The international transmission of bank capital requirements: Evidence from the UK

We use data on UK banks? minimum capital requirements to study the impact of changes to bank-specific capital requirements on cross-border bank loan supply from 1999Q1 to 2006Q4. By examining a sample in which each recipient country has multiple relationships with UK-resident banks, we are able to control for demand effects. We find a negative and statistically significant effect of changes to banks? capital requirements on cross-border lending: a 100 basis point increase in the requirement is associated with a reduction in the growth rate of cross-border credit of 5.5 percentage points. We also find that banks tend to favor their most important country relationships, so that the negative cross-border credit supply response in “core” countries is significantly less than in others. Banks tend to cut back cross-border credit to other banks (including foreign affiliates) more than to firms and households, consistent with shorter maturity, wholesale lending which is easier to roll off and may be associated with weaker borrowing relationships.     

Payout initiation by IPO firms: The choice between dividends and share repurchases

This study evaluates the economics of the choice of form of payout initiation mechanism adopted by IPO firms. Our results suggest that IPO firms demonstrate a preference for repurchases over dividends as the specific form of payout initiation mechanism. We however, find that while the market views post-IPO payout initiations favorably, it is indifferent to the specific form of payout mechanism adopted. Further, we find that dividends and repurchases represent distinct payout mechanisms adopted by IPO firms with fundamentally different characteristics and motivation to initiate payouts during the post-IPO phase. Our results suggest that while dividend initiations are primarily driven by life cycle and catering theory considerations, signaling theory provides the more likely explanation for payout initiations through share repurchases.     

SOCIAL ACCOUNTS AND THE DISTRIBUTION OF INCOME: THE MALAYSIAN ECONOMY IN 1970

Although the functional and institutional distributions of income are integrally connected to individual living standards and other development policy objectives, these dimensions are rarely given prominence or even accommodated within standard national accounting frameworks. This paper summarizes research on the estimation of a social accounting matrix (SAM) for Malaysia for 1970 in which the distribution of income between different factors and socio-economic groups is identified. It is the latest of a series of case studies involving some of the authors and is, perhaps, the most detailed of its kind. The study departs from the United Nations SNA guidelines at various points. The SNA basically proposes a commodity balance approach to national income accounting. In giving equal emphasis to income/outlay accounts as to the production accounts, the present study has brought together data from two major primary sources: a household expenditure survey and a production survey. Their combination poses several problems which are discussed in the paper. It leads to an integrated picture, in matrix form, of the interrelationships between income distribution and production structure in the Malaysian economy. Both the factor and household accounts in our SAM are disaggregated according to race and the geographic distinction between Peninsular and East Malaysia, with an urban/rural split within Peninsula Malaysia. The Peninsula labor force is further disaggregated by education level, while its households are then subdivided according to the employment status of main income earners. Arguments for and against these choices are presented. Some other aspects of the study can be noted. First, the distinction drawn between East and Peninsular Malaysia is desirable not only because of the inherent interest of the regions but also because of large differences in data availability and hence in estimation methods. Secondly, to complete our SAM it was necessary to estimate inter-household transfers, being the institutional analogue of inter-industry commodity flow. And finally an attempt has been made to impute the labor component of unincorporated business income. These, then, are the major problems which had to be overcome in our attempt to quantify the generation, distribution, and redistribution of income within Malaysia in a SAM framework.     

Communication and marketing of services by religious organizations in India

Marketing communication is a vital strategic tool for religious organizations to achieve competitive differentiation. The study uses media richness theory with competitive response to develop hypotheses about the use of personal and non-personal channels by religious organizations. The study uses unique primary survey data on 568 Hindu, Muslim, Christian, Sikh and Jain organizations spread over 7 states in India, collected between 2006 and 2008, to investigate the marketing communication strategy of religious organizations in response to their competitors' use of non-personal communication channels and provision of non-religious services. The findings suggest that if a competitor uses higher non-personal communication channels, then this evokes a retaliatory reaction with the incumbent, increasing their personal communication channels. Second, an incumbent who is more responsive to a competitor increasing their non-religious service provision will respond by increasing their non-personal communication channels and by decreasing their personal channels. The findings have implications for managers who need to select the richness of the media for their communications' strategy in the context of competitive response.     

Real options and demographic decisions

The theory of real options is used to incorporate the influence of uncertainty on demographic decision-making. The decision to have children is formulated as an investment using portfolio theory. The timing of the decision to have a child is modelled as a real options decision, with uncertainty affecting a woman's ability to exercise the ‘option to wait’ in order to delay or space births. An increase and reduction in uncertainty on this option is explored. Compared to the widely used net present value (NPV) framework, the real options approach (ROA) better explains the process of demographic decision-making in poor countries.     

On material balances when there are capacity limitations

A method for the computation of a consistent set of material balances is proposed when there are capacity limitations in domestic production and exports, and it is related to certain planning practices in East European countries as reported by Montias. Although the computational procedure solves a linear programming problem, it has nothing to do with standard linear programming algorithms. Instead it is a direct generalization of the input-output type of balancing method.     

Technological progress and regress in pre-industrial times

This paper offers micro-foundations for the dynamic relationship between technology and population in the pre-industrial world, accounting for both technological progress and the hitherto neglected but common phenomenon of technological regress. A positive feedback between population and the adoption of new techniques that increase the division of labor explains technological progress. A transient shock to productivity or population induces the neglect of some techniques rendered temporarily unprofitable, which are therefore not transmitted to the next generation. Productivity remains constrained by the smaller stock of knowledge and technology has thereby regressed. A slow process of rediscovery is required for the economy to reach its previous level of technological sophistication and population size. The model is employed to analyze specific historical examples of technological regress.

Jared Diamond, Ten Thousand Years of Solitude, 1993.

     

Supply Chain Innovations and Partial Ownership

Review of Industrial Organization - When knowledge sharing is non-contractible, we show that competing downstream firms may prefer to help improve an inefficient alternative supply source than help...