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on Regulation |
| By: | FERES José; REYNAUD Arnaud (LERNA, University of Toulouse); |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:ler:wpaper:06.16.209&r=reg |
| By: | Simon Deakin |
| Abstract: | The use of reflexive forms of regulation is growing within the EU, in particular as the open method of coordination ('OMC') is applied to a growing number of contexts including employment policy, social inclusion, enterprise promotion, environmental protection, energy policy, and fundamental human rights. Company law, however, seems to be an exception to this: recent activity has taken the form of 'hard law' harmonization through directives, coupled with the stimulation of regulatory competition through judgments of the European Court of Justice in relation to freedom of movement, stemming from the Centros case. There is a very limited 'company law OMC' in the form of the deliberations of the European Corporate Governance Forum, but there is little evidence here of what proponents of the OMC call 'learning from diversity'; instead, the Forum appears to envisage the elimination of country-specific practices which it refers to as 'distortions of competition'. This paper argues that the lack of a meaningful company law OMC is likely to prove a more serious long-term obstacle to capital market integration than the persistence of inter-country variations in corporate governance practices. The example of labour law shows how functional convergence and a coordinated raising of standards can be achieved by the dovetailing of the OMC with social policy directives. By contrast, the recent failure of the Takeover Directive to impose a uniform model of takeover regulation indicates the limits of top-down modes of harmonization. At the same time, the case of labour law highlights the importance of placing the OMC within a wider framework of legal support for fundamental rights, of the kind which is capable of providing a countervailing force against court-led deregulation. |
| Keywords: | reflexive governance, company law, labour law, European Union |
| JEL: | K22 K31 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp346&r=reg |
| By: | Haibin Zhu |
| Abstract: | This paper develops a stochastic dynamic model to examine the impact of capital regulation on banks' financial decisions. In equilibrium, lending decisions, capital buffer and the probability of bank failure are endogenously determined. Compared to a flat-rate capital rule, a risk-sensitive capital standard causes the capital requirement to be much higher for small (and riskier) banks and much lower for large (and less risky) banks. Nevertheless, changes in actual capital holdings are less pronounced due to the offsetting effect of capital buffers. Moreover, the non-binding capital constraint in equilibrium implies that banks adopt an active portfolio strategy and hence the counter-cyclical movement of risk-based capital requirements does not necessarily lead to a reinforcement of the credit cycle. In fact, the results from the calibrated model show that the impact on cyclical lending behavior differs substantially across banks. Lastly, the analysis suggests that the adoption of a more risk-sensitive capital regime can be welfare-improving from a regulator's perspective, in that it causes less distortion in loan decisions and achieves a better balance between safety and efficiency. |
| Keywords: | Capital requirement, economic capital, regulatory capital, actual capital holding, procyclicality effect, dynamic programming, prudential regulation |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:232&r=reg |
| By: | REYNAUD Arnaud (LERNA, University of Toulouse); ; |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:ler:wpaper:06.09.202&r=reg |
| By: | Alexander Heuer; Malwina Mejer; Jennifer Neuhaus |
| Abstract: | We analyze the impact of national pharmaceutical regulation on the launch delay of new chemical entities approved by the EMEA’s centralized procedure. We find that direct price control regimes have a significantly negative impact on the launch timing. These results cannot be found when investigating the impact of indirect price controls. Our results show that Germany (65%) has the highest probability of experiencing an early launch, while it is the lowest in southern European countries (18% for Portugal and 19% for Greece). This difference accrues from both price regulation and market attractiveness, since southern European countries generally have lower prices. Due to the possibilities for parallel trade within the EU, pharmaceutical companies, by acting strategically, may further increase launch delays. |
| Keywords: | pharmaceuticals, regulation, new chemical entity, parallel trade |
| JEL: | I11 I18 L51 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieasw:437&r=reg |
| By: | OECD |
| Abstract: | This paper provides a revised measure of regulatory restrictions on inward foreign direct investment (FDI) for OECD countries and extends the approach to 13 non-member countries. The methodology is largely similar to that adopted in the previous version of the OECD indicator and covers three broad categories of restrictions: limitations on foreign ownership, screening or notification procedures, and management and operational restrictions. The FDI restrictiveness indicator captures statutory deviations from "national treatment", i.e. discrimination against foreign investment. When combined with other factors having an influence on foreign investment decisions, it has proven to be a good predictor of countries' inward FDI performance. <P>L'indice OCDE des restrictions réglementaires sur les investissements en provenance de : Révisions et extension à plus de pays. <BR>Ce document présente une mesure révisée des restrictions réglementaires envers les influx des investissements directs étrangers (IDE) pour les pays de l'OCDE et étend la mesure à 13 pays non-membres. L'approche est dans son ensemble similaire à celle adoptée lors de la version antérieure de l'indicateur de l'OCDE, et couvre essentiellement trois catégories de restrictions: les limites sur la part de firmes domestiques pouvant être détenues par le capital étranger, les procédures d'examen sélectif et de notification, et les restrictions concernant la gestion et les opérations des entreprises. L'indicateur de restrictions réglementaires mesure les déviations par rapport au "traitement national" c'est-à-dire les discriminations à l'encontre des investissements étrangers. Combiné à d'autres facteurs ayant une influence sur les décisions d'investissement à l'étranger, cet indicateur contribue à expliquer la performance des pays en matière d'influx des IDE. |
| Keywords: | foreign direct investment, FDI restrictions, investissement direct étranger, restrictions sur l'IDE, foreign ownership, contrôle étranger |
| JEL: | F21 F23 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:oec:dafaaa:2006/4-en&r=reg |
| By: | Sonja Fagernäs; Prabirjit Sarkar; Ajit Singh |
| Abstract: | This paper uses a new time series dataset of shareholder protection consisting of 60 annual legal indicators for the period 1970-2005 for France, Germany, the UK and the US. On the basis of these data it examines developments in shareholder protection and reassesses the claims that common-law countries have better shareholder protection than civil law countries. Furthermore it examines the relationship between legal changes and stock market development. It casts serious doubt on the claim that common-law countries have better shareholder protection which in turn leads to more stock market development. |
| Keywords: | Stock Market, Corporate Governance, Financial Development, Leximetrics |
| JEL: | F02 F36 E44 G11 O16 K22 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp343&r=reg |
| By: | Klein Haneveld, Wim; Streutker, Matthijs; van der Vlerk, Maarten (Groningen University) |
| Abstract: | This paper discusses the implementation of new regulatory rules in a multistage recourse ALM model for Dutch pension funds. The new regulatory rules, which are called the ?Financieel Toetsingskader?, are effective as of January 2007 and have deep impact on the issues of valuation of liabilities, solvency, contribution rate, and indexation. Multistage recourse models have proved to be valuable for pension fund ALM. The ability to include the new regulatory rules would increase the practical value of these models. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:rugsom:07005&r=reg |
| By: | Stefano DellaVigna; Eliana La Ferrara |
| Abstract: | Illegal arms are responsible for thousands of deaths in civil wars every year. Yet, their trade is very hard to detect. We propose a method to statistically detect illegal arms trade based on the investor knowledge embedded in financial markets. We focus on eight countries under UN arms embargo in the period 1990-2005, and analyze eighteen events during the embargo that suddenly increase or decrease conflict intensity. If the weapon-making companies are not trading or are trading legally, an event worsening the hostilities should not affect their stock prices or affect them adversely, since it delays the removal of the embargo. Conversely, if the companies are trading illegally, the event may increase stock prices, since it increases the demand for illegal weapons. We detect no significant effect overall. However, we find a large and significant positive reaction for companies head-quartered in countries where the legal and reputation costs of illegal trades are likely to be lower. We identify such countries using measures of corruption and transparency in arms trade. We also suggest a method to detect potential embargo violations based on stock reactions by individual companies, including chains of reactions. The presumed violations are higher for conflicts with more UN investigations and for companies with more Internet stories regarding embargo. |
| JEL: | G14 J00 O17 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13355&r=reg |
| By: | Mathias M. Siems |
| Abstract: | Following the 1900 congress in Paris, the beginning of the 20th century saw comparative law emerge as a significant discipline. This paper suggests that the early 21st century is seeing the decline, or maybe even the 'end', of comparative law. In contrast to other claims which see the 21st century as the 'era of comparative law', there are at least four trends which give rise to pessimism: 'the disregard', 'the complexity', 'the simplicity', and 'the irrelevance' of comparative law. These phenomena will be explained in the body of this paper; the concluding part considers suggestions as to how to proceed further. |
| Keywords: | Comparative law, numerical comparative law, legal culture, law and finance, World Bank, harmonisation, convergence, governance. |
| JEL: | K00 K20 N20 N40 P51 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp340&r=reg |
| By: | HIRIART Yolande (LERNA, University of Toulouse); MARTIMORT David; POUYET Jerome |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:ler:wpaper:06.27.220&r=reg |
| By: | Ryan Stever; James A Wilcox |
| Abstract: | We propose that individual banks' reported loan losses and provisions for future loan losses are lower, all else equal (including their own financial statements), when the banking industry is weaker. We further hypothesize that this option of underreporting charge-offs and provisions provides banks with incentives, when the banking industry is weaker, to cluster more, or to seek "safety in similarity." We provide evidence that large, individual U.S. banks indeed tend to report both lower charge-offs and lower provisions for loan losses, after controlling for their other determinants, when the banking industry is weaker. We also show that banks tend to be more clustered, or similar, when the industry is weaker. In addition, individual banks change their risk-taking to make it more similar to that of banking industry averages, and change it faster, when the industry is weaker. At the same time, in contrast to banks, we show that non-bank financial corporations show virtually no tendency to cluster more as their part of the financial sector weakens. |
| Keywords: | Procyclicality, reporting discretion, bank capital, clustering, bank risk |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:235&r=reg |