Timothy Messer-Kruse. Banksters, Bosses, and Smart Money: A Social History of the Great Toledo Bank Crash of 1931. Columbus, Ohio: The Ohio State University Press, 2004. xii + 196 pp. ISBN 0-8142-0977-7, $44.95 (paper).

In his book, Timothy Messer-Kruse argues that the financialsector has real effects and examines the causes and effectsof the banking collapse in Toledo, Ohio, during the summer of1931. Messer-Kruse makes an important contribution with hiscomprehensive microeconomic study of a banking panic and collapse,using a social history approach. Much of the book identifiesindividuals and details their actions and relationships to Toledo’sbanks, real estate firms, corporations, and municipal, county,     

Sale before Completion of Development: Pricing and Strategy

The paper examines the risk-and-return characteristics of a popular development strategy, the presale system (or sale before completion), used in many Asian cities. We model a presale decision in a real-options framework and suggest that the use of presale is primarily for a risk-sharing purpose. That is, developers can reduce bankruptcy and marketing risks by selling (or leasing) their projects before their completion dates. Our model also indicates that, because of the presale system, there is a barrier for new developers to enter into a market, which helps explain the anecdotal observation that most real estate markets in Asian cities are oligopolistic in nature and dominated by large developers.     

Do reductions in tick sizes influence liquidity?

On 4 December 1995, the Australian Stock Exchange reduced the minimum tick size for stocks priced below $A0.50 and stocks priced above $A10. We use this natural experiment to examine the impact of tick size reductions on liquidity. The present paper reports that although lower tick sizes generally lead to increased liquidity, this result is not universal. Stocks with larger relative tick sizes experience the greatest improvement in liquidity, while stocks with small relative tick sizes and low trading volume experience reduced liquidity. There is no change in order exposure as a result of the reduced tick sizes.     

Value versus Glamour

The fragility of the CAPM has led to a resurgence of research that frequently uses trading strategies based on sorting procedures to uncover relations between firm characteristics (such as “value” or “glamour”) and equity returns. We examine the propensity of these strategies to generate statistically and economically significant profits due to our familiarity with the data. Under plausible assumptions, data snooping can account for up to 50 percent of the in‐sample relations between firm characteristics and returns uncovered using single (one‐way) sorts. The biases can be much larger if we simultaneously condition returns on two (or more) characteristics.     

The Envelope Theorem and Comparative Statics of Nash Equilibria

The Envelope Theorem for Nash equilibria shows that the strategic reaction of the other players in the game is important for determining how parameter perturbations affect a given player's indirect objective function. The fundamental comparative statics matrix of Nash equilibria for theithplayer in anN-player static game includes the equilibrium response of the otherN−1players in the game to the parameter perturbation and is symmetric positive semidefinite subject to constraint. This result is fundamental in that it holds for all sufficiently smooth Nash equilibria and is independent of any curvature or stability assumptions imposed on the game.Journal of Economic LiteratureClassification Numbers: C72, C61.     

Ethics in business and administration: An international and historical perspective

This is a study of ethical and moral behavior, or perhaps unethical behavior, in two different societies. One society, contemporary Australia and in particular the state of Western Australia, is currently undergoing an exhaustive Royal Commission into the shenanigans of a number of well-known business men and former leading politicians who seem to have been playing fast and loose with large amounts of other peoples' money. While this was initially the major focus of the paper, a secondary focus developed based on the interest shown in acquiring an historical background by a group of business policy students. The opportunity to acquire an appreciation of historical events and in particular, the development of a sense of history seems to be lacking in the curricula of modern day business students. The secondary focus of the paper therefore illustrated that malfeasance, misfeasance and other forms of malpractice in business and administration were just as common in Greco-Roman times as today. In this context, reference has been made to a selection of the writings of some of the more well-known writers of this period. The paper ends on a nonpositive note, raising the (rhetorical) question, that if, after two thousand years people are still continuing to engage in sharp business practices whenever the occasion arises is there any point in developing and offering courses in moral behavior and business ethics?     

“Following” or “attracting” the customer? Japanese Banking FDI in Europe

Using firm-level Japanese FDI data on investment into 18 European countries between 1970–2000 in all industries (banking, manufacturing, wholesale/retail distribution, and business services), this study examines if the “follow the customer” (FTC) hypothesis holds for firm-level data. The results suggest that banks do follow their customers into a foreign market, as part of a larger strategy that goes beyond the FTC theory. The firm level data show that the majority of FDI into a host country occurs after the foreign bank has established operations. Policy implications of this finding include the suggestion that host economies liberalize their financial sector early in an effort to attract banking FDI which then will attract non-banking FDI rather than the reverse.     

Alkoholabhängigkeit und Public Health — Soziale und arbeitsmedizinische Aspekte

On the basis of epidemiological estimations the number of alcohol addicts in Germany is estimated at 1.6 million, the number of patients abusing alcoholic drinks at 2.7 million. The diagnosis is often difficult due to aspersion and adulteration tendencies by the affected persons. Particularly psychosocial impairments are crucial for the diagnosis besides an increased quantity of drinking and alcohol related somatic and neurological consequential damages. Different questionnaire tests and clinical-chemical parameters such as GGT and CDT can relieve the diagnosis. Impairments of social environment and industrial world are substantial. The overall consequential damages by alcoholism are estimated at 20 billion € per annum. In this regard indirect costs of alcohol associated diseases are higher than direct costs. Alcohol addiction is often diagnosed at a rather late stage. However, at the beginning of an adequate therapy prognoses are often better than expected. Most of the withdrawal therapies are still conducted at a hospital. Abstinence rates of more than 40 % seem to be achievable. Furthermore a short survey of success rates of ambulant and stationary therapies is given.