Default and aggregate income

This paper studies how default varies with aggregate income. We analyze a model in which optimal contracts enable risk sharing of privately observed, idiosyncratic income by allowing for default. Default provisions allow agents with low idiosyncratic income realizations to repay less and thus provide insurance. Default penalties ensure that only these agents default. We show that default can occur under the optimal contract and that default provisions vary with aggregate income. We provide conditions such that both the amount of default and default penalties vary countercyclically with aggregate income and show that the default rate can be discontinuous.     

Aging and Retirement: Evidence Across Countries

How do demographic factors influence retirement? Using a large cross-country data set, I show that in countries with a larger share of elderly in their population the length of retirement is longer. This result holds true if I control for wealth effects, and when the effective labor force participation rate of the elderly is used instead of the official retirement age. Retirement policies and the social security size are strictly related: a new variable, representing the aggregate relevance of retirement policies, turns out to be significant in explaining the size of social security. Finally, the total amount of social security transfers is positively related with the increase of the elderly population, while in per capita terms this relation is not significant.     

Entrepreneurial activity, risk, and the business cycle

This paper analyzes a model in which the risk associated with entrepreneurial activity implies that the amount of such activity is procyclical and results in amplification and intertemporal propagation of productivity shocks. In the model risk averse agents choose between a riskless project and a risky project with higher expected output (‘the entrepreneurial activity’). Agents who become entrepreneurs need to bear part of the project-specific risk for incentive reasons. More agents become entrepreneurs when productivity is high, because agents are more willing to bear risk and need to bear less risk for incentive reasons. Furthermore, cross-sectional heterogeneity can be countercyclical.     

Assessing qualitative similarities between financial reporting frameworks using visualization and rules: COREP vs. pillar 3

Financial institutions are struggling with larger volume, more specific and greater frequency of regulatory reporting after the global financial crisis in 2008, especially those that need to report to multiple jurisdictions. To help to improve reporting efficiency, this paper aims to assess the existence of similarities between templates related to credit and counter party credit risk of COREP and Pillar 3 regulatory reporting frameworks by applying Correspondence Analysis and Association Rules Mining. Our results suggest a high degree of overlap between these reporting frameworks, more prominently the three business functions as Front office, Finance and Risk. These patterns can be used as guidance for financial institutions to reshape their reporting architecture.     

Lobbying for Education in a Two‐Sector Model

Firms specialized in two different sectors lobby to induce the government to subsidize the type of education complementary to their production. Lobbying is endogenous. We show that, if lobbying is not costly, both sectors will lobby in equilibrium and the education policy will induce the same skill composition that would be chosen by the social planner. However, if lobbying is costly and there is sufficient asymmetry between the sectors, only one sector will exert pressure on the policy‐maker in the attempt to direct resources toward the type of education required by its production. Which sector will engage in lobbying depends on relative size, productivity, and price. We also provide some preliminary evidence that lobbying activity by firms may influence the production of skills needed by those firms.     

Collateral and capital structure

We develop a dynamic model of investment, capital structure, leasing, and risk management based on firms' need to collateralize promises to pay with tangible assets. Both financing and risk management involve promises to pay subject to collateral constraints. Leasing is strongly collateralized costly financing and permits greater leverage. More constrained firms hedge less and lease more, both cross-sectionally and dynamically. Mature firms suffering adverse cash flow shocks may cut risk management and sell and lease back assets. Persistence of productivity reduces the benefits to hedging low cash flows and can lead firms not to hedge at all.     

EBITDA margin in brazilian companies Variance decomposition and hierarchical effects

This study explores the controversy between the business and academic perspectives regarding earnings before interest, taxes, depreciation, and amortization (EBITDA). Some authors argue that EBITDA is not useful as an indicator, except for comparing companies within the same sector (Assaf Neto, 2003, McClure, 2006, Stumpp, 2000). On the other hand, the business world strongly uses this type of indicator as a tool to support its decisions (Schmalensee, 1985, Moraes, 2005). This difference in opinions has aroused interest in understanding the reasons for its use and has raised questions regarding the usefulness of EBITDA for comparing companies from both the same and different sectors. By applying Hierarchical Linear Modeling (HLM), the main goal of this research is to observe EBITDA behavior across companies selling goods in Brazil, comparing them within the same sector and across different sectors over time. This research allows for the analysis of the reasons why EBITDA patterns occasionally occur. The results show significant variation in EBITDA among companies across the same sector and across companies from different sectors. On the other hand, our results have shown, nevertheless, that the variability among companies from the same sector was the highest one, raising questions on the actual usefulness of this indicator to compare companies from the same sector.     

Protected Geographical Indications and Designations of Origin: An Overview of the Status Quo and the Development of the Use of Regulation (EC) 510/06 in Europe,With Special Consideration of the German Situation

This article gives an overview of the current use of the European system of protected designations of origin according to Council Regulation (EC) 510/06, using the example of Germany to demonstrate its implementation as well as evaluating the potential and future development of this system of protection. The considerations show that in a few years the number of protected products in Europe will reach a figure of over 1,000 without the dynamic of new registrations weakening in the midterm. In Germany, the system of Council Regulation (EC) 510/06 has not been used very extensively. Despite this, an increase in the number of protected products can also be expected in Germany due to the promotion orientation of the Central Marketing Association and the European Commission.     

Segmentation by benefits sought: the case of rural tourism in Madeira

Rural tourism has been promoted as an effective catalyst for growth in rural areas severely hit by the rural structuring process. However, with regard to islands, rural tourism has been mainly advertised and promoted as a counterpoint to mass tourism. While in most Western countries rural tourism has been in place for decades, islands have been pursuing a rural tourism agenda only since the 1990s. Consequently, we face a dearth of research regarding motivation factors that attract tourists to the rural hinterland on islands. The purpose of this study is to segment and profile rural tourists based on benefits sought in order to gain a better understanding of the current demand trends. The data collection procedure were based on a self-administered survey applied to a sample of 180 tourists, and four clusters were identified. The relaxer cluster which comprises individuals attracted by opportunities to relax and recharge batteries, are the most dominant, suggesting that the sector mimics, to a large extent, the main tourism market. This is a problematic outcome because the sector is failing to attract a more diverse and wealthy clientele. Due attention should also be paid to other clusters. The ruralist segment values relaxation in natural segments to escape from daily routine, the ‘want it all segment’ is composed of tourists interested in all kind of activities and the family-oriented cluster is mainly interested in socialising with the family. Implications of our preliminary conclusions for theory and practice are discussed.