Integration in the mortgage market

The deregulatory trend and advances in technology during the 1980s removed many restrictions on the ability of U.S. depository financial institutions to obtain and redistribute funds across diverse geographical markets. This pervasive deregulation and innovation should have increased the degree of integration between different geographical financial markets. Yet there is little empirical evidence available on the validity of this expectation. It is important to provide such evidence since much of the U.S. depository institution regulatory policy is predicated on the assumption of highly localized, segmented financial markets. Considering alternative breakpoints at 1980 (DIDMCA) and at 1982 (Garn-St Germain), the current study tests the hypothesis that the degree of geographical financial integration after this period exceeded that prior to this period. Mortgage markets are focused on due to their historical importance in the regulation of funds flows. The study finds a significant increase in the mean contemporaneous correlation among FHLB districts' mortagage rate residuals in a vector-autoregressive system between two test periods. Further analysis shows that the distance between FHLB districts' headquarters and their respective pairwise interdistrict correlation coefficients are negatively related in the prior period but not significantly related in the later period. Economic booms and busts alternated among the districts over the two sample periods in a manner consistent with the reallocation of capital among more integrated financial markets. Individual districts' mortgage rates have been more sensitive to variations in national credit market conditions since deregulation was legally recognized by DIDMCA in 1980. Thus, the collective empirical evidence found in this study indicates that mortgage markets have responded to deregulation and marked technological advances by moving toward a national, highly integrated market. Regulators' preoccupation with highly localized, segmented markets must consequently be reexamined.     

Determinants of age at marriage in Karnataka during 1971-1981: a district level analysis

"In this paper we examined the interdistrict variations in mean age at marriage of males and females in Karnataka [India] in two points of time, 1971 and 1981, and also the possible factors influencing this variation....A multivariate analysis of the determinants of mean age at marriage in Karnataka showed that literacy rate, sex ratio of the population and percentage of villages electrified are important in explaining the regional and time variation in age at marriage of both sexes.... Our regression results indicated that a 10 per cent increase in female literacy rate is associated with approximately one-year increase in female age at marriage. However, neither the increase in female literacy nor the changes in the sex ratio of the population could explain all the increase in female age at marriage during 1971-81. This indirectly suggests that there was an increase in female age at marriage among all socio-economic groups."     

Are you a strategist or just a manager?

Perhaps the greatest strategist of all time was not a business executive but a general. Helmuth von Moltke, chief of the Prussian and German general staffs from 1858 to 1888, issued "directives" to his officers rather than specific commands. These guidelines for autonomous decision making encouraged Moltke's subordinates to show individual initiative. In this article, Hans Hinterhuber and Wolfgang Popp translate Moltke's example into business terms. According to Moltke, strategy is applied common sense and cannot be taught. The authors suggest that good entrepreneurs and managers--along with generals--are born with the qualities that make them successful. But even if managers have the potential to be good strategists, they must develop and hone their natural talents. And CEOs and top management can help by identifying and promoting such talents in their employees. Hinterhuber and Popp have created a questionnaire that helps measure strategic management competence. Managers and entrepreneurs take this test themselves, answering ten questions such as, "Do I have an entrepreneurial vision?", "Do I have a corporate philosophy?", and "Do I have competitive advantages?" Using the questionnaire, company management can evaluate managers being considered for a promotion. At the same time, those who take the test can use it to determine their own performance as strategists. Strategic managers provide subordinates with general guidelines, just as Helmuth von Moltke issued directives to his officers. And outstanding entrepreneurs create a corporate culture in which their vision, philosophy, and business strategies are implemented by employees who think independently.     

Is Germany a model for managers?

Most American managers have a hard time making sense of Germany. The country has a fraction of the resources and less than one-third the population of the United States. Labor costs are substantially higher, paid vacations are at least three times as long, and strong unions are deeply involved at all levels of business, from the local plant to the corporate boardroom. Yet German companies manage to produce internationally competitive products in key manufacturing sectors, making Germany the greatest competitive threat to the United States after Japan. The seemingly paradoxical nature of the German economy typically evokes one of two diametrically opposed responses. The first is to celebrate the German economy as a "model" worth emulating--indeed, as the answer to declining U.S. competitiveness. The alternative, more skeptical response is to question Germany's staying power in a new, more competitive global economy. According to Kirsten Wever and Christopher Allen, the problem with both points of view is that they miss the forest for the trees. Observers are so preoccupied with praising--or blaming--individual components of the German economy that they fail to see the dynamic logic that ties these components together into a coherent system. In their review of recent research on the German business system, Wever and Allen argue that managers can learn an important lesson from Germany. In the global economy, competition isn't just between companies but between entire socioeconomic systems. Germany's ability to design a cohesive economic and social system that adapts continuously to changing requirements goes a long way toward explaining that country's competitive success.