Information acquisition and financial contagion

This paper incorporates costly voluntary acquisition of information à la Nikitin and Smith (2007) [Nikitin, M., Smith, R.T., 2007. Information acquisition, coordination, and fundamentals in a financial crisis. Journal of Banking and Finance, in press, doi:10.1016/j.jbankfin.2007.04.031], in a framework similar to Allen and Gale (2000) [Allen, F., Gale, D., 2000. Financial contagion. Journal of Political Economy 108, 1–33], without relying on any unexpected shock to model contagion. In this framework, contagion and financial crises are the result of information gathering by depositors, weak fundamentals and an incomplete market structure of banks. It also shows how financial systems entering a recession can affect others with apparently stronger economic conditions (contagion). Finally, this is the first paper to investigate the effectiveness of the Contingent Credit Line procedures, introduced by the IMF at the end of the nineties, as a mechanism to prevent the propagation of crises.     

Structural Breaks and Convergence in the Regions of Peru: 1970–2010

The aim of this paper is the analysis of stochastic and β‐convergence in the relative regional per capita outputs using different unit root tests both with and without structural breaks and using a further test that is robust to the presence of I(0) or I(1) errors. It allows robust inference on the estimates of the initial per capita output (intercepts) and the respective growth rates (slopes). The results of the application of unit root tests without structural breaks show the absence of stochastic convergence. However, by incorporating the presence of endogenous breaks, the results are reversed for all regions. In the case of β‐convergence, the results of the robust test W_RQF show that all regions have a structural break at some point during the period 1970–2010. We find different behavior for different regions. There is a catching‐up process and a lagging‐behind process for different groups of regions towards more negative or more positive paths.     

Natural disasters and university enrolment: evidence from L’Aquila earthquake

Although there are several studies looking at the effect of natural disasters on economic growth, less attention has been dedicated to their impact on educational outcomes, especially in more developed countries. We use the synthetic control method to examine how the L’Aquila earthquake affected subsequent enrolment at the local university. This issue has wide economic implications as the University of L’Aquila made a large contribution to the local economy before the earthquake. Our results indicate that the earthquake had no statistically significant effect on first-year enrolment at the University of L’Aquila in the three academic years after the disaster. This natural disaster, however, caused a compositional change in the first-year student population, with a substantial increase in the number of students aged 21 or above. This is likely to have been driven by post-disaster measures adopted in order to mitigate the expected negative effects on enrolment triggered by the earthquake.     

Hysteresis versus NAIRU and convergence versus divergence: The behavior of regional unemployment rates in Brazil

The aim of this work is to analyze the regional unemployment rate behavior in Brazil. Firstly, unit root tests with structural breaks were used to determine which theoretical framework – hysteresis or NAIRU – is more appropriate to explain the unemployment dynamics not only in six Brazilian metropolitan areas – São Paulo, Rio de Janeiro, Belo Horizonte, Porto Alegre, Salvador and Recife – but also at national level. Hysteresis is found to be the best choice in five, but Rio de Janeiro. This indicates a high persistence in the Brazilian regional unemployment rate. Secondly, we investigated whether these five metropolitan regions, characterized by the hysteresis effect, show a stochastic convergence. The latter was found in every case, but Porto Alegre.     

The Basic Analytics of Access to Financial Services

Access to financial services, or rather the lack thereof, is often indiscriminately decried as problem in many developing countries. This paper argues that the “problem of access” should rather be analyzed by identifying different demand and supply constraints. We use the concept of an access possibilities frontier, drawn for a given set of state variables, to distinguish between cases where a financial system settles below the constrained optimum, cases where this constrained optimum is too low, and—in credit services—cases where the observed outcome is excessively high. We distinguish between payment and savings services and fixed intermediation costs, on the one hand, and lending services and different sources of credit risk, on the other hand. We include both supply and demand side frictions that can lead to lower access. The analysis helps identify bankable and banked population, the binding constraint to close the gap between the two, and policies to prudently expand the bankable population. This new conceptual framework can inform the debate on adequate policies to expand access to financial services and can serve as basis for an informed measurement of access.     

Entrepreneurial attributes for success in the small hotel sector: a fuzzy-set QCA approach

By examining small hotels in Spain, this research contributes to understanding how human capital, social capital, and contingency factors interact to build a success model based on high hotel occupancy rates, profit, and profit per employee. Human capital theory, social capital theory, and multilevel theory provide the theoretical basis for this research. The study used fuzzy-set qualitative comparative analysis applied to a sample of 51 small Spanish hotels. The results reveal the existence of different configurations that lead to the desired performance outcomes. Each configuration combines two or three causal conditions. The results also reflect the difficulties that small hotels may face in reconciling different performance objectives. This paper thus provides solutions for managers, who must make strategic decisions based on existing conditions both inside and outside their organisations. The findings discussed herein can thus help small hotels better define their performance objectives by considering their individual characteristics. The findings can also help new small hotel entrepreneurs better understand the conditions required for success in this highly competitive market.     

Government, taxes and banking crises

This paper analyzes the effectiveness of different government policies to prevent the emergence of banking crises. In particular, we study the impact on welfare of using taxpayers money to recapitalize banks, government injection of money into the banking system through credit lines, the creation of a buffer and taxes on financial transactions (the Tobin tax). We illustrate the trade-off between these policies and derive policy implications.     

Climate perceptions and the customer orientation of frontline service employees

Satisfaction of customers' needs is particularly dependent upon the customer orientation of frontline employees. Understanding the drivers of such orientation is, therefore, a key issue in current research. Research relating perceptions of organisational values with the customer orientation of employees is rather sparse. This topic is approached by investigating the role of selected dimensions of psychological climate in promoting the customer orientation of frontline service employees. A structural equations model is developed and empirically tested, indicating that perceptions of customer, ethical, and innovation climates exert an indirect effect on the adoption of customer-oriented behaviours by frontline employees.     

Volatility Spillovers and the Risk-Return Relation Between Stock and Foreign Exchange Markets in Brazil

We examine the evidence of mean and volatility spillovers between stock and foreign exchange markets in Brazil with multivariate GARCH models and nonlinear Granger causality tests. We also use a multivariate GARCH-in-mean model to assess the relationship between risk and return in these markets. The results indicate that the stock market leads the foreign exchange market in price formation and that nonlinear Granger causalities from the exchange market to the stock market do occur. Part of these nonlinear causalities are explained by volatility spillovers. We show that exchange rate volatility affects not only stock market volatility but also stock returns.