What Factors Keep Cash Alive in the European Union?

This paper aims to analyze the determinants of cash usage in a selection of European Union (EU) countries over the 2003–2016 period, based on a set of technological, socioeconomic, and socio-cultural indicators and cost components. Our results reveal the existence of both common and region-specific determinants for the EU advanced and Central and Eastern European (CEE) countries. In both groups cash usage is determined by payment system characteristics. Additionally, in the EU advanced countries cash usage can also be explained by the level of economic development and income inequalities and proliferation of Internet. In contrast, cash usage in CEE countries is negatively associated with consumer confidence and is inversely related to the technological progress, expressed in terms of mobile users.

     

Predictive abilities of speculators in energy markets

Using nonparametric methodology, I find that speculators are successful in taking profitable positions in energy futures markets, although the magnitude of this effect is lower than that found previously for agricultural markets. A plausible explanation for this difference is that price forecasting is more difficult for energy commodities. Moreover, I find that the energy speculators’ returns are due to the existence of the risk premiums rather than to speculators’ forecasting abilities. Futures risk premium is highly time-variant; notably, energy investors’ profits have been very limited in the GFC and post-GFC period, which coincided with the financialization of commodity markets.     

A Strategic Analysis of Eutrophication Abatement in the Baltic Sea

Cooperation between the littoral countries of the Baltic Sea to mitigate eutrophication has proven difficult in the past. In this study, we explore the countries’ incentives to free-ride on agreements, find stable coalitions where free-riding is deterred, and propose alternative ways of designing stable agreements that would reduce eutrophication in the sea. We conclude that strong free-riding incentives for some countries preclude the socially optimal solution in the absence of an enforcing authority. A stable agreement can, however, be formed with some loss in efficiency. The research shows that a treaty with modest abatement targets between all the littoral countries would be more efficient than a coalition between fewer countries but with more ambitious targets. We compare the two international institutions involved in the protection of the Baltic Sea—the intergovernmental Helsinki Commission and the partly supranational European Union—and show that the European Union would not benefit from enforcing an agreement among its member states on the Baltic without Russia being involved in the conservation efforts. Our results suggest that efficient abatement and full participation could be achieved by using the power the European Union has to enforce such an agreement among its members and, simultaneously, negotiating with Russia within the Helsinki Commission.     

The drivers of domestic acquisitions in People's Republic of China: a resource-based analysis

Domestic acquisitions of firms in emerging markets have so far evaded scholarly interest. This article contributes to closing this gap by looking into the drivers of cross-province acquisitions in the People's Republic of China, covering 569 deals in manufacturing industry conducted between 1999 and 2012. Drawing on the resource-based view, this study looks at prior Chief Executive Officer (CEO) experience and organizational slack as two drivers of cross-province acquisitions, and analyses the moderating effects of firm ownership types and the location of an acquiring firm. The results show that private firms having CEOs with experience outside of the home province are the drivers of cross-province acquisitions in China.     

Credit Cards: Transactional Convenience or Debt‐Trap?

We survey individuals on their credit card usage. Contrary to popular press, most credit card holders use credit cards in a responsible manner. They tend to use credit cards for transaction convenience and pay little interest. Only a minor subset of people uses credit cards to access expensive credit, with only 7% of credit card holders in our sample never paying the balance in full. Credit card debt is more common among older, less financially literate, and less trusting respondents. Even individuals with credit card debt are well aware about its costs and are likely to make informed financial choices.     

False self‐employment: the case of Ukrainian migrants in London's construction sector

This article, presenting qualitative accounts of Ukrainian business owners, highlights how migrants engage in false self‐employment in the UK. Their experiences problematise notions of legality and binary depictions of migrant workers as ‘victims or villains’, demonstrating that migrants see their illegal status as a transient stage before gaining legal status.     

Macroprudential policy and the inward transmission of monetary policy: The case of Chile,Mexico, and Russia

This paper studies whether domestic macroprudential policy may attenuate the inward transmission of monetary policy shocks from the United States to domestic bank lending growth in three emerging market economies—Chile, Mexico, and Russia. Identification relies on banks’ heterogeneous exposure to prudential policies and the fact that foreign monetary policy shocks are exogenous from the perspective of these economies. After analyzing the effects of the aggregate domestic prudential policy stance, we focus on specific prudential policies targeting mortgage and consumer loans, as well as foreign‐currency deposits. Although our overall results are mixed, we find evidence that the strength of international monetary policy spillovers varies depending on the stance of domestic macroprudential policy. In particular, a tighter reserve requirement stance over foreign‐currency deposits in Chile dampens the effect of an international monetary policy shock on domestic local‐currency lending, but reinforces that on foreign‐currency lending, whereas in Russia, it dampens the effect on both local‐currency and foreign‐currency lending, although to different degrees. Prudential policies targeting the asset side of banks’ balance sheets, such as mortgage loans or consumer credit, are found to amplify international monetary policy spillovers in some cases and attenuate it in others, depending on the country context.     

Executive compensation and the cost of debt

This study examines how different components of executive compensation affect the cost of debt. We find that debt-like and equity-like pay components have differing effects: an increase in defined benefit pensions is associated with lower bond yield spread, while higher share holdings lead to higher spreads. In addition, we find that stock options have a mixed impact on the cost of debt whereas cash bonus has no significant impact. Overall, our results indicate that corporate bondholders are fully aware of both risk-taking and risk-avoiding incentives created by various executive pay components.     

An Empirical Analysis of the Stockholder-Bondholder Conflict in Corporate Spin-Offs

We analyze the effect of daily stock and bond abnormal returns around spin-off announcements. Over a three-day event window, we find statistically significant abnormal returns of 3.07% for stocks and 0.11% for straight bonds. Both stock and bond abnormal returns are higher for firms with lower interest and dividend payouts. Stock abnormal returns are also higher for firms with higher pre-spin-off leverage. Overall, we find that the firm value increase compensates for the wealth transfer effect and that bondholders' wealth is not reduced as a result of spin-off.     

Price limits in futures markets: effects on the price discovery process and volatility

Price limits are actively employed by many futures exchanges as a regulatory mechanism directed at reducing volatility and improving price discovery process. The aim of this paper is to investigate whether price limits achieve these goals without affecting market liquidity for a number of agricultural futures contracts. We employ models of changing volatility in order to show that price limits do not appear to significantly reduce market volatility. In addition, we find evidence confirming the hypothesis that price limits delay price discovery instead of facilitating it. Our results also suggest that the impact of price limits on volatility and price reversals, found in previous studies, are mainly due to the properties inherent to the futures returns, such as volatility clustering. Finally, although trading decreases significantly due to the price limits, traders do not seem to switch from the contracts affected by price limits to other maturities in order to minimize the impact of circuit breakers.