Regulation,recession, and bank lending behavior: The 1990 credit crunch

This article utilizes a pooled time-series and cross-section sample of banks to investigate the causes of the credit contraction which occurred during the 1990–1991 period. The methodology involves an econometric model which recognizes that banks' decisions regarding lending and capital are simultaneously determined. Bank lending behavior is modeled as being determined by a combination of economic conditions, loan quality problems, and capital growth. The results of the econometric tests are consistent with a multiplicity of factors contributing to the reduction in lending. The evidence suggests that the credit contraction of 1990–1991 cannot be explained solely as a result of recession and low capital levels. Changes in the supervisory climate and in bank capital regulation, perhaps coupled with independent changes in bankers' assessments of the risk climate, were likely responsible for a substantial part of the credit contraction.     

The effects of MiFID II on sell-side analysts,buy-side analysts,and firms

Review of Accounting Studies - This paper provides early but broad empirical evidence on MiFID II, which requires investment firms to unbundle investment research from other costs they charge to...     

On the asymptotic normality of Fourier flexible form estimates

Rates of increase in the number of parameters of a Fourier factor demand system that imply asymptotically normal elasticity estimates are characterized. This is the multivariate analog of work by Andrews (1991). Our proof strategy is new and consists of relating the minimum eigenvalue of the sample sum of squares and cross-products matrix to the minimum eigenvalue of the population matrix via a uniform strong law with rate that is established using results from the empirical processes literature. In its customary form, the minimum eigenvalue of the Fourier sum of squares and cross-products matrix, considered as a function of the number of parameters, decreases faster than any polynomial. The consequence is that the rate at which parameters may increase is slower than any fractional power of the sample size. In this case, we get the same rate as Andrews. When our results are applied to multivariate regressions with a minimum eigenvalue that is bounded or declines at a polynomial rate, the rate on the parameters is a fractional power of the sample size. In this case, our method of proof gives faster rates than Andrews. Andrews' results cover the heteroskedastic case, ours do not.     

The generality/specificity issue in consumer innovativeness research

The purpose of the present study was to explore the role of personality in shaping consumer innovativeness by testing a model of the hierarchical relationships between a global (broad or abstract) personality trait, its domain-specific manifestation in a consumer context, and overt consumer behavior. A survey of 465 adult consumers measured global innovativeness, domain-specific innovativeness for two product categories (clothing and electronics) and self-reported purchase of new clothing and electronic items. Three hypotheses were tested. First, global innovativeness is more highly correlated with domain-specific innovativeness than it is with the purchase of new items. Second, domain-specific innovativeness is more highly correlated with the purchase of new items than is global innovativeness. Finally, the association between global innovativeness and new product purchase is mediated by domain-specific innovativeness. All three hypotheses were supported for both product categories.     

Catching up: The role of demand, supply and regulated price effects on the real exchange rates of four accession countries

The main aim of this paper is to examine the exchange rate behaviour of a group of four transitional, EU accession countries, with a view to making policy recommendations regarding their full accession to the European Monetary Union. We employ a dynamic OLS panel estimator to investigate the relative importance of demand and supply influences on the exchange rates of these countries. Our analysis shows that both supply‐ and demand‐side effects are important for the accession countries, although their overall effect on inflation differentials and competitiveness seems to be small. An additional focus of the paper is the examination of the role that administrated, or regulated, prices and the productivity of the distribution sector play in the real exchange rate dynamics. Using a unique database we show that administrative prices have been a powerful force behind price and real exchange developments for our group of accession countries. The distribution sector is shown to have an independent effect on the internal price ratio over and above that generated by the Balassa–Samuelson effect.     

Competitive trade models and real world features

Competitive small-dimension international trade models perform well in comparing free (or restrictive) trade with autarky, especially in emphasizing that consumption patterns can differ from production patterns and that production becomes highly concentrated while consumption patterns are expanded. Variations on these small-dimensional models can usefully show how with trade production patterns may nonetheless be more diverse and a country’s labor force become more heterogeneous in its skills. The paper illustrates how the Middle Products framework can be reinterpreted to support variety in production and in labor skills.      

Good News and Bad News: Search from Unknown Wage Offer Distributions

The largest market in national economies is the labor market. Labor market contracting is characterized by job search, often from unknown wage offer distributions. This paper reports experimental tests of finite horizon models of job search in which the wage offer distribution is unknown. Theoretically-optimal search from an unknown wage offer distribution can have the seemingly paradoxical property that some offers will be accepted that are lower than other offers that will be rejected in the same period of the search horizon. Thus the reservation wage property (or lowest acceptable wage path) may not exist. This can occur because an offer that is a priori relatively high (good news) can imply that it is highly probable that search is from a favorable distribution, and such an offer can look unattractive when it is an a posteriori relatively low offer from a favorable distribution (bad news). This paper reports results from experimental treatments for search from unknown distributions in which the reservation wage property does exist and treatments in which it does not exist. We find that the consistency of search behavior with search theory reported in earlier papers is robust to the presence or absence of the reservation wage property and to whether the draws come from known or unknown distributions.