Unruly entrepreneurs – investigating value creation by microfinance clients in rural Burundi

ABSTRACT

This study explores the entrepreneurial potential of the rule-breaking practices of microfinance programs’ beneficiaries. Using the storyboard methodology, we examine the strategies employed by the poor in Burundi to bypass institutional rules. Based on 66 short interviews conducted in seven rural provinces of Burundi, our exploratory study analyzes the entrepreneurial potential in four instances of rule-evasion: consumption spending, illegitimate investment, loan juggling and loan arrogation. We argue that some of the unruly practices are in fact entrepreneurial, as they create tangible and intangible value for the rural poor at both household and community levels. These include strengthening social ties through gift exchange and ceremonies, which then help poor households to self-insure against shocks through social networks. By analyzing the push and pull factors for unruly behavior, we show that rule-breaking practices are often necessitated by the microfinance industry itself and call for increased flexibility and adaptability of microfinance products.     

Defining personalized concepts for XBRL using iPAD‐drawn fuzzy sets

An efficient and effective analysis of business data requires a better understanding of what the data represents, and to what degree. A human‐like way of accomplishing that without being too detailed yet learning more about data content is to summarize and map the data into concepts familiar to a person performing analysis. Processes of summarization help identify the most essential facts that are embedded in the data. All this is of significant importance for analysis of large amounts of business data required to make good and sound financial decisions. There are two aspects enabling more comprehensive yet easier processing of data: a standardized representation format of financial data; and a human‐friendly way of defining concepts and using them for building personalized models representing processing data. The first of the aspects has been addressed by the eXtensible Business Reporting Language (XBRL)—a standardized format of defining, representing and exchanging corporate and financial information. The second aspect is related to providing individuals with the ability to gain understanding of data content via determining a degree of truth of statements summarizing data based on their own perception of concepts they are looking for. In this paper, we introduce a tablet application—Tablet‐based input of Fuzzy Sets (TiFS)—and demonstrate its usefulness for entering personalized definitions of concepts and terms that enable a quick analysis of financial data. Such analysis means utilization of soft queries and operations of aggregation that extract and summarize the data and present it in a form familiar to analysts. The application allows for defining concepts and terms with ‘finger‐made’ drawings representing a person's perception of concepts. Further, these definitions are used to build summarization statements for exploring XBRL data. They are equipped with ‘drawn’ definitions of linguistic terms (e.g. LARGE, SMALL, FAST) and linguistic quantifiers (e.g. ALL, MOSTLY), and enable summarization of data content from the perspective of a user's interests. The ‘drawn’ linguistic terms and quantifiers represent membership functions of fuzzy sets. Utilization of fuzzy sets allows for performing operations of data summarization in a human‐like way. The application of TiFS illustrates ease of inputting personalized definitions of concepts and their influence on the interpretation of data. This introduces aspects of personalization and adaptation of artificial intelligence systems to perceptions and views of individuals. The proposed application is used to perform a basic analysis of an XBRL document.     

An Extension of Arrow's Result on Optimal Reinsurance Contract

We consider the problem of finding reinsurance policies that maximize the expected utility, the stability and the survival probability of the cedent for a fixed reinsurance premium calculated according to the maximal possible claims principle. We show that the limited stop loss and the truncated stop loss are the optimal contracts.     

Czech privatisation 25 years later

Privatisation is still a hot political topic today and divides economists as well as politicians and the general public. The paper aims to capture the Czech privatisation in its historical, economic and political contexts. The first part explains the difference between transitional privatisation and standard privatisation. The second part examines the interests in the privatisation process. The third part discusses the privatisation methods used in the Czech Republic. The fourth part offers an international comparison.     

Endogenous market power

In this paper we develop a framework to study markets with heterogeneous atomic traders. The competitive model is augmented as we provide traders with correct beliefs about their price impacts to define equilibrium with endogenously determined market power and show that such equilibrium exists in economies with smooth utility and cost functions and is generically determinate. Traders? price impacts depend positively on the convexity of preferences or cost functions of the trading partners and are subject to mutual reinforcement. Compared to the competitive model, the volume of trade is reduced, and hence is Pareto inefficient. The price effects of non-competitive trading depend on the convexity of marginal utility or cost function.     

Spatial Heterogeneity of Willingness to Pay for Forest Management

The paper investigates the spatial heterogeneity of public’s preferences for the implementation of a new country-wide forest management and protection program in Poland. Spatial econometric methods and high resolution geographical information system data related to forest characteristics are used to explain the variation in individual-specific willingness to pay (WTP) values, derived from a discrete choice experiment study. We find that respondents’ WTP is higher the closer they live to their nearest forest, and the scarcer forests are in the area where they live. Interestingly, the higher the ecological value of forests in respondents’ area, the more people prefer extending areas of national forest protection. We also investigate spatial patterns in individual-specific WTP scores and in latent class membership probabilities, finding that preferences are indeed spatially clustered. We argue that this clustering should be taken into account in forest management and policy-making.     

Regional determinants of MNE’s location choice in post-transition economies

This article focuses on the impact of agglomeration and labour market factors on the location choice of MNEs in post-transition economies. We compare data from 33 regions in East Germany, the Czech Republic and Poland using a mixed logit model on a sample of 4,343 subsidiaries for the time period between 2000 and 2010. The results show that agglomeration advantages, such as sectoral specialization as well as a region’s economic and technological performance prove to be some of the most important pull factors for FDI in post-transition regions. With respect to access to labour, the results suggest that FDI in post-transition regions is (no longer) only dominated by efficiency seeking behaviour, but also by access to well-qualified labour.     

No-arbitrage, state prices and trade in thin financial markets

We examine how non-competitiveness in financial markets affects the choice of asset portfolios and the determination of equilibrium prices. In our model, potential arbitrage is conducted by a few highly specialized institutional investors who recognize and estimate the impact of their trades on financial prices. We apply a model of economic equilibrium, based on Weretka (, 2007a), in which price effects are determined endogenously as part of the equilibrium concept. For the case in which markets allow for perfect insurance, we argue that the principle of no-arbitrage asset pricing is consistent with non-competitive behavior of the arbitragers and extend the fundamental theorem of asset pricing to the non-competitive setting.     

Capturing the time dynamics of central bank intervention

We estimate central bank reaction functions using the autoregressive conditional hazard model and the autoregressive conditional binomial model. We find that the Federal Reserve and Bundesbank intervened when the market was calmer, and the Bundesbank intervened in response to exchange rates being out-of-line with fundamentals. Japan intervened in response to changes in the nominal exchange rate, and intervention differed before and after Eisuke Sakakibara became Director General of the International Finance Bureau of the Ministry of Finance in Japan. We argue that these results are consistent with central bank policy goals and the effect of intervention on the exchange rate.     

Toward an ontology‐driven blockchain design for supply‐chain provenance

An interesting research problem in our age of Big Data is that of determining provenance. Granular evaluation of provenance of physical goods (e.g., tracking ingredients of a pharmaceutical or demonstrating authenticity of luxury goods) has often not been possible with today's items that are produced and transported in complex, interorganizational, often internationally spanning supply chains. Recent adoptions of the Internet of Things and blockchain technologies give promise at better supply‐chain provenance. We are particularly interested in the blockchain, as many favored use cases of blockchain are for provenance tracking. We are also interested in applying ontologies, as there has been some work done on knowledge provenance, traceability, and food provenance using ontologies. In this paper, we make a case for why ontologies can contribute to blockchain design. To support this case, we analyze a traceability ontology and translate some of its representations to smart contracts that execute a provenance trace and enforce traceability constraints on the Ethereum blockchain platform.