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on Regulation |
| By: | James Drummond (OECD); Daniel Shephard (Columbia University); Daniel Trnka (OECD) |
| Abstract: | Governments are created and run by humans, who can experience the same behavioural biases and barriers as individuals in society. Therefore, it makes sense to explore how behavioural insights (BI) can be applied to the governance of regulatory policy making, and not just to the design of regulations themselves. Applying BI can help improve the efficiency and effectiveness of the decision-making process, which can, in turn, help improve regulatory decisions. This paper maps the ways in which barriers and biases can affect the institutions, processes and tools of regulatory governance, with a focus on regulatory oversight bodies and regulatory management tools. It concludes with practical ways governments can translate these findings into research and reforms that can help future-proof regulatory policy making and ensure it is agile, responsive and fit for tackling important and complex policy challenges. |
| Keywords: | Behavioural economics, Behavioural insights, Regulation, Regulatory governance, Regulatory policy |
| JEL: | A1 H11 K23 Z18 F00 N40 D7 E03 |
| Date: | 2021–11–11 |
| URL: | http://d.repec.org/n?u=RePEc:oec:govaah:16-en&r= |
| By: | Saruta, Fuyuki |
| Abstract: | This study investigates the effects of vertical integration between an Internet service provider (ISP) and a content provider (CP) on the ISP's zero-rating choice and social welfare. We develop a simple model where a monopolistic ISP delivers content from two CPs to a representative consumer. The ISP can offer zero-rating contracts to one or two CPs, allowing the consumer to use zero-rated content without consuming monthly data usage. We investigate how the integration between the ISP and a CP impacts the ISP's zero-rating choice and social welfare. Our findings are as follows. First, the vertically integrated ISP may zero-rate the unaffiliated CP exclusively when the CPs' profitability is low and the ISP's operating cost is high. Second, the integration decreases the total surplus when the CP's profitability is sufficiently low; otherwise, it improves the total surplus. Our results indicate that a vertical integration and zero-rating could be both welfare-enhancing and reducing. |
| Keywords: | Mobile Internet; Zero-rating; Sponsored data; Net neutrality; Vertical integration |
| JEL: | D21 L11 L96 |
| Date: | 2021–10–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:110288&r= |
| By: | Dertwinkel-Kalt, Markus; Wey, Christian |
| JEL: | D43 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc21:242336&r= |
| By: | Biguri, Kizkitza; Stahl, Jörg R. |
| Abstract: | We present novel evidence on the value of cross-border political access. We analyze data on meetings of US multinational enterprises (MNEs) with European Commission (EC) policymakers. Meetings with Commissioners are associated with positive abnormal equity returns. We study channels of value creation through political access in the areas of regulation and taxation. US enterprises with EC meetings are more likely to receive favorable outcomes in their European merger decisions and have lower effective tax rates on foreign income than their peers without meetings. Our results suggest that access to foreign policymakers is of substantial value for MNEs. |
| Keywords: | Cross-border political access,European Commission,firm value |
| JEL: | D72 G30 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:lawfin:9&r= |
| By: | Jang, Yungshin (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); Kang, Gu Sang (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)) |
| Abstract: | In 2018, the largest yet cross-border M&A deal between digital platforms in Southeast Asia was reached, namely the Grab-Uber M&A case. The local digital platform Grab consolidated the regional operations of San Francisco, California-based Uber, a development which had significant effects on competition and consumer welfares in the Southeast Asia digital market. The competition authorities in the region independently initiated their investigation and started to deliberate the merger case to determine the anti-competitive effects on their domestic market, and to decide whether this transaction should be restricted or approved. Even though the two merging and merged firms completed their transactions, each authority applied different logic and imposed different remedies in deciding the case. Authorities in some member states such as Singapore and the Philippines decided that the Grab-Uber merger was anti-competitive, while others such as Indonesia and Viet Nam considered the merger not anti-competitive. Upon this backdrop, this article reviews the competition policies and laws of four major ASEAN countries – Indonesia, Singapore, Viet Nam, and the Philippines – from institutional and legal perspectives, focusing on M&A review regimes. Then, we briefly introduce how these com-petition authorities decided on the Grab-Uber merger case, also analyzing the competition effects of the case on the ride-hailing market in the countries. Based on the analysis results, we propose overseas competition policies for Korea. |
| Keywords: | ASEAN; Grab-Uber; merger; M&A; Southeast Asia; Indonesia; Singapore; Viet Nam; the Philippines |
| Date: | 2021–09–03 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kiepwe:2021_039&r= |
| By: | Sigurd Bjarghov; Hossein Farahmand; Gerard Doorman |
| Abstract: | While volume-based grid tariffs have been the norm for residential consumers, capacity-based tariffs will become more relevant with the increasing electrification of society. A further development is capacity subscription, where consumers are financially penalised for exceeding their subscribed capacity, or alternatively their demand is limited to the subscribed level. The penalty or limitation can either be static (always active) or dynamic, meaning that it is only activated when there are active grid constraints. We investigate the cost impact for static and dynamic capacity subscription tariffs, for 84 consumers based on six years of historical load data. We use several approaches for finding the optimal subscription level ex ante. The results show that annual costs remain both stable and similar for most consumers, with a few exceptions for those that have high peak demand. In the case of a physical limitation, it is important to use a stochastic approach for the optimal subscription level to avoid excessive demand limitations. Facing increased peak loads due to electrification, regulators should consider a move to capacity-based tariffs in order to reduce cross-subsidisation between consumers and increase cost reflectivity without impacting the DSO cost recovery. |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2111.06253&r= |
| By: | Carlo Cenedese; Patrick Stokkink; Nikolas Gerolimins; John Lygeros |
| Abstract: | We propose an incentive-based traffic demand management policy to alleviate traffic congestion on a road stretch that creates a bottleneck for the commuters. The incentive targets electric vehicles owners by proposing a discount on the energy price they use to charge their vehicles if they are flexible in their departure time. We show that, with a sufficient monetary budget, it is possible to completely eliminate the traffic congestion and we compute the optimal discount. We analyse also the case of limited budget, when the congestion cannot be completely eliminated. We compute analytically the policy minimising the congestion and estimate the level of inefficiency for different budgets. We corroborate our theoretical findings with numerical simulations that allow us to highlight the power of the proposed method in providing practical advice for the design of policies. |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2111.05600&r= |
| By: | Valeriya Azarova; Jed Cohen; Andrea Kollmann; Johannes Reichl |
| Abstract: | A crucial part of the recently adopted “Fit for 55” package of the European Commission is devoted to the transition to a greener energy system. More specifically, the amendment to the Renewable Energy Directive sets up an increased target to produce 40% of energy from renewable sources by 2030. Hence, encouraging private investments in renewable generation capacity is becoming even more imperative to reach the ambitious climate-neutrality goals of the EU and to make the European Green Deal a reality. In this context, a pertinent design and endorsement of community renewable energy (CRE) projects may play a crucial role. A recent study based on a survey administered across 31 European nations, shows that there is high interest across Europe in CRE investment models, with 79% of respondents choosing to invest in at least one of the eight investment scenarios shown to them. Yet, operational details matter: e.g. administration through a local community organization is preferred to being administrated by an utility company. On top of that, highlighting local economic benefits, such as job creation from CRE projects, improves participation more so than highlighting general environmental benefits. |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:econpb:_37&r= |
| By: | Tröger, Tobias; Steuer, Sebastian |
| Abstract: | We study the design features of disclosure regulations that seek to trigger the green transition of the global economy and ask whether such regulatory interventions are likely to bring about sufficient market discipline to achieve socially optimal climate targets. We categorize the transparency obligations stipulated in green finance regulation as either compelling the standardized disclosure of raw data, or providing quality labels that signal desirable green characteristics of investment products based on a uniform methodology. Both categories of transparency requirements can be imposed at activity, issuer, and portfolio level. Finance theory and empirical evidence suggest that investors may prefer "green" over "dirty" assets for both financial and non-financial reasons and may thus demand higher returns from environmentally-harmful investment opportunities. However, the market discipline that this negative cost of capital effect exerts on "dirty" issuers is potentially attenuated by countervailing investor interests and does not automatically lead to socially optimal outcomes. Mandatory disclosure obligations and their (public) enforcement can play an important role in green finance strategies. They prevent an underproduction of the standardized high-quality information that investors need in order to allocate capital according to their preferences. However, the rationale behind regulatory intervention is not equally strong for all categories and all levels of "green" disclosure obligations. Corporate governance problems and other agency conflicts in intermediated investment chains do not represent a categorical impediment for green finance strategies. However, the many forces that may prevent markets from achieving socially optimal equilibria render disclosure-centered green finance legislation a second best to more direct forms of regulatory intervention like global carbon taxation and emissions trading schemes. Inherently transnational market-based green finance concepts can play a supporting role in sustainable transition, which is particularly important as long as first-best solutions remain politically unavailable. |
| Keywords: | green finance,sustainable finance,ESG,mandatory disclosure,taxonomies,benchmarks,labels,asset pricing,market discipline,climate change,climate risk |
| JEL: | D4 D6 G1 G3 G4 K2 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:lawfin:24&r= |
| By: | Jorge M. Uribe (Faculty of Economics and Business, Universitat Oberta de Catalunya, Spain; Riskcenter, University of Barcelona, Spain.); Stephania Mosquera-López (Department of Finance, Universidad EAFIT, Colombia.) |
| Abstract: | We study the transmission of natural gas price shocks to electricity prices across different scenarios of electricity generation for thirteen European electricity markets. To this end, we propose a statistic based on the estimation of conditional quantile regression models, which allows us to identify the most vulnerable countries in the region to variations in the global price of natural gas, under scenarios of generation distress. We point out to market integration and different electricity generation mixes as the main factors underlying our results. Our main contribution is the analysis of the proposed static for the case of European markets from a comparative perspective, which helps to guide and support timely policy responses in European countries, aiming to isolate the most vulnerable consumers and firms from dramatic electricity price increments as those observed in the first three quarters of 2021. The most vulnerable countries according to our indicator are Portugal and Spain, while the most resilient are Italy and Finland. |
| Keywords: | Quantile regression, Power markets, Energy crises, Energy shortages, Gas markets. JEL classification: Q40, L94, L95, C22. |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:ira:wpaper:202117&r= |
| By: | López Prol, Javier; Schill, Wolf-Peter |
| JEL: | Q42 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc21:242463&r= |
| By: | Breuer, Matthias; Leuz, Christian; Vanhaverbeke, Steven |
| Abstract: | We investigate the impact of reporting regulation on corporate innovation. Exploiting thresholds in Europe's regulation and a major enforcement reform in Germany, we find that forcing firms to publicly disclose their financial statements discourages innovative activities. Our evidence suggests that reporting regulation has significant real effects by imposing proprietary costs on innovative firms, which in turn diminish their incentives to innovate. At the industry level, positive information spillovers (e.g., to competitors, suppliers, and customers) appear insufficient to compensate the negative direct effect on the prevalence of innovative activity. The spillovers instead appear to concentrate innovation among a few large firms in a given industry. Thus, financial reporting regulation has important aggregate and distributional effects on corporate innovation. |
| Keywords: | Financial Reporting,Disclosure,Regulation,Innovation,Patents,Growth |
| JEL: | K22 L51 M41 M42 M48 O43 O47 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:lawfin:8&r= |
| By: | Rabah Arezki (African Development Bank); Vianney Dequiedt (CERDI, Université Clermont Auvergne); Rachel Yuting Fan (The World Bank); Carlo Maria Rossotto (International Finance Corporation, World Bank Group) |
| Abstract: | The paper investigates the pace of technology adoption in telecom technology post liberalization and its effect on stock returns using a new global panel dataset. Results are twofold. First, evidence points to the complementarity between telecom liberalization and regulatory independence in driving a sustained pace of technology adoption. Second, results show a positive and economically significant effect of telecom adoption on stock returns pointing to significant spillovers of telecom to the rest of the economy. |
| Keywords: | Liberalization, Technology Adoption, Telecom, Regulation, Stock Returns JEL classification: F30, L11, O16 |
| Date: | 2021–08–09 |
| URL: | http://d.repec.org/n?u=RePEc:adb:adbwps:2478&r= |
| By: | LEOGRANDE, ANGELO; COSTANTIELLO, ALBERTO; LAURETI, LUCIO |
| Abstract: | In this article we estimate the determinants of broadband penetration in Europe. We use data from the European Innovation Scoreboard of the European Commission for 37 countries in the period 2010-2019. We apply Panel Data with Fixed Effects, Panel Data with Random Effects, WLS, OLS and Dynamic Panel. We found that the level of “Broadband Penetration” in Europe is positively associated to “Enterprises Providing ICT Training”, “Innovative Sales Share”, “Intellectual Assets”, “Knowledge-Intensive Service Exports”, “Turnover Share SMEs”, “Innovation Friendly Environment” and negatively associated with “Government procurement of advanced technology products”, “Sales Impact”, “Firm Investments”, “Opportunity-Driven Entrepreneurship”, “Most Cited Publications”, “Rule of Law”. In adjunct we perform a clusterization with k-Means algorithm optimized with the Silhouette Coefficient and we find the presence of three different clusters. Finally, we apply eight machine learning algorithms to predict the level of “Broadband Penetration” in Europe and we find that the Polynomial Regression algorithm is the best predictor and that the level of the variable is expected to increase of 10,4%. |
| Keywords: | General; Innovation and Invention: Processes and Incentives; Management of Technological Innovation and R&D; Technological Change: Choices and Consequences; Intellectual Property and Intellectual Capital. |
| JEL: | O30 O31 O32 O33 O34 |
| Date: | 2021–10–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:110457&r= |
| By: | Goel, Tirupam (Bank for International Settlements); Lewrick, Ulf (Bank for International Settlements); Mathur, Aakriti (Bank of England) |
| Abstract: | Profitability underpins the opportunity cost of shrinking assets and the ability to generate capital. It thus shapes banks’ responses to higher capital requirements. We present a stylised model to formalise this insight and test our theoretical predictions on a cornerstone of the too-big-to-fail reforms. Leveraging textual analysis to identify the treatment date, we show that less profitable banks reduced their systemic importance as intended by regulation. Those close to the regulatory thresholds that determine bank-specific capital surcharges – a source of exogenous variation in the regulatory treatment – shrunk by even more. In contrast, more profitable banks continued to expand. |
| Keywords: | Global systemically important bank (G-SIB); textual analysis; capital regulation; systemic risk; bank profitability; difference-in-differences (DD) |
| JEL: | G21 G28 L51 |
| Date: | 2021–10–29 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:0946&r= |
| By: | Rabah Arezki (African Development Bank); Asif Islam (The World Bank); Grégoire Rota-Graziosi (CERDI, Université Clermont Auvergne) |
| Abstract: | This paper explores the interplay between concentration of wealth and policies, namely regulation and taxation. The paper exploits variation in exposure to international commodity prices. Using a global panel data set of the net worth of billionaires, the results point to a positive relationship between commodity prices and the concentration of wealth at the top. Regulation especially pertaining to competition is found to limit the effects of commodity price shocks on the concentration of wealth, while taxation has little effect. Moreover, commodity price shocks crowd out non-resource tax revenue, hence limiting the scope for income transfers and redistribution. The results are consistent with the primacy of ex ante interventions over ex post ones for addressing wealth inequality. |
| Keywords: | Inequality, Wealth concentration, Competition, Tax, Natural Resources, Development JEL classification: D31, D63, H26, H20, O13 |
| Date: | 2021–08–09 |
| URL: | http://d.repec.org/n?u=RePEc:adb:adbwps:2476&r= |
| By: | Khalil Assala (ENSTA Bretagne_SHS - Département Sciences Humaines et Sociales ENSTA Bretagne - ENSTA Bretagne - École Nationale Supérieure de Techniques Avancées Bretagne); Suela Bylykbashi (Brest Business School); Gilles Roehrich |
| Abstract: | In this research, we analyse the internal structure of competitive intensity on the basis of competitive dynamics. We propose a measure of competitive intensity based on two dimensions: strategic and tactical. This two-dimensional design makes it possible to gain a better understanding of the competitive battle, allowing managers to improve operations and the allocation of resources, according to both dimensions. It also provides a better understanding of the relationship between competitive intensity and other variables. |
| Keywords: | Competitive intensity,Competitive dynamics,New product,Strategic decisions,Tactical decisions |
| Date: | 2021–01–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03381232&r= |
| By: | Uluc Aysun (University of Central Florida, Orlando, FL); Michael Tseng (University of Central Florida, Orlando, FL) |
| Abstract: | This paper identifies two theoretical mechanisms that relate the regulatory arbitrage behavior of internationally active banks (IABs) to global financial conditions. According to the first mechanism, regulation becomes more binding during adverse financial conditions. Under these conditions, IABs face higher compliance costs in more regulated markets. According to the second mechanism, higher regulation suppresses the degree of risk-taking and asset returns so that highly-regulated nations are more insulated from global financial risk. These results are reversed in less-regulated nations. We use a panel of bilateral BIS banking statistics and a unique empirical strategy to find that the first of the two theoretical mechanisms above is more prevalent. Specifically, IABs expand their claims more rapidly in less-regulated nations when global perception of financial risk is higher. The direction of arbitrage is reversed under loose conditions. This evidence is corroborated by the inferences from a structural vector autoregressive model fitted to data from individual countries. |
| Keywords: | push factors, global banks, BIS statistics, regulation, arbitrage. |
| JEL: | F44 G11 G15 G21 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:cfl:wpaper:2021-01ua&r= |
| By: | Behn, Markus; Haselmann, Rainer; Vig, Vikrant |
| Abstract: | Using loan-level data from Germany, we investigate how the introduction of model-based capital regulation affected banks' ability to absorb shocks. The objective of this regulation was to enhance financial stability by making capital requirements responsive to asset risk. Our evidence suggests that banks 'optimized' model-based regulation to lower their capital requirements. Banks systematically underreported risk, with under reporting being more pronounced for banks with higher gains from it. Moreover, large banks benefitted from the regulation at the expense of smaller banks. Overall, our results suggest that sophisticated rules may have undesired effects if strategic misbehavior is difficult to detect. |
| Keywords: | capital regulation,internal ratings,complexity of regulation,Basel regulation |
| JEL: | G01 G21 G28 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:lawfin:20&r= |
| By: | Thiemann, Matthias; Tröger, Tobias |
| Abstract: | This paper contributes to the debate on the adequate regulatory treatment of non-bank financial intermediation (NBFI). It proposes an avenue for regulators to keep regulatory arbitrage under control and preserve sufficient space for efficient financial innovation at the same time. We argue for a normative approach to supervision that can overcome the proverbial race between hare and hedgehog in financial regulation and demonstrate how such an approach can be implemented in practice. We first show that regulators should primarily analyse the allocation of tail risk inherent in NBFI. Our paper proposes to apply regulatory burdens equivalent to prudential banking regulation if the respective transactional structures become only viable through indirect or direct access to (ad hoc) public backstops. Second, we use insights from the scholarship on regulatory networks as communities of interpretation to demonstrate how regulators can retrieve the information on transactional innovations and their risk-allocating characteristics that they need to make the pivotal determination. We suggest in particular how supervisors should structure their relationships with semi-public gatekeepers such as lawyers, auditors and consultants to keep abreast of the risk-allocating features of evolving transactional structures. Finally, this paper uses the example of credit funds as non-bank entities economically engaged in credit intermediation to illustrate the merits of the proposed normative framework and to highlight that multipolar regulatory dialogues are needed to shed light on the specific risk-allocating characteristics of recent contractual innovations. |
| Keywords: | shadow banking,regulatory arbitrage,principles-based regulation,credit funds,prudential supervision,non-bank financial intermediation |
| JEL: | G21 G28 H77 K22 K23 L22 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:lawfin:2&r= |
| By: | Gregor Dorfleitner; Lars Hornuf; Julia Kreppmeier |
| Abstract: | This article analyzes how the General Data Protection Regulation (GDPR) has affected the privacy practices of FinTech firms. We study the content of 308 privacy statements respectively before and after the GDPR became binding. Using textual analysis methods, we find that the readability of the privacy statements has decreased. The texts of privacy statements have become longer and use more standardized language, resulting in worse user comprehension. This calls into question whether the GDPR has achieved its original goal—the protection of natural persons regarding the processing of personal data. We also analyze the content of privacy statements and link it to company- and industry-specific determinants. Before the GDPR became binding, more external investors and a higher legal capital were related to a higher quantity of data processed and more transparency, but not thereafter. Finally, we document mimicking behavior among industry peers with regard to the data processed and transparency. |
| Keywords: | data privacy, FinTech, General Data Protection Regulation, privacy statement, textual analysis, financial technology |
| JEL: | K20 L81 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9359&r= |
| By: | Granja, João; Leuz, Christian |
| Abstract: | An important question in banking is how strict supervision affects bank lending and in turn local business activity. Supervisors forcing banks to recognize losses could choke off lending and amplify local economic woes. But stricter supervision could also change how banks assess and manage loans. Estimating such effects is challenging. We exploit the extinction of the thrift regulator (OTS) to analyze economic links between strict supervision, bank lending and business activity. We first show that the OTS replacement indeed resulted in stricter supervision of former OTS banks. Next, we analyze the ensuing lending effects. We show that former OTS banks increase small business lending by roughly 10 percent. This increase is concentrated in well-capitalized banks, those more affected by the new regime, and cannot be fully explained by a reallocation from mortgage to small business lending after the crisis. These findings suggest that stricter supervision operates not only through capital but can also correct deficiencies in bank management and lending practices, leading to more lending and a reallocation of loans. |
| Keywords: | Bank regulation,Enforcement,Loan losses,Aggregate outcomes,Prudential oversight,Business lending,Entry and exit |
| JEL: | E44 E51 G21 G28 G31 G38 K22 K23 L51 M41 M48 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:lawfin:4&r= |
| By: | Giacomo Calzolari; Leonardo Felli; Johannes Koenen; Giancarlo Spagnolo; Konrad O. Stahl |
| Abstract: | We study how informal buyer-supplier relationships in the German automotive industry affect procurement. Using unique data from a survey focusing on these, we show that more trust, the belief that the trading partner acts to maintain the mutual relationship, is associated with both higher quality of the automotive parts and more competition among suppliers. Yet both effects hold only for parts involving unsophisticated technology, not when technology is sophisticated. We rationalize these findings within a relational contracting model that critically focuses on changes in the bargaining power, due to differences in the costs of switching suppliers. |
| Keywords: | relational contracts, hold-up, buyer-supplier contracts, bargaining power |
| JEL: | D86 L14 L62 O34 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9362&r= |