Analysis and design of microfinance services: A case of ROSCA

Rotating savings and credit association (ROSCA) is a well-known microfinance association widely used in many countries around the world with long histories. By considering extra profits that such a system can provide when compared to banking transactions, we develop optimization problems to achieve an optimal design of a ROSCA. We find that ROSCAs might attract investors when deposit and loan rates from formal banking systems are not favorable. Furthermore, optimal rates and optimal orders to maximize system outputs are reported.     

What If Immigrants Had Not Migrated?

A bstract .   Despite strong theoretical arguments and models about international migration, very few empirical studies rigorously test these arguments and models. The purpose of the present study is to analyze determinants and consequences for international migration, focusing particularly on the returns to post-hoc international migration. The present study compares residential well-being of Korean international migrants in the United States with that of their hypothetical well-being if they had not migrated. Our suggested models of the selectivity corrected returns to various characteristics for immigrants and nonimmigrants enable us to estimate the "opportunity well-being" of individuals and households; that is, the well-being of immigrants-had-they-stayed and of nonimmigrants-if-they-had-immigrated. The data for our analyses are drawn from the 1990 Korea Census Data and the Public Use Microdata Samples (PUMS) of the 1990 U.S. Census. In either case of migrants-had-they-stayed or of nonimmigrants-had-they-migrated, international migration to the United States has a significant and positive effect on the probability of homeownership, especially for women. The results show that the predicted probability of homeownership attainment increases as a result of migration by 15 percent to 16 percent for women and by 8 percent for men. The study concludes that migrating to the United States offers better opportunities for homeownership than staying in Korea does, particularly for women.     

The cross‐Euler equation approach to intertemporal substitution in import demand

This paper addresses the empirical dilemma in identifying and estimating the parameters governing the intertemporal elasticity of substitution (IES) for import demand. We propose a new concept, the cross‐Euler equation, for overcoming this empirical dilemma. IES parameters are estimated by exploiting the cointegrating restriction implied by the cross‐Euler equation. Further, by comparing the IES estimates from the cross‐Euler equation to those from the standard Euler equation, we test the hypothesis whether import demand is affected by nuisance factors. Using the US data, we found imported goods consumption to be robust against nuisance factors, but not for domestic goods. Copyright © 2005 John Wiley & Sons, Ltd.     

Retail market structure and the threat by the manufacturer to sell goods directly to the consumer

When a manufacturer and its retailers and consumers are spatially separated, the retailers’ market size may be limited by the manufacturer who provides consumers with an option to purchase goods directly from them. The manufacturer uses this tactic to increase profit when a few retailers dominate the market. The mill price of a manufacturer, that is, the price of the good at delivery from a manufacturer’s factory, is critical under these circumstances.If the manufacturer charges a franchise fee, thus absorbing the retailer’s profit, this fee is a function of the mill price. Mill price policy can be used to maximize profit on the sale of goods and collection of the franchise fee. The resulting retail market structure becomes preferable for the manufacturer and consumers since the manufacturer’s profit is larger, as is the quantity purchased, compared with a competitive equilibrium in which every firm entering the market area is assumed to move its location instantly without cost.     

Underwriter syndication and corporate governance

The main purpose of this paper is to examine underwriters’ response to issuers’ ineffective corporate governance. Given the growing importance of corporate governance for the success of equity offerings, we examine this response using a sample of seasoned equity offerings (SEOs). Previous studies suggest various rationales behind underwriter syndication, such as risk sharing, market-making, information production, certification, and monitoring. We offer an information-asymmetry-reduction hypothesis for the persistence of underwriter syndication. We argue that less effective corporate governance decreases information credibility, which, in turn, increases information asymmetry, leading underwriters to increase syndicate size to mitigate subsequent agency problems. Consistent with this prediction, we find that the size of the underwriter syndication is inversely related to proxies that measure the effectiveness of corporate governance. Results remain robust even after controlling for other confounding factors.     

Earnings disaggregation and analysts＇ forecasts

Accounting concepts dictate that separately disclosed components should contain separate useful information. This paper examines the relations between income statement components and analysts＇ earnings forecasts and forecast errors. Regressions explaining earnings forecasts using earnings components provide a better fit than regression using just aggregate income to explain forecasts. We interpret this as consistent with the hypothesis that analysts use incremental information in components not available in aggregate income. However, additional tests based on predictability of forecast errors indicate that analysts do not incorporate all information available in components into earnings forecasts. In addition, this inefficiency appears to increase at longer forecast horizons.