Growth,markets, and competitive strategies: Successes and challenges in Latin America

M. Kotabe & R. Leal (Eds.). 2001. Market Revolution in Latin America: Beyond Mexico. New York: Pergamon. 379 pages. ISBN 0‐08‐043897‐0. F. Robles, F. Simon, & J. Haar (Eds.). 2002. Winning Strategies for the New Latin Markets. Englewood Cliffs, NJ: Financial Times/Prentice Hall. 364 pages. ISBN 0‐13‐061716‐4. J. Vial & P. K. Cornelius (Eds.). 2002. The Latin American Competitiveness Report 2001–2002. New York: Oxford University Press. 213 pages. ISBN 0‐19‐515256‐5.     

Foreign investment in Russia and China: A long way to go,but reason for optimism

D. LeBaron, with D. Carpenter. 2002. Mao, Marx, and the Market: Capitalist Adventures in Russia and China. New York: John Wiley & Sons, Inc. 303 pages; ISBN: 0‐471‐15315‐X. B. Granville & P. Oppenheimer (Eds.). 2001. Russia's Post‐Communist Economy. Oxford, England: University Press. 538 pages; ISBN 0‐19‐829525‐1. H. Fung & K.H. Zhang (Eds.). 2002. Financial Markets and Foreign Direct Investment in Greater China. New York: M.E. Sharpe, Inc. 302 pages; ISBN: 0‐7656‐0804‐9.     

The Influence of Financial Well‐Being on Pawnshop Use

This research examined the influence of financial well‐being on pawnshop use. Data from the 2015 National Financial Capability Study were used to construct a measure of financial well‐being, based on the Consumer Financial Protection Bureau's definition. A higher financial well‐being reduced the odds of pawnshop use by 17%, even after controlling for having a bank account, having a credit card, being financially overconfident, proximity to local pawnshops, and selected demographic characteristics. The authors make recommendations for future research based on changes in the pawnshop industry and its users.     

The Effects of Financial Education on Short‐Term and Long‐Term Financial Behaviors

This study investigates how financial education in high school, college, or in the workplace affects the short‐ and long‐term financial behaviors of adults using the 2015 National Financial Capability Study (NFCS) data. Financial education appears to have generally insignificant effects on short‐term behaviors for which there is regular feedback and penalties, and thus greater opportunity for learning by doing. If consumers do not pay off their credit card bill, they get a monthly statement showing interest charges and penalties. Financial education appears to have more positive and stronger effects on long‐term behaviors with less timely feedback, and for which the adverse consequences are not fully realized until later in life, so learning by doing may not work. Not saving enough money for retirement cannot be easily or quickly corrected, if at all. The benefits to financial education may differ based on the time horizon for the financial behaviors.     

Exploring the Relationship between Financial Education and Financial Knowledge and Efficacy: Evidence from the Canadian Financial Capability Survey

Researchers and policymakers in many countries are interested in better understanding the relationship between financial education participation and cognitive outcomes such as financial knowledge and self‐efficacy. We used two waves of the nationally representative Canadian Financial Capability Survey along with propensity score matching (PSM) to compare outcomes between persons who had taken a financial education course to those who had not. After matching and adjusting for demographic and economic factors, financial education participants exhibited significantly higher objective and subjective financial knowledge and financial self‐efficacy scores. Post‐estimation analysis showed that higher overall objective financial knowledge scores were at least partially driven by higher scores of men. Financial education participants had higher subjective knowledge and financial self‐efficacy scores for both genders and across age. Future research into financial education ought to consider cognitive dimensions in addition to behavioral and financial outcomes.     

Financial Liberalisation and Growth in China’s Economic Reform

This paper summarises China’s financial liberalisation experience and examines the contributions of financial resources on economic growth during the post‐reform period. Financial liberalisation has resulted in the reallocation of the four sources of total investment in fixed assets: state budget appropriation, national bank loans, self‐raised funds, and foreign investment. We find that the growth of GDP and industrial production are positively related to the growth of self‐raised funds and foreign investment. We conclude that the use of foreign investment and funds raised by the enterprises themselves are more efficient than the government’s appropriation and provision of bank loans.     

Dealing with financial crises in emerging markets

Financial crises in emerging markets are a reality of doing business in these countries in the early twenty‐first century. Managers can gain some perspective on this problem from experiences of firms in crises that occurred in Mexico, Thailand, and Russia during the 1990s. We show how firms have taken steps to protect themselves against financial crises and to deal with the crises once underway in these three countries. Such strategies are divided into frameworks of: short‐term, immediate responses to a crisis; intermediate steps during the period of economic downturn; and long‐term continuing responses for operating in emerging markets. © 2002 Wiley Periodicals, Inc.     

Trend and business cycles with external markets: Non‐capacity generating semi‐autonomous expenditures and effective demand

The Global Financial Crisis has underlined the importance of developments in the household sector to explaining macro patterns. Some recent papers have discussed the role of non‐capacity generating semi‐autonomous expenditures in growth theory. This literature ties together several aspects of heterodox thought: growth and distribution; the Sraffian supermultiplier; Duesenberry's relative income hypothesis; the endogenous money approach and Kalecki–Luxemburg external markets. The basic message is that non‐wage sources of effective demand, based on mortgage and consumer credit, can play a key role in inducing capacity investment and driving long‐run output growth. This article gives a broad overview of the role of financed‐induced semi‐autonomous expenditures in growth, cycles and crises, and thus criticizes some of the previous approaches that claim to mimic actual cycles while abstracting from these crucial determinants of economic activity.     

The impact of electronic trading on bid‐ask spreads: Evidence from futures markets in Hong Kong,London, and Sydney

During 1999 and 2000, three major futures exchanges transferred trading in stock index futures from open outcry to electronic markets: the London International Financial Futures and Options Exchange (LIFFE); the Sydney Futures Exchange (SFE); and the Hong Kong Futures Exchange (HKFE). These changes provide unique natural experiments to compare relative bid‐ask spreads of open outcry vs. electronically traded markets. This paper provides evidence of a decrease in bid‐ask spreads following the introduction of electronic trading, after controlling for changes in price volatility and trading volume. This provides support for the proposition that electronic trading can facilitate higher levels of liquidity and lower transaction costs relative to floor traded markets. However, bid‐ask spreads are more sensitive to price volatility in electronically traded markets, suggesting that the performance of electronic trading systems deteriorates during periods of information arrival. © 2004 Wiley Periodicals, Inc. Jrl Fut Mark 24:675–696, 2004     

Book Reviews

Books reviewed: PETER REUTER and EDWIN M. TRUMAN, Chasing Dirty Money: The Fight Against Money Laundering FRANCESCO GIAVAZZI, ILAN GOLDFAJN and SANTIAGO HERRERA (eds.), Inflation Targeting, Debt and the Brazilian Experience, 1999 to 2003 THEODORE H. MORAN, EDWARD M. GRAHAM and MAGNUS BLOMSTRÖM (eds.), Does Foreign Direct Investment Promote Development? JEFFREY FRANKS, VALERIE MERCER‐BLACKMAN, RANDA SAB and ROBERTO BENELLI, Paraguay: Corruption, Reform, and the Financial System     

Book Reviews

Books reviewed: Thomas F. Cargill, Michael M. Hutchinson and Takatoshi Ito, Financial Policy and Central Banking in Japan Klaus Günter Deutsch and Bernard Speyer, The World Trade Organization Millennium Round – Freer Trade in the Twenty‐first Century Lonnie Golden and Deborah M. Figart (eds.), Working Time, International Trends, Theory and Policy Perspectives G. Cornelis van Kooten and Erwin H. Bulte, The Economics of Nature: Managing Biological Assets     

Why price‐level dispersion went up in Europe after the financial crisis

Persistent price differences across euro area countries are an indication of incomplete economic integration. We analyse long‐ and short‐run developments of price‐level dispersion in the euro area and compare the results with price dispersion across US cities. We find that monetary and economic integration in Europe has been successful in establishing a major downward trend in price‐level differences across countries since 1960. After the Global Financial Crisis and the European Sovereign Debt Crisis, diverging economic conditions across euro area countries led to higher income dispersion, which contributed to a widening of price‐level differences again.     

Now Read This: Book Review Spelling Out Corporate Responsibility

Cannon, Tom, Corporate Responsibility, Financial Times, Pitman Publishing, 1992, pp. 265, Hardback £30.00, ISBN 0-273-03727-7.     

Book Reviews

Geography and Trade by PAUL KRUGMAN (Cambridge MA, London, MIT Press, 1991), pp. xi and 142, £15.95 hardback, ISBN 0 262 11159 4. Reforming Central and Eastern European Economies — Initial Results and Challenges by VITTORIO CORBO, FABRIZIO CORICELLI and JAN BOSSAK (eds.), (Washington: The World Bank, 1991, obtainable in the UK from Microinfo Ltd., Po Box 3, Omega Park, Alton, Hampshire, GU34 2PG) pp. xiv and 299, ISBN 0 8213 1893 4. Financial Enterprise in South Africa Since 1950 by STUART JONES (ed.), (Basingstoke: Macmillan, 1992), pp. xiv and 316, ISBN 0 333 52412 8. Commodities in Crisis by ALFRED MAIZELS (Oxford, New York, The Clarendon Press, 1992), pp. xviii and 307, £35.000 hardback, ISBN 0 19 828387 An Economic Analysis of the EC by JØRGEN ULFF-MØLLER NIELSON, HANS HEINRICH and JØRGEN DRUD HANSEN (London, New York: McGraw-Hill, 1992), pp. xiii and 247, £17.95 softback, ISBN 0 07 707422 X. Economic Integration and Financial Liberalization, Prospects for Southern Europe by HEATHER D. GIBSON and EUCLID TSAKALOTOS (eds.), (Basingstoke: Macmillan in association with St Antony's College, Oxford, 1992), pp. xiv and 209, ISBN 0 333 54444 7. Dynamic International Oil Markets, Oil Market Developments and Structure 1860–1990 by COBY VAN DER LINDE (Dordrecht, Boston, London: Kluwer Academic Publishers Group, 1992), pp. 224, Dfl 165.00, US $94.00, £56.00 hardback, ISBN 0 7923 1478 6. GATT and Conflict Management, A Transatlantic Strategy for a Stronger Regime by REINHARD RODE (ed.), (Oxford: Westview Press, 1990), pp. 125, US $28.50, £18.95 softback, ISBN 0 8133 7967 9.     

Financial models with defaultable numéraires

Financial models are studied where each asset may potentially lose value relative to any other. Conditioning on nondevaluation, each asset can serve as proper numéraire and classical valuation rules can be formulated. It is shown when and how these local valuation rules can be aggregated to obtain global arbitrage‐free valuation formulas.     

Propensity to plan,financial capability,and financial satisfaction

Propensity to plan is an indicator of financial capability that contributes to consumer financial well‐being. Previous research has shown that propensity to plan is positively related to objective financial well‐being but little research was found to examine its association with subjective financial well‐being. Using financial satisfaction to measure subjective financial well‐being, this study addressed this research gap and had three objectives: (1) to explore factors associated with propensity to plan, (2) to examine the association between propensity to plan and financial capability factors, and (3) to examine the association between propensity to plan and financial satisfaction. Using data from the 2015 US National Financial Capability Study, the results showed socioeconomic differences in propensity to plan. The results suggest consumers with more economic resources had higher scores in propensity to plan. In addition, propensity to plan was positively associated with financial capability factors, suggesting financial planning is a desirable financial behavior. Finally, propensity to plan made unique contributions to financial satisfaction after controlling for socioeconomic and other financial capability factors.     

Changing a Culture: Evaluation of a Leadership Development Program at Mellon Financial Services

The purpose of this study was to evaluate the effectiveness of an internally developed and delivered Leadership Development program conducted at Mellon Financial Services. The 9‐month program integrated action learning/action science strategies into 13 modules. Program effectiveness was measured using instruments and statistics that already existed in the organisation—employee satisfaction surveys, annual employee turnover statistics, and regional scorecard results. In addition, the training participants completed midpoint and end‐of‐training feedback forms. Results of the evaluation showed that the impact of the training transferred to the participants’ job performance through increased job satisfaction, decreased turnover, and improved scorecard statistics.     

The Links between Early‐Life Cognition and Schooling and Late‐Life Financial Knowledge

Using the Wisconsin Longitudinal Study, a sample of Wisconsin high school graduates from the class of 1957, we explore the relationship between late‐life financial knowledge and human capital formed in early life. Specifically, we examine the associations between early‐life cognition and schooling experiences—such as academic performance and coursework—and late‐life financial knowledge. Financial knowledge is measured as individuals' knowledge of their own financial situations, which we argue is a prerequisite for good financial behavior. We find that those with lower early‐life cognitive functioning, especially those without college degrees, have lower levels of financial knowledge in late life. We find more limited evidence for independent associations of academic performance and math course work with late‐life financial knowledge.     

Book Reviews

Books reviewed: CARL DAVIDSON and STEVEN J.MATUSZ, International Trade and Labour Markets: Theory, Evidence, and Policy Implications. CHRISTINA L. DAVIS, Food Fights Over Free Trade: How International Institutions Promote Agricultural Trade Liberalization. JAN JOOST TEUNISSEN and MARK TEUNISSEN (eds), Financial Stability and Growth in Emerging Economies: The Role of the Financial Sector. MARC FLANDREAU and FRÉDÉRIC ZUMER, The Making of Global Finance 1880–1913.     

Targeting Financial Management Training at Low‐Income Audiences

While interest in financial management training programs for low‐income persons has grown in recent years, the specific training needs of low‐income consumers have not been well articulated. This article describes needed training content for such audiences, based on review of previous research and the authors’ experiences in evaluating the Financial Links for Low‐Income People (FLLIP) program. We also illustrate how the choice of financial management training models can seriously impact the subgroups of the low‐income population who attend training, as well as the success of programs in recruiting and graduating participants. The implications of these findings both for financial management curriculum development and for the selection of program models are presented.