Creating Customer Value in Participating Life Insurance

The value of a life insurance contract may differ depending on whether it is looked at from the customer's point of view or that of the insurance company. We assume that the insurer is able to replicate the life insurance contract's cash flows via assets traded on the capital market and can hence apply risk‐neutral valuation techniques. The policyholder, on the other hand, will take risk preferences and diversification opportunities into account when placing a value on that same contract. Customer value is represented by policyholder willingness to pay and depends on the contract parameters, that is, the guaranteed interest rate and the annual and terminal surplus participation rate. The aim of this article is to analyze and compare these two perspectives. In particular, we identify contract parameter combinations that—while keeping the contract value fixed for the insurer—maximize customer value. In addition, we derive explicit expressions for a selection of specific cases. Our results suggest that a customer segmentation in this sense, that is, based on the different ways customers evaluate life insurance contracts and embedded investment guarantees while ensuring fair values, is worthwhile for insurance companies as doing so can result in substantial increases in policyholder willingness to pay.     

The role of psychological and socio-demographical factors for electric bike use in Norway

The electric bike (e-bike) is emerging as a new sustainable transport mode in Norway and has the potential to lead to increased cycling among the population. However, little is known about psychosocial determinants of e-bike use. The aim of the study was to examine the role of normative and environmental beliefs, the perceived attributes of e-bikes, and innovativeness and demographical factors related to e-bike use in a Norwegian sample. An online survey was used to collect data from 910 respondents, including both e-bike users (252) and non-users (658). The respondents were recruited via a commercial panel (response rate 42.04%) and a Facebook post. A structural equation modeling analysis was used to analyze the data. The structural model had a good fit to the data. The results showed that attitudes towards e-bike use followed by innovativeness were the most important predictors of e-bike use. The normative processes measured within the Norm Activation Model activated positive attitudes towards e-bike use, which in turn predicted e-bike use. There was a negative relationship between e-bike and conventional bike use, while a positive relationship was found between car and e-bike use. The results are discussed with regard to their implications for interventions aiming to promote e-bike use.     

Economic diversification of a single-asset tourism city: evidence from Antalya†

It is often argued that the growth of single-asset tourism places is fragile because it is vulnerable to economic fluctuations and is based on specialization and localization economies that lead to an ever stronger lock-in process of path-dependent urban economic development and, in the end, slow growth. In this paper, it is doubted whether a high urban tourism growth implies an ever stronger specialization and an ever stronger lock-in. This paper shows that the growth of tourism stimulates the growth of related and unrelated industries and generates a diversification of the economy, even though some other sectors are crowded out. Antalya (Turkey) is selected as a case-study area not only because its economy is dominated by tourism (it is a good example of a single-asset tourism city), but also because its economy shows a tendency to economic diversification at the sectoral level. This diversification tendency is shown by means of a shift-share analysis and Herfindahl indexes.     

Price Rigidity in Turkey: Evidence from Micro Data

In this study we investigate the duration of consumer price spells and price change patterns for Turkey by employing a comprehensive micro price data covering around 6,000 items over four years. In detail, we analyze how long typical price spell lasts and we investigate the size, frequency, distribution and synchronization of price changes. Compared to advanced economies, a higher frequency of price changes is estimated. Findings suggest substantial heterogeneity among sub-groups in terms of frequency and synchronization indicators. The mixed evidence of both state and time-dependent pricing is also relevant for Turkey, an emerging market economy.     

The New Game in Town: Competitive Effects of IPOs

We analyze the effect of initial public offerings (IPOs) on industry competitors and provide evidence that companies experience negative stock price reactions to completed IPOs in their industry and positive stock price reactions to their withdrawal. Following a successful IPO in their industry, they show significant deterioration in their operating performance. These results are consistent with the existence of IPO‐related competitive advantages through the loosening of financial constraints, financial intermediary certification, and the presence of knowledge capital. These aspects of competitiveness are significant in explaining the cross‐section of underperformance as well as survival probabilities for competing firms.     

Handelsblatt Ranking and Journal Quality: A Cautionary Note

I provide a brief discussion of the Handelsblatt ranking by focusing on its journal quality weights. I summarize the methodology underlying journals’ prestige measure, which is derived from their citation networks, and discuss its strengths and shortcomings. Although I agree that Handelsblatt ranking provides a great service to the profession, that same profession needs to be rather careful not to overemphasize the journal quality weights.     

The presence of unemployment hysteresis in the OECD: what can we learn from out-of-sample forecasts?

This paper investigates the relevance of unemployment hysteresis in seventeen OECD countries. We employ an out-of-sample forecast exercise in which a mean-reverting autoregressive model is compared to an autoregressive model with an imposed unit root. A substantial difference in forecasting performance between the two models is established for many countries, but the results are mixed in their strength. The evidence for unemployment hysteresis in Austria, Finland, Iceland, Israel, Italy, Japan and Sweden is, however, convincing. For no country can unambiguous support for a mean reverting unemployment rate be found.     

Business Ethics Research with an Accounting Focus: A Bibliometric Analysis from 1988 to 2007

This article uses bibliometric analysis to empirically examine research on business ethics published in a broad set of journals, focused over the period 1988–2007. We consider those journals with an emphasis on accounting. First, we determine the citation frequencies of documents to identify the core articles in accounting research with an ethics focus as well as the contributions of influential fields included in the research sphere of these journals. We also employ document co-citation analysis to analyze the scholarly communication patterns that exist within the realm of the specified articles. Second, we utilize social network analysis tools to profile the centrality features of the co-citation network of these documents.     

BANK CAPITAL REQUIREMENTS, BUSINESS CYCLE FLUCTUATIONS AND THE BASEL ACCORDS: A SYNTHESIS

Abstract.  In order to survey the mechanisms through which the introduction of Basel II bank capital requirements is likely to accentuate the procyclical tendencies of banking, this paper brings together the theoretical literature on the bank capital channel of propagation of exogenous shocks and the literature on the regulatory framework of capital requirements under the Basel Accords. We conclude that the theoretical models that revisit the bank capital channel under the new accord generally support the Basel II procyclicality hypothesis and that the magnitude of the procyclical effects essentially depends on (i) the composition of banks' asset portfolios, (ii) the approach adopted by banks to compute their minimum capital requirements, (iii) the nature of the rating system used by banks, (iv) the view adopted concerning how credit risk evolves through time, (v) the capital buffers over the regulatory minimum held by the banking institutions, (vi) the improvements in credit risk management and (vii) the supervisor and market intervention under Basel II. The recent events and instability in financial markets all over the world have led the procyclicality issue to enter the agendas of several political international  fora  and some measures to mitigate procyclicality are being put forward. The bank capital channel literature should now play an important role in evaluating their effectiveness.