Market discipline in the Brazilian banking industry: an analysis for the subordinated debt holders

Market discipline is a regulatory mechanism which has as its main task the punishment of bad risk management by financial institutions. Subordinated debt holders are considered by the literature as the most propitious private agent to discipline the financial institutions. The key to prove the existence of market discipline is to show the relationship between banks’ asset prices and its respective risks. The main objective of this article is an empirical analysis of the relation between credit risk (ratings and accounting information) and debentures return for the Brazilian case. The results denote a weak presence of market discipline in Brazil.     

GIS-Based Hedonic Pricing of Landscape

Hedonic prices of landscape are estimated in the urban fringe of Dijon (France). Viewshed and its content as perceived at ground level are analyzed from satellite images supplemented by a digital elevation model. Landscape attributes are then fed into econometric models (based on 2,667 house sales) that allows for endogeneity, multicollinearity, and spatial correlations. Results show that when in the line of sight, trees and farmland in the immediate vicinity of houses command positive prices and roads negative prices; if out of sight, their prices are markedly lower or insignificant: the view itself matters. The layout of features in fragmented landscapes commands positive hedonic prices. Landscapes and features in sight but more than 100–300~m away all have insignificant prices.     

The Cost Factor in Patent Systems

The objective of this paper is to assess to what extent the cost of patenting affects the demand for patents. The empirical analysis, which focuses on the patent systems of the USA, Japan, and Europe in 2003, leads to the following methodological and empirical conclusions: (1) for a proper international comparison, the size of the market and the average number of claims included in a patent must be accounted for; (2) when the cost per claim per capita (the 3C-index) is considered, a negative linear relationship appears between the cost of patenting and the number of claims that are filed; (3) after the grant of a patent by the EPO, the translation, validation and transaction costs induced by an effective protection in several European countries witness a highly fragmented and very expensive European market for intellectual property; (4) for a patent designating 13 European countries, the 3C-index is about ten (two) times higher than in the US (Japanese) system (for process and translation costs up to the grant); (5) The European market being more than twice as large as the US market in terms of inhabitants, the 3C-index suggests that there would be a clear justification for higher nominal examination fees at the EPO, that would ensure the pursuit of a rigorous granting process.     

Decision-Making in the Police Work Force: Affordances Explained in Practice

Studies of decision-making in High Reliability Organizations as supported by Information Technology have mostly pertained to the “cold” context, that is, the planning and briefing tasks that precede intervention. Meanwhile, the degree of elasticity required of High Reliability Teams during critical processes is key to stabilizing team performance and can be enhanced through the use of technology. However, off-the-shelf technologies are often used in organizations without due consideration of their impact on task interdependence and affordance. This article presents the results from a three-step explorative field study that investigated the effects of the imbrication between human (e.g., users) and material (e.g., technology) agencies on the decision-making processes used by a police force. Particularly, we address the impact on the individual, collective, and shared affordances of mobile technology (i.e., smartphone) in terms of the daily work routine of officers on the streets. Teams of police officers were shadowed during their daily work for a period of 80 hours. This article presents the findings in the form of four vignettes. The approach used proved useful for determining the affordance of technology in relation to task interdependence on micro-processes and decision-making.     

Herding in Chinese stock markets: a nonparametric approach

The paper reports new evidence of herding in the Chinese A-type and B-type markets by employing nonparametric kernel regression. We find statistically significant evidence of herding in A-type market under both extreme high and low market returns. Herding in B-type market, which predominantly consists of foreign investors, indicates only weak evidence of herding. We do not find any statistically significant evidence of herding in the pre-2001 sample of B-type market, when only foreign investors could do the trading. Lack of knowledge and experience of local investors may be attributed to the presence of herd behaviour in the Chinese markets.     

Revisiting the democracy-private investment nexus: Does inequality matter?

Contrary to the predictions of a large theoretical literature, recent cross-country evidence suggests autocracies can generate statistically indistinguishable levels of private investment compared to democracies. We argue that the previous exclusion of inequality explains part of this puzzle. We model current investment as a function of investors’ beliefs about future tax rates, which are conditioned by the constraints on the Executive in setting tax rates and expropriating tax revenues. In democracies, where tax rates reflect the preferences of the median voter, investment declines with rising inequality. In autocracies, investor beliefs about future tax rates reflect the relative power of Elites compared to the Executive. As inequality rises, the increased resources available to Elites constrains the Executive’s ability to expropriate more tax revenues. The heterogeneous determinants of investor beliefs can explain the observed pattern of investment across regime types. We first test our predictions at the macro-level with cross-country data. We then test the behavioral underpinnings of our model with a novel laboratory experiment showing how inequality affects individual-level investment behavior dependent upon regime type. Results from both types of analyses show that when inequality is taken into account autocracies can generate similar levels of investment to democracies.     

Budget over health unless overweight: A Solomon four‐group study

Budget and health motivations for food purchase (e.g., discounts and health consciousness, respectively) affect consumer choice while shopping and well‐being afterward. However, not all findings from research have suggested that discounts/taxations on healthy/unhealthy food encourage health‐conscious food choice. On the other hand, the consumer behaviour line of research on the influence of front‐of‐package health messages has mostly echoed similar results that such communication leads to overconsumption; thus, obesity. We examined the influence of market practices targeting consumers’ budget and health‐related motivations for food purchase in a 2 (price: recommended retail price, discount price) × 2 (product: regular potato chips, potato chips with ‘75% less saturated fat’) experiment using six Solomon four‐group designs. Our results indicate that overweight consumers are not prone to discounts, unlike their normal‐weight counterparts. A price cut nullifies the influence of health messages on purchase intentions among normal‐weight buyers when the regular and healthier packaged foods are both on discount.     

Optimal privatization of vertical public utilities

Abstract We examine restructuring, divestiture, and deregulation of a vertically integrated public utility, (e.g., electricity), from a public finance perspective. How an optimal restructuring plan for the utility depends on the cost of public funds and on the X‐efficiency gains from privatization, how the optimal degree of competition in the upstream and downstream segments are connected, and implications of privatization for consumer prices are examined. The higher the cost of public funds, the more likely the post‐privatization price will exceed the regulated public utility price. The greater the X‐efficiency gains from privatization, the more likely the post‐privatization price will fall.     

With whom do you trade? Defensive innovation and the skill‐bias

Abstract We examine whether increased trade with countries with ineffective protection of intellectual property has contributed to the skill‐deepening of the 1980s. We construct an index of effective protection of intellectual property at the country level, combining data on protection of patents and rule of law. Next, we construct an industry‐specific version of this index, using as weights each country's trade share in the total trade of the industry. We find a decline in this trade‐weighted index, owing to a rise in trade with countries with low effective protection of intellectual property, which explains 29% of the rise in within‐industry skill‐intensity.     

Distributive Politics and Electoral Competition

Within the framework of pure redistribution (dividing one unit of a homo- geneous good among identical individuals), the paper analyses the redistribution that arises from Downsian, two-party, electoral competition. It appears that the strategic behavior of vote-maximizing parties leads them to propose divisions which are not far from the egalitarian one. Journal of Economic Literature Classification Numbers: C72, D63, D72.