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on Regulation |
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Issue of 2006‒01‒01
thirteen papers chosen by Christian Calmes Université du Québec en Outaouais, Canada |
| By: | Luca Casolaro (Bank of Italy, Economic Research Department); Leonardo Gambacorta (Bank of Italy, Economic Research Department); Luigi Guiso (Università di Sassari, Ente Einaudi e Cepr) |
| Abstract: | Regulation and contract enforcement may be important determinants of the development of the household loan market, as much as they are of the supply of corporate loans on which the literature has focused. This paper draws on the Italian experience to provide evidence that formal and informal institutions and banking regulation are crucial determinants of availability and cost of the household credit. Historically the Italian household credit market has been very small by international standards and its degree of development differs considerably across local markets. It has grown very fast over the last decade. This paper argues that the traditional small size reflects the joint operation of more limited legal and informal enforcement and tight financial regulation. Differences within Italy in the efficiency of the courts, in social trust and in exposure to regulation explain the geographical differences, while massive deregulation of market entry during the 1990s spurred supply and led to fast lending growth. This evidence, together with marked differences in the quality of legal enforcement, endowment of social capital and tightness of financial regulation across countries, implies that the forces found in Italy are likely to be a major explanation for the international differences in the size of the household loan market. |
| Keywords: | consumer loans, financial liberalization, financial contracts enforcement |
| JEL: | D12 E21 G21 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_560_05&r=reg |
| By: | Susanne Büchner; Andreas Freytag; Luis G. Gonzalez; Werner Güth |
| Abstract: | A procurement contract is granted by a bureaucrat (the auctioneer) who is interested in a low price and a bribe from the provider. The optimal bids and bribes are derived based on an iid private cost assumption. In the experiment, bribes are negatively framed (between subjects treatment) to capture that society is better off if bribes are rare or low. Although bids are lower than predicted, behavior is qualitatively in line with the linear equilibrium prediction. When bribes generate a negative externality, there is a significant increase in the variability of the data. |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:esi:discus:2005-30&r=reg |
| By: | Francois Cochard; Anthony Ziegelmeyer; Kene Boun My |
| Abstract: | We investigate the ability of the damage based tax mechanism to induce socially optimal outcomes in a controlled laboratory environment which incorporates important aspects of nonpoint pollution problems. Our experimental setting combines a strictly convex damage function with uncertainty in measuring the ambient level of pollution, indefinitely repeated interactions among heterogeneous polluters, limited information on the regulator's side about the polluters' profit functions, and, in half of the experimental conditions, limited information on the polluters' side about the strategic environment. We additionally investigate whether the relative position of the social optimum in the polluters’ emission space has an impact on the efficiency of the fiscal instrument. In almost all implemented conditions, the observed total pollution level is not significantly different from the socially optimal level but compliance at the individual level is rarely observed. Experimental conditions in which polluters have to dramatically reduce their emissions in order to comply with the fiscal instrument lead to higher efficiency levels than those where compliance implies less dramatic reductions. Our most striking result is that less information on the polluters' side is beneficial from a social point of view as the performance of the damage based tax mechanism is higher the less information polluters have about the strategic environment. |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:esi:discus:2005-37&r=reg |
| By: | Richard J. Sullivan |
| Abstract: | Nonbank providers of payment services are important in the United States and appear to have become more prominent in recent years. This development, by itself, poses unique risks to the payments system. Associated with this change is a significant transformation in the mix of payment types away from checks and towards electronic payments, which introduces new risks to the payments system and potentially compounds the risks posed by increased reliance on nonbank providers of payment services. This paper reviews these recent developments in the retail payments system, discusses the associated risks, and presents an overview of the supervision of nonbank providers of payment services. Policies aimed at controlling risk in the retail payments system need to better address an increasing level of information asymmetries, externalities, and coordination problems. Policy tools such as standards setting, disclosure, clarifying legal responsibilities, and supervision can each play a role in improving control of payments system risk. To guide policy reforms, it would be useful to collect more information on the sources, extent and cost of disruptions to payment systems associated with nonbank payment providers. |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedkpw:psrwp04-03&r=reg |
| By: | Badri Narayanan G (Indira Gandhi Institute of Development Research) |
| Abstract: | In recent years, employment has fallen in the organised textile sector despite an aggregate rise in output and capital. This paper analyses the role of various factors that influence employment using 3-digit classification of Indian textile industry from 1973-74 to 1997-98. Our results document that the fall in employment can be explained in terms of rise in wages, output shocks, lack of capital utilisation and trade restrictiveness pertaining to Multi Fibre Arrangement (MFA). Environmental regulations enhance employment in the sub-sectors that are most likely to be influenced by them. The results are robust to dierent measures of capital, its utilisation and disaggregation to statelevel. We also illustrate that in a post-MFA regime, employment in the sector is bound to increase owing to absence of trade restrictions and prospects of huge investment in general and in complying with environmental regulations, though the labour regulations might affect the magnitude of that increase. |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:ind:igiwpp:2005-005&r=reg |
| By: | Simeon Djankov; Rafael LaPorta; Florencio Lopez-de-Silanes; Andrei Shleifer |
| Abstract: | We present a new measure of legal protection of minority shareholders against expropriation by corporate insiders: the anti-self-dealing index. Assembled with the help of Lex Mundi law firms, the index is calculated for 72 countries based on legal rules prevailing in 2003, and focuses on private enforcement mechanisms, such as disclosure, approval, and litigation, governing a specific self-dealing transaction. This theoretically-grounded index predicts a variety of stock market outcomes, and generally works better than the commonly used index of anti-director rights. |
| JEL: | G3 G38 K22 |
| Date: | 2005–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11883&r=reg |
| By: | Oren Sussman |
| Abstract: | In 2002, a new legislation that harmonises insolvency laws within the EU came into effect. I find reasons – both theoretical and empirical – to doubt whether the new law has achieved the goal of decreasing the cost of cross-border insolvency and borrowing. I thus suggest an alternative approach to the problem, which is based – to a larger extent – on market forces rather than on political or bureaucratic initiative. |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:sbs:wpsefe:2005fe16&r=reg |
| By: | Omar Azfar (IRIS Center, Department of Economics, University of Maryland); Peter Murrell (Department of Economics, University of Maryland) |
| Abstract: | Randomized response methods, which were designed to elicit candid answers to sensitive questions, have not succeeded in eliminating reticence in survey responses. We implement a methodology that effectively stands the randomized response technique on its head, using it to identify reticent respondents. In a sample of Romanian company officials, we identify a specific 10% of respondents as reticent with near certainty and estimate that roughly 40% of the whole sample were actually reticent. The identifiably reticent respondents admit to corruption interactions significantly less often than others do. They are also more likely to state that it is impermissible to break socially beneficial rules. We show that reticence is related to the respondent's age and the colonial heritage of the respondent's region. These results suggest some difficulties in making cross-country comparisons of corruption and of values using the types of survey data often employed in social science research and policy analysis. |
| Keywords: | corruption, survey methods, randomized response, regulation, Romania |
| JEL: | D72 D82 H10 K40 N40 P51 |
| Date: | 2005–12 |
| URL: | http://d.repec.org/n?u=RePEc:umd:umdeco:azfar_murrell_1&r=reg |
| By: | Isamu Matsukawa (Musashi University) |
| Abstract: | This paper investigates the long-run effects of average revenue regulation on an electricity transmission monopolist who applies a two- part tariff comprising a variable congestion price and a non-negative fixed access fee. A binding constraint on the monopolistfs expected average revenue lowers the access fee, promotes transmission investment, and improves consumer surplus. In a case of any linear or log-linear electricity demand function with a positive probability that no congestion occurs, average revenue regulation is allocatively more efficient than a Coasian two-part tariff if a positive access fee under average revenue regulation is lower than that under a Coasian two-part tariff. |
| Keywords: | congestion pricing; electric power transmission; two-part tariff; average revenue regulation; Coasian two-part tariff |
| JEL: | L |
| Date: | 2005–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpio:0512009&r=reg |
| By: | Marco Arnone (Catholic University of Milan); Diego Scalise (Catholic University of Milan) |
| Abstract: | This paper builds on the Blanchard and Giavazzi (2003) model of deregulation. We concentrate on product market to construct a framework explaining in a more nuanced way the redistributive effects of deregulation between sectors and within the same sector, and possible oppositions to this policy by firms and workers. In a general equilibrium framework, we introduce two sectors(regulated and unregulated), heterogeneity in firms' productivity, and a…fixed cost of entry. In such a context effects of deregulation policies can be ambiguous depending on some parametric restrictions, and sometime counterproductive. As a result, deregulation policies are not always welfare improving: a deregulation action will succeed in increasing competition and reducing mark up when the economy is already partially deregulated (sufficiently high level of competition), but may achieve the opposite outcome when it is highly regulated. Additionally, we study the choice of the best policy instrument and the optimal sequencing in the use of instruments. |
| JEL: | E61 L43 |
| Date: | 2005–12–25 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpma:0512015&r=reg |
| By: | Frank Dierick (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany); Fatima Pires (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany); Martin Scheicher (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany); Kai Gereon Spitzer (Deutsche Bundesbank, Wilhelm-Epstein-Strasse 14, 60431 Frankfurt am Main, Germany) |
| Abstract: | Following the adoption by the Basel Committee of new capital rules for banks, a process is now taking place in the EU to transpose the rules into Community law and, ultimately, into national legislation. This paper gives an overview of the main issues that relate to the EU implementation, mainly from the perspectives of financial stability and financial integration. Although the EU rules are to a large extent based on the texts of the Basel Committee, modifications have been introduced to account for the specific legal and institutional setting, as well as for some features of the European financial system. The paper gives an overview of these modifications and deals in greater detail with a number of selected topics: the monitoring of procyclicality, the role of the consolidating supervisor and the treatment of real estate lending and covered bonds. The paper concludes with an outlook for the future. |
| Keywords: | Banks, Basel II, capital requirements, financial regulation, financial stability, financial supervision, risk management. |
| JEL: | G21 G28 |
| Date: | 2005–12 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20050042&r=reg |
| By: | Eduardo Siandra (Departmento de Economía, Facultad de Ciencias Sociales, Universidad de la República) |
| Abstract: | This paper discusses the process of legal infrastructure reform to build better institutions for capital market development in Uruguay during the 1990s. It contains a description, a brief literature survey, an explanation, and an evaluation. From this we draw lessons and make a prospective analysis of the fate of capital market development under the new political scenario shaped by the first left-wing government in the national history. In particular we find fascinating the conundrum of a legal reform in a country in which the legislator and the politician have played a first order role in the interpretation of the law and regulating the gap between "law-in-the-books" and "law-in-action". |
| Keywords: | bankruptcy, capital markets, finance, common law tradition, civil law tradition, disclosure, law, legal, reform, trust |
| JEL: | G K Z13 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:ude:wpaper:0205&r=reg |
| By: | Pablo Moyal; Máximo Rossi (Departmento de Economía, Facultad de Ciencias Sociales, Universidad de la República); Tatiana Rossi |
| Abstract: | This paper analyzes the perception that the Uruguayans have of the level of corruption in the country. We understand for corruption the illegal profit of the public officials from their position in the public office. In Uruguay the citizenship perceives that the level of the public officials' corruption is high. The more intense is the belief that the corruption is extended, there is a higher disposition of the citizens interviewed to consider that it is necessary to give a bribe to solve a problem with the officials. The citizen's personal experience with regard to corrupt acts is the fact that affects in a significant and important way the perception of the levels of corruption in the society. |
| Date: | 2004–10 |
| URL: | http://d.repec.org/n?u=RePEc:ude:wpaper:0904&r=reg |