Does the Private Sector Help or Hurt the Environment? Evidence from Carbon Dioxide Pollution in Developing Countries

How does the nature of enterprise ownership affect the environment in an economy? Conventional wisdom and theoretical conjectures are split on this important question. In this paper we estimate a reduced-form, random-effects model using data from 44 developing countries over nine years (1987–95) to study for any systematic empirical relationship between the relative level of private sector involvement in an economy and the environmental performance of the economy in terms of its emission of industrial carbon dioxide. We control for both observed and unobserved crosscountry heterogeneity along various institutional and structural dimensions such as the scope of financial market, industrial sector composition and level of foreign direct investment. The regression results indicate that the higher the degree of private sector involvement in a developing economy, the lower is its environmental degradation. In addition, its environmental degradation is likely to be further reduced in presence of a well-functioning domestic capital market and through increased participation by developed economies in its private sector development.     

Does School Quality Matter? Evidence from the Hong Kong Experience

This paper analyses the differential returns to education and to language ability of natives and Chinese immigrants in Hong Kong. The large difference in quality between Hong Kong schools and Chinese schools provides a natural experiment for evaluating the effect of school quality on students' performance in the labor market. We show that the rate of return to schooling is more than three times higher among local-born workers than among Chinese immigrants to Hong Kong. Our analysis also suggests that English language education is one important component of the success of the Hong Kong education system.     

Does Aid for Roads Attract Foreign or Domestic Firms? Evidence from Cambodia

Less developed countries have received substantial foreign aid for transport infrastructure, making its quantitative assessment important. To investigate the effect of aid for road infrastructure on the location of foreign and domestic firms, this study employs the first comprehensive census on all business establishments in Cambodia for 2011 and measures the geographical distribution of aid disbursements in roads. Estimating a negative binomial model, we find that aid disbursements in roads have little influence on the entry of foreign and domestic firms across communes. Compared with the aid effect, the location of firms is more strongly influenced by other determinants such as population size, electricity access, and labor supply.     

Does microcredit reduce the gender gap in employment? Evidence from Egypt

In Egypt, there is a remarkable gap between men's and women's participation in the labour market. In this study, we examine the impact of microcredit on the labour supply of men and women and subsequently investigate whether microcredit can reduce the employment gap between men and women in Egypt. We find a negative effect of microcredit on men's employment, but a positive effect on the employment of women. Borrowing from a microcredit source increases the probability of women working by 8.5 percentage points and mainly affects self‐employed work. We also find a positive effect of microcredit on work in small businesses. This finding suggests that women can use microcredit to open small shops or household businesses. Finally, using decomposition analysis, we find that microcredit reduces the overall employment gap between men and women by 0.743%.     

Does export liberalization cause the agglomeration of pollution? Evidence from China

This paper investigates the impact of export liberalization on the geographic concentration of water pollution. Data shows that water pollution emissions are unevenly distributed across regions in China. Using China's accession to the World Trade Organization (WTO) as the exogenous shock, we identify a negative causal effect of export liberalization on the agglomeration of water pollution across regions in China. It suggests that relatively more water pollution is discharged in those previously low-pollution regions after export liberalization. We confirm this with data on regional relative pollution emissions. Further decomposition shows that it is the intensive margin (average pollution emission) rather than the extensive margin (number of polluting firms) that drives the deglomeration of water pollution emissions within the liberalized industry.     

Does peace boost stock prices? Evidence from the Korean stock market

This study analyzes the impact on the Korean stock market of the inter-Korean summits in 2000, 2007, and 2018 and the North Korea–United States summit in 2018 using the event study methodology. Three portfolios, which have high exposures to North Korea risks are constructed: stocks related to Kaesong Industrial Complex (KS portfolio), stocks related to inter-Korean economic cooperation (IEC portfolio), and stocks related to the defense industry (DEF portfolio). Empirical analysis show that the cumulative abnormal returns (CARs) of KS, IEC, and DEF portfolios react positively or negatively to each summit. These results imply that peace does not simply play a role in boosting stock prices and that the stock price reflects all available information related to the summits, including the process and agreement of the summits' discussion and political context. The robustness test (performed by changing the event day to the announcement rather than the agreement) shows that KS and IEC portfolios reflect positive expectation and that the DEF portfolio reflects negative expectation in the financial market. Although each CAR pattern varies, it is true that the stock price reflects all available information of summits swiftly. In other words, our paper shows that the efficient market hypothesis holds in the Korean stock market.     

Does participating in the standards-setting process promote innovation? Evidence from China

This paper provides novel empirical evidence on the positive effect of standards-setting involvements on corporate innovation in China, reflecting in improving the patent quantity and patent quality. This kind of positive effect increases as the firm's top management team quality increases. We also show that the positive effect of standards-setting involvements is more evident for state-owned enterprises than non-state-owned enterprises due to the unique features of state-owned enterprises. Our results are robust to a battery of tests, including the use of alternative model specifications, firm fixed effects, the instrumental variable approach, potential omitted variables, and propensity score matching procedure. Further analysis reveals that standards-setting involvements foster innovation mainly through improving firms' R&D efficiency, reducing financial constraints, and inducing collaborative innovation. Overall, our findings suggest that standards-setting involvements matter for corporate innovation in China.     

Does board gender diversity matter in the banking sector? Evidence from Tunisia

The purpose of this paper is to investigate the effects of board gender diversity on banks’ performance and risk for the case of a developing African country. Our sample includes a unique data set of Tunisian banks during the period 2005–2018. We use the two‐way cluster regression proposed by Petersen. This approach corrects for the unobserved firm effect (time‐series dependence) and time effect (cross‐sectional dependence). It gives robust standard errors adjusted for heteroscedasticity, serial correlation, and cross‐sectional correlation. Our results support a positive relationship between gender diversity and banks’ performance measured by ROA and ROE, while women board members are associated with more default risk measured by Z‐score. Our results remain robust to various measures of gender diversity, banks’ performance and risk. The findings contribute to the literature by providing empirical evidence from Tunisia, an African emerging economy, where the examination of the role of board gender diversity on bank governance is unexplored.     

Does higher language proficiency decrease the probability of unemployment? Evidence from China

This paper considers how proficiency in Standard Mandarin, China's official language, affects employment probabilities in China. Previously, research has focused on language proficiency' effects on earnings, with little research having been done on how proficiency affects employment probabilities vis-à-vis unemployment. Data will be taken from the China Labor-force Dynamics Survey (CLDS), which makes it possible to distinguish between employed and unemployed people. Using a linear probability model, it is estimated that a one-standard-deviation increase in Mandarin proficiency decreases unemployment probabilities by 5%. Significant heterogeneity is also found. The ‘employment premium’ for language proficiency is highest for younger people and people living in urban areas. The effects on employment is not significant for older people, and people living in rural areas.     

Does Membership Homogeneity Matter for Group-based Financial Services? Evidence from the Gambia

This paper examines the effect of membership composition on the components of group design to provide financial services, and on the performance of these groups. Regression results based on data from RoSCAs in the Gambia show that gender homogeneity is less likely to affect components of group design than is homogeneity in income generating capacity of members. Membership homogeniety does not directly affect the repayment performance of the members but only indirectly through the components of the group design. — Cet article examine l’incidence de la composition sur les composantes et la performance des groupes constitués en vue de la fourniture de services financiers. Selon les résultats d’une analyse de régression basée sur les données de “RoSCA” en Gambie, il apparaît que l’homogénéité du genre influe moins sur les composantes de la conception des groupes que l’homogénéité de la capacité des groupes à générer des revenus. En ce qui concerne la performance en matière de remboursement, l’incidence de l’homogénéité de la composition n’est pas directe mais indirecte au travers des composantes de la conception des groupes.     

Does Trade,Technology, or Education Expel Traditional Sectors? Some Evidence from the Collapse of the Silk Sector in South Korea*

Rapid economic growth and development often drives out traditional activities. We determine how increased trade, technology, and access to education in South Korea led to the collapse of its silk sector. Results show that although the imports of silk yarn and fabric reduced domestic silk output and prices, trade liberalization was not the sole contributor to the collapse. Inelastic labor demand for unskilled workers, skill‐biased technology, and especially increased access to education all led to a sharp rise in the relative wage of unskilled workers, and the ensuing rise in production costs contributed to the silk sector's collapse.     

Does economic uncertainty affect the soundness of banks? Evidence from emerging Asian economies

This paper examines the impact of economic uncertainty on four dimensions of banking soundness, namely, banks’ loan growth rates, interest rate spreads, capitalization and risk. By using the bank-level panel data of approximately 500 commercial banks in seven emerging Asian economies, we find consistent evidence that increased economic uncertainty decelerates banks’ loan growth, narrows their interest rate spreads and aggravates their risk, but induces banks to increase their capital holdings. Our results are shown to be robust in a series of checks that use alternative indicators of economic uncertainty and econometric methodologies.     

Does Terrorism Affect the Stock‐Bond Covariance? Evidence from European Countries

Using daily stock and bond returns data from four European countries—France, Germany, Spain, and Great Britain—that have been the victims of significant terrorist activity, this study addresses the issue of whether transnational and/or domestic terrorist attacks have affected in any significant manner the time‐varying stock–bond covariance, their returns, and their variances. Stock and bond markets can be influenced and determined not only by the usual array of macroeconomic factors but also by security shocks, such as a terrorist incident, that have the potential to affect investors' sentiment and portfolio allocation decisions. The issue at hand is addressed using a VAR(p)‐GARCH(1,1)‐in‐mean model, and the results reported herein indicate that terrorist attacks trigger a flight‐to‐safety effect primarily in France and Germany and to a smaller degree in Great Britain and Spain.     

Does It Get Better? Recent Estimates of Sexual Orientation and Earnings in the United States

Using 2013–2015 National Health Interview Survey data, we reproduce a well‐documented finding that self‐identified lesbians earn significantly more than comparable heterosexual women. These data also show — for the first time in the literature — that self‐identified gay men also earn significantly more than comparable heterosexual men, a difference on the order of 10% of annual earnings. We discuss several possible explanations for the new finding of a gay male earnings premium and suggest that reduced discrimination and changing patterns of household specialization are unlikely to be the primary mechanisms.     

What Does the `Show Case' Show? Evidence of and Lessons from Adjustment in Uganda

Uganda is often seen as an African show case for the beneficial effects of structural adjustment. High growth rates have been combined with a high degree of “ownership” of the reforms. At the same time, critics have pointed to continued aid dependence, and limited growth of the important agricultural export sector. The contribution of this paper to this debate is three-fold. First, “ownership” has not always been exemplary and is still fragile in some respects. Second, although aid has indeed been important for bringing about high growth, aid dependence has diminished over time. Third, there have been real supply responses from the agricultural export sector.     

Does Chinese Environmental Policy Affect Income Inequality? Evidence from the Central Environmental Protection Inspection

This paper investigates the effect of environmental policy on income inequality. It focuses on the central environmental protection inspection led by the central government in China. Using a difference-in-differences approach, it finds evidence that environmental regulation decreased the per capita income and enlarged the gap between urban and rural income while showing an insignificant effect on employment. Although the policy can reduce pollution levels and bring environmental benefits in aggregate, the findings of this study suggest that the regulations appear to have reduced the proportion of manufacturing industry and hindered general innovation and investment from entrepreneurs, which resulted in greater inequality. Rural residents suffered more from environmental regulation due to relatively high migration costs and their disadvantaged human resources on the aspects of health, education level, and skills. The local government's execution incentive can also play a key role in the effectiveness of environmental policy. Regions with lower GDP growth targets and younger government leaders were affected significantly with regard to the income growth of local residents and the urban–rural income gap.     

Does Accounting Conservatism Discipline Qualitative Disclosure? Evidence From Tone Management in the MD&A*

We investigate whether accounting conservatism, which has been found to be effective in constraining management opportunism in other settings, constrains upward tone management (UTM) in the Management's Discussion and Analysis (MD&A) portion of the 10-K filing. We hypothesize that conservatism makes it harder for managers to opportunistically downplay bad news and magnify good news when discussing current performance. Consistent with this hypothesis, we find that UTM is negatively associated with several accounting conservatism proxies. Additionally, we hypothesize and find that this association is stronger for firms where managers have higher incentives to manipulate tone. In supplemental analyses, we find evidence to suggest that our results are not due to an endogenous relationship between conservatism and UTM. We also find that conservatism neither encourages downward tone management (DTM) nor constrains managers from conveying real information about future good news. Together, our results suggest that accounting conservatism improves disclosure narratives.