Entry and Prices: Evidence from the Supermarket Sector

The purpose of this paper is to investigate the effect on prices of the entry of a large supermarket into a given location. We use a panel with data from fifteen cities in Chile for the period 1998:I–2004:IV. We correct for the potential simultaneity problem derived from the fact that entry can be a response to price differentials. We find that the entry of a hypermarket to a given city reduces relative prices in that local market by 7–11%. Most interestingly, we also find that part of this effect takes place the year before the supermarket actually opens for business.      

Gated Communities in Santiago: Wall or Frontier?

It is a widely held notion, disseminated in particular by the LA school of urban studies, that gated communities are enclaves, which not only maintain segregation but also help increase it. In Chile a more benevolent interpretation has arisen. Sabatini, C´ceres and Cerda argue that gated communities help out the poor communities that surround them. If the spatial scale of segregation is reduced — from city to local or neighborhood level — social disintegration should slow, according to their analysis. This article seeks to empirically complement and expand on Sabatini, Caceres and Cerda's position, which seems to be a better interpretation of Chilean reality than the grim picture presented by the LA school. The article is an ethnographic work based on in‐depth interviews in gated communities and a surrounding shantytown in the Huechuraba district, a lower socio‐economic class area in north‐west Santiago. The research concludes that, despite the existence of a wall that promotes community integration among so‐called equals, in conditions of spatial proximity sociability between inside and outside groups is not diminished. Thus, in Huechuraba there is no impenetrable wall separating poor and rich; equally, the walls do not seem to promote community integration within. Spatial proximity has encouraged relations mainly in the realm of functional exchange, making the creation of gated communities in poor neighborhoods a socially desirable experience, at least in the case of Santiago. En études urbaines, l'idée que les communautés privées sécurisées, gated communities, soient des enclaves qui entretiennent, et accentuent, la ségrégation est courante, notamment pour l'école de Los Angeles. Le Chili suscite une interprétation plus humaine. Selon Sabatini, Cáceres et Cerda, les communautés privées sécurisées sont un soutien pour les communautés pauvres avoisinantes. Si l'échelle spatiale de la ségrégation est réduite — de la ville au niveau local ou de quartier — la désintégration sociale devrait, d'après eux, ralentir. L'article vise à compléter et développer de façon empirique leur théorie, celle‐ci semblant traduire la réalité chilienne plus fidèlement que le sombre tableau de l'école de Los Angeles. Il s'agit ici d'un travail ethnographique qui s'appuie sur des entretiens poussés dans des communautés privées sécurisées et un bidonville du secteur de Huechuraba, zone socio‐économiquement pauvre du nord‐est de Santiago. Les recherches concluent que, malgré l'existence d'un mur qui favorise l'intégration communautaire entre soi‐disant égaux, la sociabilité entre les groupes intérieur et extérieur ne diminue pas en cas de proximité spatiale. Ainsi, à Huechuraba, il n'existe aucun mur impénétrable entre riches et pauvres; de même, les murs ne créent pas, semble‐t‐il, d'intégration communautaire dans leur enceinte. La proximité spatiale a encouragé les relations surtout dans le domaine des échanges fonctionnels, faisant de la création de communautés privées sécurisées dans les quartiers pauvres une expérience souhaitable au plan social, du moins dans le cas de Santiago.     

Institutional environment and Business Groups' resilience in Brazil

This article combines the institutional theory and political economy approaches to test hypotheses about how transitions in institutional environments affect the performance of Business Groups. Its primary hypothesis is that the different types of political connections established by Business Groups have moderating effects on this relationship. A sample of 1709 observations, from 317 distinct groups operating in Brazil between 2001 and 2009, was used in unobserved effects panel data models, which included the moderating effects of political connections. Our findings suggest that the institutional environment significantly affects Business Groups' performance and that this effect is moderated by political connections, when assessed in terms of the local or federal government as a minor shareholder of the Business Group. The moderating effects of political connections assessed through campaign donations were not conclusive.     

European banks’ executive remuneration under the new European Union regulation

We review how the new European regulation of bank executive compensation could affect the future of banking in Europe. Although there is no conclusive empirical evidence on the relation between bank executive remuneration and the financial crisis, authorities have intensively regulated the compensation of bank managers to eliminate risk-taking incentives in the financial industry. However, the new regulation could have unintended consequences of creating an adverse selection problem at European banks, reducing the number of best-performing managers available for European banks, and motivating an excessive increase in fixed remuneration over total remuneration, altering the way incentive systems work.     

Budgets,expenditure composition and political manipulation

Abstract

This paper analyses the presence of political cycles in Portuguese Governments’ expenditures using monthly data over the period 1991–2013 for the main categories of government expenditures. The results indicate that Portuguese Governments act opportunistically regarding the budget surplus and that they favour capital instead of current spending near to the elections. Moreover, right-wing governments are more prone to reduce expenditures and deficits after the elections than left-wing ones. A deeper disaggregated analysis of the components of government expenditures corroborates these findings while disentangling other relevant patterns of political manipulation in Portugal.     

Political and Institutional Determinants of Credit Booms

The literature that investigates credit booms has essentially focused on their economic determinants. This paper explores the importance of political conditionings and central bank independence and provides some striking findings on this matter. Estimating a fixed effects logit model over a panel of developed and developing countries for the period 1975q1–2016q4, we find that credit booms are less likely when right‐wing parties are in office, especially in developing countries, and when there is political instability. However, they have not proven to depend on the electoral cycle. More independent Central Banks are also found to reduce the probability of credit booms. Moreover, they seem to be more likely to occur and spread within a monetary union.     

Can sustainable investments outperform traditional benchmarks? Evidence from global stock markets

To contribute to overcoming global sustainability challenges, investors have been increasingly interested in making sustainable investments and incorporating environmental, social and governance (ESG) criteria into their portfolio selection decisions and managerial activities. However, these investors and other agents interested in sustainable investment need updated and robust information to support their decision making. We analyzed the performance of several Dow Jones Sustainability Indices (DJSIs) and compared them with their respective market benchmarks from 2013 to 2018. The indices comprise the following regions and countries: the world, the Asia‐Pacific, Europe, emerging markets and the US. The analysis was conducted based on both classic and modern portfolio metrics. The results suggest that sustainable investment performance is still heterogeneous worldwide, but there is a promising opportunity for investors to obtain superior risk‐adjusted returns in certain regions while incorporating sustainable investment practices. The findings are of utmost importance to financial market practitioners, business managers, academics and other stakeholders interested in promoting investments, corporate practices and scientific knowledge to achieve the Sustainable Development Goals (SDGs).     

Vertical and Horizontal Scope Economies in the Regulated U.S. Electric Power Industry

This paper investigates vertical economies between generation and distribution of electric power, and horizontal economies between different types of power generation in the U.S. electric utility industry. Our quadratic cost function model includes three generation output measures (hydro, nuclear and fossil fuels), which allows us to analyze the effect that generation mix has on vertical economies. Our results provide (sample mean) estimates of vertical economies of 8.1% and horizontal economies of 5.4%. An extensive sensitivity analysis is used to show how the scope measures vary across alternative model specifications and firm types.     

A darker side to decentralized banks: Market power and credit rationing in SME lending

We use loan-level data to study how the organizational structure of banks impacts small business lending. We find that decentralized banks—where branch managers have greater autonomy over lending decisions—give larger loans to small firms and those with “soft information.” However, decentralized banks are also more responsive to their own competitive environment. They are more likely to expand credit when faced with competition but also cherry pick customers and restrict credit when they have market power. This “darker side” to decentralized banks in concentrated markets highlights that the level of local banking competition is key to determining which organizational structure provides better lending terms for small businesses.