capital market development in china abstract this paper examines why and how capital markets have developed in a low income socialist country it shows that the development is the response of economic agents operating under a more market oriented economic environment with a highly regulated and inefficient banking system this development has presented new policy challenges and opportunities the paper argues that the developmental effects of the emergence of capital markets in china can be as important as its impact on improving allocative efficiency and resource mobilization

marriage bequest and assortative matching in rural ethiopia abstract this article examines the determinants of human and physical capital at marriage using detailed data from rural ethiopia we find that assets brought to marriage are distributed in a highly unequal manner for first unions assets brought to marriage are positively associated with parents wealth indicating that a bequest motive affects assets at marriage parental wealth affects the inheritance of neither groom nor bride sibling competition from brothers affects grooms inheritance but sisters have no effect the marriage market is a major conduit for rural and gender inequality although avenues do exist for couples to accumulate wealth over their life cycle

a new monetarist model of fiat and e money we develop a dual payment new monetarist model where an electronic money e purse competes with fiat money cash the two payment instruments differ in terms of security cost and acceptability strategic complementarities lead to multiple monetary equilibria we establish the conditions under which e money can coexist with or replace fiat money and explain the reasons for the e purse failure success in a few countries we also compare welfare when one currency or both circulate when the risk of theft of cash is endogenous e money cannot replace cash entirely however low inflation can facilitate the adoption of e money in parallel with fiat money jel d83 e40 e50

the dilemmas of market socialism capital market reform in china part i bonds this two part article analyses the attempts to reform the socialist financial system in china by diversifying financial assets and introducing capital markets the approach used is that of political economy in the sense of elucidating the interplay between political and economic interests actors and issues in the reform process part i discusses the issue of bonds by governments and enterprises although the reform era has seen gradual progress towards something resembling a bond market in terms of a diversification of bond types and growing competition between bond issues there is no evidence that this has improved allocative efficiency in the economy rather bonds have functioned as one instrument in a complex struggle for resources between political institutional and economic actors in the context of a continuing shortage economy this competitive system falls far short of a true market rather it embodies powerful systemic factors reflecting the basic structural and institutional features o

son preference children s gender and parents time allocation evidence from china this article investigates the effect of children s gender on parents time allocation in developing countries due to the long existing tradition of son preference a collective model generates pred

whither loose change the diminishing demand for small denomination currency while payment card usage has increased dramatically the stock of outstanding currency has not declined as rapidly we analyze changes in cash demand for 13 advanced economies from 1988 to 2003 by separating cash into three denomination categories to disentangle its store of wealth and payment functions defining denominations commonly dispensed by automated teller machines atms as the medium category we show that demand for small denomination currency decreases with greater debit card usage and with greater retail market consolidation in contrast the demand for high denomination notes decreases when interest rates rise but is generally unaffected by changes in debit card usage

you are close to your rival and everybody hates a winner a study of rivalry in college football we use a recent survey of college american football fans to study rivalry where we find the most intense rivalries occur between in state teams relatedly within a conference fans are more likely to target rivalrous feelings toward the winningest teams and in bowl championship series conferences teams who have been conference members for a longer proportion of time while the stakes are different from other settings such as warring nations college football teams compete for resources and often have loyal followings with strong emotional ties thus examining rivalrous feeling in this setting provides insights into rivalry more generally besides being of interest in its own right as college football is a multi billion dollar industry jel l22 l83 i introduction for millions of americans saturdays in the fall are synonymous with college american football college football has a pageantry all its own as people gather in groups sometimes in excess of 100 000 to cheer for their team and socialize even though many fans have no real connection to the university on the field the teams compete to win games and over the course of a season teams compete to win their conference title however many fans do not view all opponents in the conference in the same way games against some opponents are considered more important irrespective from their impact on conference standings for example the university of arizona and arizona state university have played for the territorial cup for over 100 years 1 similarly the university of wisconsin and the university of minnesota compete for paul bunyan s axe while the university of alabama and the university of tennessee play on the third saturday in october 2 sanford and scott 2014 find that fans are willing to pay higher ticket prices for rivalry games and these games generate significant television revenue despite the amateur status of the players college football is an 8 billion industry 3 several high profile teams are valued at over 100 million dollars each brewer et al 2011 team revenue comes from a variety of sources television rights merchandising fan support etc and on the field success and profit are connected through these channels in addition teams find themselves repeatedly battling over the resources needed to compete on the field namely players and coaches in this sense football rivalries are similar to rivalries between siblings firms or nations sibling rivalries form when children compete for scarce resources financial attention etc from their parents garg and morduch 1998 morduch 2000 the cola wars between coke and pepsi and the diaper wars between kimberly clark and procter gamble arise because these comparable companies offer slightly differentiated products in the same markets rivalries between warring nations also often involve prolonged competition over scarce resources goertz and diehl 1993 klein goertz and diehl 2006 rivalry is a subjective phenomenon kilduff elfenbein and staw 2010 but it has an identifiable set of antecedents geographical proximity is typically an important determinant of conflict even in the context of firm level rivalries as argued for instance in yu and canella 2007 identity also plays an important role in the creation of a rivalry menon thompson and choi 2006 finally history and the outcomes of previous interactions are another key determinant of rivalries kahneman and miller 1986 miller and chen 1996 all three of these factors are at play in college football conferences are typically comprised of comparable schools in a particular region fans identify with their team by wearing certain clothes and in more extreme cases with body paint and other adornments despite periodic conference realignment many teams play each other year after year thus we believe that in addition to being interesting in its own right examining what drives rivalrous feelings in college football can provide insight into rivalry more generally

financial deregulation and economic performance an attempt to relate european financial history to current ldc issues abstract the mckinnon model of repressed capital and money markets is tested against concise accounts of the development of such markets in england france germany and italy differences of a national and institutional character are observed it is concluded that the question is more complex than one of repressed vs unrepressed capital markets and that the explosive reactions in latin america from recent deregulation may have originated not in inconsistencies in policies wrong order of reform steps or other current explanations so much as precipitousness which failed to give markets sufficient time to settle down between deregulation measures getting asset prices right rather than underpriced and overtraded and permitting expectations time to settle in stable fashion

risky debt investment incentives and reputation in a sequential equilibrium the agency relationship of corporate insiders and bondholders is modeled as a dynamic game with asymmetric information the incentive effect of risky debt on the investment policy of a levered firm is studied in this context in a sequential equilibrium of the model a concept of reputation arises endogenously resulting in a partial resolution of the classic agency problem of underinvestment the incentive of the firm to underinvest is curtailed by anticipation of favorable rating of its bonds by the market this anticipated pricing of debt is consistent with rational expectations pricing by a competitive bond market and is realized in equilibrium some empirical implications of the model for bond rating debt covenants and bond price response to investment announcements are explored

the nature of the savings function in developing countries a survey of the theoretical and empirical literature the savings rate marginal or average is regarded as a key performance indicator by development economists and foreign aid practitioners admonish their clients to increase their savings ratio as a primary condition for achieving a satisfactory rate of economic growth however not only have questions been raised regarding the significance of the savings effort as an independent determinant of economic progress but the formulation of policies designed to increase the savings propensity has suffered from a dearth of knowledge regarding the nature of the savings function in developing countries a number of alternative savings hypotheses derived mainly from the literature relating to developed economies have been advanced but the paucity of reliable data has made it difficult to test these hypotheses and obtain results which warrant a reasonable degree of confidence the purpose of this article is a to review the theoretical and empirical literature on the savings function in developing countries b to assess critically the findings with respect to the major hypotheses and c to summarize the state of our knowledge on this important topic we shall begin with a brief review of the nature of the data on savings in developing countries with which economic analysts must work

fiscal policy monetary targets and the price level in a centrally planned economy an application to the case of china this paper presents a planned economy monetary model of china a money supply equation links changes in broad money to government transactions evaluated at official prices the demand for real money balances by consumers equals the nominal demand for money deflated by an unobserved true price index the model explains money demand as the divergence between the then official and true price indices changes in the money supply are explained by government transactions while money demand is explained by real income and the anticipated true rate of inflation the true rate of inflation is 2 5 times the official rate copyright 1987 by ohio state university press

hidden child labor determinants of housework and family business work of children in 16 developing countries summary two forms of hidden child labor housework and family business work are studied for 178 000 children in 16 african and asian countries about 30 of african children and 11 of asian children work over 15 h a week in hidden child labor girls are more involved in housework and boys more in family business work but this division is not strict most 80 90 of variation is due to household factors children work less in urban less traditional and more educated areas gender differences are larger in asia probably due to a stricter form of patriarchy

the market for electronic cash cards we develop a theoretical framework aimed to model the pricing of electronic cash cards and the market domain in which these cards will be used in an environment where charge cards and currency the legal tender are competing payment media we also investigate whether the adoption of the various payment media generates an underutilization or overutilization of the electronic cash cards relative to currency

all for one family size and children s educational distribution under credit constraints this paper examines the possibility that a child s years of schooling could increase in the number of siblings instead of being diminished by competition for parents resources if unable to finance the education of their younger children parents may do so through their older children s labor income we examine this possibility in a model combining convex returns to education and credit constraints our model predicts correlations among family size years of schooling and birth order which would not exist when either of these two elements is absent empirical patterns shown in the united states mexico and south korea support the model predictions

pathways into and out of poverty a study of rural household wealth dynamics in kenya this study identifies the factors associated with smallholder farm households that have risen out of poverty or descended into poverty between 1997 and 2007 in kenya the study uses data from a nationwide balanced panel of 1 275 households and data from detailed retrospective life history survey of 84 households that had experienced either an appreciable improvement or decline in their asset wealth over the 10 year panel period the results indicate that household welfare dynamics are associated with a disparate set of idiosyncratic and unexpected shocks such as death and chronic illness demographic factors proximity to infrastructural facilities as well as intergenerational wealth transfers

small businesses and liquidity constraints in financing business investment evidence from shanghai s manufacturing sector abstract when firms experience financial hierarchy external finance if at all available is substantially more expensive than internal finance factors such as transaction costs agency problem and asymmetric information have created such a hierarchy stiglitz and weiss 1981 argue that asymmetric information between firms and potential suppliers of external finance creates adverse selection and moral hazard problems in the credit market in developed market economies this problem of a higher cost of external finance is commonly thought to be more serious for small firms because they are more disadvantaged than their larger counterparts in accessing external finance due to several factors 1 public information on small firms is generally not available and leads to the even greater problem of asymmetric information i e more severe adverse selection and moral hazard problems these information problems have excluded small firms from bond and share markets 2 due to the lack of available means of external finance small firms rely more heavily on bank loans than their larger counterparts in addition as small firms are more interested in cultivating stable relationships with a few banks in order to secure a stable supply of credit these banks become virtual monopolies by lending to small businesses and exercise their market power in lending to small firms most of existing research considers only small firms in market economies little research has been done to understand the relationship between firm size and investment financing in any economy in transition this paper makes a contribution to the literature by studying the relationship between firm size and liquidity constraints by using a firm level data of manufacturing enterprises in shanghai during the period of 1989 1992 we consider whether small manufacturing firms in shanghai are constrained by the availability of liquidity compared with their larger counterparts when they are financing their fixed investment in a transforming economy such as china or other similar transition economies external finance relies heavily on loans from banks that are fully owned by the state due to historical reasons allocations of credit are always biased in favor of state owned enterprises such a lending bias imposes an extra cost on small chinese enterprises in financing investment as the majority of them are not state owned in such an environment our empirical results show that small manufacturing firms in shanghai are actually less liquidity constrained than their larger counterparts in financing their fixed investment this surprising result is rather different from what people normally predict based on the experience in market economies we suggest three possible explanations for this peculiar finding 1 the composition of various firm size classes plays an important role in explaining the result non state enterprises which are fast growing and efficient dominate the small firm classes their successes in the markets helps them to generate enough internal funds to smooth their investment over time 2 the presence of heavy indebtedness of large state owned enterprises may deprive them of sufficient cash available for investment decision given that state owned enterprises have been making heavy losses the central and regional governments have a liquidity problem in satisfying their huge liquidity demands 3 small enterprises in non state sectors can rely on the informal credit market to obtain funds for investment although they are excluded from the state banking system however the further trade liberalization in terms of eliminating tariffs and quotas caused by china s bid of joining the wto will erode the profits of these small enterprises as imported goods will be supplied at lower prices in addition further reforms in financial sectors may also affect the supply of external finance to small enterprises in nonstate sectors the consequence may lead to a tight liquidity constraint for small enterprises in china

financial development and economic growth international evidence the importance of the relationship between financial development and economic growth has been well recognized and emphasized in the field of economic development 1 although recent writings on this subject seem to accept the hypothesis that financial development is crucial for successful economic growth 2 patrick asked the critical question which sector financial or real leads in the dynamic process of economic development patrick identified two possible patterns in the causal relationship between financial development and economic growth in the first growth induces an expansion of the financial system 3 according to this view called demand following the lack of financial growth is a manifestation of the lack of demand for financial services as the real side of the economy develops its demands for various new financial services materialize and these are met rather passively from the financial side in the second pattern the expansion of the financial system precedes the demand for its services channeling scarce resources from small savers to large investors according to relative rates of return the financial sector precedes and induces real growth the deliberate establishment and promotion of financial institutions in many less developed countries ldcs might reflect this belief in the supply leading relationship between the two developments a natural question then concerns the direction of causality between financial development and economic growth patrick asserted that the direction of causality changes over the course of development in his view financial development is able to induce real innovation type investment before sustained modern economic growth gets under way and as the process of real growth occurs the supply leading impetus gradually becomes less important and the demand following financial response

child labour a review of recent theory and evidence with policy implications in recent years a growing number of authors have turned their attention to the question of why children work the purpose of this paper is to review some of the more recent theoretical and empirical research into the topic of child labour and to illustrate the fact that no one factor on its own can account for the phenomenon of child labour therefore policies aimed at eradicating child labour will need to address the broad range of underlying factors that contribute to the incidence of child labour such as poverty market imperfections and access to education

the global child labor problem what do we know and what can we do the problem of child labor has moved from a matter of regional and national concern to one of international debate and possible global persuasion and policy intervention in crafting policy for mitigating this enormous problem of our times it is important to start with a proper theoretical and empirical understanding of the phenomenon what gives rise to child labor and what are its consequences what interventions might end child labor without hurting children a well meaning but poorly designed policy can exacerbate the poverty in which these laboring children live even leading to starvation the article surveys the large and rapidly growing literature on this subject focusing mainly on the new literature based on modern economic theory and econometrics it also looks at some of the broad policy implications of these new findings with the objective of contributing to better informed discussion and policy design

moral hazard and secured lending in an infinitely repeated credit market game we analyze repeated moral hazard with discounting in a competitive credit market with risk neutrality even without learning or risk aversion long term bank borrower relationships are welfare enhancing the main result is that the borrower obtains an infinite sequence of unsecured loans at below spot market cost following the first good project realization this contract produces first best action choices prior to this stage the borrower gets secured loans with above market borrowing cost the optimal contract thus displays a selective memory feature taking only one of two forms at any given point in time depending on prior history we consider an infinitely repeated bank borrower relationship with moral hazard and universal risk neutrality and explore the ramifications of credit contract duration when the two well known benefits of long term contracting learning and improved risk sharing are absent our objectives are twofold the first is to analyze an infinitely repeated game with discounting in a credit market context we thus relate the theory of repeated games to financial intermediation theory particularly to issues of moral hazard and collateral related distortions the second objective is to understand noteworthy stylized facts of credit markets such as durability in credit relationships lower borrowing costs for established borrowers and unsecured loans for established borrowers versus secured loans for newer borrowers while these practices may be partly due to learning we show that learning is not essential to rationalize them even if information decays rapidly and banks learn nothing about borrowers through time these aspects of credit contracting arise in a repeated game context our main results are as follows first despite universal risk neutrality and the absence of learning a durable bank relationship benefits the borrower 2 the intuition is that the long term contracting permitted by a durable relationship enables the bank to efficiently tax and subsidize the borrower through time to reduce the use of costly collateral second the average welfare loss due to moral hazard per period is positive even as the time horizon goes to infinity third the optimal infinite horizon contract has the striking property that following the period

alternative monies and the demand for media of exchange prepaid cards cash cards electronic purse smart cards these are but a few of the elements in the revolution now taking place in monetary systems around the world at that movement s heart is the emergence of a new value transfer system where alternative monies are offered to consumers through the miracle of electronics in some cases the new monies are merely a repackaging of existing media of exchange for example stored value cards that have been traditionally available for single vendors now are being offered for multiple merchant use in other cases technology and its acceptability are being cross sold as with debit cards and the expanded use of atm cards as point of sale vehicles however the banking industry is perhaps most enthusiastic about the emerging technology of smart cards chip in cards that have been making inroads in europe with the expanded capability of a memory chip alternative monies are seen to have the capability of moving to a new plateau of acceptance there are many stories in the business press about the general enthusiasm for these new forms of money for example block 1995 and cutler 1994 herald the new day of electronic money they forecast the demise of both the greenback and of commercial banks that exploit the float derived from its use according to the hyperbole from marketing reps from this side of the financial community currency and demand deposits soon will be endangered species consumer acceptance is alleged to be high and cost efficiency associated with the new technology is expected to be substantial

the effect of sibling sex composition on women s education and earnings this paper documents the impact of siblings on the education of men and women born in the united states between 1920 and 1965 we examine the effect of the number and sex composition of a boy or girl s siblings on that child s educational attainment we find that throughout the century women s educational choices have been systematically affected by the sex composition of her siblings and that men s choices have not women raised only with brothers have received on average significantly more education than women raised with any sisters controlling for household size since sibling sex composition affects women s educational attainment and plausibly may be unrelated to other determinants of earnings it may provide a useful instrument for education in earnings functions for women our results suggest that standard estimates significantly underestimate the return to schooling for women

unintended consequences of sanctions for human rights conflict minerals and infant mortality abstractare victims of human rights abuses better off with or without economic sanctions targeted at their perpetrators we study this question in the context of a us human rights policy the conflict minerals section of the 2010 dodd frank act by discouraging companies from sourcing tin tungsten and tantalum from the eastern democratic republic of the congo the policy has acted as a de facto boycott on mineral purchases that may finance warlords and armed militias we estimate the policy s impact on the mortality of children born before 2013 and find that it increased the probability of infant deaths in villages near the policy targeted mines by at least 143 percent we find suggestive evidence that the legislation induced boycott did so by reducing mothers consumption of infant health care goods and services

adverse selection in dynamic moral hazard this paper studies a multiperiod moral hazard problem under two assumptions i contracts are subject to renegotiations ii the agent s action has long term effects the action is also interpreted as a choice of characteristic or type renegotiation proof contracts that implement various actions including random ones are characterized under appropriate conditions the equilibrium involves the principal implementing a random action therefore the equilibrium has standard properties of adverse selection models

good bye financial repression hello financial crash some unintended consequences of financial liberalization in latin america are analyzed in this paper intrinsic imperfectious in financial markets and the policy dilemmas they pose are reviewed first the stylized facts of southern cone experiments in financial liberization are then presented alternative ways of organlzing domestic capital markets under latin american conditions are discussed and an eclectic reform mongering program is proposed

deposit banks and the market for payment media this paper develops a model of bank deposit pricing with optimal consumer choices of spending shares among alternative media of exchange interpreting deposits as a tie in feature of the sale of bank payment services the paper shows that the wedge between consumer and social costs of currency use may reverse typical prescriptions regarding bank market structure and distortionary taxes on banks an explanation is offered for below cost bank service fees despite deregulated deposit interest rates while rate ceilings are shown to induce substitution into payment media with higher social costs copyright 1992 by ohio state university press

how people pay evidence from grocery store data abstract empirical evidence based on grocery store transaction data shows that consumer payment behavior at the point of sale is important for understanding models of money demand there are statistically significant effects of transaction costs opportunity costs and product characteristics on the choice of payment instrument which then in turn affect money demand these results emphasize the overlap between the work of empirical researchers in payment choice and theoretical modelers of monetary economics and should inform both literatures

birth spacing fertility selection and child survival analysis using a correlated hazard model if fertility reflects the choice of households results of their choice duration between successive births and health of the children cannot be considered to be determined randomly most existing studies of child health however tend to overlook the effects of fertility selection on child health this paper argues that not accounting for this selection issue yields biased estimates and it is difficult a priori to predict the direction of this bias we find that the estimates of birth spacing on child mortality are different when we do not account for fertility selection additionally the correlated hazard estimates that we present here better fit our samples than the corresponding bivariate probit estimates used in the literature a comparison of the fertility behaviour of households in the indian and the pakistani punjab highlights the differential nature of institutions on demographic transition in these neighbouring regions

financial repression the new structuralists and stabilization policy in semi industrialized economies abstract this paper examines the short and long run effects of a variety of macroeconomic policies in a simple model where the curb market plays a pivotal role as the marginal supplier of loanable funds it is found that financial liberalization may fail in the short run and contrary to the claims of the new structuralists that the financial market repercussions of devaluation may be favorable in evaluating any policy the time horizon is critical short and long run multipliers may differ in sign in all cases save that of a contraction in the stock of bank credit

marriage institutions and sibling competition evidence from south asia using data from south asia this article examines how arranged marriage cultivates rivalry among sisters during marriage search parents with multiple daughters reduce the reservation quality for an older daughters groom rushing her marriage to allow sufficient time to marry off her younger sisters relative to younger brothers younger sisters increase a girls marriage risk relative to younger singleton sisters younger twin sisters have the same effect these effects intensify in marriage markets with lower sex ratios or greater parental involvement in marriage arrangements in contrast older sisters delay a girls marriage because girls leave school when they marry and face limited earning opportunities when they reach adulthood the number of sisters has well being consequences over the life cycle younger sisters cause earlier school leaving lower literacy a match to a husband with less education and a less skilled occupation and marginally lower adult economic status data from a broader set of countries indicate that these cross sister pressures on marriage age are common throughout the developing world although the schooling costs vary by setting

education and human capital externalities evidence from colonial benin colonial benin we investigate the effect of education on living standards occupation and political participation since both school locations and student cohorts were selected with very little information treatment and control groups are balanced on observables we can therefore estimate the effect of education by comparing the treated to the untreated living in the same village as well as those living in villages where no schools were set up we find a significant positive treatment effect of education for the first generation of students as well as their descendants they have higher living standards are less likely to be farmers and are more likely to be politically active we find large village level externalities descendants of the uneducated in villages with schools do better than those in control villages we also find extended family externalities nephews and nieces directly benefit from their uncle s education and show that this represents a family tax as educated uncles transfer resources to the extended family

the conundrum of successful credit projects in floundering rural financial markets many governments use credit projects to foster agricultural development and donors spend billions of dollars supporting these activities in low income countries lics most of these activities are justified by the purported impact that loans have on ultimate borrowers for example credit demands filled additional crops produced changes in modern inputs used and borrowers incomes increased most project evaluations report favorable impacts that in turn stimulate donors and governments to spend more money on agricultural credit these favorable evaluations have prompted policymakers to conclude that rural financial markets are strengthened by most credit projects at the same time other researchers have evaluated rural financial markets in countries with successful credit projects and have found mounting problems they report on markets that lose substantial portions of the purchasing power of their loan portfolios to ravages of default or inflation concentrations of cheap loans in the hands of the wealthy political meddling in lending systems that offer few savings opportunities large transaction costs for lenders and borrowers lenders who are addicted to outside funds for their sustenance and credit institutions that sporadically implode or self destruct these reports of healthy parts but infirm wholes present a conundrum how can the major parts of the rural financial system involved in donor and government projects be doing well while the system as a whole is doing poorly are these projects islands of tranquility in otherwise stormy seas or is one of these two approaches to evaluation giving an erroneous picture unfortunately few credit project evaluations are published in journals or books although a large number of these studies have been done typically evaluation results are buried in unpublished reports or in graduate student theses while millions of dollars have been spent

school inputs and educational outcomes in south africa we examine the relationship between educational inputs primarily pupilteacher ratios and school outcomes in south africa immediately before the end of apartheid government black households were severely limited in their residential choice under apartheid and attended schools for which funding decisions were made centrally by white controlled entities over which they had no control the allocations resulted in marked disparities in average class sizes controlling for household background variables we find strong and significant effects of pupilteacher ratios on enrollment on educational achievement and on test scores for numeracy

credit layering in informal financial markets abstract informal lenders with access to markets or capital often find it attractive to delegate loan provision to downstream lenders who have an information or enforcement advantage in dealing with particular borrowers in this paper we examine the conditions under which such an arrangement is preferred by two informal lenders a landlord and a merchant who compete in loan provision to tenant farmers differentiated by wealth we show that credit layering is preferred only when tenants are sufficiently poor in this case the trader lends to tenant farmers via a contract with their landlord otherwise only the trader lends as a consequence a pattern of borrowing emerges in which relatively wealthy tenants borrow from merchants while poor tenants borrow mainly from their landlords interlinkage between land and credit thus arises only for a subset of tenants and purely as a consequence of credit layering this pattern is shown to be supported empirically

effects of a sibship extension to foster children on children s school enrolment a sibling rivalry analysis for indonesia in this paper we question whether and how the sibship extension to foster children a common practice in many developing countries affects children s school enrolment status based on indonesian data we show that children s school enrolment increases with the number of foster grandchildren in their sibship given that grandchildren fostering is associated with positive transfers from biological to host parents this result reflects either a release of liquidity constraints in the host household or the uncommon preferences of host grandparents conversely the proportion of other foster children in a sibship does not have any effect the latter result s explanation depends on the reason children other than grandchildren are fostered

growth of china s rural enterprises impacts on urban rural relations china s rural enterprises are economic units established by local government in the countryside or by the peasants and they operate outside the planning system rural enterprises have grown twice as fast as the rest of the economy since 1984 the rural enterprise sector has so far challenged the urban economy in both product markets and markets for raw materials what are the prospects for their relationship competition or cooperation to answer the question we develop a well specified but simple model of the rural and urban economies the rural enterprise boom was caused in this model by the presence of barriers to factor mobility within china price distortions and the pool of available labour in the countryside the origins of the boom imply that rural enterprise exports tend to be relatively labour intensive the complementarities between rural and urban enterprises are likely to dominate their future economic relationship and lead to further growth in the rural enterprise sector

the global child labor problem the problem of child labor has moved from a matter of regional and national concern to one of international debate and possible global persuasion and policy intervention in crafting policy for mitigating this enormous problem of our times it is important to start with a proper theoretical and empirical understanding of the phenomenon what gives rise to child labor and what are its consequences what interventions might end child labor without hurting children a well meaning but poorly designed policy can exacerbate the poverty in which these laboring children live even leading to starvation the article surveys the large and rapidly growing literature on this subject focusing mainly on the new literature based on modern economic theory and econometrics it also looks at some of the broad policy implications of these new findings with the objective of contributing to better informed discussion and policy design

models of financially repressed developing economies abstract the past decade has witnessed an explosion of research on financial sector models of financially repressed developing economies for the most part financial repression is interpreted to be the technique of holding interest rates particularly deposit rates of interest below their free market equilibrium levels the recent spate of activity in this field was produced by the simultaneous publication in 1973 of books by mckinnon and shaw both authors demonstrate how economic theory can be applied to the analysis of the effects of financial conditions on investment and the real rate of economic growth since 1973 models of financially repressed developing economies have been formalized mathematically extended to open economies in order to analyse exchange rate policies and tested empirically this paper presents a critical survey of the major contributions to the literature in this field since 1973

financial deregulation and segmented capital markets the case of korea abstract this paper deals with the relation between the official and the unregulated or curb segments of the capital market in korea the paper focuses on the behavior of officially controlled interest rates paid on time deposits and on freely determined curb market interest rates the effects of financial deregulation on interest rates investment and growth are investigated it is argued that under some plausible circumstances financial deregulation can generate significant crowding out in the curb market reducing the total degree of financial intermediation the empirical results provide some support to the crowding out hypothesis and indicate that changes in the officially controlled time deposit rate have been positively related to changes in the freely determined curb market interest rate an aggregate investment function is also estimated for korea it is found that an increase decrease in the curb rate discourages encourages investment on the other hand increases in the real volume of credit intermediate in the official segment have a positive effect on real aggregate investment

dynamic microlending under adverse selection can it rival group lending we derive an optimal lending contract in a two period adverse selection model with limited commitment on the borrower side the contract involves penalty interest rates after default and favorable rates after success under some conditions it also charges first time borrowers higher rates than repeat borrowers as in relationship lending because the lender is constrained to keep borrowing attractive while using revealed information to price for risk we compare the efficiency of a group lending contract of the kind popularized by the microcredit movement to the dynamic individual contract both types of contracts reveal the same information but the contracts face different constraints on using the information to improve risk pricing as a result either type of contract can lead to greater efficiency depending on specifics of the environment opening the possibility that dynamic lending has played a role comparable to that of group lending in the success of microcredit we also characterize the optimal dynamic group contract when both lending techniques are feasible and find that it combines both approaches but with varying emphases a recurrent theme is that in more marginal environments dynamic lending performs relatively better than and is prioritized over group lending we also discuss a number of extensions including spatially and serially correlated risk and the effect of competition

ethical issues in the evolution ofcorporate governance in china china is establishing its corporate governance structures by emulating the stylized anglo american model however the country does not yet have the necessary formal and informal institutions or the financial infrastructure to make these structures work effectively corruption stock market manipulation tax cheating fraudulent dealing all manners of plundering of state assets and the lack protection of shareholders rights are some of the more conspicuous manifestations of the ethical issues that have emerged in this mismatch this study shows how these issues arise in the context of the characteristics of country s economic and corporate governance development it evaluates various potential policy responses that may be implemented to improve governance effectiveness and diminish the damage from those problems

inefficiencies from financial liberalization in the absence of well functioning equity markets since the seminal works by mckinnon 1973 and shaw 1973 there has been active research into the working of financially repressed economies and the beneficial effects of elnancial liberalization see fry 1982 for a survey of literature they claim that liberalization of the elnancial sector from interest rate ceilings and other restrictions facilitates economic development and growth because higher interest rates lead to both increased savings and greater efficiency of capital allocation today the idea that financial activity should not be repressed has become the new orthodoxy in academia as well as in the major international institutions that provide policy guidelines for developing countries the elnancial liberalization argument however is incomplete the literature on emancial liberalization has emphasized eliminating interest rate ceilings and fostering free competition among banks it has largely overlooked the possibility that endogenous constraints in the credit market such as imperfect information could be signielcant barriers to efelcient credit allocation even when banks are freed from interest rate ceilings nor has the literature dealt with market structure e g the oligopolistic and cartelized banking systems found in most locs the literature has emphasized the role of the banking sector which is correctly perceived as the only organized capital market in most developing countries it has neglected the potential

financial market liberalisation in ldcs the incidence of risk allocation effects of interest rate increases high deposit interest rates are central to the financial liberalisation argument the article investigates the relatively neglected issue of who must pay two issues are stressed if loan charges increase the incidence falls on typically highly geared businesses and overall financial saving may not rise as claimed second although loan charges need not increase and enhanced credit availability may compensate borrowers if they do the financial risks of banks increase these risks are pertinent to monetary policy and may force actions contrary to the liberalisation approach institutional developments to foster the supply of risk bearing capital are emphasised in conclusion

the life cycle of a microfinance institution the irish loan funds abstract ireland s loan funds were a long lived self sustaining large scale microfinance organization that made millions of loans without collateral to the poor during the first 100 years of their life cycle a period of growth ending in the 1840s they adapted constantly and obtained improvements to their legal structure because they were complementary to the banking system and seen as effective in relieving poverty in their 2nd century they became ossified in part because of competition with commercial banks the loan funds provide an example of sustainable microfinance under harsh economic conditions and illustrate how organizations change incrementally and when successful alter their institutional framework

sibling rivalry endowment and intrahousehold allocation in gansu province china abstractthis article evaluates the strategies employed by households in rural china to allocate educational expenditure to children of different physical endowments examining whether parents use educational funding to reinforce or compensate for these differences climatic shocks are employed as an instrument for endowment measured as height for age allowing for the identification of the impact of quasi exogenous variation in endowment on parental allocations conditional on household fixed effects the results suggest that educational expenditure is directed to the relatively weaker child in response to the mean difference in height for age between siblings parents redirect around 25 of discretionary educational spending to the child with the lower height for age and this effect is robust to the potentially confounding effects of gender and birth order there is some evidence that time allocation may also be a relevant margin of compensation but no evidence that medical expenditure responds to diff

a simple general equilibrium version of the baumol tobin model this paper presents a simple general equilibrium model that includes optimizing choices of the frequency of trips to the bank the model is used to analyze the effect of inflation on the capital stock the interest elasticity of money demand the optimum quantity of money and the welfare costs of inflationary finance

inheritance patterns in migration prone communities of the peruvian highlands abstract on the basis of detailed information on inheritance practices collected in the course of an in depth survey of three andean communities of peru and unlike most empirical studies which rely on remittance functions we have been able to estimate an inheritance function with a view to identifying the main factors associated with particular patterns of land bequests a central result is that the positive relationship between caring and a favourable access to land bequest indeed exists yet is only observed for migrant children whether urban or rural long distance or short distance migrants combined with other findings and observations this result strengthens the case for an interpretation based on an active role of potential heirs in the determination of inheritance outcomes it therefore calls into question the strategic bequest theory which presumes that parents are the ultimate decision makers in this matter in addition our study shows that inheritance patterns are complex besides migration and caring behavior personal characteristics of potential heirs such as gender birth order and family status having children or not do appear to influence division of parental land

credit policy inflation and growth in a financially repressed economy this report analyzes credit policy in an open economy macro model incorporating stylized facts about the financial sector of ldc s absence of security markets existence of a curbmarket these facts are incorporated in the financial sector part of a keynes wicksell growth model it focuses on a transmission channel of monetary policy into the supply side of the economy via the cost of working capital it shows that ignoring this effect when analysing restrictive credit policy leads to underestimates of inflation and overestimation of output and current account improvements it is shown that a credit crunch can be stagflationary in the short run a cut in the real stock of credit is shown to lead to a lower steady state capital stock