An analytical approach for systematic risk sensitivity of structured finance products

The global financial crisis has shown that many financial institutions dealing with credit derivatives were exposed to severe unexpected losses. This indicates that systematic influences are decisively underestimated particularly with regard to structured products like securitized tranches of collateralized debt obligations. Our analytical study addresses these systematic effects: We provide a simple model which allows a closed-form comparison of both bonds and tranches with respect to their systematic risk. We demonstrate that the exposure to systematic risk of tranches may be many times higher than the exposure of bonds, even if both products share the same rating grade, e.g., an ‘AAA’ rating, measured by either default probability or expected loss. Particularly in economic downturns, default rates of tranches may be multiples of those of bonds. Our results help understand high default rates of tranches during the financial crisis and show that classical ratings are insufficient metrics for measuring risks of structured products.     

Is collaboration paying off for firms?

Practitioners, academics, and consultants are all calling for firms to drop their guard and collaborate with their business partners. At best, reports to date are mixed. Does collaboration work? Can firms do better? This research indicates the answer is yes to both questions, but managers must do more to reap long-term gains by formalizing relationships. Executives at many of today 's most successful companies provide important insights as to how this can be accomplished.     

The effects of polychronic-orientation upon retail employee satisfaction and turnover

Keeping front-line retail employees satisfied, and subsequently reducing their turnover, is important in retail management. This study introduces polychronic-orientation, or an employee's preference for switching between multiple tasks within the same time-block, as an employee trait with important implications for retail employee turnover. It demonstrates empirically that a polychronic-orientation has both direct (employee fit) and indirect (through fairness perceptions) effects on retail employee satisfaction. Moreover, by exploring these effects across career stages, polychronicity is revealed to be a stable and enduring trait but one whose impact is magnified in early stages of the retail career. Implications for hiring and employee education are derived.     

Labour-saving technologies in smallholder agriculture: An economy-wide model with field operations

Labour-saving technologies are relevant for agricultural development. Yet, as this study shows, they are poorly integrated into agricultural production functions of economy-wide models. We report a computable general equilibrium (CGE) model, which explicitly incorporating field operations (e.g. land preparation, weeding or harvesting) in the context of smallholder agriculture. The field operations approach allows to model technological trade-offs in organic and conventional production systems at various stages of the agricultural production process. Simulating a structural change scenario, we compare the performance of the field operations approach with published benchmark production structures by assessing how they replicate empirically observed changes in land and agrochemical use. This benchmark analysis shows that incorporating field operations replicates the observed empirical changes most accurately and allows for more realistic modelling of labour-saving technologies. We use the field operations model to investigate three policy options to mitigate labour shortages in the agricultural sector of Bhutan. Permitting the employment of Indian workers in agriculture has the highest short-term potential in this respect. We find that subsidising agricultural machinery hiring services and removing import tariffs on agrochemical inputs are found to be less effective. Further options for model developments, such as combining field operations and labour market seasonality, are highlighted.