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on Regulation |
| By: | Goel, Rajeev K. (BOFIT) |
| Abstract: | This paper uses recent data on a large cross-section of countries to study the determinants of corrupt activity. The main contribution is to examine the effects of different types and severities of government regulations on corrupt activities. The results show that greater prosperity and democracy lead to less corrupt activity. Variables representing the degree of fractionalization across three dimensions and least developed nations are statistically insignificant. Having more regulation, including number of procedures and time involved across four categories (business startup, licensing, property registration, and taxation), leads to greater corruption. More regulatory procedures, especially for business startups and property registrations, have the most corruption-enhancing effect. Whereas lengthier procedures also generally spur corruption, there are important differences. Finally, higher regulatory transactions costs do not seem to significantly impact corruption. Policy implications are discussed. |
| Keywords: | corruption; business startup; licenses; property; taxes; fractionalization; democracy; prosperity |
| JEL: | H26 H87 K42 |
| Date: | 2008–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2008_010&r=reg |
| By: | Luc Laeven; Ross Levine |
| Abstract: | This paper conducts the first empirical assessment of theories concerning relationships among risk taking by banks, their ownership structures, and national bank regulations. We focus on conflicts between bank managers and owners over risk, and show that bank risk taking varies positively with the comparative power of shareholders within the corporate governance structure of each bank. Moreover, we show that the relation between bank risk and capital regulations, deposit insurance policies, and restrictions on bank activities depends critically on each bank's ownership structure, such that the actual sign of the marginal effect of regulation on risk varies with ownership concentration. These findings have important policy implications as they imply that the same regulation will have different effects on bank risk taking depending on the bank's corporate governance structure. |
| JEL: | G18 G2 G3 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14113&r=reg |
| By: | Jens Arnold; Giuseppe Nicoletti; Stefano Scarpetta |
| Abstract: | This paper relates diverging productivity performances across OECD countries over the past fifteen years to differences in the stringency of regulations in the product market. We first summarize industry-level evidence linking these diverging patterns to delays in service markets reforms in the wake of the ICT shock. The evidence we survey suggests that, especially in continental EU countries, tight regulation of services has slowed down growth in ICT-using sectors, which use intermediate service inputs intensively. Based on harmonised cross-country firm-level data, we then provide new evidence that one of the key channels through which inappropriate service regulations affect productivity growth is by hindering the allocation of resources towards the most dynamic and efficient firms. At the industry level, resources were allocated less efficiently across firms in countries where service regulations are less market-friendly. Firmlevel econometric estimates confirm that anti-competitive service regulations hamper productivity growth in ICT-using sectors, with a particularly pronounced effect on firms that are catching up to the technology frontier and that are close to international best practice. In other words, regulations hurt in particular those firms that have the potential to excel in domestic and international markets. <P>Réglementation, allocation des ressources et productivité dans les pays de l’OCDE : évidence empirique au niveau des secteurs et des entreprises <BR>Cette étude établi un rapport entre trajectoires divergentes de productivité dans les pays OCDE pendant les dernières 15 années, et différences dans la rigidité de la réglementation sur les marchés des biens. La première partie du papier résume les résultats empiriques existants au niveau des industries sur le rapport entre productivité et réglementation dans les secteurs de services, ainsi que son rapport avec le choc technologique dans les technologies de l'information et de la communication (TIC). L’évidence empirique que nous examinons suggère qu’en particulier dans les pays d’Europe continentale la réglementation rigide a ralenti la croissance dans les secteurs «utilisateur des TIC», qui utilisent de manière intensive les services réglementés. Sur la base de données harmonisées au niveau des entreprises, ce papier présente ensuite des résultats nouveaux qui montrent que l’effet de la réglementation sur la croissance de la productivité se transmet principalement à travers des obstacles à l’allocation des ressources vers les entreprises les plus dynamiques et efficientes. L’allocation des ressources au sein de chaque industrie est moins efficiente dans les pays ayant une réglementation plus rigide dans les secteurs des services. Nos estimations économétriques au niveau des entreprises montrent ensuite que la réglementation des services réduit la croissance de la productivité dans les secteurs « utilisateur des TIC », avec un effet particulièrement prononcé sur les entreprises qui sont proches de la frontière technologique et y convergent rapidement. Autrement dit, la réglementation nuit surtout aux entreprises qui ont le plus haut potentiel de succès dans les marchés nationaux et internationaux. |
| Keywords: | product market regulation, productivity, productivité, allocative efficiency, firm-level data, réglementation dans les marchés des biens, efficience dans l’allocation de ressources, données individuelles d’entreprise |
| JEL: | D24 E23 K23 L11 L51 |
| Date: | 2008–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:616-en&r=reg |
| By: | Blackorby, Charles (Department of Economics, University of Warwick); Szalay, Dezsö (Department of Economics, University of Warwick) |
| Abstract: | We study the regulation of a firm with unknown demand and cost information. In contrast to previous studies, we assume demand is influenced by a quality choice, and the firm has private information about its quality capacity in addition to its cost. Under natural conditions, asymmetric information about the quality capacity is irrelevant. The optimal pricing is weakly above marginal costs for all types and no type is excluded. |
| Keywords: | Asymmetric Information ; Multi-dimensional Screening ; Regulation |
| JEL: | D82 L21 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:858&r=reg |
| By: | Grischa Perino (University of Heidelberg, Department of Economics) |
| Abstract: | Most real world emission permit schemes are in effect hybrid instruments that feature both quantity and price controls. While the effects of price bounds are well understood for issues such as uncertain abatement costs it has not been investigated how such bounds affect time-consistency of environmental regulation and research incentives. The present paper analyzes these issues for two types of innovation. While price bounds increase static efficiency they reduce incentives to innovate. Commitment on details of a scheme’s design might be necessary to avoid the latter. |
| Keywords: | Environmental Regulation, Hybrid Instruments, Innovation, Time-inconsistency |
| JEL: | Q55 H23 O33 L51 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:awi:wpaper:0467&r=reg |
| By: | Kris J. Mitchener; Mari Ohnuki |
| Abstract: | Using a newly-constructed panel data set which includes annual estimates of lending rates for 47 Japanese prefectures, we analyze why interest rates converged over the period 1884-1925. We find evidence that technological innovations and institutional changes played an important role in creating a national capital market in Japan. In particular, the diffusion in the use of the telegraph, the growth in commercial branch banking networks, and the development of Bank of Japan's branches reduced interest-rate differentials. Bank regulation appears to have played little role in impeding financial market integration. |
| JEL: | F15 G21 N15 O16 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14090&r=reg |
| By: | B. LEYMAN; K. SCHOORS |
| Abstract: | We use a unique dataset to analyze the contract renegotiation between a debtor and its secured bank creditors during Belgian court-supervised reorganization. We find that secured banks with higher collateralization succeed in renegotiating higher debt repayments during the court-supervised post-confirmation stage. There is also mild evidence that secured bank creditors renegotiate higher loan repayments during the court-supervised post-confirmation stage if the debtor’s assets are more redeployable. The proceeds of asset sales are used to generously repay secured banks and there is some evidence that secured banks push for those sales. Our findings are consistent with theory suggesting that secured creditors prefer liquidation above court-supervised reorganization. |
| Keywords: | Bankruptcy, bank lending, collateral, liquidation rights |
| JEL: | G10 G20 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:rug:rugwps:08/508&r=reg |
| By: | Kohei Kubota (Graduate School of Economics, Osaka University); Yoshiro Tsutsui (Osaka School of International Public Policy, Osaka University) |
| Abstract: | The purpose of this paper is to estimate the degree of competition of consumer loan industry in Japan utilizing responses to a questionnaire survey conducted by Japan Consumer Finance Association. Estimating the cost function, we found that the industry is characterized by large scale economies. Estimation of Lerner index, H-statistics, degree of noncompetition, and degree of collusion reveals that consumer loan market is highly monopolistic. Consumer loan companies answered to a question that they commit neither interest rate competition nor quantity competition through extending branch-networks. We further investigated the reason why consumer loan market is monopolistic. Market for new customers is characterized by informational asymmetry, usury law, and hyperbolic discounting of borrowers, which makes the market monopolistic. Meanwhile, market for incumbent customers is monopolistic because they would not search for new lenders to avoid switching costs. These findings may be useful to draft new regulations on the industry. |
| Keywords: | consumer loans, degree of competition, scale economy, degree of collusion, H-statistics |
| JEL: | G21 L13 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:0826&r=reg |
| By: | Tara Watson; Angela Fertig |
| Abstract: | Alcohol policies have potentially far-reaching impacts on risky sexual behavior, prenatal health behaviors, and subsequent outcomes for infants. We examine whether changes in minimum drinking age (MLDA) laws affect the likelihood of poor birth outcomes. Using data from the National Vital Statistics (NVS) for the years 1978-88, we find that a drinking age of 18 is associated with adverse outcomes among births to young mothers -- including higher incidences of low birth weight and premature birth, but not congenital malformations. The effects are largest among black women. We find suggestive evidence from both the NVS and the 1979 National Longitudinal Study of Youth (NLSY) that the MLDA laws alter the composition of births that occur. In states with lenient drinking laws, young black mothers are more likely to have used alcohol 12 months prior to the birth of their child and less likely to report paternal information on the birth certificate. We suspect that lenient drinking laws generate poor birth outcomes because they increase the number of unplanned pregnancies. |
| JEL: | I18 J13 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14118&r=reg |
| By: | Abdelkrim Araar; Yazid Dissou; Jean-Yves Duclos |
| Abstract: | This study assesses the incidence of pollution control policies on households. In contrast to previous studies, we employ an integrated framework combining a multisector general equilibrium model with a stochastic dominance analysis using household-leved data. We consider three policy instruments in a domestic emission trading system: (i) an output-based allocation of permits (OBA); (ii) the use of the proceeds of permit sales to reduce payroll taxes (RPT); (iii) and the use of these proceeds to reduce consumption taxes instead (UCS). The general equilibrium results suggest that the return to capital is more negatively affected than the wage rate in all simulations, since polluting industries are capital intensive. Abstracting from pollution externalities, the dominance analysis allows us to conclude that all three policies have a normatively robust negative (positive) impact on welfare (poverty). Formal dominance tests indicate that RPT first-order welfare dominates OBA over all values of household incomes. UCS also first-order poverty dominates RPT for any choice of poverty line below $CAN 18,600, and poverty dominates for any poverty line (and thus welfare dominates) at the second order. Finally, while the three pollution control policies do not have a numerically large impact on inequality (in comparison to the base run), statistical tests indicate that inequality increases significantly more with OBA and RPT than with UCS. |
| Keywords: | Pollution control policies, household incidence, stochastic dominance, general equilibrium effects |
| JEL: | C68 D31 D58 D63 H23 Q52 Q56 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:0809&r=reg |
| By: | Marc Peters (Banking, Finance and Insurance Commission, Brussels, Belgium); Hugues Pirotte (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels and Luxembourg School of Finance (LSF), University of Luxembourg.) |
| Abstract: | This paper is an opinion on the public consultation on possible changes to the Capital Requirements Directive1 and more particularly on the Annex IX Part 2 (item 10 on the Technical Amendments to Directive 2006/48/Ec), related to the significance of the risk transfer in the context of securitisation operations. It will demonstrate that the onus should be put on an economic approach to significant risk transfer rather than a mechanical approach, the latter being less capable of apprehending the various risk profiles a securitisation transaction might take. |
| Keywords: | Securitisation, significant credit risk transfer. |
| JEL: | G28 G21 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:08-021&r=reg |