The main determinants of banking crises in OECD countries

Banks’ stability can be affected by economic fluctuations, banks’ risk-taking behavior, connections among banks and countries’ financial system structure. At the same time, banking regulation and supervision were designed to protect banks from failure, but a large number of banking crises were not prevented recently. Using binary response models for panel data and focusing on OECD countries, this paper studies the main determinants of banking crises over a period of 21 years. Results suggest a bank’s high debt and a country’s low GDP growth rate as the major determinants of banking crises. There is also evidence of contagion across countries from the same geographical region and from G7 to other countries, and that bank-based financial systems are less prone to borderline banking crises. Regulatory and supervision practices are found not to have been relevant in bankruptcy prevention.     

The “Services” Explanation for Resale Price Maintenance: Deleterious Results Missed in the Economics Literature and in Legal Decisions

Policy discussions and a U.S. Supreme Court decision interpret retailer services induced by retail price maintenance (RPM) as enhancing consumer surplus (CS) and welfare enhancing, marginalizing dissenting opinions that use similar models but with different parameters. However, if presales services stimulate demand by providing information about a product's value, they need not raise postsale value in use. Inframarginal consumers' presales perceived value may increase, but their postsale value may be unchanged, so their supposed CS gains are ephemeral, and their actual surplus falls proportional to price increase. We show that, even adding in gains to marginal consumers, effects on CS are far more negative than conceived of in this literature. Consequently, in a rule‐of‐reason antitrust environment, if RPM is challenged without alleging collusion or exclusion, presales demand‐inducing information provision is a flimsy defense if CS is the standard and not always convincing if total surplus is the standard.     

Deterministic seasonality in Dickey–Fuller tests: should we care?

This paper investigates the properties of Dickey–Fuller tests for seasonally unadjusted quarterly data when deterministic seasonality is present but it is neglected in the test regression. While for the random walk case the answer is straightforward, an extensive Monte Carlo study has to be performed for more realistic processes and testing strategies. The most important conclusion is that the common perception that deterministic seasonality has nothing to do with testing for the long-run properties of the data is incorrect. Further numerical evidence on the shortcomings of the general-to-specific t-sig lag selection method is also presented.

Empirical test of the trust–performance link in an international alliances context

Despite the widespread use of trust as a determinant of successful relationships, limited empirical evidence exists to substantiate a positive relationship between trust and performance. Thus, the purpose of this study is to investigate the antecedents of trust and to examine the trust–performance relationship in international alliances. The conceptual model was tested empirically using primary data collected from 232 international alliances involving Portuguese and international firms. The results reported suggest that when controlling for the experience and size of a firm, trust has a strong and positive effect on performance. Key antecedents identified as significant influencers on trust are shared values, communication and opportunistic behaviour. Additionally, interaction effects are identified, indicating that similarities among partners enhance the positive relationship between trust and performance.     

Place-Based Policies and Nowcasting

There is a growing need to gauge local economic activity in real time. Localised economic challenges have been emphasised in the wake of the COVID-19 pandemic. Real-time trackers (such as OECD trackers) and other nowcasting applications typically correspond to national or highly aggregated regions. In this discussion paper, we briefly explore how unconventional data might be used to produce nowcasts of local economies. We argue that in the absence of traditional nowcasting metrics, efforts to nowcast local economies need a local perspective, with data capture tailored to address heterogeneity across three domains: (1) resources, (2) people and (3) life.