Does bank capital affect lending behavior?

This paper investigates the existence of cross-sectional differences in the response of lending to monetary policy and GDP shocks owing to differences in bank capitalization. It adds to the literature by using the excess capital-to-asset ratio, which can better control the riskiness of banks' portfolios, and by disentangling the effects of the “bank lending channel” from those of the “bank capital channel.” The results, based on a sample of Italian banks, indicate that bank capital matters in the propagation of different types of shocks to lending, owing to the existence of regulatory capital constraints and imperfections in the market for bank fund-raising.     

Economic feasibility analysis for electrical generation from biogas in waste disposal sites in Mexico City

This article highlights the main aspects related to energy generation from biogas in a controlled landfill of Mexico City in order to determine profits and environmental benefits. The designed structures and public policies to provide waste management services in Mexico City have been exceeded. A significant increase in demand has led the government of Mexico City to base public services on rudimentary techniques using obsolete equipment. The modernization of waste disposal facilities and the diversification of services linked to waste treatment can offer several business opportunities to optimize energy generation from solid wastes. The use of landfills to dispose large amounts of waste enables the energy generation from biogas. The energy generated can diversify the electricity market and provide economic benefits to landfills managers to cover operational costs.     

The Proposals for a European Tax on CO2 and Their Implications for Intercountry Distribution

This paper analyzes the advantages andimplications of the implementation of aEuropean tax on carbon dioxide emissions as anown resource of the EU and it focuses on itseffects on intercountry distribution. Incontrast to a harmonized tax, which would onlyhave distributive effects within each memberstate, a tax collected at European scale wouldalso have important distributive effects amongdifferent countries. These effects would alsodepend on the use of tax revenues. The paperinvestigates through a simple empiricalanalysis the distributive effects among themember states of three tax models: a pureCO₂ model; a 50%/50% energy-CO₂model and a CO₂ model with a burden onnuclear power.     

Geographical Agglomeration as an Alternative to Vertical Integration

This paper provides empirical evidence of the relationship between agglomeration and vertical integration decisions. It contributes to the existing literature by first developing a conceptual framework that focuses on both opportunism risk and communication problems to explain how physical proximity among firms can be an alternative to internal organization. Second, this study tests this relationship through the use of firm-level data from 10,955 establishments in the Spanish meat industry. Results confirm that establishments located in agglomerated areas internally undertake fewer stages of the value chain. We also find that this relationship is weaker than expected and fades at distances greater than 2.5 km, which may be explained by the particular characteristics of this industry.     

Determinants of self-employment survival in Europe

This paper investigates the determinants of self-employment survival in Europe in two stages. The first one focuses on the effect of variables at the individual level, while the second raises questions regarding specific regional factors through the introduction of macro variables. In conducting this analysis, discrete choice models, including both single and competing risks frameworks, are applied to data drawn from the European Community Household Panel from 1994 to 2001. Different destination states are considered: paid employment, unemployment and inactivity. This allows us to search for the underlying determinants of these different hazards. The results suggest a positive impact on survival of formal education and previous experience within the labour market. In addition, we find that entering self-employment from unemployment has a strong negative effect on survival within self-employment. However, our results also show that the expenditure on start-up subsidies decreases the risk of exiting self-employment specifically for the group of individuals entering self-employment from unemployment. Therefore, the availability of these incentives might be seen by policymakers as not only a route to increase entry into self-employment, but also as an adequate instrument for equalising survival chances across individuals entering self-employment from unemployment and those entering with a different starting status.     

The Unintended Consequences of Italy's Labour Laws: How Extensive Labour Regulation Distorts the Italian Economy

Simple solutions to complex problems often have unintended and undesirable consequences. An example is Italy's approach to combating unemployment. Rigid laws designed to protect the employed perversely discourage businesses from hiring and people from working. They also encourage precarious temporary employment among young people, informal work, and under‐the‐table deals that compromise worker benefits. The numbers of Italy's unemployed and of those outside the workforce are much higher than official estimates suggest. Italy's employment protection legislation – arguably the most restrictive in Europe – creates that which it seeks to prevent: the insecurity of unemployment.     

An adjusted binomial model for pricing Asian options

We propose a model for pricing both European and American Asian options based on the arithmetic average of the underlying asset prices. Our approach relies on a binomial tree describing the underlying asset evolution. At each node of the tree we associate a set of representative averages chosen among all the effective averages realized at that node. Then, we use backward recursion and linear interpolation to compute the option price.     

The Market for New Issues: Impact of Offering Price on Price Support and Underpricing

Previous studies have shown that the pattern of first day returns to initialpublic offerings is consistent with the hypotheses of underpricing and price support. We examine two different periods, 1975–1984 and 1996–2002, and find that in each case the measures of price support and underpricing are substantially affected by the initial public offerings' beginning price. During the period 1975–1984, the mean and standard deviation of returns to the price supported group are nearly always zero regardless of price, whileg the mean of the returns to the underpriced group is smile-shaped: high for low-priced and high-priced stocks but lower for stocks offered at intermediate prices. The patterns are different in the most recent data: the mean and standard deviation of both the price supported and underpriced groups are smile-shaped. For the lowest priced stocks, the measures in the later period mirror those for the 1975–1984 period, but for more expensive stocks the measures are substantially higher. The results apply to the first day returns of both firm commitment and best efforts offerings. Once price is taken into account, other than the difference in the probability of price support, the differences among offering types seem to be of secondary importance in explaining first day returns. JEL Classification: 1, G12, G24