A DEA model for resource allocation

This paper concerns inverse DEA. The aim is to estimate input/output levels of a given Decision Making Unit (DMU) when some or all of its input/output levels are changed, under preserving the efficiency index. We show that in the case of estimating increased required input vector when the output vector is increased, the current method which uses weakly efficient solution of the relevant multiple objective optimization problem may fail. We propose some sufficient conditions for input estimation.     

Adoption of digital banking channels in an emerging economy: exploring the role of in-branch efforts

The aim of this qualitative study is to analyse the role of in-branch efforts of banks on migrating customers from branch banking to digital banking in India. In-depth semi-structured interviews were conducted with bank executives representing senior management from public and private sector banks in India. Qualitative content analysis technique was used to analyse the data. Varieties of responses received during interviews were clubbed into four main themes based on data reduction, display, and conclusion-drawing processes. In-branch communication with customers, digital transformation of the branch, customer-centric initiatives, and redefined role of branch staff hold the potential to bridge the customers’ migration to digital banking. The paper suggests that the key identified factor in improving digital banking acceptance in India is the requirement of integrated cultural and organisational changes at the bank’s level to gain the customers’ confidence and trust in digital banking.

     

Monetary and fiscal policy interactions: Evidence from emerging European economies

This paper examines the interactions between fiscal and monetary policy for some former transition, emerging European economies over the 1995Q1–2010Q4 period by using a Markov regime-switching model. We consider the monetary policy rule proposed by Taylor (1993) and the fiscal policy rule suggested by Davig and Leeper (2007) in accounting for monetary and fiscal policy interactions. Empirical results suggest that monetary and fiscal policy rules exhibit switching properties between active and passive regimes and all countries followed both active and passive monetary policies. As for fiscal policy, the Czech Republic, Estonia, Hungary, and Slovenia seem to have alternated between active and passive fiscal regimes while fiscal policies of Poland and the Slovak Republic can be characterized by a single fiscal regime. Although the policy mix and the interactions between monetary and fiscal policy point a diverse picture in our sample countries, the monetary policy seems to be passive in all countries after 2000. This finding is consistent with the constraints imposed by European Union enlargement on monetary policy.     

Countercyclical pricing: A consumer heterogeneity explanation

We show that a seasonal good could be priced countercyclically due to the heterogeneous seasonal shifts in consumer valuations. We provide empirical support for our explanation based on two product categories (canned soup and tuna) studied in the literature.     

Clustering as an organizational response to capital market inefficiency: evidence from microenterprises in Ethiopia

Absence of a well-developed capital market has been listed as a key obstacle to industrialization in developing countries in the development literature. In this paper, we show that industrial clusters, through specialization and division of labor, can ease the financial constraints of microenterprises even in the absence of a well-functioning capital market. By using data from more than 17,000 microenterprises in four sectors and four regions of Ethiopia, we find that clustering lowers capital entry barrier by reducing the initial investment required to start a business. This effect is found to be significantly larger for microenterprises investing in districts with high capital market inefficiency, indicating the importance of clustering as an organizational response to a credit constrained environment. The findings highlight the importance of cluster-based industrial activities as an alternative method of propagating industrialization when local conditions do not allow easy access to credit.     

Are maximizers blind to the future? When today’s best does not make for a better tomorrow

A number of studies have demonstrated that a maximizer’s tendency to settle for only the best choice option leads them to discard the past and feel dissatisfied in the present. The current study, however, investigates whether maximizers’ quests for perfection blinds them toward the future. A study of 522 respondents drawn from a probabilistic sample of the US population examines a series of hypotheses related to how a maximizer views the future. Consistent with the resource slack theory (i.e., the overestimation of the amount of time that will be available in the future), maximization tendencies diminish the consumer’s ability to look ahead to the future, both directly and indirectly, through the intervening roles of both regret and polychronicity (i.e., multitasking). Maximizers do not estimate future task demand accurately as they associate strong feelings of regret with their previous choices and dismiss them as poor decisions. Additionally, low polychronicity hinders their capacity to set aside sufficient time resources to be devoted to future tasks when engrossed in a current task. Implications for managers and researchers are discussed before concluding with further research avenues and limitations.     

Cyclicality of liquidity creation: Nonlinear evidence from US bank holding companies

Using a panel smooth transition regression framework on a new proxy of the business cycle (BC) index and quarterly data of US bank holding companies from 1993Q1 to 2020Q1, our results provide empirical support for the theory that the BC has a nonlinear effect on liquidity creation. We find a positive and highly significant nonlinear effect of the BC on liquidity creation, which not only supports the pro-cyclicality of liquidity creation but also improves the liquidity creation estimation compared to previous studies. The results are robust to different proxies of the BC and model specifications. We also document that US bank holding companies create liquidity more during the expansion phase (normal times) than during the recession phase (crisis times) of the BC, suggesting an asymmetrical effect of BC changes on liquidity creation. Our findings have important implications for financial market participants by suggesting that banks should keep alternative sources of funding on hand during the BC recession phase. Insights from our study also provide policy implications for central banks and prudent supervisors to consider when incentivizing banks, for instance, by lowering regulatory requirements, adjusting the policy rate, or implementing any other quantitative easing policy during the BC recession phase to keep the financial system efficient.     

Economic policy uncertainty and fund flow performance sensitivity: Evidence from New Zealand

Utilizing a large sample of actively managed equity funds and a recently developed EPU index for New Zealand, we show that fund flow performance sensitivity decreases with policy uncertainty. The role of policy uncertainty as a determinant of fund flow performance sensitivity is found to be stronger, particularly for funds with global focus, large sized funds, high momentum funds and those with high idiosyncratic volatility and low downside risk. The findings support the argument that high policy uncertainty dampens investors' ability to process information that allows them to distinguish fund manager skill from luck. The results remain strong after accounting for various macroeconomic factors.     

Navigating wasta in business practices in Lebanon

Faced with severe social, political, and economic challenges, Lebanon is described as a weak state. Argued to be a key factor weakening the formal institutions there, is the prevalent practice of wasta. This article seeks to answer two questions: (1) Why is wasta prevalent in a business environment characterised by weak formal institutions, such as Lebanon? (2) How can managers navigate the use of wasta in the Lebanese business context where it prevails, avoiding its negative outcomes while utilizing its positive outcomes? Fourteen semi-structured interviews were conducted of managers from the Lebanese industrial sector. The findings highlight that wasta is used due to the networked nature of Lebanese society, economic hardship, widespread corruption and to maintain power. It was found that wasta could be beneficial in securing jobs, removing red tape, and gaining employment for humanitarian reasons. Finally, the negative outcomes of using wasta were found to include the employment of unqualified individuals, a reduction of organizations' productivity and a further weakening of formal institutions.