The Effectiveness of Bank Governance Reforms in the Wake of the Financial Crisis: A Stakeholder Approach

This study examines the impact of bank corporate governance reforms in the wake of the financial crisis. These reforms correspond to criticism of shareholder-focused agency-based corporate governance practices and a renewed focus on the stakeholder impact of corporate governance lapses in the financial sector. This study differs from previous studies of corporate governance in the financial sector in using performance indicators that proxy the interests of customers and the community. Drawing on data from 134 countries over an eight-year period from 2004 to 2011, we find that the post-crisis corporate governance reforms in the banking sector appear to be effective in promoting greater bank attention to non-shareholder stakeholders’ interests. This study provides a means to conceptualize measures of bank performance from a stakeholder perspective in order to test emerging ideas about governance effectiveness in the financial sector.     

A censored random coefficients model for the detection of zero willingness to pay

In this paper we address the problem of negative estimates of willingness to pay. We find that there exist a number of goods and services, especially in the fields of marketing and environmental valuation, for which only zero or positive WTP is meaningful. For the valuation of these goods an econometric model for the analysis of repeated dichotomous choice data is proposed. Our model restricts the domain of the estimates of WTP to strictly positive values, while also allowing for the detection of zero WTP. The model is tested on a simulated and a real data set.     

A threshold model for respondent heterogeneity

Continuous models of respondent heterogeneity assume the existence of a response function where variables of interest are continuously related to explanatory variables. In many situations this assumption may not be true. In this paper we propose an approach of modeling respondent heterogeneity that identifies abrupt changes in the distribution of response coefficients around a threshold specification. Our model differs from traditional threshold models by introducing the threshold effect to describe across-unit behavior as opposed to within-unit behavior. We illustrate our proposed Bayesian threshold model for survey data from a large national retail bank that examines the effects of service wait times on customer satisfaction. We find evidence of a threshold effect where long in-process wait times are associated with bank branches characterized by weak associations between service quality drivers and overall perceptions of service quality. Branches with wait times below the threshold are found to have much stronger associations.     

Frame of reference rater training issues: recall,time and behavior observation training

This study investigated three controversial issues regarding frame of reference training (FOR), a type of rater training: (1) Does it improve behavioral recall, (2) Can it be improved by incorporating behavior observation training (BOT), and (3) Can its effects persist over time? Results suggested that even though FOR training increases the number of behaviors recalled, it does not necessarily improve the quality of the recalled behaviors, but a combined FOR + BOT program does improve recall quality. Lastly, results suggested that FOR training can improve rating accuracy, even after a two‐week delay between rater training and the rating task.     

Cost Inefficiency and the Holding of Non-traditional Assets by Solvent Stock Thrifts

In contrast to greater restrictions on thrifts' non-traditional assets under FIRREA, Congress is considering new legislation forcing thrifts to convert to banks. Hence, the efficiency implications of product diversification for thrifts is an important issue. We examine the relation between thrifts' movement into non-traditional assets and the operating inefficiency of adequately capitalized stock thrifts in 1988 and 1994. We estimate inefficiency scores for individual thrifts for each year using a stochastic cost-frontier methodology. In a second step, we regress these scores against measures for movement into non-traditional assets. We find a significant fall in inefficiency with a rise in holdings of both traditional and non-traditional assets. Our results suggest that greater diversification privileges for thrifts should be beneficial to the health of the industry.     

The hierarchical terminology technique: a method to address terminology inconsistency

A review of prior research in the computer-supported cooperative work (CSCW) field found that the terminology and definitions used by researchers were inconsistent, with some terms being defined differently but then used interchangeably. Inconsistency in the use of terminology makes it difficult to determine what technology is being used in the research and where a research study fits into the research field. Authors in many fields describe the problem of inconsistent terminology use. A suitable method for identifying inconsistencies and structuring terminology for greater clarity of terminology use in a given research field was not identified. This paper presents a new method, the hierarchical terminology technique (HTT), which is a form of qualitative content analysis process that extends the idea of concept mapping. HTT was developed for this research problem to structure a hierarchy of terms to expose the relationship between the terms. This technique includes terminology identification, analysis and presentation to show the scope of the research field, and to present terminology and definitions to improve consistency. This technique could be used in other fields of study.     

Does sustainable investing reduce portfolio risk? A multilevel analysis

This study complements and extends prior research on the risk mitigation role of sustainable investing. We use a continuous measure of funds' sustainability traits, rather than a categorical approach, and assess impact on risk directly rather than by looking at fund performance in up versus down markets. We find that sustainable investing plays a significant role in mitigating total, systematic, and idiosyncratic risk of equity funds, even after controlling for other fund characteristics. Further evidence indicates that the explanation for the risk reduction role of sustainable funds largely runs through traits of the firms held in the funds.     

Contract teachers and student achievement in rural China: evidence from class fixed effects

For schooling to play an important role in the development of human capital, the system of education needs to provide quality education, which among other things requires high‐quality teachers. Facing fiscal constraints and growing enrolments, school systems in developing countries often supplement their teaching staff by hiring contract teachers. However, there is limited evidence on how the effectiveness of these teachers compares to that of civil service teachers. We use a dataset from rural primary schools in western China to estimate the causal effect of contract teachers on student achievement and find that gains in student scores on standardised examinations in mathematics and Chinese are less in classes taught by contract teachers than in classes taught by civil service teachers. The results demonstrate that China's education system needs to focus on producing high‐quality teachers to improve the quality of schooling in its rural education system. The findings imply that educators in developing countries should not only seek to hire increasingly more civil service teachers in rural schools, but they should also identify ways of improving the quality of contract teachers. If efforts to improve teaching can succeed, rural students can learn more, earn higher incomes and contribute more to the productivity of the overall economy.     

PRIVATIZATION OF WATER: EVALUATING ITS PERFORMANCE IN THE DEVELOPING WORLD

Private‐sector provision of water has been promoted in developing countries since 1990 in order to expand water service coverage to low‐income households. Decades later, the consequences of privatizing water utilities are still disputed. Some scholars have found that areas with privatized water services see positive development effects, while others contend that the private‐sector supply of a social good will always lead to its under‐provision. However, does more privatization of water provision in developing countries actually bring about more access to water? This paper hypothesizes that more private participation in water provision will not ensure more access to water at the national level. The relationship is tested using data on weighted percentages of private ownership of water utilities, and access to improved water sources from 1990 to 2015 across 62 countries. Multivariate OLS results indicate a positive relationship but with no statistical significance. 2SLS results, on the other hand, indicate a positive, small and statistically significant effect of water privatization on water access. Nonetheless, the causal mechanism behind these results must be further explored, given that the measured effect could be capturing the result of an increase in investment that is associated with private ownership of water utilities.     

How do changes in monetary policy affect bank lending? An analysis of Austrian bank data

Using a panel of Austrian bank data we show that the lending decisions of the smallest banks are more sensitive to interest rate changes, and that for all banks, sensitivity changes over time. We propose to estimate the groups of banks that display similar lending reactions by means of a group indicator which, after estimation, indicates each bank's classification. Additionally, we estimate a state indicator that indicates the periods during which the lending reaction differs from what we normally observe. Bayesian methods are used for estimation; a sensitivity analysis and a forecast evaluation confirm our model choice. Copyright © 2006 John Wiley & Sons, Ltd.