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on Regulation |
| By: | Fares Triki (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I) |
| Abstract: | This paper investigates the relation between liquidity and asset prices. It shows that, when banks balance sheets are marked to market and banks are targeting a financial leverage level - a situation similar to current environment - formation of Leverage Bubble phenomenon and suggests a new regulation rule based on a Dynamic Leverage Ratio (DLR) rule. |
| Keywords: | Financial crises, rational bubbles, Dynamic Leverage Ratio, mark to market accounting, asset pricing, macroprudential regulation, market liquidity. |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00390688_v1&r=reg |
| By: | Rafael Di Tella; Juan Dubra |
| Abstract: | We propose a model where voters experience an emotional cost when they observe a firm that has displayed insufficient concern for other people's welfare (altruism) in the process of making high profits. Even with few truly altruistic firms, an equilibrium may emerge where all firms pretend to be kind and refrain from charging "abusive" prices to their customers. Our main result is that, as competition decreases, the set of parameters for which such pooling equilibria exist beomes smaller and firms are more likely to anger consumers. Regulation can increase welfare, for example, through fines (even if there are no changes in prices). We illustrate these gains in a monopoly setting, where regulation affects welfare through 3 channels (i) a reduction in monopoly price leads to the production of units that cost less than their value to consumers (standard channel); (ii) regulation calms down existing consumers because a reduction in the profits of an "unkind" firm increases total welfare by reducing consumer anger (anger channel); and (iii) individuals who were out of the market when they were excessively angry in the unregulated market, decide to purchase once the firm is regulated, reducing the standard distortions described in the first channel (mixed channel). |
| JEL: | D64 L4 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15201&r=reg |
| By: | E. Philip Davis |
| Abstract: | The UK financial market has been severely affected by the recent financial crisis. The crisis has exposed weaknesses in the supervisory framework as well as that for crisis management and resolution. This paper reviews the supervisory and regulatory framework and the many reforms that have already been adopted to remedy these weaknesses. It also provides recommendations for further reforms. This Working Paper relates to the 2009 Economic Survey of the United Kingdom (www.oecd.org/eco/surveys/uk).<P>Stabilité financière au Royaume-Uni : miser sur la prudence<BR>Le marché financier britannique a été sévèrement touché par la crise financière. Celle-ci a mis en évidence de nombreuses faiblesses des mécanismes de contrôle et des dispositifs de gestion et de résolution des crises. Le présent chapitre examine le cadre de contrôle et de réglementation, ainsi que les nombreuses réformes qui ont déjà été adoptées pour remédier à ses faiblesses. Il s’achève par des recommandations concernant de nouvelles réformes. Ce document de travail se rapporte à l'Étude économique de l'OCDE sur le Royaume-Uni 2009 (www.oecd.org/eco/etudes/uk). |
| Keywords: | financial regulation, réglementation financière, UK banking system, système bancaire du Royaume-Uni, macroprudential issues, questions macroprudentielles, financial stability, stabilité financière |
| JEL: | G18 G21 G29 |
| Date: | 2009–07–22 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:717-en&r=reg |
| By: | Agoraki, Maria-Eleni; Delis, Manthos D; Pasiouras, Fotios |
| Abstract: | This study investigates whether regulations have an independent effect on bank risk-taking or whether their effect is channeled through the market power possessed by banks. Given a well-established set of theoretical priors, the regulations considered are capital requirements, restrictions on bank activities and official supervisory power. We use data from the Central and Eastern European banking sectors over the period 1998-2005. The empirical results suggest that banks with market power tend to take on lower credit risk and have a lower probability of default. Capital requirements reduce risk in general, but for banks with market power this effect significantly weakens. Higher activity restrictions in combination with more market power reduce both credit risk and the risk of default, while official supervisory power has only a direct impact on bank risk. |
| Keywords: | Banking sector reform; regulations; competition; risk-taking; CEE banks |
| JEL: | G38 G32 G21 |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:16495&r=reg |
| By: | Pablo Antolín; Sandra Blome; David Karim; Stéphanie Payet; Gerhard Scheuenstuhl; Juan Yermo |
| Abstract: | This paper assesses the impact of different quantitative approaches to regulate investment risk on the retirement income stemming from defined contribution (DC) pension plans. It looks at how such regulations affect the spectrum of investment policies available and, through this channel, how they affect the retirement income that an individual may expect from a DC pension plan. The analysis shows that there is a trade-off between potential retirement income and protection from bad outcomes. Reducing the downside risk on retirement income from DC pension plans requires moving into relatively conservative investment policies where the share of assets allocated to bonds may be quite large. However, this comes at the cost of renouncing potentially higher replacement rates that are attainable but at a higher risk of unfavourable retirement income outcomes. Less risk adverse regulators and supervisors would aim at lower probability requirements as regard the downside risk, which will increase the range of investment policies available and thus the share of riskier assets.<P>Réglementations en matière d’investissements et retraites à cotisations définies<BR>Ce document examine l'impact de différentes approches quantitatives en matière de réglementation du risque d'investissement sur le revenu de retraite issu de plans de retraite à cotisations définies. Il étudie dans quelle mesure ces réglementations affectent le spectre des stratégies d'investissement et, par leur intermédiaire, le revenu de retraite qu'un individu peut attendre d‘un plan de retraite à cotisations définies. Cette analyse montre qu‘il existe un compromis entre le revenu de retraite potentiel et la protection contre des évènements défavorables. La réduction du risque de baisse du revenu de retraite issu de plans de retraite à cotisations définies nécessite d‘aller vers des stratégies d‘investissement relativement conservatives, dans lesquelles la part allouée aux obligations peut être assez importante. Cependant, ceci n‘est possible qu‘à condition de renoncer à des taux de remplacement potentiellement plus élevés, qui ne peuvent être atteints qu‘à un niveau de risque plus élevé de survenue d‘évènements défavorables pour le revenu de retraite. Des régulateurs et superviseurs moins averses au risque peuvent diminuer leurs exigences en terme de probabilité du risque de baisse, ce qui augmentera la gamme des stratégies d‘investissement disponibles et ainsi la part des actifs plus risqués. |
| Keywords: | investment, investissement, regulation, replacement ratios, taux de remplacement, plans de retraite à cotisations définies, defined contribution plans , risk management, gestion des risques, retirement income, revenu des retraites |
| JEL: | D14 D91 E21 G11 G38 J14 J26 |
| Date: | 2009–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:oec:dafaab:37-en&r=reg |
| By: | Grund, Christian (University of Würzburg); Harbring, Christine (University of Cologne) |
| Abstract: | Based on two representative samples of employees, the German Socio Economic Panel and the European Social Survey, we explore the relation between certain measures of control in employment relationships (i.e. working time regulations, use of performance appraisal systems, monitoring by supervisors, autonomy to organize the work) and individuals’ inclination to trust others. Trust is measured by the general trust question like in most other economic studies based on surveys. We find that strict working time regulations, monitoring and lack of autonomy – all indicators for control at the workplace – are negatively related to trust. Moreover, we contribute to the literature on trust by gathering hints to other potential determinants of trust. |
| Keywords: | autonomy, control, monitoring, performance appraisal, regulation of working time, trust |
| JEL: | J81 M12 M5 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4297&r=reg |
| By: | Thomas de Haan |
| Abstract: | The OECD Document “Convergence and Next Generation Networks” analysed developments in Next Generation Networks (NGN), and the convergence of core and access networks. The aim of that paper was to review areas where policy changes may be required and to put forward recommendations for considerations in areas where change may be necessary to support new developments and to ensure that telecommunication policy goals can be met. The paper depicted areas of regulatory interest, arising from the deployment of NGN. The objective was to identify policy and regulatory issues that government and national regulatory authorities may have to confront in the framework of the development of core next generation networks. It noted that the issue of ‘Numbering, naming and addressing” was a policy area that would need further analysis and that ENUM was one of the potentially significant developments in the converging world of telephone numbering, naming and addressing. |
| Date: | 2009–06–02 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stiaab:156-en&r=reg |
| By: | Djamel Kirat (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Ibrahim Ahamada (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) |
| Abstract: | In order to comply with their commitments under the Kyoto Protocol, France and Germany participate to the European Union Emission Trading Scheme (EU ETS) which concerns predominantly electricity generation sectors. In this paper we seek to know if the EU ETS gives appropriate economic incentives for an efficient and strong system in line with Kyoto commitments. Because if so electricity producers in these countries should include the price of carbon in their costs functions. After identifying the different sub periods of the EU ETS during its pilot phase (2005-2007), we model the prices of various electricity contracts and look at their volatilities around their fundamentals while evaluating the correlation between the electricity prices in the two countries. We find that electricity producers in both countries were constrained to include the carbon price in their cost functions during the first two years of operation of the EU ETS. During this period, German electricity producers were more constrained than their French conterparts and the inclusion of the carbon price in the cost function of electricity generation has been so much more stable in Germany than in France. Furthermore, the European market for emission allowances has increased the market power of the historical French electricity producer and has greatly contributed to the partial alignment of the wholesale price of electricity in France with those of Germany. |
| Keywords: | Carbon Emission Trading, multivariate GARCH models, structural break, non parametric approach, energy prices. |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00384496_v1&r=reg |
| By: | Figueres, Christiana; Streck, Charlotte |
| Abstract: | Despite the many calls to reform the CDM, its conceptual underpinnings are strong and it will most likely survive in the post-2012 climate regime. Some modifications may be considered in the short term to strengthen the effectiveness and transparency of the mechanism without modifying the Marrakesh Accords. In the medium term substantially increased mitigation efforts in developing countries may require a combination of three possible financial mechanisms: the current activity-based CDM albeit improved, a second market mechanism that would seek to improve the long term emission trends of developing countries by promoting broad based emission reduction programs primarily in the private sector, and a third financial mechanism outside of the market which would be an incentive for the adoption of policy changes leading to a low carbon path, but where emission reductions would not be used as international offsets. |
| Keywords: | Environmental Economics&Policies,Carbon Policy and Trading,Montreal Protocol,Energy and Environment,Environment and Energy Efficiency |
| Date: | 2009–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5008&r=reg |
| By: | David C. Cook; Rob W. Fraser; Jeffrey K. Waage; Matthew B. Thomas |
| Abstract: | This paper is motivated by the observation that there is a difference between the time paths of damage valuations for invasions which affect agricultural compared with environmental systems. In particular, unlike agricultural systems, studies have shown that the social valuation of an environmental system is likely to be exponentially positively related to the extent of its deterioration. This paper explores the implications of this difference in determining biosecurity investment priorities. It is concluded that because of this difference an environmental system will often not be prioritised for such protection over an agricultural system even though its ultimate social value exceeds that of the agricultural system. |
| Keywords: | Biosecurity; invasive species |
| JEL: | Q51 Q57 Q58 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:ukc:ukcedp:0908&r=reg |
| By: | Astrid Coates (ISE, University of Antwerp); Wim Van Opstal (HIVA, Catholic University of Leuven) |
| Abstract: | In the last two decades, several innovative legal frameworks for social entrepreneurship were developed across Europe. The differential success of these innovations raise certain questions. Is the intrinsic design of these legal frameworks optimal for social enterprises? Secondly, is the attractive capacity of these legal frameworks high enough to attract both new as existing social enterprises? And lastly, have these new legal frameworks reached full maturity? If this is not the case, these changes may well impede rather than encourage the development of social enterprises. In this paper, we look at the Belgian situation where an innovative framework was introduced and where multiple legal frameworks for social entrepreneurship coexist. By means of a multi-disciplinary approach involving law and economics, we investigate the joys and burdens of having numerous legal frameworks for social enterprises. We provide an introduction to the Belgian legal environment for social entrepreneurship, and argue that the current institutional design is suboptimal. Finally, we conclude with lessons that can be learned from the Belgian case relevant for other countries and contexts. |
| Keywords: | legal design, social enterprise |
| JEL: | K22 K23 L21 L31 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:hva:wpssce:0903&r=reg |
| By: | Peter Smith; Maria Goddard |
| Abstract: | The government’s health reform programme since 2000 has covered many aspects of the organisation of health care and was accompanied by a sizeable increase in spending on healthcare. Many of these reforms have the potential to improve the efficiency and responsiveness of the health care system and ultimately health outcomes, although it is too early to make definitive judgements on their effectiveness. This chapter provides an overview of the organisation and financing of the National Health Service, reviews its performance, assesses the reforms since the start of the decade and provides recommendations for further development. This Working Paper relates to the 2009 Economic Survey of the United Kingdom (www.oecd.org/eco/surveys/uk).<P>Système national de santé anglais : Bilan de santé économique<BR>Le programme de réformes engagé par le gouvernement depuis 2000 dans le secteur de la santé couvre de nombreux aspects de l’organisation des soins et services de santé et il s’est accompagné d’une augmentation notable des dépenses consacrées à la santé. Nombre de ces réformes sont de nature à améliorer l’efficience et la réactivité du système de santé et, en fin de compte, les résultats sur le plan de la santé, bien qu'il soit trop tôt pour porter des jugements définitifs sur leur efficacité. Ce chapitre donne une vue d’ensemble de l’organisation et du financement du National Health Service ; il en examine les performances et évalue les réformes conduites depuis le début de la décennie, et formule des recommandations pour la poursuite des réformes. Ce document de travail se rapporte à l'Étude économique de l'OCDE de le Royaume-Uni 2009 (www.oecd.org/eco/etudes/uk). |
| Keywords: | health care reforms, résultats de la santé, health expenditure, dépenses de santé, English health care system, système de soins de santé anglais, health outcomes, réforme du système de soins de santé |
| JEL: | H51 I12 O57 |
| Date: | 2009–07–22 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:716-en&r=reg |
| By: | Maurus Rischatsch (Socioeconomic Institute, University of Zurich); Maria Trottmann |
| Abstract: | Many politicians blame physician dispensing (PD) to increase health care expenditure and to undermine independence of drug prescription and income leading to a suboptimal medication. Therefore, PD is not allowed in most OECD countries. In Switzerland, PD is allowed in some regions depending on the density of pharmacies. This enables to investigate the difference in prescribing behavior between physician which gain income from prescribing a specific drug and their colleagues which prescribe the drug but do not sell it. Because the considered drugs are bioequivalent we focus on the economic consequence of PD. We analyze the prescribing behavior of Swiss physicians using cross-sectional data between 2005 and 2007 for three important agents. The results support our hypothesis that dispensing physicians have a higher probability of prescribing the drug with the (most likely) higher margin compared to non-dispensing physicians. Further, generic drugs are prescribed more often to patients with higher cost-sharing while patients' cost-sharing is less influential with PD. High-income patients face a much higher probability to receive the brand-name drug due to their lower marginal utility of income. Today's administered reimbursement prices for generics seem to be high enough to gain physicians for prescribing generics because of their high margins. |
| Keywords: | Physician dispensing, prescribing behavior, generics, brand-name drugs |
| JEL: | I10 I18 I19 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:soz:wpaper:0911&r=reg |