STRATEGY, BUDGETING, AND CRISIS IN LATIN AMERICA

This empirical study investigated the relationship between business strategy and budgetary usage, given perceived crisis in Latin America. Using the strategy typology of Miles and Snow (1978), it was hypothesized that the Defender and Reactor strategy usage would be positively associated with Crisis while the Prospector and Analyzer strategy usage would be negatively associated. Employing LISREL analytic techniques, study results supported these relationships (although an alternate analysis supports the possibility that Defenders and Prospectors enact their strategy to be consistent with their Crisis perceptions). Further, though relationships between all strategy types should be related to Budgetary Usage, results indicated that the only significant relationship was between Prospector and Budgetary Usage. Though these results are consistent with the literature and have implications for budgeting practice in Latin America, additional research is needed. © 1997 Elsevier Science Ltd     

The third world and the new world order in the 1990s

This article examines how well the developing countries fared at the end of the 1980s; identifies contemporary constraints on growth and development in developing formations; and makes projections on the future of Third World economies in view of the developments discussed.     

Designing an immunized portfolio: Is M-squared the key?

The theoretical and empirical properties of M-squared, a measure of cash flow dispersion used in designing duration-hedged portfolios, are examined. Contrary to prior research, minimizing M-squared is not independent of the stochastic process and the minimum M-squared portfolio is a ‘bullet’ only under a specific, convexity condition derived in the paper.Using a data base of default-free, Government of Canada bonds to set up minimum M-squared, duration-matching portfolios, we find that the convexity property does not hold in general and that minimum M-squared portfolios fail to hedge as effectively as portfolios including a bond maturing on the horizon date.     

European banking: An overview

Against a background of far-reaching structural change in the banking sector, this article reviews the recent academic literature on developments in European banking. European banking markets have become increasingly integrated in recent years, but barriers to full integration, especially in retail banking, still remain. European integration has possible implications for systemic risk, and poses various challenges for the current supervisory framework. The banks’ responses to the changing competitive environment include the pursuit of strategies of diversification, vertical product differentiation and consolidation. European integration has implications for competition in banking markets, for the nature of long-term borrower-lender relationships, and for the relationships between ownership structure, technological change and bank efficiency. The article concludes by reviewing recent literature on the credit channel in the monetary transmission mechanism, and interest rate pass-through.     

Die prämienbegünstigte Zukunftsvorsorge in Österreich

Due to the predictable demographic developments and the budgetary restrictions in the Stability Pact of the Treaty of Maastricht the big pay-as-you-go public sector pension systems in many western European countries seem to have reached their limits. Since 2003 the Austrian government has put its trust in strengthening the third pillar of the pension system and supports private provision with state-aided premiums. In this paper this state-aided private provision system with its capital guarantee is presented, evaluated and analyzed. Moreover we point out the dilemma of this pension provision product: in the case of low asset returns the state premiums will be eroded by the expenses of the issuers. Furthermore it will be clarified that the issuers, in contrast to the clients, have no interest in investing in volatile assets since in that case the probability of exercising the capital guarantee will increase.     

Money and inflation in the euro area: A case for monetary indicators?

This paper examines inflation indicators for the euro area by studying the relationship between inflation, output, money and interest rates, using data spanning 1980–2001. The central finding is that both the output gap and the real money gap (the difference between the real money stock and the long-run equilibrium real money stock) contain considerable information regarding future inflation. In contrast, the Eurosystem's money-growth indicator (the difference between nominal money growth and a reference value), the prominent “first pillar” in its monetary strategy, contains little information about future inflation, and no information beyond that contained in the output and real money gaps. The predictive performance of the output gap has improved compared to that in a previous version of this paper, most likely because of better estimation methods.     

Measuring interest rate sensitivity of consumer depositors

The impetus for the deregulation of consumer deposits presumed that institutions need flexibility in setting rates to control deposit levels. Previous research indicated that institutions may find varying levels of sensitivity of depositors which will make it difficult to predict volume response. This study examined the timed response of interest rate changes on deposit volume changes. Using available time series techniques, it found that volume response varied with market characteristics as well as money market conditions. In some markets, deposit volume responded significantly to interest rate differentials, while in others the deposits were insensitive to small differentials. Thus, an institution is well advised to study its particular deposit market before implementing a liability rate strategy.     

A smoothed maximum score estimator for the binary choice panel data model with an application to labour force participation

In a binary choice panel data model with individual effects and two time periods, Manski proposed the maximum score estimator based on a discontinuous objective function and proved its consistency under weak distributional assumptions. The rate of convergence is low ( N ^1/3) and its limit distribution cannot easily be used for statistical inference. In this paper we apply the idea of Horowitz to smooth Manski's objective function. The resulting smoothed maximum score estimator is consistent and asymptotically normal with a rate of convergence that can be made arbitrarily close to N ^1/2, depending on the strength of the smoothness assumptions imposed. The estimator can be applied to panels with more than two time periods and to unbalanced panels. We apply the estimator to analyze labour force participation of married Dutch females.     

Banking Sector Development and Energy Consumption in Nigeria: Exploring the Causal Relationship and its Implications

This study examines the causal relationship between banking sector development and energy consumption in Nigeria over the period 1971–2013 incorporating crude oil price and indicators of economic performance. An autoregressive distributed lag bounds testing approach to cointegration provides evidence of long‐run relationship among the variables. The long‐run and short‐run estimates suggest that a non‐linear inverted U‐shaped relationship exists between banking sector development and energy consumption in Nigeria, indicating that initially, energy consumption increases as the banking sector develops and then declines as the banking sector matures to generate efficiency in energy consumption. In addition, this study explores the direction of causality between the variables using the Toda–Yamamoto Granger causality test procedure. The results suggest that a unidirectional causality runs from crude oil price to banking sector development, from banking sector development to energy consumption and from energy consumption to economic growth. It may therefore be necessary for policy makers in Nigeria to incorporate banking sector development in the energy and sustainable economic policies.