This paper is an attempt to investigate the effect of intellectual capital (henceforth IC, which is defined using Value Added Intellectual Coefficient (VAICâ„¢) as discussed in Pulic (2008, 2004, 2001, 1998) on financial performance and financial stability of 32 banks in Ghana from 2000 to 2015. The dataset is an unbalanced panel of 354 observations. The methodology of the paper is to test eight hypotheses related to IC and its components (Human Capital Efficiency or HCE, Structural Capital Efficiency or SCE and Capital Employed Efficiency or CEE) and their relationship with financial performance and financial stability. The paper finds support in favour of the claim that VAICâ„¢ has a positive and significant impact on financial performance and financial stability. On the other hand, among the components of VAICâ„¢, it is only HCE that behaves in a manner similar to VAICâ„¢. Among the other components, SCE has a negative impact on financial performance and financial stability. CEE has a positive impact on financial performance but a negative impact on financial stability. This implies that SCE reduces both financial performance and financial stability, while CEE increases financial performance but reduces financial stability. Effects of controls, such as leverage, bank size, concentration and ownership structure are discussed in some detail
{"title":"Intellectual Capital: Its Impact on Financial Performance and Financial Stability of Ghanaian Banks","authors":"J. M. Onumah, King Carl Tornam Duho","doi":"10.30958/AJBE.5-3-4","DOIUrl":"https://doi.org/10.30958/AJBE.5-3-4","url":null,"abstract":"This paper is an attempt to investigate the effect of intellectual capital (henceforth IC, which is defined using Value Added Intellectual Coefficient (VAICâ„¢) as discussed in Pulic (2008, 2004, 2001, 1998) on financial performance and financial stability of 32 banks in Ghana from 2000 to 2015. The dataset is an unbalanced panel of 354 observations. The methodology of the paper is to test eight hypotheses related to IC and its components (Human Capital Efficiency or HCE, Structural Capital Efficiency or SCE and Capital Employed Efficiency or CEE) and their relationship with financial performance and financial stability. The paper finds support in favour of the claim that VAICâ„¢ has a positive and significant impact on financial performance and financial stability. On the other hand, among the components of VAICâ„¢, it is only HCE that behaves in a manner similar to VAICâ„¢. Among the other components, SCE has a negative impact on financial performance and financial stability. CEE has a positive impact on financial performance but a negative impact on financial stability. This implies that SCE reduces both financial performance and financial stability, while CEE increases financial performance but reduces financial stability. Effects of controls, such as leverage, bank size, concentration and ownership structure are discussed in some detail","PeriodicalId":169311,"journal":{"name":"Athens Journal of Business & Economics","volume":"33 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129014458","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The twenty first century has witnessed wide-ranging changes in the banking industry and these changes have brought a number of challenges for customers and employees. Many banks have looked to employ storytelling as one way of trying to help both customers and employees to accommodate these changes and challenges. This exploratory paper looks provide a range of illustrations of the ways in which the UK‘s leading banks have publicly employed stories on the Internet as part of their external and internal communication programmes and offers some reflections on the role of stories within such programmes. The paper reveals that the UK‘s five leading banks all publicly employ stories, which address a number of issues including business successes and achievements, customers‘ experiences, environmental and social commitments, career development, employees‘ work experiences and the history of banks and their branches. The authors suggest that these themes collectively looked to reinforce the banks‘ fundamental emphasis on trust, confidence, and customer relationships. At the same time, while the findings of the paper revealed that the stories are exclusively positive and are essentially scripted to cast banks in a favourable light, the authors counsel caution in that there is a danger that such stories may not always be fully representative of a bank‘s relationships with its customers and employees.
{"title":"Stories and Storytelling in UΚ Banking","authors":"P. Jones, D. Comfort","doi":"10.30958/AJBE.5-4-1","DOIUrl":"https://doi.org/10.30958/AJBE.5-4-1","url":null,"abstract":"The twenty first century has witnessed wide-ranging changes in the banking industry and these changes have brought a number of challenges for customers and employees. Many banks have looked to employ storytelling as one way of trying to help both customers and employees to accommodate these changes and challenges. This exploratory paper looks provide a range of illustrations of the ways in which the UK‘s leading banks have publicly employed stories on the Internet as part of their external and internal communication programmes and offers some reflections on the role of stories within such programmes. The paper reveals that the UK‘s five leading banks all publicly employ stories, which address a number of issues including business successes and achievements, customers‘ experiences, environmental and social commitments, career development, employees‘ work experiences and the history of banks and their branches. The authors suggest that these themes collectively looked to reinforce the banks‘ fundamental emphasis on trust, confidence, and customer relationships. At the same time, while the findings of the paper revealed that the stories are exclusively positive and are essentially scripted to cast banks in a favourable light, the authors counsel caution in that there is a danger that such stories may not always be fully representative of a bank‘s relationships with its customers and employees.","PeriodicalId":169311,"journal":{"name":"Athens Journal of Business & Economics","volume":"74 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-04-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115963605","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Bangladesh has a large and persistent trade deficit with its neighboring country India over the years. This paper explored the trends and patterns of trade between these two countries using both aggregated and disaggregated data. More specifically, it examined the relative position of the two countries in global trade, explores the overall trend in exports to and imports from India, and the trend in trade balance using aggregate level data. Further, utilizing some disaggregated data, analysis is conducted regarding the commodity composition of Bangladesh exports to and imports from India by major product categories. Additionally, the paper estimates revealed comparative advantage (RCA) to reflect inter-industry trade based on comparative advantage by HS-2 digit commodity groups. The paper finds that India has a much stronger position in the global trade vis-A -vis Bangladesh and that India strongly dominates Bangladesh in bilateral trade, resulting in a very large and persistent trade deficit with India. At a disaggregated level, the paper finds that Bangladesh has comparative advantage in some products whereas India has comparative advantage relatively in more product categories.
{"title":"Bangladesh Trade with India: Trends and Patterns","authors":"A. Islam","doi":"10.30958/AJBE.5-2-2","DOIUrl":"https://doi.org/10.30958/AJBE.5-2-2","url":null,"abstract":"Bangladesh has a large and persistent trade deficit with its neighboring country India over the years. This paper explored the trends and patterns of trade between these two countries using both aggregated and disaggregated data. More specifically, it examined the relative position of the two countries in global trade, explores the overall trend in exports to and imports from India, and the trend in trade balance using aggregate level data. Further, utilizing some disaggregated data, analysis is conducted regarding the commodity composition of Bangladesh exports to and imports from India by major product categories. Additionally, the paper estimates revealed comparative advantage (RCA) to reflect inter-industry trade based on comparative advantage by HS-2 digit commodity groups. The paper finds that India has a much stronger position in the global trade vis-A -vis Bangladesh and that India strongly dominates Bangladesh in bilateral trade, resulting in a very large and persistent trade deficit with India. At a disaggregated level, the paper finds that Bangladesh has comparative advantage in some products whereas India has comparative advantage relatively in more product categories.","PeriodicalId":169311,"journal":{"name":"Athens Journal of Business & Economics","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-03-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131237289","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Identity matters for entrepreneurship in business environments marked by financial market imperfections. In the absence of formal finance, much of the economics literature on entrepreneurship focuses on the interplay of moral hazard and limited liability in explaining outcomes. However, this formulation of the problem bypasses a discussion of how entrepreneurial identity informs her perception of business prospects. While a recent branch of the literature has introduced the importance of social networks in enabling access to finance in developing countries, it does not address the issues an entrepreneur faces in developing an âidentityâ by belonging to a particular region or place. This paper addresses the aspect of location-based counterfactual thinking (CFT) in identity formation (which is created naturally by being a native member of a region) and its impact on the risk perception of entrepreneurs in the context of an industrially backward region. While the empirical results of the paper are drawn from a primary survey in the state of Bihar, India conducted in 2016 through snowball sampling for food processing industries, the results generalize to any context of entrepreneurial identity in the background of a low industrial base. Drawing insights from enterprise ecology, we find that (i) counterfactual thinking matters for risk perception and that (ii) both these variables change over the lifetime of entrepreneurship. We find that as the experience of the entrepreneur increases and she/he accesses more business networks/ associations, perception of risk is lowered. Alongside, the negative affect in counterfactual thinking (linked to a location-based identity) changes to positive affect with experience and exposure to business networks. The policy lesson from this exercise is that industrial policy initiatives must go beyond pecuniary incentives and pro-actively engaging in supporting entrepreneurial learning to strengthen investments and industrial outcomes in states like Bihar
{"title":"Identity and Perception of Risk for Entrepreneurs: Lessons from an Industrially Less Developed State in India","authors":"Debdatta Saha","doi":"10.30958/AJBE.5-2-4","DOIUrl":"https://doi.org/10.30958/AJBE.5-2-4","url":null,"abstract":"Identity matters for entrepreneurship in business environments marked by financial market imperfections. In the absence of formal finance, much of the economics literature on entrepreneurship focuses on the interplay of moral hazard and limited liability in explaining outcomes. However, this formulation of the problem bypasses a discussion of how entrepreneurial identity informs her perception of business prospects. While a recent branch of the literature has introduced the importance of social networks in enabling access to finance in developing countries, it does not address the issues an entrepreneur faces in developing an âidentityâ by belonging to a particular region or place. This paper addresses the aspect of location-based counterfactual thinking (CFT) in identity formation (which is created naturally by being a native member of a region) and its impact on the risk perception of entrepreneurs in the context of an industrially backward region. While the empirical results of the paper are drawn from a primary survey in the state of Bihar, India conducted in 2016 through snowball sampling for food processing industries, the results generalize to any context of entrepreneurial identity in the background of a low industrial base. Drawing insights from enterprise ecology, we find that (i) counterfactual thinking matters for risk perception and that (ii) both these variables change over the lifetime of entrepreneurship. We find that as the experience of the entrepreneur increases and she/he accesses more business networks/ associations, perception of risk is lowered. Alongside, the negative affect in counterfactual thinking (linked to a location-based identity) changes to positive affect with experience and exposure to business networks. The policy lesson from this exercise is that industrial policy initiatives must go beyond pecuniary incentives and pro-actively engaging in supporting entrepreneurial learning to strengthen investments and industrial outcomes in states like Bihar","PeriodicalId":169311,"journal":{"name":"Athens Journal of Business & Economics","volume":"27 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-03-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122595519","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper attempts to conceptualize a corporate citizenship program in the context of land acquisition for commercial purposes in India. At present, instances of land acquisition related sustainability challenges are rampant, which have affected both business and society. Land related socio-economic impasses were also acute especially in Indiaâs post-independence era in the 1950âs. Bhoodan (land-gift) movement, a fusion of servant leadership and social entrepreneurship, was by and large effective to address them. Considering its socio-cultural relevance, business can employ the tenets of Bhoodan to streamline the present situation. In this regard, we propose the Bhoodan-based corporate citizenship that can serve and empower land-owners and users, facilitate spontaneous land transfers, and streamline land acquisition for commercial purposes in India. Implications for research and practice are discussed
{"title":"Bhoodan-Based Corporate Citizenship: Corporate Accountability Based on Serving and Empowering Land-Owners and Users","authors":"Siddharth Mohapatra, Pratima Verma","doi":"10.30958/AJBE.5-2-3","DOIUrl":"https://doi.org/10.30958/AJBE.5-2-3","url":null,"abstract":"This paper attempts to conceptualize a corporate citizenship program in the context of land acquisition for commercial purposes in India. At present, instances of land acquisition related sustainability challenges are rampant, which have affected both business and society. Land related socio-economic impasses were also acute especially in Indiaâs post-independence era in the 1950âs. Bhoodan (land-gift) movement, a fusion of servant leadership and social entrepreneurship, was by and large effective to address them. Considering its socio-cultural relevance, business can employ the tenets of Bhoodan to streamline the present situation. In this regard, we propose the Bhoodan-based corporate citizenship that can serve and empower land-owners and users, facilitate spontaneous land transfers, and streamline land acquisition for commercial purposes in India. Implications for research and practice are discussed","PeriodicalId":169311,"journal":{"name":"Athens Journal of Business & Economics","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-03-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128510627","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
According to the three-sector hypothesis, the national share of employees in the industrial sector will be shrinking after having reached a specific peak level. In line with societal development over time, the tipping point at which deindustrialization starts should be related to a certain income per capita. Predictions from literature showed an inverted-U relationship of manufacturing employment (%) over income per capita (log) for mature countries. By regression analysis, a universal tipping point at which deindustrialization starts was calculated. In this study, this theory was tested on a sample of 12 mature (high income, tipping by 1980) and 25 emerging (upper-middle income, later tipping) countries. No single standard function for all national economies was found, but certain paths related to the general state of economic development of national economies. The tipping point is moving over time, driven by increasing sectoral productivity. Productivity rises result in a shift over time towards higher income (x-axis) and lower relative employment (y-axis). In accordance with existing theory, the country-specific maximum of relative employment in manufacturing is reached at a certain threshold productivity, which again corresponds to a specific national income per capita. As a stylized fact, two falling linear functions of maximum manufacturing employment (%) over GDP per capita (log) were identified for mature and emerging countries. Their divide follows the international division of labour between highly-productive technology owners (mature countries) and less productive sub-suppliers (emerging countries). In addition, the critical manufacturing productivity at which maximum manufacturing employment is reached was analysed as a function of time (tipping year). Corresponding to the findings on the tipping point, the critical manufacturing productivity is rising over time. Two markedly separated rising linear functions for mature and emerging countries were identified.
{"title":"The Interrelation between Manufacturing Productivity, Maximum Sectoral Employment and National Income Per Capita","authors":"Rainer Przywara","doi":"10.30958/AJBE.5-2-1","DOIUrl":"https://doi.org/10.30958/AJBE.5-2-1","url":null,"abstract":"According to the three-sector hypothesis, the national share of employees in the industrial sector will be shrinking after having reached a specific peak level. In line with societal development over time, the tipping point at which deindustrialization starts should be related to a certain income per capita. Predictions from literature showed an inverted-U relationship of manufacturing employment (%) over income per capita (log) for mature countries. By regression analysis, a universal tipping point at which deindustrialization starts was calculated. In this study, this theory was tested on a sample of 12 mature (high income, tipping by 1980) and 25 emerging (upper-middle income, later tipping) countries. No single standard function for all national economies was found, but certain paths related to the general state of economic development of national economies. The tipping point is moving over time, driven by increasing sectoral productivity. Productivity rises result in a shift over time towards higher income (x-axis) and lower relative employment (y-axis). In accordance with existing theory, the country-specific maximum of relative employment in manufacturing is reached at a certain threshold productivity, which again corresponds to a specific national income per capita. As a stylized fact, two falling linear functions of maximum manufacturing employment (%) over GDP per capita (log) were identified for mature and emerging countries. Their divide follows the international division of labour between highly-productive technology owners (mature countries) and less productive sub-suppliers (emerging countries). In addition, the critical manufacturing productivity at which maximum manufacturing employment is reached was analysed as a function of time (tipping year). Corresponding to the findings on the tipping point, the critical manufacturing productivity is rising over time. Two markedly separated rising linear functions for mature and emerging countries were identified.","PeriodicalId":169311,"journal":{"name":"Athens Journal of Business & Economics","volume":"11 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-03-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134352130","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Deposit insurance has two main objectives: at the micro-level, it should protect small depositors against the failure of their bank and at the macro-level, it should contribute to the stability of the financial system and of the economy as a whole. To have the appropriate resources to achieve their mission, deposit insurers collect premiums from insured banks to build a so-called ex-ante fund. Setting an optimal pricing scheme is a challenge. On one hand, it should be fair, that is correctly adjusting for the risk of each bank and on the other hand it should be consistent with the stability objective, which implies avoiding pro-cyclicality. Up to now, two main pricing schemes have been used: fixed rate pricing and risk adjusted rate pricing. Our analysis shows that none achieves both goals satisfactorily. Fixed rate pricing is not pro-cyclical but it is somewhat unfair as it does not adjust for risk. Risk adjusted rates are fair but are pro-cyclical. This paper proposes a new approach based on relative risk that reconciles both objectives. Relative risk is defined as the difference between the risk measure of a bank and the weighted risk measure of the banking sector. A numerical example illustrates the working of the new approach and shows that it adjusts for risk and avoids pro-cyclicality while allowing the deposit insurer to accumulate the same revenues over the cycle. Finally, the materiality of the problem of pro-cyclicality and the performance in terms of effectiveness and efficiency of the proposed model are discussed.
{"title":"Optimal Pricing of Deposit Insurance: Aiming at Fairness and Stability","authors":"J. Roy","doi":"10.30958/ajbe.5-1-2","DOIUrl":"https://doi.org/10.30958/ajbe.5-1-2","url":null,"abstract":"Deposit insurance has two main objectives: at the micro-level, it should protect small depositors against the failure of their bank and at the macro-level, it should contribute to the stability of the financial system and of the economy as a whole. To have the appropriate resources to achieve their mission, deposit insurers collect premiums from insured banks to build a so-called ex-ante fund. Setting an optimal pricing scheme is a challenge. On one hand, it should be fair, that is correctly adjusting for the risk of each bank and on the other hand it should be consistent with the stability objective, which implies avoiding pro-cyclicality. Up to now, two main pricing schemes have been used: fixed rate pricing and risk adjusted rate pricing. Our analysis shows that none achieves both goals satisfactorily. Fixed rate pricing is not pro-cyclical but it is somewhat unfair as it does not adjust for risk. Risk adjusted rates are fair but are pro-cyclical. This paper proposes a new approach based on relative risk that reconciles both objectives. Relative risk is defined as the difference between the risk measure of a bank and the weighted risk measure of the banking sector. A numerical example illustrates the working of the new approach and shows that it adjusts for risk and avoids pro-cyclicality while allowing the deposit insurer to accumulate the same revenues over the cycle. Finally, the materiality of the problem of pro-cyclicality and the performance in terms of effectiveness and efficiency of the proposed model are discussed.","PeriodicalId":169311,"journal":{"name":"Athens Journal of Business & Economics","volume":"41 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115702436","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper focuses on monetary policy transmission through the bank lending channel in the euro zone. We analyze the relationship between output, inflation, short-term and longterm interest rates, and bank loans. In addition, based on recent concerns of rising deficits and debt we include three variables that capture fiscal vulnerability. Using quarterly data from 2002 to 2016 for the original twelve members of the euro zone (Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, and Spain) we estimate a panel vector autoregression and examine impulse responses and variance decompositions. Our results show that tight monetary policy leads to an expected decline in output, but surprisingly, raises prices. We also find that the high deficits and debt burdens affect monetary policy transmission for the euro zone-12 countries. Overall, our results suggest that the euro zone is at best, only partially functioning as a cohesive unitKeywords: Budgetary Policy, Capital Taxation Rate, Consumption Taxation Rate, DSGE Model, Labor Taxation Rate, Wages Rigidity
{"title":"Monetary Policy Transmission in the Euro Zone","authors":"Ayla OguÅŸ Binatli, Niloufer Sohrabji","doi":"10.30958/AJBE.5-1-4","DOIUrl":"https://doi.org/10.30958/AJBE.5-1-4","url":null,"abstract":"This paper focuses on monetary policy transmission through the bank lending channel in the euro zone. We analyze the relationship between output, inflation, short-term and longterm interest rates, and bank loans. In addition, based on recent concerns of rising deficits and debt we include three variables that capture fiscal vulnerability. Using quarterly data from 2002 to 2016 for the original twelve members of the euro zone (Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, and Spain) we estimate a panel vector autoregression and examine impulse responses and variance decompositions. Our results show that tight monetary policy leads to an expected decline in output, but surprisingly, raises prices. We also find that the high deficits and debt burdens affect monetary policy transmission for the euro zone-12 countries. Overall, our results suggest that the euro zone is at best, only partially functioning as a cohesive unitKeywords: Budgetary Policy, Capital Taxation Rate, Consumption Taxation Rate, DSGE Model, Labor Taxation Rate, Wages Rigidity","PeriodicalId":169311,"journal":{"name":"Athens Journal of Business & Economics","volume":"73 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115183138","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We use a simple DSGE model with prices and wages rigidities to evaluate the efficiency of various fiscal policies intended to sustain economic activity and growth. We show that a fiscal policy aiming at reducing the tax burden would be all the more efficient as wages are more flexible. Besides, a decrease of the capital taxation rate appears as the most efficient fiscal policy. Indeed, it would decrease the capital cost, and it would foster private and public investment, but also private and public consumption. Wages rigidities would then reduce the inflationary tensions due to this economic growth. In comparison, a decrease of the consumption taxation rate increases private consumption, and all other components of global demand; however, economic growth is then more limited than with a decrease of the capital taxation rate. Finally, a decrease of the labor taxation rate would increase private investment and consumption and public expenditure exactly in the same proportions, but it would be much less efficient than the previous policies in order to sustain economic growth. Besides, it would favor public consumption expenditure, whereas the decrease of consumption or capital taxation rates would mainly promote the most productive public investment expenditure.
{"title":"Efficiency of Cuts in Various Taxation Rates to Foster Economic Growth in a Framework of Wages Rigidity","authors":"S. Menguy","doi":"10.30958/AJBE.5-1-1","DOIUrl":"https://doi.org/10.30958/AJBE.5-1-1","url":null,"abstract":"We use a simple DSGE model with prices and wages rigidities to evaluate the efficiency of various fiscal policies intended to sustain economic activity and growth. We show that a fiscal policy aiming at reducing the tax burden would be all the more efficient as wages are more flexible. Besides, a decrease of the capital taxation rate appears as the most efficient fiscal policy. Indeed, it would decrease the capital cost, and it would foster private and public investment, but also private and public consumption. Wages rigidities would then reduce the inflationary tensions due to this economic growth. In comparison, a decrease of the consumption taxation rate increases private consumption, and all other components of global demand; however, economic growth is then more limited than with a decrease of the capital taxation rate. Finally, a decrease of the labor taxation rate would increase private investment and consumption and public expenditure exactly in the same proportions, but it would be much less efficient than the previous policies in order to sustain economic growth. Besides, it would favor public consumption expenditure, whereas the decrease of consumption or capital taxation rates would mainly promote the most productive public investment expenditure.","PeriodicalId":169311,"journal":{"name":"Athens Journal of Business & Economics","volume":"38 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121605614","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
US banks experiencing losses during the 2008-2009 financial crises quickly returned to profitability. What does managerial control contribute to re-establishing performance? Return on equity (ROE) for 1200 banks that survived the crisis is evaluated by degree of control and leverage from 2001 through 2011. We estimate a performance equation and find that both control, measured as the coefficient of variation of ROE, and leverage have significant effects on ROE: control negative, leverage positive. Control affects the patterns of ROE across time; leverage does not. The ability of the estimate to account for and predict ROE holds up well through the crisis but only for banks with tight managerial control. As control loosens, the performance of the estimate deteriorates. During the financial crisis, tightening control improved profitability. The persistent influence of managerial control on ROE is discriminating. Prior performance predicts future performance but only for tightly controlled banks.
{"title":"Control & Prediction: Reexamining the 2008-2009 US Banking Crisis","authors":"K. Hatten, J. Keeler, W. James","doi":"10.30958/AJBE.4-4-1","DOIUrl":"https://doi.org/10.30958/AJBE.4-4-1","url":null,"abstract":"US banks experiencing losses during the 2008-2009 financial crises quickly returned to profitability. What does managerial control contribute to re-establishing performance? Return on equity (ROE) for 1200 banks that survived the crisis is evaluated by degree of control and leverage from 2001 through 2011. We estimate a performance equation and find that both control, measured as the coefficient of variation of ROE, and leverage have significant effects on ROE: control negative, leverage positive. Control affects the patterns of ROE across time; leverage does not. The ability of the estimate to account for and predict ROE holds up well through the crisis but only for banks with tight managerial control. As control loosens, the performance of the estimate deteriorates. During the financial crisis, tightening control improved profitability. The persistent influence of managerial control on ROE is discriminating. Prior performance predicts future performance but only for tightly controlled banks.","PeriodicalId":169311,"journal":{"name":"Athens Journal of Business & Economics","volume":"28 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-09-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133053039","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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