Estimating the impact of exchange rate changes on the asset growth of multinational banks

The article develops an empirical model to explain how changes in exchange rates have affected the growth of total assets of a sample of the world's largest banks over the 17-year period of 1972–1989. The model was estimated over a period in which U.S. banks' assets grew less rapidly than the assets of large banks headquartered in other industrial countries. The model provides an estimate of the banks' allocation between home currency and foreign currency assets, which allows a calculation of the estimated impact of exchange rate changes on bank asset growth. The results of the model suggest that no single economic variable explains the faster growth of non-U.S. banks. Changes in real exchange rates were estimated to have had a significant but not overwhelming impact on bank asset growth through their impact on the dollar value of banks' home-currency assets. Other factors, such as faster home-country economic growth, an expanding trade and foreign investment sector, and the ability of large banks to retain their share of domestic intermediation, were also important factors in determining relative rates of bank asset growth.The views expressed in this article are those of the authors and should not be interpreted as representing the views of the Department of State, the Board of Governors of the Federal Reserve System, or its staff.     

Ethnic influences on service expectations: Results of pilot study

This paper presents the first stage of the results of a study on the ethnic influence on service expectations. The study explores the difference in importance of various service expectations between service customers of different ethnic backgrounds, in particular of Canadian and Chinese customers. Through a variety of statistical analyses, significant variables influencing service expectations were identified. The results of this comparative analysis indicate that there is a difference in customer expectations based on ethnicity. Further, service firms can capitalize on these differences to enhance their service offerings and increase customer satisfaction.     

Toward an ontology‐driven blockchain design for supply‐chain provenance

An interesting research problem in our age of Big Data is that of determining provenance. Granular evaluation of provenance of physical goods (e.g., tracking ingredients of a pharmaceutical or demonstrating authenticity of luxury goods) has often not been possible with today's items that are produced and transported in complex, interorganizational, often internationally spanning supply chains. Recent adoptions of the Internet of Things and blockchain technologies give promise at better supply‐chain provenance. We are particularly interested in the blockchain, as many favored use cases of blockchain are for provenance tracking. We are also interested in applying ontologies, as there has been some work done on knowledge provenance, traceability, and food provenance using ontologies. In this paper, we make a case for why ontologies can contribute to blockchain design. To support this case, we analyze a traceability ontology and translate some of its representations to smart contracts that execute a provenance trace and enforce traceability constraints on the Ethereum blockchain platform.     

Pricing and Hedging of Discrete Dynamic Guaranteed Funds

We derive a risk‐neutral pricing model for discrete dynamic guaranteed funds with geometric Gaussian underlying security price process. We propose a dynamic hedging strategy by adding a gamma factor to the conventional delta. Simulation results demonstrate that, when hedging discretely, the risk‐neutral gamma‐adjusted‐delta strategy outperforms the dynamic delta hedging strategy by reducing the expected hedging error, lowering the hedging error variability, and improving the self‐financing possibility. The discrete dynamic delta‐only hedging not only causes potential overcharge to clients but also could be costly to the issuers. We show that a naive application of continuous‐time hedging formula to a discrete‐time hedging setting tends to worsen these possibilities.     

A core-theoretic solution for the design of cooperative agreements on transfrontier pollution

For a simple economic model of transfrontier pollution, widely used in theoretical studies of international treaties bearing on joint abatement, we offer in this paper a scheme for sharing national abatement costs through international financial transfers that is inspired by a classical solution concept from the theory of cooperative games—namely, the core of a game. The scheme has the following properties: total damage and abatement costs in all countries are minimized (optimality property), and no coalition or subset of countries can achieve lower total costs for its members by taking another course of action in terms of emissions or transfers, under some reasonable assumption about the reactions of those not in the coalition (core property). In the concluding section economic interpretations of the scheme are proposed, including its connection with the free-riding problem.     

Intangible Assets and Firm Asset Risk Taking: An Analysis of Property and Liability Insurance Firms

Intangible assets facilitate insurers' capacity to retain existing business and attract new clients. In this study we analyze how the incentives to protect intangible assets affect asset risk-taking behavior of property and liability insurers. The result supports the view that insurers' incentives to protect their intangible assets lead to an inverse relation between intangible assets and asset risk. Consistent with the view that highly levered firms may go for broke, asset risk of highly levered insurers is less elastic to intangible assets than that of lower-levered insurers. An additional notable finding of our article is that tangible factors like firm size and capitalization increase insurers' appetites for asset risk taking.     

Challenges of green consumption in China: a household energy use perspective

To encourage economic progress, China's government has been pushing domestic consumption as a substitute for its waning growth in investment and exports. It has also been promoting greener policies for growth, of which green consumerism is a prime component. By examining the economy through the lens of household energy consumption, this paper lays out the challenges the nation must overcome through green consumption. We explore the trends in household energy use and decompose energy used indirectly by households into six factors: changes in total population, urbanization rate, energy efficiency, interindustry input mix, household consumption preferences, and per capita household consumption level. Doing so yields insights into how progress in industrial technology, household income, urbanization, and lifestyles has affected energy use in the production of goods and services used by households. It also offers policy suggestions on how China might guide lifestyle changes to effect green consumption.     

Prospects for the Euro: Why has it been so weak?

In this article, Stephen Hall and Brian Henry consider the reasons for the Euro's weakness since its introduction and ask what are the likely prospects for a recovery to near-fundamental levels over the medium term. They conclude that the major factor leading to the currency's depreciation since 1999 has been a rise in the risk premium surrounding the Euro. A successful launch of Euro notes and coins may help to eliminate this premium.     

Historical Materialism and Agrarian History

Theory as History: Essays on Modes of Production and Exploitation , by Jairus Banaji. Leiden and Boston: Brill, 2010 . Historical Materialism Book Series Volume 25 . Pp. xix+406. €101 (hb). ISBN 978‐90‐04‐18368‐1 The collection provides an opportunity to assess Jairus Banaji's original and provocative contributions over more than three decades. This review tries to chart a path across the range of the essays as a whole, marked by three themes and their connections and possible disconnections: what constitutes modes of production; modes of production before capitalism and their histories; and characterizing and periodizing capitalism. Banaji's emphatic arguments for long histories/trajectories of commodity production, exchange and accumulation across different times and places, especially in estate agriculture and the circuits of merchant capital, traverse these three themes.