introduction imperfect information and rural credit markets puzzles and policy perspectives rural credit markets have been at the center of policy intervention in developing countries over the past forty years many governments supported by multilateral and bilateral aid agencies have devoted considerable resources to supplying cheap credit to farmers in a myriad of institutional settings the results of many of these interventions have been disappointing and one explanation for this must be that they were based on an inadequate understanding of the workings of rural credit markets the articles in this symposium issue are devoted to empirical and theoretical investigations of rural credit markets in the framework of the imperfect information paradigm the authors show how this framework is useful not only in explaining puzzling features of these markets but also in providing a policy perspective to assess the successes and failures of specific interventions

environmental efficiency and abatement efficiency measurements of china s thermal power industry a data envelopment analysis based materials balance approach abstract appropriate measurement of environmental and emission abatement efficiency is crucial for assisting policy making in line with constructing a more sustainable society the majority of traditional approaches for environmental efficiency measures take pollutant emissions as either undesirable outputs or environmentally determined inputs which suffer a limitation of not satisfying the physical laws that regulate the operation of economic and environmental process in this study we propose a dea based approach which is combined with the materials balance principle mbp that accounts for laws of thermodynamics to jointly evaluate environmental and abatement efficiency this approach is along the line of weak g disposability based modelling but is an extension to existing models that in our approach the identification of possible adjustments on polluting mass bound in inputs and outputs and potential adjustments on abatement of pollutants are all included the overall environmental efficiency measured by this approach is decomposed into the measures of technical efficiency polluting inputs allocative efficiency and polluting and non polluting inputs allocative efficiency with the emphasizing of incorporating pollutant abatement activities accordingly new measures of abatement efficiency are proposed which help to identify the pollutant abatement potential that can be achieved from end of pipe abatement technology promotion associated with polluting input quality promotion and input resources reallocation furthermore several global malmquist productivity indices for identifying the changes on environmental and abatement efficiency are proposed this approach is applied to china s thermal power industry and some empirical results verifying the necessity of introducing the mbp are obtained

evidence on corporate hedging policy this paper provides empirical evidence on the determinants of corporate hedging decisions the paper examines the evidence in light of currently mandated financial reporting require ments and in particular the constraints placed on anticipatory hedging data on hedging are obtained from 1992 annual reports for a sample of 3 022 firms out of the 771 firms classified as hedgers 543 firms disclose information in their annual reports on their hedging activities the remaining 228 firms report use of derivatives but no information on hedging activities based on the evidence i draw the following conclusions with respect to the models of hedging evidence is inconsistent with financial distress cost models evidence is mixed with respect to contracting cost capital market imperfections and tax based models and evidence uniformly supports the hypothesis that hedging activities exhibit economies of scale

microfinance literature a sustainability level perspective survey abstract since the early microcredit programs up to the present microfinance has grown exponentially as it has the academic interest on it as a research subject considering that this sector has impact in terms of sustainability any research in the field requires an analysis with wide criteria which should include the economic environmental social and governance dimensions eesg as well as their interrelationships the objectives of this survey are to investigate the contributions of microfinance sectoral scholarly research to sustainability through a systematic literature review using content analysis method contextualizing the scientific production and studying its terminology according to the eesg criteria and under global reporting initiative framework and finally to identify research gaps and to propose future research paths

debt in rural south india fragmentation social regulation and discrimination this micro level study combines multivariate and qualitative analyses to highlight the fragmented nature of debt in southern indian rural households it finds that debt is socially regulated in the sense that social interactions shape the cost use and access to debt caste social class and location affect how individuals borrow varying amounts from distinct money providers for varied purposes and at differing costs debt thus is not purely an economic but first and foremost a social transaction which inscribes debtors and creditors into local systems of hierarchies furthermore we find that debt is an illustration and catalyst of broader socio economic and political trends namely a lack of social protection persistent under employment and rising consumerism in terms of policy implications the study highlights the ambiguities and illusions inherent to financial inclusion policies aiming to eradicate informal debt

alternative regulatory methods and firm efficiency stochastic frontier evidence from the u s electricity industry the use of incentive regulation and other alternative regulatory programs in u s electricity markets has grown during the past two decades within a stochastic frontier framework i investigate the effect of individual programs on the technical efficiency of a large set of coal and natural gas generation units i find that those programs tied directly to generator performance and those that modify traditional fuel cost pass through programs to provide a greater incentive to reduce fuel costs are associated with greater efficiency levels other programs have no statistical association with efficiency levels

competition under credit rationing theory and evidence from rural china abstract we present a duopoly model of financial competition to describe the conditions under which competition leads to greater bank effort when repressed financial systems ration credit the model features an entrant that freely sets its interest rate and an incumbent that must charge a rate below that which is market clearing both players may exert costly effort to inform themselves about borrower types using data on rural financial institutions in china we test empirically the effects of competition on deposit growth loan portfolio composition repayment rates and other effort measures finding positive effects of competition on effort and financial performance

examining the cost efficiency of chinese hydroelectric companies using a finite mixture model this paper evaluates the operational activities of chinese hydroelectric power companies over the period 2000 2010 using a finite mixture model that controls for unobserved heterogeneity in so doing a stochastic frontier latent class model which allows for the existence of different technologies is adopted to estimate cost frontiers this procedure not only enables us to identify different groups among the hydro power companies analysed but also permits the analysis of their cost efficiency the main result is that three groups are identified in the sample each equipped with different technologies suggesting that distinct business strategies need to be adapted to the characteristics of china s hydro power companies some managerial implications are developed

total factor spillovers similarities and competitions in the petroleum industry this chapter investigates multi dimensional spillovers similarities and competitions in the petroleum industry spatial techniques are applied first in production function in order to observe the cross sectional dependence in each of the four dimensions product technology segment and region wide these four single dimensional spatial models are then aggregated by a model averaging method that assigns weights to different models based on their ability to explain data taking all dependences into consideration this chapter estimates the total factor spillovers similarities and competitions in the spirit of total factor productivity negative spillover effects are observed in all the four dimensions moreover segment wide competition has negative effect on productivity some policy implications concerning human capital globalization and development strategies are also discussed

formal microlending and adverse or nonexistent selection a case study of shrimp farmers in bangladesh microcredit schemes have become a popular means of improving smallholders access to credit and making long term investment possible however it remains to be explored whether the current microcre

formal credit corruption and the informal credit market in agriculture a theoretical analysis the paper presents a theory of interest rate determination on informal credit in backward agriculture when there is a market for formal credit the farmer has to bribe the official of the formal credit agency in order to get formal credit the official and the moneylender play a non cooperative game in choosing the amount of formal credit and the informal interest rate respectively the informal sector interest rate and the effective formal sector interest rate incorporating the bribe are equal in equilibrium a reduction in the formal interest rate and or an increase in the price of the product may lead to an increase in the equilibrium bribing rate and the informal interest rate when the formal credit and the informal credit are complementary to each other

strategic interaction in undeveloped credit markets abstract this paper studies the strategic interaction between informal and formal lenders in undeveloped credit markets in a model with adverse selection loan seniority market power and differences in the cost of lending it is shown that under general conditions a co funding equilibrium will be a nash outcome of the game we demonstrate that a collateral requirement in connection with formal loans always generates a new co funding equilibrium in which both lenders earn higher profits a government subsidy to the formal lender may have the opposite effect we relate our results to existing empirical evidence and the emerging discussion of how to best ensure financial viability and outreach of microfinance institutions

symbiosis vs crowding out the interaction of formal and informal credit markets in developing countries abstract it is a common observation in many developing countries that enterprises are active borrowers in both formal and informal credit markets we propose a model in which the formal sector s superior ability in deposit mobilization is traded off against the informational advantage that lenders in the informal sector enjoy the formal sector can screen borrowers by providing only partial financing for projects thereby forcing borrowers to resort to the informal sector for the remainder of the loan we use the model to predict how the market structure responds to changes in the environment and we consider the policy implications of various forms of government intervention

the reform of electricity power sector in the pr of china deregulation was launched as a concept in the united states more than a decade ago the european union commission has also formally announced that electric deregulation must be completed by the end of 2005 deregulation or reform has already been a popular topic on the electricity power sector this paper will discuss the restructuring and regulatory reforms in the pr china s power sector it begins with a discussion of the characteristics of electricity reform or deregulation in other countries including the us the united kingdom and so on it will be followed by the industry structure and regulatory framework that characterized china s power industry during the latter part of the 20th century and the history of china s reform to restructure the power industry to competitive suppliers of generating services in recent years it discusses the role of the state power corporation in the reform and gives a detailed description of the latest electricity reform in the year 2002 the paper concludes with some thoughts regarding future challenges and trends on the reform for china s power sector

informal credit markets in india informal financial markets those which are not regulated or monitored by the banking authorities account for much of business credit in developing countries these unregulated informal credit markets icm are important both in their own right as part of each country s financial system and because of their reciprocal relations with growing enterprises and the regulated financial sector in order to study the operations of some of these markets in detail in urban commercial settings we conducted an extended survey of some of the informal credit markets of india 2 based in some cases on centuries of operation these markets proved to be important in the functioning of the contemporary economy indigenous style bankers belonging to particular ethnic communities and castes formerly provided the full range of banking services to their clients 3 with the rise of modern western style banking the indigenous bankers either have transformed themselves to serve sectors such as wholesale trade not well served by the modern sector or provide services which the modern bankers cannot provide though any estimate is very approximate it seems that informal credit markets account for as much as 20 of commercial credit outstanding in the various markets surveyed we began by surveying the gujeratis some of whom still practice their traditional form of full service banking in their homeland of gujerat and adjoining bombay the shikarpuris or multanis originally full service bankers in sind who now provide commercial credit in various other centers the chettiars in south india the rastogis in uttar pradesh and the marwaris especially in eastern india 4 but our surveys revealed that a wide range of ethnic groups were now involved in informal credit markets and the more meaningful differentiations

the effects of electricity reforms on productivity and efficiency of china s fossil fired power plants an empirical analysis abstract this paper investigates the effects of electricity reforms on productivity and efficiency of china s generation plants based on the third industrial census data and the first economic census data partial factor productivity pfp analysis indicates that the productivity improvements in labor and capital inputs associated with the reforms are approximately 26 and 45 respectively the effect of the reforms on fuel expense is weakly significant but there is evidence of significant productivity improvement in fuel usage further total factor productivity tfp analysis shows that the efficiency gain from the reforms is still significant when the substitution effect of labor and capital inputs are considered though the magnitude is much lower than that of the pfp analysis the effect of the reforms on technical efficiency becomes weakly significant when fuel expense is further included in tfp analysis but a significant positive effect is expected if fuel input is measured in physical quantity

do village funds improve access to finance evidence from thailand summary this paper examines whether recently introduced village funds one of the largest microfinance programs ever implemented improve access to finance village funds are analyzed in a cross sectional approach in comparison to competing financial institutions we find first that they reach the target group of lower income households better than formal financial institutions second village funds provide loans to those kinds of borrowers who tend to be customers of informal financial institutions third village funds help to reduce credit constraints thus village funds provide services in the intended direction albeit to a seemingly limited degree

joint liability versus individual liability in credit contracts abstract i offer an explanation for the coexistence of joint liability and individual liability microcredit contracts i show that both contracts maximize welfare when credit is rationed due to limited liability but for different borrowers borrowers monitor each other when liability is joint while the lender monitors individual loans joint liability offers poorer borrowers larger loans with less monitoring effort than would have to be exerted by the lender individual liability offers the wealthier among credit constrained borrowers larger loans even without monitoring the theory explains why individual loans serve the wealthier among poor borrowers and are larger and why businesses funded with individual loans grow more

national research funding and energy efficiency evidence from the national science foundation of china abstract the enhancement of energy efficiency is crucial to saving energy and reducing pollution emissions increasing investment in basic research may promote innovative energy technologies that improve energy efficiency in this paper the authors employ a stochastic frontier analysis to evaluate the impact of government funded research programs on improving national energy efficiency using estimates of energy efficiency based on the shepherd energy distance function the analysis used panel data from 30 provinces in china over the 2006 2015 period using the number of research programs funded by the national natural science foundation of china nsfc as a proxy the results show that research funding has a significantly negative effect on energy inefficiency the average energy efficiency continually increased from 2006 to 2015 in china while the energy efficiency in the eastern region was higher than that in the central and western regions in most years moreover a robustness test further validates and supports these findings some policy implications are proposed based on the empirical results

banking competition good or bad the case of promoting micro and small enterprise finance in kazakhstan competition is claimed to be beneficial in development projects promoting micro and small enterprise finance although there are still doubts as to whether these loans can be developed into a pro

borrowing money exchanging relationships making microfinance fit into local lives in kumaon india summary why don t microfinance clients use programs the way development planners and funders expect why do clients change how microfinance projects function in unanticipated ways previous scholarship on microfinance has overlooked the relevance of already existing borrowing practices and norms to how people engage with and use microfinance over 18 months of ethnographic fieldwork in the kumaon region of eastern uttarakhand state in northern india i found that kumaonis altered the microfinance program of a local ngo to make it fit with their already existing borrowing practices which were intimately tied to their livelihood strategies kumaoni livelihoods were based on exchange relationships with family friends and neighbors through which they could secure the means for physical and financial survival as well as social and emotional survival these relationships were governed by a moral economy that obligated exchange partners to properly assist one another and ensured balance between partners and across multiple social ties rather than abandoning their exchange relationships kumaonis and local fieldworkers who also relied on these ties altered microfinance so that it fit with this moral economy and became another node in the already existing networks of assistance if they had not been able to alter projects kumaonis would likely have stopped participating as other groups in similar circumstances around the globe have done although the microfinance program was a success in the eyes of beneficiaries senior staff members and donors remained unaware of why projects changed on the ground to ensure that development programs can be made relevant to people s lives and cultural values development practitioners must relinquish control over the minutiae of development and allow local level workers to negotiate the details of projects with participants

microfinance and moneylender interest rate evidence from bangladesh summary the linkage between the formal and informal credit markets in developing countries has largely been unexplored this paper addresses one important aspect of the linkage by empirically investigating the impact of the intervention of microfinance programs on the moneylender interest rates in northern bangladesh and finds that moneylender interest rates increase with microfinance program coverage higher microfinance program coverage increases moneylender interest rates in the villages in which more loans are invested in productive economic activities than consumption borrowers resort to moneylenders for additional funds probably because of inadequate supply unavailability of seasonal working capital from mfis and tight repayment schedules which in turn increase demand for moneylender loans

the use of village agents in rural credit delivery using a simple principal agent model this article examines the incentive problems that arise when a formal financial institution such as a rural bank utilises a member of the rural community to act as an agent in screening potential borrowers and collecting repayment optimal compensation schemes are derived for the agent and their implications are discussed in addition i show that the norms and rules that govern village life may aid the financial institution by helping to constrain possible strategic behaviour by the agent

imperfect substitutes the local political economy of informal finance and microfinance in rural china and india abstract banking authorities in both china and india have attempted to limit most forms of informal finance by regulating them banning them and allowing certain types of microfinance institutions the latter policy aims to increase the availability of credit to low income entrepreneurs and eliminate their reliance on usurious financing nonetheless the intended clients of microfinance continue to draw on informal finance in both rural china and india this article argues that the persistence of informal finance may be traced to four complementary reasons the limited supply of formal credit limits in state capacity to implement its policies the political and economic segmentation of local markets and the institutional weaknesses of many microfinance programs

why institutional credit agencies are reluctant to lend to the rural poor a theoretical analysis of the indian rural credit market abstract this paper examines why institutional credit facilities remain unable to extend credit to the rural poor analysis indicates that poor peasants at best can offer an entitlement set as a mortgage comprised only of future shares of their harvest which itself is subject to risk consequently lenders can not advance loans without risking extensive loss of loanable funds as the landlords income is subject to the same risk as that of peasants they advance loans to ensure that their own income is not affected by the peasants financial situation an extension of institutional credit to peasants results only in subsidization of landlords

reform of china s electric power industry challenges facing the government abstract china s electrical power industry requires substantial reform if the country s economic growth is to be sustained the 1997 electricity law the creation of a state power company and the abolition of the ministry of electric power are important first steps on the path of reform but it seems that a clear plan is lacking objectives of the reform should include increasing the capacity to deliver power constraining the costs of the power industry increasing end user efficiency and minimising environmental damage efforts should be directed at restructuring the industry in such a way that fair competition may be introduced at least in power generation and at establishing a viable regulatory agency both tasks have the potential to be thwarted by a range of vested interests at different levels of government and industry

how to reform a planned economy lessons from china the countries of eastern europe and the former soviet union have been flooded with advice from the west on how to liberalize their planned econo mies this advice is unfortunately offered in an empirical vacuum no one knows how these econo mies will react to the proposed liberalization meas ures there exists however a neglected source of information china offers a long time series of data over a decade s worth on the effects of reforms on a planned economy china s reforms were gradual but their cumulative effect has been large and they have been remarkably successful china s experiments provide some practical les sons on what kinds of reforms can work elsewhere the dominant school of thought among economists favours the big bang policy of reforming quickly and according to a comprehensive plan partial reforms in this view are useless they will be negated by the remnants of the planning system the proponents of big bang reform have been influential with poland czechoslovakia and rus sia announcing plans for a rapid transition to capi talism

social networks and factor markets panel data evidence from ethiopia we investigate the role of an indigenous social network in ethiopia the iddir in facilitating factor market transactions among smallholder farmers we use detailed longitudinal household survey data and employ fixed effects estimation approaches to identify the effect of iddir membership on factor market transactions among farmers we find that joining an iddir network improves households access to land labour and credit transactions our findings also hint that iddir networks may crowd out borrowing from local moneylenders locally referred as arata abedari a relatively expensive credit source these results suggest that non market institutions can play crucial roles in facilitating market transactions

the efficiency of conventional fuel power plants in south korea a comparison of parametric and non parametric approaches abstract the efficiencies of the 64 conventional fuel power plants operating in south korea were determined by data envelopment analysis dea approaches as well as by a stochastic frontier method the banker charnes and cooper bcc dea efficiencies were introduced into an econometric estimate of a standard production function model leading to a corrected factors version of the model with significant improvement of the statistical explanation of our data a statistical analysis of the dea efficiencies was carried out and these were compared to efficiencies revealed by a stochastic frontier method

an imbalanced development of coal and electricity industries in china china s coal and electricity industries have a strong reliance on each other however because of excessive invasion of government it is difficult for these two industries to form a stable reasonable and transaction cost saving relationships but long run disputes and quarrels this paper discusses the pricing policies and transaction relationship between these two industries from the historical perspective it begins with the discussion of coal coal market has become competitive since 1980 due to the system of dual track approach but coal sold to electricity was still tightly controlled by government guided pricing then the paper examines electricity investment and tariff reform unlike coal entry to electricity generation sector was gradually relaxed but generation and retailing tariffs are still strictly regulated as energy demand and prices soared after 2002 coal and electricity enterprises are all unsatisfied with the rule of price setting of coal sold to electricity industry this paper concludes that the deliberate low coal price policy does protect electricity industry from fuel cost fluctuation but harm coal industry allocative and productive efficiency are difficult to achieve in the long run

on grid electricity tariffs in china development reform and prospects abstract with the introduction of market oriented measures in china s power sector in the mid 1980s electricity sale prices to the grid companies on grid electricity tariffs became the focus of the energy industry thus affecting all related stakeholders including fuel suppliers power generators and end use consumers a number of changes have gradually been undertaken in terms of electricity tariff settings and their implementation to address specific requirements of the expansion of the power industry at each stage of its development on grid electricity tariffs had been used as a key lever to attract investment in power generation at an early stage of reform and then to encourage competition in the power industry in response to the rising concerns about environmental protection and the promotion of clean energy utilisation tariffs have progressively been developed for renewable electricity generation which has contributed to massive expansion of the renewable power industry in china this paper reviews key milestones of the development of on grid electricity tariffs in china examines the tariff setting mechanisms of coal fired power plants and renewable power generation analyses the factors associated with the adjustments of the tariff levels and discusses the options for further reform and more effective electricity pricing

the decline of township and village enterprises in china s economic transition summary a paradoxical phenomenon in china s transitional economy is that markets developed under predominant public ownership which nevertheless has declined with the development of markets previous studies reveal that initial political and economic conditions of reform and fiscal decentralization gave rise to local public enterprises leading role in early marketization this paper explains the subsequent fall of such a role building and expanding on recent studies of privatization we argue that market development and competition have constrained the abilities of local public enterprises to address revenue and employment imperatives whereas local governments sales oriented growth strategies have exacerbated governance problems panel data are analyzed to provide provisional test of pertinent hypotheses

access to capital in rural thailand an estimated model of formal versus informal credit the aim of this paper is to understand the mechanism underlying access to credit the author focuses on two important aspects of rural credit markets in thailand first moneylenders and other informal lenders coexist with formal lending institutions such as government or commercial banks and more recently micro lending institutions second potential borrowers presumably face sizable transaction costs obtaining external credit the author develops and estimates a model based on limited enforcement and transaction costs that provides a unified view of those facts the results show that the limited ability of banks to enforce contracts more than transaction costs is crucial in understanding the observed diversity of lenders

microfinance spillovers a model of competition in informal credit markets with an application to indian villages despite widespread interest in the development of microfinance spillover effects on the non using population and redistributive issues remain largely unexplored i study a competition game between microfinance institutions mfis offering joint liability loans and moneylenders offering individual loans in presence of adverse selection i show that one unintended consequence of the entry of a microfinance sector in local credit markets can be to trigger an increase in the equilibrium informal interest rate because mfis tend to attract a disproportionately safe share of the borrower pool away from incumbent moneylenders the existence of such composition externality depends crucially on the size of the microfinance sector and the risk composition of the borrower pool the model predicts a non linearly increasing relationship between informal interest rates and mfis capacity in relatively safe credit markets and no relationship in risky villages i show evidence supporting these predictions using a first hand panel database that records all credit transactions over 8 years for a sample of about 1000 households living in indian villages with extensive space and time variation in the size of their microfinance sector

empirical measurement of credit rationing in agriculture a methodological survey empirical analysis of rural credit market failure has been of key scientific and political interest in recent years the aim of this article is to give an overview of the various methods for measuring credit rationing that are employed in the literature furthermore the methods are subjected to a comparative evaluation of their specific strengths or shortcomings six approaches are distinguished measurement of loan transaction costs analysis of qualitative information collected in interviews analysis of quantitative information collected in interviews using the credit limit concept analysis of spill over effects with regard to secondary credit sources econometric household modeling and the econometric analysis of dynamic investment decisions an explicit comparison with a first best solution is impossible in the first three approaches since they essentially rely on a subjective assessment of borrowers access to credit based on qualitative or quantitative indicators the fifth and sixth approaches allow a rigorous interpretation in the framework of neoclassical equilibrium theory the fourth approach takes an intermediate position since spill over on segmented loan markets reveals a willingness to pay with regard to the supposedly less expensive but rationed primary source the approaches are fairly data demanding in general usually requiring specific data on loan transactions even so most approaches are applicable to cross sectional household data with the exception of the first all methods surveyed might plausibly be used to empirically detect credit rationing

delayed formal credit bribing and the informal credit market in agriculture a theoretical analysis abstract the paper presents a theory of interest rate determination in the informal credit market in backward agriculture the market for informal credit is created by the delay in disbursement of formal credit the delay is controlled by the official of the formal credit agency and he is bribed by the farmer to reduce the delay the official and the moneylender play a non cooperative game in choosing the bribing rate and the informal interest rate respectively the informal sector interest rate and the effective formal sector interest rate incorporating the bribe are equal in equilibrium agricultural price and credit subsidy policies may raise the interest rate in the informal credit market

household sectoral choice and effective demand for rural credit in india an analysis of the icrisat data from three indian villages raises concern about the extent of rationing mechanism inhibiting the spread of formal credit in rural india where a significant proportion of households do not have any outstanding loan or borrow from the informal sector only a limited dependent econometric analysis of the factors jointly determining household sectoral choice and effective demand for informal loan conditional on whether a formal loan is available suggests that compared to formal loan easy and adequate access and prompt recovery are significant determinants of the popularity and viability of informal rural credit among sample households also some households substitute labour income to ease the extent of credit thus rationing of the formal credit is not the only factor inhibiting the spread of formal credit in the study villages

credit for what informal credit as a coping strategy of market women in northern ghana abstract this paper explores the use of informal credit as a strategy for managing risks by market women in northern ghana a broad concept of the costs of risk management strategies is introduced and encompasses both a time and monetary dimension based on qualitative data the analysis reveals that market women invest a considerable amount of time in maintaining complex networks of informal credit providers to ensure their access to credit once a shock occurs informal credit involves high transaction costs and prevents market women from growing out of poverty in the long term

the productivity and efficiency of the australian electricity supply industry australia s electricity supply industry has been through a period of reform over the last 10 years the purpose of this paper is to analyse the changes that have occurred to the australian electricity supply industry over the past 30 years in order to evaluate to what degree these reforms have improved the productivity and efficiency performance of the industry

of finance and development neglected and unsettled questions abstract the article analyzes some of the neglected and still unsettled issues on the interrelationship of finance and development and in the subdiscipline of finance notably the implications of the dichotomy of formal and informal finance the modalities and sequencing of financial reform the challenge of maintaining competition in oligopolistic systems the scope for market related monetary policy instruments the case for autonomy of central banks and divestiture of their developmental role and revamping of their prudential functions it argues for a sharply focused country specific issues oriented research agenda

the propensity to hedge with futures contracts the case of potato futures contracts this paper studies why uk non financial firms hedge with potato futures contracts it is found that the financial characteristics of firms in the sample play an important role in influencing the propensity to hedge for example it is found that firms that hedge are on average larger than firms that do not hedge firms that hedge also have more volatile earnings furthermore firms that do hedge appear to want to smooth earnings to reduce the costs of financial distress and avoid entering the highest tax threshold 2005 taylor francis

bank reputation bank commitment and the effects of competition in credit markets this article discusses the effects of credit market competition on a bank s incentive to keep its commitment to lend to a borrower when the borrower s credit quality deteriorates it is shown that unlike in the borrower s commitment problem to keep borrowing from the same bank in good times the increased competition may strengthen a bank s incentive to keep its commitment banks offer loans with commitment to the highest quality borrowers but when faced with competition from bond markets they also give these loans to lower quality borrowers an increase in the number of banks has a nonmonotonic effect new banks reinforce a bank s incentive only if there are small number of banks the inability to contract across all contingencies may result in inefficiencies in bank lending the borrower may not undertake efficient investments if future refinancing is difficult to obtain in the case of temporary distress the lender may not provide funds when the borrower is in distress if the surplus cannot be shared in the long run 1 this problem can be mitigated however if the lender and the borrower interact repeatedly for example a bank s concern to maintain a good reputation can induce the bank to keep its commitment to a costly action see e g sharpe 1990 boot greenbaum and thakor 1993 aoki 1994 chemmanur and fulghieri 1994 indeed the use of bank reputation as an enforcement mechanism seems to be widespread 2

the impossible default qualitative data on borrower responses to two types of social collateral microfinance structures in rural china abstractqualitative data reveal how the social context underlying the ties linking borrowers in microfinance programmes influences their decisions focusing directly on social context makes it possible to distinguish between two social collateral structures and explain why one facilitated repayment while the other did not fieldwork in rural china shows that the basis of the social ties in the social collateral structure is central to explaining whether and why individuals decided to sanction defaulters and repay loans the article closes with reflections on generalisations of these findings to future microfinance research

a deterministic parametric metafrontier luenberger indicator for measuring environmentally sensitive productivity growth a korean fossil fuel power case abstract this paper contributes to the current literature by proposing an alternative parametric metafrontier productivity approach called the deterministic parametric metafrontier luenberger productivity indicator dpmlpi for measuring environmentally sensitive productivity growth incorporating technological heterogeneities the luenberger productivity indicator is constructed based on a quadratic output directional distance function with undesirable outputs and then combined with the deterministic metafrontier to develop dpmlpi the dpmlpi can be decomposed into efficiency change technological change and productivity growth gap the productivity growth gap can be further divided into efficiency change gap and technological change gap the parametric linear programming technique is used to estimate parameters and construct the metafrontier an empirical study for the korean fossil fuel power industry at the plant level is conducted for the 2003 2011 period the results show a 0 15 increase in environmentally sensitive productivity growth which is mainly driven by environmental technological change the oil fired power plants show higher levels than the coal fired ones of environmentally sensitive productivity growth and technological change performance some related policy implications are also proposed for the korean fossil fuel power sector

interest rates collateral and de interlinkage a micro study of rural credit in west bengal this study based on a primary field survey in rural west bengal analyses the terms and conditions of the differentiated structure of rural credit with the advent of capitalist agriculture within the interventionist state the sample households are classified according to the economic classes of patnaik as well as the standard acreage criterion the possibility of interlinkage between credit and all other structures is remote the average rate of interest is inversely related to ascending class status there is a systematic association between rate of interest and the value of collateral on the one hand and marketability of collateral and interest rates on the other

thy neighbor s keeper the design of a credit cooperative with theory and a test economists now appreciate that resource allocation in less economically developed economies is profoundly influenced by non firm economic institutions however our theories of non firm institutions often suggest different answers to many questions including those of policy this paper illustrates a method for discriminating between alternative theories using data from german credit cooperatives from the nineteenth and early twentieth century germany we build a model of credit cooperatives designed to provide monitoring incentives and test this using nineteenth century data authors

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

finance and growth for microenterprises evidence from rural china using a survey dataset of chinese rural households we find that access to external finance is positively associated with the decision to become entrepreneur and the initial investment for microenterprises also we find that use of informal finance especially financing from friends and family is positively associated with sales growth of microenterprises with employees but not of self employed we do not find any significant relationship between the use of formal finance and firm growth our findings underline the importance of finance for entrepreneurship and microenterprise growth and the role of informal finance in the absence of efficient formal financial institutions

collateral and rationing sorting equilibria in monopolistic and competitive credit markets the authors examine how market structure affects credit allocation under universal risk neutrality and asymmetric information about borrowers they consider both monopolistic and perf ectly competitive banks and examine the role of collateral in each ca se when a bank is a monopolist on the loan side they find collatera l is never used and asymmetric information results in reduced bank le nding under perfect competition collateral has a useful sorting rol e moreover rationing is possible even with collateral availability and perfectly elastic deposit supply in this setting the authors sh ow co signers are valuable social welfare properties of the monopoly and competitive equilibria are also compared copyright 1987 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

rural industrialization in china and india role of policies and institutions summary the dynamic rural nonfarm sector in china has been a major contributor to the country s remarkable growth while in india the growth in output and employment in this sector has been rather stagnant this paper argues that the observed patterns in the rural nonfarm development are the results of institutional differences between the two countries especially in their political systems ownership structure and credit institutions a review of the strengths and weaknesses of the rural nonfarm economy in china and india highlights the potentials and challenges of growth in the sector

moneylenders and bankers price increasing subsidies in a monopolistically competitive market abstract in many areas of the world a significant part of the cost of obtaining a good or service is the cost of enforcing the contracts entailed in its provision we present models of markets with endogenous enforcement costs motivated by studies of rural credit markets we show that subsidies may have perverse effects under monopolistic competition increasing prices or inducing exit higher prices interest rates result from the loss of scale economies or from negative externalities among suppliers the models are consistent with the puzzling evidence that infusions of government subsidized formal credit have not improved the terms offered by moneylenders

formal informal sector interaction in rural credit markets abstract the majority of small cultivators in the less developed countries are not regarded as credit worthy by the formal sector financial institutions and are forced to borrow from the moneylenders in the informal credit market this paper shows that when such borrowers differ in their likelihood of default and the moneylenders are asymmetrically informed about the client specific degree of risk the policy of providing cheap credit through the formal sector can generate adverse composition effects which worsen the terms of credit and the availability of loans in the informal sector

signaling in credit markets in this paper we show that under a variety of alternative assumptions about the private information of loan applicants a competitive market for loans is characterized by screening banks separate out loan risks by offering higher loans at higher interest rates depending on the nature of the informational asymmetry it may be that applicants with less risky projects select larger rather than smaller loans comparative statics implications are also examined in particular we explore the effects of an increase in banks cost of funds on average loan quality

the impact of rural pensions in china on labor migration we study the impact of china s new rural pension program on promoting migration of labor by applying a regression discontinuity analysis to this new pension program the results reveal a perceptibl

adding value to randomization with qualitative analysis the case of microcredit in rural morocco this paper analyzes microcredit demand and use to draw lessons on how households appropriate microcredit services it introduces qualitative analysis to a randomized study findings suggest that microcredit demand and use is shaped not only by agro ecological conditions but by two major partially interrelated factors debt related norms articulated with the perception of the sanction in case of repayment default and the social life of microcredit namely how social actors credit officers and local leaders engage with microcredit on a conceptual perspective we argue that microcredit markets do not result from supply confronting demand but instead are historical political and social constructs

microfinance with chinese characteristics abstract analyzing household survey data from three microfinance program sites we provide an early systematic assessment of chinese microfinance programs which have grown rapidly since 1994 are based on the grameen model and include an unprecedented large scale government initiative we examine the empirical propositions that underpin successful microfinance programs reaching the poor targeting financial and operational performance sustainability and program benefits impact we find that nongovernmental programs perform well in all three areas but that governmental programs perform poorly given the remote location and focus on agricultural projects in china s poor areas we advocate greater flexibility in loan contract terms especially repayment schedules

analysis of technological progress and input prices on electricity consumption evidence from china abstract this paper establishes a translog cost function model with productivity growth equations to study the influence of technological progress and price changes on electricity production factors and consumption within a unified analytic framework regression is applied to the panel data for seven regions in china during the period 1997 to 2013 the functions of production costs on factor substitution are analyzed based on the regression the influence of electricity price and technological progress on electricity productivity and the rebound effect of electricity are discussed electricity price can significantly and positively influence electricity productivity expressed by the total value of output consumed by unit electricity however the stimulation of technological progress is not notable the rebound effect of electricity computed based on an electricity price breakdown showed that values of the rebound effect in southwestern china and central china were higher than 100 while annual average values of the rebound effect in northeastern china and southern china were 60 39 and 81 47 respectively the area with the lowest annual average value for the rebound effect was northwestern china at 14 96

the power industry reform in china 2015 policies evaluations and solutions abstract more than a decade ago in china s electric power industry the investment for generation side and power grids was inadequate and the gap between power supply and demand kept enlarging in order to relief the problems above power industry reform has been carried out in 2002 under the guidance of no 5 document by the central government the reform in 2002 has made a series of achievements including the enhancement of operation efficiency of power industry and the fulfillment of power demand all over the country during the past decade as the rapid development of the society and economy the external environment of china s power industry has changed greatly however the pricing and planning mechanism of china s power industry still operates following the requirements of no 5 document this has led to a number of problems including twisted pricing mechanism irrational power system planning inefficient utilization of renewable energy and so on these problems have not only hindered the development of power industry in china for quite a long time but also brought negative influence on the business operation of upstream and downstream industries therefore chinese government has issued no 9 document in 2015 and launched a new round of power industry reform policies were carried out to form new pricing mechanism new policies about renewable energy generation and power system planning process to solve the problems mentioned above this paper has reviewed the history of reform in 2002 and summarized the existing problems of china s power industry besides the main policies of no 9 document were deeply analyzed and their significance as well as backwards were illustrated at last solutions were proposed accordingly and these solutions have considerable theoretical and practical significance to china s electric power industry reform in the future

effects of regulatory reforms in the electricity supply industry on electricity prices in developing countries electric power sector reforms in the electricity supply industry have had an impact on industrial and household prices in developing countries in latin america the former soviet union and eastern europe using original panel data for 83 countries during the period from 1985 to 2002 we examine how each policy instrument of the reform measures influenced electricity prices for countries in the above regions we found that variables such as entry of independent power producers ipp unbundling of generation and transmission establishment of a regulatory agency and the introduction of a wholesale spot market have had a variety of impacts on electricity prices some of which were not always consistent with expected results the research findings suggest that neither unbundling nor introduction of a wholesale pool market on their own necessarily reduces the electric power price in fact contrary to expectations there was a tendency for the price to rise however coexistent with an independent regulator unbundling may work to reduce electricity prices privatization and the introduction of foreign ipp and retail competition lower electricity prices in some regions but not all

the determinants of the cost efficiency of electric generating plants a stochastic frontier approach this article provides a detailed analysis of generation plant operating cost efficiency over the period 1988 1997 i estimate a stochastic frontier cost function together with a model of plant inefficiencies to measure the operating efficiencies of individual plants and identify factors that are associated with variations in plant efficiencies i find evidence that plant efficiencies are associated with capacity utilization of the plant the number of plants under utility management and ownership form i also find that regulatory restructuring activity in certain states is associated with improvements in plant operating performance the purpose of this article is to provide a detailed analysis of the operating cost efficiencies of electricity generating plants over the period 1988 1997 i estimate the operating efficiencies of fossil fueled steam generating plants and examine factors that influence plant operating performance i use the estimation procedure of battese and coelli 1995 to simultaneously estimate a stochastic frontier cost function and a function relating plant efficiency levels to plant specific factors and other explanatory variables a comprehensive data set allows me to investigate the influence of capacity utilization ownership form and utility experience on plant efficiency levels since significant regulatory change in the electricity industry had begun during this time period i also investigate the impact of state level regulatory change on plant operating efficiency a number of authors have analyzed the efficiencies of electricity generating plants relative to a best practice frontier including kopp and smith 1980 schmidt and lovell 1979 stevenson 1980 cote 1989 reifschneider and stevenson 1991 hammond 1992 pollitt 1995 and fire grosskopf and logan 1983 1985 these studies find considerable evidence of inefficiency in electricity generation during the 1960s and 1970s the present study provides more recent information regarding generating plant efficiencies during a period of significant regulatory and structural change studies investigating the determinants of power plant departures from the frontier have focused primarily on the effects of ownership mode pollitt 1995 provides a comprehensive review of these studies reifschneider and stevenson 1991 examine the impact on cost efficiency of a number of variables including the capacity utilization of the firm s generating facilities more recently knittel 2001 examines the impact of incentive regulation on plant efficiency levels steiner

the political economy of electricity dispatch reform in china the transition to a cleaner and more cost efficient electricity system in china is political economic as well as technological an example is the reform of china s method of dispatching power plants which potentially affects the economic relationships between consumers and producers between grid and generating companies and between central and provincial governments historically coal fired power plants in china all received roughly the same number of operating hours regardless of efficiency or cost in 2007 chinese government agencies began to pilot energy efficient dispatch which requires that generators be dispatched on the basis of thermal efficiency using a case study of guangxi zhuang autonomous region in southern china we evaluated potential energy and cost savings from a change to energy efficient dispatch we found that the savings are at best relatively small because large efficient generators already account for a significant share of total generation moreover as an administrative policy that does not change economic incentives energy efficient dispatch exacerbates imbalances and center provincial tensions in the current system we argue that incentive based dispatch reform is likely to produce better outcomes and that the keys to this reform are empowering an independent regulator with pricing authority and establishing a formal transparent ratemaking process

multi agent simulations to explore rules for rural credit in a highland farming community of northern thailand thanks to recent advances in the field of distributed artificial intelligence agentbased models abm can now be used to run simulations of social phenomena based on their computerized representations and to apply experimental methods in social sciences axelrod 1997 gilbert and troitzsch 1999 jager 2000 in the field of renewable resource management and environmental sciences several abm simulation platforms offer the possibility to explore interactions between social and ecological dynamics costanza and ruth 1998 bousquet et al 1998 lansing 2002 in these complex systems the social and economic dynamics can be viewed as a set of interactions among heterogeneous agents generating aggregate phenomena that are different from the behaviour of groups of average individuals considered in classical economic thinking rouchier and bousquet 1998 such a view was adopted in the research presented here

rural banking in china geographically accessible but still financially excluded abstractrural banking in china geographically accessible but still financially excluded regional studies based on the distribution patterns of rural credit cooperatives in about 2200 counties in 2009 this paper examines two aspects of financial exclusion in rural china after the restructuring of the banking industry despite the state s efforts to ensure financial inclusion in rural areas poor farmers could be spatially included while still being denied loans due to their inability to provide collateral and the lack of formal credit records the mismatch between the supply and demand of credit has led to informal loans substituting for formal loans and thus contributed to the proliferation of informal banking in china

china s electricity market restructuring and technology mandates plant level evidence for changing operational efficiency abstract china s electricity sector has experienced substantial efficiency improvement during the last one and a half decades the recent literature has mostly attributed the efficiency improvement to the 2002 unbundling reform with little attention paid to the large scale retrofitting process introduced by technology mandates using a unique panel dataset for hundreds of power plants from 1997 to 2010 we are able to examine the contributions from technology mandates and market restructuring we confirm the significant contributions from the unbundling reform but more importantly technology mandates have contributed at least half of the observed efficiency improvement during this period the results have significant implications for efficiency and demand forecast in the future

estimating the environmental efficiency and marginal co2 abatement cost of coal fired power plants in china abstract we estimate the environmental efficiency reduction potential and marginal abatement cost of carbon dioxide co2 emissions from coal fired power plants in china using a novel plant level dataset derived from the first and second waves of the national economic survey which were implemented in 2004 and 2008 respectively the results indicate that there are large opportunities for co2 emissions reduction in china s coal fired power plants given that all power plants operate fully efficiently china s co2 emissions in 2004 and 2008 could have been reduced by 52 and 70 respectively accompanied by an expansion in electricity output in other words the opportunities for double dividend exist in 2004 the average marginal abatement cost of co2 emissions for china s power plants was approximately 955 yuan ton whereas in 2008 the cost increased to 1142 yuan ton the empirical analyses show that subsidies from the government can reduce environmental inefficiency but the subsidies significantly increase the shadow price of the power plants older and larger power plants have a lower environmental efficiency and marginal co2 abatement cost the ratio of coal consumption negatively affects the environmental efficiencies of power plants

evaluating the atkinson index of household energy consumption in china abstract improving equality and efficiency of household energy distribution is the primary concern of china s policy makers in their effort to reform the energy pricing system in this paper we use atkinson index as an analytical tool to quantitatively and systematically evaluate the equality and efficiency of household energy distribution the result shows that the atkinson index of electricity expenditure is much smaller than that of transportation expenditure which indicates that transportation expenditure responds better to income differences furthermore a geographical distribution analysis indicates that households in middle china suffer greater inequality in energy distribution than those in eastern and western china in view of the oncoming energy pricing reform in china we reevaluate the atkinson index under the new pricing scenarios for electricity and petroleum products compared to the current household energy pricing mechanism the simulated new policies generate more allocative efficiency of household energy and ensure more equality of energy consumption for low income households on this account we suggest that geographical differences and equality in energy distribution be duly addressed in reforming energy policies in china

government as a discriminating monopolist in the financial market the case of china abstract we show that the many unusual features of china s financial markets are consistent with a government choosing regulations to maximize a standard type of social welfare function under certain conditions these regulations are equivalent to imposing explicit taxes on business and interest income yet should be much easier to enforce the observed implicit tax rates are broadly in line with those observed in other countries the theory also forecasts however that china will face increasing incentives over time to shift to explicit taxes

performance and efficiency in colombia s power distribution system effects of the 1994 reform we assess evolution in performance efficiency and productivity of colombia s power distribution utilities before and after the 1994 regulatory reform that introduced electricity market activities for the power sector in 12 distribution companies from 1985 to 2001 performance is evaluated contrasting changes in mean and median by wilcoxon rank sum and pearson tests on financial and other performance indicators technical efficiency is measured by means of data envelopment analysis dea the nature of the dataset allows the estimation of malmquist productivity index and its evolution in time results show a recovery after the reform in the main performance indicators of profitability partial input productivity and output plant efficiency and productivity increased after the reform mainly in the largest utilities used as benchmarks in the dea efficiency scores measures meanwhile the less efficient power distribution companies did not improved after the reform and were not able to undertake plant restructuring to catch up in plant efficiency with respect to the pareto efficient input allocations econometric results on dea efficiency scores suggest a positive effect of policy reform

equilibrium credit rationing of small farm agriculture it is often argued that externally imposed contractual restrictions lead to inequitable credit rationing this paper argues that unrestricted laissez faire markets may also inequitably ration credit a formal model which grants borrowers autonomy in credit application and use demonstrates that adverse incentive and selection effects may cause banks to endogenously impose interest rate restrictions and ration small farms out of the credit market consequently liberalization of financial markets may be insufficient to guarantee small farms access to credit

interactions between institutional and informal credit agencies in rural india in an attempt to expand rural credit and displace the village moneylender india created a system of rural cooperatives in the 1950s and expanded branch banking into rural areas in the 1970s this article examines how these measures affected the rural market it begins with the question of how large the expansion of institutional credit has been and the extent to which it has dislodged the village and nonresident moneylenders a detailed comparison of three major surveys of the indian rural credit market suggests that in various guises the moneylender is still a major source of loans the article also examines the weak evidence on intermediation between the formal and informal sectors a formal model of the interaction between the informal moneylender and institutional lender is constructed under a variety of assumptions about the exclusivity of loan contracts and the competitive structure of the informal sector the conclusions are drawn together in the form of five proposals for public policy

on the determinants of corporate hedging finance theory indicates that hedging increases firm value by reducing expected taxes expected costs of financial distress or other agency costs this paper provides evidence on these hypotheses using survey data on firm s use of forwards futures swaps and options combined with computstat data on firm characteristics of 169 firms in the sample 104 firms use hedging instruments in 1986 the data suggest that firms which hedge face more convex tax functions have less coverage of fixed claims are larger have more growth options in their investment opportunity set and employ fewer hedging substitutes

decoupling decomposition and forecasting analysis of china s fossil energy consumption from industrial output abstract industries are a major fossil energy consumer and economic development contributor in china the chinese government is performing the industrial reforms to diminishing the dependence of industrial output on fossil energy consumption to guide the present industrial policy adjustment this study employs the tapio decoupling index a structural decomposition algorithm a hybrid forecasting model and industry related data from 2001 to 2014 to evaluate decompose and forecast the relationship between china s industrial output and fossil energy consumption empirical results show that the decoupling index of fossil energy consumption from the value added by china s industry was less than 0 in 2015 consequently the industrial fossil energy consumption reached its peak at that time and will gradually decrease in the future even though the added value continuously increased the mitigation goals set by the chinese government for industrial fossil energy intensity by 2020 are expected to be achieved ahead of schedule the attainment of these goals will strongly support the realization of china s fossil energy related prospects for 2030 to reduce industrial fossil energy consumption china should develop strategies for non fossil energy electricity generation implement electricity price bidding prevent overheated investments to real estate and infrastructure and eliminate backward capacity and establish market access rules for acetic acid calcium carbide ethyl alcohol and dimethyl ether