect of workplace ostracism on job tension such that the effect is stronger when employees’ need for affiliation is high rather than low. We discuss the theoretical and practical implications subsequently.     

Effects of customer loyalty on customer entitlement and voiced complaints

The value of customer loyalty has been well documented by academicians and practitioners. Nevertheless, prior literature has paid little attention to the negative consequences of customer loyalty, for example, entitlement behaviors (e.g. requests for deeper discounts) and complaint behaviors (voicing dissatisfaction to the company). This research empirically examines the effects of customer loyalty on entitlement and voiced complaint behaviors in the context of Frequent Flyer programs in airline industry. Base on partial least squares-structural equation modeling, the results show that (1) customer loyalty has a positive effect on customer entitlement, which is the extent to which customers expect special treatment from the company; (2) the effect of customer loyalty on voiced complaints is fully mediated by customer entitlement; (3) perceived status of loyalty programs amplifies the entitlement behaviors of loyal customers, while tangible rewards of loyalty programs mitigate the entitlement behaviors of loyal customers. Theoretical and managerial implications are elaborated in the discussion section.     

Determinants of the capital structure of Chinese non-listed enterprises: Is TFP efficient?

This paper investigates the relationship between TFP (Total Factor Productivity) and leverage measures (total, short-term and long-term leverage) of Chinese non-listed firms during the period 1999–2007. First, TFP is significantly and positively associated with the three leverage measures of private and foreign owned enterprises, but insignificantly correlated with state-owned enterprises. Second, financial constraints, leverage costs, and the institutional environment can affect the relation between TFP and leverage; this relation tends to be much stronger when enterprises face stronger financial constraints, higher leverage costs, and an underdeveloped institutional environment. Third, we show that TFP also plays a significant and positive role on formal and informal leverage. Our research offers new evidence that TFP is an important determinant of capital structure choices.