DO DEPOSITORS RESPOND RATIONALLY TO BANK RISKS? EVIDENCE FROM JAPANESE BANKS DURING CRISES

This paper empirically examines depositors' ability to distinguish healthy banks from problematic banks, a necessary condition for depositors to impose discipline on banking institutions. We analyzed a large panel of 784 deposit‐taking institutions in Japan during the period from the 1992 financial year to the 2002 financial year. Our estimates indicate that depositors rightly appreciated the difference between healthy banks and risky banks, and that depositors of larger institutions are more sensitive to the bank risks than those of smaller institutions. We further argue that the estimated risk sensitivities of depositors are large enough to discipline the deposit‐taking institutions.     

Do environmental,social, and governance activities improve corporate financial performance?

This study investigated the relationship between corporate efficiency and corporate sustainability to determine whether firms concerned about environmental, social, and governance (ESG) issues can also be efficient and profitable. We applied data envelopment analysis to estimate corporate efficiency and investigated the nonlinear relationship between corporate efficiency and ESG disclosure. Evidence shows that corporate transparency regarding ESG information has a positive association with corporate efficiency at the moderate disclosure level, rather than at the high or low disclosure level. Governance information disclosure has the strongest positive linkage with corporate efficiency, followed by social and environmental information disclosure. Moreover, we explored the relationship between particular ESG activities and corporate financial performance (CFP), including corporate efficiency, return on assets, and market value. We found that most of the ESG activities reveal a nonnegative relationship with CFP. These findings may provide evidence about voluntary corporate social responsibility strategy choices for enhancing corporate sustainability.     

Macroeconomic Implications of Term Structures of Interest Rates Under Stochastic Differential Utility with Non-Unitary EIS

This paper proposes a continuous-time term-structure model under stochastic differential utility with non-unitary elasticity of intertemporal substitution (EIS, henceforth) in a representative-agent endowment economy with mean-reverting expectations on real output growth and inflation. Using this model, we make clear structural relationships among a term structure of real and nominal interest rates, utility form and underlying economic factors (in particular, inflation expectation). Notably, we show that, if (1) the EIS is less than one, (2) the agent is comparatively more risk-averse relative to time-separable utility, (3) short-term interest rates are pro-cyclical, and (4) the rate of expected inflation is negatively correlated with the rate of real output growth and its expected rate, then a nominal yield curve can have a low instantaneous riskless rate and an upward slope.     

High Precision CAE Analysis of Automotive Transaxle Oil Seal Leakage

The manufacturing industry today due to worldwide competition is focused on shorter development cycle. In this situation, computer aided education （CAE） technology as a tool for simultaneous achievement of quality, cost and delivery （QCD） plays an important role. The hardware-software environment surrounding CAE has evolved. Though technological problems have been understood and general solutions have been derived and reflected in the CAE analysis software, research findings that boost the credibility of CAE have still not been incorporated fully enough into the development of design process. The real technical mechanism issue is not precisely capture. Therefore, it is important to clarify the real cause in CAE results through CAE simulation in order to assure product reliability and assurance. It is the aim of this study to realize the prediction of design analysis process through understanding of unclear technical mechanism in abnormal occurrences with the utilization of CAE simulation. In other words, it is the aim of this study to focus on issue in automotive transaxle oil seal leakage to understand, grasp, and visualize the main cause through usage of CAE analysis process. It is understood that the point of contact and pump volume was related and this could contribute towards seals quality design. Plus, the utilization of CAE analysis in prediction phase to realized design development is also possible