Pub Date : 2023-09-08DOI: 10.11648/j.eco.20231203.13
Gemechu Mulatu
Rural credit is one of the tools used to combat poverty. Credit enables smallholder farmers to purchase agricultural tools and inputs when cash is scarce. Therefore, the main objective of this study was to investigate the effect of access to credit on household’s income. Both primary and secondary data were utilized in this study. Primary data was collected using semi-structured questionnaires. Descriptive, inferential, and econometric techniques were applied for data analysis. The mean comparison test revealed that on average the total annual income of smallholder farmers who received credit was better than non-beneficiaries by 26,878.46 Ethiopian Birr per annum. Heckman's two-stage econometric model was fitted. The Wald chi-square test of independency of access to credit and total household income per annum (rho = 0) was tested and showed that there is a strong relationship between the two equations at a 1% significance level. Landholdings, membership to cooperatives and education attainment of household head were among the common underlying factors which affect access to credit and the level of household income statistically significantly at less than 5% significance level. Therefore, government and non-governmental institutions must expand credit services and solve the problem of credit rationing facing smallholder farmers in Ethiopia.
{"title":"The Effect of Micro-Credit on Rural Households’ Income in the Case of Sinana District, Bale Zone, Oromia National Regional State, Ethiopia","authors":"Gemechu Mulatu","doi":"10.11648/j.eco.20231203.13","DOIUrl":"https://doi.org/10.11648/j.eco.20231203.13","url":null,"abstract":"Rural credit is one of the tools used to combat poverty. Credit enables smallholder farmers to purchase agricultural tools and inputs when cash is scarce. Therefore, the main objective of this study was to investigate the effect of access to credit on household’s income. Both primary and secondary data were utilized in this study. Primary data was collected using semi-structured questionnaires. Descriptive, inferential, and econometric techniques were applied for data analysis. The mean comparison test revealed that on average the total annual income of smallholder farmers who received credit was better than non-beneficiaries by 26,878.46 Ethiopian Birr per annum. Heckman's two-stage econometric model was fitted. The Wald chi-square test of independency of access to credit and total household income per annum (rho = 0) was tested and showed that there is a strong relationship between the two equations at a 1% significance level. Landholdings, membership to cooperatives and education attainment of household head were among the common underlying factors which affect access to credit and the level of household income statistically significantly at less than 5% significance level. Therefore, government and non-governmental institutions must expand credit services and solve the problem of credit rationing facing smallholder farmers in Ethiopia.","PeriodicalId":53338,"journal":{"name":"Economics-The Open Access Open-Assessment E-Journal","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136363007","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract This article examines the asymmetric aspect of U.S. consumption using disaggregated quarterly consumption expenditure data, including durables, nondurables, and services from 1994 to 2019. We apply a novel nonlinear autoregressive distributed lag analysis considering a regime-switching mechanism and find that U.S. consumers behave differently during economic upturns and downturns, with asymmetry existing for the consumption of durables (in the long run) and services (in both the short and long-run), but not for nondurables. Since services account for more than 40% of U.S. aggregate output, the slow adjustment toward equilibrium and the elasticity less than unity proves that services are more of a necessity than a luxury for U.S. consumers. The results indicate that the consumption of services is the primary determinant of U.S. consumer behavior, and monetary policy has a limited effect on U.S. consumption.
{"title":"Reinvestigating the U.S. Consumption Function: A Nonlinear Autoregressive Distributed Lags Approach","authors":"Esmaeil Ebadi, Wasiu Are","doi":"10.1515/econ-2022-0045","DOIUrl":"https://doi.org/10.1515/econ-2022-0045","url":null,"abstract":"Abstract This article examines the asymmetric aspect of U.S. consumption using disaggregated quarterly consumption expenditure data, including durables, nondurables, and services from 1994 to 2019. We apply a novel nonlinear autoregressive distributed lag analysis considering a regime-switching mechanism and find that U.S. consumers behave differently during economic upturns and downturns, with asymmetry existing for the consumption of durables (in the long run) and services (in both the short and long-run), but not for nondurables. Since services account for more than 40% of U.S. aggregate output, the slow adjustment toward equilibrium and the elasticity less than unity proves that services are more of a necessity than a luxury for U.S. consumers. The results indicate that the consumption of services is the primary determinant of U.S. consumer behavior, and monetary policy has a limited effect on U.S. consumption.","PeriodicalId":53338,"journal":{"name":"Economics-The Open Access Open-Assessment E-Journal","volume":"71 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135560522","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Existing studies are not clear about the process of building organizational resilience that is crucial for the performance of firms. To tap into this still unexplored terrain, the aim of this qualitative study is to shed more light on how organizational resilience is built amid challenges from a perspective of path constitution. We present a single, longitudinal case study of the dynamic development of China Light & Textile Industry City Group, the leading textile trading platform operator in China. The results show that the process of organizations building resilience could be regarded as a process of organizational path constitution. Therefore, a theory model of the organizational resilience building was developed, which expanded the applicable scope of the path constitution theory. Further, this study deconstructed the mechanism of resilience building based on the interaction between opportunity space and organizational learning, which contributes to the organizational resilience literature and enriches the body of qualitative research in corporate management. Additionally, our findings provide practical implications for companies to maintain resilience and sustainable performance.
{"title":"Path Constitution: Building Organizational Resilience for Sustainable Performance","authors":"Gennian Tang, Wenhui Luo, Yaping Zheng, Qunfang Zhou","doi":"10.1515/econ-2022-0048","DOIUrl":"https://doi.org/10.1515/econ-2022-0048","url":null,"abstract":"Abstract Existing studies are not clear about the process of building organizational resilience that is crucial for the performance of firms. To tap into this still unexplored terrain, the aim of this qualitative study is to shed more light on how organizational resilience is built amid challenges from a perspective of path constitution. We present a single, longitudinal case study of the dynamic development of China Light & Textile Industry City Group, the leading textile trading platform operator in China. The results show that the process of organizations building resilience could be regarded as a process of organizational path constitution. Therefore, a theory model of the organizational resilience building was developed, which expanded the applicable scope of the path constitution theory. Further, this study deconstructed the mechanism of resilience building based on the interaction between opportunity space and organizational learning, which contributes to the organizational resilience literature and enriches the body of qualitative research in corporate management. Additionally, our findings provide practical implications for companies to maintain resilience and sustainable performance.","PeriodicalId":53338,"journal":{"name":"Economics-The Open Access Open-Assessment E-Journal","volume":"44 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135667539","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract This study underscores the indispensable role of knowledge management (KM) in promoting sustainable entrepreneurship (SE) among small and medium-sized enterprises (SMEs) in developing economies. SMEs, being the backbone of various facets of society, including employment rates, gross domestic product growth, innovation, social cohesion, economic development, growth, and public policies, should be considered. SE is a pressing issue for low- and high-income countries and developed and developing economies. The study utilized a self-administered questionnaire to gather data from 490 SMEs operating in different commercial regions and industries, providing a large-scale empirical study that fills gaps in the existing literature. The study highlights the significance of KM processes in facilitating organizational integration (OI) activities, which positively influence the SE practices of these SMEs. The research offers practical recommendations for SMEs to foster SE through effective KM practices and OI strategies. Moreover, the study provides valuable insights for future research in this area. The findings of this study have substantial implications for policymakers, practitioners, and researchers seeking to enhance the entrepreneurial landscape in developing economies.
{"title":"Organizational Integration, Knowledge Management, and Sustainable Entrepreneurship for SMEs in Developing Economies","authors":"Olufisayo Akinlotu, Gözde Inal Cavlan","doi":"10.1515/econ-2022-0046","DOIUrl":"https://doi.org/10.1515/econ-2022-0046","url":null,"abstract":"Abstract This study underscores the indispensable role of knowledge management (KM) in promoting sustainable entrepreneurship (SE) among small and medium-sized enterprises (SMEs) in developing economies. SMEs, being the backbone of various facets of society, including employment rates, gross domestic product growth, innovation, social cohesion, economic development, growth, and public policies, should be considered. SE is a pressing issue for low- and high-income countries and developed and developing economies. The study utilized a self-administered questionnaire to gather data from 490 SMEs operating in different commercial regions and industries, providing a large-scale empirical study that fills gaps in the existing literature. The study highlights the significance of KM processes in facilitating organizational integration (OI) activities, which positively influence the SE practices of these SMEs. The research offers practical recommendations for SMEs to foster SE through effective KM practices and OI strategies. Moreover, the study provides valuable insights for future research in this area. The findings of this study have substantial implications for policymakers, practitioners, and researchers seeking to enhance the entrepreneurial landscape in developing economies.","PeriodicalId":53338,"journal":{"name":"Economics-The Open Access Open-Assessment E-Journal","volume":"2023 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135705020","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-05-14DOI: 10.5018/economics-ejournal.ja.2018-30
C. Almanza, Jhon James Mora Rodríguez
Abstract This article analyzes the sources of bank efficiency in Colombia over the period 2000–2011. To perform this research, the authors propose a score of bank efficiency using the directional distance function, which was estimated using data envelopment analysis. Additionally, they use an ordered probit panel regression to explore the effects of some market-related and bank-specific factors on efficiency. The results show that the noninclusion of non-performing loans (NPLs) leads to higher bank inefficiency indicators, which are significantly different from those obtained when NPLs are included. Further, they find that economic growth, capital risk, foreign and national banks, and account liquidity risk explain, in part, the efficiency of Colombian banks.
{"title":"Profit efficiency of banks in Colombia with undesirable output: a directional distance function approach","authors":"C. Almanza, Jhon James Mora Rodríguez","doi":"10.5018/economics-ejournal.ja.2018-30","DOIUrl":"https://doi.org/10.5018/economics-ejournal.ja.2018-30","url":null,"abstract":"Abstract This article analyzes the sources of bank efficiency in Colombia over the period 2000–2011. To perform this research, the authors propose a score of bank efficiency using the directional distance function, which was estimated using data envelopment analysis. Additionally, they use an ordered probit panel regression to explore the effects of some market-related and bank-specific factors on efficiency. The results show that the noninclusion of non-performing loans (NPLs) leads to higher bank inefficiency indicators, which are significantly different from those obtained when NPLs are included. Further, they find that economic growth, capital risk, foreign and national banks, and account liquidity risk explain, in part, the efficiency of Colombian banks.","PeriodicalId":53338,"journal":{"name":"Economics-The Open Access Open-Assessment E-Journal","volume":"12 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-05-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.5018/economics-ejournal.ja.2018-30","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70660160","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper, the dynamics of Standard and Poor's 500 (S&P 500) stock price index is analysed within a time-frequency framework over a monthly period 1791:08-2015:05. Using the Empirical Mode Decomposition technique, the S&P 500 stock price index is divided into different frequencies known as intrinsic mode functions (IMFs) and one residual. The IMFs and the residual are then reconstructed into high frequency, low frequency and trend components using the hierarchical clustering method. Using different measures, it is shown that the low frequency and trend components of stock prices are relatively important drivers of the S&P 500 index. These results are also robust across various subsamples identified based on structural break tests. Therefore, US stock prices have been driven mostly by fundamental laws rooted in economic growth and longterm returns on investment.
{"title":"A Historical Analysis of the US Stock Price Index using Empirical Mode Decomposition over 1791-2015","authors":"A. Tiwari, A. B. Dar, Niyati Bhanja, Rangan Gupta","doi":"10.7910/DVN/FZUQDM","DOIUrl":"https://doi.org/10.7910/DVN/FZUQDM","url":null,"abstract":"In this paper, the dynamics of Standard and Poor's 500 (S&P 500) stock price index is analysed within a time-frequency framework over a monthly period 1791:08-2015:05. Using the Empirical Mode Decomposition technique, the S&P 500 stock price index is divided into different frequencies known as intrinsic mode functions (IMFs) and one residual. The IMFs and the residual are then reconstructed into high frequency, low frequency and trend components using the hierarchical clustering method. Using different measures, it is shown that the low frequency and trend components of stock prices are relatively important drivers of the S&P 500 index. These results are also robust across various subsamples identified based on structural break tests. Therefore, US stock prices have been driven mostly by fundamental laws rooted in economic growth and longterm returns on investment.","PeriodicalId":53338,"journal":{"name":"Economics-The Open Access Open-Assessment E-Journal","volume":"10 1","pages":"1-15"},"PeriodicalIF":0.0,"publicationDate":"2016-02-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"71363300","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2014-05-23DOI: 10.5018/economics-ejournal.ja.2014-22
Shaun P. Hargreaves Heap
Abstract This paper reviews some of the economic experimental evidence on conformism. There is nothing to match the early psychology experiments where subjects were often swayed by the behaviour of others to an extraordinary degree, but there is plenty of evidence of conformism. This seems built-in to our sociality either because we have preferences for conversation or status which are activated by the knowledge of what others do, or because other people face relevantly similar decisions to our own and so that their behaviour signals something useful to us about the uncertain world. These social influences can cause mischief. The more worrying cases, however, are those where individual preferences themselves change through interaction with others: the strongest experimental evidence for this is with respect to individual social preferences, particularly in a context where individuals belong to different groups.
{"title":"Social Influences towards Conformism in Economic Experiments","authors":"Shaun P. Hargreaves Heap","doi":"10.5018/economics-ejournal.ja.2014-22","DOIUrl":"https://doi.org/10.5018/economics-ejournal.ja.2014-22","url":null,"abstract":"Abstract This paper reviews some of the economic experimental evidence on conformism. There is nothing to match the early psychology experiments where subjects were often swayed by the behaviour of others to an extraordinary degree, but there is plenty of evidence of conformism. This seems built-in to our sociality either because we have preferences for conversation or status which are activated by the knowledge of what others do, or because other people face relevantly similar decisions to our own and so that their behaviour signals something useful to us about the uncertain world. These social influences can cause mischief. The more worrying cases, however, are those where individual preferences themselves change through interaction with others: the strongest experimental evidence for this is with respect to individual social preferences, particularly in a context where individuals belong to different groups.","PeriodicalId":53338,"journal":{"name":"Economics-The Open Access Open-Assessment E-Journal","volume":"8 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2014-05-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.5018/economics-ejournal.ja.2014-22","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70660086","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2014-05-15DOI: 10.5018/economics-ejournal.ja.2014-19
Mehdi Ben Jebli, Slim Ben Youssef
Abstract The authors consider a symmetric model composed of two countries and a firm in each country. Firms produce the same good by means of a polluting technology which uses fossil energy. However, these firms can adopt clean technology which uses renewable energy, having lower costs. Interestingly, opening markets to international competition increases the per-unit emission-tax and decreases the per-unit production subsidy. The socially optimal adoption date under a common market better internalizes transboundary pollution than that under autarky. In autarky (resp. a common market), firms adopt the clean technology earlier (resp. later) than what is socially optimal and, therefore, regulators induce clean technology adoption at the socially optimal adoption date by firms postponing (resp. speeding up) adoption subsidies. Opening markets to international trade speeds up socially optimal adoption dates and reduces global flow of pollution.
{"title":"Timing of Adoption of Clean Technologies, Transboundary Pollution and International Trade","authors":"Mehdi Ben Jebli, Slim Ben Youssef","doi":"10.5018/economics-ejournal.ja.2014-19","DOIUrl":"https://doi.org/10.5018/economics-ejournal.ja.2014-19","url":null,"abstract":"Abstract The authors consider a symmetric model composed of two countries and a firm in each country. Firms produce the same good by means of a polluting technology which uses fossil energy. However, these firms can adopt clean technology which uses renewable energy, having lower costs. Interestingly, opening markets to international competition increases the per-unit emission-tax and decreases the per-unit production subsidy. The socially optimal adoption date under a common market better internalizes transboundary pollution than that under autarky. In autarky (resp. a common market), firms adopt the clean technology earlier (resp. later) than what is socially optimal and, therefore, regulators induce clean technology adoption at the socially optimal adoption date by firms postponing (resp. speeding up) adoption subsidies. Opening markets to international trade speeds up socially optimal adoption dates and reduces global flow of pollution.","PeriodicalId":53338,"journal":{"name":"Economics-The Open Access Open-Assessment E-Journal","volume":"8 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2014-05-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.5018/economics-ejournal.ja.2014-19","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70660028","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2014-03-26DOI: 10.5018/economics-ejournal.ja.2014-15
M. R. de la Fonteijne
Abstract In order to understand the sources of profits or monetary profits of capitalists and firms, the author examines the phrase of Marx: ‘Die Gesamtklasse der Kapitalisten kann nichts aus der Zirkulation herausziehen, was nicht vorher hineingeworfen war.’ (The class of capitalists cannot extract from the circulation what has not previously been thrown in.) Steve Keen studied the monetary paradox and contrary to circuitists he came to the conclusion that capitalists can make a monetary profit with the possibility to earn enough to repay their debt, with positive balances for all actors. The author demonstrates that Keen made a fundamental mistake and is using the Stock Flow Consistency Principle in an inconsistent way by combining it with behavioral equations in a dynamic model. The solution presented here shows not only problems with the numbers but with the method. This solution resolves a dispute between Keen and circuitists and implies that, in a Wicksellian pure credit economy, it remains impossible for all actors to gain a monetary profit.
摘要:为了理解资本家和企业的利润或货币利润的来源，笔者考察了马克思的一句话:“资本主义的起源”(Die Gesamtklasse der Kapitalisten kannnightsaus der Zirkulation herausziehen)，即“工人战争的起源”。(资本家阶级不能从流通中榨取以前没有投入的东西。)史蒂夫·基恩(Steve Keen)研究了货币悖论，与电路主义者相反，他得出的结论是，资本家可以赚取货币利润，有可能赚到足够的钱来偿还债务，所有参与者都有正的余额。作者证明了Keen犯了一个根本性的错误，他将库存流量一致性原理与动态模型中的行为方程结合起来，以一种不一致的方式使用了它。这里提出的解决方案不仅显示了数字上的问题，而且显示了方法上的问题。这个解决方案解决了基恩和电路主义者之间的争议，并暗示，在威克塞尔式的纯信用经济中，所有参与者都获得货币利润仍然是不可能的。
{"title":"An Inconsistency in Using Stock Flow Consistency in Modelling the Monetary Profit Paradox","authors":"M. R. de la Fonteijne","doi":"10.5018/economics-ejournal.ja.2014-15","DOIUrl":"https://doi.org/10.5018/economics-ejournal.ja.2014-15","url":null,"abstract":"Abstract In order to understand the sources of profits or monetary profits of capitalists and firms, the author examines the phrase of Marx: ‘Die Gesamtklasse der Kapitalisten kann nichts aus der Zirkulation herausziehen, was nicht vorher hineingeworfen war.’ (The class of capitalists cannot extract from the circulation what has not previously been thrown in.) Steve Keen studied the monetary paradox and contrary to circuitists he came to the conclusion that capitalists can make a monetary profit with the possibility to earn enough to repay their debt, with positive balances for all actors. The author demonstrates that Keen made a fundamental mistake and is using the Stock Flow Consistency Principle in an inconsistent way by combining it with behavioral equations in a dynamic model. The solution presented here shows not only problems with the numbers but with the method. This solution resolves a dispute between Keen and circuitists and implies that, in a Wicksellian pure credit economy, it remains impossible for all actors to gain a monetary profit.","PeriodicalId":53338,"journal":{"name":"Economics-The Open Access Open-Assessment E-Journal","volume":"8 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2014-03-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.5018/economics-ejournal.ja.2014-15","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70659962","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
It is a matter of debate in how far credit ratings contribute to allocative efficiency or to excessive volatility of asset prices and cross-border capital flows. Yet it is generally taken for granted that ratings play a significant role in the transnationalization of financial relations. That hypothesis is tested in this paper with regard to data on sovereign credit ratings and foreign portfolio investment. A rating-related gravity model of finance is derived from the choice-theoretical framework of Okawa and van Wincoop (2012) and estimated in three stages, based on the IMF’s Coordinated Portfolio Investment Survey (CPIS) for the 2000s and unilateral datasets going back to the 1970s. At the first stage, it is explored to which extent the introduction and evolution of sovereign ratings has affected inward portfolio investment stocks and flows in the host countries. At the second stage, it is examined to which extent sovereign ratings predict levels of investors’ home bias, as measured by the share of outward portfolio investment holdings in the home countries’ portfolios. At the third stage, the focus is set more specifically on rating determinants of the size of bilateral portfolio investment. Evidence for a significant role of credit ratings in the transnationalization of finance is found at all three stages.
{"title":"The Role of Sovereign Credit Ratings in the Transnationalization of Finance","authors":"Finn Marten Körner, Hans‐Michael Trautwein","doi":"10.2139/ssrn.2348756","DOIUrl":"https://doi.org/10.2139/ssrn.2348756","url":null,"abstract":"It is a matter of debate in how far credit ratings contribute to allocative efficiency or to excessive volatility of asset prices and cross-border capital flows. Yet it is generally taken for granted that ratings play a significant role in the transnationalization of financial relations. That hypothesis is tested in this paper with regard to data on sovereign credit ratings and foreign portfolio investment. A rating-related gravity model of finance is derived from the choice-theoretical framework of Okawa and van Wincoop (2012) and estimated in three stages, based on the IMF’s Coordinated Portfolio Investment Survey (CPIS) for the 2000s and unilateral datasets going back to the 1970s. At the first stage, it is explored to which extent the introduction and evolution of sovereign ratings has affected inward portfolio investment stocks and flows in the host countries. At the second stage, it is examined to which extent sovereign ratings predict levels of investors’ home bias, as measured by the share of outward portfolio investment holdings in the home countries’ portfolios. At the third stage, the focus is set more specifically on rating determinants of the size of bilateral portfolio investment. Evidence for a significant role of credit ratings in the transnationalization of finance is found at all three stages.","PeriodicalId":53338,"journal":{"name":"Economics-The Open Access Open-Assessment E-Journal","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2013-10-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68129207","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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