Does CEO gender matter for bank risk?

This paper addresses the relation between CEO gender and bank risk. We exploit a unique dataset of 365 Polish cooperative banks, 42% of which are run by female CEOs. We find that banks headed by female CEOs are less risky: they report higher capital adequacy and equity to assets ratios. Credit risk in female-led banks is not different from male-led banks, and therefore higher capital adequacy does not stem from lower asset quality and is likely to be linked to higher risk aversion of female CEOs. Our evidence supports the view that women are more risk averse bank CEOs than men. Our findings suggest that gender quotas in bank boards can contribute to reduce risk-taking behavior.     

Does bank capitalization matter for bank stock returns?

We examine US bank capitalization and its association with bank stock returns, and find that the book- and market-based capital ratios show different patterns. Fama-MacBeth regressions and portfolio analyses suggest that banks’ market-based capital ratios are negatively associated with banks’ stock returns during the (tranquil) 1994–2007 period while book-based capital ratios are positively associated with banks’ stock returns during the (turbulent) 2008–2014 period. These results suggest that the effect of bank capitalization on bank stock returns depends on the capital measure used and the period considered.     

Does the bank risk concentration freeze the interbank system?

Probably, one test of the stability of the banking system is to evaluate how risky assets are distributed across banks’ portfolios and the implications for the contagion via interbank relations. This paper explores theoretically a bank sector with risks concentration and the functioning of interbank markets. It employs a simple model where banks are exposed to both credit and liquidity risk that suddenly correlate over the business cycle. We show that risk concentration makes interbank market breakdowns more likely and welfare monotonically decreases in risk concentration.     

How important can bank lending shocks be for economic fluctuations?

We analyze the quantitative importance of bank lending shocks on real activity fluctuations in Norway and the UK, using structural VARs estimated on quarterly data from 1988 to 2010. We find that an adverse bank lending shock causes output to contract, and that such shocks can account for a substantial share of output volatility. This suggests that financial intermediation is an important source of shocks. The empirical analysis comprises the Norwegian banking crisis (1988–1992) and the recent period of banking failures in the UK. However, the results are also non-trivial when omitting periods of systemic banking distress from the sample.     

Did covenants distort risk signals from bank subordinated debt yields before the financial crisis?

Restrictive covenants on bank debt require a bank to take or refrain from specific actions that affect the riskiness of that debt. Although covenants all but disappeared in the 1990s, they re-emerged after 2004 with an increase in bank risk leading up to the financial crisis. Subordinated debt yields potentially enable better risk monitoring by supervisors, but covenants can shift risk from bondholders to stockholders without reducing overall bank risk. This can distort the risk signal used by market participants to discipline excessive risk taking. Because covenants are endogenous and increase during periods of bank stress, the yield signal is dampened the most precisely when regulators most need accurate risk monitoring.     

How does risk transference to private partner impact on public-private partnerships’ success? Empirical evidence from developing economies

This work analyses how risk transference to the private partner affects the success of public-private partnerships (PPP). For this purpose, a broad sample from the World Bank database of 6,022 PPP infrastructure projects in 59 developing countries in the period 1997 to 2016 is analysed. Using multilevel logistic models our results show that PPPs' success is more likely when the private partner takes more risk and the economic and institutional environments are better. Another interesting finding is that an excessive transference of risks to the private party when certain institutional features show good records could prejudice PPPs’ performance.     

How can firms access bank finance for circular business model innovation?

Access to bank finance has emerged as a key challenge for firms engaged in circular business model innovation (circular BMI), both in practice and in the academic literature. Through interviews, focus groups and archival documents, we document the experience of firms accessing finance for circular BMI and assess bank willingness to lend to firms that engage in circular BMI. Our findings offer potential strategies for firms who look for external (bank) finance to realise circular BMI. Using a case study-based theory-refining approach, we identify three core strategies that firms can use to obtain bank finance for circular BMI. First, firms can signal future cash flow expectations by aiming to secure customer contracts and preorders. Second, relationship building with banks, suppliers and customers improves the banks' risk perception of firms. Third, firms can design standardised, long-lasting circular assets that can serve as bank collateral, especially once secondary markets develop, overcoming the difficulty of lending based on innovative, firm-specific assets.     

Recent evidence on the impact of government budget deficits on the ex ante real interest rate yield on Moody’s Baa-rated corporate bonds

This study provides recent empirical evidence on the impact of the federal budget deficit on the ex ante real interest rate yield on Moody’s Baa-rated corporate bonds. The study is couched within an open loanable funds model that includes the ex ante real short term real interest rate, the M1 money supply, net international capital inflows, and the unemployment rate. Using quarterly data for the period 1973.1–2007.4, two-stage least squares estimation reveals that the federal budget deficit, expressed as a percent of GDP, exercised a positive and statistically significant impact on the ex ante real interest rate yield on these corporate issues.     

Brain drain or brain bank? The impact of skilled emigration on poor-country innovation

The development prospects of a poor country or region depend in part on its capacity for innovation. In turn, the productivity of its innovators, whom are often concentrated around urban centers, depends on their access to technological knowledge. The emigration of highly skilled individuals weakens local knowledge networks (brain drain) but may also help remaining innovators access valuable knowledge accumulated abroad (brain bank). We develop a model in which the size of the optimal innovator Diaspora depends on the competing strengths of co-location and Diaspora effects for accessing knowledge. Then, using patent citation data associated with inventions from India, we estimate the key co-location and Diaspora parameters. The net effect of innovator emigration is to harm domestic knowledge access, on average. However, knowledge access conferred by the Diaspora is particularly valuable in the production of India’s most important inventions as measured by citations received. Thus, our findings imply that the optimal emigration level may depend, at least partly, on the relative value resulting from the most cited compared to average inventions.     

Are the profitability and investment factors valid ICAPM risk factors? Pre-1963 evidence

We empirically evaluate whether the profitability and investment factors from Novy-Marx (2013) and Fama and French (2015, 2018) are compatible with Merton’s (1973) intertemporal CAPM (ICAPM) framework in the pre-1963 period. We show that: (i) the covariance risk price estimates of the profitability factors are positive and statistically significant, which indicates that they have explanatory power with respect to the cross-section of stock returns; (ii) the investment factors carry insignificant covariance risk prices and are therefore not valid ICAPM risk factors; and (iii) the profitability factors forecast the first moment of the aggregate stock return and economic activity with the correct sign, which is consistent with their positive covariance risk price estimates and satisfies the sign restrictions associated with the ICAPM.     

Is literacy shared within households? Theory and evidence for Bangladesh

A member of a collective-action households may or may not share the benefits of literacy with others in that household; the shared gains from doing so may well be offset by a shift in the balance of power within the family. Using household survey data for Bangladesh, we find strong external effects of education on individual earnings. Holding a range of personal attributes constant, an illiterate adult earns significantly more in the non-farm economy when living in a family with at least one literate member. These effects are strongest, and most robust, for women. Omitted-variable bias cannot be ruled out but would also be consistent with an intra-household externality of literacy.     

Corporate entrepreneurship: a test of external and internal influences on managers’ idea generation,risk taking,and proactiveness

Because upper managers have the responsibility to set the corporate entrepreneurship agenda, their entrepreneurial characteristics matter to a firm's successful implementation of corporate entrepreneurship. This study investigated influences on the idea creation, risk taking, and proactiveness perceptions of upper managers in a random sample of 105 Thai manufacturing firms. Results indicate that these managers' idea generation was influenced by the type of product produced, the size of the company, and the extent of firm support for individual entrepreneurship. Managerial risk taking was associated with firm size and extent of support for personal entrepreneurship. Managerial proactiveness as associated only with the scope of firms' competition, firm size, organizational entrepreneurial climate and support for personal entrepreneurship. Results suggest that firm context can influence the basis for corporate entrepreneurship.     

Using DEA for measuring teachers’ performance and the impact on students’ outcomes: evidence for Spain

This research contributes to the ongoing debate about differences in teachers’ performance. We introduce a new methodology that combines production frontier and impact evaluation insights that allows using DEA as an identification strategy of a treatment with high and low quality teachers within schools to assess their performance. We use a unique database of primary schools in Spain that, for every school, supplies information on two classrooms at 4th grade where students and teachers were randomly assigned into the two classrooms. We find considerable differences in teachers’ efficiency across schools with significant effects on students’ achievement. In line with previous findings, we find that neither teacher experience nor academic training explains teachers’ efficiency. Conversely, being a female teacher, having worked five or more years in the same school or having smaller class sizes positively affects the performance of teachers.     

Is competition really bad news for cooperatives? Some empirical evidence for Italian producers’ cooperatives

In this paper, we analyse the nature of the relationship between market power and technical efficiency for producers’ cooperatives. More specifically we test two hypotheses: first, we evaluate the extent to which increasing market pressure may help producers’ cooperatives to improve technical efficiency to guarantee positive profits; second, we test whether higher technical efficiency induces producers’ cooperatives to have a larger market share. These hypotheses are tested on a sample of Italian conventional and cooperative firms for the Wine Production and Processing sector, using both frontier analysis and dynamic panel techniques. The results support the hypothesis that increasing market pressure can affect positively the cooperatives′ efficiency, while gains in technical efficiency do not seem to have any impact on the cooperatives’ market share.

Do physicians employ aides efficiently?: Some new evidence on solo practitioners

This paper investigates the issue of efficient employment of aides in the production of medical care services by self-employed solo practice physicians. Several alternative specifications of the production function for physician services are estimated. The parameter estimates obtained are then used to draw inferences about medical care delivery technology and allocation efficiency. The findings suggest that solo practice physicians overemploy aides and in so doing neither maximize medical practice profit nor minimize the cost of delivering medical care services.     

Is the tax administration just a money machine? Empirical evidence on redistributive politics

Personal income tax represents the main source of tax revenue in any developed country. In this paper, we analyse how efficiently this tax is administered in the Spanish case. While we find that the managerial (or net) efficiency of the tax administration was very high for the period 1993–2002 (95.9%), our main aim here is to identify the determinants of this. Interestingly, political factors are found to play a role. Specifically, the fear of losing a parliamentary seat in a region forces the tax authorities to reduce their efficiency in ensuring tax compliance in that region (“swing voter model”). Additionally, in those electoral districts where the central government obtains higher electoral support the efforts to collect taxes diminish (“core voter model”). However, the former political effect tends to disappear when the central government holds a sufficient majority in the central parliament. Thus, we find empirical evidence on redistributive politics in tax administration.     

Are health care scams infectious? Empirical evidence on contagion in health care fraud

This paper examines the presence of contagion in health care fraud across jurisdictional boundaries. Using state‐level data for the United States, we find evidence of contagion in medical fraud. There are also spillovers from border corruption on medical fraud, but no evidence of spillovers from international borders. In other findings, greater urbanization, greater elderly population, and higher hospital occupancy positively contribute to medical fraud, while nursing employment has a mitigating effect. Further, it is economic inequality rather than economic prosperity that seems relevant. The main findings are robust to consideration of simultaneity, but dependent upon the prevalence of fraud across states.     

Why is it a man’s world,after all? Women on bank boards in India

Employing information on all publicly listed Indian banks covering the period 2003–2012, the study explores whether gender diversity impacts bank behaviour. The evidence suggests that the value addition to banks from the induction of women on their boards of directors is not compelling, although executive women directors enhance bank stability. Looking across ownership, the evidence suggests that gender diversity in state-owned banks enhances stability, but at the cost of lower profitability.