Towards a New Euro Crisis?

Intereconomics - There is thus a fundamental credibility issue about the willingness of the ECB to be a lender of last resort in the government bond markets. This will continue to make the eurozone...     

Flight‐to‐safety and the credit crunch: a new history of the banking crises in France during the Great Depression†

Despite France's importance in the interwar world economy, the scale of the French banking crises of 1930–1 and their consequences have never been fully assessed quantitatively. The lack of banking regulation severely limited the availability of balance sheet data. Using a new dataset of individual balance sheets from more than 300 banks, this article shows that the crises were much more severe than previously thought, although they did not affect the main commercial banks. By reconstructing financial flows, this study shows that the fall in bank credit was mostly driven by a flight‐to‐safety by deposits, from banks to savings institutions and the central bank. The decrease in bank deposits due to bank runs was offset by an increase in deposits with savings institutions, with the central bank, and in cash hoarding, whereas the decrease in bank credit was not offset by an increase in loans from non‐bank financial institutions. In line with the gold standard mentality, cash deposited with savings institutions and the central bank was used to decrease marketable public debt and increase gold reserves, rather than pursuing countercyclical policies. Despite massive capital inflows and rising aggregate money supply, France suffered from a severe, persistent credit crunch.     

From Fiduciary Duty to Impact Fidelity: Managerial Compensation in Impact Investing

Journal of Business Ethics - Investors with standard monetary preferences will give a fund manager incentives to increase firm profits, which can be achieved through a share in profits via carried...     

Entrepreneurial orientation and innovation in family SMEs: Unveiling the (actual) impact of the Board of Directors

Drawing on stewardship and resource dependence theories, we examine how the board of directors (BoD) influences the link between entrepreneurial orientation (EO) and ambidextrous innovation in small and medium sized family firms (family SMEs). Our analysis of 230 Spanish family SMEs shows that family involvement in the BoD has a negative effect on their ability to turn EO into innovation. Moreover, we show that the BoD's strategic involvement in service and control tasks and the provision of knowledge and skills have positive effects, whereas the intensity of BoD activity has a surprisingly negative effect. These findings underscore that the effects of the BoD on the entrepreneurship-innovation link are more complex than previously thought, pointing to the important role of both BoD composition and BoD functioning for enabling innovation in family SMEs.     

Structural comparisons of networks and model-based detection of small-worldness

In this paper, we consider the problem of assessing the “level of small-worldness” of a graph and of detecting small-worldness features in real networks. After discussing the limitations of classical approaches, based on the computation of network indicators, we propose a new procedure, which involves the comparison of network structures at different “observation scales”. This allows small-world features to be caught, even if “hidden” deeply into the network structure. Applications of the procedure to both simulated and real data show the effectiveness of the proposal, also in distinguishing between different small-world models and in detecting emerging small-worldness in dynamical networks.     

Understanding the Racial/Ethnic Gap in Bank Account Ownership among Older Adults

The observed racial/ethnic gap in bank account ownership among older adults is substantial. We investigate socioeconomic, cognitive, and cultural barriers underling it. As additional potential barriers are accounted for, the residual gaps in financial inclusion with respect to Whites are reduced by 19% for blacks and 46% for Hispanics. We find that citizenship and “taste for privacy” play a limited role for both minority groups, while real asset ownership, health, cognitive ability, and cultural hurdles contribute substantially to the gap. For Hispanics, language barriers explain most of the gap, while neighborhood‐level socioeconomic characteristics are more salient for blacks. We also examine how the racial/ethnic composition of couples influences financial decisions. We estimate a significantly smaller residual gap between “mixed” and white couples than between minority and white couples. We provide empirical evidence suggesting that, other things equal, mixed couples are less concerned with the cultural/psychological barriers facing minority couples.     

Inequality in turbulent times: income distribution in Germany and Britain, 1900–50

Using social tables, this article provides new data on inequality in Germany and Britain on an annual basis for the first half of the twentieth century. Inequality trends in these two countries tended to follow opposite patterns. The decline in inequality in Germany was interrupted during the First World War and the Nazi period, while in Britain the reversal took place between the end of the First World War and the Great Depression. Results show that the drop in inequality during the twentieth century in Europe did not follow secular trends, thus supporting the notion of inequality cycles.     

Optimal strategy for a fund manager with option compensation

I consider the problem of portfolio optimization for a manager whose compensation is given by the sum of a constant and a variable term. The constant term is a fixed percentage of the managed funds that is payed to the manager independently of his performance. The variable term is a premium that is proportional to the profit earned by the manager over a benchmark at a certain evaluation date. I find the optimal strategy and the optimal portfolio value in the Black–Scholes setting when the benchmark is a linear combination of the risky asset and the money market account.     

Analyzing online reviews in hospitality: data-driven opportunities for predicting the sharing of negative emotional content

Hospitality is one of the sectors that are nowadays most heavily characterized by consumers’ tendency to share online reviews on dedicated digital platforms. While most past work has focused on understanding the effect of online reviews and ratings on consumers’ evaluation and purchase decisions, this research tackles the issue of what drives the sharing of certain types of online content. Specifically, we investigate the sharing of user-generated content characterized by negative emotional valence, and study the effect of two factors on the extent to which user-generated content contains negative emotions. One such factor is reviewer's expertise, while the other is hotel quality. Our analysis of 1200 TripAdvisor reviews on Italian hotels located in three major Italian cities confirm our hypothesis that expert reviewers might share reviews containing less intense negative emotional content compared to less expert reviewers especially when the hotel is of high quality. To support our hypothesis, we build on the research on psychological antecedents of word-of-mouth behaviour suggesting that expert consumers are particularly reluctant to share negative word-of-mouth to avoid projecting a negative image of themselves in social contexts, thus possibly damaging their reputation.     

Sensitive Survey Questions: Measuring Attitudes Regarding Female Genital Cutting Through a List Experiment

Potential bias in survey responses is higher if sensitive outcomes are measured. This study analyses attitudes towards female genital cutting (FGC) in Ethiopia. A list experiment is designed to elicit truthful answers about FGC support and compares these outcomes with the answers given to a direct question. Our results confirm that the average bias is substantial as answers to direct questions underestimate the FGC support by about 10 percentage points. Moreover, our results provide suggestive but not statistically significant evidence that this bias is more pronounced among uneducated women and women targeted by an NGO intervention (not randomly assigned).