Banks’ Interest Rate Risk and Search for Yield: A Theoretical Rationale and Some Empirical Evidence

We investigate German banks’ exposure to interest rate risk. In finance, higher demand for a risky asset is typically associated with higher expected return. However, employing a utility function which implies both risk‐averse and risk‐seeking behavior depending on the level of profits, we show that this relationship may get weaker and even change its sign at low profit levels. For the period 2005–14, we find not only the common positive relationship of higher expected returns and rising interest rate exposure but also that this relationship does become weaker with falling operative income, its sign eventually changing.     

Processing fluency: examining its relationship with thinking style and purchase intention

This study aims to examine the relationship between processing fluency and thinking style. In addition to that, the impact of processing fluency on purchase intention will be investigated. Specifically, it is proposed that experiential thinking style induces more fluent processing than rational thinking style. Getting the audience to attend to the ad in an intuitive manner rather than a rule-based manner and presenting them with affective stimuli rather than analytical stimuli increases the fluency experiences. Moreover, it is expected that the processing fluency that is experienced by consumers will influence their purchasing intent. It is suggested that consumer’s level of confidence in their choices mediates the relationship between processing fluency and purchase intent.     

Macroeconomic performance index: a new approach to calculation of economic wellbeing

Since the rise of the global financial crisis, there has been revival of interest in performance indexes that measure the overall stance of the economy and the wellbeing of households. Such indexes typically consist of inflation, growth, employment and long-term interest rates. We develop such an index by appending exchange rate and weighting each variable by the inverse of its variance in order to prevent the more volatile variable to dominate the index. We call this macroeconomic performance index (MPI) and argue that such an index better explains the overall economic stance especially in emerging economies. We generate the index using data from three emerging economies, namely Turkey, Brazil and Poland. Our analysis indicates that the index has a nonlinear structure and hence we analyse its behaviour using threshold autoregressive (TAR) model. It is observed that MPI captures the economic stance and main economic incidents quite successfully in each subject country. To further see the relevance of the MPI, we run TAR cointegration analysis with consumer confidence indexes (CCIs) for the subject countries with TAR cointegration test. The results indicate long-term relationship between the MPI and CCI in all three countries.     

Deregulation and firm investment: evidence from the dismantling of the license system in India

We analyse the impact of deregulatory reforms in India during the 1990s, which eliminated compulsory industrial licensing, on manufacturing firms’ investment decisions. We find an economically and statistically significant positive effect of delicensing on investment. We also show that firms in states with better credit conditions benefitted more from the removal of licences. Moreover, our analysis demonstrates that the increase in investment was predominantly driven by smaller firms.     

Traveler satisfaction in rapid rail systems: The case of Istanbul metro

Multifaceted characteristics of urban travel have an impact on the passengers' overall satisfaction with the transport system. In this study, we investigate the interrelationships among traveler satisfaction, travel and traveler characteristics, and service performance in a multimodal network that comprises of a trunk line and its feeder lines. We analyze the factors influencing the choices of access to rail transit stations and the satisfaction of transit travelers with the rapid rail transit systems. We quantitatively study these relationships and demonstrate the complexity of evaluating transit service performance. Since the interrelationships among variables affecting this system are mainly stochastic, we analyze the satisfaction with transit system problem using a Bayesian Belief Network (BBN), which helps capture the causality among variables with inherent uncertainty. Using the case of Istanbul, we employ the BBN as a decision support tool for policy-makers to analyze the rapid rail transit services and determine policies for improving the quality and the level of service to increase the satisfaction with transit system. In the case study, satisfaction with accessibility and access mode variables are found to be more effective variables than total travel time for travel time satisfaction, confirming the significant role of access in multimodal travels.     

Communication versus Information Transparency in One‐Shot Interactions: A Labor Market Experiment

This is an experimental study of communication and information transparency in one‐shot labor market relations with incomplete contracts. We find that communication in the form of non‐binding broadcast chat messages increases wages, effort levels, and overall efficiency regardless of the information regime. It serves as a negotiation platform and helps workers and firms learn how to cooperate. Communication outperforms information transparency in motivating trust and cooperative behavior in one‐shot interactions. Although transparency might be important in the long term, it does not improve any of the market outcomes in short‐term relations unless it is combined with communication. Copyright © 2017 John Wiley & Sons, Ltd.     

MARKUPS AND WELFARE COSTS OF BUSINESS CYCLES IN TURKEY

The paper, using a simple theory‐based measure of the variations in aggregate economic efficiency in a New Keynessian structure, analyses the nature of the business fluctuations and estimates their welfare costs in Turkey during the period 1998–2009. The measure contains two components: a price markup and a wage markup. It seems that the latter mainly drives the fluctuations in Turkey. The paper also shows that inefficient fluctuations in the allocation of resources do generate moderate welfare costs on average. However, the aggregate efficiency costs increase much more during deep recessions.     

The Role of Goals and Feedback in Incentivizing Performance

In this paper, we experimentally investigate how goal setting and feedback policies affect work performance. In particular, we study the effects of (i) absolute performance feedback, (ii) self‐specified goals, and (iii) exogenous goals and relative performance feedback. Our results show that the average performance of the subjects who are provided self‐performance feedback is 11% lower than the ones who obtain no feedback. Moreover, setting a non‐binding personal goal does not affect performance. Finally, assigning an exogenous goal and providing relative performance feedback decreases performance by 8%. We discuss the insights our findings offer for the optimal design of goal setting and feedback mechanisms. Copyright © 2015 John Wiley & Sons, Ltd.     

The relationship between Turkey’s foreign debt and economic growth: an asymmetric causality analysis

Tackling foreign debt that arises as a result of limited and ineffective use of resources is an item that remains on the agenda particularly for developing countries. In this study, we examine the foreign debt debates to date in terms of economic growth and using the time series for the period 2003Q1 to 2017Q1. We used unit root tests to determine the maximum integration degree of series, and we conducted causality analysis. We found a causality relationship between net foreign debt stock and economic growth in causality analyses performed for Turkey. The empirical results of this study indicate that there is a causality relationship, including both positive and negative aspects, between net foreign debt stock and economic growth. The results of our testing showed a significant causal relationship between the variables.