LIQUIDITY RISK AND TIME‐VARYING CORRELATION BETWEEN EQUITY AND CURRENCY RETURNS

Using the data of 20 major Organization for Economic Co‐operation and Development countries over time, this article documents new evidence on real equity and real currency prices: higher real returns in the home equity market relative to its foreign counterparts are generally associated with real home currency depreciation at monthly frequency, but this negative correlation breaks down or even reverses during times of relatively higher aggregate economic uncertainty or volatility. This article also argues that a long‐run risks‐type model with time‐varying liquidity risk in stock markets can provide one plausible explanation for the time‐varying correlation structure. (JEL E43, F31, G12, G15)     

FIRM PRODUCTIVITY AND SALES DESTINATIONS: EVIDENCE FROM WITHIN CHINA

This paper builds on and extends the literature on the linkage between firm productivity and their export destinations to study the productivity of Chinese firms and their sales destinations in other provinces within China. Moving the study from international markets to domestic markets conveniently avoids the hard to control heterogeneity across different destination markets in international trade, as provincial markets within China are less heterogeneous than international markets but segmented by Chinese provincial borders. The paper explicitly controls the fact that many firms only sell in their home provinces by using the zero‐inflated negative binomial method. It finds that firms with higher productivity tend to sell in other provincial markets, and more productive firms enter more provincial markets. The results are robust. (JEL F15, D21, D24)     

EXCHANGE RATE REGIMES AND FISCAL DISCIPLINE: THE ROLE OF CAPITAL CONTROLS

How do exchange rate regimes influence fiscal discipline? This important question has typically been addressed exploiting the classic dichotomy of fixed versus flexible exchange rate regimes assuming perfect capital mobility. However, the role of capital controls cannot be neglected, particularly in developing countries. This paper analyzes the effects of capital controls on fiscal performance by focusing on dual exchange rate regimes. In a model in which the fiscal policy is endogenously determined by a nonbenevolent fiscal authority, dual regimes induce politicians to have higher fiscal deficits than under fixed and flexible regimes operating under perfect capital mobility. The model also shows this effect increases as fiscal authorities become more impatient. Dynamic panel regressions confirm that dual regimes lead to higher fiscal deficits than fixed and flexible regimes operating under unified rates. Using a dummy for pre‐electoral year as an indicator of fiscal authorities' shortsightedness, we also confirm that dual exchange rate has a more adverse effect on fiscal deficits as the authorities become more impatient. (JEL E50, E60, F31, F41)     

Review of CIS Stock Markets: Future Perspectives

This paper critically reviews the market structure of major stock exchanges in eight members of Countries of Independent States (CIS)—Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Uzbekistan and Ukraine. Because these markets are somewhat similar in terms of their size, trading volume and market design, their comparative analysis will enhance our knowledge on the development of the financial sector in CIS countries. By examining the data provided by the Federation of Euro-Asian Stock Exchanges, we observe the similarities and differences among these markets that may be improved through structural changes. Later we discuss what CIS equity markets can learn from the successful examples of small and emerging company marketplaces. We also study the advantages and disadvantages of potential regional consolidation among these eight stock exchanges. We propose that while current fragmented structure may be beneficial in the short or medium term, the stock exchanges of CIS countries will benefit from consolidation in the long term. Later we focus on the Baku Stock Exchange (BSE) and propose specific suggestions to develop the market mechanism and facilitate a better environment of financial markets in Azerbaijan. We find that the BSE currently lacks several fundamental factors required to establish well-functioning financial markets. Our suggestions aim to contribute to the improvement process started by BSE management.     

Reconfiguring ‘post‐socialist’ regions: cross‐border networks and regional competition in the Slovak and Ukrainian clothing industry

The global garment industry is currently being reshaped in dramatic ways through processes of trade liberalization, delocalization and interfirm and interregional competition. There has been much speculation about the increasing importance of factor (especially labour) costs in fuelling further rounds of de‐localization of garment production towards low‐cost production locations, such as China and India. However, the extent to which these processes mean the end to garment production in higher factor‐cost locations, including those neighbouring the major clothing markets of the USA and the EU, is open to question. In this article we interrogate the interregional shifts in garment sourcing taking place in Europe and its surrounding regions. While factor costs (including labour) are important determinants of the geography of sourcing, a range of other costs (logistical and policy costs) are important in structuring the geographies of global and regional production. Firms in the Slovak Republic are responding to increasing competitive pressures and we assess how trans‐border sourcing, subcontracting and FDI are being integrated into strategies to sustain European production networks. We highlight the emergence of cross‐border production relocation to Ukraine as one specific strategy. We examine the product specificity of these changes and the ways in which they are embedded within already existing production networks, forms of cross‐border contracting and central European trade regimes. In other words, we explore some of the forces that shape the somewhat tentative continuation of garment production for export to EU markets in central Europe despite the ‘spectre of China’.     

The International Price Transmission in Stock Index Futures Markets

This study explores dynamic price relationships among nine major stock index futures markets, combining an error-correction model with directed acyclic graph (DAG) analysis. DAG-based innovation accounting results show that the Japanese market is isolated from other major stock index futures markets. The United States and the United Kingdom appear to share leadership roles in stock index futures markets. The UK and German markets rather than the U.S. exert significant influences on most European markets, which indicates a pattern of regional integration in Europe. Innovation accounting results based on widely used Choleski decomposition are found to be seriously misleading.     

The growth of halal meat markets in Europe: An exploration of the supply side theory of religion

Over the last 15 years dedicated markets for halal meat have emerged in a number of European countries. While ethnic stores still constitute the major retail outlet for halal meat in most countries, ‘halal’ labelled meat and meat products are increasingly available in supermarkets and fast food restaurants. Market expansion has also facilitated the rise of new certification bodies, each with their own marketing strategies and interpretations of what constitutes authentic ‘halal’, who question the reliability of certification policies that allow the practice of stunning before slaughter.     

Implementation and evaluation of tourism industry: Evidentiary case study of night market development in Taiwan

Taiwan’s night markets are the most popular and unique characteristics of domestic and foreign tourists’ night life and have great potential value for tourism development. However, development of the night market is vulnerable to the negative impact of COVID-19. To discover the potential value and evaluation of the night market, we interviewed 46 experts from several industries and occupations in Taiwan to investigate the relationships between brand equity, benefits, motivations of and satisfaction with night market tourism and development. The results show that travel motivation has both direct and indirect effects on brand equity, benefits and satisfaction. Furthermore, customer satisfaction is the most critical performance attribute of night market tourism, which may be influenced by brand equity, benefit, and motivation. Managerial implications and future research directions are discussed.     

‘Scarred’ young entrepreneurs. Exploring young adults’ transition from former unemployment to self-employment

The recent increase in youth unemployment has major implications for the current and future development of European labour markets. Previous studies reveal the long lasting ‘scarring effects’ of early unemployment experience on later career prospects, including a higher probability of future unemployment or social exclusion. Self-employment is often advocated as a potential remedy for unemployment in general and youth unemployment in particular. In this study, we investigate the individual-level factors that lead young people with the ‘scar’ of previous unemployment to engage in self-employment. Based on a recent survey among young adults in eleven European countries, we show that previous unemployment has a significant moderating effect on other individual-level characteristics usually associated with a higher likelihood of being self-employed. While the overall propensity of self-employment is not affected by unemployment experience, the reasons for becoming one’s own boss differ considerably between those young adults who have and those who have not experienced unemployment in the past.     

The public sphere and debates about europe in Britain

This article undertakes an analysis of British public debates on European integration by recourse to an original data set on political claims-making. The public sphere is conceptualized as a space where citizens interact through their acts of public communication. Such public communications are an important source of the Europe-building process, because they potentially provide public inputs to the elite-led processes of European political institutional integration. Our empirical findings show that British public debates are internalized within the nation-state rather than creating links to supra- or transnational European polities. In addition, we find relatively low levels of civil society engagement compared to that of political elites, and a high level of political competition between the two major political parties, Labour and Conservative. Overall, we argue that elite ambivalence to Britain's position within the European Union has created this climate of uncertainty and political competition over Europe.     

Ordering competition: the interactional accomplishment of the sale of art and antiques at auction

Auctions provide an institutional solution to a social problem; they enable the legitimate pricing and exchange of goods where those goods are of uncertain value. In turn, auctions raise a number of social and organizational issues that are resolved within the interaction that arise in sales by auction. In this paper, we examine sales of fine art, antiques and objets d'art and explore the ways in which auctioneers mediate competition between buyers and establish a value for goods. In particular, we explore how bids are elicited, co-ordinated and revealed so as to rapidly escalate the price of goods in a transparent manner that enables the legitimate valuation and exchange of goods. In directing attention towards the significance of the social interaction, including talk, visual and material conduct, the paper contributes to the growing corpus of ethnographic studies of markets. It suggests that to understand the operation of markets and their outcomes, and to unpack issues of agency, trust and practice, we need to place the 'interaction order' at the heart of analytic agenda.     

Warum es kaum Pensionsfonds in Deutschland gibt. Kapitalmarktrisiken,Finanzindustrie und die Politik der Mindestverzinsung

Studies of the rise of private defined-contribution pension plans have traditionally focused on social policy concerns about the allocation of risks and costs for beneficiaries and employers. There is however another dimension of pension privatization, which situates it in the context of financial markets and—more broadly—the economic system. Here, regulations forcing private pension providers to guarantee a minimum rate of return on individuals’ pension assets make a crucial difference for financial markets because they incentivize fund managers to invest a greater chunk of plan portfolios in fixed-income securities and therefore away from equities. While different segments of the financial industry have divergent preferences over minimum return guarantees, politicians are caught in a dilemma: Should they prioritize predictable benefit levels or the development of equity markets? Using the case of the introduction of the German Riester Rente, we argue that, as politicians linked the introduction of private defined-contribution plans with cuts in statutory pensions, insurance firms in coalition with trade unions insisted on minimum guarantees, thereby restricting the expansion of equity markets in Germany.     

Financial Literacy,Human Capital and Stock Market Participation in Europe

Households’ stock market participation has significant effects on savings and on an economy’s financial development and performance. Yet participation into capital markets is limited and quite heterogonous both among and within several countries. This phenomenon represents an empirical puzzle whose understanding is rather incomplete. In this work, we exploited a combination of datasets for nine European countries and used different econometric specifications that allow to control for endogeneity of financial literacy and human capital, to assess the role of several variables in affecting the probability to participate in the stock market in year 2010. Besides socio-demographic variables, we found that financial literacy has a positive and significant effect on stock market participation, together with the level of human capital and social interaction. Country level differences are explained by such institutional factors as the effectiveness of the education system and by the attractiveness of the stock markets.     

Financial Resources and Product Market Development: Strategic Choice and Institutional Processes During China's Transition

During an economic transition from socialism, market exchange replaces redistribution. We study firm decisions to enter product markets to understand the factors that influence this process. Managers in Chinese State Owned Enterprises operated within institutional constraints to make strategic decisions, and state intervention shaped which factors were salient. Firms financed through central government and bond issues relied less on markets. Firms funded through local government moved into markets faster; firms funded by banks were initially faster to markets but slower to markets after bank reform shifted lending policies. Thus, the accessibility, flexibility, and stability of financing shaped decisions about market entrance.     

Labor migration in Asia

"A recent conference sponsored by the United Nations Center for Regional Development (UNCRD) in Nagoya, Japan examined the growing importance of labor migration for four major Asian labor importers (Japan, Hong Kong, Malaysia, and Singapore) and five major labor exporters (Bangladesh, Korea, Pakistan, Philippines, and Thailand).... The conference concluded that international labor migration would increase within Asia because the tight labor markets and rising wages which have stimulated Japanese investment in other Asian nations, for example, have not been sufficient to eliminate migration push and pull forces...."     

International Transmission Effect of Volatility between the Financial Markets during the Asian Financial Crisis

In this paper I propose an analysis of interaction among global economies by focusing on the regional financial markets of Asian countries during and after the Asian financial crisis in 1997, in order to study the dynamic relationship between stock returns and exchange rate changes. In addition, the impact of the Asian financial crisis is also examined. For the methodology, the bivariate EGARCH (exponential generalized autoregressive conditional heteroskedasticity) and EGARCH-X models are used to examine the interrelationship of stock markets and foreign exchange markets. The empirical results show that a two-way feedback relationship exists between the volatility of stock returns and exchange rate changes during the recovery period of the Asian countries. This result is important because the effect of volatility transmission between global financial markets can still be observed today. Furthermore, when comparing the volatility transmission during the crisis period with that during the recovery period, it shows that the spillover effect has increased during the recovery period, indicating that the strength of the transmission mechanism has increased after the Asian financial crisis. This result also suggests that the interactions of the stock and foreign exchange markets of Asian countries were affected by the Asian financial crisis, and the impact is greater for Indonesia, Japan, the Philippines, and especially Thailand, which were more vulnerable during the financial crisis.     

Does Overconfidence Bias Explain Volatility During the Global Financial Crisis?

This paper explores the problem of the current global financial crisis, using a behavioral perspective. Particularly, the main objective of this paper is to test whether overconfidence bias can explain excessive volatility witnessed during global financial crisis in developed and emerging equity markets. Empirical results of EGARCH estimated models show an asymmetric effect of volatility for all equity market indexes. The relation between excessive trading volume of overconfident investors and excessive prices volatility is then estimated. The results indicate that conditional volatility is positively related to trading volume caused by overconfidence bias. This finding provides strong statistical support to the presence of overconfidence bias among investors in developed and emerging stocks markets. This cognitive bias contributes to the exceptional financial instability that erupted in 2008. However, during the subprime financial crisis period overconfidence bias cannot explain volatility because of the loss of confidence by investors in financial markets.     

Metropolitan Labour Markets, Peripheral Labour Markets and Socio-economic Outcomes among Immigrants to Israel

This article focuses on the impact of the local opportunity structure on socio‐economic outcomes of recent immigrants to Israel. Specifically, it examines the extent to which metropolitan labour markets versus peripheral labour markets differentially affect socio‐economic incorporation of recent “Russian” immigrants who arrived in Israel after the collapse of the former Soviet Union in 1989. Using the 1995 Israeli Census of Population, the analyses address the following questions: (1) were recent immigrants differentially sorted to local labour markets; (2) do local labour markets differentially affect socio‐economic attainment; and (3) do modes of socio‐economic attainment and patterns of ethnic inequality differ across metropolitan and peripheral labour markets? The analyses reveal that immigrants from the European republics and of lower education are more likely to settle in peripheral labour markets than in metropolitan labour markets. Peripheral labour markets, compared with metropolitan labour markets, have detrimental consequences for the socio‐economic outcomes of immigrants. The data do not provide strong support for the thesis that patterns of socio‐economic attainment and inequality differ much across labour markets. The rules according to which socio‐economic attainment of immigrants is determined are, for the most part, similar across labour markets. In general, occupational status and earnings of immigrants are likely to increase with the passage of time, education, European origin; and to decline with age regardless of type of the local labour market. However, the socio‐economic outcomes of immigrants are considerably higher in the metropolis than in the periphery. The findings suggest that the local labour market plays a major role in the determination of immigrants' socio‐economic rewards and outcomes.     

EU Accession, Financial Integration, and Contagion Effects: Dynamic Correlation Analysis of CEEC-3 Bond Markets

In this paper, we investigate the conditional correlations between the bond markets in CEEC-3 (i.e., Poland, Czech Republic, and Hungary) and Germany from 2000 to 2013 using the asymmetric dynamic conditional correlation model developed by Cappiello et al. (J Financ Econ 4:557–572, 2006). CEEC-3 comprise emerging transition economies that became European Union (EU) members in 2004, while Germany serves as a representative of the EU because it is the largest economy in the eurozone. Based on the presented analytical models, we make four important findings. First, we show that financial integration had already evolved before the adoption of the euro in 2004 in the Czech Republic, while the financial integration process continues in Poland but not in Hungary. Second, the bond markets in both Poland and Hungary decreased their dependence on that in Germany during the global financial crisis period. Third, financial contagion did not occur in the bond markets in CEEC-3 and Germany during the European sovereign debt crisis period. Finally, we can observe asymmetric effects on returns over time when markets fluctuate sharply.     

Les normes comptables comme institution du capitalisme. Une analyse du passage aux normes IFRS en Europe à partir de 2005

In 2002, the European Union changed direction from its past efforts to harmonise European accounting systems and turned instead to a subcontractor, requiring listed European companies to adopt accounting standards drawn up by a private London-based organisation, the IASB (International Accounting Standards Board), which had until then had no public mandate. This decision was all the more significant because the EU has no institutional means of control over the IASB, although it was the first geographical group to decide to impose these standards on its businesses. IASB standards are rooted in the “anglo-saxon” tradition of standardisation for the financial markets, and the view of the enterprise they promote diverges from the accounting traditions of continental European capitalism. This article shows how the new standards are transforming the concept of enterprise, and examines the span of factors that brought about what is a major institutional change for European capitalism. — Special issue: New patterns of institutions.