The productivity and performance of Australia’s major banks since deregulation

The aim of this study is to present some measures of the performance of banks operating in Australia since the deregulation of the Australian financial system in early 1980s; including the periods of financial market instability (the early 1990s and mid to late 2000s). In undertaking this measurement two approaches will be used. The first simply applies standard financial indicators. The second approach applies data envelopment analysis (DEA), to determine Malmquist indices of the levels of and the changes in the efficiency and productivity of Australian banks. The empirical results demonstrate the effect of deregulation and periodic financial crisis’s on the performance of individual banks, and the major part of the Australian banking sector. Overall the productivity performance of the Australian banks tended to improve considerably in those periods of strongest economic growth (i.e. the mid 1980s and 2000s).     

Entrepreneurial Orientation’s effect on marketing strategies and success: implications for US firms entering Cuba

Entering a newly liberalized market is a great challenge for companies as the environment is new and untested. On one side, to have success in these markets, firms must have a plan of action before resources are committed. Entrepreneurial orientation (EO) is associated with the successful exploration of resources and the creation of new niches as the Resource Theory supports. On another side, a natural bond between EO and marketing is found in the Value Creation Theory. So, to maximize firm success in newly liberalized markets (such as Cuba), firms must be able to objectively gauge their own entrepreneurial orientation adopting a marketing approach. Within this framework, the present paper will attempt to effectively measure the entrepreneurial orientation of US firms that have an interest in entering the Cuban market. A final sample of 81 US firms was obtained. The sample was then split into two groups (high and low entrepreneurial orientation) and compared regarding their marketing strategies (H1) and their levels of success (H2). Our results confirmed both hypotheses.     

The effects of financial liberalization on productivity: Evidence from India’s manufacturing sector

Using a panel of India’s registered manufacturing firms and both economy-wide and firm-level financial data, we investigate the effects of India’s financial liberalization on the productivity of its manufacturing sector in the 1990s and 2000s. Our dynamic panel analysis shows that the series of financial liberalization policies/measures, at both the macro and micro levels, significantly enhanced the productivity of the manufacturing sector. Total factor productivity increased for all firms, including those owned by the state government, with greater gains for the firms in the private and foreign sectors. Our results suggest that policies favoring financial liberalization should be pursued further in order for India to foster higher economic growth.     

Forecasting Australia’s economic performance during the Asian crisis

During the Asian economic crisis of 1997–98, published forecasts from a Bayesian vector autoregressive (BVAR) model consistently indicated that the crisis would have little or no effect on Australia’s economic performance, despite the deterioration in the trade balance. The worsening trade deficit led many other forecasters to predict a sharp fall in Australia’s GDP growth rate, as the countries most severely affected by the crisis represent over 60 percent of Australia’s export markets. This paper argues that the more pessimistic forecasts attached too much weight to the links between Australia’s external accounts and GDP growth. In particular, I show that forecasts for the period September 1997 to December 1998, conditional on the actual path of the merchandise trade balance, predict higher inflation and interest rates than unconditional forecasts from a model without the trade balance. There does, however, appear to be useful information in the individual components of the trade deficit. Conditioning on the actual paths of both exports and imports generally produces more accurate forecasts than conditioning on net exports. In particular, conditioning on the trade balance results in the least accurate forecasts for inflation and interest rates of any of the models considered here. On the other hand, conditioning on the individual trade flows produces the most accurate forecasts for inflation, and the second-most accurate for interest rates. Taken together, the results presented here lend support to the argument that Australia’s trade flows represent the outcomes of optimizing decisions, rather than defining constraints on economic growth.     

An empirical study of the Mexican banking system’s network and its implications for systemic risk

With the aim to measure and monitor systemic risk, we present some topological metrics for the interbank exposures and the payments system networks. The evolution of such networks is analyzed, we draw important conclusions from the systemic risk's perspective and propose a measure of interconnectedness. Additionally, we suggest non-topological measures to describe individual behavior of banks in both networks. The main findings of this paper are: the structures of the payments and exposures networks are different (in terms of connectivity); the topology of the exposures network changed after the collapse of Lehman Brothers, whereas the structure of the payments network does not; the proposed measure of interconnectedness can be used to determine the importance of a bank in terms of connectivity. Finally, we found that interconnectedness of a bank is not necessarily related with its assets size but it is linked to the contagion it might cause.     

Afriat’s theorem for indivisible goods

We identify a natural counterpart of the standard GARP for demand data in which goods are all indivisible. We show that the new axiom (DARP, for “discrete axiom of revealed preference”) is necessary and sufficient for the rationalization of the data by a well-behaved utility function. Our results complement the main finding of Polisson and Quah (2013), who rather minimally modify the original consumer problem with indivisible goods so that the standard GARP still applies.     

Ambiguity on the insurer’s side: The demand for insurance

Empirical evidence suggests that ambiguity is prevalent in insurance pricing and underwriting, and that often insurers tend to exhibit more ambiguity than the insured individuals (e.g., Hogarth and Kunreuther, 1989). Motivated by these findings, we consider a problem of demand for insurance indemnity schedules, where the insurer has ambiguous beliefs about the realizations of the insurable loss, whereas the insured is an expected-utility maximizer. We show that if the ambiguous beliefs of the insurer satisfy a property of compatibility with the non-ambiguous beliefs of the insured, then optimal indemnity schedules exist and are monotonic. By virtue of monotonicity, no ex-post moral hazard issues arise at our solutions (e.g., Huberman et al., 1983). In addition, in the case where the insurer is either ambiguity-seeking or ambiguity-averse, we show that the problem of determining the optimal indemnity schedule reduces to that of solving an auxiliary problem that is simpler than the original one in that it does not involve ambiguity. Finally, under additional assumptions, we give an explicit characterization of the optimal indemnity schedule for the insured, and we show how our results naturally extend the classical result of Arrow (1971) on the optimality of the deductible indemnity schedule.     

Swimming on Land: Some Suggestions for Today’s Public Administration

In recent decades researchers have suggested various models for public administration organizations. These models and reforms, generally called New Public Management and Post-New Public Management, ignore the different developmental phases of public organizations, especially when dealing with non-Western countries. Instead of asking how public organizations should look, we suggest asking what should they do? To answer this question, we present several principles on the individual and organizational levels that can serve as a good compass for public managers. On the individual level, we maintain that public employees should focus on listening, helping and learning. On the organizational level, we advocate incorporating public policy with public administration, embracing core principles as opposed to trying to achieve ends, and returning public administration to its key role. These principles reinforce each other and thus can enhance the capability of public organizations.     

Fiscal decentralization and China’s provincial economic growth: a panel data analysis for China’s tax sharing system

Quality & Quantity - Theoretical studies suggest that there is a close association between fiscal decentralization and economic growth. However, whether this linkage holds in China or not is a...     

Erratum to: Fiscal decentralization and China’s provincial economic growth: a panel data analysis for China’s tax sharing system

Quality & Quantity -     

The “frequency divide”: implications for internet-based surveys

Those who use the internet more frequently are more likely to notice a request to participate in a survey than less frequent users. The frequency of internet use is thus likely to affect the likelihood of participation in internet-based surveys. If frequent and infrequent users are different in relevant features, this could influence survey estimates. This study aims to identify which demographic characteristics most differentiate frequent and infrequent users of the internet and whether those distinctions have an influence on substantive responses. The effect of internet usage frequency when conducting internet-based surveys on specific subgroups of the population is also examined. Results suggest that frequent and infrequent users are different both in demographic characteristics and substantive estimates. Differences in substantive estimates are also found when comparing frequent and infrequent users in the 15–24 years subgroup. Weighting can reduce the discrepancies found for most of the substantive estimates, but the differences between frequent and infrequent users remain statistically significant for some specific items.     

Reflections on PATCO’s Legacy: Labor’s Strategic Challenges Persist

The 1981 PATCO strike stands out as a symbol of union decline. The penchant to stigmatize PATCO detracts from important aspects of the union’s unorthodox strategy. Preparations for 1981 negotiations were coordinated by rank-and-file activists who referred to themselves as ‘choir boys’. An extensive mobilization network cultivated by the ‘choir boys’ contributed to cohesiveness and in effect democratized PATCO. The union’s effectiveness in building internal solidarity was its most notable accomplishment. Twenty-first-century labor-movement revitalization will require not only strong, creative leadership but also rank-and-file mobilization in the mold of PATCO’s ‘choir boy’ system. It is this type of grassroots activism that has the potential to promote an internal culture of militant action which can serve as the foundation for union growth.

Incentive regulation and performance measurement of Taiwan’s incineration plants: an application of the four-stage DEA method

The aim of this paper is to provide a technical efficiency assessment of Taiwan’s incineration plants as the basis of incentive regulation schemes. We integrate the four-stage approach with Simar and Wilson’s (in J Econom 136:31–64, 2007) double bootstrapping to filter out the impacts of external variables in the efficiency measurement. Empirical results show that there is room for 15 % cost reductions and capacity, ownership, location and experience are all influential in improving the performance of these plants. We also demonstrate how the results can be applied to modify a yardstick incentive scheme.     

Existence and transversality conditions for a general ‘unbounded-horizon’ model of the mining firm

This paper derives conditions under which optimal programs exist for a general model of the competitive or monopolistic mining firm. The model significantly extends and synthesizes previous formulations by including both resource extraction and discoveries of new reserves, with stock-dependent resource exploitation costs and incomplete resource exhaustion, endogenous technical innovation, and state-dependent resource demand. In addition, the analysis addresses complications arising from having optimal programs defined over an ‘unbounded horizon’, with the possibility of either a finite or infinite terminal time and a non-zero terminal (‘salvage’) valuation if the terminal time is finite. The necessity of the infinite-horizon transversality conditions also is established. The paper illustrates a strongly intuitive approach to existence questions for infinite-horizon or unbounded-horizon control problems, with weaker concavity and interiority assumptions than are often encountered in the literature.     

Kuhn’s Theorem for extensive form Ellsberg games

We propose the notions of mixed and behavioral Ellsberg strategies for extensive form games and prove that these strategies are outcome-equivalent if and only if mixed Ellsberg strategies satisfy a certain rectangularity condition. In addition, we show that not only the profile of Ellsberg strategies must be appropriately chosen but also the extensive form must satisfy further restrictions beyond those implied by perfect recall in order to ensure that each player will respect his ex ante strategy choice with the evolution of play.     

Network advantage’s effect on exit performance: examining venture capital’s inter-organizational networks

This study investigates how a venture capital’s network affects its exit performance. While most network research focuses on individual characteristics such as centrality and density, this study explores the overall advantage that results from holding a network position (i.e., a network advantage). This network advantage is examined at the syndicate level, which is a group of organizations. Within this context, the study contemplates the syndicate’s network advantage and hones in on the syndicate’s network advantage diversity, because the composition of members’ network advantage within the syndicate as well as the syndicate’s network advantage itself may affect the syndicate’s performance. To do this, first it is hypothesized that both a venture capital syndicate’s network advantage and its network advantage diversity are positively associated with its exit performance. Next, the study predicts that a syndicate’s network advantage diversity negatively moderates the positive relationship between the syndicate’s network advantage and its exit performance. Then a two stage least squares analysis of 1137 venture capital syndicate investments largely confirms the predicted effects. A syndicate’s network advantage is shown to contribute to its exit performance. A syndicate’s network advantage diversity clearly weakens the positive relationship between the syndicate’s network advantage and performance, while its direct effect on performance is not significantly supported. Overall, these findings show that a syndicate’s network advantage and its diversity are critical determinants of its exit performance in the venture capital industry.

     

Specifying and assessing a formative measure for Hofstede’s cultural values: a Malaysian study

The growing interest on Hofstede’s cultural values has dominated the area of management and organizational research. However, the extant literature with disappointing psychometric results have provoked a pressing need to re-examine its measurement model specification. To fill this gap, this study attempts to specify the epistemic nature of Hofstede’s cultural values and its underlying dimensions, and to assess a proposed second-order reflective–formative model for Hofstede’s cultural values at individual level in the school organizational context. The stratified sample consisted of 1,154 teachers selected from 30 Malaysian primary schools. The analysis was conducted using Partial Least Square analysis with SmartPLS 2.0 software program. Findings revealed the absence of multicollinearity with the convergent, nomological and discriminant validity were affirmed. This study has confirmed Hofstede’s cultural values as formative second-order hierarchical latent construct which are commonly operationalized by means of reflective dimensions would be better captured using a formative measure perspective by providing rigorous empirical evidence. Limitations and thoughts to stimulate future studies are discussed.