On the implications of market power in banking: Evidence from developing countries

This paper investigates how different degrees of market power affect bank efficiency and stability in the context of developing economies. It sheds light on the competition-stability nexus by documenting and analyzing the complex interactions between a tripod of variables that are central for regulators: the degree of market power, bank cost and profit efficiency, and overall firm stability. The results show that an increase in the degree of market power leads to greater bank stability and enhanced profit efficiency, despite significant cost efficiency losses. The findings lend empirical justification to the traditional view that increased competition may undermine bank stability, and may bear significant implications for stressed banking systems in developing economies.     

The impact of off-balance-sheet activities on banks returns: An application of the ARCH-M to Canadian data

This paper revisits the impact of off-balance-sheet (OBS) activities on banks risk-return trade-off. Recent studies (e.g., Stiroh and Rumble, 2006) show that increasing OBS activities does not necessarily yield straightforward diversification benefits for banks. However, introducing a risk premium in the standard banks returns models, and resorting to an ARCH-M procedure, Canadian data suggest that banks risk-return trade-off displays a structural break around 1997. In the second subperiod of our sample (1997–2007), we find that the noninterest income generated by OBS activities no longer impacts banks returns negatively. While during the first period (1988–1996) the volatility variable is not significant in any returns equations, a risk premium eventually emerges, pricing the risk associated to OBS activities.     

Effect of Secondary School Fees on Educational Attainment*

In this study, the heterogeneity of the fee abolition process in West German secondary schools is used to identify the effect of school fees on educational attainment and to obtain an estimate of the price elasticity of upper secondary education. The analysis is based on representative individual‐level data from three annual surveys of the German Mikrozensus. While coefficients cannot be estimated precisely, the results suggest that, on average, upper secondary school attainment increased by at least 8 percent in response to the fee abolition. The educational attainment of females appears to be more price sensitive than that of males.     

Social Preferences,Sorting, and Competition*

In this paper, I investigate how an increase in competition for workers influences the impact of social preferences on labor‐market outcomes. By sorting themselves into firms with homogeneous work forces, workers can ensure that they suffer less from social comparisons. Competition promotes choice and thus facilitates sorting. However, competition also boosts rent differences in the labor market, because firms cannot curb internal inequity among its employees without losing workers to competitors. To reduce their exposure to social comparisons, workers might engage in inefficient sorting into unemployment. Consequently, social preferences can have strong effects (i.e., unemployment) in a competitive labor market, whereas they only have a slight impact on labor‐market outcomes in a monopsony.     

TRANSATLANTIC CAPITAL MARKET PRICE DISCOVERY DURING A FINANCIAL CRISIS

Previous results show relatively small amounts of time variation in the Hasbrouck (1995) information share across international markets. Using data from a security that was cross‐listed on the New York and London Stock Exchanges in the 1860s, we find that the information share changes dramatically during a financial crisis that began in the foreign market.     

ISO 14001 and the Reduction of Toxic Emissions

ISO 14001 is an international standard for Environmental Management Systems, adopted by over 36,000 organizations worldwide. This paper attempts to determine the length of time after which a given company has implemented ISO 14001 experiences emission reduction. The sample used is a group of 264 manufacturing facilities in the USA, which represent 23 percent of all the ISO 14001 certified organizations in the US, analyzed throughout the period from 1996 to 2001. The results show that 75 percent of the companies experienced a reduction in their emissions, among which 53 percent had already done so just one year after obtaining ISO 14001.     

Why do financial systems differ? History matters

We describe a dynamic model of financial intermediation in which fundamental characteristics of the economy imply a unique equilibrium path of bank and financial market lending. Yet we also show that economies whose fundamental characteristics have converged may continue to have very different financial structures. Because setting up financial markets is costly in our model, economies that emphasize bank lending are more likely to continue doing so in the future, all else equal.     

WAGE‐RISE CONTRACT AND QUANTITY COMPETITION WITH PROFIT‐MAXIMIZING AND LABOUR‐MANAGED FIRMS

This paper examines the behaviours of a profit‐maximizing firm and a labour‐managed profit‐per‐worker‐maximizing firm in a two‐stage quantity‐setting model with a wage‐rise contract as a strategic commitment. The paper then shows that there exists a unique equilibrium that coincides with the Stackelberg solution where the profit‐maximizing firm is the leader and the labour‐managed firm is the follower.