Corporate social responsibility and bank risk profile: evidence from Europe

This study analyzes the impact of risk profile on sustainability reporting and its quality in European banks. Financial institutions (FI) play a social role in the financial inclusion process and incorporate environmental considerations into credit risk assessment, making corporate social responsibility (CSR)-related issues vital for risk management systems. FI with lower capital risk, higher liquidity risk, higher profitability in banking, and higher sensitivity to market risk tend to issue CSR reports. The findings suggest that FI with lower profitability in banking disclose higher quality CSR financial services sector (FSS)-specific information, whereas FI not submitting CSR reports for external assurance or having their CSR reports assured by certain auditors issue lower quality CSR/FSS-specific information.     

Does backward participation in global value chains affect countries’ current account position?

Review of World Economics - This paper addresses the impact of countries’ backward participation in global value chains (GVCs) on their current account balances. Our results, based on a large...     

Credit and inflation under borrower?s lack of commitment

In this paper we study the effects of monetary policy on privately supplied credit in model economies where money is needed for transaction purposes and agents who default on their loans cannot participate in the credit market but are allowed to accumulate money. In our deterministic benchmark economy where agents alternate in productivity, credit has the role of smoothing consumption. We show that deflation crowds out credit completely. The reason is that deflation increases the value of being excluded from the credit market and eliminates the incentive to repay loans. When inflation is positive but low, credit, consumption smoothing and welfare increase with inflation, until inflation reaches a threshold at which the allocation is efficient and money becomes superneutral.     

Reducing Carbon Dioxide Emissions in Australia: A Minimum Disruption Approach

Abstract
While at the Toronto Conference in 1988, Australia adopted a target of reducing carbon dioxide emissions by 20 per cent of 1988 levels by the year 2005, however action to reduce emissions has been negligible. Unilateral action is deemed too costly in terms of the negative effects it could have on employment, GDP growth, exports and international competitiveness .
Most Australian studies have evaluated the effect on such variables of employing a specified policy instrument, such as a carbon tax, to reduce emissions. This study instead uses an input-output method developed by Proops, Faber and Wagenhals (1993) to ascertain the minimum set of changes necessary in different sectors of the economy required to achieve the Toronto Target, where constraints on key macroeconomic variables, such as GDP growth and the level of employment, are met. The cost of reducing emissions is defined here in terms of the required structural changes, when factors like GDP growth are held positive .
The results suggest that the necessary changes in various sectors under each of the scenarios are not far removed from the observed rates of change for Australia. The results are also consistent with those obtained for both Germany and the United Kingdom .     

Necessity entrepreneurship in Latin America: it´s not that simple

ABSTRACT

Entrepreneurship literature takes for granted the motivation dichotomy; however, this simplistic view have been criticised for several studies because it likely does an injustice to entrepreneurs, particularly Latin America (LA) entrepreneurs. This study seeks to contribute to the body of knowledge on entrepreneurs to better explain the process of entrepreneurs being motivated by necessity. We use the Global Entrepreneurship Monitor (GEM) database for LA countries and develop an econometric model based on a set of variables, including contextual variables. First, we identify three types of entrepreneurial motivation: necessity, opportunity and transition. We then demonstrate that the motivation dichotomy does not represent LA entrepreneurship. Second, we find that necessity-driven entrepreneurship does not necessarily indicate the absence of high growth aspirations because some entrepreneurs in this category have such aspirations. Third, we observe that significant differences exist among entrepreneurs based on context, specifically among necessity-driven entrepreneurs. These findings have practical implications for research on entrepreneurship and for regional development.     

Has the CDS market influenced the borrowing cost of European countries during the sovereign crisis?

This paper assesses the potential influence of the growing CDS market on the borrowing cost of sovereign states during the European sovereign crisis. We analyze the sovereign debt market to ascertain the pattern of information transmission between the CDS and corresponding bond markets. Our methodological innovation is the use of a non-linear specification rather than the linear VECM specification customarily employed. Using a panel smooth transition model during the 2008–2010 period, we find that: 1) linearity tests clearly reject the null hypothesis of a linear transmission mechanisms between the bond and the CDS markets; 2) market distress alters the mutual influence and 3) the higher the distress the more the CDS market dominates the information transmission between CDS and bond markets.     

Is “getting started” an effective way for people to overcome the depletion effect?

Whereas most research on depletion focuses on its effect on the overall performance of a subsequent task requiring self‐control, we examine the effect of depletion on self‐control after performance has begun. Across different manipulations of depletion and using different measures of self‐control (e.g., overriding an automatic behavioural tendency, enduring on a physically demanding task, and making healthy consumption choices), the results of three studies show that when self‐control has been initiated, the effect of depletion has little influence on subsequent behaviour also requiring self‐control: in other words, “getting started” on a self‐control task attenuates the depletion effect. The results also show that the way in which self‐control starts—that is, whether people choose to regulate, or whether this choice is forced—appears irrelevant. This research clarifies an effective way to facilitate self‐control after depletion, while providing a better understanding of the process underlying depletion. Copyright © 2015 ASAC. Published by John Wiley & Sons, Ltd.     

The Wage Inflation‐Unemployment Curve at the Macroeconomic Level

Based on the reduced form New Keynesian Wage Phillips Curve, we estimate wage rigidity and indexation at the aggregate level in several advanced countries for the 1985–2014 period. We document that the wage setting process is heterogenous among our sample of countries: nominal wage rigidities are more important in the United States, while wage indexation is dominant in European Countries. We also present evidence that indexation to past inflation has decrease as inflation stabilizes at lower levels. In addition, our results suggest that wage rigidity is not linked to the institutional environment at the macroeconomic level. Finally, we show that there is significant time variation in the estimated coefficients on the implied equation that is usually not taken into account in the theoretical literature.     

Opportunity motivation and SME internationalisation in emerging countries: Evidence from entrepreneurs’ perception of institutions

Institutional studies based on cross-country comparisons and founded on a determinist perspective analyse the behaviour in emerging economies. The current research, in contrast, looks to neo-institutionalism and the literature on entrepreneurship to pose two research questions based on individuals’ discretion: (1) How does the entrepreneur’s perception of the institutional dimensions influence their decision to involve their SME in international operations? (2) What role does opportunity motivation play in the impact of those perceptions on the internationalisation decision? We analyse a sample of 296 entrepreneurs who had founded their businesses in Brazil (Federal State of Sergipe), and our results confirm that the individual’s perception of the normative and regulative aspects of institutions, the interaction between the two, and the interaction between the normative and cognitive aspects of institutions, explain the decision to embark on international operations. Opportunity motivation mediates the impact of the normative aspects of institutions on that decision.     

EU After COVID-19: An Opportunity for Policy Coordination

Intereconomics - Despite all the difficulties inherent to our political organisation, the European Union has taken a bold step by doubling the EU budget for the next six years with the NGEU fund.