Does lending behaviour of banks in emerging economies vary by ownership? Evidence from the Indian banking sector

While much has been discussed about the relationship between ownership and financial performance of banks in emerging markets, literature about cross-ownership differences in credit market behaviour of banks in emerging economies is sparse. Using a portfolio choice model and bank-level data from India for 9 years (1995–96 to 2003–04), we examine banks’ behaviour in the context of credit markets of an emerging market economy. Our results indicate that, in India, the data for the domestic banks fit well the aforementioned portfolio-choice model, especially for private banks, but the model cannot explain the behaviour of foreign banks. In general, allocation of assets between risk-free government securities and risky credit is affected by past allocation patterns, stock exchange listing (for private banks), risk averseness of banks, regulations regarding treatment of NPA, and ability of banks to recover doubtful credit. It is also evident that banks deal with changing levels of systematic risk by altering the ratio of securitized to non-securitized credit.     

Mind the gaps: a political economy of the multiple dimensions of China's rural–urban divide

China's impressive growth has been accompanied by high inequality and a wide rural–urban divide. This paper identifies and examines some of the major dimensions of this divide: income, consumption, education, employment, health care, pensions, access to public services, and the environment. The paper attributes the main causes of the divide to China's urban‐biased development strategies and the resulting lack of social provision of public goods in rural areas. It also highlights the severe and multidimensional constraints on the Chinese peasantry and argues that increased equality and efficiency can now be pursued simultaneously.     

Multiple agency perspective,family control,and private information abuse in an emerging economy

Using a comprehensive sample of listed companies in Hong Kong this paper investigates how family control affects private information abuses and firm performance in emerging economies. We combine research on stock market microstructure with more recent studies of multiple agency perspectives and argue that family ownership and control over the board increases the risk of private information abuse. This, in turn, has a negative impact on stock market performance. Family control is associated with an incentive to distort information disclosure to minority shareholders and obtain private benefits of control. However, the multiple agency roles of controlling families may have different governance properties in terms of investors’ perceptions of private information abuse. These findings contribute to our understanding of the conflicting evidence on the governance role of family control within a multiple agency perspective.     

An error correction model of induced innovation in UK agriculture

Cointegration techniques are applied to a model of induced innovation based on the two-stage Constant Elasticity of Substitution (CES) production function. This approach results in direct tests of the inducement hypothesis, which are applied to agricultural data for the United Kingdom from 1953 to 2000. The time series properties of the variables are checked, cointegration is established and an Error Correction Model (ECM) constructed, which attempts to separate factor substitution from technological change. Finally, the ECM formulation is subjected to causality tests, which show that the factor price ratio for chemicals and land is Granger-prior to the factor-saving bias of technological change. However, long-run relative prices are not causally prior to the machinery/labour ratio. This results from perturbations in the user cost of machinery, caused by oil price shocks. Thus, the Induced Innovation Hypothesis (IIH) may explain long-run transformations like the mechanical and fertilizer revolutions that dominated the twentieth century, but not reflect short-run price volatility.     

Efficiency in wine grape production: comparing long‐established and newly developed regions of South Africa

Efficiency, partly based on technology, is central to international competitiveness. This article applies a stochastic frontier inefficiency model to a panel of 77 wine grape farms in South Africa between 2005 and 2015 and allows the comparison of efficiency levels for the old established wine regions with those of newer entrants. Thus, we investigate whether experience plus first choice of location matters more than the follower's advantage of newer technology. In all regions, a greater share of permanent labor and increased supervision raised efficiency, while more inorganic fertilizer and less irrigation has the opposite effect. Innovations in trellising had insignificant effects (except in the old regions) but not replacing old vines reduced efficiency. However, a higher proportion of red varietals also lowered efficiency in the old regions due to a fall in the price of red wine as these farmers continued to concentrate on quality reds. The new regions compensated for falling prices by increasing crop size with irrigation and fertilizer and extending the area planted, but with less concern for quality. This appears to be more successful in efficiency terms, but as international demand for quality wine increases it may be a poor long‐term strategy.     

Labour Demand in the Post‐apartheid South African Wine Industry

In 2013 the minimum agricultural wage in South Africa was increased by an unprecedented 51%. We use data on 77 Western Cape Province wine grape farms from 2005–2015 to estimate the impacts on employment. Previous post‐apartheid labour market reforms increased minimum wages substantially, but re‐entry to global markets after sanctions were lifted increased demand and this preserved jobs in the wine sector. However, by 2005 this demand growth had largely ceased. The long‐run wage elasticity for permanent employees was found to be ?0.4, but for casual workers the figure was ?4.7, so the 51% wage increase is likely to decimate casual employment in the future. Thus, the poorest and most vulnerable casual workers lose most in terms of jobs, incomes and secure livelihoods, whereas 80% of full‐time staff benefit from the higher minimum wages. Thus, the minimum wage change is likely to increase the gap between privileged permanent staff and casual workers. This result is not surprising in view of the long‐standing interdependence between farmers and their permanent workers in wine grape production.     

District-level total factor productivity in agriculture: Western Cape Province, South Africa, 1952–2002

This article measures total factor productivity (TFP) growth in Western Cape agriculture for 31 magisterial districts from 1952 to 2002 to illustrate the benefits of disaggregation compared with national TFPs. There is negative or low growth in the eastern districts and rapid growth in the western districts. The regions with substantial chicken, pigs, dairy, and, especially, export fruit production grew rapidly, whereas the sheep-dominated Karoo had negative growth. Productivity growth correlates mostly with output mix, which in turn depends on irrigation investment. A similar program will be needed at the national level if prosperity is to be extended to black smallholders who currently lack access to water and other modern infrastructure.     

Book reviews

Innovation and Industrial Strength in the UK, West Germany, United States and Japan Joan Cox & Herbert Kriegbaum London, Policy Studies Institute, 1989, 168pp. Industrial Societies After the Stagnation of the 1970s. Taking Stock from an Interdisciplinary Perspective Burkhard Strumpel (ed.) Berlin, de Gruyter, 1989, 313pp.

The Social Basis of the Microelectronics Revolution Alfonso Hernan Molina Edinburgh, Edinburgh University Press, 1989, xxi + 260pp., £25.00 h/b (also avail-able in p/b)

Innovation and Technology Transfer in Japan and Europe: Industry-Academic Relations Glynn 0. Philips (assisted by Michael Hughes) London, Routledge, 1990, 282pp.) £45.00

Banking 1992-A Eurostudy Special Report Ian Gillespie (ed.) I,ondon, Eurostudy Publishing, 1990, 162pp., $£60 ($99)     

Corporate Governance and Performance in Publicly Listed,Family-Controlled Firms: Evidence from Taiwan

Using a multi-industry dataset of 228 firms listed on the Taiwan Stock Exchange (TSE) this paper analyses the effects of ownership structure and board characteristics on performance in large, publicly traded firms that are controlled by founding families. After taking account of possible endogeneity problems, we do not find that family control is associated with performance measured in terms of accounting ratios, sales per issued capital, earnings per share and market-to-book value. However, share ownership by institutional investors, and foreign financial institutions in particular, is associated with better performance. Our results indicate that board independence from founding family and board members’ financial interests have a positive impact on performance.