Spatial Competition and Shopping Externalities: Evidence from the Housing Market

In search markets, greater spatial concentration of sellers increases price competition. At the same time, though, a greater concentration of sellers can create a shopping externality by attracting more buyers to the site. Using housing sales data, we test for spatial competition and shopping externality effects on prices and marketing time. We find that they reflect both competitive and shopping externality effects from surrounding houses, although the relative strength varies with how fresh the house is in the market, the freshness of surrounding houses, and the phase of the market cycle. New listings have the strongest shopping externality effect on neighboring houses that have been on the market for some time. Vacant houses have their strongest competition effects in the declining market and externality effects in the rising market. Fresh houses on the market reap little benefit from shopping externalities in all phases of the market cycle.     

An appraisal framework for evaluating financing approaches for public infrastructure

Innovative financing solutions for public infrastructure megaprojects require new approaches to assess the various financing portfolios being proposed. This paper discusses a range of international financing models and presents a new multi- criteria appraisal framework for assessing alternative ways of raising capital. The proposed framework combines elements of a multi-criteria analysis and cost benefit analysis, and incorporates both monetary and intangible impact measures to facilitate the selection of a financing approach that is in society’s best interest.     

Financial market spillovers and macroeconomic shocks: Evidence from China

With the development of China’s financial reform, Chinese financial markets have become closely linked. The cross-market spillover effect of financial risks is at the core of systemic risks. This paper’s marginal contributions include (1) a new method is proposed based on structure learning for Bayesian networks to measure the multilateral spillover effect of a multiasset financial system. Additionally, this paper discusses (2) the macroeconomic mechanism behind the linkage of financial markets. The empirical results show that (1) the linkages between financial markets significantly exist, (2) uncertainty and negative macroeconomic shocks enhance the spillover effect in financial markets, and (3) the impact of negative macroeconomic shocks on the spillover effect of the financial market is weakened at the high economic growth stage.     

Inter-industry FDI spillovers from foreign banks: Evidence in transition economies

Using a sample of nonfinancial domestic firms in transition economies from Eastern Europe and Central Asia, we examine whether and how inter-industry spillover from foreign direct investment in the banking sector occurs. Our findings show that the innovation pursued by domestic firms benefits from foreign bank penetration. However, these positive inter-industry spillovers surprisingly do not seem to work through enhanced credit access. We further find these positive spillovers to occur mainly for foreign banks that use relationship lending, domestic firms that do not export, and host countries that are less open to the global market.     

Media sentiment and CDS spread spillovers: Evidence from the GIIPS countries

This study explores the role of newswire messages during the European debt crisis. It quantifies how this news metric, revealed by statements recorded by newspapers articles, affects CDS spillovers across five European countries with sovereign debt problems and strict bail-out programs, i.e. Greece, Ireland, Italy, Portugal, and Spain with daily data spanning the period 2009–2012. Using panel ARDL and asymmetric conditional volatility modeling methods, the empirical findings document that the news variable generates significant spillover effects across the underlined CDS markets. These findings cast a cloudy doubt on the effectiveness of economic modeling on which CDS spreads are based.     

Preparing for disaster: a comparative analysis of education for critical infrastructure collapse

This article explores policy approaches to educating populations for potential critical infrastructure collapse in five different countries: the UK, the US, Germany, Japan and New Zealand. ‘Critical infrastructure’ is not always easy to define, and indeed is defined slightly differently across countries – it includes entities vital to life, such as utilities (water, energy), transportation systems and communications, and may also include social and cultural infrastructure. The article is a mapping exercise of different approaches to critical infrastructure protection and preparedness education by the five countries. The exercise facilitates a comparison of the countries and enables us to identify distinctive characteristics of each country’s approach. We argue that contrary to what most scholars of security have argued, these national approaches diverge greatly, suggesting that they are shaped more by internal politics and culture than by global approaches.     

Overcoming failure in infrastructure risk governance implementation: large dams journey

There is ample recognition of the risk inherent in our very existence and modes of social organization, with a reasonable expectation that implementing risk governance will result in enhanced resilience as a society. Despite this, risk governance is not a mainstream approach in the infrastructure sector, regardless of the increasing number of peer-reviewed published conceptualizations, mature procedures to support its application, or public calls to cope with systemic risks in our modern societies. This paper aims to offer a different view on the issue of risk governance, with focus in the analysis of the root causes of its relatively low degree of implementation in the infrastructure sector. We later analyze the impact of such essential causes, which we have grouped and labeled as the ontology, the concerns, the anathemas, and the forgotten, in the specific field of large dams. Finally, we describe the journey toward risk governance in the specific field of large dams, thus supporting the ultimate objective of this paper to facilitate an evidence-based approach to successful risk governance implementation within and outside the dam sector.     

Common ownership and bank stability: Evidence from the U.S. banking industry

We empirically test competing theoretical arguments about the impact of common ownership on bank stability: the common ownership hypothesis, where banks decrease risk-taking by internalizing risk externalities on commonly held banks, and the diversification hypothesis, where banks increase risk-taking influenced by common owners who hold diversified portfolios and are less risk averse. Using data from the U.S. banking industry from 1991 to 2016, we find that banks with more common ownership linkages undertake lower risk, as predicted by the common ownership hypothesis. This relation is statistically significant and economically sizable, which is consistent across alternative measures of common ownership and bank risk and robust to potential endogeneity. Our study adds the financial stability perspective to the ongoing discussions on common ownership and antitrust regulations.     

Asymmetric volatility spillovers between economic policy uncertainty and stock markets: Evidence from China

This study explores the spillovers between economic policy uncertainty (EPU) and stock market realized volatility (RV). The monthly index of Chinese and US EPU and RV are used to analyze the pairwise directional spillovers. We find that RV is a net receiver that is more vulnerable to shocks from U.S. EPU than to shocks from Chinese EPU. We further decompose the RV into good and bad volatility to test the asymmetric spillover effect between the stock market and EPU. The results suggest that EPU has a bigger effect on bad volatility in the stock market throughout most of the sample period. However, we find that good volatility spillovers become larger during periods of stimulated reform, whereas bad volatility spillovers become larger during periods of international disputes. We show that Chinese stock market volatility is sensitive to both U.S. and Chinese EPU and that the spillover is asymmetric in different periods.     

Are financial spillovers stable across regimes?: Evidence from the 1997 Asian crisis

We investigate breaks in financial spillovers between the US and eight South-East Asian capital markets before and during the 1997 Asian crisis. We construct threshold vector autoregressive models and apply novel techniques to test whether causality patterns between markets are characterized by one or two regimes. Linkages between the US and Asian markets are shown to follow the threshold model with two regimes, turmoil and tranquility, pointing to differences in cross-border return spillovers in stable and crisis periods. The causality analysis shows that spillovers between US and Asian markets become stronger in the turmoil regime.     

Financial Constraints,Institutions, and Firm Productivity: Evidence from China

ABSTRACT

This paper investigates whether Chinese firms utilize trade credit as an alternative financial intermediation to alleviate financial constraints, and whether trade credit matters for firm productivity. The results show that trade credit significantly affects firm productivity in private and foreign-owned firms but not state-owned enterprises, indicating that trade credit is an efficient financial intermediation for non-state firms. Second, trade credit better helps firms that have severe financial constraints grow. Third, the mechanism of trade credit and TFP is by the substitution effect of cash flow, the smoothing effect of working capital and the drive of innovation. Finally, the impact of trade credit on productivity is driven by the regions under a more institutionally developed environment.     

Risk spillovers from China's and the US stock markets during high-volatility periods: Evidence from East Asianstock markets

This paper studies cross-country risk spillovers through C-vine copula quantile regression. We find Both China's and the US markets can result in large risk spillovers to East Asian markets. Furthermore, their significant conditional spillovers indicate they can emit risk through an intermediary market. However, their distinctive dependency structures with East Asian markets reflect their differences in spillovers to the markets in magnitude. The risk spillovers from US are stronger than China in magnitude. Moreover, the risk spillover from China's stock market during its high-volatility period is weaker than the whole period, which is contrary to the US market. It may imply Chinese financial influences gradually increase with Chinese financial liberalization and regional integration. Our results have implications for macroprudential regulators adopt the effective supervision and regulation to deal with the cross-border risk spillovers, and for international investors in risk hedging, derivative valuation and investment.     

Risk spillovers between FinTech and traditional financial institutions: Evidence from the U.S.

In this paper, we propose a novel approach to examine the risk spillovers between FinTech firms and traditional financial institutions, during a time of fast technological advances. Based on the stock returns of U.S. financial and FinTech institutions, we estimate pairwise risk spillovers by using the Granger causality test across quantiles. We consider the whole distribution: the left tail (bearish case), the right tail (bullish case) and the center of the distribution and construct three types of spillover networks (downside-to-downside, upside-to-upside, and center-to-center) and obtain network-based spillover indicators. We find that linkages in the network are stronger in the bearish case when the risk of spillover is higher. FinTech institutions' risk spillover to financial institutions positively correlates with financial institutions' increase in systemic risk. These results have important policy implications, as they underscore the importance of enhancing the supervision and regulation of FinTech companies, to maintain financial stability.     

Private Participation in Infrastructure and Financial Sector Development: Evidence from Developing Countries

This article studies whether private participation in infrastructure (PPI) investments promote financial sector development (FSD). With data from 62 developing countries over the period 1990–2013, we provide evidence of a positive and significant relationship between PPI investments and FSD, irrespective of different control variables, estimation methods and measures of FSD. With heterogeneity tests, we illustrate that the promotion effect is larger in emerging countries than in the other countries; however, the difference is marginal. We also identify that both civil and common legal origins have a comparative advantage than socialist legal origin for FSD.     

Going public in the 1980s: Evidence from Sweden

The paper explores the going public decision in a sample of family-owned corporations in Sweden, 1970–1991. the issuers' motivations for going public are documented and contrasted with economic theory. We find that the average firm is old, that a significant portion of the shares are sold by existing shareholders, that most going public activity took place after an exceptionally sharp stock price increase, and that going public activity is not related to the business cycle. the findings suggest that firms were taken public by their owners who wanted to liquidate their investment to finance consumption or portfolio diversification. the findings strike the common view that firms go public to finance growth. Data from other European countries exhibit similar patterns and suggest that our findings for Sweden may extend to other markets as well.     

Poverty alleviation and firm productivity: Evidence from China's minimum wage system

The reduction of income inequality is important for poverty alleviation. We manually collect the data of the local minimum wage standard of the 254 prefectural cities of 31 provinces in China. The results show that higher minimum wage attributes to the rise of firm productivity. Minimum wage hikes force the enterprises to optimize internal production, reduce redundant employees, and develop innovations. Moreover, the enterprises with higher sensitivity in labor cost, less governmental support, and stronger financial pressures are more intensive to higher minimum wage. It is robust when choosing alternative measurements, an IV strategy, and a DID analysis. It is implicated that an appropriate minimum wage system plays a positive role in achieving balance between poverty alleviation and economic growth, and the improvement in compensation can stimulate high-quality development in practice.     

Earnings management and initial public offerings: Evidence from the Netherlands

This paper presents one of the first studies of earnings management by initial public offering (IPO) firms in a European country. Using a sample of 64 Dutch IPOs, we investigate the pattern of discretionary current accruals (DCA) over time. We find that managers manage their company's earnings in the first year as a public company but not in the years before the IPO. We also examine the impact of earnings management on the long-run stock price performance of IPOs. We find a negative relation between the size of the DCA in the first year as a public company and long-run stock price performance over the next 3 years. A number of additional tests support these findings.     

Monitoring via staging: Evidence from Private investments in public equity

I study the causes and consequences of staging in the setting of private investments in public equities (PIPEs). I find that, in PIPE investments, as in venture capital staging, the staging strategy is used by investors as a monitoring mechanism to mitigate information asymmetry and agency problems. Moreover, strategic investors and investors investing alone are more likely to utilize staging. I show also that staging reduces the cost of financing and has positive implications for PIPE issuers’ long-run stock performance.     

External technology dependence and manufacturing TFP: Evidence from China

It remains an open question whether the reduction of external technology dependence (ETD) on foreign countries can improve the total factor productivity (TFP) of China's manufacturing industry. This paper uses the data of China's manufacturing industry from 2000 to 2016, to study the impact of ETD on TFP. Empirical results show that a 1% decrease in ETD could induce a 1% increase in TFP. As the TFP gap between China and the frontier countries shrinks, the indigenous innovation gains increasing importance. One can find that the effect of ETD on TFP in technology-intensive industries is stronger than that of other industries. Moreover, this study finds that the influence of ETD on TFP shows a significant threshold effect. Further, this paper uses the ratio of patents granted to represent the innovation capacity, and verifies its moderating role in the effect of ETD on TFP.