The Industrial Finance Department: An Australian Experiement in Small Business Finance

Small business has an uneasy relationship with the banking sector. In some countries, governments have stepped in to create specialist institutions for small business finance. One such institution was created in Australia after World War II. An Industrial Finance Department was created within a restructured Commonwealth Bank to provide specialist financial assistance to small business. This institution, neglected by historians, grew and survived in an evolving political and often hostile environment. The Industrial Finance Department provides further insight into the politics of financial provision and regulation in Australia.     

British Industry in the 1980's

British industry has had a turbulent decade, and it is hard to assess how far it has come over the 1980's. The BBC's Money Programme wanted to enlighten public debate on the subject, and commissioned London Business School researchers to furnish them with as much data as possible. This article catalogues the data and summarises many arguments of interpretation around it.     

Economic Analysis at the Federal Communications Commission

This article reviews a number of the major economic issues confronting the Federal Communications Commission (FCC) over the past year and discusses new analytic techniques that FCC economists applied to some of those issues. The article also identifies several areas in which further academic research would be valuable to this agency.Martin Perry is serving as FCC Chief Economist on leave from Rutgers University, New Brunswick NJ. Jonathan Levy is the FCC Deputy Chief Economist and, like Evan Kwerel and Chuck Needy, works in the FCCs Office of Strategic Planning and Policy Analysis. Mark Uretsky works in the FCCs International Bureau and Tracy Waldon in the FCCs Media Bureau. All authors are economists except for John Williams, an engineer consultant who advises the FCC on spectrum issues.     

The importance of product positioning: successful entry in the national newspaper market

You cannot afford to get positioning wrong, but there are limited rewards for getting it right. That is the rather pessimistic conclusion you can draw from this account of recent entry into the British newspaper industry. The authors use the experience of that industry to illustrate some principles of good and bad positioning.     

The unintended harms of infrastructure: Opium and road construction in Afghanistan

This study provides evidence that infrastructure investment can encourage economic activity through illicit pathways. I examine this relationship in the context of Afghanistan, where I show that the construction of the country's largest modern infrastructure project, a 2,200 kilometer highway known as the A1 or Ring Road, led to significant increases in local opium cultivation over the past decade. Estimates from a two-way fixed effects model that exploits spatial and temporal variation in district-level poppy cultivation and proximity to the road suggest that the introduction of a highway to a district is associated with a 650 hectare increase in poppy cultivation in the subsequent year. This cultivation increases the longer a district has access to the road: Production in the second and third years rises by 750 and 900 hectares over pre-highway levels, respectively. Estimates also suggest that improved highway access leads Afghan farmers to substitute away from the production of legal crops towards opium, and that more farmers grow opium as their primary income-generating crop. These findings suggest that in nations where the rule of law is limited and opportunities for legal livelihoods remain scarce, investments in physical infrastructure can inadvertently incentivize illegal economic activity.     

Privatization,foreign bank entry and bank efficiency in Croatia: a Fourier-flexible function stochastic cost frontier analysis

Using bank balance sheet data for Croatia for 1994 to 2000, this study estimates a Fourier-flexible frontier cost function. Specification tests indicate that the stochastic frontier model with a Fourier-flexible form with a truncated normal distribution of the inefficiency term allowing for time varying cost efficiency is preferred. The results show that new private and privatized banks, contrary to some expectations, are not the most efficient banks through most of the period. Privatization also does not seem to have an immediate effect on improved efficiency. However, better cost efficiency is associated with a lower likelihood of failure, suggesting that better risk management and better cost management are signs of better management in general. Finally, foreign banks have substantially better efficiency scores than all categories of domestic banks.     

Hedge funds as international liquidity providers: evidence from convertible bond arbitrage in Canada

We examine the impact of Canadian convertible bond issuance on equity market liquidity. Using issuance event dates between April 2002 and March 2011, we analyze the change in short interest and stock liquidity during a 1-year event window. We consider mainstream liquidity measures, including turnover, dollar volume, dollar spread, percentage spread, and the ratio of daily absolute stock return to dollar volume. We find that after convertible bond issuances, there are significant increases in short interest, but minimal overall improvements in liquidity. The change in liquidity is not significantly related to the change in short interest, except for the firms with large change in short interest. Interpreting increased short interest after issuance as a proxy for convertible bond arbitrage activity, the results suggest that there is limited positive liquidity externality of hedge fund activity in Canada.     

Worker poaching in a supply chain: Enemy from within?

Worker poaching represents the primary mode by which workers change employers. We examine worker poaching between firms linked in a value chain. We find that, in a value chain, the less productive firm may offer its workers higher wages and poach workers from the more productive firm. We also find that worker flows accomplished via poaching impact supply chain management: (a) the identity of the bottleneck firm may depend on whether poaching is available; (b) poaching between linked firms may benefit both, and (c) the value chain cannot be fully coordinated without controlling wages in the labor market.