measuring economic freedom an alternative functional specification and subsequent ranking abstractthe widely cited economic freedom of the world index is an aggregate measure of economic freedom calculated by using a simple arithmetic mean of scores over five sub dimensions 1 size of

competitive equilibrium in the credit market under asymmetric information abstract we study a competitive credit market equilibrium in which all agents are risk neutral and lenders a priori unaware of borrowers default probabilities admissible credit contracts are characterized by the credit granting probability the loan quantity the loan interest rate and the collateral required the principal result is that in equilibrium lower risk borrowers pay higher interest rates than higher risk borrowers moreover the lower risk borrowers get more credit in equilibrium than they would with full information no credit is rationed and collateral requirements are higher for the lower risk borrowers

proxies in the new political economy caveat emptor i introduction today proxies for cultural political and institutional variables abound in econometric studies and strong policy recommendations are based on results obtained with them unlike the traditional data of economists they are neither market generated nor the fruit of large official or semi official statistical projects the main providers are ideological or public interest organizations such as transparency international and freedom house supplemented by scholars corporations and miscellaneous organizations the diverse and perhaps suspect origins of these data are reasons to use them cautiously yet even the prudent robert barro 1999 takes freedom house s ratings of international political and civil liberty on faith in his recent study of the determinants of democracy the trust standard what i shall call the correlation test is a common way to assess multiple proxies for an intangible variable which also breeds complacency because it often is used as a substitute for direct appraisal of them alberto alesina and beatrice weder 1999 p 10 use it in a study of corruption s relation to foreign aid claiming that these relatively high correlations among proxies for corruption provide some confidence in the measures of corruption since most of them were compiled by different institutions using very different methodologies the same spirit infuses what i shall call the mutual corroboration test for regression results it is considered probative that different proxies for the same intangible variable produce similar or at least mutually compatible regression estimates the correlation and corroboration tests also appear in a recent world bank study kaufman et al 2000 p 11 utilizing measures of the quality of governance the authors write that if the data were not informative we would not expect to see the strong agreement across sources about the quality of governance particularly striking is the broad consensus that emerges among many diverse raters they acknowledge the conceptual differences among the literally hundreds of measures used in their study all qualitative but omit none from their composite indicators finally a pioneer in the new data gerald scully 1992 constructs eight economic freedom indexes plus an average of them to be the economic freedom variable in one of his projects he cites high rank correlations among them approvingly these tests use mutual resemblance or consistency as substitutes for directly assessing the suitability of proxies for a particular project one by one evaluation is to be sure a laborious and inconvenient task but ease and convenience are not tests of the validity of evaluation procedures correlation among the proxies or results obtained with them must not be confused with aptness of the proxies or results the correlation and corroboration tests assume for instance that only measurement error differentiates proxies from one another yet political institutional variables normally are defined differently from one another good governance is already a subjective judgment broad consensus allows differences of opinion identical policy conclusions cannot follow from regressions based on measures having different meanings so the quotation from alesina and weder is an indictment of their study not a defense of it the main purpose of this article is to show that the trust standard and the correlation and corroboration tests are pseudo criteria for judging the quality of proxies and results based on them because they are capable of supporting fallacious statistical estimates these tests i show endorse statistical nonsense in an interesting familiar case the nonsense is attributable in part to the inapposite use of proxy regressors in estimations of a simple and well known model specifically bivariate regressions often cited in support of the strict free market school of thought

migration regional equilibrium and the estimation of compensating differentials in this study we have developed an improved model of net migration that encompasses both equilibrium and disequilibrium components instrumental variables fixed effects estimates of the model with time series data for 51 areas in the united states over the period 1971 1988 support the importance of both equilibrium and disequilibrium factors in migration excerpt

freedom and international migration economic and political freedoms are regressed on a bilateral cross section of international migrant stocks using ordinary least squares and tobit techniques a positive relationship between these variables is found economic freedom is statistically significant even when controlling for income per capita and political freedom in addition the impact of these freedoms on migration flows into oecd countries between 2001 and 2006 using fixed effects estimations is analyzed the panel data analysis mostly corroborates the cross sectional analysis the notable exception is that political freedom appears to have had a negative impact on migration flows during this period

costly monitoring financial intermediation and equilibrium credit rationing abstract this paper establishes a link between equilibrium credit rationing and financial intermediation in a model with asymmetrically informed lenders and borrowers costly monitoring and investment project indivisibilities intermediation is shown to dominate borrowing and lending between individuals and these financial intermediaries exhibit several of the important features of intermediaries as we know them equilibrium interest rates and the aggregate quantity of loans respond quite differently to changes in taste and technology parameters depending on whether or not there is rationing in equilibrium

credit derivatives in banking useful tools for managing risk abstract we model the effects on banks of the introduction of a market for credit derivatives in particular credit default swaps a bank can use such swaps to temporarily transfer credit risks of their loans to others reducing the likelihood that defaulting loans trigger the bank s financial distress because credit derivatives are more flexible at transferring risks than are other more established tools such as loan sales without recourse these instruments make it easier for banks to circumvent the lemons problem caused by banks superior information about the credit quality of their loans however we find that the introduction of a credit derivatives market is not necessarily desirable because it can cause other markets for loan risk sharing to break down

an exploration of competitive signalling equilibria with third party information production the case of debt insurance in markets in which sellers know more about product quality than buyers but cannot convey their superior information either by directly issuing costly signals of the spence type or by successfully funding the production of information i suggest another way in which the informational asymmetry problem can be resolved a third party can produce the necessary information at a cost and use it to price a service consumed by the sellers buyers can then observe a seller s choice of service consumption level and be well informed in equilibrium in this framework i construct a model in which a borrower s choice of insurance coverage signals its default probability to lenders and explore the properties of the resulting signalling equilibrium in a variety of cases subsequent to akerlof s provocative paper 1 the analysis of equilibria in markets with asymmetrically informed agents has been the subject of considerable enquiry akerlof s novel insight was the observation that such markets can fail in the sense that the demand at any price is zero this market failure can be prevented however if a priori imperfectly informed buyers of a given product can somehow revise their initial conditional estimates of product quality so that prices are consistent with quality in an equilibrium bhattacharya 2 3 ross 9 and spence 12 13 14 have suggested that one way of achieving this is to allow sellers of the product or service to issue costly signals of the quality offered for sale in a rational equilibrium prospective buyers could use these signals to discriminate accurately between products of differing quality campbell and kracaw 4 have recently suggested another possibility that sellers can make side payments to information producers to acquire the necessary information at a cost and convey it to the market this paper explores yet another distinct way of resolving the information asymmetry problem the market structure considered here involves three parties a group of sellers each aware of the quality of its own product a set of buyers who perhaps satisfy the rational expectations assumption that they are aware of the average quality of the products in the market but are unable to distinguish one seller from the other on the basis of product quality and third party information producers who expend resources to produce information about the quality of each product offered for sale these information producers recover the cost of information acquisition by using their knowledge to structure and price some fixed quality service that they provide to

information reliability and a theory of financial intermediation this paper is an analysis of when it will be beneficial for agents engaged in the production of information to form coalitions the model is cast in a financial market framework thus leading to an identification of conditions sufficient for the existence of financial intermediaries intermediation is shown to improve welfare if informational asymmetries are present and the information generated to rectify these asymmetries is potentially unreliable the usual appeal to transactions costs to explain intermediation is not needed

informal responses to crises of urban employment an investigation into the structure and relevance of small scale informal retailing in kaduna nigeria simon p b 1998 informal responses to crises of urban employment an investigation into the structure and relevance of small scale informal retailing in kaduna nigeria reg studies 32 547 557 micro enterprises in the informal sector of developing countries arguably possess potential and provide a niche in the employment generation process in the light of continuing economic decline this paper articulates the findings of a study that investigated the socio economic significance of small scale informal retailing in kaduna nigeria findings from this empirical study of informal retailing sustain the proposition that these activities can constitute a dependable source of urban employment income and livelihood the fullest extent of this relevance is however felt mostly by a relatively small category 20 of core informal enterprises in particular retailing practices evidence from this inquiry supports further a conclusion about the existence of a dual informal labour market external policy con

further evidence on the relationship between economic freedom and economic growth often it is maintained that economic freedom may further high levels of economic growth using various measures of economic freedom constructed by scully and slottje the robustness of this relationship is examined both direct and indirect effects of lack of liberties are analysed our main conclusion is that the link between economic freedom and economic growth depends upon the measure used for some indicators of economic freedom there appears a robust direct relationship while for others there is no such relationship investment is not related to our indicators for economic freedom

emerging problems with the basel capital accord regulatory capital arbitrage and related issues in recent years securitization and other financial innovations have provided unprecedented opportunities for banks to reduce substantially their regulatory capital requirements with little or no corresponding reduction in their overall economic risks a process termed regulatory capital arbitrage these methods are used routinely to lower the eaective risk based capital requirements against certain portfolios to levels well below the basel capital accord s nominal 8 total risk based capital standard this paper discusses the principal techniques used to undertake capital arbitrage and the diaculties faced by bank supervisors in attempting to deal with these activities under the current capital framework 2000 elsevier science b v all rights reserved

voting with your feet and the quality of life index abstract this paper develops a new technique that uses the utility maximizing migration decisions of rational voters consumers to construct qol rankings we apply our technique to canadian inter provincial migration data for 1970 1990

economic freedom and migration a metro area level analysis we examine the determinants of intra u s population migration at the metropolitan area level msa with an emphasis on the presence of policies that are consistent with economic freedom we are the first to produce a multivariate regression analysis of migration and economic freedom at the local level combining a 1993 2014 unbalanced panel of msa to msa migration data from the internal revenue service with a new economic freedom index for u s metropolitan areas we find that a 10 increase in economic freedom of a destination msa relative to the economic freedom of an origin msa was associated with a 27 4 increase in net migration from the origin msa to the destination msa if we use mean net migration flows as a benchmark we would expect a 10 increase in relative economic freedom to increase net migration to the destination msa by 22 workers per year from each other msa

the use of loan sales and standby letters of credit by commercial banks abstract this paper examines the incentives banks have to engage in off balance sheet activities such as commercial loan sales and the issuance of standby letters of credit slcs i show that loan sales and loans backed by slcs have payoff characteristics similar to secured debt like secured debt off balance sheet activities permit banks to sell a portion of the cash flows associated with new investment oppurtunities this ability permits banks to invest in loans with positive net present values that they would pass up if restricted to deposit financing an examination of the risk premium on large certificates of deposit provides evidence consistent with the model

federalism as a commitment to reserving market incentives the authors advance a new perspective in the study of federalism their approach views federalism as a governance solution of the state to credibly preserving market incentives market incentives are preserved if the state is credibly prevented from compromising on future economic success and from bailing out future failures the salient features of federalism decentralization of information and authority and interjurisdictional competition help provide credible commitment or these purposes in addition the authors suggest that some federalism are self sustaining

financial intermediation and delegated monitoring this paper develops a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders it presents a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary diversification within an intermediary serves to reduce these costs even in a risk neutral economy the paper presents some more general analysis of the effect of diversification on resolving incentive problems in the environment assumed in the model debt contracts with costly bankruptcy are shown to be optimal the analysis has implications for the portfolio structure and capital structure of intermediaries

effects of urban growth controls on intercity commuting this paper presents an empirical study of the effects of urban growth controls on the intercity commuting of workers growth controls land use regulations that attempt to restrict population growth and urban sprawl have increased housing prices and diverted population growth to uncontrolled cities it has been suggested that resulting changes in local labour supply might stimulate intercity commuting from uncontrolled to controlled cities to test this hypothesis a gravity model of commuting flows between places in california is estimated using alternative econometric methods ols heckman selection and count data the possibility of spatial dependence in commuting flows is also taken into consideration results suggest larger commuting flows to destination places that restrict residential growth

loan sales as a response to market based capital constraints models of bank loan sales often appeal to regulatory constraints to motivate this off balance sheet activity here we present a market based model of bank asset sales in which information asymmetries create the incentive for unregulated banks to originate and sell loans to other banks rather than fund them with deposit liabilities banks have a comparative advantage in locating and screening projects within their locality however because of private information banks can fund projects in their portfolio only to the extent that their capital can adequately buffer potential losses on these investments a loan sales market allows a banker having adequate capital to acquire profitable projects originated by a banker whose own capital is insufficient to support the additional risk

capital constraints asymmetric information and internal capital markets in banking new evidence a growing literature investigates the role of internal capital markets in mitigating financial constraints faced by the subsidiaries of a conglomerate most studies have relied on indirect tests based on correlations between the cash flows and the investment of the subsidiaries in contrast we avoid the widespread criticisms of such specifications by providing direct tests that focus on the mechanisms through which internal reallocations of funds occur we find that internal capital markets are used by multibank holding companies to mitigate capital constraints faced by individual bank subsidiaries in addition we show that internal capital management within a multibank holding company involves not only the movement of capital to those subsidiaries with a relatively greater need for capital but also the movement of assets loans from less well capitalized to better capitalized subsidiaries by means of loan sales and purchases among the subsidiaries furthermore net loan sales are used to allow efficiency enhancing specialization among bank subsidiaries insofar as those subsidiaries with the best loan origination opportunities are able to focus on loan originations even if they do not have sufficient capital to hold the loans our evidence is consistent with banks affiliated with holding companies more actively participating in loan sales and purchases because by using their internal secondary loan market they are able to avoid the lemons problem faced by stand alone banks

self selection and the earnings of immigrants this paper analyzes the way in which the earnings of the immigrant population may be expected to differ from the earnings of the native population because of the endogeneity of the decision to migrate the empirical study shows that differences in the u s earnings of immigrants with the same measured skills but from different home countries are attributable to variations in political and economic conditions in the countries of origin at the time of migration excerpt

income inequality and economic freedom in the u s states this paper examines the impact of economic freedom on income inequality using cross sectional data for u s states while previous research has explored this relationship internationally the results have been conflicting in addition while it seems obvious that the large institutional differences across countries will impact income inequality it isn t so obvious that the smaller variation in policies among u s states can have a measurable impact can improvements in income inequality be used as a justification for marginal pro market policy reforms at the state level or is this argument applicable only to national level institutional reforms

do the gses expand the supply of mortgage credit new evidence of crowd out in the secondary mortgage market abstract the dramatic government takeover of fannie mae and freddie mac in september 2008 was motivated in part by a desire to ensure a continued flow of credit to the mortgage market this study examines a closely related issue the extent to which gse activity crowds out mortgage purchases by private secondary market intermediaries evidence of substantial crowd out suggests that government support for the gses may be less warranted whereas the absence of crowd out implies that gse loan purchases enhance liquidity using 1994 2008 hmda data for conventional conforming sized loans three distinct periods with regard to gse crowd out are apparent from 1994 to 2003 the share of loans sold to the secondary market increased from 60 to over 90 private sector and gse market shares of loan purchases were roughly similar for most market segments and iv estimates indicate relatively little gse crowd out of private secondary market purchases from 2004 to 2006 private loan purchases boomed and dominated those of the gses while iv estimates indicate crowd out jumped to 50 at the peak of the boom this is especially true in the market for home purchase as opposed to refinance loans with the crash in housing and mortgage markets in 2007 private sector intermediaries pulled back the gses regained market share and evidence of gse crowd out disappeared in both the home purchase loan and refinance markets these patterns suggest that the degree of gse crowd out varies with market conditions and that the federal takeover of fannie mae and freddie mac likely served to enhance liquidity to the mortgage market during the 2007 2009 financial crisis

loan sales and the cost of bank capital this paper considers a model where banks may improve the returns on loans by monitoring borrowers bank regulation together with competitive deposit and equity financing can give banks an incentive to sell loans but the extent of their loan selling is limited by a moral hazard problem a solution is given for the optimal design of the bank loan buyer contract that alleviates this moral hazard problem an explanation is also given as to why some banks might buy loans and why loan sales volume has recently increased banks practice of making loans and then selling them to other institutions and individuals has grown in popularity an important example in the development of loan selling has been the increase in banks mortgage loans that are insured and pooled under the authority of the government national mortgage association gnma and then sold to secondary market investors recently however there has been a dramatic rise in the volume of other types of loans being sold especially by money center banks portions of commercial loans originated by these larger banks are being sold to smaller banks foreign banks and other financial and nonfinancial institutions in addition banks car loans and credit card receivables have also been pooled and sold to institutions and individuals selling loans that were once considered nonmarketable assets a process that has been termed asset securitization may be signalling the start of a fundamental change in the commercial banking business the leading banks in loan selling operations now view themselves more as originators and distributors of loans rather than as institutions holding loans as assets the potentially large impact of loan sales on the future of commercial banking naturally evokes the question of what incentives exist for banks to sell loans in this paper we show that loan sales allow some banks to finance loans less expensively than by traditional deposit or equity issue because bank funds received via loan sales can avoid costs associated with required reserves and

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

costly information production equilibria in the bank credit market with applications to credit rationing in this paper we explore the nature of equilibria in an asymmetrically informed bank credit market in which credit applicants know their own intrinsic default risks but potential lenders can discover these default risks only by expending resources to produce information the resolution of informational asymmetries in the capital market is in the contemporary view considered a very important function served by financial intermediaries like commercial banks and in the opinion of some even the primary justification for their existence 17 we therefore focus on how the presence of asymmetric information in particular the response of expected profit maximizing banks to it affects the equilibrium prices and quantities of credit offered in the banking system

financial structure and aggregate economic activity an overview this paper surveys literature that explores the possible links between the financial system and aggregate economic behavior the survey is in two parts the first reviews the traditional work and the second discusses new research copyright 1988 by ohio state university press

economic freedom and migration flows between u s states a modified gravity model is estimated using a cross section of data drawn from the u s census bureau survey of 2000 in order to analyze the impact of economic freedom on gross migration flows among the lower 48 states spatial econometric methods are utilized in order to capture spatial effects not detected by distance in addition the economic freedom of north america index is decomposed to determine the individual impact of various policies results show that states with higher relative economic freedom experience greater migration inflow through its direct impact on income and employment growth in aggregate the findings indicate that individuals migrate toward states with relatively higher government consumption expenditures relatively lower tax burdens and states with more freedom with respect to labor decisions in the form of less restrictive minimum wages less concentration of unions and less dependence on public employment

proxies for economic freedom a critique of the hanson critique economic freedom indicators have become quite popular recently as a useful tool to quantify the relationship between a country s institutions and its prosperity in a recent article hanson 2003 criticizes these types of studies for i failing to adequately distinguish between different proxies for economic freedom ii not considering the potential for endogeneity and iii accepting significance of economic freedom s ability to promote prosperity even though regression analysis generates nonsensical results closer inspection reveals that most of his arguments are questionable do not apply to much of the literature or are not original and that he is guilty of misinterpreting his own econometric evidence relating freedom to the level of gdp

threshold cointegration and causality relationship between energy use and growth in seven african countries abstract the paper investigates the long run and the causality relationship between energy consumption and economic growth for seven sub saharan african countries during the period 1970 2007 using the gregory and hansen 1996a 1996b testing approach to threshold cointegration we find that energy consumption is cointegrated with economic growth in cameroon cote d ivoire ghana nigeria and south africa moreover this test suggests that economic growth has a significant positive long run impact on energy consumption in these countries before 1988 and this effect becomes negative after 1988 in ghana and south africa furthermore causality tests suggest bidirectional causality between energy consumption and real gdp in cote d ivoire and unidirectional causality running from real gdp to energy usage in the case of congo and ghana

bank funding modes securitization versus deposits abstract we examine a bank s choice of whether to fund the loans it originates by emitting deposits or to sell the loans to investors with common knowledge of loan quality and laissez faire banking we find that the choice is irrelevant with asymmetric information but without government intervention we find that better quality assets will be sold securitized and poorer quality assets will be funded with deposits public regulation can influence the bank s choice subsidies can cause a bank to favor deposit funding but mutual funds and third party insurers may mitigate the effects of governmental subsidies

short term safety or long term failure empirical evidence of the impact of securitization on bank risk based on a sample of u s commercial banks from 2002 to 2012 this paper shows that bank loan securitization has a significant and positive impact on both z scores and the likelihood of bank failure indicating a short term risk reduction and a long term risk increase effect we also find disparate impacts between mortgage and non mortgage securitization loan sale activities are found to have a similar impact to securitization

marriage equality and interstate migration abstractthis study examines the impact of state imposed marriage equality laws on interstate migration prior to the 26 june 2015 u s supreme court ruling to legalize same sex marriage in all states results of the estimation of a series of probit models suggest that all head of households are more likely to leave states without marriage equality this estimated impact is significantly larger for household heads in same sex relationships when examining the migration choices separately by both sex and relationship type this result remains significant for female heads of households in different sex relationships and male heads of households in same sex relationships simulations using the results of the probit estimations the analysis of regional trends and recent rebellions against the supreme court ruling indicate that state level marriage equality laws may be aggravating the imbalanced distribution of same and different sex couple households across the country

the solvency of financial institutions in spain lessons from securitization on analysing a sample of spanish banks we find that securitization has a slightly negative impact on the soundness of the issuing entity an unbalanced dynamic panel model was estimated using the forward orthogonal deviations gmm method and used to analyse 537 traditional securitizations issued by 61 banks between 1998 and 2012 the analysis revealed that the entities soundness became weaker immediately prior to the crisis but this effect became insignificant after 2007 securitization has facilitated a process of regulatory capital arbitrage leading to lower capital requirements while at the same time giving rise to a slight worsening of the quality of the originators portfolios it was found that profitability liquidity and inflation positively affect solvency while changes in short term interest rates affect it negatively

loan sales and the cost of corporate borrowing when a loan is sold it goes to a lower cost financing source than its originator yet lending markets are less than perfectly competitive despite the lower funding cost therefore the loan price is not necessarily more favorable to the borrower however corporate borrowers are averse to the participation of their loans to other lenders because of the complexity of dealing with multiple banks and the potential information costs of the sale announcement consequently i conjecture that the borrower extracts a price concession in exchange for allowing the bank to sell participations in the loan using a hand matched dataset of loans borrowers and lenders i find that the average yield spread on loans originated by active loan sellers is about 20 basis points lower than the average spread on loans originated by moderate loan sellers copyright 2006 oxford university press

of free markets and a secular mind the value of economic decentralization and individual secular values in entrepreneurship building upon hayek s seminal work regarding the benefits of market decentralization in this study we examine the complementary role of an individual s secular values in further explaining the association between decentralization of economic affairs entrepreneurial activity and self employment we argue that studies on hayek s notion of decentralization may be incomplete in their conceptualization without a transition to individual morality based on more secular values we consider decentralization of economic affairs and secular values to explain why entrepreneurial activity differs across countries in study 1 we find that the decentralization of economic affairs increases the odds of being an entrepreneur in a startup but does not influence the likelihood of owning managing a business or perceptions related to the opportunity to start a business in study 2 we find evidence of mixed support for decentralization and self employment however with meaningful effect sizes but with marginal significance we find that an individual s secular values complement the association between decentralization of economic affairs and self employment the findings are robust to alternate specifications by demonstrating the role of secular values in strengthening decentralization we lay the foundation for melding economic perspectives with the freedom from religious ethos as an important consideration for entrepreneurial activity however the mixed effects of decentralization on different modes of entrepreneurship also call into question the value of decentralization in modern economies plain english summary higher levels of individual secular values even by a small amount enhance the benefits that economic decentralization can have on entrepreneurial activity in this paper we use a two study approach to examine how individual secular values might influence the effects of economic decentralization on entrepreneurial activity in study 1 we find that the decentralization of economic affairs increases the odds of being an entrepreneur in a startup but does not influence the likelihood of owning managing a business or individual perceptions related to existing opportunities to start a business in study 2 we find evidence of mixed support for the effects of economic decentralization on self employment however we find some evidence suggesting that an individual s secular values complement the association between decentralization of economic affairs and self employment thus the principal implication of this study is that policymakers should take into consideration the overall secular values present in society when making decisions regarding economic decentralization particularly with regard to understanding the potential effects that decentralization could have on entrepreneurial activity

institutions freedom and technical efficiency the impact of institutions on economic performance is currently the subject of much research in this study we use panel data to estimate a stochastic production frontier and the sources of inefficiency for a broad set of countries a maximum likelihood procedure is used to estimate the parameters for the stochastic production frontier and the determinants of inefficiency simultaneously our results show that institutions that promote greater economic freedom in turn promote efficiency

securitization with recourse an instrument that offers uninsured bank depositors sequential claims abstract this paper expands on the observation that securitization with recourse offers a lender the protections of an uninsured bank deposit with an additional senior claim if the bank fails the senior claim derives from the commitment of the revenues from a group of securitized assets that pay off the securitized lender first thus securitization with recourse provides sequential claims for bank liability holders which improves the allocation of risk sharing among them securitization with recourse may also improve the selection of loans granted by partially offsetting the moral hazard incentives toward risk taking created by fixed rate deposit insurance empirical results are given which are consistent with the theoretical model