Optimal make–take fees for market making regulation

We address the mechanism design problem of an exchange setting suitable make– take fees to attract liquidity on its platform. Using a principal–agent approach, we provide the optimal compensation scheme of a market maker in quasi‐explicit form. This contract depends essentially on the market maker inventory trajectory and on the volatility of the asset. We also provide the optimal quotes that should be displayed by the market maker. The simplicity of our formulas allows us to analyze in details the effects of optimal contracting with an exchange, compared to a situation without contract. We show in particular that it improves liquidity and reduces trading costs for investors. We extend our study to an oligopoly of symmetric exchanges and we study the impact of such common agency policy on the system.     

Antecedents,consequences, and reducers of perceived risk in social media: A systematic literature review and directions for further research

The social media has become an integral part of the marketing strategy. Marketing activities are now more inclined to online social networks (OSNs) than ever before in the history of the business. More and more consumers are joining OSNs for the sake of fun, socialization, and online buying. Every user perceives some degree of risk while joining and using OSNs. The current systematic literature review gathers and synthesizes research records of the last 9 years (2010–18) on consumer perceived risks concerning OSNs. We used PRISMA as a protocol to conduct this systematic literature review. The synthesis provides a detailed account of the perceived risk factors, their antecedents and consequences, risk-reducing strategies, and future research potential in the said domain.     

Teaming Up? China,India and Brazil and the Issue of Benefit-Sharing from Genetic Resource Use

ABSTRACT

This article focuses on an area that has not been systematically addressed but is of crucial importance to China, India and Brazil: the global governance of genetic resources. All three are biodiversity-rich and, ever since biotechnology promised to turn DNA into gold, have been significant players in the genetic-resources regime complex. Shortcomings notwithstanding, the establishment of a new access and benefit-sharing regime constitutes a rare instance where emerging countries have succeeded in becoming rule-makers of sorts. We analyse how these three countries have sought to pursue their interests in this area, especially after the extension of national sovereignty over previously ‘free’ genetic resources and the erection of a complex set of rules attempting to regulate access to and benefits from their utilisation from the early 1990s onwards. Despite presenting a generally unified front in international fora, their domestic implementation differs significantly and raises questions about the continuation of a common international position. The article adds to our understanding of emerging countries’ engagement with global governance by focusing on the concrete drivers and domestic processes that have motivated and shaped the agency of China, India and Brazil in this new policy regime.     

Resource abundance,financial crisis and economic growth: did resource‐rich countries fare better during the global financial crisis?

This study examines the role of resource abundance in the cross‐country differences in the impacts of the global financial crisis (GFC) of 2008–2009. Using forecasts from the unobserved components model and exponential smoothing technique, we estimate the output levels a country would reach in 2009 and 2013 in the absence of the GFC, and compare these with the realised output levels. We find large variations in the output losses across 72 countries. The mineral‐rich countries have been found to be in a strong position to survive any adverse shocks stemming from the GFC. Income per capita, trade openness, and institutional quality and government effectiveness are also found to be key factors determining the differences in output loss in the post‐crisis period. These findings have strong implications for resource‐rich countries such as Australia and are expected to shed new light on alternative policy designs and appropriate strategies to deal with any future economic crisis.     

Impact of environmental information disclosure and real estate segments on cost of debt: Evidence from the Chinese real estate industry

The novel part of this paper is to examine the individual and joint effects of the real estate segments (RETs) and environmental information disclosure (EID) on the cost of debt (COD) in the real estate industry in China. Building on extant literature, using 1,250 firm‐year observations from 2006 to 2016 and applying both Feasible General Least Squares and Two‐stage Least Squares Instrumental Variable approaches, we provide evidence that the commercial RET leads to an increase in the COD, while EID leads to a decrease in the COD. The joint effects of the RETs and EID on the COD indicate a significantly positive relationship with the COD. This signifies that even with the increased levels of EID in commercial real estate sectors, its COD is higher than for residential real estate sectors. These findings have important policy implications for environmental risk assessments for real estate sectors, their lending institutions and wider stakeholder groups.     

Cultural indicators in Abu Dhabi: theoretic framework and challenges for their building

Quality & Quantity - Evidence-based decision-making in Abu Dhabi cultural sector is increasingly being influenced by the development of data generation from a coordinated statistical system....     

The role of corporate governance strength in crisis and non-crisis times

This study evaluates corporate governance practices of listed firms in the United Arab Emirates and investigates whether corporate governance mitigates/exacerbates the impact of leverage and risk on firm performance during crisis and non-crisis times. The study constructs a corporate governance index not only to examine the dispute of the role of corporate governance during the crisis but also its influence on other factors that fuelled the crisis. A firm-level panel data is used that spans the period 2008–2012 of all listed firms on Abu Dhabi Securities Exchange (ADX) and Dubai Financial Market (DFM). The study finds a positive influence of corporate governance strength on the accounting performance, but a negative influence on the firms’ economic performance. In normal times, corporate governance mitigates the negative influence of leverage and risk on the accounting and economic firm performance. However, this synergy effect varies across performance indicators during crisis.     

Financial globalization and stock market risk

This paper examines stock market volatility measured by either “beta-volatility” or by the standard deviation of stock returns over 1995-2007. In our dynamic panel data framework, after controlling for size, turnover, and real output growth, we find some support to increases in financial integration reducing total stock return volatility for representative emerging markets, with almost no impact for industrial economies. Allowing for feedback effects from stock volatility to stock turnover, we obtain a richer interpretation for the broadening of investor basis hypothesis: more integrated financial markets leads to lower stock volatility, yet these are not so strong as found previously and are not accompanied by more turnover.     

Stock Market Reaction to Quality,Safety, and Sustainability Awards in Logistics

Although quality, safety, and sustainability are important concerns in logistics, managers are sometimes reluctant to invest in these areas because it is not always clear how such investments will benefit firm performance. Empirical literature provides little guidance in the context of logistics as previous studies report mixed findings across a diverse set of industries, which may not be directly applicable to logistics. To address this gap, we conducted an event study to estimate the stock market reaction to quality, safety, and sustainability award announcements in logistics. Based on 244 award announcements during the period 2004–13, we found that stock market participants react positively to announcements of these awards. The market reaction appears to be stronger for sustainability awards than for quality and safety awards. Our results also suggest that the market reacts more favorably to quality and sustainability award announcements for firms with better past financial performance and for smaller firms.     

Drivers of technical efficiency in Malaysian banking: a new empirical insight

Restructuring and rationalisation of Malaysian banking in 2000 and the subsequent policy of deregulation and liberalisation adopted by Bank Negara Malaysia (BNM) have resulted in a significant transformation of Malaysian banking. Banks are now poised to play a pivotal role in the economic transformation of the economy as envisaged in the Financial Sector Blue Print 2011–20 of BNM. Using the data envelopment analysis technique, the technical efficiency of 19 commercial banks (8 domestic banks and 11 foreign banks) operating in Malaysia during 2005–12 is evaluated. Then, using bootstrap‐corrected efficiency scores, the drivers of bank efficiency were estimated using the Tobit regression approach. Results clearly show that three large domestic banks are not only more efficient than their counterparts, but are also more efficient than the foreign banks. Bank size and return on assets are found to be the significant drivers of technical efficiency of Malaysian banks. Capital adequacy and the advances to deposit ratio also have a role in driving technical efficiency. The results also indicate that banks that are more effective in managing credit risk, as reflected in a lower level of non‐performing assets as a percentage of total assets, and have lower levels of personnel expenses to total assets, are more efficient. The findings have significant implications at the individual bank level and also at the policy level.