Is there a pecking order? Evidence from a panel of IPO firms

We test the pecking order model of capital structure by examining the financing of firms that went public in 1983. We estimate a logit to predict external financing, and a multinomial logit to predict the type of financing using data on the IPO firms' security offerings during 1984–1992. Our results indicate that the probability of obtaining external funds is unrelated to the shortfall in internally generated funds, although firms with cash surpluses avoid external financing. Firms that access the capital markets do not follow the pecking order when choosing the type of security to offer.     

Estimating the demand for settlement balances in the Canadian Large Value Transfer System: How much is too much?

This paper applies a static model of an interest rate corridor to the Canadian data and estimates the aggregate demand for central bank settlement balances in the Large Value Transfer System (LVTS). The analysis takes into account the downward divergence of the overnight interest rate from the target rate, which has been persistent since 2005. The results suggest that a target of $3,000,000,000 for LVTS settlement balances does not seem excessive during the time period when Canadian monetary policy was operating at the effective lower bound (ELB). In addition, the estimation shows that the point elasticity of overnight interest rate is around 0.17 in the ELB framework.     

Price reaction functions and conjectural variations

Price conjectural variations are estimated to measure the degree of price competition in a product differentiated oligopoly. The empirical model is a simultaneous equation system of product demand and price reaction functions. Own and cross price demand elasticities are estimated in conjunction with the price conjectural variations and price reaction function elasticities. The conjectural variations are estimated for pairs of ready-to-eat breakfast cereal products using brand price and quantity data. The empirical results reject competitive brand pricing behavior in favor of independent or collusive pricing. Further, the hypothesis of a unique consistent conjecture is rejected.     

Determinants of Entry and Profits in Local Banking Markets

This paper estimates a two equation model of market entry and profits, utilizing data on entry into over 2,000 banking markets over the period 1977--88. The entry equations measure whether entry depends on incumbent firms' profits and other market attributes that reflect the long-term attractiveness of markets for entry. Market profits, assumed to follow a partial-adjustment process, are affected by entry directly and indirectly through market structure. The model also corrects for an unavoidable source of error in market-level profits for the banking industry. The estimates suggest that a competitive process is at work in banking markets that limits the ability of supra-normal profits to persist. Entry is more likely in markets that have high profits, consistent with previous empirical results that market structure adjusts more quickly when profits are supra-normal. Population and population growth are also strong determinants of entry. Entry, in turn, reduces profits in rural markets.     

Gender mainstreaming in multi-level political governance in urban Zambia: A critical review of Millennium Development Goal (MDG) achievements

This paper evaluates the progress made by Zambia on the third Millennium Development Goal (MDG) of increasing the political participation of women in urban areas. Based on Nancy Fraser's framework of redistribution-recognition-participatory parity we demonstrate that women's political participation in Zambia is thwarted by a range of historical, economic, socio-cultural and political factors along with specific factors in urban areas such as long work hours, the informal economy and lack of familial support. It concludes that without the introduction of gender-specific quotas within local bodies in Zambia, the newly instituted Sustainable Development Goals will see growing difficulty in achieving progress.     

Asset diversification,firm risk,and risk-based capital requirements in banking

The implications of diversification by firms for risk has been raised particularly in connection with conglomerate mergers. This issue is of special interest in banking now because of a recently implemented policy — risk-based capital guidelines. This study presents results of an empirical investigation into the relationship between diversification of a bank's financial assets and indicators of the risk of insolvency. Results indicate that financial asset diversification, as well as geographic diversification, are related to lower risk.