A test for inflation persistence in Nigeria using fractional integration & fractional cointegration techniques

This study seeks to test for inflation persistence in Nigeria using the recently developed fractional cointegration VAR model by Johansen and Nielsen (2012) and complemented with univariate fractional integration techniques. The empirical results suggest evidence of high inflation persistence in Nigeria albeit with a lower trend after the global financial crisis. Also, the major classes of inflation – headline, core and food inflation rates, share long run properties regardless of the sample used. This suggests that any policy action directed at a particular class of inflation will have a spill-over effect on the other classes given the strong association among them. The ability to also exploit the fractional cointegration in a multivariate set-up when modeling inflation is a major contribution of this study and ignoring same may lead to wrong conclusions. However, the results are sensitive to the choice of data frequency.     

Financial statement comparability and bank risk-taking

This study examines the relationship between financial statement comparability and bank risk-taking. Our analysis of a sample of publicly listed U.S. banks over the 1994–2019 period shows that banks with more comparable financial statements are related to significantly less risk-taking. We also find that the negative relationship between comparability and risk-taking is more pronounced for firms with more severe moral hazard and agency problems. Our documented findings are robust across alternative measures of comparability and risk-taking and considering change analysis, after controlling for strength of corporate governance and using propensity score matching and two-stage least squares estimation to address endogeneity concerns. Our analysis also shows that the relationship between financial statement comparability and bank risk-taking is stronger for smaller banks than for larger banks. Overall, this study provides unique insights into the role of financial statement comparability in curbing risk-taking in the banking sector.     

Guarantees,transparency and the interdependency between sovereign and bank default risk

Bank debt guarantees have traditionally been viewed as costless measures to prevent bank runs. However, as recent experiences in some European countries have demonstrated, guarantees may link the coordination problems of bank and sovereign creditors and induce a functional interdependence between the likelihoods of a government default and bank illiquidity. Employing a global-game approach, we model this link, showing the existence and uniqueness of the joint equilibrium and derive its comparative statics properties. In equilibrium, the guarantee reduces the probability of a bank run, while it increases the probability of a sovereign default. The latter erodes the guarantee’s credibility and thus its effectiveness ex ante. By setting the guarantee optimally, the government balances these two effects in order to minimize expected costs of crises. Our results show that the optimal guarantee has clear-cut welfare gains which are enhanced through policies that promote greater balance sheet transparency.     

Impact of macroeconomic surprises on the Brazilian yield curve and expected inflation

This study investigates how unexpected announcements in Brazilian and U.S. macroeconomic indicators affect the term structure of nominal interest rates, as well as implicit inflation expectations and real interest rates. Using daily data from March 2005 to December 2012, we employ an extended Vector Error Correction Model to take into account nonstationarity and the long-term equilibrium among different maturities of those curves. We found empirical evidence that macroeconomic surprises, domestic (Brazilian) and external (U.S. American), which lead the market to believe that there might be a higher risk of inflation or an overheated economy, raise nominal interest rates, implicit expected inflation and real interest rates. Surprisingly, in relation to the efficient-market hypothesis, we found that some macroeconomic surprises have a lagged effect on the yield curves. We also tested the impact of the global financial crisis of 2007–09 and found that the crisis affected significantly the direction and magnitude of the responses to macroeconomic news.     

Should we geoengineer larger ice caps?

The climate of Earth is susceptible to catastrophes that could threaten the longevity of human civilization. Geoengineering to reduce incoming solar radiation has been suggested as a way to mediate the warming effects of contemporary climate change, but a geoengineering program for thousands of years could also be used to enlarge the size of the polar ice caps and create a permanently cooler climate. Such a large ice cap state would make Earth less susceptible to climate threats and could allow human civilization to survive further into the future than otherwise possible. Intentionally extending Earth’s glacial coverage will require uninterrupted commitment to this program for millenia but would ultimately reach a cooler equilibrium state where geoengineering is no longer needed. Whether or not this program is ever attempted, this concept illustrates the need to identify preference among potential climate states to ensure the long-term success of civilization.     

Public perceptions of future threats to humanity and different societal responses: A cross-national study

There is growing scientific evidence that humanity faces a number of threats that jeopardize its future. Public perceptions of these threats, both their risks and reactions to them, are important in determining how humanity confronts and addresses the threats. This study investigated the perceived probability of threats to humanity and different responses to them (nihilism, fundamentalism and activism), in four Western nations: the US, UK, Canada and Australia. Overall, a majority (54%) rated the risk of our way of life ending within the next 100 years at 50% or greater, and a quarter (24%) rated the risk of humans being wiped out at 50% or greater. The responses were relatively uniform across countries, age groups, gender and education level, although statistically significant differences exist.Almost 80% agreed “we need to transform our worldview and way of life if we are to create a better future for the world” (activism). About a half agreed that “the world’s future looks grim so we have to focus on looking after ourselves and those we love” (nihilism), and over a third that “we are facing a final conflict between good and evil in the world” (fundamentalism). The findings offer insight into the willingness of humanity to respond to the challenges identified by scientists and warrant increased consideration in scientific and political debate.     

Global imbalances and dynamics of international financial markets

We provide an overview of the special issue “Global Imbalances and dynamics of international financial markets”. This special issue, which is associated with the 7th International Finance Conference, features research papers dealing with the impact of global imbalances, market complexity, and the impact of the recent global financial crisis on the conduct of monetary policies, financial market dynamics, financial stability, and risk management models.     

International educational tourism: Does it foster global learning? A survey of South African high school learners

International educational tourism has the potential to foster global learning; however, very little empirical research exists to support this claim. This study responds to the growing demand in the literature for rigorous empirical research to test the underpinning assumption of IET. A global learning survey instrument is developed and completed by 1152 Grade 11 learners in 16 South African exclusive high schools. In doing so, this paper demonstrates that some types of IET are more conducive to global learning than others. Furthermore, for significant global learning to occur, educational tourism needs to be facilitated and cultural difference needs to be experienced.Personality traits that include curiosity, altruism, and being open-minded to new experiences, are identified as predictors of global learning, but the effect of school-based academic achievement is small.Additionally, through the synthesis of educational tourism, international education, experiential learning and global learning theories, the concept of IET is developed.     

Knowing your boundaries: Integration opportunities in international professional service firms

This study presents three different business models (continuous, repetitious, and unique) identified in international professional service firms that pursue a transnational strategy. These business models have varying opportunities for global integration. We extend the integration–responsiveness framework by offering a framework for analyzing how to balance global integration with local responsiveness when pursuing a transnational strategy. By identifying the content, structure, and governance transactions of the three business models, we can determine when to pursue headquarters-initiated global integration and when to choose strategies that ensure local responsiveness and subsidiary competitiveness in local markets.     

Does Size Matter? Evaluating Corporate Environmental Disclosure in the Australian Mining and Metal Industry: A Combined Approach of Quantity and Quality Measurement

There are an increasing number of companies in the mining and metals sector disclosing environmental sustainability information in their annual reports, sustainability reports and corporate internet web pages. However, there is ongoing debate about the relationship between the quantity and the quality of environmental disclosure. That is, does an increase in number equate to an increase in quality? This study investigates the relationship between the quantity and the quality of environmental disclosure reports. Using content analysis, we examine the environmental disclosure of 55 Australian mining and metal companies which are listed among the Australian Securities Exchange's (ASX) Top 100 mining and metal sector companies. We find that the size of firms influences both the quantity and the quality of corporate environmental disclosure. That is, we find that market capitalization is positively and significantly correlated to the quantity (number of words) and the quality of disclosure. We also confirm that there is a very highly significant, positive correlation between quantity (number of words) and quality of environmental disclosure. In order to investigate any differences between the top performing group and the bottom performing group in terms of environmental disclosure quality, further analysis also confirms that there is a positive relationship between the quantity and the quality of environmental disclosure. Copyright © 2015 John Wiley & Sons, Ltd and ERP Environment