The Role of Credit in the 2007–09 Great Recession

This paper examines the financial crisis of 2007/9 and the downturn in the U.S. We argue that effective demand over the 2001?C2006 expansion was maintained by credit. The role of credit in a Vector Error Correction Model and Granger-causality between aggregate spending, credit, disposable income, and profits are examined. We show that credit itself is determined by factors outside the circular flow of income. The results raise new hypotheses about the crucial relationships in macroeconomics that sustain aggregate spending. We then compute the generalized impulse responses in the VECM to demonstrate the severity of the downturn and show that legislative changes that dismantled the restrictions placed on the financial sector and the consequent structural changes after 1980 enabled the growth of new debt instruments and credit. The overexpansion of credit when profits and house prices were declining in 2005/06 and informational asymmetries on the quality of credit and its sudden withdrawal in 2007 paralyzed the economy and led to the Great Recession.     

Group Decision Support Using Fuzzy Cognitive Maps for Causal Reasoning

Cognitive maps have been used for analysing and aiding decision-making by investigating causal links among relevant domain concepts. A fuzzy cognitive map (FCM) is an extension of a cognitive map with the additional capability of representing feedback through weighted causal links. FCMs can be used as tools for both static as well as dynamic analysis of scenarios evolving with time. An FCM represents an expert's domain knowledge in a form that lends itself to relatively easy integration into a collective knowledge base for a group involved in a decision process. The resulting group FCM has the potential to serve as a useful tool in a group decision support environment. An appropriate methodology for the development and analysis of group FCMs is required. A framework for such a methodology consisting of the development and application phases is presented.     

Determinants of Demand for Delivery Services in Sudan: An Empirical Investigation with Reference to Khartoum State, 2004*

Abstract: Using multinomial logistic methods, we examined the determinants of the delivery care seeking behavior of women in Khartoum State of Sudan, as well as the impact of changes in the attributes of public delivery services on the market shares of delivery services. Time distance and transportation cost have significant negative effects, while the random ‘quality’ coefficient is positive but not significantly different from zero. Further, the likelihood of choosing home over public delivery services increases with order of birth. The positive effects of women's education and household income are most important for those who prefer private over home delivery whereas the use of modern antenatal services is decisive in choosing modern over home delivery. Also, shifts in demand toward public delivery services resulting from improvements in quality and qualifications of medical staff might be undermined by the reduction in demand emanating from a rise in the order of delivery, time distance and transportation cost to public delivery institutions. The income effects are more pronounced, particularly for the share of private delivery services. Educated women tend to shift from home to modern delivery services.     

Cournot, Bertrand, and game theory: A further note

This note synthesizes the discussion on the role of Cournot and Bertrand in the analysis of duopoly by drawing on the history of the debate. We conclude that while Bertrand presented a critique of the mathematical economics of Cournot and stimulated the analysis of strategic choice in game theory, he did not present a duopoly model with price as a strategic variable, as opposed to Cournot's model with quantity. In fact, Cournot has both types of models. We show that Irving Fisher contributed to the myth about Bertrand's duopoly theory.     

Libéralisation financière,développement financier et croissance économique: Nouvelle évidence empirique

Résumé: La relation entre le développement financier et la croissance économique a suscité beaucoup d’attention ces dernières années dans la littérature économique. Dans ce papier, nous avons présenté, en premier lieu, l’effet du développement bancaire sur la croissance économique à travers une validation empirique en données de panel d’un modèle à effets aléatoires de 52 pays de 1980 à 2005, et en second lieu, nous avons essayé d’explorer les liens qui peuvent exister entre le développement financier au sens large (bancaire et boursier) et la croissance économique à travers une analyse en coupe transversale pour 42 pays durant la période 1988–2002. Les principaux résultats retenus de ce travail montrent que le niveau du développement financier au sens large peut être un facteur important pour la croissance économique. Toutefois, force est de signaler que cette contribution est conditionnée par la réunion de certaines conditions.     

Alibaba: Entrepreneurial growth and global expansion in B2B/B2C markets

The purpose of this case-based research is to analyze and discuss Alibaba Group (hereafter Alibaba) and its entrepreneurial growth and global expansion in B2B/B2C markets. The paper uses company and industry-specific data and surveys to analyze a fast growing Chinese B2B/B2C firm and its internationalization and expansion in global markets. Findings of the work reveal that in a short time, Alibaba has become a major entrepreneurial icon and global player and continues to grow worldwide because of its well-planned business initiatives and B2B/B2C-based business models. The paper also provides implications in the area of international entrepreneurship and its related areas. International entrepreneurs need to learn from Alibaba’s fast growing business model and dynamic growth because of its competitive platforms and Web-based strategies which helped the company to target small and medium-sized enterprises (SMEs) in global markets. Within the areas of international entrepreneurship and international business, the paper also provides discussion which deals with the changing e-commerce industry and its future growth and developments.     

Effects of communication and financial concerns on banking attitude-behaviour relations

Despite extensive discussion of the concept of Islamic banking, which is based on the fundamental doctrines of Islamic law (Shariah) and Islamic economics (prohibition of interest and profit-loss sharing), few studies have explored the factors that potentially affect behaviour intentions among customers. This study investigates direct and moderating effects of communication and financial factors on customer attitudes and behavioural intentions towards Islamic banking. Data were collected from the customers of Islamic banks and the Islamic banking divisions of conventional banks in Malaysia using online surveys. The hypotheses were tested using hierarchical regression analysis. The results suggest that relationship marketing, informative advertising, perceived benefits, and profit-loss sharing are important determinants of behavioural intentions among both Muslim and non-Muslim customer groups. This study also found moderating effects for most of the conceptualized moderating variables, particularly attitude interactions with informative advertising, ease of online banking, and the principle of profit-loss sharing. There are both notable similarities and differences in the results for the two customer groups. The findings imply that different strategies should be used both to retain existing customers and attract new ones.