Church‐based Credit Cooperatives in Germany

Abstract The traditional business focus of credit co‐operatives is locally oriented and business success is explained by the efficient way to induce monitoring of borrowers. Church‐based credit co‐operatives in Germany are not that locally oriented but were extraordinary successful over the last decades. First, this analysis describes the special characteristics of church‐based institutions compared to other credit co‐operatives. This part is based on a historical backward glance, an analysis of annual reports and a survey on their business policy. Second, we discuss the special characteristics of church‐based credit co‐operatives to explain the business success in a broader context and to understand the perspectives of credit co‐operative banking beyond the local orientation.     

Surety Bonds with Fair and Unfair Pricing

Surety bonds are instruments used in public and private procurement to avoid the problem of contractor bankruptcy. A surety company issuing such a bond guarantees to either finish the project itself or pay the bond to the procurement agency in case of contractor's bankruptcy. This situation is analysed under the assumption that the bond is either priced fairly, or a risk loading that is proportional to the money at risk is imposed. If the surety is priced fairly, full insurance (or even overinsurance) is optimal. If the surety is priced unfairly, more solvent contractors are more likely to win, thus the problem of abnormally low tenders is alleviated.     

Drug approval decisions: A note on stock liquidity effects

We analyze the relationship between positive stock returns, changes in trading activities, and liquidity improvements following drug approval announcements. Using a unique hand-collected data set on approval decisions in Europe, we find that stock liquidity does change. Stocks temporarily exhibit strong abnormal trading volume, lower spreads, and permanently become more liquid. Our results suggest that the initial positive wealth effect of a new drug release reflects both positive information content and liquidity improvements.     

Are wages equal across sectors of production?

The assumption that national labour markets are homogeneous across tradable and non‐tradable goods is common in multisector (open‐economy) macro models and crucial for the prominent Balassa–Samuelson hypothesis. To test it, this study introduces a novel, theory‐based method of distinguishing the tradable and non‐tradable sectors to the Balassa–Samuelson literature and employs modern empirical methods and a large and detailed macro dataset. It finds that both the internal relationship between productivity and wages in the tradable and non‐tradable sectors postulated by the Balassa–Samuelson hypothesis and its external transmission mechanism are rejected.     

COLLECTIVE BARGAINING,AWARENESS OF GENERAL EQUILIBRIUM EFFECTS,AND UNEMPLOYMENT*

We explore the significance of general equilibrium feedback effects for wage‐bargaining. We examine a two‐sector economy and show that if agents only consider labor demand effects low real wages and low unemployment are the consequences. With an intermediate view, i.e., when partial equilibrium effects within a sector are taken into account, high real wages and unemployment result. If all general equilibrium effects are perceived simultaneously, we once again obtain a situation with low wages and unemployment. The results may explain why unemployment is high in some European countries.     

Acceptance of Genetically Modified Foods with Health Benefits: A Study in Germany

A study was carried out in Germany in order to assess consumers' acceptance of genetically modified (GM) foods with health benefits (bread, yohurt and eggs). Acceptability of GM foods increases when its source does not involve animal products such as eggs. Three factors have been identified as direct antecedents of the acceptance of GM foods: respondents' attitude towards biotechnology, health consciousness, and time pressure, being the first one the most salient one. Price consciousness has an indirect positive impact (mediated by health consciousness) upon acceptance of GM products. Males were more likely to accept GM foods with health benefits.     

Farmers' Acceptance of the Organic Certification System in Germany: A Partial Least Squares Model

The institutional framework of the certification scheme is a crucial factor in the future success of the organic market. Increasing complexity and a couple of scandals indicate that current control structures might be insufficient. A better understanding of farmers' attitudes is necessary to increase acceptance and to guarantee the longer term success of the organic certification system. By means of a conceptual framework based on the technology acceptance model, an investigation was conducted into acceptance of the organic certification system in Germany. The empirical basis of the study was a survey conducted among organic farmers in Germany. Partial least squares was used as a multivariate analysis technique to estimate the parameters of the proposed causal model. The findings indicate that the majority of farmers accept the present organic certification system but are not convinced of its cost-benefit relationship.     

Government interventions in banking crises: effects of alternative schemes on bank lending and risk taking

We analyse the effects of policy measures to stop the fall in loan supply following a banking crisis. We apply a dynamic framework in which a debt overhang induces banks to curtail lending or choose a fragile capital structure. Government assistance conditional on new banking activities, like on new lending or on debt and equity issues, allow banks to influence the scale of assistance and externalise risks, implying overinvestment or excessive risk taking or both. Assistance without reference to new activities, like granting lump sum transfers or establishing bad banks, does not generate adverse incentives, but may have higher fiscal costs.