Household Participation in Formal and Informal Savings Mechanisms: Evidence from Pakistan

Savings are an important determinant of both individual and national wellbeing. Typically, households employ a wide range of mechanisms for saving, including both formal and informal institutions. The choice of savings instrument has important micro- and macroeconomic implications. However, little is known empirically about the patterns of use of these instruments, or the factors affecting household decisions/ abilities to use them. The authors apply household-level data from a nationally representative survey for Pakistan to explore these issues in detail. In particular, they focus on the choice between banks and bisi , an informal saving committee similar in nature to a rotating-savings-and-credit association.     

The liquidity effect for open market operations

The liquidity effect is the negative relationship between the supply of federal funds and the overnight federal funds rate. Deviations of the federal funds rate from its target can be interpreted as demand innovations for federal funds. Permanent adjustments to demand are modeled as an unobserved component and estimated using the Kalman filter to identify liquidity effects. The demand-based approach for identifying the liquidity effect contrasts previous work which concentrates on errors forecasting the supply of federal funds. This paper finds a liquidity effect several times larger than that from previous studies, indicating the market for federal funds is less liquid than previously thought. The effect of a $1 billion increase in open market operations over a 1-week period is a decrease of the federal funds rate by about 12 basis points.     

Web-Based Product Development Systems Integration and New Product Outcomes: A Conceptual Framework

In hopes of improving the effectiveness of their new product development (NPD) processes, many firms increasingly are eager to adopt integrated web‐based NPD systems for NPD. However, few would argue that the mere use of web‐based NPD systems substantially will improve the NPD process. But we know little about how and when these systems can be used for enhancing NPD. An organization desiring to employ the web in its NPD process can use it at varying levels of functionality and sophistication, ranging from a tool for automating manual tasks and exchanging data to a means of integrating various intra‐ and interorganizational NPD functions and processes. At higher levels of technology sophistication or integration, an organization's NPD processes will get more integrated internally, i.e., between different stages of the NPD process and with the processes of its suppliers, technology providers, etc. Such integration of both internal and external NPD processes is considered important for successful innovation. Thus, on the surface, higher levels of web‐based systems integration may seem universally desirable. However, each increasing level of integration brings with it higher costs—not only the costs of expensive technology but also costs of implementing a complicated system, redesigning intra‐ and interorganizational processes, disrupting the status quo, and spending management time and energy during implementation. Therefore, it may not be wise for firms to jump blindly on the web‐based NPD bandwagon. High levels of web‐based NPD systems integration may be created when low levels of integration may not deliver the desired results. Further, if such systems are installed without appropriate conditions within and outside the firm, it may not be possible to exploit their full potential. As such, it is important to know how much web‐based NPD systems integration is suitable for different conditions. In this article, we develop a conceptual framework that focuses on how web‐based NPD systems integration can influence the outcome of NPD and how the relationship between systems integration and outcomes can be affected by various contextual factors. For this purpose, we draw on research in areas such as NPD, web‐based information systems, and organization theory and on many discussions we had with professionals and software vendors who deal with NPD and web‐based NPD systems. The contextual factors of interest in this framework are strategic orientation of the firm, product‐related factors, business environment, organizational factors, information technology factors, and partner‐characteristics. Managerial and research implications of the framework are discussed.     

Are the Discounts in Seasoned Equity Offers Due to Inelastic Demand?

This paper investigates the large and diverse discounts in UK open offers and placings. Large discounts are a substantial cost to shareholders who do not buy new shares. The existing literature mainly examines US firm‐commitment offers and private placements. The institutional setting differs in the UK, in ways that make the theory of inelastic demand for shares more important as an explanation for discounts than in the US. The paper finds that inelastic demand, or illiquidity of the issuer's shares, and financial distress, are key determinants of the discount. We expect these results to apply to other stock markets.     

Regulation,Profit Variability and Beta

Many tests of the Peltzman hypothesis that regulation buffers the firm's cash flows examine the firm's equity beta. We model the asset beta and show that it (and the equity beta) are a function of several variables beyond those found in previous tests. Since these variables are also affected by regulation, tests of the Peltzman theory that do not hold these factors constant will be biased. The empirical tests in this paper hold other determinants of beta equal and find evidence consistent with the Peltzman buffering hypothesis and the model of beta.     

The regime-switching risk premium in the gold futures market

A bivariate Markov-switching model identifies two regimes in the futures-price and risk-premium models. The persistent underlying states have very different implications for spot and risk-premium forecasts. In the “low” state, a positive bias predicts spot price appreciation. The “high” state is associated with lower spot appreciation and higher risk premiums. The regime-switching framework provides a new perspective on the intertemporal role of gold as a hedge or safe-haven asset. The gold spot-price appreciation regime is shown to be correlated with higher inflation rates and the complement regime is associated with high market returns and stock market risk premia. Since the state-space methodology procedure can be employed using only past data, forecasts of the persistent unobserved underlying state of the gold price appreciation regime will be augmented as more data becomes available.     

A comparison of the performance of open-and closed-end investment companies

This paper investigates the impact of corporate structure on the return performance and related operational characteristics of open- and closed-end investment companies. A statistical model is used to test for differences in several characteristics of these two different types of funds. The results show that there are differences in the returns of open-and closed-end funds, as well as differences in turnover and expenses of funds with different corporate structures. Moreover, the results are surprising in that they are significantly affected by the type of security held in the funds.