MONEY AND INFLATION IN INDIA: EVIDENCE FROM P‐STAR MODEL

This study uses P‐star model to examine the role of money in explaining inflation in India. In particular, we compare the performance of traditional Phillips curve approach against P‐star model in forecasting inflation. Moreover, the study estimates P‐star model using the alternative measures of money such as simple sum and Divisia M3, to examine the relevance of aggregation theoretic monetary aggregates in explaining inflation. The empirical results indicate that P‐star model with real money gap has an edge over traditional Phillips curve approach in forecasting inflation. More importantly, we found that the P‐star model estimated with Divisia real money gap performs better than its simple sum counterpart. These empirical findings suggest that the changes in real money gap play a crucial role in explaining inflation in India.     

CONSISTENT ESTIMATION OF A LIMITING COVARIANCE MATRIX

This paper provides a consistent and positive semi-definite estimator of the limiting covariance matrix of a nonlinear instrumental variable estimator for a nonlinear simultaneous equation model with selectivity studied in Sapra (1989).     

An analysis of B2B ingredient co-branding relationships

The proliferation of co-branding in consumer markets has been given considerable attention in the literature, yet attention to the practice in business-to-business markets has been limited, despite the growing attention to the role of relationships in the B2B arena. In an examination of co-branding in the industrial sector, this paper discusses the use of ingredient co-branding and uses an econometric modeling approach to offer a rationale for why it occurs. The analysis provides insight into why downstream manufacturers participate in a relationship that strengthens the supplier's position in the market. We find that under the threat to the supplier of entry from a competitor whose costs are unobservable, co-branding relationships will be entered into resulting in a reduced probability of entry. This co-branding arrangement benefits both the incumbent supplier and the downstream manufacturer. The incumbent supplier benefits from the reduced probability of competitor entry, and the downstream manufacturer is rewarded with a lower price. Further, we find that the cost of the co-branded product is lower, due to a mitigation of double marginalization in a vertically-integrated solution. We examine co-branding relationships with and without advertising support and find that co-branding relationships with advertising support tend to be superior.     

Transparency in IPO mechanism: Retail investors’ participation,IPO pricing and returns

Using data from the transparent Indian IPO setting, the paper examines retail investors’ participation, their influence on IPO pricing and the returns they make on IPO investment. The transparency in the mechanism, which allows investors to observe prior investors’ participation, leads to demand which is concentrated at either one or two points of the offer price range. Analysis of investors’ demand during the offer period shows that the participation of retail investors is significantly influenced by the participation of institutional investors. We examine IPO pricing and find that favourable demand by retail investors is positively associated with a high IPO price even after controlling for demand by institutional investors. Further, we find that due to aggressive bidding by overconfident investors, retail investors are, on average, unlikely to make positive allocation weighted initial returns even in a setting where they do not have to compete with institutional investors. Retail investors, however, can earn significant positive allocation weighted initial returns if they limit their participation in IPOs with above average institutional investors’ demand.     

Competitiveness and Efficiency of the Banking Sector and Economic Growth in Egypt

Abstract: This paper investigates the impact of financial reforms on competitiveness and production efficiency of the banking sector, as well as the short‐term and long‐term impact on economic growth, in Egypt during 1992–2007. The results suggest that the reforms have a positive and significant effect on competitiveness and production efficiency. Also, the evidence shows that state‐owned banks are generally less competitive than private banks and foreign banks are less competitive than domestic banks. The average x‐inefficiency of Egyptian banks is around 30 per cent, which is comparable to those reported for other African countries. Finally, there is evidence to suggest a significant relationship between financial bank productive efficiency and economic growth in the short run but not in the long run. Overall, the results support the argument for continuing the financial sector reform programme in Egypt.     

International equity portfolio allocations and transaction costs

In spite of the critical role of transaction cost, there are not many papers that explicitly examine its influence on international equity portfolio allocation decisions. Using bilateral cross-country equity portfolio investment data and three direct measures of transaction costs for 36 countries, we provide evidence that markets where transaction costs are lower attract greater equity portfolio investments. The results imply that future research on international equity portfolio diversification cannot afford to ignore the role of transaction costs, and policy makers, especially in emerging markets, will have to reduce transaction costs to attract higher levels of foreign equity portfolio investments.     

THE EFFECT OF THE FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991 ON BANK STOCKS

In this study we use a multivariate regression model to investigate the effect of the passage of the Federal Deposit Insurance Corporation Improvement Act (FDICIA) of 1991 on returns to the shareholders of bank-holding companies. The empirical results suggest that the shareholders of well-capitalized banks benefited from the enactment of the FDICIA, while those of undercapitalized banks experienced significant losses during the announcement period. However, the shareholders of adequately capitalized banks did not gain or lose significantly from the enactment of the FDICIA. The FDICIA also affected stock returns of large and small bank-holding companies similarly.     

Can brand image move upwards after Sideways? A strategic approach to brand placements

In today's environment of fragmented mass media and popular technologies, such as DVR and TiVo, it is increasingly challenging for marketers to obtain quality face time with audiences. As more customers try to avoid advertisements, there has been growth in brand placement: the practice of integrating brands into entertainment media, particularly television and film. Brand placement engages the audience, limits viewers’ ability to ignore commercial messages, and even impacts purchase behavior—as evidenced by the surge in Blackstone pinot noir wine sales after the brand's placement in the movie Sideways. Despite the prevalence of this practice, however, the industry often operates in a somewhat unfocused manner. In this article, we draw from academic literature and industry publications, offer insight regarding the growing popularity of brand placements, and suggest a specific set of guidelines to enhance the efficacy of placements in accomplishing a brand's marketing objectives.