Exchange rate returns and volatility: the role of time-varying rare disaster risks

This paper provides empirical evidence to the theoretical claim that rare disaster risks have predictability for exchange rate returns and volatility using a nonparametric quantile-based methodology. Using dollar-based exchange rates for Brazil, Russia, India, China, and South Africa, the quantile-causality test shows that indeed rare disaster-risks affects both returns and volatility over the majority of their respective conditional distributions. In addition, these effects are much stronger when compared to those using the British pound, especially in terms of currency returns.     

Assessing Recreational Activities’ Service Quality in Hotels: An Examination of Animation and Spa & Wellness Services

In this study, service quality perceptions of international tourists’ about the recreational activities in a five-star hotel located in Antalya, Turkey were examined by a measurement tool adapted from the ServQual model. Study 1 for animation and Study 2 for wellness & spa services, were carried out with the participation of 213 and 143 tourists, respectively. Analyses of the data show that both recreation activities’ service quality consists of three dimensions, which are: ‘Tangibility,’ ‘Competence & Courtesy,’ and ‘Credibility & Safety.’ Results show that all service dimensions of animation have almost the same effect on overall satisfaction from the hotel, while the ‘Tangibility’ dimension belong to spa & wellness have the highest.     

Ethnic Minority Enterprise in its Urban Context: South Asian Restuarants in Birmingham

The embeddedness of ethnic minority business activity is widely accepted, as researchers increasingly eschew ethno‐culturalist explanations of the phenomenon. However, despite the importance of urban processes, studies of ethnic minority enterprise are often ‘spaceless’. This article uses Rekers and van Kempen’s urban spatial framework to assess the experiences of South Asian owners in Birmingham’s restaurant industry. One taken‐for‐granted but evidently important element to which this article draws attention is location, which emerges as one of the key points of differentiation within the ethnic business community. Location is seen to influence individual access to market potential, an unevenly distributed resource largely shaped by local social geography. At the same time, entry into more lucrative market niches is heavily dependent on the possession of other resources such as capital, information and in some instances management skills. Si l’intégration d’entreprises créées par des minorités ethniques est largement admise, les chercheurs évitent de plus en plus les explications ethno‐culturalistes du phénomène. Par ailleurs, malgré l’importance des processus urbains, les études sur ces entreprises n’ont souvent pas de ‘bornes’. Cet article utilise le cadre spatial urbain de Rekers et van Kempen pour évaluer les expériences de propriétaires de restaurants sud‐asiatiques à Birmingham. Il attire l’attention sur une composante normale, quoique manifestement importante: le lieu. Celui‐ci apparaît comme l’un des points de différenciation essentiels au sein de la communautééconomique ethnique. Il influence l’accès individuel au marché potentiel, ressource inégalement répartie et largement configurée par la géographie sociale locale. Parallèlement, une pénétration de niches de marché plus lucratives dépend considérablement de la détention d’autres ressources, telles qu’un capital, des informations et, dans certains cas, des compétences de dirigeant.     

Permissibility and use of options for hedging purposes in Islamic Finance

The debate concerning permissibility and use of options in Islamic finance is ongoing, and the issue is far from settled. Current analyses on this issue appear to focus on taking of unnecessary risks ( gharar), the perceived lack of a physical asset in an options contract, and the possibility of exploitation of the ignorant. To the extent that these factors are involved, options are not permitted under Islamic teachings (the Shariah). In this article, we investigate whether options may be permitted for hedging purposes in Islamic finance. We use equity options as an example in our analysis. After providing a brief overview of options markets, we review the existing literature and critically examine other work such as the religious decrees (fatwas). We also provide two examples, one each of call and put options, to illustrate the managerial issue of use of options for hedging purposes. Our analysis shows that options may be permitted for hedging purposes in Islamic finance as long as the underlying economic activities are themselves permissible (halal) from an Islamic point of view. The analysis also indicates that one of the key issues is related to unnecessary risk taking. The avoidance or reduction of such risks in hedging situations is largely dependent on the settlement and clearing function of the exchanges trading options, which effectively provides a guarantee of delivery. Mutual consent for entering into or canceling contracts and the issue of intangible assets also play a role in determining if options are permissible under the Shariah. We conclude the article by urging experts of Islamic jurisprudence to understand the theory and mechanics of options and use group ijitihad (consensus opinion of Islamic scholars) in conjunction with academics and experts in financial markets and instruments on this vital issue in contemporary finance for the benefit of the Islamic world as well as those trading with the Islamic world. © 2006 Wiley Periodicals, Inc.     

Terrorism and its Determinants in the Sub‐Saharan Africa Region: Some New Insights

Terrorism is undesirable as it adversely affects the economic development of countries. This study explores the determinants of terrorism in 29 countries of sub‐Saharan Africa (SSA). The data is extracted from reliable sources spanning over 2005 to 2016. Econometric techniques relevant for panel data that control for unobserved heterogeneity (fixed effects) and endogeneity (generalized method of moment) are employed to estimate the specified models. The results indicated that low growth in per capita incomes along with political instability are the main driving forces responsible for terrorism. Similarly, military expenditures are influencing terrorism positively whereas corruption has impacted terrorism negatively in the SSA region. Further, the growth of both physical as well as human capital reduces terrorism. The paper suggests that the region should take appropriate steps for increasing income of the population, education and capital stock, along with ensuring political stability to eradicate terrorism from the region.     

Changes in the marketing and operational capacity of retail sector firms through corporate securitization

Corporate securitization is a structured finance product that retail companies use to raise funds on the back of their operating assets. We investigate whether corporate securitization enhances the retail firm's marketing and operational capacity through a set of structural enhancements including operating covenants. Operating covenants are designed to mitigate the financial and operating risks of a securitized business and improve its marketing potential. Using the case of a retail firm's securitization, the United Kingdom's Mitchell's & Butler's, we find some support for this conjecture. We also find that corporate securitization is more successful where managers have considerable scope for making changes in the retail firm's operating and marketing environment.     

No-arbitrage under a class of honest times

This paper quantifies the interplay between the no-arbitrage notion of no unbounded profit with bounded risk (NUPBR) and additional progressive information generated by a random time. This study complements the one of Aksamit et al. (Finance Stoch. 21:1103–1139, 2017) in which the authors have studied similar topics for the model stopped at the random time, while here we deal with the question of what happens after the random time. Given that the existing literature proves that NUPBR is always violated after honest times that avoid stopping times in a continuous filtration, we propose here a new class of honest times for which NUPBR can be preserved for some models. For these honest times, we obtain two principal results. The first result characterizes the pairs of initial market and honest time for which the resulting model preserves NUPBR, while the second result characterizes honest times that do not affect NUPBR of any quasi-left-continuous model (i.e., in which the asset price process has no predictable jump times). Furthermore, we construct explicitly local martingale deflators for a large class of models.     

Managing international joint ventures to improve performance: The role of structural and social mechanisms

Poor performance has been a major concern in research on international joint ventures (IJVs). This study integrates the IJV management mechanisms from transaction cost theory (TCT) and social exchange theory (SET) in order to gain insights into management mechanisms that improve IJV performance. The framework consists of three structural (i.e., symmetric dependence, symmetric equity share and resource complementarity) and three social (i.e., trust, communication and cultural adaptation) IJV management mechanisms, which are considered as potential determinants of IJV performance. Based on the analysis of data collected from 89 IJVs established by Nordic firms in Asia, Europe and the USA, results indicate that TCT-based symmetric dependence and resource complementarity on the one hand and SET-based trust, communication and cultural adaptation on another significantly improve IJV performance. However, impact of symmetric equity share on IJV performance remains negative and non-significant, explaining that IJV partners may consider it rather a safeguard to their own stake and interests in IJVs. In addition, SET-based IJV management mechanisms are found to be more effective than the TCT-based IJV mechanisms in improving IJV performance.