Should Access to Credit be a Right?

Discussion on financial ethics increasingly includes the problem of exclusion of the poorer segments of society from the financial system and access to credit. This paper explores the ethical dimensions surrounding the concept of a human right to credit. If access to credit is directly instrumental to economic development, poverty reduction and the improved welfare of all citizens, then one can proclaim, as Nobel Prize Laureate M. Yunus has done, that it is a moral necessity to establish credit as a right. Arguments both supporting and opposing the concept of a right to credit are presented. While there may be general agreement that access to financial services may provide a pathway out of poverty, granting a universal right could induce perverse effects such as overindebtedness. Bearing in mind the ultimate goal of proponents of this right as well as the potential harmful consequences, this paper offers a new perspective on the question of access to credit based on a goal-right system.      

On decompositions of some random variables

The aim of this paper is to present several stochastic analogs of classical formulas for the gamma function. The obtained results provide representation of some random variables as finite or infinite products of independent random variables. Examples include generalized gamma, normal, beta and other distributions.     

Business Integrity in Transitional Economies: Central & Eastern Europe

What are the ethical concerns among the growing populations of business people in Central & Eastern Europe, and how might they be dealt with practically in the course of business life? David Murray has been a management consultant since 1979 working primarily with the Hay Group in the area of strategic organisational change. Since founding Maine Consulting Services in 1991 he spends most of his time in the field of business and professional ethics, also holding a Visiting Fellowship at the University of Central Lancashire. He is chairman of the Professional & Technical Board at the (British) Institute of Quality Assurance and a coordinating editor of the quarterly Organisations & People. Marek Kucia is a social researcher operating his own research agency (which organised the Polish part of this exercise) and an academic teaching sociology, and conducting and co-ordinating Central European Studies at the Jagiellonian University, Krakow. He studied political science, sociology and philosophy at Krakow and studied for his PhD at Oxford. He has also worked for Gallup, London, in opinion and market research. This survey report is based on presentations made in April 1994 to the EBEN Research Centres Conference in Prague, and in June 1994 to the conference on “Ethics in Transition” organised in Gödöllö, Hungary, by the Democracy after Communism Foundation, Budapest. The authors wish to acknowledge the major contribution to this work of Mr Juraj Kusnierik of the Central European Foundation, SEN, Bratislava, who co-ordinated the survey exercise. The project was sponsored by The Ethics Development Initiative, CARE, London; the Central European Foundation, SEN, Bratislava, Slovakia; SIS Ltd., Bratislava, Slovakia; and Maine Consulting Services, 16 Acrefield, Blackburn, Lancashire, England BB2 7BJ, to which all correspondence connected with this report should be addressed.     

Business Environment Index for Developing Countries: The Case of Latin America

This article develops a new business environment index with indicators that are appropriate, broadly available for developing regions, and, most importantly, are not double-edged. We used the index to analyze the business environment in Latin America, and it suggests the main role of basic economic principles, institutional economics approach and historical context. We propose the identification of an interdisciplinary variable as well as interpretation of the index, based on 10 factors divided into three dimensions (economic, institutional, and social). The novelty is in the consideration of past values; it is neither based on popularity votes, and nor does it favor large economies.     

中国与捷克的贸易联系:部门分析

捷克与中国的贸易存在巨额的赤字。撇开捷克贸易赤字的出口一方,我们来看一下进口。捷克是中国对欧盟进口的门户吗?中国的进口是否被用到了进一步加工领域?文章分析了影响贸易赤字的各个因素,比较了捷克与欧盟15国及波兰、匈牙利和斯洛伐克从中国的进口情况。分析表明,捷克从中国的进口表现出与其他国家非常不同的发展趋势,不仅进口量巨大(占GDP的比重),而且在投资品和进一步加工产品方面有快速的发展。对格鲁伯—劳埃德产业内贸易指数的计算表明,在所有测算国家中中捷贸易的数值最低。该研究验证了一个假设:捷克是中国进入和拓展欧盟市场的一个立足点。     

Arbitrage pricing of defaultable game options with applications to convertible bonds

This paper is the first in a series that we devote to studying the problems of valuation and hedging of defaultable game options in general, and convertible corporate bonds in particular. Here, we present mathematical foundations for our overall study. Specifically, we provide several results characterizing the arbitrage price of a defaultable game option in terms of relevant Dynkin games. In addition, we provide important results regarding price decomposition of defaultable options. These general results are then specified to the case of convertible bonds, yielding in particular a decomposition of convertible bonds in an optional and a bond component.     

Hayek’s monetary theory and policy: A note on alleged inconsistency

Challenging the dominant view, we claim that Hayek’s monetary views did not significantly change over his lifetime. The prevalent perception of early Hayek as a money stream stabilizer and late Hayek as a price level stabilizer is attributable to an unjustified normative interpretation of Hayek’s positive analysis. We argue that in his contributions to monetary theory, Hayek took the goals of monetary policy as exogenously given and analysed the efficiency of different means of achieving them. Hayek’s allegedly inconsistent transformation from a critic to an advocate of price level stabilization is explained by a change of issues under his focus, rather than by a change in his positive views. We also claim that Hayek was always aware that every practical monetary policy involves difficult trade-offs and that he was therefore reluctant to impose his own value judgments on what people should strive for.     

Agent based model of a simple economy

This article proposes a model of a simple economy based on a set of agent-based modeling principles. The model is based on the ??trust game?? formulated by Berg et?al. (Games Econ Behav 10:122?C142, 1995), and anticipates a random matching of partners taking in to account adaptive agent behavior. Simulation in the NetLogo programming environment, using profile distributions obtained from empirical studies, has shown the most successful agents to posses low parameters of trust in the role of Sender and high parameters of trustworthiness in the role of Receiver.     

My journey through finance and stochastics

This year, Finance and Stochastics celebrates its 25th anniversary. The journal provides a platform for the community of researchers on which they can publish their ideas and results.

Publication is an outcome of research which may be conducted for a number of years before it reaches the required maturity. I find this research process to be very important. Unfortunately, it is almost impossible to decode it from reading the research publications. This special issue of Finance and Stochastics gives me an opportunity to focus on it. I am grateful I can present my personal memory of this process. Understanding why questions are asked and how the answers are found is critical.