Convergence in the EU

The EU has long viewed economic and institutional convergence as important goals, but the results thus far have been decidedly mixed, and there remain several open questions: How exactly should convergence be defined? How much convergence is necessary? What steps can be taken to improve convergence in the EU, and how can success be defined? Finally, how much convergence can be achieved by improving the economic performance in underperforming regions, and how can convergence in the form of harmonisation towards lower welfare levels be avoided?     

Consumers and debt in the Federal Republic of Germany

The author reports on an action taken by German consumer advice centres on behalf of consumer-debtors against specialized credit banks (Teilzahlungsbanken). The report refers to contracts concluded in the period of 1975 to 1980. By aggressive marketing mostly among marginal consumers, banks were able to charge consumers excessive interest rates and impose unfair contract conditions. Due to loss of job or personal misfortune many consumers have been unable to pay the instalments and have been subject to an assortment of harsh debt collection methods. The Supreme German Civil Court stepped in by annulling a number of credit contracts considered as being extortionate. Advice centres figured out that a great number of credit contracts could be regarded as void when applying the criteria of the Court. Banks have tried to evade the court rulings. Therefore the advice centres set up a network of action to help the consumer-debtor by negotiating his case with the bank, by making settlements, by using media, and by bringing legal actions. It is hoped that a collective settlement scheme can be worked out one day.

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Verbraucherverschuldung in der Bundesrepublik Deutschland

Zusammenfassung Der Beitrag berichtet von den sog. Kreditaktionen der Verbraucherzentralen zugunsten von Konsumenten, die bei Teilzahlungsbanken Kredite zu überhöhten und z.T. sittenwidrigen Bedingung en aufgenommen hatten. Wegen Arbeitslosigkeit oder Umständen im persönlichen Bereich war es vielen Verbrauchern nicht möglich, die fälligen Kreditraten aus ihrem (reduzierten) Einkommen zurückzuzahlen. Eine wesentliche Hilfe für diese unverschuldet in Not gekommenen Verbrauchergruppen bildete die Rechtsprechung des Bundesgerichtshofes, die eine Reihe der in der Niedrigzinsphase von 1975–80 geschlossenen Verträge wegen Zinsüberhöhung und sonstiger belastender Bedingungen für sittenwidrig und damit nichtig erklärte. Nach Erhebungen war anzunehmen, daß eine große Zahl von Kreditverträgen gem, den Kriterien des BGH unwirksam war, ohne daß die Verbraucher das wußten oder rechtlichen Schutz bemühten. Die Banken hatten von sich aus keinen Anlaß, den Verbrauchern entgegenzukommen. Deshalb begannen die Verbraucherzentralen, insbes. in Hamburg, Bremen und Nordrhein-Westfalen, sog. Kreditaktionen, in denen die Verbraucher aufgefordert wurden, ihre Verträge überprüfen zu lassen. Die Verbraucherzentralen bemühten sich bei festgestellter Zinsüberhöhung in Verhandlungen mit der Bank, und durch Öffentlichkeitsarbeit eine für den Verbraucher günstige Regelung zu erreichen. Angestrebt wird eine globale Vereinbarung zur Regelung des Problemkreises.

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Annette Kähler is a lawyer and consultant to the Verbraucherzentrale Nordrhein-Westfalen, Mintropstraße 27, D-4000 Düsseldorf 1, FRG.     

Effects of securities deregulation in underwriting: An Analysis of SEC Rule 415

In this paper we present evidence on the effects of Rule 415, the SEC Rule that relaxed the SEC's long-standing opposition to delayed offerings. Shelf registration allows securities to be offered on a continuous or delayed basis in certain circumstances. We provide evidence on one aspect of the controversy surrounding Rule 415's adoption: the effect of shelf registration on the distribution of underwriting revenues among broker/dealers. We find on average all broker/dealers experienced an increase in underwriting revenues following the adoption of shelf registration due to an increase in total business financing. However, we find that the largest underwriters experienced an increase in underwriting revenues relative to total business financing. The relationship for smaller broker/dealers between underwriting revenues and total business financing did not change significantly after the adoption of shelf registration. Thus, shelf registration appears not do have harmed small broker/dealers.     

A market without the 'right' property rights

While Vietnam's reforms provided some of the weakest legal private property rights amongst the transitions countries, cities like Ho Chi Minh City have booming domestic real estate markets. Interestingly, while most properties in 2001 did not have legal title, those on the market did advertise a variety of property rights claims. Employing a hedonic price model to analyse the pattern of prices at which sellers offer properties in Ho Chi Minh City, this study examines how this market values property rights. The findings show that multiple forms of property rights, enforced by highly decentralized state institutions, are operational in this market. Furthermore, legal title itself is not the most valuable form of property right. These findings suggest that the value of property rights emanates from where it is enforced within the particular institutional context of a market.     

Vertically Linked Industries,Product Quality and Minimum Quality Standards

This paper extends the seminal model of vertical product differentiation by Ronnen (1991) to a two‐tier supply chain. While Ronnen considers the duopoly case, we add a vertical structure such that each downstream firm procures an input from a monopolistic upstream supplier. While simultaneous up‐ and downstream regulation in the form of a minimum quality standard restores Ronnen's findings, if only one firm is regulated in the vertical chain, a free‐rider effect results: all the bargaining power is given to the non‐regulated member of the chain, which uses it to free‐ride on the pressure exerted by the regulator onto the other member.     

Using export market performance to evaluate regional preferential policies in China

We evaluate the effectiveness of two types of preferential regional policy programs in China’s manufacturing sector. The primary goal of the Economic and Technological Development Zones (ETDZs) is to facilitate internationalization strategies, while Science and Technology Industrial Parks (STIPs) aim to generate technology spillovers. Various dimensions of export market performance are used as objective indicators for the upgrading of product quality and firm operations. We compare startups that locate into one of these zones with startups on the outside, while controlling for self-selection using treatment evaluation methods. The results indicate that firms locating in an ETDZ achieve much higher export values, driven by higher volumes of trade and numbers of destinations. Firms locating in a STIP perform best on quality dimensions. In particular they fetch higher export prices and have more success exporting to high-income countries.     

Who participates in tax avoidance? Evidence from Swedish microdata

This article empirically examines why not all individuals participate in tax avoidance. We use rich Swedish administrative panel data on all taxpayers, with a link between corporate and individual tax returns and document that few individuals utilize legal and observable tax avoidance opportunities. Our results show that there are several frictions in tax avoidance participation. In addition to monetary benefits from tax avoidance (incentives), the opportunity to participate in tax avoidance (access), as well as information and knowledge about these opportunities (awareness), are important factors for the individual’s tax avoidance decision. We further show that tax avoidance spreads within communities. The impact of the local network is stronger for non-commuters who live and work in the same municipality.