rogoff revisited the conservative central banker proposition under active fiscal policies abstract the paper re examines rogoff s rogoff k 1985 the optimal degree of commitment to an intermediate monetary target quarterly journal of economics 100 1169 1189 influential monetary policy result it shows that responses of a conservative central banker and the resulting macroeconomic outcomes may be substantially different if interactions with ambitious fiscal policy are taken into account

political and economic determinants of the likelihood of privatizing argentine public banks abstract this paper discusses the political economy of bank privatization in argentina following institutional changes related to the implementation of the convertibility plan and to the tequila crisis the empirical results strongly support the hypothesis that political incentives affect the likelihood of privatization we find 1 poorly performing banks were more likely to be privatized 2 overstaffing tended to reduce the probability of privatization 3 large banks were less likely to be privatized and 4 higher levels of provincial unemployment and higher shares of public employees reduced the probability of privatization although the hypotheses were tested for a specific industry in a specific country which makes it possible to control for enterprise performance and institutional characteristics it seems reasonable that similar results might hold in other industries and countries

inflation and reputation in many macroeconomic models with rational expectations optimal policy is time inconsistent and therefore announced policy may not be credible this paper models the government s credibility explicitly using kreps and wilson s analysis time consistent optimal government policy emerges as a sequential equilibrium in a repeated game this policy is at least as good as the inconsistent optimal policy and dominates the consistent policy when reputational effects are ignored thus the analysis resolves the problem of specifying a credible optimal policy in such models the results show why attempts to disinflate may lead to recession even with perfectly flexible prices this abstract was borrowed from another version of this item

mexico s experiments with bank privatization and liberalization 1991 2003 during the 1990s mexico conducted two experiments with its banking system in the first experiment 1991 96 it privatized the banks this experiment took place with weak institutions to enforce contract rights it also took place without institutions that encourage prudent behavior by bankers the result was reckless behavior by banks and a collapse of the banking system in the second experiment 1997 2003 mexico reformed many of the institutions that promoted bank monitoring and it opened up the industry to foreign investment it was less successful however in reforming the institutions that promote the enforcement of contract rights the result was that bankers behaved prudently but prudent behavior in the context of weak contract rights implies that banks are reluctant to extend credit to firms and households

institutional failure or market failure we investigate the effect of the power of creditors property rights protection and institutional quality on bank profits using a panel of 498 banks from 46 countries results show that better institutions and stronger property rights protection reduce bank profits while stronger power of creditors drives up bank profits significantly results imply that better institutions and enhanced property rights protection lead to greater flow of credit allowing firms and investors to undertake more profitable ventures by extension stronger creditor rights erect steeper barriers to external finance for firms and investors national indicators of economic freedoms may be more important to lowering the spread than strict creditor rights seemingly credit markets fail when economic institutions fail or when governments intervene into these markets in ways that impede the safety and soundness of financial transactions and private contracting

a simple microfoundation for the utilization of fragmentation indexes to measure the performance of a team abstract we propose a simple non cooperative game model in which two fragmented teams compete to increase their performance the theoretical framework is based on the theory of conflict we show that depending on the value of a parameter in the model the power of the competing teams may be expressed as a function of well known fragmentation indexes the herfindahl hirschman index the laakso taagepera index the best shot index and the weakest link index

wage dispersion and team performance a theoretical model and evidence from baseball we develop a general theoretical model of the effect of wage dispersion on team performance which nests two possibilities wage inequality may have either negative or positive effects on team performance a parameter which captures the marginal cost of effort which we estimate using game level data from major league baseball determines whether wage dispersion and team performance are negatively or positively related we find low marginal cost of effort consequently wage disparity is negatively related to team performance game and season level regressions also indicate a negative relationship between inequality and performance we discuss a variety of interpretations of our results

the financial and operating performance of newly privatized firms an international empirical analysis this study compares the pre and postprivatization financial and operating performance of 61 companies from 18 countries and 32 industries that experience full or partial privatization through public share offerings during the period 1961 to 1990 our results document strong performance improvements achieved surprisingly without sacrificing employment security specifically after being privatized firms increase real sales become more profitable increase their capital investment spending improve their operating efficiency and increase their work forces furthermore these companies significantly lower their debt levels and increase dividend payout finally we document significant changes in the size and composition of corporate boards of directors after privatization the last fifteen years have witnessed a significant global shift away from state socialism towards entrepreneurial capitalism one of the most important and visible aspects of this trend has been the enthusiasm with which governments of all political persuasions have sold their state owned enterprises soes to private investors in hopes that the generally unsatisfactory economic performance of these firms can be improved by the discipline of private ownership this denationalization process given its current title of privatization by the conservative government of margaret thatcher in

privatization matters bank efficiency in transition countries abstract to investigate the impact of bank privatization in transition countries we take the largest banks in six relatively advanced countries namely bulgaria the czech republic croatia hungary poland and romania income and balance sheet characteristics and efficiency measures computed from stochastic frontiers are compared across four bank ownership types our empirical results support the hypotheses that foreign owned banks are most efficient and government owned banks are least efficient in addition the importance of attracting a strategic foreign owner in the privatization process is confirmed however counter to the conjecture that foreign banks cherry pick the most profitable opportunities we find that domestic banks have a local advantage in pursuing fee for service business finally we show that both the method and the timing of privatization matter to performance specifically voucher privatization does not lead to increased efficiency and early privatized banks are more efficient than later privatized banks even though we find no evidence of a selection effect

from state to private ownership issues from strategic industries abstract this paper investigates the effects of privatization for a panel of 189 firms from strategic industries headquartered in 39 countries and privatized between 1984 and 2002 strategic firms can hardly be compared to manufacturing or competitive industries as they are generally under state monopoly and involve specific issues such as regulation political and institutional constraints we examine the change in ownership and postprivatization means of control by the government and assess whether positive changes in performance obtain in these particular industries that include firms from the financial mining steel telecommunications transportation utilities and oil sectors we document that governments continue to exert influence on former state owned firms after three years by retaining golden shares and or appointing politicians to key positions in the firm our multivariate results reveal a negative effect of state ownership on profitability and operating efficiency which the presence of a sound institutional and political environment moderates

bank reforms foreign ownership and financial stability abstract numerous studies have focused on foreign ownership of banks but instead of linkages to financial stability they typically analyzed other issues and used country level data this article fills the gap in the literature by applying the gmm techniques on dynamic panels using bank level data for asian countries to investigate the impact of foreign ownership on financial stability as well as whether the relation between foreign ownership and stability changes under different conditions of bank reforms in the host country specifically we reach five conclusions first the existence of the home field advantage hypothesis is supported nevertheless when considering the effects of bank reforms the global advantage hypothesis holds second an inverse u shaped relation between foreign ownership and stability is supported third a higher degree of credit control liberalization mitigates the negative effect of foreign ownership on stability fourth liberalization of interest rate control and banking supervision do enhance stability fifth and finally we confirm a significantly negative relation between an explicit deposit and stability

banking reforms performance and risk in china we investigate the impact of the banking reform started from 2005 on ownership structures in china on commercial banks profitability efficiency and risk over the period 2000 2012 providing comprehensive evidence on the impact of banking reform in china we find that banks on average tend to have higher profitability lower risk and lower efficiency after the reforms and the results are robust with our difference in difference approach our results also show that the big 5 state owned banks socb underperform banks with other types of ownership when risk is measured by non performing loans npls over the entire study period but tend to have fewer npls than other banks during the post reform period our results provide some supporting evidence on the ongoing banking reforms in china suggesting that attracting strategic foreign investors and listing socbs on stock exchanges appear to be effective ways to help socbs deal with the problem of npls and manage their risk

pay equality and industrial politics personnel managers often argue that equitable pay treatment manifested as wage compression is useful because it reduces disharmony among workers but it is far from obvious that a compressed salary structure is morale improving since better workers may feel disenchanted by this scheme however when workers rewards are based on relative comparisons salary compression reduces uncooperative behavior that is detrimental to the firm relative comparisons imply that some reference group must be selected the major result is that within the relevant groups some wage compression is efficient

efficiency wages and wage dispersion the efficiency wage hypothesis has normally been used to generate an equilibrium level of unemployment the authors use it instead to generate an equilibrium wage distribution this paper starts by generalizing the previous work of r m solow in this area they then use their results on effort wage elasticities to derive a model of wage dispersion the wage rate is shown to be an increasing function of the damage potential of workers that is workers with the highest damage potential receive the highest wage the analysis of the equilibrium of the wage distribution provides interesting qualitative insights into the nature of actual wage differentials copyright 1991 by the london school of economics and political science

wage disparity and team productivity evidence from major league baseball using data describing baseball teams from 1985 to 1998 it is found that levine s levine d i 1991 cohesiveness productivity and wage dispersion journal of economic behavior and organization 15 237 255 team cohesiveness hypothesis is supported over ramaswamy and rowthorn s ramaswamy r rowthorn e 1991 efficiency wages and dispersion economica 58 501 514 danger potential hypothesis the implication is that teams with greater wage disparity experience a reduction in team performance 2000 elsevier science s a all rights reserved

evolution of bank efficiency in brazil a dea approach abstract this paper investigates cost technical and allocative efficiencies for brazilian banks in the recent period 2000 2007 we use data envelopment analysis dea to compute efficiency scores brazilian banks were found to have low levels of economic cost efficiency compared to banks in europe and in the us for the period with high macroeconomic volatility 2000 2002 the economic inefficiency in brazilian banks can be attributed mainly to technical inefficiency rather than allocative inefficiency state owned banks are significantly more cost efficient than foreign private domestic and private with foreign participation there is no evidence of differences in economic efficiency due to type of activity and bank size these results may provide some useful guidance for financial regulators and bank managers

raising salary or redistributing it a panel analysis of major league baseball abstract using data in major league baseball mlb this article conducts panel granger causality tests for teams salary structures and corresponding performance the results show that a reliable way to enhance performance is to compress salaries rather than to enlarge the payroll

partial privatization and firm performance most privatization programs begin with a period of partial privatization in which only non controlling shares of firms are sold on the stock market since management control is not transferred to private owners it is widely contended that partial privatization has little impact this perspective ignores the role that the stock market can play in monitoring and rewarding managerial performance even when the government remains the controlling owner using data on indian state owned enterprises we find that partial privatization has a positive impact on profitability productivity and investment widespread privatization in recent decades has generated a large empirical literature concerning the effect of ownership on firm performance most studies find that privatization has a positive impact on the profitability and efficiency of firms see megginson and netter 2001 for a recent survey 1 the firms in these studies have had a majority of their assets privatized and control rights have been transferred from the government to private owners surprisingly little is known about the effect of partial privatization where the government remains the controlling owner this paper seeks to address this gap in the literature by investigating whether the performance of state owned enterprises in india is affected by the sale of non controlling equity stakes on the stock market

do privatized banks in middle and low income countries perform better than rival banks an intra industry analysis of bank privatization abstract this paper presents a comprehensive analysis of the pre and post privatization operating performance and stock market performance of privatized banks and their rivals in middle and low income countries first we find that privatization announcements elicit negative abnormal returns for rival banks the effects are more pronounced for subsequent tranche sales where the proportion of government ownership in the privatized bank is reduced second we observe that the privatized banks underperformed the benchmark index in the long run investors who bought shares of the privatized banks on the first day of trading and held them for 5 years instead of investing in the market index lost 24 of their wealth the underperformance is consistent with the negative long run returns that have been documented for initial public offerings third we document marginal improvements in the post privatization operating performance of the privatized banks though the privatized banks in middle and low income countries are better capitalized than rival banks they carry higher problem loans and are overstaffed relative to other private banks in the post privatization period since most of the sample firms are partially privatized we submit that perhaps the continued government ownership of the privatized banks might have hindered managers ability to restructure the firms

minimax after money max why major league baseball players do not follow optimal strategies using real life sports data of major league baseball this paper investigates whether professional players follow the minimax theorem in their strategies our empirical results using the 2010 regul

intra industry effects of bank privatization a clinical analysis of the privatization of the commonwealth bank of australia abstract this paper provides a comprehensive analysis of the effects of the privatization of the commonwealth bank of australia cba on the bank s performance and that of the rival banks first we find that the major rival banks reacted negatively to the privatization announcements although the initial partial privatization and the final full privatization announcements elicited stronger stock market reaction from the rival banks second we find that the cba s long term stock market performance improved markedly as the proportion of government ownership decreased with the bank s cumulative abnormal returns being 50 more than those of its rivals three years after the bank had been fully privatized also the cba has not only been very efficient in reducing cost and improving its profitability in the post privatization period it has outperformed its rivals on almost all the operating performance measures and has become the most profitable bank in australia a particularly noteworthy finding is that the improvements in the cba s operating and stock market performance and the rival banks reaction to the partial and full privatization announcements were strongest after the bank had been fully privatized the implication of the results for governments contemplating privatization of state owned enterprises is that full privatization is necessary in order to achieve strong gains in efficiency profitability and stock market performance

cohesiveness productivity and wage dispersion abstract when work groups support the goals of the firm firms will want to increase group cohesiveness if narrowing wage dispersion increases cohesiveness then companies will pay an efficiency wage to the low end of the wage distribution this variant of efficiency wages predicts firm wage effects and predicts that unemployment will be concentrated among low wage workers furthermore workers at cohesive firms will have higher marginal products than will similar workers at other firms thus policies to encourage the growth of cohesive firms will increase national output

the financial and operating performance of newly privatized firms evidence from developing countries this paper examines the change in the financial and operating performance of 79 companies from 21 developing countries that experienced full or partial privatization during the period from 1980 to 1992 we use accounting performance measures adjusted for market effects in addition to unadjusted accounting performance measures both unadjusted and market adjusted results show significant increases in profitability operating efficiency capital investment spending output employment level and dividends we also find a decline in leverage following privatization but this change is significant only for unadjusted leverage ratios our results are generally robust when we partition our data into various subsamples

privatization and bank performance in developing countries abstract we examine the postprivatization performance of 81 banks from 22 developing countries our results suggest that i on average banks chosen for privatization have a lower economic efficiency and a lower solvency than banks kept under government ownership ii in the postprivatization period profitability increases but depending on the type of owner efficiency risk exposure and capitalization may worsen or improve however iii over time privatization yields significant improvements in economic efficiency and credit risk exposure iv we also find that newly privatized banks that are controlled by local industrial groups become more exposed to credit risk and interest rate risk after privatization

privatization financial development property rights and growth abstract this study analyzes how prevailing institutional arrangements i e property rights contracting rights political institutions and corporate governance practices affect privatized firms performance capital markets development and economic growth most of the studies surveyed show that privatization enhances privatized firms performance efficiency and profitability which percolates to economic growth privatized firms performed better in countries with better regulatory and legal frameworks partial privatization may be beneficial in countries with weak institutions namely the french civil law countries the stronger the economic and the governing institutions the easier it is for privatized firms to thrive and contribute to economic growth overall privatization allows firms to achieve improved efficiency while driving the development of the financial sector

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