Regulating Banks through Market Discipline: A Survey of the Issues

Abstract.  The interest in the application of market discipline to regulate the financial industry has boomed recently due to the proposed New Capital Accord. This paper reviews the potential role market discipline can play in financial regulation. We start with a discussion of the rationale for financial regulation and with a brief history of the current regulatory mechanisms. Next, a definition of market discipline as a regulatory mechanism is advanced. We evaluate the disciplining power various market participants have. Finally, we argue that more external risk management disclosure is a condition sine qua non in order to enable market discipline as a regulatory mechanism. In this respect, the Basle Committee has taken the right approach.     

HOUSEHOLD AND ENTERPRISE SAVING AND CAPITAL FORMATION IN THE UNITED STATES: A MARKET TRANSACTIONS VIEW

Contrary to conventional macro theory, it is not the consumption function in terms of either the permanent income or the life-cycle theory of saving that has furnished the saving for enterprise capital formation in the United States. Household sector accounts indicate that household gross saving, correctly measured, did not exceed household gross capital formation in the United States over the period since 1947. Furthermore, historical data on enterprise saving and capital formation in the United States, and cross-section tax return data of U.S. corporations indicate that the gross saving for many enterprise sectors has been equal to or greater than their gross capital formation. There are exceptions, however: these same sources indicate that public utilities have borrowed substantially to finance their capital formation. Finally, it is argued that employer pension and insurance reserves held by financial institutions for future benefit payments represent retained income of a nature similar to undistributed profits, and that these constitute a source of saving in the economy.     

Legalistic organizational responses to catastrophic illness: The effect of stigmatization on reactions to HIV/AIDS

The HIV/AIDS epidemic has focused increased attention on catastrophic illnesses in the workplace, and because of the stigmas associated with HIV/AIDS, it raises three primary concerns for organizations: (1) organizational avoidance of legal sanctions and litigation; (2) the maintenance of organizational legitimacy; and (3) organizational protection of employee rights. Although many organizations adopt legalistic responses to cope with these concerns, the analysis presented in this article suggests that while legalistic approaches function well to protect organizational interests in terms of both legal liability and legitimacy, the are only partially able to protect employee rights. Drawing upon the limited literature on HIV/AIDS in the workplace, this article presents an agenda for future research on organizational responses to HIV/AIDS.     

Introduction: What Role Can Experiments Play in Research on Regulation?

Journal of Regulatory Economics -     

Concessional Amnesty and the Politics of Immigration Reforms

This paper establishes a political support model of immigration reforms. The analysis highlights the distinction between border enforcement and employer sanction measures in that the former can be more aptly characterized as an income transfer from employer to native labor interests, whereas the latter generates deadweight losses that are borne entirely by producers. We show that while amnesty may appear to run contrary to the original intent of the immigration reform, it may nevertheless facilitate rent capture by the politician by "wiping the slate clean" and reducing the deadweight loss of employer sanction measures.     

The Influence of Environmental Pressures, Diversification Strategy, and Union/Nonunion Setting on Employee Participation

This study tests the hypotheses that environment, diversification strategy, and union/nonunion setting affect the number and variety of employee participation programs. A survey of large U.S. manufacturing firms measured the implementation of employee participation programs. Regression results suggest that environmental pressures exert a direct effect on participation in union settings. However, in nonunion settings, environment and diversification strategy both correlated directly with participation. These results suggest that unions could potentially affect participation program implementation.     

After the famine: food aid policy and management issues in sub-Saharan Africa

The large amount of food aid that was required to meet Africa's emergency food situation resulted in the postponement of some fundamental decisions that were being taken about food aid use in sub-Saharan Africa. Now the donor community and recipient governments are again giving priority to integrating food aid with other available resources in order to meet longer-term food policy and wider development objectives. This paper looks at some of the policy and management issues which need to be addressed if the effectiveness of food aid assistance is to be improved in the current African context. Shortages of locally qualified personnel to administer project food aid have proven to be a major bottleneck in most sub-Saharan countries. Most sub-Saharan states receive food aid from a variety of sources: multilateral, bilateral and a few private-voluntary organizations. As a result, countervailing priorities are set by the donors themselves and give rise to conflicts. The recent drought and famine conditions have compounded an image problem in which food aid is narrowly identified by recipient governments as a project resource to be used primarily for nutrition interventions and for the rural sector. The image problem often limits project selection and overlooks innovative uses of food aid. Many sub-Saharan countries are starting to acquire considerable amounts of counterpart funds from program food aid. However, their use is not coherently integrated with the total aid flow. Multi-year programming has emerged as a management issue which has unnecessarily divided the food aid donor community. The fundamental issue is flexibility in programming, not multi-year programming. The major policy objective now facing the food aid donor community and recipient countries is how to lower emergency allocations while simultaneously increasing project and program aid. Most nonfood-aid donor agencies and their constituent bodies do not treat food aid as a valid economic resource, thereby undermining its effectiveness. The eventual success of food aid use in Africa may be a function of the recipient governments and other major donor and financial organizations.     

Cooperative goals and team performance: Examining the effects of advice network

Based on the theory of cooperation and competition, this study examines the relationships between cooperative goals, advice network, and team performance, and their boundary conditions. Based on multi-source data from 189 teams in a military organization, results indicate that cooperative goals positively influence team performance via advice network density. Moreover, advice network centralization moderates the relationship between advice network density and team performance. In addition, advice network centralization moderates the indirect effect of cooperative goals on team performance via advice network density.     

Tourism and cross cultural communication

Adaptive strategies that facilitate economic and socio-cultural interaction in a West Mexican resort community, Puerto Vallarta, are examined over time. The special role played by bilingual culture brokers and the presence of both seasonal and resident foreigners contribute to rapid culture change, the expansion of tourism, and strenghening ethnic identity. This paper focuses on the spatial, temporal, linguistic, and cultural factors that mediate between the various types of guests and the host country.