A Time to Scatter Stones,and a Time to Gather Them: The Annual Cycle in Hedge Fund Risk Taking

Analyzing a sample of hedge fund daily returns from Bloomberg, we find a seasonal pattern in their risk taking. During earlier months of a year, poorly performing funds reduce risk. The reduction is stronger for funds with higher management fees, shorter redemption periods, and recently deteriorating performance, consistent with a managerial aversion to early fund liquidation. Toward the end of a year, poorly performing funds gamble for resurrection by increasing risk. It is largely achieved by increasing exposure to market factors, and can be linked to stronger indirect managerial incentives during the second half of a year.     

Restless minds: South African students and the brain drain

This article reports the results of a 2002 survey of emigration potential among a representative sample of 4784 postgraduate and final-year undergraduate students at South Africa's tertiary educational institutions. The authors created a valid and reliable index of emigration potential and found slightly higher levels than those measured by identical questions in previous surveys of skilled adult South Africans. Multivariate regression analysis revealed that the factors that most increase emigration potential among South Africa's future skills base are logistical ones, including family encouragement and financial resources. Next in importance are students' prospects of a better life for themselves and their families in their target countries than in South Africa. Finally, the study showed that patriotism and strong national identity decrease emigration potential while previous travel abroad and access to information about life abroad increase it. It also found that a range of possible government attempts to make emigration more difficult would only increase students' probability of leaving the country.     

Disentangling barriers to internationalization

Abstract. Recent literature on multinational firms has focused on low productivity as a barrier to the internationalization of firms. But labour market frictions or financial constraints may also hamper internationalization. In order to assess the importance of these barriers, we present new empirical evidence on the extensive and intensive margin of exports and foreign direct investment (FDI) based on micro‐level data of German firms. First, we find a positive impact of firm size and productivity on firms’ international activities. Second, labour market frictions can constitute barriers to foreign activities. Third, self‐reported financial constraints have no impact on firms’ internationalization decisions. JEL classification: F23, G2     

The rise and demise of gedik markets in Istanbul, 1750–1860

Using new evidence uncovered from Istanbul court records, this paper shows that Ottoman markets were capable of spontaneous financial innovation before the introduction of modern financial instruments. At the same time, however, it demonstrates that the impact and sustainability of these innovations depended on the underlying political equilibrium. Gediks—entitlements to usufruct rights over the factors of production used in urban commercial and industrial activity—gradually transformed into liquid assets during the late eighteenth century. This transformation was enabled by the coercive power of Janissary‐infiltrated guilds in response to the financial needs of small‐ and medium‐scale actors operating within the confines of the domestic economy. The entry barriers, which enabled gedik markets to exist in the first place, also limited their use for growth‐promoting purposes and thus set them apart from similar financial instruments that emerged in the West. Gedik markets disappeared as the Janissary–guild coalition declined and better financial instruments emerged during the mid‐nineteenth century.     

Do Information Rents in Loan Spreads Persist over the Business Cycles?

In this paper, we seek empirical evidence for information rents in loan spreads by analyzing a sample of UK syndicated loan contracts for the period from 1996 to 2005. We use various measures for borrower opaqueness and control for bank, borrower and loan characteristics and we find that undercapitalized banks charge approximately 34 bps higher loan spreads for loans to opaque borrowers. We further analyze whether this effect persists throughout the business cycle and find that this effect prevails only during recessions. However, we do not find evidence that banks exploit their information monopolies during expansion phases.     

Es gibt weiterhin ökonomische Argumente für einen öffentlichen Rundfunk

Recent economic literature criticises the size and mandate of public broadcasting in Germany. Technological progress has changed the methods of producing and distributing broadcasting content. Traditional broadcasting and print media have converged in a digital environment. Some of the classical arguments for publicly funded broadcasting have become invalid. This article argues that the converging media markets are nonetheless characterised by ongoing market failures, mostly because of positive external effects created by public value content. Markets will underprovide such content, which is why they should be publicly funded. We discuss the scope and form of public broadcasting and conclude that there are still economic reasons for dedicated public service broadcasters to exist.     

Climate-induced migration: using mental models to explore aggregate and individual decision-making

The US Dust Bowl of the 1930s (a prolong period of drought experienced in the United States accompanied by severe sand storms) is often described as an abnormal event. However, climate change is likely to increase the frequency and impact of similar occurrences. Because of this, a growing number of scholars have begun to examine multiple facets of climate-induced migration from various disciplinary traditions. Specifically, scholars have called for continued research into individual decision-making processes. Responding to this call, we construct a mental model from historical interviews of those who migrated to California during the US Dust Bowl. Our model provides insight into the migration process with a unique focus on individual decision-making processes of migrants.