when in rome how non domestic companies listed in the uk may not comply with accepted norms and principles of good corporate governance does home market culture explain these corporate behaviours and attitudes to compliance non domestic companies are increasingly present on the london stock exchange such companies have specific governance requirements they may seek to access capital in a more liquid market and to diversify ownership the reputational bonding coffee northwest univ law rev 93 641 708 1999 columbia law rev 102 1757 1831 2002 to a prestigious exchange should be a statement to the market of a propensity to disclosure and a willingness to protect minority shareholders yet many non domestic companies retain tightly controlled shareholding structures and are based in emerging regions where national culture norms differ to the uk we hypothesise that non domestic companies are likely to be less compliant with the principles of the uk corporate governance code and suggest a correlation between lower levels of compliance and non domestic companies from countries that demonstrate high power distance in the hofstede culture s consequences international differences in work related values 1980a cultural value framework we find some encouraging signs of compliance with the reigning governance code principles in board structures however we find only partial compliance in leadership and board effectiveness measures in those companies from cultures high on the power distance scale further we include analysis into ownership characteristics and find companies from emerging markets are dominated by a single or controlling group of shareholders which is likely to impact on attitudes to compliance and is particularly evidenced in terms of board structures with no executive directors or led by an executive chairman much of the prior research effort into the levels of compliance with the uk s comply or explain approach to governance has produced mixed results and focused on all companies in our exploratory approach to analysing only the non domestic subsample we report some evidence linking cultural distance to lower levels of compliance with the uk standards we develop a framework to guide future research into the context and cultural underpinnings of this sub sample of companies hypothesising that frequent market capitalisation induced index changes may divert attention away from any potential compliance issues on the one hand our evidence is encouraging for governance regimes based on voluntary compliance disclosures such as the uk and similar european and international markets as we report partial compliance with the principles of the current governance code our research may however be helpful in guiding future versions of the uk governance framework and other international governance regimes adopting the comply or explain approach and in setting policy to improve disclosure it contributes to the understanding of the specific context of non domestic companies and any cultural tendencies to non compliance by demonstrating evidence of lower levels of compliance with key principles of the code by non domestic companies we present a framework enabling lawmakers to further improve corporate governance codes

corruption in bank lending to firms cross country micro evidence on the beneficial role of competition and information sharing abstract building on the important study by beck demirguc kunt and levine 2006 bank supervision and corruption in lending journal of monetary economics 53 2131 2163 we examine the effects of both borrower and lender competition as well as information sharing via credit bureaus registries on corruption in bank lending using the unique world bank data set wbes covering more than 4 000 firms across 56 countries with information on credit bureaus registries assembled by djankov mcliesh and shleifer 2007 private credit in 129 countries journal of financial economics 84 299 329 and bank regulation data collected by barth caprio and levine 2006 rethinking bank regulation till angels govern cambridge university press new york to measure bank competition and information sharing we find strong evidence that both banking competition and information sharing reduce lending corruption and that information sharing also helps enhance the positive effect of competition in curtailing lending corruption we also find that the ownership structure of firms and banks legal environment and firm competition all exert significant impacts on lending corruption

estimating the effect of hierarchies on information use theory suggests that greater hierarchical distance between a subordinate and his boss makes it more di cult to share abstract and subjective information in decision making a novel data set put together from credit dossiers of large corporate loan applicants enables us to observe the information collected by loan o cers and also how it is used by the ultimate loan approving o cer we flnd that greater hierarchical geographical distance between the information collecting agent and the loan approving o cer leads to less reliance on subjective information and more on objective information by exploiting non linearities in the assignment rules that determine an applicant s hierarchical distance and using information collecting agent flxed efiects we show that our result cannot be driven by endogenous assignment of applicants we also flnd that higher frequency of interactions between the information collecting agent and loan approving o cer both over time and through geographical proximity helps mitigate the efiects of hierarchical distance on information use our results show that hierarchical distance in uences information use and highlights the importance of human touch in communication

growth of firms in developing countries evidence from cote d ivoire the paper presents evidence in support of a particular growth process of firms that is consistent with a missing middle in the size distribution of manufacturing firms in african countries firm growth is explained by size and age effects as a result of efficiency exploiting through scale enlargements and learning but is strongly moderated by reputation effects and formal legitimation which facilitate access to output markets and resources complementing the model with data on growth obstacles as perceived by the owners of firms medium sized firms are found to be strongly hurt by insufficient access to infrastructure and financial services

cultural values and international differences in business ethics we analyze ethical policies of firms in industrialized countries and try to find out whether culture is a factor that plays a significant role in explaining country differences we look into the firm s human rights policy its governance of bribery and corruption and the comprehensiveness implementation and communication of its codes of ethics we use a dataset on ethical policies of almost 2 700 firms in 24 countries we find that there are significant differences among ethical policies of firms headquartered in different countries when we associate these ethical policies with hofstede s cultural indicators we find that individualism and uncertainty avoidance are positively associated with a firm s ethical policies whereas masculinity and power distance are negatively related to these policies

the economics of small business finance the roles of private equity and debt markets in the financial growth cycle abstract this article examines the economics of financing small business in private equity and debt markets firms are viewed through a financial growth cycle paradigm in which different capital structures are optimal at different points in the cycle we show the sources of small business finance and how capital structure varies with firm size and age the interconnectedness of small firm finance is discussed along with the impact of the macroeconomic environment we also analyze a number of research and policy issues review the literature and suggest topics for future research

gift giving guanxi and illicit payments in buyer supplier relations in china analysing the experience of uk companies this paper explores the relationship between gift giving guanxi and corruption through a study of the relationships between uk manufacturing companies in china and their local component suppliers the analysis is based on interviews in the china based operations of 49 uk companies interviews were carried out both with senior often expatriate staff and with local line managers who were responsible for everyday purchasing decisions and for managing relationships with suppliers the results suggest that gift giving is perceived to be a significant problem in uk owned companies in china however the relationship between these payments and established understanding of gift giving within guanxi networks appears to be weak gift giving appears to be associated with illicit payments corruption and the pursuit of self interest firms seek to reduce the incidence of illicit transactions by changing staff roles instituting joint responsibilities which include the separation of different aspects of sourcing purchasing ineasing the involvement of senior staff in the process and through the education of employee and suppliers

corruption and the role of information several studies have explored how certain economic and cultural variables affect a country s corruption level this study extends previous research by not only considering these variables but also taking into account the impact that information and communication technology can have on corruption the results indicate that the greater the access to information the lower the corruption levels therefore bridging the digital disparity across countries can also serve to lessen national corruption levels

culture income and co2 emission given the devastating effects of global warming the problem of human induced climate change and in particular carbon dioxide emissions has been high on the global policy agenda in this study we examine the relationship between national culture carbon dioxide emissions and economic growth in the framework of the environmental kuznets curve ekc applying system gmm panel estimator across 69 developed and developing countries we confirm the existence of ekc and show that culture significantly affects the income emission relationship moreover the effects of the six cultural dimensions on ekc can be collapsed into two i masculinity power distance and indulgence move the ekc upward and shift the income turning point to the left and ii individualism uncertainty and long term orientation move the ekc downward while shifting the income turning point to the right the impact of culture on ekc remains also robust for alternative specifications future policy and global initiatives in sustainable development should incorporate the multidimensional impact of culture on national behavior towards environment and economic growth a relationship that has been largely ignored in economic decision making models

a nonlinear mixed integer multiperiod firm model abstract we formulate and test an advanced multiperiod model for strategic firm planning this has not been previously considered as a mixed integer nonlinear problem minlp our approach is to show the differences between a linear and a nonlinear mixed integer approach the key property of our model is the simplicity and efficiency of generating optimal firm strategies a cornerstone for managerial acceptance our purpose is to maximize the discounted value of net income and return on investment roi our model has been tested on some major finnish firms and it seems to give reliable results with the data of our sample firm for this paper optimal roi and optimal net income presuppose different strategies when optimizing roi the model balances between cash and fixed assets while optimizing net income results in an intensive investment program even if our sample firm is but one case the results are indicative of some fundamental principles governing managerial decision making

a framework to update hofstede s cultural value indices economic dynamics and institutional stability this study offers an update of the hofstede cultural value dimensions we argue that changes in economic conditions are the source of cultural dynamics while the endurance of institutional characteristics provides the foundation for cultural stability it is found that national wealth measured by gdp per capita has a curvilinear relationship with individualism long term orientation and power distance scores relatively speaking uncertainty avoidance and masculinity mainly reflect some rather stable institutional traditions such as language religion climate ethnic homogeneity and legal origin and are less likely to change over time

markets and institutions in financial intermediation national characteristics as determinants abstract given the importance of financial intermediation and the rise of globalization there is little prior research on how national preferences for financial intermediation markets versus institutions are determined by cultural legal and other national characteristics using panel analysis for data on a recent 8 year period for 30 countries this paper documents that national preferences for market financing increase with political stability societal openness economic inequality and equity market concentration and decreases with regulatory quality and ambiguity aversion we confirm with robustness tests that our result for regulatory quality is independent of differences in national wealth and that our result for political stability is independent of both wealth and political legitimacy these results should be of much interest to managers scholars regulators and policy makers

perceptions of country corruption antecedents and outcomes globalization has increased the need for managers and future managers to predict the potential for country corruption this study examines the relationship between hofstede s cultural dimensions and how country corruption is perceived power distance individualism and masculinity were found to explain a significant portion of the variance in perceived corruption a significant portion of country s risk trade flow with u s a foreign investment and per capita income was explained by perceived corruption

finance firm size and growth the authors examine whether financial development boosts the growth of small firms more than large firms and hence provides information on the mechanisms through which financial development fosters aggregate economic growth they define an industry s technological firm size as the firm size implied by industrial specific production technologies including capital intensities and scale economies using cross industry cross country data the results indicate that financial development exerts a disproportionately large effect on the growth of industries that are technologically more dependent on small firms this suggests that financial development accelerates economic growth by removing growth constraints on small firms and also implies that financial development has sectoral as well as aggregate growth ramifications

exploring and controlling a bank s interest risk sensitivity analysis of an asset and liability co ordination model abstract for exploration and control of a bank s interest risk an asset and liability co ordination model is used that has been developed in close co operation with a big german commercial bank this model is capable of analyzing the sensitivity of a bank s interest surplus to sudden and unforeseen changes of the interest rate scenario furthermore a model based iterative procedure is suggested for control of interest risk by bank management a pragmatic approach is employed mainly in reference to the generation of alternative future interest rate scenarios the data required by the model are restricted to those that are usually available to commercial banks

optimal non linear pricing with regulatory preference over customer type abstract in this paper we characterize the pareto optimal set of non linear pricing schedules when non negative weights are assigned to each customer type our analysis first compares general non linear tariff schedules and sets of self selecting two part tariffs when there are two customer types and the cost function is linear we then derive optimal sets of two part tariffs for arbitrary numbers of customer types and general cost functions we also consider the sustainability of non linear pricing schedules under the threat of entry of rival firms

psychometrics as a tool to improve credit information this paper studies the use of psychometric tests designed by the entrepreneurial finance lab efl as a tool to screen out high credit risk and potentially increase access to credit for small business owners in peru we compare repayment behavior patterns across entrepreneurs who were offered a loan based on the traditional credit scoring method versus the efl tool we find that the psychometric test can lower the risk of the loan portfolio when used as a secondary screening mechanism for already banked entrepreneurs that is those with a credit history the efl tool can also allow lenders to offer credit to some unbanked entrepreneurs that is those without a credit history who were rejected based on their traditional credit scores without increasing the risk of the portfolio

the influence of financial and legal institutions on firm size abstract theory does not predict an unambiguous relationship between a country s financial and legal institutions and firm size using data on the largest industrial firms for 44 countries we find that firm size is positively related to financial intermediary development the efficiency of the legal system and property rights protection we do not find any evidence that firms are larger in order to internalize the functions of the banking system or to compensate for the general inefficiency of the legal system

cronyism a cross cultural analysis the devastating economic effects of the asian financial crisis and us corporate scandals have underscored the need to strengthen corporate governance provisions although cronyism has been suggested as a leading cause of the two crises it has received little attention from scholars in this paper we analyze the concept of cronyism and argue that it comes in various guises arising from different motivational bases and power dependence relations we distinguish cronyism from related constructs and posit that it is a form of corruption with different dynamics from other forms we advance propositions on its likelihood of occurrence across cultures and develop a typology of cronyist exchanges

a dynamic bank portfolio planning model with multiple scenarios multiple goals and changing priorities abstract the paper discusses a practical application of a two stage linear goal programming model to the management of the domestic and foreign currency denominated assets and liabilities of a large bank in finland the planning horizon includes three one year planning periods a number of alternative scenarios are used to describe uncertainty concerning future developments in these periods the scenarios are related to general economic conditions as well as the state of the domestic and foreign financial markets the bank is assumed to have multiple conflicting goals with different and changing priorities the goals deal with expected profits risk liquidity capital adequacy growth customer relationships and several other aspects of the bank s operations

a socially efficient water tariff under the english optional metering scheme we design a socially efficient water tariff in the institutional context of england where water metering is largely optional and non metered households are levied proportional to the rateable value rv of their property within this context it is theoretically demonstrated that the larger the rv the more likely the household to opt for metering and the larger the rv the smaller the demand effect of metering dem the fall in water consumption resulting from metering these two hypotheses are confirmed with econometric analyses using datasets provided by a water company operating in east anglia england the results signify an adverse selection problem wealthier households are more likely to opt for metering yet they are expected to exhibit a smaller dem once a meter is installed in order to overcome this we propose a two part tariff for metered households consisting of a variable charge levied proportional to water consumption at a uniform price and a progressive standing charge to place a heavier burden on wealthier households the latter component has a potentially major role in attaining social efficiency of metering by encouraging poorer households to install meters whilst discouraging wealthier ones the optimal two part tariff is determined empirically

wealth culture and corruption this paper examines the impact of national wealth income distribution government size and four cultural variables on the perceived level of corruption in a country the study finds that corruption is significantly correlated to gnp per capita power distance masculinity and uncertainty avoidance significant interaction effects occur in collectivistic and high power distance countries suggestions for future research are developed

lost in translation the effect of cultural values on mergers around the world we find strong evidence that three key dimensions of national culture trust hierarchy and individualism affect merger volume and synergy gains the volume of cross border mergers is lower when countries are more culturally distant in addition greater cultural distance in trust and individualism leads to lower combined announcement returns these findings are robust to year and country level fixed effects time varying country pair and deal level variables as well as instrumental variables for cultural differences based on genetic and somatic differences the results are the first large scale evidence that cultural differences have substantial impacts on multiple aspects of cross border mergers

property rights and finance which is the tighter constraint on private sector investment weak property rights or limited access to external finance from a survey of new firms in post communist countries we find that weak property rights discourage firms from reinvesting their profits even when bank loans are available where property rights are relatively strong firms reinvest their profits where they are relatively weak entrepreneurs do not want to invest from retained earnings

an interest rate risk management model for commercial banks abstract this paper develops a goal programming model to assist a commercial bank in managing its exposure to interest rate risk the bank s objective is to immunize its equity position against innovations in interest rates while maximizing its market value to accomplish this task a duration gap framework is developed that does not require interest rate forecasts as decision variables the model includes assets liabilities and off balance sheet derivative securities the focus is on a protective put strategy that uses options on interest rate futures but to provide contrast a short interest rate futures position is examined as well application of the model to an illustrative environment indicates that for larger interest rate changes the option strategy provides better protection against interest rate risk than the short futures position

collectivism and corruption in bank lending this paper examines how national culture and collectivism in particular influences corruption in bank lending we hypothesize that interdependent self construal and particularist norms in collectivist countries lead to a higher level of lending corruption through their influence both on the interactions between bank officers and bank customers and on the dynamics among bank colleagues using a sample covering 3835 firms across 38 countries we find strong evidence that firms domiciled in collectivist countries perceive a higher level of lending corruption than firms domiciled in individualist countries in terms of economic magnitude the effect of collectivism is substantially larger than the effects of other cultural dimensions uncertainty avoidance masculinity and power distance and institutional factors identified in prior studies bank supervision bank competition information sharing and media monitoring we further find that the positive relationship between collectivism and lending corruption is not driven by endogeneity and that it is robust to different measures of bank corruption different measures of collectivism and different estimation methods finally we find that the link between collectivism and lending corruption cannot be explained by the role of the government in the economy political connections biased responses from disgruntled borrowers or relationship lending

financial and legal constraints to growth does firm size matter using a unique firm level survey database covering 54 countries we investigate the effect of financial legal and corruption problems on firms growth rates whether these factors constrain growth depends on firm size it is consistently the smallest firms that are most constrained financial and institutional development weakens the constraining effects of financial legal and corruption obstacles and it is again the small firms that benefit the most there is only a weak relation between firms perception of the quality of the courts in their country and firm growth we also provide evidence that the corruption of bank officials constrains firm growth

law finance and firm growth we investigate how differences in legal and financial systems affect firms use of external financing to fund growth we show that in countries whose legal systems score high on an efficiency index a greater proportion of firms use long term external financing an active though not necessarily large stock market and a large banking sector are also associated with externally financed firm growth the increased reliance on external financing occurs in part because established firms in countries with well functioning institutions have lower profit rates government subsidies to industry do not increase the proportion of firms relying on external financing the corporate finance literature suggests that market imperfections caused by conflicts of interest and informational asymmetries between corporate insiders and investors constrain firms in their ability to fund investment projects the magnitude of these imperfections depends in part on the effectiveness of the legal and financial systems because these systems differ across countries the literature implies that there should exist systematic cross country differences in firms ability to obtain external capital to finance investment in this paper we examine whether the underdevelopment of legal and financial systems does prevent firms in some countries from investing in potentially profitable growth opportunities in particular we focus on the use of long term debt or external equity to fund growth see our earlier work demirgut kunt and maksimovic 1996a which compares firms financial structures in developed and developing countries and finds the greatest difference to be in the provision of long term credit we estimate a financial planning model to obtain the maximum growth rate that each firm in our thirty country sample could attain without access to long term financing we then compare these predicted growth rates to growth rates realized by firms in countries with differing degrees of development in their legal and financial systems our approach enables us to identify specific characteristics of the legal and financial systems that are associated with long term financing of firm growth thus we provide a micro level test of the hypoth

bank funding risks risk aversion and the choice of futures hedging instrument currently theories of financial futures hedging are based on either a portfolio choice approach or a duration approach this article presents an alternative a firm theoretic model of bank behavior with financial futures assuming the bank is uncertain about cash cd interest rates and the quantity of cds it needs in the future expressions for the optimal futures hedge are derived under constant absolute risk aversion and constant relative risk aversion the performance of these two strategies is estimated from 19811983 using either the recently developed cd futures contract or the t bill futures contract these results are also compared with the performance of a portfolio choice strategy and a routine hedging strategy the analysis indicates that the cd futures market can serve a hedging purpose that is not served by the previously established t bill futures market the emergence and rapid growth of interest rate futures markets suggest that

a more complete conceptual framework for sme finance abstract we propose a more complete conceptual framework for analysis of sme credit availability issues in this framework lending technologies are the key conduit through which government policies and national financial structures affect credit availability we emphasize a causal chain from policy to financial structures which affect the feasibility and profitability of different lending technologies these technologies in turn have important effects on sme credit availability financial structures include the presence of different financial institution types and the conditions under which they operate lending technologies include several transactions technologies plus relationship lending we argue that the framework implicit in most of the literature is oversimplified neglects key elements of the chain and often yields misleading conclusions a common oversimplification is the treatment of transactions technologies as a homogeneous group unsuitable for serving informationally opaque smes and a frequent misleading conclusion is that large institutions are disadvantaged in lending to opaque smes

historical financing of small and medium size enterprises we focus on the economies of the north atlantic core during the 19th and early 20th centuries and find that an impressive variety of local financial institutions emerged to supply the needs of smes wherever there was sufficient demand for their services although these intermediaries had significant weaknesses they were able to tap into local information networks and so extend credit to firms that were too young or small to secure funds from large regional or national institutions in addition by raising the return to savings for local households they helped to mobilize significant new resources for economic development

values versus regulations how culture plays its role this study examines the impact of culture on regulation and corruption our empirical results suggest that cultural values have significant effects on countries regulatory policies levels of corruption and economic development contrary to the conclusions drawn by others this study shows no significant relationship between the regulatory policies of countries and their perceived levels of corruption thus evidence of the public choice view toward entry regulation derived in related studies seems to be at least attenuated

a new database on the structure and development of the financial sector this article introduces a new database of indicators of financial structure and financial development across countries and over time the database is unique in that it combines a wide variety of indicators that measure the size activity and efficiency of financial intermediaries and markets it improves on previous efforts by presenting data on the public share of commercial banks introducing indicators of the size and activity of nonbank financial institutions and constructing measures of the size of bond and primary equity markets this article introduces a new database the first to provide comprehensive measures of the development structure and performance of the financial sector this database is the first to define and construct indicators of the size and activity of nonbank financial intermediaries such as insurance companies pension funds and non deposit money banks it is also the first to include indicators of the size of primary equity markets and primary and secondary bond markets in constructing the database authors carefully deflate measures and match stock and flow variables

the role of ethical leadership versus institutional constraints a simulation study of financial misreporting by ceos this article examines the proposition that a major cause of the major financial accounting scandals that received much publicity around the world was unethical leadership in the companies and compares the role of unethical leaders in a variety of scenarios through the use of computer simulation models it shows how a combination of ceo s narcissism financial incentive shareholders expectations and subordinate silence as well as ceo s dishonesty can do much to explain some of the findings highlighted in recent high profile financial accounting scandals furthermore it shows that the nature and impact of ethical leadership depends greatly on the institutional setting and can be expected to vary greatly by country and culture in certain circumstances ethical leadership can have either a negligible or even opposite effect to that expected

financing patterns around the world are small firms different using a firm level survey database covering 48 countries we investigate how financial and institutional development affects financing of large and small firms our database is not limited to large firms but includes small and medium size firms and data on a broad spectrum of financing sources including leasing supplier development and informal finance small firms and firms in countries with poor institutions use less external finance especially bank finance protection of property rights increases external financing of small firms significantly more than of large firms mainly due to its effect on bank finance small firms do not use disproportionately more leasing or trade finance compared with larger firms so these financing sources do not compensate for lower access to bank financing of small firms we also find that larger firms more easily expand external financing when they are constrained than small firms finally we find suggestive evidence that the pecking order holds across countries

water demand under alternative price structures we estimate the price elasticity of water demand with household level data structurally modeling the piecewise linear budget constraints imposed by increasing block pricing we develop a mathematical expression for the unconditional price elasticity of demand under increasing block prices and compare conditional and unconditional elasticities analytically and empirically we test the hypothesis that price elasticity may depend on price structure beyond technical differences in elasticity concepts due to the possibility of endogenous utility price structure choice observed differences in elasticity across price structures may be due either to a behavioral response to price structure or to underlying heterogeneity among water utility service areas

corporate reputation s invisible hand bribery rational choice and market penalties drawing upon rational choice and investor attention theories we examine how accusations of corporate bribery and subsequent investigations shape market reactions using event study methodology to measure loss in firm value for public firms facing bribery investigations from 1978 to 2010 we found that total market penalties amounted to 60 61 billion we ran moderated multiple regression analysis to examine further the degree to which the unique characteristics of bribery explain variations in market penalties companies committing bribery in less corrupt host countries and with the involvement of compromised executives experienced greater market penalties than did other companies after partitioning share value losses into components for regulatory penalties class action settlements and loss to reputation we found that reputational penalties account for 81 8 of every dollar of share value loss omission of reputational penalties in rational choice calculus underestimates bribery costs by 4 5 times the results suggest that firms should not underestimate the importance of market imposed reputational penalties by merely considering regulator imposed fines and sanctions

african smes networks and manufacturing performance abstract this paper examines the role of private support institutions in determining small and medium enterprise smes growth and performance in sub saharan africa ssa it finds that smes in ssa get around market failures and lack of formal institutions by creating private governance systems in the form of long term business relationships and tight ethnically based business networks there are important links between these informal governance institutions and sme performance networks raise the performance of insiders and in the sparse business environments of the ssa region have attendant negative consequences for market participation of outsiders such as indigenous african smes this is indicated through the determinants of access to supplier credit policy interventions will be needed to improve the platform for relation based governance mechanisms and to address the exclusionary effects of tight networks

a general model of the banking firm under conditions of monopoly uncertainty and recourse abstract we develop a stochastic programming model of the monopolistic competition banking firm it assumes the bank faces a downward sloping loan demand curve and is a price taker in securities markets uncertainty and liquidity requirements are incorporated bank decisions are made within a two stage framework where realized disturbances that violate constraints can be rectified ex post at a cost the results are 1 optimal loan and deposit rates are positive functions of the recourse penalty 2 asset liability decisions are interdependent and elastically supplied deposits lower the loan rate 3 the effect of uncertainty depends upon the penalty rate level

measuring unethical consumer behavior across four countries the huge amounts spent on store security and crime prevention worldwide not only costs international businesses but also amounts to a hidden tax on those law binding consumers who bear higher prices most previous research has focused on shoplifting and ignored many other ways in which consumers cheat businesses using a hybrid of both qualitative research and survey approaches in four countries an index of 37 activities was developed to examine consumers unethical activities across uk us france and austria the findings indicate that around three quarters of consumers in all four countries can be classified as heavy offenders for these minor cheats the paper argues that government agencies marketers and retailers should adopt more pro active preventative approaches rather than reactive loss limitation measures to combat unethical behavior

ethical preferences for influencing superiors a 41 society study with a 41 society sample of 9990 managers and professionals we used hierarchical linear modeling to investigate the impact of both macro level and micro level predictors on subordinate influence ethics while we found that both macro level and micro level predictors contributed to the model definition we also found global agreement for a subordinate influence ethics hierarchy thus our findings provide evidence that developing a global model of subordinate ethics is possible and should be based upon multiple criteria and multilevel variables

why firms engage in corruption a top management perspective this study builds upon the top management literature to predict and test antecedents to firms engagement in corruption building on a survey of 341 executives in india we find that if executives have social ties with government officials their firms are more likely to engage in corruption further these executives are likely to rationalize engaging in corruption as a necessity for being competitive the results collectively illustrate the role that executives social ties and perceptions have in shaping illegal actions of their respective firms

uk bank services for small business how competitive is the market abstract this study is the first to employ an econometric model to examine the pricing behaviour of british financial institutions with respect to key bank products services offered to small and medium sized enterprises smes including current accounts investment accounts business loans and mortgages a mean group approach is used on a panel of monthly data to gauge individual banks reactions to identify factors influencing the setting of deposit and loan rates and to assess the competitive structure that best describes the uks sme banking market though the results should be interpreted with caution the empirical evidence is suggestive of a complex oligopoly policies directed at improving information and making it easier for small businesses to change banks accounts would reduce inertia and improve competition among financial institutions

the mnc as an agent of change for host country institutions fdi and corruption most empirical research examines how the institutional environment of corruption shapes the behavior of multinational corporations mncs in this study we would like to highlight the other side of the picture how the presence of mncs may shape the institutional environment of corruption over time we propose three avenues through which the mncs may have an impact on its host institutions regulatory pressure effect demonstration effect and professionalization effect based on extensive data on foreign direct investment and corruption for a large sample of countries over the last 30 years the empirical results are generally consistent with our hypothesis such findings provide a glimmer of hope for the future of the host country where corruption is prevalent

collectivism and corruption in commercial loan production how to break the curse recent research suggests that collectivism breeds corruption in bank lending this finding together with the stickiness of culture poses a direct challenge to economic growth in collectivist societies in this paper we address this grim outlook by examining the types of firms that are susceptible to the detrimental effect of collectivism on lending integrity and the formal institutions that can help alleviate such effect we find that the adverse effect of collectivism on bank corruption is more severe in small and medium sized firms privately owned firms and non exporting firms while it is considerably weaker in countries with more effective private monitoring a higher lower fraction of foreign owned government owned banks a more competitive banking sector better information sharing and stronger legal and political institutions our findings are robust to using alternative measures of collectivism and alternative dependent variables these results highlight how firm level characteristics and formal institutions interact with collectivism in affecting firms access to bank credit

information sharing in credit markets we present a model with adverse selection where information sharing between lenders arises endogenously lenders incentives to share information about borrowers are positively related to the mobility and heterogeneity of borrowers to the size of the credit market and to advances in information technology such incentives are instead reduced by the fear of competition from potential entrants in addition information sharing increases the volume of lending when adverse selection is so severe that safe borrowers drop out of the market these predictions are supported by international and historical evidence in the context of the consumer credit market a large body of literature on credit markets has shown that asymmetric information may prevent the efficient allocation of lending leading to credit rationing e g jaffee and russell 1976 stiglitz and weiss 1981 or to a wedge between lending and borrowing rates e g king 1986 in this literature informational asymmetries are taken to be exogenous lenders fail to observe some relevant characteristic or action of potential borrowers and have no way of learning about it in some countries however lenders can improve their knowledge about new customers by exchanging information with other lenders through information brokers generally known as credit bureaus the latter collect file and distribute the information voluntarily supplied by their members and operate on the principle of reciprocity lenders who do not provide data are denied access to the bureau s files in other countries instead these institutions do not exist the literature offers no guide to identify the factors that lead to endogenous communication between lenders this paper is an attempt to fill the gap information sharing is important for a number of reasons it may increase the degree of competitiveness within credit markets vives 1990 improve

do rivals enhance your credit conditions abstract in a model where firms rely on bank financing to build capacity put up specialized productive assets as collateral and then compete a la cournot we introduce a probability of default we investigate how the number of competitors affects the equilibrium amount of bank credit and derive conditions under which an inverted u shaped relationship occurs on the one hand more competitors enhance the resale value of collateralized productive assets on the other hand more competitors shrink firms profits and the resulting income that can be pledged to banks we then extend the analysis to firms outside the cournot industry that are willing to buy productive assets in liquidation and show that the equilibrium bank credit becomes monotonically decreasing in the number of competitors

cost of capital and public loan guarantees to small firms in this paper we study the determinants of the spread charged by banks under a uk policy intervention scheme aimed at supporting access to the credit market for small firms through guarantee backed loans we exploit a unique dataset containing data on 29 266 guarantee backed loans under the uk sflg scheme over the period 2000 to 2005 results suggest that lower spreads are offered for loans of larger amounts and higher durations for service firms for larger firms and for those located in the most advanced regions higher spreads are applied to high tech manufacturing firms and to loans issued for working capital purposes we also find that the presence of other extant debt is associated with a relatively higher spread and that this effect is especially significant for the subset of firms that have reached a maximum debt capacity based on collateralized assets further we also find that the higher the incidence of the publicly guaranteed debt over the total amount of outstanding loans the lower on average the spread however an increase in the guaranteed coverage leads to a contraction in the spread only for loans aimed at covering working capital needs rather than investments

managing interest rate risk in banking institutions abstract this paper develops and employs a multiperiod goal programming model to examine the normative effects of changing interest rates on the rearrangements of depository bank balance sheets and associated profits a two stage state preference framework allows a dynamic interpretation of the model s prescribed decisions as well as a natural incorporation of profit sensitivity to interest rate risk the model includes on and off the balance sheet decision variables experimental results indicate that constraining the latter decision can seriously curtail the bank s ability to achieve its profit objectives

a goal programming model for bank assets and liabilities management abstract assets and liabilities management is one of the most important issues in bank strategic planning in the past this problem has often been addressed through conventional mathematical programming i e linear programming however bank management typically involves several conflicting goals such as the maximisation of returns minimisation of risk expansion of deposits and loans etc the complexity of this problem can be captured more adequately by multiobjective mathematical programming this paper discusses the construction and application at the commercial bank of greece of a goal programming model that takes into account the essential institutional financial legal and bank policy considerations

bank supervision and corruption in lending abstract which commercial bank supervisory policies ease or intensify the degree to which bank corruption is an obstacle to firms raising external finance based on new data from more than 2500 firms across 37 countries this paper provides the first empirical assessment of the impact of different bank supervisory policies on firms financing obstacles we find that the traditional approach to bank supervision which involves empowering official supervisory agencies to monitor discipline and influence banks directly does not improve the integrity of bank lending rather we find that a supervisory strategy that focuses on empowering private monitoring of banks by forcing banks to disclose accurate information to the private sector tends to lower the degree to which corruption of bank officials is an obstacle to firms raising external finance in extensions we find that regulations that empower private monitoring exert a particularly beneficial effect on the integrity of bank lending in countries with sound legal institutions

who owns the media the authors examine patterns of media ownership in 97 countries around the world they find that almost universally the largest media firms are controlled by the government or by private families government ownership is more pervasive in broadcasting than in the printed media government ownership is generally associated with less press freedom fewer political and economic rights inferior governance and most conspicuously inferior social outcomes in education and health the adverse effects of government ownership on political and economic freedom are stronger for newspapers than for television the adverse effects of government ownership of the media do not appear to be restricted solely to instances of government monopoly the authors present a range of evidence on the adverse consequences of state ownership of the media state ownership of the media is often argued to be justified on behalf of the social needs of the disadvantaged but if their findings are correct increasing private ownership of the media through privatization or by encouraging the entry of privately owned media can advance a variety of political and economic goals especially those of meeting the social needs of the poor

egalitarianism and international investment abstract this study identifies how country differences on a key cultural dimension egalitarianism influence international investment flows a society s cultural orientation toward egalitarianism is manifested by intolerance for abuses of market and political power and a desire for protecting less powerful actors we show egalitarianism to be based on exogenous factors including social fractionalization dominant religion circa 1900 and war experience from the 19th century we find a robust influence of egalitarianism distance on cross national flows of bond and equity issuances syndicated loans and mergers and acquisitions an informal cultural institution largely determined a century or more ago egalitarianism exercises its effect on international investment via an associated set of consistent contemporary policy choices but even after controlling for these associated policy choices egalitarianism continues to exercise a direct effect on cross border investment flows likely through its direct influence on managers daily business conduct

an analysis of the impact of economic wealth and national culture on the rise and fall of software piracy rates a number of studies have investigated and found a significant relationship among economic wealth hofstede s national culture dimensions and software piracy rates spr no study however has examined the relationship between economic wealth culture and the fact that national sprs have been declining steadily since 1994 using a larger sample than has previously been available 57 countries we confirm the expected negative relationship between economic wealth culture individualism and masculinity and levels of software piracy the rate of decline in software piracy however is found to be a cultural phenomenon with two factors power distance pdi and uncertainty avoidance uai working in opposition similar results are found for a subset of 37 relatively poor countries this suggests that while the rise in economic wealth seen for most countries should lead to a reduction in software piracy the rate of decline is determined by cultural factors global strategies for dealing with software piracy are discussed

the normalization of deviant organizational practices wage arrears in russia 1991 98 we apply a normalization of deviance model to understand the prevalence of the illegal practice of wage arrears the delayed payment of wages in russia during the 1990s viewing organizational dev

who are russia s entrepreneurs social scientists studying entrepreneurship have emphasized three distinct sets of variables the institutional environment sociological variables and personal and psychological characteristics we are conducting surveys in five large developing and transition economies to better understand entrepreneurship in this short paper using over 2 000 interviews from a pilot study in russia we find evidence that the three sets of variables matter perceptions of the local institutional environment social network effects and individual characteristics are all important in determining entrepreneurial behavior jel m13 o12 p12

the welfare economics of optional water metering a model of decentralised metering decisions that applies to the water industry is developed the social benefit of metering is higher the more sensitive demand is to the price allowing households to choose whether or not to have meters is efficient when only small households should have meters but does not work when the regulator does not know household characteristics and only larger households should have meters the policy of requiring meters to be provided free which has been adopted in england and wales is analysed

financial development and economic growth views and agenda this critique argues that the preponderance of theoretical reasoning and empirical evidence suggests a positive first order relationship between financial development and economic growth the body of work would push even most skeptics toward the belief that the development of financial markets and institutions is a critical and inextricable part of the growth process and away from the view that the financial system is an inconsequential sideshow responding passively to economic growth many gaps remain however and the paper highlights areas in acute need of additional research

small and medium size enterprises access to finance as a growth constraint abstract this paper presents recent research on access to finance by small and medium size enterprises smes smes form a large part of private sector in many developed and developing countries while cross country research sheds doubt on a causal link between smes and economic development there is substantial evidence that small firms face larger growth constraints and have less access to formal sources of external finance potentially explaining the lack of smes contribution to growth financial and institutional development helps alleviate smes growth constraints and increase their access to external finance and thus levels the playing field between firms of different sizes specific financing tools such as leasing and factoring can be useful in facilitating greater access to finance even in the absence of well developed institutions as can systems of credit information sharing and a more competitive banking structure

business collateral and personal commitments in sme lending abstract using a database of sme credit approvals from a large belgian bank this paper extends the empirical evidence on the determinants of collateral by examining the determinants of business collateral simultaneously with the determinants of personal collateral commitments our results suggest that firm and relationship characteristics seem to be more important determinants of collateral commitment protection than loan and lender characteristics family firms are more likely to offer a higher degree of collateral commitment protection while introducing competition between banks decreases this likelihood the collateral requirement decreases in the length of the bank borrower relationship furthermore trade credit seems to have a signalling effect the lazy banks hypothesis was not supported our results suggest that beside risk arguments also commercial arguments help explain the pledging of collateral using a continuation ratio logit model we discover several differences in the determinants of the collateralisation decision and the determinants of the type of collateral commitments

political variables in cross country growth analysis the recent boom in cross country growth analysis has renewed the empirical interest in political sources of economic growth a large number of studies have tested political variables in growth regressions and a very heterogenous set of variables has been proposed to measure economically relevant differences in the political systems of countries this paper distinguishes five categories of relevant political variables democracy government stability political violence policy volatility and subjective perception of politics for each of these categories the specification testing method and results of the most relevant studies are presented and are critically discussed the paper concludes that measures of democracy are least successful and measures of policy volatility and subjective perception of politics most successful as explanatory variables in cross country growth regressions