Internal monitoring, regulation, and compensation of top executives in banks

This paper examines the relation between incentive pay, monitoring, and regulatory requirements in banks. Using a one-period model with asymmetrical information between the bank owner and the top management team, as well as within the team itself, we show that (1) incentive pay increases the mutual-monitoring activity among top executives; (2) senior executives, especially the CEO, collect more incentive pay than their subordinates; and (3) bank regulations, such as capital adequacy (CAD) requirements, reduce the absolute amount of incentive pay granted to executives.     

Insurance with Frequency Trading: A Dynamic Analysis of Efficient Insurance Markets

This paper extends existing insurance results on the type of insurance contracts needed for insurance market efficiency to a dynamic setting. It introduces continuously open markets that allow for more efficient asset allocation. It also estimates the role of preferences and endowments in the classification of risks, which is done primarily in terms of the actuarial properties of the underlying risk process. The paper further extends insurability to include correlated and catastrophic events. Under these very general conditions the paper defines a condition that determines whether a small number of standard insurance contracts (together with aggregate assets) suffice to complete markets or one needs to introduce such assets as mutual insurance. Journal of Economic Literature Classification Numbers: D81, D99, G11.     

Explicit filters and supply chain design

Due to the complexity of present day supply chains it is important to select the simplest supply chain scheduling decision support system (DSS) which will determine and place orders satisfactorily. We propose to use a generic design framework, termed the explicit filter methodology, to achieve this objective. In doing so we compare the explicit filter approach to the implicit filter approach utilised in previous OR research the latter focusing on minimising a cost function. Although the eventual results may well be similar with both approaches it is much clearer to the designer, both why and how, an ordering system will reduce the Bullwhip effect via the explicit filter approach. The “explicit filter” approach produces a range of DSS designs corresponding to best practice. These may be “mixed and matched” to generate a number of competitive delivery pipelines to suit the specific business scenario.     

Dominance Statistics: A Simulation Study on the d Statistic

Quality &; Quantity - Cliff (1993) has proposed the use of a measure of effect size alternative to traditionalmean differences: δ {? = Pr(xi1 &;gt; xj2) - Pr(xi1 &;lt; xj2)}which,...     

An Analysis of Differences in Earnings Between Small and Large Commercial Banks

This paper introduces a simple, yet rich, measure of efficiency changes based on the revenue-generating-ability (RGA) principle. Using this principle, we explain the connections between efficiency changes and the variables, such as pretax profits, interest expense, non-interest expense, profit margins, loan loss provision, and asset quality. These connections are used to explain earnings differences between small and large commercial banks.     

Are serial Condorcet rules strategy-proof?

Abstract. This paper explores the extent to which majority rule is invulnerable to manipulation by individuals and coalitions, even when majority rule is used to select more than one alternative. The resulting rule may or may not be strategy-proof, depending on the size of the coalitions that can form, and on the nature of the individual preferences over sets of alternatives. No individual can manipulate with respect to a wide family of preferences over sets. The only restriction on the domain of true and revealed individual preferences is that the selection rule is always well defined. Received: 1 November 1999 / Accepted: 7 May 2001 We thank two anonymous referees for suggestions that have significantly improved the paper. We are also grateful to l'Université de Caen for sponsoring a Workshop on Social Choice Theory, where a first draft of this paper was presented in May, 1999, and to the workshop participants for helpful observations. Work on the final version of the paper was done while one of the authors was a guest of the Project on Intergenerational Equity supported by the Ministry of Education, Science, and Technology of Japan. We are grateful to the Ministry and to the project leader, Professor Kotaro Suzumura, for their support.     

Enhancing television advertising: same-language subtitles can improve brand recall,verbal memory,and behavioral intent

This research explores how same-language subtitles—on-screen text that matches the spoken language—can enhance advertising effectiveness for television commercials on normal viewing audiences outside of foreign-language or deaf-viewer contexts. A preliminary eye-tracker study shows that same-language subtitles capture disproportionate visual attention, and a first study highlights that same-language commercial subtitles can increase brand recall and memory of other verbal ad information. Three further studies using 12 additional ads reinforce the positive effects of subtitles and show how same-language subtitle effectiveness varies with changes in visual and verbal ad complexity. In addition to showing how subtitles can increase behavioral intent, results also highlight how varying subtitle content affects memory gains and illustrate how subtitles can lead to negative effects in the uncommon situation that brand information is missing from the audio. As the efficacy of television advertising becomes increasingly debated, same-language subtitling is a simple way to boost advertising effectiveness.     

Institutions for private sector development and pro‐poor growth: Evidence from Vietnam

Using the Vietnam Household Living Standards Survey 2008, we explore the differences in pro‐poor growth performance in provinces in Vietnam according to the quality of the provinces’ institutions that support private sector activity. We exploit the localized and varying effect of French colonial legacy across Vietnamese provinces to address the endogeneity of institutions. We find strong and robust evidence of a positive effect of good‐quality institutions that support private sector activity on pro‐poor growth and that enhanced working hours and hourly wage and extended income from non‐farm self‐employment play critical roles in this outcome.     

Kicking a crude habit: diversifying away from oil and gas in the twenty-first century

Abstract

This article investigates the correlates of diversification away from oil and natural gas dependence in the context of the twenty-first century resource boom (and bust). In a sample of 40 oil- and gas-dependent economies, the majority showed significant sectoral diversification of GDP, but exports remained highly concentrated in fuel exports. Regression analysis indicates that countries that began the boom with higher levels of oil and gas dependence, poorer countries, and those with significantly larger- or smaller-than-average populations were more successful in diversifying their GDP during the commodities boom. Governance matters – more effective, capable bureaucratic structures are associated with greater GDP diversification away from oil and gas – though the effects are not uniformly positive. For any given level of government effectiveness, stronger rule of law is associated with less GDP diversification. Education appears to affect GDP and export diversification differentially. Consistent with endogenous growth theory, countries with more educated populations saw greater growth in their nonresource sectors than countries with less educated populations, though education is associated with greater export concentration. Internal economic diversification in the twenty-first century has been less a matter of policy formation and implementation, and more a matter of factors that shape the policy-making environment.     

Implementation of college admission rules

Summary We consider both Nash and strong Nash implementation of various matching rules for college admissions problems. We show that all such rules are supersolutions of the stable rule. Among these rules the lower bound stable rule is implementable in both senses. The upper bound Pareto and individually rational rule is strong Nash implementable yet it is not Nash implementable. Two corollaries of interest are the stable rule is the minimal (Nash or strong Nash) implementable solution that is Pareto optimal and individually rational, and the stable rule is the minimal (Nash or strong Nash) implementable extension of any of its subsolutions.We wish to thank Professor William Thomson for his efforts in supervision as well as his useful suggestions. We are grateful to the participants in his reading class, workshops at Bilkent University, University of Rochester, and in particular Jeffrey Banks, Stephen Ching, Bhaskar Dutta, Rangarajan Sundaram and an anonymous referee for their helpful comments.