An examination of minimum tick sizes on the Tokyo Stock Exchange

In setting a minimum tick size, exchanges balance the competing objectives of lowering transaction costs and encouraging liquidity provision by minimizing stepping-ahead risk. We examine the trade-off between these two types of costs by examining the proportion of time that the quoted spread equals the minimum tick size (PTIMEMIN). We undertake this analysis on the Tokyo Stock Exchange, a market that sets nine different tick sizes based on stock price. PTIMEMIN varies markedly across stocks, ranging from almost 0 to almost 100 percent. We find that trade size, the number of trades, and price are the most important determinants of whether the minimum tick size is a binding constraint. In fact, trade size and number of trades are more significant determinants of tick size constraint than price. Consequently, we argue that tick size should be set based on trading activity and price, rather than price alone.     

Perceptions and attitudes following a terrorist shock: Evidence from the UK

Transnational terrorism in Western countries has raised questions about security measures that constrain civil liberties. This is the first paper that uses a terrorist attack, that in the London 7/7/2005, as an exogenous source of variation to study the dynamics of risk perception and the effect on the readiness to trade off civil liberties for enhanced security. In this framework we show that willingness to trade off security for liberties is dramatically affected by changes in individual risk assessments due to a terrorist attack. We document the extent of persistence of changed attitudes.     

MAINTAINING MARKET POSITION: TEAM PERFORMANCE,REVENUE AND WAGE EXPENDITURE IN THE ENGLISH PREMIER LEAGUE

This paper investigates the relationship between playing success and commercial success in team sports. Utilizing a data set relating to the English Premier League that combines both financial measures and indicators of playing skills and performances, our empirical analysis is based on three behavioural equations. Our analysis indicates that on‐field success can be directly related to players’ skills and abilities and that revenue is positively related to on‐field success. Wage expenditure is also shown to systematically reflect player skills and performances. One interpretation of this evidence is that investment in players’ skills and ability buys on‐field success, with richer teams becoming ever richer and able to maintain or even build upon success by spending more on players than less successful clubs. To the extent that richer clubs are successful in their objective there is a causal link between revenue earned and competitive imbalance via investments in players. The implications of this tendency within a league are discussed in our conclusion, which also considers the potentially wider implications of our study as they relate to the evolution of firm size and issues of market share.     

Democracy and prosperity in two decades of transition1

This article revisits the relationship between democracy, liberalization and prosperity in transition countries, using a panel of 25 countries over 20 years. Earlier investigations found political and economic liberalization to be positively correlated although the relationship between political liberalization and prosperity remained unclear. In this article, the results are ambiguous regarding the relationship between democracy indicators by Freedom House and the Polity Project on one hand and growth on the other. This contribution therefore investigates the component variables of these indicators to determine their degree of influence. The findings suggest that basic constitutional rights and constraints on the government rather than political competition as such may be conducive to both economic liberalization and prosperity in the transition countries.     

The real puzzle of blackmail: An informational approach

The “puzzle” of blackmail is that threats to reveal private information that would be harmful to someone in exchange for money are illegal, but revelation is not. The resolution is that concealment of information about product quality impedes the efficient operation of markets, whereas revelation promotes it. The real puzzle is why possessors are not naturally inclined to sell to uninformed parties, who value the information more than would-be blackmail victims. The answer has to do with the public good qualities of information, which create an appropriability problem in transactions with uninformed parties. The paper also discusses incentives to acquire compromising information.     

Fractional Integration of Nominal Exchange Rates: Evidence from CEECs in the Light of EMU Enlargement

This paper uses fractional integration models to describe the long‐run dependence of nominal exchange rates in Central and Eastern European countries (CEECs). The analysis is validated using nonparametric, semiparametric and parametric techniques. From comparing the results across the three approaches, it was clear that mean reversion takes places only for the euro exchange rates in Bulgaria, Estonia, and Slovenia. Other exchange rates based on the euro also display mean reversion with the parametric methods. For the US dollar rates, the unit‐root null hypothesis cannot be rejected in any single country, indicating that shocks affecting the exchange rates against the US dollar are of a permanent nature, while those directed against the euro are less persistent, and tend sometimes to disappear in the long run. Policy implications are derived.     

Strategic environmental policy and the accumulation of knowledge

In dealing with a transnational pollutant-emitting duopoly welfare-maximising policy makers face two negative externalities: imperfect competition and unpriced emissions. Strategic environmental policy models show that these externalities involve a trade-off between reducing pollution and allowing for rent-seeking of the respective firm. This dilemma usually results in a suboptimal internalisation of the negative externality emerging from emissions. Indeed, the conventional model setup includes an R&D stage that enables the firms to mitigate regulation costs. But the typical one period configuration ignores that R&D expenditures create knowledge capital which is, due to its inherent cumulativeness, also effective in following periods. Our model analyses the established trade-off in a two period setting and therefore allows for an investigation of intertemporal knowledge accumulation. We find that the intertemporal effects provide an incentive for a policy maker to set a higher tax rate compared to a one-period setup which lessens the magnitude of the suboptimal internalisation of emissions. Under certain conditions even a tax rate above the Pigouvian level is possible in period 1.     

四步减少供应商风险

那些依靠供应商提供商品或服务的公司总是面临着由此而带来的财务风险.在经济环境艰难的时候,总有一些供应商要走向破产,在他们无力偿还债务的同时,金融机构又拒绝为他们提供每日运营所需的短期贷款.当企业走到快要山穷水尽的时候,他们会被迫不惜以降低产品质量和延长交付时间为代价来削减成本,而当企业这样做的时候,破产也就离他们不远了...     

Assessing Systemic Importance With a Fuzzy Logic Inference System

Three metrics are designed to assess Colombian financial institutions' size, connectedness and non-substitutability as the main drivers of systemic importance: (i) centrality as net borrower in the money market network; (ii) centrality as payments originator in the large-value payment system network; and (iii) asset value of core financial services. An aggregated systemic importance index is calculated based on expert knowledge by using a fuzzy logic inference system. We use principal component analysis to calculate a benchmark index for comparison purposes. Overall similarities between both indexes put forward that expert knowledge aggregation is consistent with that based on a purely quantitative standard approach. Specific non-negligible differences concur with the nonlinear features of an approach whose intention is to replicate human reasoning. Both indexes are complementary and provide a comprehensive relative assessment of each financial institution's systemic importance in the Colombian case, in which the choice of metrics pursues the macroprudential perspective of financial stability. Copyright © 2015 John Wiley & Sons, Ltd.