Which Governance Mechanisms Promote Efficiency in Reaching Poor Clients? Evidence from Rated Microfinance Institutions

This paper evaluates the effectiveness of several governance mechanisms on microfinance institutions' (MFI) performance. We first define performance as efficiency in reaching many poor clients. Following the literature on efficiency in banks, we estimate a stochastic cost frontier and measure output by the number of clients. Therefore, we capture the cost minimisation goal and the goal of serving many poor clients, both of which are pursued by MFIs. We next explore the impact of measurable governance mechanisms on the individual efficiency coefficients. The results show that efficiency increases with a board size of up to nine members and decreases after that. MFIs in which the CEO chairs the board and those with a larger proportion of insiders are less efficient. The evidence also suggests that donors' presence on the board is not beneficial. We do not find consistent evidence for the effect of competition, and we find weak evidence that MFIs in countries with mature regulatory environments reach fewer clients, while MFIs regulated by an independent banking authority are more efficient.     

Multi-country event-study methods

We provide the first simulation evidence of event-study test performance in multi-country non-US samples. The nonparametric rank and generalized sign tests are more powerful than two common parametric tests, especially in multi-day windows. The two nonparametric tests are mostly well specified, but neither is perfectly specified in all situations. The parametric standardized cross-sectional test can provide a useful robustness check but is less powerful than the nonparametric tests and rejects too often in single-market samples and when firm-specific events affect the market index. Local-currency market-model abnormal returns using national market indexes are sufficient.     

Options and efficiency in spaces of bounded claims

In a seminal contribution, Ross (1976) showed that a static finite state-space market can be completed by supplementing the primitive securities with ordinary call and put options. Galvani (2009) extends this result to norm separable _Lp$L_p$-spaces, with 1≤p<∞$1\le p<\infty$. This study concludes that options maintain the same spanning power in the space of bounded payoffs topologized by the duality with the space of the state price densities. In particular, under mild assumptions on the probability space, options written on a claim that is a.s. equal to an injective function complete the market.     

Environmental Policy and the International Diffusion of Cleaner Energy Technologies

Technology transfer is an important channel of technological change and sustainable development for countries with less innovative ability than technological leaders. This paper studies whether domestic environmental policies affect the inward technology transfer of cleaner innovation from abroad. We focus specifically on the power sector, for its important role in the decarbonization process, by looking at zero-carbon (renewable) and carbon-saving (efficient fossil) technologies for energy production. Using data on cross-country patent applications, we provide evidence that environmental policy contributes to attracting foreign cleaner technology options to OECD markets but not to non-OECD markets. We show that this is due to the nature of the implemented policy instruments. Market-based approaches positively impact technology transfer to both OECD and non-OECD economies, while non-market based approaches have at best only a weak effect in OECD countries. Domestic environmental policies may provide too weak a signal for foreign innovators in countries off the technological frontier. This calls for a strengthening of policy incentives for technology transfer in light of pressing climate change objectives.     

Scale economies and input price elasticities in microfinance institutions

We evaluate the efficiency of microfinance institutions (MFIs) using a structural approach which also captures these institutions’ outreach and sustainability objectives. We estimate economies of scale and input price elasticities for lending-only and deposit-mobilizing MFIs using a large sample of high-quality panel data. The results confirm conjectures that improvements in efficiency can come from the growth or consolidations of MFIs, as we find substantial increasing returns to scale for all but profitability-focused deposit-mobilizing MFIs. Our results support the existence of a trade-off between outreach and sustainability. All inputs are inelastic substitutes, but we find differences in own-price elasticities in lending-only and deposit-mobilizing MFIs.     

Analysing the risk premium in the Italian stock market: ARCH-M models versus non-parametric models

This Paper investigates the variability of the risk premium in the Italian stock market, over the period 1978–89. We have modelled voatility using two different approaches: ARCH-M models and non-parametric models. The estimate of the ARCH-M models confirm the existence of both an ARCH process in the variance and a time-varying risk premium. Also the non-parametric specification confirms the existence of a time varying risk premium. Moreover in both models the acceleration in the inflation rate has a negative effect on stock prices.