financial supervision regimes and bank efficiency international evidence abstract there exists a lively debate as for the appropriate architecture of the financial supervision regime with a long list of theoretical advantages and disadvantages associated with each one of its key dimensions the present study investigates whether and how bank profit efficiency is influenced by the central bank s involvement in financial supervision the unification of financial authorities and the independence of the central bank the results show that efficiency decreases as the number of the financial sectors that are supervised by the central bank increases additionally banks operating in countries with greater unification of supervisory authorities are less profit efficient finally central bank independence has a negative impact on bank profit efficiency

the export diversifying impact of japanese and us foreign direct investments in the indian manufacturing sector the paper highlights the export diversifying impact of foreign direct investment fdi in a developing country fdi may lead to export diversification in the host country if it positively affects the export intensity of industries that have a low share in world exports indirectly fdi may encourage export diversification through spillover effects that is the presence of fdi in an industry may increase the export intensity of domestic firms the empirical results for the indian economy in the post liberalisation period show that fdi from the us has led to diversification of india s exports both directly and indirectly however japanese fdi has had no significant impact on india s exports

what does export diversification do for growth an econometric analysis it is frequently suggested that export diversification contributes to an acceleration of growth in developing countries horizontal export diversification into completely new export sectors may generate positive externalities on the rest of the economy as export oriented sectors gain from dynamic learning activities due to contacts with foreign purchasers and exposure to international competition vertical diversification out of primary into manufactured exports is also associated with growth since primary export sectors generally do not exhibit strong spillovers yet there have been remarkably few empirical investigations into the link between export diversification and growth this paper attempts to examine the hypothesis that export diversification is linked to economic growth via externalities of learning by doing and learning by exporting fostered by competition in world markets the diversification led growth hypothesis is tested by estimating an augmented cobb douglas production function on the bas

some models for estimating technical and scale inefficiencies in data envelopment analysis in management contexts mathematical programming is usually used to evaluate a collection of possible alternative courses of action en route to selecting one which is best in this capacity mathematical programming serves as a planning aid to management data envelopment analysis reverses this role and employs mathematical programming to obtain ex post facto evaluations of the relative efficiency of management accomplishments however they may have been planned or executed mathematical programming is thereby extended for use as a tool for control and evaluation of past accomplishments as well as a tool to aid in planning future activities the ccr ratio form introduced by charnes cooper and rhodes as part of their data envelopment analysis approach comprehends both technical and scale inefficiencies via the optimal value of the ratio form as obtained directly from the data without requiring a priori specification of weights and or explicit delineation of assumed functional forms of relations between inputs and outputs a separation into technical and scale efficiencies is accomplished by the methods developed in this paper without altering the latter conditions for use of dea directly on observational data technical inefficiencies are identified with failures to achieve best possible output levels and or usage of excessive amounts of inputs methods for identifying and correcting the magnitudes of these inefficiencies as supplied in prior work are illustrated in the present paper a new separate variable is introduced which makes it possible to determine whether operations were conducted in regions of increasing constant or decreasing returns to scale in multiple input and multiple output situations the results are discussed and related not only to classical single output economics but also to more modern versions of economics which are identified with contestable market theories

bertrand the cournot paradigm and the theory of perfect competition in this paper we extend to a general equilibrium context bertrand s classic critique of cournot we present a game theoretic model of a pure exchange monetary economy in which buyers as well as sellers announce both quantities and prices when buyers act strategically the edgeworth nonexistence problem is circumvented under weak conditions a pure strategy nash equilibrium exists for this game we make precise the bertrand idea that when agents in a finite economy are permitted to compete by price the resulting allocations will be competitive specifically the nash equilibria for our game yield allocations that are competitive allocations for the underlying exchange economy provided that there are at least two buyers and two sellers actively trading in every market under this characterization of strategic behaviour then two is enough for competition our objective is to provide a general equilibrium game theoretic formulation of the idea of bertrand price competition bertrand s classic critique of cournot can be paraphrased as follows when agents regard price rather than quantity as the strategic variable no price above the competitive equilibrium price can be sustained as a noncooperative equilibrium this idea is made precise in our game theoretic model of a pure exchange economy in which buyers as well as sellers act strategically our treatment of buyers behaviour is novel while sellers announce price and quantity vectors buyers specify sums of money and menus of alternative nonmonetary commodity bundles a buyer s action is a commitment to purchase any one of the specified commodity bundles in exchange for the sum of money our first result is that under weak conditions a nash equilibrium in pure strategies exists the paper thus also points to a way of resolving the classical edgeworth nonexistence problem second all nash equilibria yield allocations that are competitive for the underlying economy provided that in every market at least two buyers and two sellers are actively trading under this characterization of strategic

price quantity strategic market games this paper is yet another in a rapidly growing series e g 2 11 on strategic approaches to economic equilibrium our aim here is to make precise the remark implicitly due to bertrand 1 or 10 ch 4 5 that if the agents in an economy use price setting strategies then the strategic nash equilibria will in fact be walrasian and this without any assumption of a large number of small agents however in our models not only prices but also quantities are set by the agents thus it might actually be more appropriate to call them bertrand cournot types of models we begin with a standard walras exchange economy with a finite number of traders and commodities this is recast as a game in strategic form in essentially two different ways there is a trading post for each commodity to which traders send contingent statements about how much they wish to buy and sell and at what prices in model 1 the trading point is determined by the intersection of the aggregate supply and demand curves in model 2 trade takes place so as to meet as many contingent statements as possible each buyer whose orders are filled pays the price he quoted using a fiat money which can be borrowed costlessly and limitlessly but after trade is over there is a settlement of accounts and a penalty is levied on those who are bankrupt no attempt is made to model the penalty in any detail it is simply described in the form of a disutility but this in turn may be imagined to stem from confiscation of assets see remark 5 or the necessity of procuring highly priced loans etc call a noncooperative equilibrium active if it turns out that no trader is isolated i e trapped as the sole buyer or seller at some trading post then our results may be described as follows in model 1 the active2 n e of the game coincide with the c e of the market furthermore there is a subset of tight active n e which also coincide with the c e and each n e in this subset is strong

technical and allocative efficiency in european banking this paper specifies an empirical framework for estimating both technical and allocative efficiency using the translog cost share system thus providing a solution to the issue known in the literature as the greene problem the model is applied to a large panel of european banks and the results are compared with those of a model that does not include an allocative inefficiency term and also with those obtained by using a consistent bayesian technique our results suggest that models which include only technical efficiency significantly overestimate it while parameter estimates from the model that includes both technical and allocative efficiency are very close to the ones obtained from the bayesian approach thus enhancing our confidence in the proposed methodology finally the fact that allocative efficiency of banks in our sample improves more than technical efficiency underlines the importance of including an allocative inefficiency component in parametric efficiency models

the impact of foreign direct investment on horizontal export diversification empirical evidence using data on stocks of foreign direct investment fdi from 131 countries spanning the years 1984 to 2004 and the number of products exported by each country we examine the effect of fdi on horizontal export diversification to quantify the effects we utilize parametric quantile and semi parametric econometric methods results from both approaches indicate that in general an increase in the stock of fdi enhances the horizontal diversification of exports the actual magnitude of the effect however varies greatly across countries depending on the existing stock of fdi and stage of diversification giving rise to an almost inverted u shaped relationship a further look at our results provides useful insights on the circumstances under which fdi may aid or inhibit the horizontal expansion of exports

stochastic data envelopment analysis a review abstract this paper provides a review of stochastic data envelopment analysis dea we discuss extensions of deterministic dea in three directions i deviations from the deterministic frontier are modeled as stochastic variables ii random noise in terms of measurement errors sample noise and specification errors is made an integral part of the model and iii the frontier is stochastic as is the underlying production possibility set pps stochastic dea utilizes non parametric convex or conical hull reference technologies based upon axioms from production theory accompanied by a statistical foundation in terms of axioms from statistics or distributional assumptions the approaches allow for an estimation of stochastic inefficiency compared to a deterministic or a stochastic pps and for statistical inference while maintaining an axiomatic foundation focus is on bridges and differences between approaches within the field of stochastic dea including semi parametric stochastic frontier analysis sfa and chance constrained dea ccdea we argue that statistical inference based upon homogenous bootstrapping in contrast to a management science approach imposes a restrictive structure on inefficiency which may not facilitate the communication of results of the analysis to decision makers semi parametric sfa and ccdea differ w r t the modeling of noise and stochastic inefficiency the two approaches are in spite of the inherent differences shown to be complements in the sense that the stochastic ppss obtained by the two approaches share basic similarities in the case of one output and multiple inputs recent contributions related to i disentangling of random noise and random inefficiency and ii obtaining smooth shape constrained estimators of the frontier are discussed

regional environmental efficiency in china an empirical analysis based on entropy weight method and non parametric models abstract while vigorously developing its economy china is attaching more and more importance to environmental protection and pollution control in different regions of china however there are great differences in economic development and the degree of environmental pollution in this study we use the entropy weight method to calculate the pollution indexes of different regions from 2015 to 2017 then we evaluate the chinese regional environmental efficiency based on a new non parametric frontier model moreover a new set of ranking interval models that treat the undesirable outputs as inputs is proposed to further describe the regional disparities of the environmental efficiency between different regions with robustness finally we conduct an empirical analysis by combining the stepwise regression and principal component analysis to identify the most influential variables that may affect regional environmental efficiency according to the results the southeast region of china performs best in environmental efficiency followed by the northeast region then the southwest region and the worst is the northwest region for managerial implications we find that the investment of high education and the development of the it industry can significantly increase regional environmental efficiency more importantly the results of the principal component analysis provide the government with a set of variables to strategically select the most appropriate strategy

the information content of quantity signals and downward inflexible prices it is shown that nonmarket clearing prices can persist in noncooperative nash competition among firms when the dis semination of information depends critically on the flexibility of pr ices the key to this explanation is that the value of the informatio n revealed by quantity signals when prices are fixed can be greater t han the short run profit obtained by an instantaneous price adjustmen t copyright 1987 by the editors of the scandinavian journal of economics

perfect competition and the core it is part of the conventional wisdom of economics that a mass market i e one with many relatively small participants will tend to be perfectly competitive one possible meaning of this is that it will behave as if prices were quoted and taken as given by the traders the final allocation of goods and services is then called walrasian there are at least two classical formal theories of perfect competition they can be associated with the names of cournot 1838 and edgeworth 1881 edgeworth s contribution has led to the modern theory of the core of a market see debreu scarf 1963 aumann 1964 and hildenbrand 1974 and his references its central result the core equivalence theorem states conditions under which in a mass economy competition in the sense of edgeworth yields at equilibrium walrasian allocations the extension to general equilibrium analysis of cournot s partial equilibrium model is currently being actively pursued gabzewicz vial 1972 hart 1979 1980 shubik 1973 novshek sonnenschein 1978 see also the april 1980 symposium issue of the journal of economic theory by now a variety of cournot equivalence theorems is available there is substantial but not complete overlap between the set of conditions identified as important by the edgeworth and the cournot type analysis by and large both approaches have proved to be useful tools for testing the competitiveness of some theoretical market situations for example differentiated commodities models have been analyzed in mas colell 1975 from the point of view of the core and in hart 1979 from the cournot perspective for yet another approach with a classical foundation to the theory of perfect competition see j ostroy 1980 it is probably fair to say that the economics profession at large thinks of perfect competition more in cournot s than in edgeworth s terms the purpose of this paper is to make the case for the core in the light of some of the issues raised by the recent cournot analysis we will try to argue that the edgeworth notion of competition yields a quite sensible concept and a very flexible tool and that not surprisingly edgeworth and cournot competition are close relatives once properly viewed by way of motivation it will be useful to begin by examining and commenting on four points of real or apparent contrast between the two approaches

a multidimensional approach to measuring bank branch efficiency abstract bank branch efficiency measurements range from simple ratio and standard regression analyses to more complex frontier approaches each with specific strengths and weaknesses however in isolation the indexes that these approaches generate fail to capture the multidimensional nature of bank branch efficiency this paper develops a three step procedure that enables combining the strengths of the existing approaches we begin by taking the widest number of efficiency indexes proposed in literature step 1 reduce the redundant information through a collinearity analysis step 2 and categorize bank branches into efficiency classes through a clustering procedure step 3 we test our approach on 23 branches of an italian regional bank the results show that this three step approach is able to provide a multidimensional view of efficiency based on indexes employing a wide range of theoretical and methodological approaches with different ways of conceiving intermediation vs production and measuring stock vs flow or physical measures bank outputs and inputs different definitions of efficiency technical and cost efficiency and different measurement approaches ratios standard regression analysis and frontier functions the resulting efficiency ranking is consistent with those that univariate indexes generate and provides a balanced evaluation of branch efficiency when such indexes produce contradictory indications

competitivity in auction markets an experimental and theoretical investigation the authors report successive rounds of theory and laboratory experiments investigating price taking behavior and market efficiency they focus on the impact of structural parameters as well as trading institution the structural parameters involve noncompetitive supply and demand and a new odd lot trading procedure for divisible goods the trading institutions include the continuous double auction and the one shot clearinghouse as well as a new quantities only clearinghouse institution the authors present and justify an as if complete information theory that explains the competitive outcomes and that correctly predicts highly noncompetitive outcomes in quantities only clearinghouse markets copyright 1995 by royal economic society

the eclectic paradigm of international production a restatement and some possible extensions this article reviews some of the criticisms directed towards the eclectic paradigm of international production over the past decade and restates its main tenets the second part of the article considers a number of possible extensions of the paradigm and concludes by asserting that it remains a robust general framework for explaining and analysing not only the economic rationale of economic production but many organisational and impact issues in relation to mne activity as well

want export diversification educate the kids first this paper uses bayesian model averaging to uncover the true determinants of export diversification among 36 potential factors and thus 236 potential models using data from 2001 to 2010 our results reveal two strong predictors primary school enrollment 99 7 posterior inclusion probability in the true model raises export diversification whereas the share of natural resources in gross domestic product 98 6 lowers diversification levels the importance of basic education coverage offers policymakers an opening toward diversifying exports at least in the long run this result is robust to accounting for the endogeneity of income levels by applying an instrumental variable bma method jel c11 f1 f34 o1 o2 o11

resolving the deposit dilemma a new dea bank efficiency model abstract one of the weaknesses of current bank efficiency models is a disagreement as to the role of deposits in the bank production process some models view deposits as an input while others view them as an output such disparity of approaches results in inconsistent efficiency estimates in this study we propose an alternative data envelopment analysis dea bank efficiency model that treats deposits as an intermediate product thus emphasizing the dual role of deposits in the bank production process consequently the effect of the amount of deposits on bank efficiency depends on the efficiency at both stages of the bank production process the main advantage of our model is that it does not require a researcher to make a judgment call as to whether having more production approach or less intermediation approach deposits is better for bank efficiency our unified framework has the potential to produce more consistent efficiency estimates

bertrand price competition with differentiated commodities abstract this develops a general equilibrium differentiated commodity version of bertrand price competition we study two related market games in which buyers as well as sellers announce both quantities and prices in the first game buyers strategies are artificially restricted the nash allocations of this game will be nearly competitive provided that the commodities supplied by sellers are sufficiently similar in the second game the restriction on buyers strategies is relaxed and a stronger solution criterion called local perfection is invoked the locally perfect equilibria of the unrestricted game coincide the nash equilibria of the restricted game

financial freedom and bank efficiency evidence from the european union this paper investigates the dynamics between the financial freedom counterparts of the economic freedom index drawn from the heritage foundation database and bank efficiency levels we rely on a large sample of commercial banks operating in the 27 european union member states over the 2000s after estimating bank specific efficiency scores using data envelopment analysis dea we develop a truncated regression model combined with bootstrapped confidence intervals to test our main hypotheses results suggest that the higher the degree of an economy s financial freedom the higher the benefits for banks in terms of cost advantages and overall efficiency our results also show that the effects of financial freedom on bank efficiency tend to be more pronounced in countries with freer political systems in which governments formulate and implement sound policies and higher quality governance

stages of diversification this paper studies the evolution of sectoral concentration in relation to the level of per capita income we show that various measures of sectoral concentration follow a u shaped pattern across a wide variety of data sources countries first diversify in the sense that economic activity is spread more equally across sectors but there exists relatively late in the development process a point at which they start specializing again we discuss this finding in light of existing theories of trade and growth which generally predict a monotonic relationship between income and diversification

bertrand edgeworth equilibria with unobservable output uncoordinated consumers and large number of firms abstract we examine a bertrand edgeworth model of price competition where the output levels of the firms are unobservable and consumers are uncoordinated we show that if the number of firms is large enough then any price greater than the competitive one can be sustained as a pure strategy nash equilibrium

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

exchange rate volatility and trade a semiparametric approach we use a gravity model to analyse the impact of exchange rate volatility on the volume of bilateral international trade semiparametric regression methods are applied to the pooled data for over 200 countries our results indicate that volatility affects trade negatively although at very high level of volatility the effect diminishes and eventually becomes statistically indistinguishable from zero countries apparently find avenues to mitigate the detrimental impact of exchange rate uncertainty when volatility attains very high levels these results help reconcile the contradictory findings often found in the literature on the impact of exchange rate uncertainty on trade volume

the interactions among foreign direct investment economic growth degree of openness and unemployment in taiwan the vector autoregression method of variance decomposition and impulse response function analysis are applied to analyse various relationships among foreign direct investment fdi economic growth unemployment and degree of openness in taiwan the analysis results show that these five variables have a long run equilibrium relationship however unemployment rate and fdi outflow have weak exogeneity we also found that there exist three unidirectional causalities from fdi outflow to fdi inflow from economic growth to degree of openness and from economic growth to unemployment in short run furthermore the shocks of economic growth and degree of openness have positive effects on fdi inflow on the contrary the shocks in economic growth and fdi inflow have negative effects on unemployment rate

aid allocation and poverty reduction the authors derive a poverty efficient allocation of aid and compare it with actual aid allocations they build the poverty efficient allocation in two stages first they use new world bank ratings of 20 different aspects of national policy to establish the current relationship between aid policies and growth onto that they add a mapping from growth to poverty reduction which reflects the level and distribution of income they compare the effects of using headcount and poverty gap measures of poverty they find the actual allocation of aid to be radically different from the poverty efficient allocation in the efficient allocation for a given of poverty aid tapers in with policy reform in the actual allocation aid tapers out with reform in the efficient allocation aid is targeted disproportionately to countries with severe poverty and adequate polices the type of country where 74 percent of the world s poor live in the actual allocation such countries receive a much smaller share of aid 56 percent than their share of the world s poor with the present allocation aid is effective in sustainably lifting about 30 million people a year out of absolute poverty with a poverty efficient allocation this would increase to about 80 million people even with political constraints introduced to keep allocations for india and china constant poverty reduction would increase to about 60 million reallocating aid is politically difficult but it may be considerably less difficult than quadrupling aid budgets which is what the authors estimate would be necessary to achieve the same impact on poverty reduction with existing aid allocations

bertrand edgeworth equilibrium with a large number of firms abstract we examine a model of price competition with strictly convex costs where the firms simultaneously decide on both price and quantity are free to supply less than the quantity demanded and there is discrete pricing if firms are symmetric then for a large class of residual demand functions there is a unique equilibrium in pure strategies whenever for a fixed grid size the number of firms is sufficiently large moreover this equilibrium price is within a grid unit of the competitive price the results go through to a large extent when the firms are asymmetric or they are symmetric but play a two stage game and the tie breaking rule is weakly manipulable

can africa industrialize by processing primary commodities the case of mozambican cashew nuts abstract industrialization strategies based on vertical diversification into processing of primary commodities have long been appealing to low income countries the performance of such strategies is mixed an aggregate level literature is divided on the advisability of low income countries processing commodities for export especially for countries relatively poor in human capital while this general literature usefully illuminates the policy debate over processing cashew nuts in mozambique commodity and country specific factors reveal the weaknesses of conducting debate at too aggregated a level it may be that the most significant constraints on processing industrialization are political rather than purely technical or economic

does risk aversion affect bank output loss the case of the eurozone abstract we propose a new model to infer the evolution of bank specific output losses due to the uncertainty in bank output prices losses are based on bank risk aversion with micro foundations tethered to the uncertainty regarding prices our model allows us to measure time varying bank specific output losses and risk aversion while taking into account all bank cross sectional heterogeneity we employ a panel data set to estimate the input and output elasticities with both parametric and non parametric techniques we are the first to document that increasing risk aversion among eurozone banks during the financial crisis resulted in sizable output losses although subdued thereafter losses have been resurging in recent years both conventional and unconventional monetary policy responses by the european central bank ecb mitigated uncertainty in bank output prices though unequally so across countries certain measures of unconventional monetary policy may have even enhanced bank risk aversion and thereby output losses but mainly so for large countries