Does bank competition promote financial inclusion? A cross-country evidence

The idea of financial inclusion has recently been discussed as one of the key strategies to enhance economic development (World Bank 2014). We move this discussion forward by examining if bank competition is a crucial component enforcing financial inclusion, which is arguably a finance supply-side driven process. In this study, we compute the financial inclusion index built on Sarma (2008) approach to better reflect banks’ willingness and capability to provide financial services. Applying System Generalized Method of Moments to the panel of 93 countries, we find that bank competition promotes financial inclusion.     

Corporate governance and firm performance in Russia: an empirical study

Using the agency and institutional perspectives, this study advances several hypotheses about the board structure–firm performance relationship within Russia. We tested these hypotheses using survey data. Despite a relatively small sample size, predictions from both theoretical perspectives were supported. Specifically, we found a negative relationship between “informal” CEO duality and firm performance. This finding is noteworthy given the 1996 Russian Federal law which prohibits the CEO from also serving as board chair. Also, we found that the more vigorously the firm pursues a retrenchment strategy, the more negative the relationship between proportion of inside directors and firm performance. Overall, these findings suggest that effective corporate governance may be essential to firm performance in Russia.     

Contrarian Investment in the Dutch Stock Market

The efficient markets hypothesis states that at any times security prices fully reflect all available information. Contrarian investment strategies do not recognize the efficiency of capital markets. They call for buying undervalued stocks, i.e. stocks with a low price relative to their fundamentals. The idea behind such a strategy is to take advantage of the extrapolation behaviour of naive investors. Using a fresh and extensive data set from the Dutch stock market, we found that these strategies yield an outperformance without a higher risk. Our results make it hard to maintain the efficient market hypothesis.     

LIQUIDITY AND ASSET PRICING UNDER THE THREE‐MOMENT CAPM PARADIGM

We examine whether the use of the three‐moment capital asset pricing model can account for liquidity risk. We also make a comparative analysis of a four‐factor model based on Fama–French and Pástor–Stambaugh factors versus a model based solely on stock characteristics. Our findings suggest that neither of the models captures the liquidity premium nor do stock characteristics serve as proxies for liquidity. We also find that sensitivities of stock return to fluctuations in market liquidity do not subsume the effect of characteristic liquidity. Furthermore, our empirical findings are robust to differences in market microstructure or trading protocols between NYSE/AMEX and NASDAQ.     

Correlates of organizational effectiveness: A multilevel analysis of a multidimensional outcome

This paper explores the relationship between environmental scarcity, organization size, and board composition with measures of financial and social performance. All three correlates were found to be related to both measures of performance and the hypotheses were largely supported. Anomalous relationships, however, were found between organizational size and social performance as well as outsider representation and financial performance. This study demonstrates that normative explorations focusing only on financial performance can lead to misleading conclusions about organizational effectiveness.William Q. Judge is currently an assistant professor of strategic management at the University of Tennessee at Knoxville. He is continuing his research in the areas of organizational effectiveness, stakeholder management, and corporate governance.     

REGULATORY NEGOTIATION IN AUTOMOBILE INSURANCE REFORM

Tort reform of the motor accident insurance compensation scheme in the Australian state of New South Wales in 1999 came about as a result of an untested experiment in regulatory negotiation. This article is a first-hand account of the successful attempt to craft a consensual modification of the scheme through deliberations among a working group of service provider representatives. The author, a Canadian lawyer, investigated the prospects for change, acted as chief negotiator, and observed the legislative process that led to the final law reform.     

Capital structure around the world: The roles of firm- and country-specific determinants

We analyze the importance of firm-specific and country-specific factors in the leverage choice of firms from 42 countries around the world. Our analysis yields two new results. First, we find that firm-specific determinants of leverage differ across countries, while prior studies implicitly assume equal impact of these determinants. Second, although we concur with the conventional direct impact of country-specific factors on the capital structure of firms, we show that there is an indirect impact because country-specific factors also influence the roles of firm-specific determinants of leverage.     

A theoretical foundation for Constant Market Share analysis

Constant Market Share (CMS) analysis is a popular tool for analyzing changes in exports of a country. Nevertheless, its theoretical foundations (and policy relevance) have been questioned. In this paper, we provide such a foundation by relating CMS analysis to a two-stage homothetic demand model. An indication of the empirical relevance of this relationship is given by comparing the CMS analysis with a two-stage Constant Elasticity of Substitution demand model applied to 1972–1976 data of the Economic and Social Commission for Asia and the Pacific (ESCAP).Paper presented at the XX-th world conference of the Applied Econometric Association in Istanbul, December 1986. The research reported in this paper was carried out as part of the project Disequi-librium and Equilibrium in Demand and Supply, which is approved by the Dutch Office of Education and Sciences. Ivo J. Steyn and Philip A. ten Cate provided excellent research assistance. We thank an anonymous referee for helpful comments.     

Characterizations of negative multinomial distributions based on conditional distributions

In this paper characterizations of negative multinomial distributions based on conditional distributions have been studied.     

Inter-market competition for exchange traded funds

We examine how the different mix of informed and liquidity trading in the market for ETFs affects the nature of inter-market competition. We find that both the characteristics of the securities and the structures of the competing markets jointly determine the nature of inter-market competition. Given the superior execution quality on the ECNs and the low adverse selection costs in the ETF market, anonymous market such as the ECNs, attract both liquidity and informed traders. We also find that markets compete in a subset of ETFs. In addition, we find that quotebased competition is prevalent in the market for ETFs.