Optimal diversification and risk-taking: a theoretical and empirical analysis

Among the justifications for capital property income received by private households is that it is a ‘return to risk-taking’. However, portfolio diversification provides an obvious means toward the reduction of risk. Moreover, it is widely believed that the wealthier the household, the more diversification it practices: the larger tends to be the proportion of its total portfolio allocated to publicly traded stock, and the larger tends to be the number of individual stock issues included in its portfolio. Using a simple ‘homogeneous securities’ model, explicit functional forms are obtained for both the optimal proportion of the portfolio allocated to stocks, and the optimal number of individual stock issues in the portfolio. Empirical evaluation of these theoretical results, using a dataset derived from the 2004 Survey of Consumer Finances (SCF), lends substantial support to the model. Applying these empirical results, it is found that as household capital wealth increases, expected capital income increases while simultaneously a reasonable risk indicator (the probability of incurring a negative return on the capital portfolio) decreases owing to the higher level of portfolio diversification. This indication casts significant doubt on the ‘return to risk-taking’ justification for capital property income received by wealthy private households.     

Impact of interest rates on Islamic and conventional banks: the case of Turkey

Identifying the impact of the interest rates upon Islamic banks is a key to understand the contribution of such institutions to the financial stability, designing monetary policies and devising a proper risk management applicable to these institutions. This article analyses and investigates the impact of interest rate shock upon the deposits and loans held by the conventional and Islamic banks with particular reference to the period between December 2005 and July 2009 based on Vector Error Correction (VEC) methodology. It is theoretically expected that the Islamic banks, relying on interest-free banking, shall not be affected by the interest rates; however, in concurrence with the previous studies, the article finds that the Islamic banks in Turkey are visibly influenced by interest rates.     

Adjusting an institutional framework to a globalising world: the creation of new institutions in the EEC, 1957-1992

ABSTRACT

This article explores the development of all new EEC institutions between 1957 and 1992 within policy areas relevant to the possible development of a European single currency. It argues that if most institutions created pre-1992 were not crisis management institutions as would be the case post-2008, some important institutions were created in response to the perception of a structural international banking/political/economic crisis, particularly in the 1970s. This comparison in time underlines the continuity of reflections about the missing elements of a functioning single currency area, the obstacles to reform, and sheds light on the radical institutional changes that occurred post-2008.     

互联网金融冲击下我国商业银行供应链金融业务发展现状分析

近年来迅速发展的商业银行供应链金融业务正受到互联网金融的冲击。互联网金融在刺激着银行改变传统业务方式的同时,也促使银行改变供应链金融业务的模式。基于此,分析了互联网金融冲击下我国商业银行供应链金融业务发展的现状,并探讨了商业银行供应链金融产品发展的方向。     

How to measure the market power of banks in the lending business accurately: a segment-based adjustment of the Lerner Index

Numerous empirical studies use the price-cost-margin-based Lerner Index (LI) to assess the general market power of banks. A common procedure within those LI applications is to approximate the market price required for the LI measurement as the ratio of a bank’s total revenues to total assets. We discuss the major flaws of this aggregated procedure and propose an adjusted (i.e. business segment-orientated) LI approach, which is then applied to assess the market power of banks in the specific lending business at the country level. Our empirical study is based on an original data set containing all interest-related categories (weighted by the respective loan as well as deposit volumes) in the countries of the European Monetary Union zone (EMU) from 2003 to 2013. Our results reveal that the country-specific market power of banks in the lending business has been substantially underestimated in previous studies based on aggregated outputs. For example, averaged across the five most important economies in the EMU, we detect a calibration factor of four. Our findings corroborate the economic notion that the interest-bearing lending business is a more locally separated, and thus profitable, segment in which competition is attenuated.     

The institutional change under lobbying and the distribution of power

In this paper, we develop a model of institutional change of land property right in China, which include the influences of lobbying and the political power division in 1978. The model illustrates how extra gains are produced under different institutions and how lobbying and political power division can affect the change. It is clear that the institutional innovation has something to do with the leaders’ legal income, the cost of institutional change and the conversion rate. Given the pattern of leader’s power division, it is the best way for the people in rural areas to change their institutional framework, and it is efficient to mix local and central governmental policies. And lobbying and leading power division can affect the direction and the course of institutional changes that would lead different result among different areas. __________ Translated from Nankai jingji yanjiu 南开经济研究 (Nankai Economic Research), 2007, (6): 17–32     

Technological change under residual risk regulation: The case of coke ovens in the U.S. steel industry

An engineering-economic model is used within a dynamic setting to determine the least cost mix of investment and import activities as the U.S. steel industry faces successively tighter controls on coke oven emissions over the next 10 years. In response to Maximum Achievable Control Technology (MACT) standards proposed for 1995, U.S. steel producers would likely export their toxic pollution by importing 6 million tons of coke per year. About 4 million tons of coke oven capacity is retrofit and about 1 million tons of annual coke consumption is replaced by new iron technologies, such as Corex. The Lowest Achievable Emission Rate (LAER) standards proposed for 1998 roughly double the coke oven retirements estimated to occur under MACT. Coke imports also are substantial but are no higher than under MACT because the additional time allows the industry to invest in more coke-saving blast furnaces and in new less toxic coke-making technologies, such as the Jewell process. The LAER standards in conjunction with higher capital costs, however, force coke imports to more than 8 million tons per year and sharply increase imports of semi-finished steel. Such a situation could exacerbate existing disputes on international steel trade.The authors are associate professor, instructor, and graduate student, respectively. This research was performed under the sponsorship of the U.S. Department of Interior, Bureau of Mines Distinguished Young Scholar Award Administered by Oak Ridge Associated Universities for the Bureau of Mines. Naturally, the usual disclaimer applies.     

The Gendered Nature of Poverty in the EU: Individualized versus Collective Poverty Measures

Due to the adoption of the household as a unit of analysis, researchers have failed to identify accurate measures of women's income poverty. This study proposes an individualized measure of European poverty to highlight gender differences in the economic crisis. Employing data from the European Union Statistics on Income and Living Conditions (EU-SILC) for the period 2007–12, it compares the household-based at-risk-of-poverty rate (ARPR) and the individualized financial dependency rate (FDR). The study shows that the gender gap in poverty in Europe is considerably higher when computed through FDR. Indeed, since the ARPR constitutes a proxy of the household's average conditions, it levels down gender inequalities within the household and also variations in individuals’ incomes over time. Only more detailed data collection on intrahousehold resource sharing will possibly allow the development of more precise and realistic indicators of women's and men's risks of poverty and financial dependency.     

Use of social networks in banking: a study in the Czech Republic

Social networks are becoming more and more important nowadays. Apart from regular users of the Internet, companies have started to use them in their business. Their potential is that a great number of people, future clients of big companies, use them on a daily basis. Thus, the aim of this article is to analyse the use of social networks in the banking sector of the Czech Republic, particularly with respect to customer support. The methods of this study include common data analysis and professional analysis. Common data analysis consists of the evaluation of public data from social networks and web pages of the selected bank institutions. The professional analysis is conducted by paid professional analytical tools that provide more detailed statistics. The findings of the study show that social networks are now well-established tools for the Czech banks to attract both their current and potential clients. The Czech banks seem to care about their clients by trying to meet their needs. Customer care and services provided, however, differ with type of bank.     

A comment on “Economy-wide estimates of the implications of climate change: Human health”

In a recent article in this journal, Francesco Bosello, Roberto Roson, and Richard Tol make the remarkable prediction that one degree of global warming will, on balance, save more than 800,000 lives annually by 2050. They introduce enormous, controversial monetary valuations of mortality and morbidity, varying with income; they then focus primarily on modeling the much smaller, indirect economic effects of the changes in health outcomes. Their calculations, large and small, are driven by the huge projected reduction in mortality — an estimate that Bosello et al. fail to substantiate. They rely on research that identifies a simple empirical relationship between temperature and mortality, but ignores the countervailing effect of human adaptation to gradual changes in average temperature. While focusing on small changes in average temperatures, they ignore the important health impacts of extreme weather events. They extrapolate the effects of small changes in average temperature far beyond the level that is apparently supported by their principal sources, and introduce arbitrary assumptions that may bias the result toward finding net health benefits from warming.     

Insulin degludec versus insulin glargine U100 for patients with type 1 or type 2 diabetes in the US: a budget impact analysis with rebate tables

Background and aims: Drug rebates are almost universally negotiated privately between the manufacturer and the payer in the US. The aim of the present study was to illustrate the use of a “rebate table” to improve the transparency and utility of published budget impact analyses in the US by modeling ranges of hypothetical rebates for two comparators. Worked examples were conducted to illustrate the budgetary implications of using insulin degludec (IDeg) relative to insulin glargine (IGlar) U100 in patients with type 1 or 2 diabetes.

Methods: A short-term (1-year) budget impact model was developed to evaluate the costs of switching to IDeg from IGlar in patients with type 1 or 2 diabetes on basal-bolus and basal-only insulin, respectively. The analysis used insulin dose and hypoglycemia data from recent randomized trials, data on the prevalence of diabetes, and estimates of the proportion of patients using each insulin regimen. The model was configured to run multiple rebate scenarios to generate a rebate table in a hypothetical 1 million member commercial plan.

Results: Relative to IGlar, IDeg resulted in reductions in non-severe and severe hypoglycemia incidence and costs both in patients with type 1 and patients with type 2 diabetes. Insulin acquisition costs were higher, and respective rebates of 7.3% and 10.6% were required for IDeg to break-even with IGlar at the full list price. Incremental per member per month IDeg costs without a rebate were USD 0.04 in type 1 diabetes and USD 0.80 in type 2 diabetes.

Conclusions: Using IDeg instead of IGlar at list price could result in a modest increase in costs when considering insulin and hypoglycemia costs alone, but modest incremental rebates with IDeg would result in cost neutrality relative to IGlar. In addition, IDeg would result in reduced incidence of severe and non-severe hypoglycemia.     

Passports for sale: The political economy of conflict and cooperation in a meta-club

Some of the member states of the European Union sell citizenship or residence to wealthy foreign investors. We analyze these “golden-passport” programs as a study in the political economy of conflict and cooperation in an international meta-club. Seen through the lens of club goods theory, the EU is a club of nations, each of which can be interpreted as itself a club. Each single nation reserves the right to govern the admission of new individual members into its own club, and new members automatically benefit from the EU wide meta-club good. We characterize the unique equilibrium when individual clubs that may differ in membership size are free to choose the terms on which they admit members, and evaluate it from the point of view of the wellbeing of the set of clubs as a whole. We identify club size and benefits as well as differences in cost externalities as the key determinants. We also consider how the set of clubs as a whole can respond to the economic inefficiency problems such a situation creates.     

Understanding the economic,daily functioning,and diabetes management burden of non-severe nocturnal hypoglycemic events in Canada: differences between type 1 and type 2

Objective:

To examine the daily functioning, diabetes management, and economic burden of non-severe nocturnal hypoglycemic events (NSNHEs) in Canada and differences in impacts by diabetes type.

Research design and methods:

A 20-min web-based survey, with items derived from the literature, expert and patient interviews, assessing the impact of NSNHEs, was administered to patients with self-reported diabetes aged ≥18 having an NSNHE in the past month.

Results:

Two thousand, two hundred and seventy-nine Canadian persons with diabetes were screened with 200 respondents meeting criteria and included in the analysis sample. Out of 87 working respondents, 15 reported on average 3.5?h of lost work (absenteeism). The reduction in work productivity (presenteeism) reported was comparable to the impact of arthritis. Other functional impacts included sleep and daily activities. Additionally, respondents’ increased their usual blood sugar monitoring practice, on average, 4.2 (SD?=?7.5) extra tests were conducted in the week following the event and reduced their insulin over the following 4.8 days. Increased healthcare utilization was also reported. Increased costs as a result of NSNHE for lost work productivity, increased diabetes management, and resource utilization was CAD 70.67 per person per year in this sample. Limitations of the study include the biases which are associated with a web-based survey and self-reported data.

Conclusions:

NSNHEs have serious consequences for patients and diabetes management practices. Greater attention to treatments which reduce NSNHEs can have a major impact on improving functioning while reducing the economic burden of diabetes.     

Evaluation of the long-term cost-effectiveness of IDegLira versus liraglutide added to basal insulin for patients with type 2 diabetes failing to achieve glycemic control on basal insulin in the USA

Background and aims: IDegLira, a fixed ratio combination of insulin degludec and glucagon-like peptide-1 receptor agonist liraglutide, utilizes the complementary mechanisms of action of these two agents to improve glycemic control with low risk of hypoglycemia and avoidance of weight gain. The aim of the present analysis was to assess the long-term cost-effectiveness of IDegLira vs liraglutide added to basal insulin, for patients with type 2 diabetes not achieving glycemic control on basal insulin in the US setting.

Methods: Projections of lifetime costs and clinical outcomes were made using the IMS CORE Diabetes Model. Treatment effect data for patients receiving IDegLira and liraglutide added to basal insulin were modeled based on the outcomes of a published indirect comparison, as no head-to-head clinical trial data is currently available. Costs were accounted in 2015?US dollars ($) from a healthcare payer perspective.

Results: IDegLira was associated with small improvements in quality-adjusted life expectancy compared with liraglutide added to basal insulin (8.94 vs 8.91 discounted quality-adjusted life years [QALYs]). The key driver of improved clinical outcomes was the greater reduction in glycated hemoglobin associated with IDegLira. IDegLira was associated with mean costs savings of $17,687 over patient lifetimes vs liraglutide added to basal insulin, resulting from lower treatment costs and cost savings as a result of complications avoided.

Conclusions: The present long-term modeling analysis found that IDegLira was dominant vs liraglutide added to basal insulin for patients with type 2 diabetes failing to achieve glycemic control on basal insulin in the US, improving clinical outcomes and reducing direct costs.     

The exchange paradigm of constitutional economics: implications for understanding the third sector

This paper reconsiders the exchange paradigm of constitutional economics from the perspective of the theory of the division of labor. According to this theory, human wants can be satisfied by two basic mechanisms—exchange and self-sufficiency. The exchange paradigm of constitutional economics emphasizes the former mechanism while neglecting the latter. Building on major economic theories of the third sector, it is argued that the latter mechanism is more helpful than the former in explaining the existence of third sector organizations. The paper concludes by discussing implications of this argument for the further development of constitutional economics.      

Strategic Interactions of Monetary Policymakers and Wage/Price Bargainers: A Review with Implications for the European Common-Currency Area

This paper reviews recent work on macroeconomic management with varying organization of wage/price bargaining and degrees of credible monetary conservatism. The emerging literature synthesizes and extends theory and empirics on central bank independence (CBI) and coordinated wage/price bargaining (CWB), arguing that the degrees of CBI and CWB interact with each other and with other political-economic conditions (sectoral composition, international exposure, etc.) to structure the incentives facing actors involved in monetary policy and wage/price bargaining. The core implication, theoretically surprising but empirically supported, is that even perfectly credible monetary conservatism has long-run, equilibrium, on-average real effects, even with fully rational expectations, and that these effects depend on the organization of wage/price bargaining. Conversely, wage/price-bargaining structure has real effects that depend on the degree of credible conservatism reflected in monetary-policy rules. Each also has interactive nominal effects though this is less surprising. Some disagreement remains over the precise nature of these interactive effects, but all emerging theory and evidence agree that a common, credibly conservative European monetary policy has nominal and real effects that depend on the Europe-wide institutional-structural organization of wage/price bargaining. Indeed, the one specific piece of theoretical and empirical agreement suggests that, for many member countries, the nominal gains from monetary-policy delegation to a credibly conservative European Central Bank will worsen these bargaining-policy interactions.     

Towards governance of human tissue engineered technologies in Europe: Framing the case for a new regulatory regime

The development of human tissue engineered technologies, located in the context of wider debates around the governance of biotechnology, raises important issues. This paper explores these issues by examining theoretical approaches to the regulation of risk, the limits of technical risk assessment and implications of scientific uncertainty in this area. We consider broader social concerns and how these shape contemporary debates relating to the sourcing and use of human tissue-engineered technologies. We examine the emergence of a new regulatory ‘regime’ in Europe and the social shaping of a regulatory space between medicinal products, medical devices and biologics where these innovative products may be situated. Reporting on recent policy initiatives and a survey of regulatory authorities in Europe, we analyse the ways in which public trust in these technologies may be engendered, providing insight into public participation in policy debate and relations between industry and the regulatory state at national and European levels.     

An analysis of the efficient production frontier in the fishery: implications for enhanced fisheries management

The transformation relationship between factor inputs and outputs - the efficient production frontier (EPF)- contains important information for fisheries managers. A directional technology distance function model of the harvesting technology is used to measure changes in the EPF over time. Frontier shifts are summarized with input- and output-based frontier indicators that are interpreted as measures of bioeconomic productivity change. The model is applied to the Mid-Atlantic surf clam and ocean quahog fishery.     

不同类型农户对退耕政策响应差异研究——以准格尔旗为例

主要探讨退耕初期不同类型农户响应退耕还林政策的差异及产生这种差异的影响因素。研究方法:多元线性回归模型。研究结果:(1)根据农户劳动力和耕地数量,可以将农户分为年轻多地型、年轻少地型、年老多地型和年老少地型;(2)四类农户参与退耕还林积极性由大到小分别为:年老多地型农户>年轻少地型农户>年轻多地型农户>年老少地型农户;(3)耕地面积是影响各类农户退耕决策最显著因子,而农户年龄是农户退耕决策影响力最大因子。研究结论:影响各类农户退耕决策的因素存在差异,针对不同类型农户制定差异化辅助政策有助于政策的落实。     

Where they go,what they do and why it matters: the importance of geographic accessibility and social class for decisions relating to higher education institution type,degree level and field of study

This article considers the impact of geographic accessibility and social class on school leavers when making decisions relating to higher education institution (HEI) type, degree level and field of study. Using a novel and comprehensive Irish data set, we consider a number of joint decisions facing school leavers in relation to where and what to study and employ a range of bivariate choice models which allows us to control for correlations in these decisions. We find that geographic accessibility and social class play an important role in determining outcomes relating to HEI type, degree level and field of study. We argue that these decisions are important in terms of future labour market and other outcomes for school leavers and that current policy in Ireland does not go far enough in mitigating the impact of distance and socio-economic barriers on these outcomes.