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on Regulation |
| By: | Praveen Jha; Sakti Golder |
| Keywords: | labour flexibility / labour market / labour policy / labour law / India |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:empelm:2008-01&r=reg |
| By: | Kristof De Witte; David S. Saal |
| Abstract: | This paper analyzes the conduct of publicly owned monopolistic utilities regulated by a voluntary sunshine regulatory model (i.e. publication of the performances of utilities). In particular, we examine the behaviour of Dutch drinking water utilities before and after the introduction of the sunshine regulation. As during the period 1992-2006 several alternative regulatory reforms including privatization, yardstick competition and profit regulation were also seriously considered, we examine how the discussion and possible implementation of these reforms influenced the behaviour of the utilities. By decomposing profit change into its economic drivers (quantity effect, price effect, operating efficiency, technical progress, scale, etc.), our results suggest that in an appropriate political and institutional context, sunshine regulation can be an effective and appropriate mean of insuring that publicly organised services are efficiently and profitably provided. In methodological terms, the profit decomposition is extended to robust (i.e. allowing for stochastic elements) and conditional (i.e. accounting for heterogeneity) non-parametric efficiency measures. |
| Keywords: | Regulation, Drinking water utilities, Profit decomposition, Data Envelopment Analysis |
| JEL: | C14 L33 L51 L95 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces0828&r=reg |
| By: | Strauss, Jason |
| Abstract: | This paper investigates strategic brinksmanship between regulated property-liability insurance firms and their regulators. Prior research suggests that firms increase their financial leverage, and thus their probability of bankruptcy and expected bankruptcy costs, in order to mitigate the severity of binding price ceilings. Although financial leverage can be altered by changing capital structure, it can also be altered by increasing other liabilities, as analyzed in this paper. This paper uses an instrumental variable for price regulation with a maximum-likelihood Heckman estimation method over panel data for Canadian property-liability insurers to extract the impact that price regulation has on the financial leverage of insurers as well as the probability of bankruptcy, the non-selection probability. |
| Keywords: | Price Regulation; Insurance; Financial Leverage; Capital Structure; Bankruptcy |
| JEL: | G22 G32 G33 |
| Date: | 2007–12–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:11212&r=reg |
| By: | Gregory de Walque (National Bank of Belgium, Research Department; University of Namur); Olivier Pierrard (Central Bank of Luxembourg; Catholic University of Louvain); Abdelaziz Rouabah (Central Bank of Luxembourg) |
| Abstract: | This paper develops a dynamic stochastic general equilibrium model with interactions between an heterogeneous banking sector and other private agents. We introduce endogenous default probabilities for both firms and banks, and allow for bank regulation and liquidity injection into the interbankmarket. Our aim is to understand the importance of supervisory and monetary authorities to restore financial stability. The model is calibrated against real data and used for simulations. We show that liquidity injections reduce financial instability but have ambiguous effects on output fluctuations. The model also confirms the partial equilibrium literature results on the procyclicality of Basel II. |
| Keywords: | DSGE, Banking sector, Default risk, Supervision, Money |
| JEL: | E13 E20 G21 G28 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:200810-23&r=reg |
| By: | Dirk Broeders; An Chen |
| Abstract: | We analyze the market-consistent valuation of pension liabilities in a contingent claim framework whereby a knock-out barrier feature is applied to capture early regulatory closure of a pension plan. We investigate two cases which we call immediate closure procedure" and delayed closure procedure". In an immediate closure procedure, when the assets value hits the regulatory boundary, the pension plan is terminated immediately. Whereas in a delayed closure procedure, a grace period is given to the pension fund plan for reorganization and recovery before premature closure is executed. The framework is then used to construct fair pension deals. |
| Keywords: | Pension funds; DB and DC pension plans; barrier options; Parisian barrier options. |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:183&r=reg |
| By: | Mark B. Greenlee |
| Abstract: | The article reviews legislative history and supervisory practices related to bank holding companies with a view toward understanding what Congress meant by referring to the Board of Governors of the Federal Reserve System as the “umbrella supervisor” in the Gramm-Leach-Bliley Act. The first part of the article looks at the historical development of bank holding company law and regulation, which laid the foundation for the current practice of umbrella supervision. The second part of the article provides answers to questions related to the Board’s current role as umbrella supervisor: What does “umbrella supervision” mean, and is it different from “consolidated supervision”? How does the GLB Act limit the Board's authority and practice and when did the Board obtain all of the legal authority to allow it to practice umbrella supervision? |
| Keywords: | Bank holding companies ; Bank supervision ; Gramm-Leach-Bliley Act ; Banking law |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwp:0807&r=reg |
| By: | Maximilian J. B. Hall (Dept of Economics, Loughborough University); Paul Hamalainen (University of Essex, Colchester, Essex, England, CO4 3SQ); Adrian Pop (University of Nantes, 44322 Nantes Cedex 3, France); Barry Howcroft (Loughborough University, Loughborough, Leicestershire, England, LE11 3TU) |
| Abstract: | The academic literature has regularly argued that market discipline can support regulatory authority discipline to monitor banking sector stability. This includes, amongst other things, using forward-looking market prices to identify those credit institutions that are most at risk of failure. The paper’s key aim is to analyse whether market investors signalled potential problems at Northern Rock in advance of the bank announcing that it had negotiated emergency lending facilities at the Bank of England in September 2007. A further aim of the paper is to examine the signalling qualities of four financial market instruments so as to explore both the relative and individual qualities of each. Therefore, the paper’s findings contribute to the market discipline literature on using market data to identify bank risk-taking and enhancing supervisory monitoring. In addition, the paper tests for evidence of an implicit “too-big-to-fail” policy in UK banking. Our analysis suggests that private market participants did signal impending financial problems at Northern Rock in advance of the bank announcing that it had negotiated emergency lending facilities. These findings lend some empirical support to proposals for the supervisory authorities to use market information more extensively to improve the identification of troubled banks. |
| Keywords: | Banking regulation, bank failures, market discipline, early warning signals. |
| JEL: | G14 G21 G28 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:lbo:lbowps:2008_11&r=reg |
| By: | Sjaak Hurkens (Institute for Economic Analysis (CSIC)); Doh-Shin Jeon (Department of Economics and Business, Universitat Pompeu Fabra) |
| Abstract: | We study how access pricing affects network competition when consumers' subscription demand is elastic and networks compete with non-linear prices and can use termination-based price discrimination. In the case of a fixed per minute termination charge, our model generalizes the results of Gans and King (2001), Dessein (2003) and Calzada and Valletti (2008). We show that a reduction of the termination charge below cost has two opposing effects: it softens competition and it helps to internalize network externalities. The former reduces consumer surplus while the latter increases it. Firms always prefer termination charge below cost, either to soften competition or to internalize the network effect. The regulator will favor termination below cost only when this boosts market penetration. Next, we consider the retail benchmarking approach (Jeon and Hurkens, 2008) that determines termination charges as a function of retail prices and show that this approach allows the regulator to increase subscription without distorting call volumes. Furthermore, we show that an informed regulator can even implement the first-best outcome by using this approach. |
| Keywords: | Networks, Access Pricing, Interconnection, Regulation, Telecommunications |
| JEL: | D4 K23 L51 L96 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:0841&r=reg |