Variables influencing the customer relationship management of banks

Banks are important role players to the economy of any country. However, to survive in a competitive business environment banks need to focus on building and maintaining client relationships and to identify how their employees influence these relationships. This study investigates the influence of variables, with regard to bank employees, on the customer relationship management (CRM) of banks. A literature study explains CRM, the banking industry and employees' involvement with banking clients. To assess the impact of the predetermined variables from literature on the CRM of banks, a number of hypotheses were constructed and tested empirically among a sample of banking clients. The findings reveal that the variables knowledgeability and attitude of bank employees have a statistically significant impact on the effectiveness of the CRM strategies of banks. Based on the findings of the empirical investigation, strategies are provided for banks to improve their employees' knowledgeability and attitude in order to ensure more effective CRM strategies.     

Push‐me pull‐you: comparative advertising in the OTC analgesics industry

We derive equilibrium incentives to use comparative advertising that pushes up own brand perception and pulls down the brand image of targeted rivals. Data on content and spending for all TV advertisements in Over‐The‐ Counter (OTC) analgesics enable us to construct matrices of rival targeting expenditures and estimate the structural model. Using brands' optimal choices, these attack matrices identify diversion ratios, from which we derive comparative advertising damage measures. We find that comparative advertising causes more damage to the targeted rival than benefit to the advertiser. We simulate banning comparative advertising to find industry profits rise.     

A public good model with lotteries in large groups

We analyze the effect of a large group on a public goods model with lotteries. We show that as populations get large, and with preferences in which people only care about their private consumptions and the total supply of the public good, the level of contributions converges to the one given by voluntary contributions. With altruistic preferences of the warm-glow type, the contributions converge to a level strictly higher than those given by voluntary contributions, but in general they do not yield first-best levels. Our results are important to clarify why in general governments do not rely on lotteries for a large part of the revenue creation for public good provision. They are also useful to understand why lottery proceeds are earmarked to worthy causes, where warm glow is likely to be larger.     

Analysis of the Nonlinear Option Pricing Model Under Variable Transaction Costs

In this paper we analyze a nonlinear Black–Scholes model for option pricing under variable transaction costs. The diffusion coefficient of the nonlinear parabolic equation for the price V is assumed to be a function of the underlying asset price and the Gamma of the option. We show that the generalizations of the classical Black–Scholes model can be analyzed by means of transformation of the fully nonlinear parabolic equation into a quasilinear parabolic equation for the second derivative of the option price. We show existence of a classical smooth solution and prove useful bounds on the option prices. Furthermore, we construct an effective numerical scheme for approximation of the solution. The solutions are obtained by means of the efficient numerical discretization scheme of the Gamma equation. Several computational examples are presented.     

Revealing the willingness to pay for income insurance in agriculture

In spite of its minor and decreasing share in EU GDP, agriculture still plays a fundamental and strategic role in the economy. This is why EU institutions have supported for decades a series of policies to guarantee a stable agricultural income, including insurance. With different degrees of public support, insurance policies covering an increasing number of risks have been developed across the EU. Eventually, EU institutions have started to encourage the development of income insurance. Income insurance covers more risks and has higher uncertainty and costs than conventional single risk or combined yield insurance. Assessing and enhancing the viability of income insurance demands an in depth knowledge of farmers’ willingness to pay (WTP) for this product. This study develops a methodology to calculate the WTP for different degrees of income protection using a revealed preference model and the certainty equivalent theory. The methodology is applied in a drought prone area in southeastern Spain. Results show that WTP for income insurance in the area is higher than observed insurance premiums. This may play in favor of the development of more comprehensive income insurance systems.     

Profitability in Banks Affiliated to a Business Group: Evidence from Mexico

In certain institutional contexts, where there are business groups, banks affiliated to these business networks are faced by incentives that might condition their profitability. The objective of this article is to test whether there is a difference between the performance of affiliated banks and that of banks not affiliated to groups, in the context of an emerging market. In particular, a study is made of the case of Mexico in the period 2007–11. Findings suggest that banks affiliated to business groups show less profitability than non-affiliated banks, which may be a consequence of the provision of loans in an internal capital market.     

Dynamic portfolio optimization with liquidity cost and market impact: a simulation-and-regression approach

We present a simulation-and-regression method for solving dynamic portfolio optimization problems in the presence of general transaction costs, liquidity costs and market impact. This method extends the classical least squares Monte Carlo algorithm to incorporate switching costs, corresponding to transaction costs and transient liquidity costs, as well as multiple endogenous state variables, namely the portfolio value and the asset prices subject to permanent market impact. To handle endogenous state variables, we adapt a control randomization approach to portfolio optimization problems and further improve the numerical accuracy of this technique for the case of discrete controls. We validate our modified numerical method by solving a realistic cash-and-stock portfolio with a power-law liquidity model. We identify the certainty equivalent losses associated with ignoring liquidity effects, and illustrate how our dynamic optimization method protects the investor's capital under illiquid market conditions. Lastly, we analyze, under different liquidity conditions, the sensitivities of certainty equivalent returns and optimal allocations with respect to trading volume, stock price volatility, initial investment amount, risk aversion level and investment horizon.     

On the reliability of unitizing textual continua: Further developments

This paper builds on an agreement coefficient proposed by Krippendorff (Content analysis: an introduction to its methodology, 2013) for measuring the reliability of unitizing and coding continuous phenomena, for example, of texts, videos, or sound recordings. It serves three purposes: It modifies Krippendorff’s definition which turned out to behave not as expected when applied to more than two observers, coders, or annotators. It extends this reliability measure to a family of four coefficients able to assess the reliabilities of diverse properties of unitized continua. It adds a way to obtain the confidence intervals of these coefficients as well as the probability of failing to reach targeted reliability levels. And it describes and provides access to free software that calculates all values of this family of reliability coefficients.     

Near‐sourcing UK apparel: value chain restructuring,productivity and the informal economy

Fast fashion's emphasis on quick response production and supply chain management is at the basis of renewed growth in UK apparel manufacturing. This article shows how increasing pressure from lead firms has resulted in manufacturers maintaining profit levels, mainly, through informal subcontracting and informal employment, as opposed to increasing productivity.