|
on Regulation |
|
Issue of 2005‒09‒29
thirty papers chosen by Christian Calmes Université du Québec en Outaouais, Canada |
| By: | Paolo Buonanno and Daniel Montolio (Universitat de Barcelona) |
| Abstract: | In this paper we study, having as theoretical reference the economic model of crime (Becker, 1968; Ehrlich, 1973), which are the socioeconomic and demographic determinants of crime in Spain paying attention on the role of provincial peculiarities. We estimate a crime equation using a panel dataset of Spanish provinces (NUTS3) for the period 1993 to 1999 employing the GMM-system estimator. Empirical results suggest that lagged crime rate and clear-up rate are positively correlated to all typologies of crime rate considered. Property crimes are better explained by socioeconomic variables (GDP per capita, GDP growth rate and percentage of population with high school and university degree), while demographic factors reveal important and significant influences, in particular for crimes against the person. These results are obtained using an instrumental variable approach that takes advantage of the dynamic properties of our dataset to control for both measurement errors in crime data and joint endogeneity of the explanatory variables. |
| Keywords: | Crime, Socioeconomic factors, Panel Data. |
| JEL: | I2 J24 K42 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:bar:bedcje:2005138&r=reg |
| By: | Marcel Gérard |
| Abstract: | Conducted in a framework which embodies tax-shifting opportunities, risk of losses and possibility of interjurisdictional loss-offset, this paper investigates a reform of multijurisdictional enterprises taxation, a move from Separate Accounting to Formulary Apportionment. Findings are summarised in a series of propositions on the strategic behaviour of enterprises and authorities. Under Separate Accounting, tax-shifting opportunities reduce investment in the lower-taxing jurisdiction, tax sensitivity of investment and tax competition. Moving to Formulary Apportionment eliminates such opportunities, pushing the economy in the opposite direction. Permitting the firm to compensate losses among affiliates allows it to benefit from a tax-shifting and insurance device. |
| Keywords: | multijurisdictional enterprise, separate accounting, formulary apportionment, cross-border loss offset |
| JEL: | H32 H73 H87 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1527&r=reg |
| By: | Liebig, Thilo; Porath, Daniel; Weder, Beatrice; Wedow, Michael |
| Abstract: | This paper investigates whether the new Basel Accord will induce a change in bank lending to emerging markets using a new loan level data set on German banks' foreign exposure. We test two interlinked hypotheses on the conditions under which the change in the regulatory capital would leave lending flows unaffected. This would be the case if (i) the new regulatory capital requirement remains below the economic capital, and (ii) banks' economic capital to emerging markets already adequately reflects risk. On both accounts the evidence indicates that the new Basel Accord should have a limited effect on lending to emerging markets. |
| Keywords: | banking regulation; Basel accord; international lending |
| JEL: | F33 F34 G28 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5163&r=reg |
| By: | Besley, Timothy; Payne, A. Abigail |
| Abstract: | One of the most striking changes in labour market policy of the past 50 years has come in the form of legislation to limit discrimination in the workplace based on race, gender, disability and age. If such measures are to be effective in ending discrimination, they need to be enforced. The latter is dependent on state and federal agencies such as the Equal Employment Opportunities Commission and ultimately the willingness of courts to find in favour of plaintiffs. Courts also play an important role in the evolution of anti-discrimination policy since past decisions create future precedent. This paper asks whether the number of charges filed with government agencies depends on the method by which judges are selected. Popularly elected judges should be expected to have more pro-employee preferences (selection) and should move closer to employee preferences (incentives). This should result in fewer anti-discrimination charges being filed in states that appoint their judges. In line with this prediction, this paper uses data on the number of employment discrimination charges filed for the period 1973-2000 and finds that states that appoint their judges have fewer anti-discrimination charges being filed. |
| Keywords: | discrimination; judicial system |
| JEL: | J7 K4 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5211&r=reg |
| By: | Corneo, Giacomo; Fong, Christina |
| Abstract: | This paper develops a simple theoretical model that can be implemented to estimate the willingness to pay for distributive justice. We derive a formula that allows one to recover the willingness to pay for distributive justice from the estimated coefficients of a probit regression and fiscal data. Using this formula and data from a 1998 Gallup Social Audit, we find that the monetary value of justice in the United States is about one fifth of GDP. We also generalize the model to estimate the value of justice for different types of people (e.g., Republicans, Democrats, urban dwellers, rural dwellers). We find no evidence that the value of justice varies across types of people. This is consistent with the idea that political differences between types are due to differences in the beliefs about the fairness of the market system, rather than differences in the values they place on distributive justice. |
| Keywords: | distributive justice; fairness; governmental redistribution |
| JEL: | D63 H24 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5227&r=reg |
| By: | Calvó-Armengol, Antoni; Patacchini, Eleonora; Zenou, Yves |
| Abstract: | This paper studies whether structural properties of friendship networks affect individual outcomes in education and crime. We first develop a model that shows that, at the Nash equilibrium, the outcome of each individual embedded in a network is proportional to her Bonacich centrality measure. This measure takes into account both direct and indirect friends of each individual but puts less weight on her distant friends. Using a very detailed dataset of adolescent friendship networks, we show that, after controlling for observable individual characteristics and unobservable network specific factors, the individual's position in a network (as measured by her Bonacich centrality) is a key determinant of her level of activity. A standard deviation increase in the Bonacich centrality increases the level of individual delinquency by 45% of one standard deviation and the pupil school performance by 34% of one standard deviation. |
| Keywords: | centrality measure; delinquency; network structure; peer influence; school performance |
| JEL: | A14 I21 K42 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5244&r=reg |
| By: | Kugler, Adriana D.; Pica, Giovanni |
| Abstract: | This paper uses the Italian Social Security employer-employee panel to study the effects of the Italian reform of 1990 on worker and job flows. We exploit the fact that this reform increased unjust dismissal costs for firms below 15 employees, while leaving dismissal costs unchanged for bigger firms, to set up a natural experiment research design. We find that the increase in dismissal costs decreased accessions and separations for workers in small relative to big firms, especially in sectors with higher employment volatility. Moreover, we find that the reform reduced firms' employment adjustments on the internal margin as well as entry rates while increasing exit rates. |
| Keywords: | employment volatility; European unemployment; firms' entry and exit; unjust dismissal costs |
| JEL: | E24 J63 J65 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5256&r=reg |
| By: | Valkanov,Emil; Kleimeier,Stefanie (METEOR) |
| Abstract: | When investigating the role of regulatory capital in bank mergers and acquisitions (M&As) we finds that i.e. US targets are better capitalized than their acquirers and non-acquired peers and that US banks maintain higher capital than European banks. Thus, US banks strategically raise their capital levels to avoid regulatory scrutiny. Furthermore, more value is created for targets with higher excess capital and in M&As involving targets with considerably higher excess capital ratios than their acquirers. Thus, the excess regulatory capital hypothesis is supported. The market prices the influence that capital has on the probability of the merger’s regulatory approval. |
| Keywords: | financial economics and financial management ; |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umamet:2005017&r=reg |
| By: | Donald A R George |
| Abstract: | A monopolist regulated via a price cap may well have an incentive to change other variables of interest to consumers, in an attempt to shift the cost and demand curves in his favour. This paper develops a model in which the monopolist can vary product quality and the terms of a warranty, in response to price regulation. The regulated and unregulated monopoly outcomes are compared with the Pareto-efficient outcome. |
| URL: | http://d.repec.org/n?u=RePEc:edn:esedps:4&r=reg |
| By: | Michael R. Pakko |
| Abstract: | Revenues at three gaming facilities in Delaware declined significantly after the implementation of a smoke-free law. The relative magnitudes of losses at the three facilities correspond to the availability of alternative gaming venues in the region, suggesting consumer flight. Efforts to mitigate revenue losses engendered additional costs, further reducing operating profits. |
| Keywords: | Tobacco industry ; Gambling industry |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2005-054&r=reg |
| By: | Julia S. Cheney |
| Abstract: | The identity theft forum sponsored by the Payment Cards Center of the Federal Reserve Bank of Philadelphia and the Gartner Fellows Program brought together a broad range of stakeholders to discuss the important issue of identity theft. Participants from the financial services and merchant industries, Internet service and technology providers, and regulatory and law enforcement agencies examined issues faced by consumers, merchants, and banks in fighting this financial crime. Discussants shared methodologies used to combat this crime and explored opportunities for coordination in searching for solutions. |
| Keywords: | Fair Credit Reporting Act ; Fraud ; Identity theft |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpdp:04-03&r=reg |
| By: | Mark Furletti |
| Abstract: | The National Bank Act (NBA), the 140- year-old statute that led to the creation of nationally chartered banks, has likely been one of the most influential forces in the formation and development of the U.S. credit card industry. The NBA gives nationally chartered banks a wide range of powers and protections. One of these protections, the ability to disregard certain state laws, is currently at the center of a very heated debate. The regulator of national banks, the OCC, recently issued a rule that interprets the act as essentially preempting most state efforts to protect credit card consumers. State attorneys general, consumer advocates, and members of Congress have charged that the OCC’s ruling is overly aggressive and results in bad public policy. This paper examines the current debate over preemption and its regulatory consequences. It analyzes how the expanding scope of preemption has affected the development of the credit card industry and the likely impact of the current debate on the industry’s future. |
| Keywords: | National Bank Act ; Credit cards ; Consumer protection |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpdp:04-02&r=reg |
| By: | Mark Furletti; Stephen Smith |
| Abstract: | This is the second in a series of three papers that examines the protections available to users of various electronic payment vehicles who fall victim to fraud, discover an error on their statement, or have a dispute with a merchant after making a purchase. Specifically, it examines the federal and state laws that protect consumers in the three situations described above as well as the relevant association, network, and bank policies that may apply. The protection information included in this paper is derived from a wide range of public and non-public sources, including federal and state statutes, issuer-consumer contracts, and interviews with scores of payments industry experts. This second paper focuses on two increasingly popular electronic payment methods: ACH electronic check applications (e-checks) and branded prepaid cards. The first paper in the series examined the two most widely used electronic payment vehicles: credit and debit cards. The third paper will discuss broader industry and policy implications of the authors’ findings. |
| Keywords: | Consumer protection ; Stored-value cards |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpdp:05-04&r=reg |
| By: | Hielke Buddelmeyer (Melbourne Institute of Applied Economic and Social Research, University of Melbourne and IZA Bonn); Roger Wilkins (Melbourne Institute of Applied Economic and Social Research, University of Melbourne) |
| Abstract: | This paper describes the dynamics of smoking behaviour in Australia and investigates what role smoking ban regulation has, if any, on individual level smoking patterns. The main argument to motivate the introduction of tougher smoking bans is the effect of second hand smoke on non-smokers. From a public policy perspective it is important to know if these policies also affect if a person smokes, or if they only influence when and where people smoke. We use data that tracks individual smoking behaviour over the period 2001 to 2003 during which separate smoking ban initiatives in Queensland, Victoria and the Northern Territory came into effect. We exploit this variation over time and across states as a natural experiment to assess the impact of tougher smoking regulations. Our findings indicate that the introduction of smoking ban regulations on individuals’ smoking behaviour has the expected sign but is not significant for most types of individuals. Interestingly, we do find a significant ‘rebellion’ effect amongst 18 to 24 year old smokers, with the introduction of smoking bans found to increase the likelihood that they continue to smoke. |
| Keywords: | smoking, evaluation, transitions |
| JEL: | C33 C35 I12 I18 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1737&r=reg |
| By: | Patrick Massey (Compecon Limited) |
| Abstract: | Over the past decade the energy and communications markets in Ireland, which were traditionally the preserve of State owned monopolies, have been opened up to competition to some extent, largely as a result of EU legislation. This has resulted in changes in the regulatory environment and the establishment of independent regulatory agencies for these industries. The present paper analyses the impact of these changes. It argues that competition, wherever it is possible, is superior to regulation. The paper suggests that policy to date has paid too little attention to measures necessary to promote greater competition and that regulation has failed to protect consumers. The paper concludes that active measures are necessary to promote greater competition in gas, electricity and postal services and that these need to be combined with reforms of the existing regulatory regime. |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:may:mayecw:n1451104&r=reg |
| By: | Joshua Angrist |
| Abstract: | Quantitative criminology focuses on straightforward causal questions that are ideally addressed with randomized experiments. In practice, however, traditional randomized trials are difficult to implement in the untidy world of criminal justice. Even when randomized trials are implemented, not everyone is treated as intended and some control subjects may obtain experimental services. Treatments may also be more complicated than a simple yes/no coding can capture. This paper argues that the instrumental variables methods (IV) used by economists to solve omitted variables bias problems in observational studies also solve the major statistical problems that arise in imperfect criminological experiments. In general, IV methods estimate the causal effect of treatment on subjects that are induced to comply with a treatment by virtue of the random assignment of intended treatment. The use of IV in criminology is illustrated through a re-analysis of the Minneapolis Domestic Violence Experiment. |
| JEL: | C21 C31 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberte:0314&r=reg |
| By: | John J. Donohue III |
| Abstract: | This essay provides an overview of the central theoretical law and economics insights concerning antidiscrimination law across a variety of contexts including discrimination in labor markets, housing markets, consumer purchases, and policing. The different models of discrimination based on animus, statistical discrimination, and cartel exploitation are analyzed for both race and sex discrimination. I explore the theoretical arguments for prohibiting private discriminatory conduct and illustrates the tensions that exist between concerns for liberty and equality. I also discuss the critical point that one cannot automatically attribute observed disparities in various economic or social outcomes to discrimination, and illustrate the complexities in establishing the existence of discrimination. The major empirical findings showing the effectiveness of federal law in the first decade after passage of the 1964 Civil Rights Act are contrasted with the generally less optimistic findings from subsequent antidiscrimination interventions. |
| JEL: | H J K |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11631&r=reg |
| By: | Jennifer Hunt; Sonia Laszlo |
| Abstract: | We provide a theoretical framework for understanding when an official angles for a bribe, when a client pays, and the payoffs to the client's decision. We test this framework using a new data set on bribery of Peruvian public officials by households. The theory predicts that bribery is more attractive to both parties when the client is richer, and we find empirically that both bribery incidence and value are increasing in household income. However, 65% of the relation between bribery incidence and income is explained by greater use of officials by high-income households, and by their use of more corrupt types of official. Compared to a client dealing with an honest official, a client who pays a bribe has a similar probability of concluding her business, while a client who refuses to bribe has a probability 16 percentage points lower. This indicates that service improvements in response to a bribe merely offset service reductions associated with angling for a bribe, and that clients refusing to bribe are punished. We use these and other results to argue that bribery is not a regressive tax. |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11635&r=reg |
| By: | Beata Smarzynska Javorcik; Mariana Spatareanu |
| Abstract: | This study investigates whether labor market flexibility affects foreign direct investment (FDI) flows across 19 Western and Eastern European countries. The analysis uses firm level data on new investments undertaken during 1998-2001. The study employs a variety of proxies for labor market regulations reflecting the flexibility of individual and collective dismissals, the length of the notice period and the required severance payment along with controls for business climate characteristics. The results suggest that greater flexibility in the host country’s labor market in absolute terms or relative to that in the investor’s home country is associated with larger FDI inflows. |
| Keywords: | Foreign Direct Investment, Labor Market Regulation, Firm-level data |
| JEL: | F21 F23 J0 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:run:wpaper:2005-005&r=reg |
| By: | Douglas Coate; Richard Schwester |
| Abstract: | One way the New Jersey state government regulates the consumption of alcoholic beverages is by linking the issuance of new licenses for the sale of alcoholic beverages for on premise consumption and for off premise consumption to population growth in municipalities. State regulations further permit municipalities that are population eligible to auction the new licenses for the sale of alcoholic beverages. Our purposes in this paper are to consider the effects of the population restrictions on alcoholic beverage licenses in New Jersey on beer, wine, and spirits consumption, to investigate the extent to which the on premise alcoholic beverage licensing system affects prices in the New Jersey restaurant industry, and to examine the determinants of the auction values of liquor licenses in New Jersey. We find that the much smaller number of per capita outlets for the purchase of alcoholic beverages for off premise consumption in New Jersey as compared to other states has had an important impact on beer consumption, reducing it by more than ten percent over what it would be if per capita outlets were as numerous as in other states. The authors’ survey of municipal clerks shows substantial values for licenses auctioned by New Jersey municipalities for on premise and for off premise alcoholic beverage consumption in the last decade. The mean auction values for these licenses in 2005 dollars are $395,000 and $312,000, respectively. Assuming any monopoly profits are bid away in the auction process, the licensing carrying costs must be recouped by license holders. Zagat guide restaurant review data show four to five dollar higher costs for a restaurant meal and one drink, food, service, and décor constant, in licensed restaurants as compared to restaurants without a liquor license. |
| Keywords: | Beverage Licenses, Beer, Wine, Spirits Consumption, Auctions |
| JEL: | I18 H20 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:run:wpaper:2005-006&r=reg |
| By: | Constantin Gurdgiev; (Department of Economics, Trinity College) |
| Abstract: | The following paper presents a set of philosophical arguments that extend the standard set of property rights under the classical libertarian perspective to include the individual rights to ownership, management and transfer of risk and uncertainty. The paper shows that an extension of property rights, proposed below, strengthens the libertarian arguments concerning the sufficiency of the minimal state for achievement of liberty and justice. However, as argued in the paper, property rights extension alone does not support the argument in favour of the minimal state as a necessary condition for justice. To achieve such argument, we extend the argument concerning the inalienable rights to include the rights to risk and uncertainty. We show that in presence of such rights, the infamous Nozickian assertion concerning the potential implications of continuity of the space of rationality with regards to its role in separation of the human domain from that of the other biological species, no longer holds. In addition we establish that incorporation of individual rights over risk and uncertainty into the set inalienable rights allows for resolution of the Hansson’s causal dilution problem. |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:tcd:tcduee:200052&r=reg |
| By: | Benito Arruñada; Veneta Andonova |
| Abstract: | Assuming that the degree of discretion granted to judges was the main distinguishing feature between common and civil law until the 19th century, we argue that constraining judicial discretion was instrumental in protecting freedom of contract and developing the market order in civil law. We test this hypothesis by analyzing the history of Western law. In England, a unique institutional balance between the Crown and the Parliament guaranteed private property and prompted the gradual evolution towards a legal framework that facilitated market relationships, a process that was supported by the English judiciary. On the Continent, however, legal constraints on the market were suppressed in a top-down fashion by the founders of the liberal state, often against the will of the incumbent judiciary. Constraining judicial discretion there was essential for enforcing freedom of contract and establishing the legal order of the market economy. In line with this evidence, our selection hypothesis casts doubts on the normative interpretation of empirical results that proclaim the superiority of one legal system over another, disregarding the local conditions and institutional interdependencies on which each legal system was grounded. |
| Keywords: | Legal Systems, Institutional Development, Law Enforcement |
| JEL: | K40 N40 O10 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:801&r=reg |
| By: | Xavier Freixas; Gyöngyi Lóránth; Alan D. Morrison |
| Abstract: | We investigate the optimal regulation of financial conglomerates which combine a bank and a non-bank financial institution. The conglomerate’s risk-taking incentives depend upon the level of market discipline it faces, which in turn is determined by the conglomerate’s liability strucure. We examine optimal capital requirements for standalone institutions, for integrated financial conglomerates, and for financial conglomerates that are structured as holding companies. For a given risk profile, integrated conglomerates have a lower probability of failure than either their standalone or decentralised equivalent. However, when risk profiles are endogenously selected conglomeration may extend the reach of the deposit insurance safety net and hence provide incentives for increased risk-taking. As a result, integrated conglomerates may optimally attract higher capital requirements. In contrast, decentralised conglomerates are able to hold assets in the socially most efficient place. Their optimal capital requirements encourage this. Hence, the practice of “regulatory arbitrage”, or of transfering assets from one balance sheet to another, is welfare-increasing. We discuss the policy implications of our finding in the context not only of the present debate on the regulation of financial conglomerates but also in the light of existing US bank holding company regulation. |
| Keywords: | Financial conglomerate, capital regulation, regulatory arbitrage |
| JEL: | G21 G22 G28 |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:820&r=reg |
| By: | Peter Tenim; Joachim Voth |
| Abstract: | If financial deepening aids economic growth, then financial repression should be harmful. We use a natural experiment – the change in the English usury laws in 1714 – to analyze the effects of interest rate restrictions. We use a sample of individual loan transactions to demonstrate how the reduction of the legal maximum rate of interest affected the supply and demand for credit. Average loan size and minimum loan size increased strongly, and access to credit worsened for those with little ‘social capital.’ While we have no direct evidence that loans were misallocated, the discontinuity in loan receipts makes this highly likely. We conclude that financial repression can undermine the positive effects of financial deepening. |
| Keywords: | Economic development, banking, financial repression, usury laws, credit rationing, natural experiments, lending decisions |
| JEL: | O16 G21 N23 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:858&r=reg |
| By: | Justina A.V. Fischer; Antonio Rodríguez Andrés |
| Abstract: | This paper uses a sample of 71 countries in a cross-country context to empirically analyze the relationship between income distribution and software piracy rates. It measures income inequality by the Gini coefficient and alternatively by quintile shares. This analysis remedies previous econometric studies by controlling for a wide range of factors that potentially influence national piracy rates and employing an instrumental variables approach. Results indicate that income inequality is negatively associated with piracy rates but also that the impact of various income classes on piracy rates may depend on the geographic region where a country is located. Moreover, the model predicts an inverted U-shaped relationship between piracy and per capita income and reveals an apparent inverse relationship between individualism and software piracy. In addition, the results seem robust to the inclusion of additional covariants often employed in predicting piracy rates and the occurrence of property crime. |
| JEL: | K42 K11 D3 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:usg:dp2005:2005-18&r=reg |
| By: | Patrick Van Roy (National Bank of Belgium, Brussels) |
| Abstract: | The purpose of this paper is to see whether and how G-10 banks have complied with the 1988 Basel Accord. The interest of this study lies in the fact that the standardized approach to credit risk in the New Basel Accord is conceptually similar to the 1988 agreement. However, very little is known about the reaction of non-US banks to the imposition of minimum capital requirements that make use of risk-weight categories. Building on previous studies, this paper uses a simultaneous equations model to analyze adjustments in capital and credit risk at banks from G- 10 countries over the 1988-95 period. The results show that regulatory pressure was successful in raising the capital to assets ratios of undercapitalized banks in Canada, Japan, the UK and the US but not in France and Italy. In addition, there is no evidence that undercapitalized G-10 banks increased or decreased their credit risk over the period studied. Interestingly, these findings are robust to the inclusion of a variable measuring the role of market discipline in influencing bank capital and risk choices. All in all, the results suggest that the 1988 Basel standards were effective in that, subsequent to their adoption, undercapitalized G-10 banks generally increased their capital but not their credit risk. |
| Keywords: | 1988 Basel Accord, capital requirements, credit risk |
| JEL: | G21 G28 |
| Date: | 2005–09–11 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpfi:0509013&r=reg |
| By: | Patrick Van Roy (National Bank of Belgium, Brussels) |
| Abstract: | This paper focuses on the standardised approach to credit risk in Basel II. The minimum capital requirements for the corporate, interbank and sovereign loan portfolios of a representative bank in each EMU country are evaluated by means of Monte-Carlo simulations depending on the credit rating agencies chosen by the bank to risk-weight its exposures. Three main results emerge from the analysis. First, although the use of different combinations of credit rating agencies leads to significant differences in minimum capital requirements, these differences never exceed 10% of banks’ regulatory capital for loans to corporates, banks and sovereigns on average in the EMU. Second, the standardised approach provides a small regulatory capital incentive for banks to use several credit rating agencies to risk-weight their exposures. Third, the minimum capital requirements for the corporate, interbank and sovereign loan portfolios of EMU banks will be higher in Basel II than in Basel I. I also show that the incentive for banks to engage in regulatory arbitrage in the standardised approach to credit risk is limited. |
| Keywords: | New Basel Accord, capital requirements, credit rating agencies |
| JEL: | G |
| Date: | 2005–09–11 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpfi:0509014&r=reg |
| By: | Raquel FONSECA (CSEF, University of Salerno); Natalia UTRERO- GONZALEZ (University Autonoma de Barcelona) |
| Abstract: | This paper investigates the importance that market regulation and financial imperfections have on …rm growth. We analyse institutions affecting labor market as Employment Protection Laws (EP) and Product Market Regulation (PM). We show that together with the beneficial effects of …nancial development, a firm will get less financing, and thus invest less, in a weak financial market (finance effect), the strictness of product and labor market regulations also affect firm growth (labor effect). In particular, we show that the stricter the rules the more detrimental the influence on growth in sectoral value added for a large number of countries. We also show that the labor effect overcomes the positive finance effect. |
| Keywords: | Financial development, labor and product market institutions, growth. |
| JEL: | G2 G32 J32 L10 |
| Date: | 2005–09–12 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpfi:0509016&r=reg |
| By: | Frédéric Puech (CERDI) |
| Abstract: | The aim of this paper is to investigate the existence of a spatial dependence of crime rates at a local level in the case of municipalities of Minas Gerais, one of the 26 Brazilian states. Results suggest the existence of a positive spatial autocorrelation of municipal violent crime rates. However, it also appears that violent crime against property and against persons do not follow the same spatial behavior. While violent economic crime seems to spread a lot, interpersonal violence is a much more localized phenomenon. |
| Keywords: | violent crime, spatial autocorrelation, Brazil |
| JEL: | C31 K42 I20 R12 |
| Date: | 2005–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpur:0509018&r=reg |
| By: | Joseph E. Harrington, Jr |
| Abstract: | In reviewing the theoretical and empirical literature on collusion, this paper distills methods for detecting cartels and distinguishing collusion from competition. |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:jhu:papers:526&r=reg |