The Industrial Organization of Financial Markets in Thailand

The purpose of this paper is to investigate the industrial organizational features of the financial markets in Thailand which may play an important role in promoting the recent high economic growth. Specifically, we examine whether or not the market-structure-performance hypothesis is valid by estimating profit and cost functions. The main results are as follows:
1) market concentration in Thailand is higher than in Japan;
2) expense rate of Thai commercial banks is considerably higher than Japanese banks;
3) economies of scale are not found;
4) the more concentrated the market is, the larger are the profits and costs of the commercial banks.     

An Asymptotic Expansion Approach to Currency Options with a Market Model of Interest Rates under Stochastic Volatility Processes of Spot Exchange Rates

This paper proposes an asymptotic expansion scheme of currency options with a libor market model of interest rates and stochastic volatility models of spot exchange rates. In particular, we derive closed-form approximation formulas for the density functions of the underlying assets and for pricing currency options based on a third order asymptotic expansion scheme; we do not model a foreign exchange rate’s variance such as in Heston [(1993) The Review of Financial studies, 6, 327–343], but its volatility that follows a general time-inhomogeneous Markovian process. Further, the correlations among all the factors such as domestic and foreign interest rates, a spot foreign exchange rate and its volatility, are allowed. Finally, numerical examples are provided and the pricing formula are applied to the calibration of volatility surfaces in the JPY/USD option market.     

Identifying and bridging networks in regional clusters

Networks within an organization and also among organizations are expected to work as conduits of resources and knowledge for innovation. Previous papers have shown that dense networks are closely related with innovation performance. Tight relationships in a close knit group foment trust among actors in the network and therefore promote collaborations, and diverse connections with the others can open an opportunity for breakthrough. In this paper, we quantitatively evaluate the network structure of an industrial cluster and compare its results with that of a field study, and found that firms in the cluster do not regard it as dense, which means that there are opportunities even in the densest network. This is because it is not so easy to look for business partners beyond a company's current partnerships while tight communication exists among firms having partnerships. Therefore, we propose a system of finding a plausible business partner to span the current boundary and to support the networking.     

The influence of the CEO’s business education on the performance of hybrid organizations: the case of the global microfinance industry

Microfinance institutions (MFIs) are typical examples of hybrid organisations, meaning organisations pursuing both a financial and social logic. This study examines the question of whether financial and social performance improves when an MFI’s chief executive officer (CEO) has a business education. We apply the random effects instrumental variable regression method to examine the influence of the CEO’s business education on the MFI’s financial and social performance. Our panel dataset that includes 353 MFIs from across the globe indicates that ‘only’ 55% of the MFIs have a CEO with a business education. The empirical results indicate that MFIs with CEOs who have a business education perform significantly better, financially and socially, than MFIs managed by CEOs with other types of educational backgrounds. The findings suggest that CEOs with a business education seem better at managing the much-debated tradeoff between providing small loans and producing healthy financial results.     

Tax clientele effects of dividends under intertemporal consumption choices

Corporate investors putatively seek high dividends because marginal tax rates on dividends are lower than those on capital gains. However, a lower tax “rate” does not necessarily mean that a higher dividend is desirable. Taking the intertemporal consumption choices given, corporate investors are expected to prefer “time-preference-fitted dividends” if tax rates remain constant over time; otherwise they confront a larger “amount” of tax obligation. If dividend shortfalls exist, they must realize capital gains and thereby suffer unfavorable tax treatment, whereas excessive payments cause intertemporal double taxation on reinvested dividends. Tax-saving problems should be linked with intertemporal consumption choices.     

Task Shifts vs. Termination as Devices for Eliciting Optimal Effort Supply

This paper contrasts assignments to punitive tasks and terminations as alternative incentive devices. The basic question we ask here is: does the threat of assigning employees to a punitive task allow one to attain higher effort levels than termination threats? The answer critically depends on whether employers are able or not to commit themselves not to fire. We show that in the no-commitment case the only relevant incentive device is termination threats. In contrast, when employers commit themselves not to fire, by threatening punitive task reassignments there obtain effort levels that are not implementable by termination. The implementation results are then applied to the study of incentive problems arising when investment infirm-specific human capital is unverifiable.