Do banks effectively manage their risks? The role of risk governance in the MENA region

This study aims to investigate (1) the effects of the creation of a board-level risk committee (RC) and the designation of a chief risk officer (CRO) on the risk-taking practices undertaken by financial institutions and (2) whether these mechanisms improve the risk management effectiveness of both conventional banks (CBs) and Islamic banks (IBs). We contribute to the scarce literature on the relationship between risk governance and risk-taking behaviour and investigate IBs in this context. Using a sample of 573 observations representing 65 banks (28 CBs and 37 IBs) in the Middle East and North Africa (MENA) region from 2005 to 2015, we find a negative association between the risk governance indices and their risk perspectives across both types of banks for the post-crisis period. Interestingly, we find that the existence of risk governance mechanisms in IBs is associated with higher risk taking for the pre-crisis period, i.e., before the recent amendments to the risk governance principles in the MENA region. This result implies that IBs can respond to regulatory reforms in the post-crisis period by curbing excessive risk taking. We offer further evidence that the risk governance effect on overall risk taking stems only from the stand-alone board-level RC and not from the role of the CRO. We note that the CBs’ performance is more associated with risk taking for banks with stronger board-level RCs. The board-level RCs improve the effectiveness of risk management within CBs but do not influence the risk management effectiveness of IBs.     

Consumers’ Preference Mapping and Their Behavior with Regard to Traditional Halwa Using a Structured Survey Questionnaire

In this study, a structured survey questionnaire was used to determine consumers’ preferences and their behavior with regard to halwa. Five types of consumer groups were identified thorough hierarchical cluster analysis based on ranked attributes. Color was ranked within the top three attributes for all the groups. In general, color, sweetness, appearance, and solubility were found to be the most important attributes for selecting the halwa. Five types of groups were identified based on their preference levels (i.e., intensity) of attributes. These could be recognized in terms of preferences for halwa with (1) black with high sweetness, (2) dark-brown with high-medium sweetness, (3) dark with low-medium sweetness, (4) brown with medium sweetness, and (5) dark with high-medium sweetness preferred consumers. The consumer segmentations identified could be used to develop retail marketing strategies and to develop store brands of diversified Arabian sweets and intermediate moisture fruit snacks, such as dates.     

Demand Analysis of Meat in Malaysia

One distinct change in Malaysians' food consumption behavior has been the preference toward meat products. Thus it is meaningful to gain insight of meat consumption patterns. As the market becomes increasingly market-led, information on current meat consumption patterns is required to assess how they are likely to change as prices and incomes change. This study attempts to provide a better understanding of demand for meat products in Malaysia. By utilizing data from Household Expenditure Survey 2004/2005, Engel curve analysis was conducted to derive income elasticities of meat products from QUAIDS model. The estimated income elasticities show that current food consumption patterns are showing signs of convergence toward a Western diet, exhibiting tendency for preference toward red meats (mutton and beef) over white meats (poultry and pork). The estimated elastic own-price elasticities indicate that Malaysian consumers are sensitive to the change in prices of the meat products, with other things remain constant.     

Preference Ordering Cash,Near Cash,and Electronic Cash

ABSTRACT

This research investigates the impact of sociocultural determinants on people’s perceptions and usage of smart systems in the United Arab Emirates (UAE). This research used the Theory of reasoned action, Unified theory of acceptance and use of technology (UTAUT) and Frambach and Schillewaert’s framework. These theories which focus on the determinants of technology acceptance behavior of users have been widely used in contemporary technology acceptance research. Data were collected from the UAE Ministries of Foreign Affairs, Health, and Economy using structured questionnaires. A total of 357 responses were analyzed using multivariate statistical techniques such as regression analysis and factor analysis. Multiple regression analysis helped to determine the direction of relationships between the constructs representing users’ sociocultural orientation, attitude toward smart systems and acceptable behavior. Factor analysis served to identify the underlying dimensions of the above constructs. The major finding of this research is that cultural values and peers’ influence significantly affect users’ perceptions and applications of technological innovations. Furthermore, the study reveals that users’ age and gender wield critical moderating effects on the relationship between cultural values and attitude toward smart systems. These findings have important implications for acceptance and implementation of smart systems in the UAE which are highlighted in this paper. This paper also identifies the limits of this research and explores the venues of further research in this field.     

Consumer evaluations of store brands: Effects of product-perceived risks

The significance of retail store brands has increased. However, despite the emergence of numerous exclusive retail products, not all of them achieved success. Seemingly, retailers have a shortsighted comprehension of the different risks related to including new categories of products to the store brands. This research analysis investigates how various categories of perceived risks connected with attributes, products, and atmosphere of stores impact consumers’ evaluation of store-branded products. A developed and tested structural model gave indications of the probability of consumers’ evaluations of store brands. The research discovered various perceptions of store brands among the respondents. Also, one of the research results found different perceptions among users and non-users of store brands.     

An experimental test of behavior under team production

This study reports experiments that examine behavior under team production and a piece rate. In the experiments, participants complete a forecasting task and are rewarded based on the accuracy of their forecasts. In the piece‐rate condition, participants are paid based on their own performance, whereas the team‐production condition rewards participants based on the average performance of the team. Overall, there is no statistically significant difference in performance between the conditions. However, this result masks important differences in the behavior of men and women across the conditions. Men in the team‐production condition increase their performance relative to men in the piece‐rate condition. However, this gap in male performances across conditions diminishes over the course of the experiment. In contrast, women in the team‐production condition show significantly lower performance than the women in the piece rate. As a consequence of these differences, men in the team‐production condition show significantly better performance than women in the team‐production condition. We also find evidence that men show stronger performance when they are in teams with a larger variation in skill level. Copyright © 2010 John Wiley & Sons, Ltd.     

Price Discovery in Real Estate Markets: A Dynamic Analysis

Although the correlation between the public and private market pricing of real estate has generated considerable research effort, the methods utilized in previous studies have failed to capture the dynamic nature of this correlation. This paper proposes a new statistical method to address this issue. This method, known as the dynamic conditional correlation GARCH model, enables us to study the dynamics of the correlation between the two markets over time and enrich our understanding of the public and private market pricing of real assets. We find that the correlation between NAV returns and REIT returns is dynamic for all REIT types and there is a strong degree of persistence in the series of correlation. Our Granger-causality tests show that price discovery generally takes place in the securitized public market. However, we also find significant variations across property types and individual firms within each type. Our results indicate that constructing an optimal portfolio requires firm level analysis of causality and correlation between REIT returns and NAV returns.     

Buyer brokerage: Experimental evidence

This paper offers an experimental investigation of two commission structures for buyer brokerage. One commission structure is the currently used structure in the industry where both the seller’s broker and the buyer’s broker each receive a percentage of the sales price as their compensation from the seller. In an alternative commission structure, while the seller’s broker still receives a percentage of the sales price from the seller, the buyer’s broker is compensated by the buyer and the compensation is inversely related to the sales price. We find that how the buyer’s broker gets compensated has significant implications. While both commission structures yield a similar probability of reaching an agreement, the alternative commission structure yields a lower price and a longer time to reach an agreement. Furthermore, the alternative commission structure achieves a better alignment of the interests of the buyer and the buyer’s broker without affecting the earnings of the players in the transaction. We also find that the improvement in the alignment of interests is more significant for female buyers than for male buyers. Furthermore, a higher listing price by the seller and a higher initial bid price by the buyer each lead to a significant increase in the negotiated price.     

The Effect of a Complex Ownership Structure and Judicial Efficiency on Leverage: Evidence from Pakistani Listed Companies

We explore the impact of complex ownership structure and judicial efficiency on firm leverage at Pakistani pyramid firms. Ratio of controlling to ownership rights is much higher at Pakistani firms than in other economies, which motivates us to study its impact on leverage. Our results reveal that complex internal structure at Pakistani pyramid firms is positively related to leverage. We find that the presence of efficient courts weaken the impact of complex ownership structure on leverage at pyramid firms. Contrary to the literature, we find that the political connections of pyramid firms in Pakistan are not related to corporate leverage.     

Abreu–Matsushima Mechanisms: Experimental Evidence

Abreu–Matsushima mechanisms can be applied to a broad class of games to induce any desired outcome as the unique rationalizable outcome. We conduct experiments investigating the performance of such mechanisms in two simple coordination games. In these games one pure-strategy equilibrium is “focal”; we assess the efficacy of Abreu–Matsushima mechanisms for implementing the other pure-strategy equilibrium outcome. Abreu–Matsushima mechanisms induce some choices consistent with the desired outcome, but more choices reflect the focal outcome. Moreover, “strengthening” the mechanism has a perverse effect when the desired outcome is a Pareto-dominated risk-dominated equilibrium.Journal of Economic LiteratureClassification Number: C7.