Does the banking sector structure matter for credit procyclicality?

The aim of this paper is to investigate whether the banking sector structure matters in explaining credit procyclicality for 17 OECD countries over the 1986–2010 period. To this end, we first provide a detailed classification of the banking system structure through the use of a hierarchical clustering methodology. Relying on the estimation of panel VAR models and accounting for potential heterogeneity between countries, we then propose a measure of credit procyclicality based on the impulse-response function of credit to a shock in GDP. Our findings show that while credit significantly responds to shocks in GDP, the structure of the banking sector is not a key factor in assessing the procyclicality of credit for OECD countries.     

Innovation orientation and long-term performance: The mediating role of market perception capability

This paper examines the relationship between the orientation towards innovation of SMEs and long-term performance, considering market perception capability as a mediating variable. This research topic is important because it can provide a better understanding of the relationship between innovation orientation and performance, since most of the previous papers that have analyzed this relationship have done so from a short-term perspective. But the effect of innovation orientation on performance may not be immediate and short-term, but long-term, and may be influenced by the company’s ability to develop marketing capabilities. A sample of 77 independent hotels is taken for empirical contrast and a system of structural equations is modelled using the Partial Least Squares (PLS) technique. The results show that the company’s capacity to understand the market in which it operates functions as a mechanism that intervenes in the relationship between innovation orientation and long-term result, with a mediating effect that explains the positive effect of innovation orientation on the long-term results.

     

Nonlinear adjustment of the real exchange rate towards its equilibrium value: A panel smooth transition error correction modelling

We study the nonlinear dynamics of the real exchange rate towards its behavioral equilibrium value (BEER) using a Panel Smooth Transition Regression model framework. We show that the real exchange rate convergence process in the long-run is characterized by nonlinearities for emerging economies, whereas industrialized countries exhibit a linear pattern. Moreover, there exists an asymmetric behavior of the real exchange rate when facing an over- or an undervaluation of the domestic currency. Finally, our results suggest that the real exchange rate may be unable to unwind alone global imbalances.     

Input–output evidence on the relative price effects of total productivity shift

This paper provides empirical evidence on the relative price effects of a notional shift in total productivity using data from ten Symmetric Input–Output Tables of five European economies. The results suggest that the direction of the price-movements is, more often than not, governed by the (traditional) labour cost condition and this could be connected to the effective ranks of the matrices of the relative shares of the capital goods.     

The moderating effect of innovative capacity on the relationship between real options and strategic flexibility

In dynamic sectors, organizations should be capable of adapting to unpredictable environmental conditions. Strategic flexibility grants organizations the capacity to respond to the changes in their environment in the direction required, renewing their strategies and making the required organizational changes. The goal of this study is to analyze how the use of real options relates to strategic flexibility from a managerial capacity perspective. Through an empirical study performed on European firms, we confirm that innovative capacity exercises a moderating role between real options and strategic flexibility. The fact that a firm's management has foreseen and contemplated real options does not necessarily lead to their execution; they must also be accompanied by some innovative capacity.     

Acquirers’ earnings management ahead of stock-for-stock bids in ‘hot’ and ‘cold’ markets

The accounting literature has found evidence that acquirers in stock-for-stock M&A have typically managed earnings upwards ahead of a bid. Other literatures have concluded that, when stock prices are high and rising, M&A is higher, more M&A is financed with stock, market sentiment and stockholders’ perceptions of information appear to change, and in these circumstances new (arbitrage) motivations for M&A emerge. This paper revisits earnings management ahead of M&A in the light of these findings, comparing experience in ‘hot’ and ‘cold’ markets. It finds that such earnings management is more pronounced in hot markets; that only in such markets are positive discretionary accruals commonly associated with positive abnormal returns on the announcement of earnings; and that in such markets – against the expectations from signalling theory – these positive returns are not reversed on announcement of a stock-for-stock bid. The results suggest that the economic benefits achieved by engaging in earnings management during hot markets are indeed significant: in hot markets, we estimate that on average share acquirers engage in working capital accrual management equivalent to over a third of the average acquirer’s return on total assets in that year; and that this earnings management is associated with increases in market value which are statistically and economically significant, enabling the bidder to secure control of the target with fewer shares.     

Liberalisation,Financial Risk,and Formal Financial Participation in Pakistan: Hyperinflationary Microeconomic Responses to Moderate Volatility in a Developing Economy

With formal financial inclusion much lower than its neighbours, Pakistan has been the focus of intensive efforts to ‘bank’ the ‘unbanked’. Yet, after a drop in deposits in the wake of Pakistan’s 2008 crisis, deposits are still struggling to return to their mid-1990s’ levels. Focusing on distortions in the banking sector, the Central Bank attributes this to ‘crowding out’ amidst a steep rise in the propensity to consume. This study draws on extensive fieldwork, identifying heightened financial risk driven by multifaceted monetary instability since the liberalisation of the rupee and of Pakistani markets. It proposes that heightened monetary risk has translated into a broad-based shift out of the rupee akin to hyperinflationary responses, but revealed in relatively moderate monetary conditions. It argues that, exposed to global markets, national currency itself has become a risky asset, pushing store-of-value and transactional holdings into unconventional liquid assets. This suggests that monetary stability, expressed in the currency itself and in broader pricing patterns in the economy, is key to the uptake of financial intermediation. The issue at the root of disintermediation in Pakistan, it is argued, is less one of ‘crowding out’ than of disruption to the role of national currency as money itself.     

Empowering young people through participatory film: a postmethodological approach

Children and young people’s voices have often been neglected in tourism research, and this is particularly the case when exploring tourism from the host community’s perspective. The lack of children and young people in tourism research has been attributed to the slow engagement and adoption of alternative and critical methodologies which open up new and fresh ways of interpreting reality. The paper aims to explore the potential for participatory film to uncover the perspectives of marginalised members of the community such as children and young people. We also discuss the use of participatory film as an epistemic philosophy, and as a post-disciplinary form of methodology (or ‘postmethodology’) which is ideologically grounded. The findings suggest that children and young people feel strongly about their community and display feelings of anger and frustration towards tourists who are perceived to not respect the community and the environment. The methodological contribution of this paper lies in the use of an innovative and voice-generative participatory visual method to empower young people to actively participate in tourism research.     

Malleability of taste perception: biasing effects of rating scale format on taste recognition,product evaluation,and willingness to pay

Product-related cues, such as brand or price, can influence consumers’ taste perception. Going beyond this observation, we examine the extent to which a stimulus-extrinsic factor, such as the format of the measurement tool on which consumers describe attributes of a taste sample, influences concurrent taste perception, and in turn, later taste recognition, overall product evaluation, and willingness to pay (WTP). The results of two experiments show that rating scale format (i) influences consumers’ concurrent impression of a taste sample, (ii) systematically biases later identification of the sample in a taste recognition test, and (iii) affects overall product evaluation and WTP. However, scale format (iv) does not influence ratings and downstream judgments when consumers are highly knowledgeable in the product domain. These findings demonstrate that the experience of taste is fleeting and not well represented in memory, and that like other subjective experiences, taste needs to be reconstructed based on accessible cues.