Does Organizational Form Impact Pricing Asymmetry? Evidence from Nonprofit Financial Institutions

Why output prices tend to rise faster in response to input cost increases than they fall in response to input cost decreases is a hotly debated issue in modern economics. In this article, I contribute to this asymmetric pricing debate by expanding the domain of organizational forms where this question has been investigated. More specifically, previous research has focused on for‐profit firms. I expand the investigation by focusing on nonprofit organizations. Credit unions are the nonprofit organization used in my analysis. Credit unions provide essentially identical types of consumer financial services and products as commercial banks but do so from a very different not‐for‐profit orientation. However, in this study, I document similar asymmetric rate‐setting behavior by credit unions. This suggests that pricing asymmetry is likely to be much more widespread, as it relates to nonprofit institutions as well as those in the for‐profit sector.     

Financial Development,Growth Volatility and Information Asymmetry in Sub‐Saharan Africa: Does Law Matter?

We re‐examine the law–finance theory relying on 33 countries in sub‐Saharan Africa over the period 2004–2011. Our evidence suggests that legal origin significantly explains cross‐country differences in financial development and economic volatility. More importantly, relative to civil law, English common law countries and those in Southern Africa have higher financial sector development both in terms of financial activity and banking efficiency on the back of lower volatility. While private credit bureau positively (negatively) affects financial development (economic volatility) with economically large impact for English legal legacy countries, the latter effect is contingent on the form of legal origin suggesting that, the establishment of information sharing offices per se may be insufficient in taming growth vagaries.     

Does religion matter to corruption? Evidence from China

There is a growing interest in understanding how religion affects corruption. Using provincial-level panel data from 1998 to 2009, this paper investigates the effect of religious beliefs on bureaucratic corruption in China. The empirical results show that, bureaucratic corruption is negatively associated with local religious heritage, implying that religious culture plays a positive role in restraining official's corruption since religion has influence on political preference and work ethic. We also find that the negative association between religion and corruption is weaker in provinces with stronger law enforcement, which identifies the substitution effect between religious ethic and legal supervision in curbing corruption. Our findings also reveal that, among the different religions, the anti-corruption effects of China's native religions (i.e., Taoism and Buddhism) are more significant than those of foreign religions (i.e., Christianity and Islam). These conclusions are consistent and robust to various measures of main variables and a variety of robustness checks. Given the very few studies and limited data resources in the context of China, this paper as a tentative study provides new evidences of the relationship between religion and corruption.     

Does China Transfer Productivity Enhancing Technology to Sub‐Saharan Africa? Evidence from Manufacturing Firms*

Abstract: This paper considers whether trade between China and sub‐Saharan Africa results in productivity‐enhancing technology transfers to sub‐Saharan African manufacturing firms. As trade flows between countries potentially results in interactions that lead to technological improvements in the production of goods and services, we parameterize the level of total factor productivity for African manufacturing firms as a function of foreign direct investment flow, and for the country in which it operates, trade openness with China, and its interaction with foreign direct investment. With micro‐level data on manufacturing firms in five sub‐Saharan African countries, we estimate the parameters of firm‐level production functions between 1992 and 2004. Our parameter estimates reveal that across the firms and countries in our sample, there is no relationship between productivity‐enhancing foreign direct investment and trade with China. In addition, increasing trade openness with China has no effect on the growth rate of total factor productivity. To the extent that total factor productivity and its growth is a crucial determinant of economic growth and living standards in the long run, our results suggest that increasing trade openness with China is not a long‐run source of higher living standards for sub‐Saharan Africa.     

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 Disclosure Regulation Work? Evidence from International IPO Markets*

This study examines whether IPO disclosure requirements mandated by countries’ securities laws are associated with variation in IPO underpricing in international IPO markets. Our empirical analysis uses a unique sample of 6,025 IPOs from 34 countries over the period from 1995 to 2002. We show for the first time that the stringency of disclosure requirements for IPO prospectuses is negatively associated with the extent of IPO underpricing, after controlling for various country‐ and firm‐level determinants of underpricing. Moreover, we find that the disclosure effect on IPO underpricing is moderated by the extent of a country’s capital market integration. Taken together, our findings are consistent with the view that increased disclosure regulation appears to reduce IPO underpricing and hence the cost of equity, and that institutional factors such as capital market integration play an important role in understanding the economic consequences of disclosure regulation in international IPO markets.     

Refinements to the Sharpe Ratio – Evidence from Malaysian Equity Funds

Abstract

We apply M-squared measure to evaluate the performance of Malaysian equity funds. Specifically, we show how financial leverage can be applied to increase the returns or to reduce the risk exposures of funds. Several alternative refinements to the original Sharpe ratio are also employed to evaluate the funds during periods of negative excess returns. We find that modified versions of Sharpe measure generally lead to similar performance rankings as the original Sharpe ratio. Our findings imply that while Sharpe ratio has experienced several methodological improvements, its basic underlying concept remains remarkably intact.     

Does Geographic Targeting of Nutrition Interventions Make Sense in Cities? Evidence from Abidjan and Accra

Although most developing country cities are characterized by pockets of substandard housing and inadequate service provision, it is not known to what degree low incomes and malnutrition are confined to specific neighborhoods. This analysis uses representative household surveys of Abidjan and Accra to quantify small-area clustering in service provision, demographic characteristics, consumption, and nutrition. Both cities showed significant clustering in housing conditions but not in nutrition, while income was clustered in Abidjan but less so in Accra. This suggests that neighborhood targeting of poverty-alleviation or nutrition interventions in these and similar cities could lead to undercoverage of the truly needy.     

Does Intra‐regional Trade Matter in Regional Stock Markets? New Evidence from the Asia‐Pacific Region

We provide new evidence on the relationship between bilateral trade and stock market returns across the Asia‐Pacific region. Using three country blocs in this region, including the Far Eastern bloc, the Chinese bloc and the Australian bloc, we examine whether trade linkages between countries affect their stock returns. Incorporating two distinct dynamic properties of regime shifting and cointegration in intra‐regional trade and stock market returns, we employ the newly suggested multivariable smooth transition autoregressive vector error correction model (STAR‐VECM). A series of estimations reveals evidence that bilateral trade significantly Granger‐causes stock returns in the Asia‐Pacific region, with effects that are asymmetric depending upon the stock market regime and the country pair. Among the three blocs, the Far Eastern bloc displays a more pronounced positive effect of bilateral trade growth on stock returns than do the other blocs.     

Does Air Pollution Affect Consumption Behavior? Evidence from Korean Retail Sales*

Using monthly regional panel data on air quality and large retail store sales in Korea, we empirically examine the effect of air pollution on retail sales. We account for regional heterogeneity in air pollution and control for various macroeconomic and climatic factors that can affect retail sales. We also use the air quality indicator in the west coastal islands (affected by trans‐border pollution but uncorrelated with the economic activity in the mainland) as an instrumental variable. The estimation results show that, in general, 1 additional day of PM₁₀ level higher than 80 μg/m³ reduces monthly retail sales by approximately 0.1 percent. Nonetheless, an adaptive pattern emerges over time, particularly when the level of air pollution in the previous month was severe.