A counter-example to an option pricing formula under transaction costs

In the paper by Melnikov and Petrachenko (Finance Stoch. 9: 141–149, 2005), a procedure is put forward for pricing and replicating an arbitrary European contingent claim in the binomial model with bid-ask spreads. We present a counter-example to show that the option pricing formula stated in that paper can in fact lead to arbitrage. This is related to the fact that under transaction costs a superreplicating strategy may be less expensive to set up than a strictly replicating one.     

Idiosyncratic use of credit facilities by consumers in an emerging economy

A worldwide increase in household debt since the turn of the century has created considerable concern about the indebtedness of households, especially those in emerging economies that have been hit particularly hard by the global economic slump. In this study, the credit consumption of consumers in Swaziland (N = 264) was investigated by means of a survey that aimed to identify and describe factors that encouraged consumers' use of credit, the influence of credit on their buying behaviour when choosing major household appliances or furniture as well as consumers' knowledge of the conditions of credit facilities that were available for their use in retail. Findings revealed that consumers unequivocally appreciate the convenience that is associated with credit, specifically to cope with unexpected purchases, to benefit from special offers and opportunity to afford expensive goods. These advantages apparently negate the negative consequences such as high interest rates and strain on household budgets. Mean scores that were obtained in the knowledge test that only reflected upon credit agreements that respondents have actually entered into in the past, confirmed their ignorance pertaining to their contractual obligations and their consequent vulnerability. Consumers' age and gender seem to have noteworthy consequences for efforts to enhance informed consumer decision‐making. Younger females were significantly better informed that their older counterpart while the reverse was true for males, although differences were not significant. The significant inverse relationship between income and the LS‐means for the credit knowledge test differ from findings in developed countries and provide valuable opportunity for further investigation.     

Young adults’ consideration of their food choices a propos consequences for their future health

Many researchers have devoted much time and effort to explain the undesirable health outcomes associated with an excessive intake of certain types of fast foods. Particularly vulnerable, are young adults who move out of their parents' homes to live on their own, and then begin to rely on the multitude of so‐called “food away from home” options which are convenient, available and even desirable in their social circles. This study investigated young adults' consideration of the consequences of their consumption of food eaten away from home due to concern about unacceptable habitual behaviour that might negatively affect their future households. The survey involved 395 young adults up to 25 years of age who completed a structured questionnaire which relied on an established Consideration of Future Consequences scale. Data analysis involved exploratory factor analysis, t‐tests and Anova. Findings revealed some concern about the immediate consequences of respondents' fast food consumption, but concern about the future consequences seemed rather distant in their minds. Although significant differences were confirmed within gender and among population groups with regard to immediate concern about their fast food consumption, the means were nevertheless low throughout indicating that much needs to be done to sensitize young people about every day food consumption that might have dire consequences for their future health.     

Female customers' expectation of the service offering and their perception of the service quality in an emerging clothing market

Worldwide, clothing retailers that offer similar merchandise and even the same brands are flanked almost next to one another in shopping centres. Clothing retail therefore appears to be poorly differentiated, and it is not always clear why consumers prefer to patronize one store and avoid another. This study explored female consumers' expectations of the service offering and their perception of the service quality of prominent clothing retail channels in Tshwane, a major urban area in South Africa. The survey involved 243 females that were 20 years of age or older. They completed a structured questionnaire that investigated their (1) expectations of customer service in terms of tangible evidence of the service offering; and (2) perception of service quality using two different instruments by means of a direct measurement approach. Explorative factor analysis was used to reduce the data in terms of relevant dimensions of the respective measuring instruments and to determine the significance of the various dimensions of customer service and service quality in the context of this research. Contrary to what the literature proposes about consumers in an emerging economy, findings of this study suggest that females' expectations of the service offering of clothing retail stores were high. Their expectations were cognitively structured in terms of three elements of customer service, namely (1) physical facilities and product presentation; (2) personnel; and (3) store image and processes. Their perception of service quality revealed an opportunity to augment the service quality through attention to activities that are associated with personnel and the so-called supportiveness dimensions of their service offering. Findings coincided with a prior investigation of Terblanche and Boshoff, although a re-labelling of one dimension of their instrument is proposed to prevent confusion. Recommendations to augment the service quality of clothing retailers are made in terms of tangible evidence of the service offering.     

South African consumers' opinions and consumption of soy and soy products

Interest in soy foods has increased with consumer awareness of its health benefits, especially with soy‐related ingredients being utilized as one of the major sources of high‐protein fortification. The aim of the present study was to assess South African (SA) consumers' opinion of soy and soy products through different statements on consumption, taste, protein value and healthiness. The respondents (n = 3001) for this randomized cross‐sectional study were randomly selected from metropolitan and rural areas in South Africa. Trained fieldworkers administered questionnaires by conducting face‐to‐face interviews. Fourteen statements from four sections of the questionnaire (consisting of 17 food‐related topics in total), probing information on consumers' opinion on soy and soy products, were used. Data on 81% of the respondents (n = 2437), who had heard of soy before, were used for statistical analyses. The data were weighted to be representative of the total SA population based on gender, age and race. No practically significant differences among metropolitan and rural respondents' opinion, gender or age variables regarding any statement were found. A practically significant higher percentage (>60%) of respondents in the total population and within all race groups were positive about soy and agreed that soy is a good source of protein, has many health benefits, associated soy with meat substitutes, were aware of a number of meat substitutes and agreed that soy can replace meat in their diet. Medium to large practically significant differences were found between racial groups regarding certain statements. More Blacks and Indians (76% and 68% respectively) than Whites (25%) use soy. Almost two‐thirds of Indians (65%) and Blacks (64%) eat or drink soy products, compared with only 22% for Whites, indicating that the potential target market for soy products should be chosen accordingly. Higher percentages of Blacks than Whites also indicated that they liked the taste of soy, would use more soy if it was readily available and if a bigger product range existed and would replace cow's milk with soy milk, confirming that Blacks are more positive about soy and would use even more soy if a bigger range of soy products were available. The findings from the current study indicated that more than 70% of SA consumers believe that soy has many health benefits and more than 60% already use soy. Insight gained from this first study of its kind in SA provided valuable information to developers and marketers, and signified that consumer segmentation should be taken into consideration to focus on developing more acceptable soy products that appeal to these consumer segments that are more positive towards the taste of soy and might consume soy regularly. Within the discipline of Consumer Science, efforts to inform consumers about the advantages of soy in terms of its health benefits, and to support it in terms of a greater availability of more acceptable soy products at reasonable prices, would support the ideal of informed, responsible buying decisions across all socio‐economic groups.     

Node selection for the Integrated Sustainable Rural Development Programme in South Africa

Various programmes and strategies in South Africa aim to reduce poverty. The Integrated Sustainable Rural Development Programme (ISRDP) is a sustained campaign against rural poverty and underdevelopment, implemented in 13 nodes selected on account of their poverty, lack of infrastructure and capacity, and provincial representivity. Using a hierarchy of development regions, data from the 2001 Census and a core-periphery model, this paper evaluates the location of the 13 nodes to determine whether the municipalities in these nodes have high levels of poverty and are in need of development. The findings are that although most of these municipalities have high poverty levels, the nodes also include municipalities with relatively high levels of development. There are also 17 municipalities in South Africa with very low levels of development that are not included as nodes in the ISRDP. Policy-makers need to take cognisance of the macro pattern of spatial economic development.     

DETERMINANTS OF SOUTH AFRICA‐US INTRA‐INDUSTRY TRADE IN SERVICES: A WILD BOOTSTRAP DYNAMIC PANEL DATA ANALYSIS1

The study attempts to empirically identify factors that determine South Africa–US intra‐industry trade (IIT) in selected services during the period 1994‐2002. The study utilises Liu‐Davidson‐Flachaire wild bootstrap, which is robust to heteroscedasticity and provides estimates of the degree of parameter bias. The empirical results, in principle, show that South Africa–US IIT in the selected services is determined by factors similar to goods‐based “North‐South” IIT studies. Specifically, differences in per capita income and differences in market size negatively affect IIT. The study also indicates that US foreign direct investment in South Africa positively contributes to the unaffiliated IIT in services.