NONPRICE COMPETITION IN THE TURKISH CREDIT CARD MARKET

Attempts to explain high and sticky credit card rates have given rise to a vast literature on credit card markets. This article endeavors to explain the rates in the Turkish market using measures of nonprice competition. In this market, issuers compete monopolistically by differentiating their credit card products. The fact that consumers perceive credit cards and all other banking services as a bundle allows banks to also employ bank level characteristics to differentiate their credit cards. Thus, the features and service quality of banks are expected to affect credit card rates. Panel data estimations also control for various costs associated with credit card lending. The results show that nonprice competition variables have significant and robust effects on credit card rates. (JEL G21, G28, O16)     

The Effect of Demographics on Job Satisfaction: A Study of Hotel Managers in Turkey

This study examined the relationship between selected demographic characteristics of middle-level hotel managers in Turkey and five selected job satisfaction dimensions (degree of satisfaction with the work, coworkers, supervision, financial compensation, and promotion opportunities). In addition, the relationship between job satisfaction dimensions and the middle-level hotel managers' overall job satisfaction level was analyzed. The study sample consists of 103 middle-level hotel managers (all Turkish nationals) in 17 rated four- and five-star hotels in Kusadasi, Turkey. Study findings indicate significant differences between managers in various demographic categories and their levels of job satisfaction. Overall, the data revealed that financial compensation, promotion opportunities, and supervision most significantly impacted middle-level hotel managers' overall job satisfaction levels.     

Optionality and Daily Dynamics of Convenience Yield Behavior: An Empirical Analysis

In this article I empirically examine the daily convenience yield behavior for six commodity markets (crude oil, heating oil, gasoline, wheat, corn, and copper). The results illustrate that convenience yield behavior can be statistically explained within an option pricing framework. However, because one of the assumptions of the standard call option formula is not fully satisfied by the observed convenience yield series, an alternative option—exchange option—may be more appropriate for modeling the daily convenience yield behavior. Furthermore, I empirically test two hypotheses on convenience yield behavior. The results confirm the assertion that the convenience yield is increasing in marginal production costs. In addition, the findings offer limited support for the hypothesis that the convenience yield is decreasing in the serial autocorrelation of spot prices. The observed switch in the sign of regression coefficients as the order of autocorrelation increases is attributed to the probable presence of mean reversion in these markets.     

Social and political components of economic performance for the 1960s: A note on Adelman and Morris' ‘society,politics and economic development’

The influence of a given sociopolitical setting on the subsequent economic performance of the LDCs is examined. For this purpose, non-economic indicators developed by Adelman and Morris and two indices of economic activity, per capita gross national product and per capita energy consumption, are used. Component and regression analysis show that in the short run, a given sociopolitical setting significantly affects subsequent economic activity. The results enable a broadening of some of Adelman and Morris' findings.     

Regulate one service,tame the entire market: Credit cards in Turkey

In credit card markets banks provide both payment and credit services. Two regulations were recently enacted in the Turkish credit card market: one on payment services in 2005 and the other on credit services in 2006. By employing the well-known  and  method and a unique quarterly data set for 21 Turkish banks between 2002 and 2008, we investigate the extent of banks’ market power in the Turkish credit card market before and after the regulations. Unlike most of the existing literature, which considers competition and regulation for either credit or payment services and ignores the externalities between them, we consider the entire market by taking both services into account. Fixed effects estimations reveal that banks enjoyed collusive oligopoly power before the regulations. Although the first regulation did not have much impact, the second led to rises in both banks’ total revenues and competition in the entire market.     

Asymmetry of information flow between volatilities across time scales

Conventional time series analysis, focusing exclusively on a time series at a given scale, lacks the ability to explain the nature of the data-generating process. A process equation that successfully explains daily price changes, for example, is unable to characterize the nature of hourly price changes. On the other hand, statistical properties of monthly price changes are often not fully covered by a model based on daily price changes. In this paper, we simultaneously model regimes of volatilities at multiple time scales through wavelet-domain hidden Markov models. We establish an important stylized property of volatility across different time scales. We call this property asymmetric vertical dependence. It is asymmetric in the sense that a low volatility state (regime) at a long time horizon is most likely followed by low volatility states at shorter time horizons. On the other hand, a high volatility state at long time horizons does not necessarily imply a high volatility state at shorter time horizons. Our analysis provides evidence that volatility is a mixture of high and low volatility regimes, resulting in a distribution that is non-Gaussian. This result has important implications regarding the scaling behavior of volatility, and, consequently, the calculation of risk at different time scales.     

Analysing dynamic linkages and hedging strategies between Islamic and conventional sector equity indexes

This study analyses the dynamic spillovers across 10 Dow Jones Islamic and conventional sector index pairs. Using various multivariate GARCH models, the results show significant time-varying conditional correlations for all the pairs. Moreover, there is evidence that the conditional correlations for all the sector pairs, except those of the Telecommunication and Utilities sectors, increase after the onset of the global financial crisis (GFC), suggesting non-subsiding risks, contagion effects and gradual greater financial linkages. The Islamic sectors’ risk exposure can be effectively hedged over time in diversified portfolios containing conventional sector stocks. These results provide several practical implications for portfolio managers and policymakers in regard to optimal asset allocations, portfolio risk management and the diversification benefits among these markets.     

Temporal dynamics of trust in ongoing inter-organizational relationships

This paper reports the results of a qualitative study undertaken to understand the nature of trust and its consequences for both suppliers and buyers in short term (relatively new) and long term (older/more mature) relationships in inter-organizational contexts. Scholars have recently pointed out the importance of research that investigates the temporal characteristics and dynamics of trust in inter-organizational studies. Our paper responds to this call by indentifying the changing nature of the level of trust as the buyer–supplier relationship matures. Our findings contribute to sparse and conflicting previous research on the relationship between length of partnership and perceptions of trust, types of dark side consequences of trusting relationships, and reasons buyers and suppliers continue or terminate low/no-trust associations. Specifically, we illustrate that buyers and suppliers draw on substantially different metaphors for understanding the nature of trust in long and short term exchange relationships. Suppliers see marked differences in trust with long term versus short term exchange partners, while buyers see little or no difference. Suppliers and buyers also appear to have different conceptions of how trust is nested (or not) within the broader economic and/or personal relationship. Through our inductive model, we elaborate several types of betrayal and disappointment, distinguish several factors that lead suppliers and buyers to stay in relationships with partners they don't trust, and identify key issues that topple untrusting relationships into terminated relationships.     

Statistical Arbitrage with Pairs Trading

We analyze statistical arbitrage with pairs trading assuming that the spread of two assets follows a mean‐reverting Ornstein–Uhlenbeck process around a long‐term equilibrium level. Within this framework, we prove the existence of statistical arbitrage and derive optimality conditions for trading the spread portfolio. In the existence of uncertainty in the long‐term mean and the volatility of the spread, statistical arbitrage is no longer guaranteed. However, the asymptotic probability of loss can be bounded as a function of the standard error of the model parameters. The proposed framework provides a new filtering technique for identifying best pairs in the market. Backtesting results are given for some of the pairs of stocks that are studied in the literature.