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Articles 1 - 10 of 10
Full-Text Articles in Social and Behavioral Sciences
The Intuition Behind Wallace Neutrality, Richard H. Serlin
The Intuition Behind Wallace Neutrality, Richard H. Serlin
Richard H. Serlin
Wallace neutrality is a term that, as far as I know, was coined by University of Michigan economist Miles Kimball. It refers to the seminal model of Neil Wallace in "A Modigliani-Miller Theorem for Open-Market Operations", American Economic Review, June 1981. In Wallace's model, open market operations have no effect on any asset prices, including money (no effect on inflation). This is a shocking result, and it cries out for how and why. Intuitively, how and why can this possibly happen? However, like so many modern models, it's extremely difficult to see the intuition behind the wall of math, and …
Small Firms And Domestic Bank Dependence In Europe's Great Recession, Mathias Hoffmann, Bent E. Sorensen
Small Firms And Domestic Bank Dependence In Europe's Great Recession, Mathias Hoffmann, Bent E. Sorensen
Mathias Hoffmann
The paper studies the role of small businesses (SME) in the transmission of the Eurozone crisis to member countries and whether regions or countries with many SMEs were less able to share risk. Our analysis draws attention to domestic bank dependence---defined as the share of domestic private credit originated by domestic banks---as a key variable modulated the impact of shocks on bank-dependent SMEs and thus on the real economy. We argue that Eurozone banking integration in the years after the creation of the single currency was lopsided in the sense that, until 2008, cross-border lending between banks increased markedly while …
The Equity Beta Of Telcos Operating In Small Island Nations, Bruno E. Viani
The Equity Beta Of Telcos Operating In Small Island Nations, Bruno E. Viani
Bruno E. Viani
Analysts often use the capital assets pricing model (CAPM) to estimate the cost of equity capital. A key parameter in estimating that cost is the so-called equity beta. Estimates of equity betas for telecommunications firms, or telcos, in small island nations are not readily available, so analysts often rely on estimated equity betas from larger firms in jurisdictions with much larger markets. Doing so may introduce significant errors if the equity risk premium for telcos in large markets differs significantly from those in small markets. In this research note we explore this hypothesis. We find that the equity betas of …
‘By A Silken Thread’: Regional Banking Integration And Pathways To Financial Development In Japan’S Great Recession, Mathias Hoffmann, Toshihiro Okubo
‘By A Silken Thread’: Regional Banking Integration And Pathways To Financial Development In Japan’S Great Recession, Mathias Hoffmann, Toshihiro Okubo
Mathias Hoffmann
Regional differences in banking integration and bank dependence interacted in spreading Japan’s Great Recession after 1990. Nationwide banks were generally more exposed to the crisis than regional ones, but their internal capital markets also substantially dampened the impact of the crisis in prefectures with many bank-dependent small firms. We instrument for modern-day banking inte- gration using the prefecture-level importance of the late-19th-century silk industry: export finance for the silk industry relied on local, cooperative banks. These local banks preserved their comparative advantage in relationship lending to small firms for a century, effectively segmenting regional banking markets during Japan’s lost decade.
Greece's Banking Sector Options, Warren Coats
Greece's Banking Sector Options, Warren Coats
Warren Coats
A review of the new Greek government's choices in its negotiations with its creditors, with a focus on the banking sector.
Government Insurance, Information, And Asset Prices, Danilo Lopomo Beteto Wegner
Government Insurance, Information, And Asset Prices, Danilo Lopomo Beteto Wegner
Danilo Lopomo Beteto Wegner
An investment decision problem is studied, in a framework where the government offers insurance against the possibility of the price of a risky asset falling drastically. The problem is considered under different informational scenarios, i.e., information quality, under which agents have to infer the state of fundamentals of the economy. Changes in information quality is shown to affect equilibrium prices despite no concomitant changes in the fundamentals, creating excess volatility. The possibility of government intervention is shown to increase equilibrium prices, which can be ordered as a function of information quality. Empirical evidence supporting the model is presented.
Integration Of Waqf And Islamic Microfiance For Poverty Reduction, Mohamed Aslam Haneef Prof., Ataul Huq Pramanik Prof., Mustafa Omar Mohamme Dr., Aliyu Dahiru Dr.
Integration Of Waqf And Islamic Microfiance For Poverty Reduction, Mohamed Aslam Haneef Prof., Ataul Huq Pramanik Prof., Mustafa Omar Mohamme Dr., Aliyu Dahiru Dr.
Aliyu Dahiru
This report presents the output of two-year collaboration between SESRIC and the Centre for Islamic Economics of International Islamic University of Malaysia (IIUM) on a research project that covered three OIC countries namely, Malaysia, Indonesia and Bangladesh. The research project aimed at developing an integrated Waqf-based Islamic microfinance model to optimize the use of combined resources of Waqf and Islamic microfinance institutions in OIC countries with a view to enhancing the effectiveness of IMF and Waqf institutions in addressing the socio-economic needs of the society, particularly through effective poverty alleviation programs. The report consists of four main sections. The first …
Aprender De Brasil, Guillermo Arosemena
Long-Run Consumption Risk And Asset Allocation Under Recursive Utility And Rational Inattention, Yulei Luo, Eric R. Young
Long-Run Consumption Risk And Asset Allocation Under Recursive Utility And Rational Inattention, Yulei Luo, Eric R. Young
Yulei Luo
We study the portfolio decision of a household with limited information-processing capacity (rational inattention or RI) in a setting with recursive utility. We find that rational inattention combined with a preference for early resolution of uncertainty could lead to a significant drop in the share of portfolios held in risky assets, even when the departure from standard expected utility with rational expectations is small. In addition, we show that the equilibrium equity premium increases with the degree of inattention because inattentive investors with recursive utility face greater long-run risk and thus require higher compensation in equilibrium. Our results are robust …
Online Appendix For "Specifying An Efficient Renewable Energy Feed-In Tariff", Niall Farrell
Online Appendix For "Specifying An Efficient Renewable Energy Feed-In Tariff", Niall Farrell
Niall Farrell
This is an online appendix for the paper "Specifying an Efficient Renewable Energy Feed-in Tariff".