nep-lam New Economics Papers
on Central and South America
Issue of 2016‒10‒02
four papers chosen by

  1. Interest margins and bank regulation in Central America and the Caribbean By Anthony Birchwood; Michael Brei; Dorian Noel
  2. Can Cash Transfers Help Households Escape an Inter-Generational Poverty Trap? By M. Caridad Araujo; Mariano Bosch; Norbert Schady
  3. The Costs of Sovereign Default: Evidence from Argentina By Hebert, Benjamin; Schreger, Jesse
  4. Debunking the Stereotype of the Lazy Welfare Recipient: Evidence from Cash Transfer Programs Worldwide By Banerjee, Abhijit; Hanna, Rema; Kreindler, Gabriel; Olken, Benjamin A.

  1. By: Anthony Birchwood; Michael Brei; Dorian Noel
    Abstract: This paper examines empirically the determinants of bank interest margins in Central America and the Caribbean over the period 1998-2014. A particular focus is set on the impact of differences in the regulatory environment and market structure across countries in explaining the interest margins of individual banks. Our results suggest that bank market power, cost inefficiency, credit risk, liquid asset holdings, and interest rate risk increase the margin between loan and deposit rates, while increased income diversification and GDP growth are associated with lower loan-deposit spreads. When considering information on banking regulation, we find strong evidence to support our main hypothesis that improvements in market quality and liberalization have a significant effect on interest margins. More specifically, reductions in entry requirements to banking, higher involvement of foreign banks, and increased financial statement transparency are associated with significant reductions in interest margins.
    Keywords: Bank margin; bank spread; Central America; Caribbean.
    JEL: G21 L11 E43
    Date: 2016
  2. By: M. Caridad Araujo; Mariano Bosch; Norbert Schady
    Abstract: Many poor households in developing countries are liquidity-constrained. As a result, they may under-invest in the human capital of their children. We provide new evidence on the long-term (10-year) effects of cash transfers using data from Ecuador. Our analysis is based on two separate sources of data and two identification strategies. First, we extend the results from an experiment that randomly assigned children under the age of 6 years to “early” or “late” treatment groups. Although the early treatment group received twice as much in transfers, we find no difference between children in the two groups on performance on a large number of tests. Second, we use a regression discontinuity design exploiting the fact that a “poverty index” was used to determine eligibility for transfers. We focus on children who were just-eligible and just-ineligible for transfers when they were in late childhood, and compare their school attainment and work status 10 years later. Transfers increased secondary school completion, but the effects are small, between 1 and 2 percentage points from a counterfactual school completion rate of 75 percent. We conclude that any effect of cash transfers on the inter-generational transmission of poverty in Ecuador is likely to be modest.
    JEL: I3
    Date: 2016–09
  3. By: Hebert, Benjamin (Stanford University); Schreger, Jesse (Harvard University)
    Abstract: We estimate the causal effect of sovereign default on the equity returns of Argentine firms. We identify this effect by exploiting changes in the probability of Argentine sovereign default induced by legal rulings in the case of Republic of Argentina v. NML Capital. We find that a 10% increase in the probability of default causes a 6% decline in the value of Argentine equities and a 1% depreciation of a measure of the exchange rate. We examine the channels through which a sovereign default may affect the economy.
    Date: 2016–05
  4. By: Banerjee, Abhijit (MIT); Hanna, Rema (Harvard University); Kreindler, Gabriel (MIT); Olken, Benjamin A. (MIT)
    Abstract: Targeted transfer programs for poor citizens have become increasingly common in the developing world. Yet, a common concern among policy makers - both in developing as well as developed countries - is that such programs tend to discourage work. We re-analyze the data from 7 randomized controlled trials of government-run cash transfer programs in six developing countries throughout the world, and find no systematic evidence that cash transfer programs discourage work.
    Date: 2015–12

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