nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2013‒08‒16
four papers chosen by
Alexander Harin
Modern University for the Humanities

  1. The perception of distributive fairness and optimal taxation under uncertainty By Weinreich, Daniel
  2. Nonmetro, Metro, and U.S. Bank-Operating Statistics, 1990 By Mikesell, James J.; Marior, Felice S.
  3. Measuring the performance of banks: theory, practice, evidence, and some policy implications By Joseph P. Hughes; Loretta J. Mester
  4. The Role of Intellectual Property Rights in Seed Technology Transfer through Trade: Evidence from US Field Crop Exports By Zhou, Minyu; Sheldon, Ian

  1. By: Weinreich, Daniel
    Abstract: This paper incorporates a preference for distributive fairness (inequity aversion) into the analysis on optimal redistributive taxation under uncertainty. We can show that introducing or strengthening the taste for distributive fairness does not affect the socially optimal tax rate (social insurance) directly. This merely works through a reduction in individual risk taking (increase in self-insurance) induced by inequity aversion. If the efficacy of self-insurance is sufficiently small, this renders taxation more desirable and therefore enhances the socially optimal tax rate. In other words, self-insurance should be complemented by social insurance in order to impair the psychic disutility stemming from income inequality. Turning to the case of moral hazard it can be shown that optimal self-insurance efforts are again increasing with the strength of inequity aversion while the effect on the optimal tax rate remains unclear.
    Keywords: distributive fairness; inequity aversion; optimal taxation; redistribution; uncertainty
    JEL: D63 H21 H53
    Date: 2013–08
  2. By: Mikesell, James J.; Marior, Felice S.
    Abstract: Bank numbers dropped-more slowly in nonmetro than in metro areas during 1990. This was true for all regions, and continued the trend of recent years. The same merger activity that reduced bank numbers increased the average bank size. The average value of assets held at the end of 1990 was, for both nonmetro and metro banks, 7 percent higher than a year earlier. Holdings of Federal Government securities were up considerably, particularly for metro banks. The average increase in such holdings was considerably larger than the decline in holdings of State and local government issues. Profit rates of nonmetro banks averaged much higher than those of metro banks, but were still down a little from a year earlier. Nonmetro banks, concentrated in the Midwest and South, generally had favorable financial characteristics: well capitalized, few loan problems, and above-average profits. Nonmetro banks in the Northeast were among the Nation's most troubled.
    Keywords: financial conditions, bank size, bank-operating statistics, Rural banks, Financial Economics, Research Methods/ Statistical Methods,
  3. By: Joseph P. Hughes; Loretta J. Mester
    Abstract: The unique capital structure of commercial banking – funding production with demandable debt that participates in the economy’s payments system – affects various aspects of banking. It shapes banks’ comparative advantage in providing financial products and services to informationally opaque customers, their ability to diversify credit and liquidity risk, and how they are regulated, including the need to obtain a charter to operate and explicit and implicit federal guarantees of bank liabilities to reduce the probability of bank runs. These aspects of banking affect a bank’s choice of risk vs. expected return, which, in turn, affects bank performance. Banks have an incentive to reduce risk to protect the valuable charter from episodes of financial distress and they also have an incentive to increase risk to exploit the cost-of-funds subsidy of mispriced deposit insurance. These are contrasting incentives tied to bank size. Measuring the performance of banks and its relationship to size requires untangling cost and profit from decisions about risk versus expected-return because both cost and profit are functions of endogenous risktaking. ; This chapter gives an overview of two general empirical approaches to measuring bank performance and discusses some of the applications of these approaches found in the literature. One application explains how better diversification available at a larger scale of operations generates scale economies that are obscured by higher levels of risk-taking. Studies of banking cost that ignore endogenous risk-taking find little evidence of scale economies at the largest banks while those that control for this risk-taking find large scale economies at the largest banks – evidence with important implications for regulation. ; Prepared for the Oxford Handbook of Banking, 2nd edition
    Keywords: Banks and banking ; Risk ; Profit ; Economies of scale
    Date: 2013
  4. By: Zhou, Minyu; Sheldon, Ian
    Keywords: Crop Production/Industries, International Relations/Trade, Research and Development/Tech Change/Emerging Technologies,
    Date: 2013–06

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