Asian Financial Crisis and the Evolution of Korean Banks Efficiency: A DEA Approach

Abstract

In the mid-1990s, the East Asian countries experienced severe financial crisis that were followed by deep economic downturns. A variety of methodologies have been used to understand the nature of the Asian financial crisis. However, the impact of the 1997 Asian financial crisis on the efficiency of the financial industry has yet to be critically examined. By employing the Data Envelopment Analysis (DEA) approach the present study attempts to examine for the first time the impact of the 1997 Asian financial crisis on the efficiency of the Korean banking sector. The study focuses on three major approaches, namely, intermediation, value added, and operating approaches. The results clearly bring forth the high degree of inefficiency in the Korean banking sector, particularly a year after the Asian financial crisis. We find that the Korean banking sector has consistently exhibit higher technical efficiency levels under value added approach, while technical efficiency seems to be lowest under intermediation approach.     

Foreign exchange exposure and impact of policy switch – the case of Malaysian listed firms

This article undertakes an in-depth study of the foreign exchange exposure of Malaysian listed firms. We examine several issues related to firm-specific and overall exposure, including an evaluation of the efficacy of adopting a hard-peg on such exposure. Our sample consists of 158 listed firms and spans the 16 year period, 1990–2005. A multivariate model using four bilateral exchange rates is used to determine firm level exposure while panel data analysis using a random-effects Generalized Least Squares (GLS) model is used to determine system-wide or aggregate sample exposure. We find a total 71% of our sample firms to have significant exchange rate exposure, a rate substantially higher than that reported for most countries, especially developed ones. The US$ is by far the single most important source of exposure with 63% of sample firms exposed to it. The sign of the beta coefficient for three of the four currencies are negative, implying that our sample firms are largely net importers in these currencies. We find exposure to be time variant and dependent on the sector within which a firm operates. Interestingly, the panel data analysis which measures aggregate exposure, shows the US$ to be a significant source of exposure even with the adoption of the hard peg. The change in policy regime to a fixed peg following the crisis appears to have had no impact at either firm-level exposure or overall system-wide exposure.     

Demand for Crop Insurance in Developing Countries: New Evidence from India

Determining farmers’ real demand for crop insurance is difficult, especially in developing countries, where there is a lack of formal financial sector integration and a high reliance on informal risk mitigation options. We provide some new estimates of farmers’ willingness‐to‐pay for insurance in the context of a large‐scale subsidised programme in India. We conducted a discrete choice experiment with agricultural households across four states in India, enabling us to estimate preferences for specific insurance policy attributes such as coverage period, method of loss assessment, timing of indemnity payments and the cost of insurance. Our results suggest that farmers do value crop insurance under certain conditions and some are willing to pay a premium for such coverage in excess of the subsidised rates they are currently required to pay under this programme. In particular, farmers value the assurances that they will receive timely payouts when they incur losses, and may not have a strong preference for the method with which losses are assessed. On the other hand, farmers are quite sensitive to coverage periods. Our baseline assessment shows that when optimised to farmer requirements, there can be a sizeable demand for crop insurance by developing country farmers.     

The predictive power of yield spread: evidence from wavelet analysis

This paper examines whether the spread between long- and short-terminterest rates contains information about future economic activity in India. Using the yields on securities with maturities ranging from three months to ten years, we construct five different yield spreads at shorter end, longer end, and policy relevant area of the yield curve. We study the predictive power of each of these spreads for output growth within aggregate and time scale framework using wavelet methodology. We find that predictive power holds only at lower frequencies for the spreads which are constructed at shorter end and policy relevant areas of yield curve. However, spreads which are constructed at the longer end of the yield curve do not seem to have predictive information for output growth.     

The value relevance of cash flows, current accruals, and non-current accruals in the UK

Cash flow statements have a longstanding history as mandated financial statement disclosures, having replaced funds flow statements. The usefulness of such disclosures with respect to one of the main purposes of financial statements—providing information relevant to the assessment of future cash flows and their uncertainty, and the market value of firms—is still subject to debate. This study investigates whether various partitions of earnings involving combinations of a cash flow measure of performance and measures of current accruals and non-current accruals improve the ability to explain market values in the UK relative to using earnings alone. Using a valuation model-based methodology, and employing a UK sample of non-financial firms for the years 1993 to 2007, our results suggest strong support for the assertion that cash flows can have incremental value relevance relative to either earnings or funds flows. By implication, cash flows can have separate value relevance from total and, in particular, current accruals. There is slightly less consistent evidence that current and non-current accruals can have separate value relevance but, nonetheless, the results are still strongly in favour in this respect. Generally, the main source of increase in explanatory power for market values is the separate inclusion of our cash flow measure in the estimated regressions. As a consequence, we conclude that the statement of cash flows in the UK provides information useful to UK investors in valuing firms. Further, requiring a cash flow statement, as opposed to a funds flow statement, improves the information content of financial statements in the UK.     

The Effect of a Complex Ownership Structure and Judicial Efficiency on Leverage: Evidence from Pakistani Listed Companies

We explore the impact of complex ownership structure and judicial efficiency on firm leverage at Pakistani pyramid firms. Ratio of controlling to ownership rights is much higher at Pakistani firms than in other economies, which motivates us to study its impact on leverage. Our results reveal that complex internal structure at Pakistani pyramid firms is positively related to leverage. We find that the presence of efficient courts weaken the impact of complex ownership structure on leverage at pyramid firms. Contrary to the literature, we find that the political connections of pyramid firms in Pakistan are not related to corporate leverage.     

Managing retailer profitability—one customer at a time!

This study examines how customer lifetime value (CLV) can be computed at individual customer level in a retail setting to maximize profitability. The study finds that maximum positive impact to CLV occurs when the customer cross-purchases, shows multi-channel shopping behavior, stays longer with the firm, buys specific product categories and purchases more frequently with the firm. Interestingly, the CLV follows an inverted U relationship with increase in return of prior purchases. Other interesting findings include a surprisingly low correlation between customer loyalty and future profitability and low correlation between stores’ historic revenues and future profitability. Several implications are suggested for retailers to manage and maximize customer profitability as well as store profitability.     

Comparative Analysis of Text Data in Successful Face-to-Face and Electronic Negotiations

Various combination of Natural Language Processing and Machine Learning methods offer ample opportunities wherever texts are an important element of an application or a research area. Such methods discover patterns and regularities in the data, seek generalization and in effect learn new knowledge. We have employed such methods in learning from a large amount of textual data. Our application is electronic negotiations. The genre of texts found in electronic negotiations may seem limited. It is an important research question whether our methods and findings apply equally well to texts that come from face-to-face negotiations. In order to confirm such more general applicability, we have analyzed comparable collections of texts from electronic and face-to-face negotiations. We present our findings on the extent of similarity between these two related but distinct genres. In this study we have analyzed similarities in the text data of electronic and face-to-face negotiations. The results show that – in certain conditions – vocabulary richness, language complexity and text predictability are similar.This is an expanded version of a paper published in the Proceedings of FINEXIN 2005 (Workshop on the Analysis of Formal and Informal Information Exchange during Negotiations), 31–42, Ottawa, Canada, May 2005.     

The association of pain interference and opioid use with healthcare utilization and costs,and wage loss among adults with osteoarthritis in the United States

Abstract

Aim: To examine associations of opioid use and pain interference with activities (PIA), healthcare resource utilization (HRU) and costs, and wage loss in noninstitutionalized adults with osteoarthritis in the United States (US).

Methods: Adults with osteoarthritis identified from the Medical Expenditure Panel Survey for 2011/2013/2015 were stratified by no-opioid use with no/mild PIA, no-opioid use with moderate/severe PIA, opioid use with no/mild PIA, and opioid use with moderate/severe PIA. Outcomes included annualized total HRU, direct healthcare costs, and wage loss. Multivariable regression analyses were used for comparisons versus no-opioid use with no/mild PIA (referent). The counterfactual recycled prediction method estimated incremental costs. Results reflect weighted nationally representative data.

Results: Of 4,921 participants (weighted n?=?20,785,007), 46.5% had no-opioid use with no/mild PIA; 23.2% had no-opioid use with moderate/severe PIA; 9.6% had opioid use with no/mild PIA; and 20.7% had opioid use with moderate/severe PIA. Moderate/severe PIA and/or opioid use were associated with significantly higher HRU and associated costs, and wage loss. Relative to adults with no/mild PIA, opioid users with moderate/severe PIA were more likely to have hospitalizations, specialist visits, and emergency room visits (all p?<?.001). Relative to the referent, opioid use with no/mild PIA had higher per-patient incremental annual total healthcare costs ($11,672, 95% confidence interval [CI]?=?$11,435–$11,909) and wage loss ($1,395, 95% CI?=?$1,376–$1,414) as did opioid use with moderate/severe PIA ($13,595, 95% CI?=?$13,319–$13,871; and $2,331, 95% CI?=?$2,298–$2,363) (all p?<?.001). Compared with the referent, estimated excess national total healthcare costs/lost wages were $23.3 billion/$1.3 billion for opioid use with no/mild PIA, and $58.5 billion/$2.2 billion for opioid use with moderate/severe PIA.

Limitations: Unobservable/unmeasured factors that could not be accounted for.

Conclusions: Opioid use with moderate/severe PIA had significantly higher HRU, costs, and wage loss; opioid use was more relevant than PIA to the economic burden. These results suggest unmet needs for alternative pain management strategies.