liquidity constraints and labor supply abstract in this paper we shed some light on how restrictions in financial markets the so called liquidity constraints might act in affecting labour supply decisions of italian workers one way to neutralize the existence of binding liquidity constraints is simply by supplying additional labor instead of reducing consumption we estimate whether resorting to additional labor supply as a smoothing consumption device is at work by using the italian survey of households income and wealth shiw the longitudinal dimension of the shiw dataset allows us to control for individual unobserved heterogeneity we also use an iv strategy to address the endogeneity of our measure for credit constraints in labor supply equations due to time varying factors our results show that liquidity constraints increase the intensity in the supply of men s labor constrained men work on average 4 hours more than their unconstrained counterpart self employed workers turn out to be more sensitive to binding liquidity constraints possibly because they are more flexible in adjusting the intensity of their labor supply

nonmonetary effects of the financial crisis in propagation of the great depression this paper examines the effects of the financial crisis of the 1930s onthe path of aggregate output during that period our approach is complementary to that of friedman and schwartz who emphasized the monetary impact of the bank failures we focus on non monetary primarily credit related aspects of the financial sector output link and consider the problems of debtors as well as those of the banking system we argue that the financial disruptions of 1930 33 reduced the efficiency of the credit allocation process and that the resulting higher cost and reduced availability of credit acted to depress aggregate demand evidence suggests that effects of this type can help explain the unusual length and depth of the great depression this abstract was borrowed from another version of this item

exposure to female colleagues breaks the glass ceiling evidence from a combined vignette and field experiment abstract we study discrimination among recruits in the norwegian armed forces during boot camp in a vignette experiment female candidates are perceived as less suited to be squad leaders than their identical male counterparts adding positive information leads to higher evaluations of the candidates but does not reduce the amount of discrimination however randomized intense collaborative exposure to female colleagues reduces discriminatory attitudes male soldiers who were randomly assigned to share room and work in a squad with female soldiers during the recruit period do not discriminate in the vignette experiment

banking development socioeconomic structure and income inequality abstract using rich unique data from the italian local credit markets provinces this paper investigates the impact of local banking development on income inequality and the role of the socioeconomic structure in this link exploiting the italian historical banking regulation to instrument for the local presence of bank branches we find that local banking development mitigates income inequality however the finance inequality nexus manifests itself only in relatively advanced areas when we study the structural channels of influence we uncover evidence that banking development can reduce inequality by affecting geographical mobility and urbanization while it has modest effects through the development of material infrastructures and human capital

the finance growth nexus evidence from bank branch deregulation this paper provides evidence that financial markets can directly affect economic growth by studying the relaxation of bank branch restrictions in the united states we find that the rates of real per capita growth in income and output increase significantly following intrastate branch reform we also argue that the observed changes in growth are the result of changes in the banking system improvements in the quality of bank lending not increased volume of bank lending appear to be responsible for faster growth

ethnic discrimination evidence from china abstract we study the role of ethnicity in experimental labor markets where employers determine wages of workers who perform a real effort task this task requires a true skill which we show is not affected by minority status in some treatments we provide subtle priming to employers about minority status of workers as commonly depicted on chinese hukou identification system we conduct our experiments at two sites located in provinces that differ by their historical shares of ethnic groups in the population we find that 1 han and minority workers are equally productive in both provinces 2 in the diverse province there is no difference in the wages between han and minority workers 3 in the non diverse province minority workers receive 4 7 lower wages than han workers

the colorblind crowd founder race and performance in crowdfunding the dearth of minority entrepreneurs has received increasing media attention but few academic analyses in particular the funding process creates challenges for either audit or correspondence methods making it difficult to assess the role or type of discrimination influencing resource providers we use a novel approach that combines analyses of 7 617 crowdfunding projects with an experimental design to identify whether african american men are discriminated against and whether this reflects statistical taste based or unconscious bias on the part of prospective supporters we find that african american men are significantly less likely than similar white founders to receive funding and that prospective supporters rate identical projects as lower in quality when they believe the founder is an african american male we conclude that the reduction in perceived quality does not reflect conscious assumptions of differences in founder ability or disamenity but rather an unconscious assumption that black founders are lower quality in two additional experiments we identify three means of reducing this bias through additional evidence of quality via third party endorsements i e awards evidence of prior support through evidence that african american founders have succeeded previously and by removing indicators of the founder s race the online appendix is available at https doi org 10 1287 mnsc 2017 2774 this paper was accepted by toby stuart entrepreneurship and innovation

financial intermediation and endogenous growth an endogenous growth model with multiple assets is developed agents who face random future liquidity needs accumulate capital and a liquid but unproductive asset the effects of introducing financial intermediation into this environment are considered conditions are provided under which the introduction of intermediaries shifts the composition of savings toward capital causing intermediation to be growth promoting in addition intermediaries generally reduce socially unnecessary capital liquidation again tending to promote growth

financial integration capital mobility and income convergence recent studies have found that capital moves uphill from poor to rich countries and brings little or no growth dividend when it does flow into poor economies we show that europe does not conform to this paradigm in the european experience of financial integration capital has flown from rich to poor countries and such inflows have been associated with significant acceleration of income convergence analysing broader samples of countries we find that downhill capital flows tend to be observed above certain thresholds in institutional quality and financial integration but europe remains different even when allowing for such threshold effects and its experience is similar to that of interstate flows within the united states our findings are consistent with the notion that financial diversification reduces countries incentives to save in order to self insure against specific shocks abdul abiad daniel leigh and ashoka mody

enabling the original intent catalysts for social entrepreneurship as capitalist economies have shifted their primary focus from providing goods and services for all to concentrating wealth at the top echelons of societies social entrepreneurs have been one source of re capturing the original intent of capitalism social entrepreneurs have combined the efficiency and effectiveness of business organizations with the social concerns of many non profit and governmental agencies as a result social entrepreneurship is viewed as having significant potential for alleviating many of the social ills we now face to accomplish this mission however will require expansion of social enterprises beyond their current footprints we explore alternate methods of expansion scaling and replication and then examine potential catalysts which can enable social entrepreneurs to attain their goals of social improvement the catalysts we identify are effectual logic enhanced legitimacy through appropriate reporting metrics and information technology we conclude with two brief case studies that exemplify how these catalysts are currently working to enhance the effectiveness of social start ups

industry growth and capital allocation does having a market or bank based system matter are market based or bank based financial systems better at financing the expansion of industries that depend heavily on external finance facilitating the formation of new establishments and improving the efficiency of capital allocation across industries we find evidence for neither the market based nor the bank based hypothesis while legal system efficiency and overall financial development boost industry growth new establishment formation and efficient capital allocation having a bank based or market based system per se does not seem to matter much

race and gender discrimination in bargaining for a new car more than three hundred paired audits at new car dealerships reveal that dealers quoted significantly lower prices to white males than to black or female test buyers using identical scripted bargaining strategies ancillary evidence suggests that the dealerships disparate treatment of women and blacks may be caused by dealers statistical inferences about consumers reservation prices but the data do not strongly support any single theory of discrimination copyright 1995 by american economic association

when being in the minority pays off relationships among sellers and price setting in the champagne industry economic sociologists have studied how social relationships shape market prices by focusing mostly on vertical interactions between buyers and sellers in this article we examine instead the price consequences of horizontal relationships that arise from intergroup processes among sellers our setting is the market for champagne grapes using proprietary transaction level data we find that female grape growers a minority in the growers community charge systematically higher prices than do male grape growers we argue that the underlying mechanism for this unexpected pattern of results involves the relationships developed and maintained by minority members specifically in depth fieldwork reveals that female growers get together to compensate for their isolation from the majority this behavior enables them to overcome local constraints on the availability of price relevant information constraints that stem from prevailing norms of market behavior individualism and secrecy we discuss the implications

regional growth and finance in europe is there a quality effect of bank efficiency abstract in this study we test whether regional growth in 11 european countries depends on financial development and suggest the use of cost and profit efficiency estimates as quality measures of financial institutions contrary to the usual quantitative proxies of financial development the quality of financial institutions is measured in this study as the relative ability of banks to intermediate funds an improvement in bank efficiency spurs five times more regional growth then an identical increase in credit does more credit provided by efficient banks exerts an independent growth effect in addition to direct quantity and quality channel effects

bank mergers and crime the real and social effects of credit market competition using a unique sample of commercial loans and mergers between large banks we provide micro level within county evidence linking credit conditions to economic development and find a spillover effect on crime neighborhoods that experience more bank mergers are subject to higher interest rates diminished local construction lower prices an influx of poorer households and higher property crime in subsequent years the elasticity of property crime with respect to merger induced banking concentration is 0 18 we show that these results are not likely due to reverse causation and confirm the central findings using state branching deregulation to instrument for bank competition we examine the real and social impact of local credit competition by documenting a link between the competitiveness of the local banking market credit conditions urban development and crime several recent studies peek and rosengren 2000 cetorelli and gambera 2001 klein peek and rosengren 2002 and burgess and pande 2003 tie credit market imperfections to diminished real economic activity and growth other studies connect the economic environment to property crime freeman 1999 levitt 2001 raphael and winter ebmer 2001 and nilsson 2004 it is reasonable to hypothesize therefore that reductions in bank competition may lead to economic decline and subsequently increases in property crime we empirically investigate the effects of bank consolidation and increased market power on credit availability and real activity using a unique sample of commercial loans and mergers between large banks in the 1990s we provide micro level evidence that garmaise is from the ucla anderson school and moskowitz is from the graduate school of business university of chicago and nber we have benefited from the suggestions and comments of tony bernardo marianne bertrand phillip bond doug diamond mark duggan eugene fama

related lending and banking development does related lending have positive or negative effects on the development of banking systems we analyze a unique cross country data set covering 74 countries from 1990 to 2007 and find that related lending on average does not have any effect on the growth of credit we do find however that there are conditional relationships related lending tends to retard the growth of banking systems when rule of law is weak whereas it tends to promote the growth of banking systems when rule of law is strong we also find that related lending appears to be associated with looting when banks are owned by non financial firms but that it does not do so when non financial firms are owned by banks our results indicate that whether related lending is positive or pernicious depends critically on the institutional context in which it takes place there is no single best policy regarding related lending these findings are robust to alternative specifications including iv regressions

the real costs of credit access evidence from the payday lending market using geographic differences in the availability of payday loans i estimate the real effects of credit access among low income households payday loans are small high interest rate loans that constitute the marginal source of credit for many high risk borrowers i find no evidence that payday loans alleviate economic hardship to the contrary loan access leads to increased difficulty paying mortgage rent and utilities bills the empirical design isolates variation in loan access that is uninfluenced by lenders location decisions and state regulatory decisions two factors that might otherwise correlate with economic hardship measures further analysis of differences in loan availability over time and across income groups rules out a number of alternative explanations for the estimated effects counter to the view that improving credit access facilitates important expenditures the results suggest that for some low income households the debt service burden imposed by borrowing inhibits their ability to pay important bills copyright 2011 oxford university press

financial development financial fragility and growth the authors study the apparent contradiction between two strands of the literature on the effects of financial intermediation on economic activity on the one hand the empirical growth literature finds a positive effect of financial depth as measured by for instance private domestic credit and liquid liabilities for example levine loayza and beck 2000 on the other hand the banking and currency crisis literature finds that monetary aggregates such as domestic credit are among the best predictors of crises and their related economic downturns for example kaminski and reinhart 1999 the authors account for these contrasting effects based on the distinction between the short and long run impacts of financial intermediation working with a panel of cross country and time series observations they estimate an encompassing model of short and long run effects using the pooled mean group estimator developed by pesaran shin and smith 1999 their conclusion from this analysis is that a positive long run relationship between financial intermediation and output growth coexists with a mostly negative short run relationship the authors further develop an explanation for these contrasting effects by relating them to recent theoretical models by linking the estimated short run effects to measures of financial fragility namely banking crises and financial volatility and by jointly analyzing the effects of financial depth and fragility in classic panel growth regressions

local financial development and household welfare in vietnam evidence from a panel survey we examine the impact of local financial development on household welfare in vietnam we employ household level panel data for the periods 2007 2008 2010 and 2013 covering three provinces and mea

contemporary echoes of segregationist policy spatial marking and the persistence of inequality the home owners loan corporation holc established in the us during the great depression to provide relief to a failing housing market had a lasting effect through institutionalising the segreg

three decades of italian comparative advantages he structure of italian exports its characteristics its changes over time its causes and implications in terms of income and growth employment and fragility with respect to domestic and international shocks has been the issue around which at least three generations of italian economists have discussed and disagreed over the last 30 years if one has to attribute to one single cause the origin of this multi faceted debate that very cause would be the perplexity associated with the evidence of italy being on the one hand a large industrialised country with per capita income comparable to the top high income oecd members world bank 2004 and on the other hand being characterised by an export composition where traditional low skilled labour intensive sectors oecd 2001 and peneder 2003 such as textiles wearing apparel leather products furniture and footwear still play a relevant role this anomaly in the italian trade structure with respect to one of its fellow members of the g7 and its high level of persistence is what makes of italy a case in the international trading system this paper describes the primary feature giving rise to this debate the italian export composition and its evolution over time the analysis makes use of the revealed comparative advantage rca index associated with the name of bela balassa and through non parametric statistical techniques estimates the empirical the author is very grateful to miur prin pie 2003 and jetro for the financial support and to giancarlo spagnolo for his encouragement discussions with matteo bugamelli giuliano conti davide castellani sergio de nardis paolo guerrieri fabrizio onida and lucia tajoli are gratefully acknowledged the author thanks riccardo faini for sharing his work on the topic and lucia piscitello for making her districts taxonomy available he also benefited from the comments of two anonymous referees that largely influenced the restructuring of the paper many of the arguments of this paper come from the inspiring discussions the author had over the years with massimo tamberi all remaining errors and omissions are the author s own responsibility the data sets and the rscript used in the paper can be downloaded from the webpage http www economiamc org debenedictis

personal bankruptcy and credit supply and demand this paper examines how personal bankruptcy and bankruptcy exemptions affect the supply and demand for credit while generous state level bankruptcy exemptions are probably viewed by most policy makers as benefiting less well off borrowers our results using data from the 1983 survey of consumer finances suggest that they increase the amount of credit held by high asset households and reduce the availability and amount of credit to low asset households conditioning on observable characteristics thus bankruptcy exemptions redistribute credit toward borrowers with high assets interest rates on automobile loans for low asset households also appear to be higher in high exemption states

social entrepreneurship in non munificent institutional environments and implications for institutional work insights from china we investigate the research question why are there very few social enterprises in china our findings unpack four types of institutional challenges to social entrepreneurship as perceived by social entrepreneurs norms of a strong role for government misunderstood or unknown role for social enterprises non supportive rules and regulations and lack of socio cultural values and beliefs in support of social goals we contribute to the literature on social enterprises by showing how an institutional environment may be non munificent i e non supportive for the existence of social enterprises and their goals and we thus address the need for more attention to the institutional environment in which social entrepreneurship takes place further by using q methodology on 42 social entrepreneurs along with illustrative qualitative data from interviews we address the need to go beyond anecdotal case studies and introduce methodological plurality in social entrepreneurship research finally our findings on institutional challenges provide us with an opportunity to discuss how social entrepreneurs may engage with purposive activities to overcome such challenges leading us to initiate a conversation between the social entrepreneurship and institutional work literatures

regulation and preemptive technology adoption two rival firms must decide if and when to adopt a new technology knowing how adoption costs decline over time and how profit flows vary with adoption patterns in many cases price and entry regulations beneficially slow technology adoption by making preemption strategies less attractive in some cases these regulations can so discourage a firm from preemption as to change the order in which firms adopt new technologies speeding one firm s adoption date and slowing the other s in the context of a particular scenario for cable and telephone companies adoption of new fiber optic technologies the case for lifting the cross ownership ban depends on the extent to which telephone companies are able to implement a superior technology reregulation of cable companies strengthens this case

what s in a picture evidence of discrimination from prosper com abstract we find evidence of significant racial disparities in a new type of credit market known as peer to peer lending loan listings with blacks in the attached picture are 25 to 35 percent less likely to receive funding than those of whites with similar credit profiles despite the higher average interest rates charged to blacks lenders making such loans earn a lower net return compared to loans made to whites with similar credit profiles because blacks have higher relative default rates these results provide insight into whether the discrimination we find is taste based or statistical

the visible hand race and online market outcomes we examine the effect of race on market outcomes by selling ipods through local online classified advertisements throughout the us each advertisement features a photograph including a dark or light skinned hand or one with a wrist tattoo black sellers receive fewer and lower offers than white sellers and the correspondence with black sellers indicates lower levels of trust black sellers outcomes are particularly poor in thin markets suggesting that discrimination may not survive competition among buyers and those with the most racial isolation and property crime consistent with channels through which statistical discrimination might operate economic outcomes in the us are highly correlated with race but the causal mechanisms underlying these correlations are not well understood in particular it remains unclear how much of the correlation is due to discrimination and how much is due to other characteristics that are correlated with race such as education there is an extensive literature on the effect of race on market outcomes focusing on both labour and goods including housing markets however discrimination is not a monolithic phenomenon and it is important to investigate its extent and causes in a variety of different contexts across which they may differ our study asks the following question when the typical person engages in a consumer transaction usually as a buyer does he or she try to avoid dealing with minority sellers and does she treat minority sellers differently

do landlords discriminate in the rental housing market evidence from an internet field experiment in us cities abstract this paper tests for racial discrimination in the rental housing market using matched pair audits conducted via e mail for rental units advertised on line we reveal home seekers race to landlords by sending e mails from names with a high likelihood of association with either whites or african americans generally discrimination occurs against african american names however when the content of the e mail messages insinuates home seekers with high social class discrimination is non existent racial discrimination is more severe in neighborhoods that are near tipping points in racial composition and for units that are part of a larger building

what constrains financial inclusion for women evidence from indian micro data summary the role and relevance of gender in financial inclusion has been an evolving area of research in recent times although there are several cross country studies on this aspect few within country studies have addressed this issue in a comprehensive manner in this context exploiting disaggregated household level data for india we analyze the interface between gender and finance more specifically we examine whether gender matters for financial inclusion and if so what are the possible factors that influence this relationship our findings suggest significant disparity in both the access to as well as the use of finance by gender on average female headed households are 8 less likely to access formal finance and 6 more likely to access informal finance as compared to households that are headed by males after taking into account other relevant household and state level characteristics that are important in explaining financial access by households similar evidence carries over to the use of finance households headed by female use 20 less cash loans as compared to male headed households subsequently we investigate the possible channels which impede financial inclusion for female headed households our analysis highlights that for female headed households education and wages are more relevant in explaining the access to finance whereas political and social factors are much more germane in explaining the use of finance

does deposit insurance increase banking system stability an empirical investigation based on evidence of 61 countries in 1980 97 the authors find that explicit deposit insurance tends to be detrimental to bank stability the more so where bank interest rates are deregulated and the institutional environment is weak the adverse impact of deposit insurance on bank stability tends to be stronger the more extensive is the coverage offered to depositors and where the scheme is funded and run by the government rather than the private sector

financial intermediation and economic performance historical evidence from five industrialized countries this paper examines the nature of links between the intensity of financial intermediation and economic performance that operated in the united states the united kingdom canada norway and sweden over the 1870 1929 period after describing the coevolution of the financial and real sectors in these countries vector error correction models vecms establish the quantitative importance of long run relationships among measures of financial intensity and real per capita levels of output and the monetary base granger causality tests then suggest a leading role for the intermediation variables in real sector activity while feedback effects are largely insignificant the results suggest an important role for intermediation in the rapid industrial transformations of all five countries

financial development and pathways of growth state branching and deposit insurance laws in the united states 1900 1940 abstract this paper studies the effect of state level banking regulation on financial development and on components of state level growth in the united states from 1900 to 1940 we use these banking laws to assess the findings of a large recent literature that has argued that financial development contributes to economic growth we contend that the institutional mechanism leading to financial development is important in determining its consequences and that some types of financial development can even retard economic growth for the united states from 1900 to 1940 we argue that the financial expansion induced by expanded bank branching accelerated the mechanization of agriculture and spurred growth in manufacturing in contrast financial expansions induced by state deposit insurance had negative consequences for both the agricultural and manufacturing sectors

are emily and greg more employable than lakisha and jamal a field experiment on labor market discrimination we study race in the labor market by sending fictitious resumes to help wanted ads in boston and chicago newspapers to manipulate perceived race resumes are randomly assigned african american or white sounding names white names receive 50 percent more callbacks for interviews callbacks are also more responsive to resume quality for white names than for african american ones the racial gap is uniform across occupation industry and employer size we also find little evidence that employers are inferring social class from the names differential treatment by race still appears to still be prominent in the u s labor market jel j71 j64

bank competition and firm creation we investigate the effects of competition in the financial sector on the creation of firms in the nonfinancial sector explicitly allowing for heterogeneous effects across borrowers characterized by different degrees of asymmetric information we find evidence of a bell shaped relationship between bank competition and firm creation in addition consistently with theories arguing that competition may reduce the availability of credit to informationally opaque firms we find that bank competition results less favorable to the emergence of new firms in industrial sectors where informational asymmetries are more important

foreign entry and the mexican banking system 1997 2007 proquest denotes formulae omitted in recent years governments around the world have been opening up their banking systems to foreign competition with the expectation of making them more efficient stable and resilient to shocks academics and policymakers have therefore been exploring the effects of foreign bank entry from both a theoretical and an empirical point of view most studies conclude that foreign entry increases the contestability of markets thereby reducing administrative costs lowering net interest margins nims and driving down bank rates of return nevertheless as clarke and others note much of what we know comes from cross country studies that are heavily weighted toward developed economies 1 this is particularly crucial because the impact of foreign entry may vary with the level of economic development 2the literature to date on foreign bank entry in developing economies does not provide a consensus set of results there is some evidence that foreign entry increases social welfare clarke cull and martinez peria find that enterprises in countries with high levels of foreign bank participation tend to rank interest rates and access to long term loans as lesser constraints on their operations and growth than do enterprises in countries with low levels of foreign bank participation 3 martinez peria and mody analyzing a group of latin american cases in a pooled time series cross sectional framework find that foreign banks charge lower interest rate spreads than domestically owned banks 4 they also find that foreign bank entry is associated with an overall increase in administrative efficiency and a decrease in interest spreads suggesting that foreign entry spurred competition denizer obtains similar results in a study of turkey foreign entry reduced domestic bank overhead expenses as well as bank profitability 5 unite and sullivan find that foreign entry was associated with declines in interest rate spreads overhead expenses and profits in the philippines but the effect was confined to domestic banks that had been tied to business groups 6 kasekende and sebudde report that foreign banks in uganda have better internal control mechanisms than domestic banks in terms of judging the quality of borrowers 7not all the evidence points in the same direction however havrylchyk finds that foreign banks in poland are more efficient than domestic banks but then shows that the efficiency gains are all located in so called greenfield banks domestic banks that are acquired by foreign banks do not become more efficient 8 cardim de carvalho finds no differences between foreign and domestic banks in brazil in terms of credit allocation or technical efficiency 9 indeed technical progress in online banking and automation in brazil has been introduced more aggressively by domestically owned banks claessens demirguc kunt and huizinga find that foreign banks operating in developing economies have higher overhead expenses charge higher interest margins and earn higher rates of return than domestic banks 10foreign banks may also be less willing to extend credit on the basis of softknowledge about firms than domestically owned banks studies of argentina and pakistan suggest that foreign entry may therefore give larger firms even greater advantages by exacerbating problems of differential access to capital 11 the finding that foreign banks eschew soft knowledge lending is supported by multicountry studies that use panel data techniques detragiache tressel and gupta report that foreign entry in a panel of poor economies is associated with a net reduction in total lending to the private sector foreign banks appear to have skimmed offthe best credit risks leaving domestic banks with a pool of weaker borrowers from which to select 12 a related body of research suggests that foreign banks represent a trade offfor a developing country galindo micco and powell develop a model and present evidence indicating that foreign banks may be less susceptible to funding shocks than domestic banks because they can tap capital from their home institutions but at the same time foreign banks are more reactive to shocks that affect expected returns

discrimination in mortgage lending evidence from a correspondence experiment we design and implement an experimental test for differential response by mortgage loan originators mlos to requests for information about loans our e mail correspondence experiment is designed to analyze differential treatment by client race and credit score our results show net discrimination by 1 8 of mlos through non response we also find that mlos offer more details about loans and are more likely to send follow up correspondence to whites the effect of being african american on mlo response is equivalent to the effect of having a credit score that is 71 points lower

business cycles and the relationship between concentration and price cost margins using a newly constructed panel data base we examine changes in price cost margins in 284 manufacturing industries between 1958 and 1981 a key finding is a dramatic narrowing of the spread between the margins of concentrated and unconcentrated industries over this period we provide evidence that this narrowing is a result of the greater sensitivity of price cost margins in more concentrated industries to demand fluctuations this finding is robust to the inclusion of other industry variables and to measures of import competition the results indicate that cross sectional estimates of the concentration margins relationship are likely to be both biased and misleading

customer racial discrimination in the market for memorabilia the case of baseball because consumer discrimination can reduce productivity it is often impossible to tell whether differential productivity is the effect of discrimination or of differential ability detailed data for the sports labor market make it possible to separate consumer discrimination from ability we use a unique approach to determine whether the entertainment value of baseball players is related to their race we examine whether race directly affects the value of a player in the market for baseball cards in contrast to studies that use salaries there is no room for owner or coworker discrimination our evidence supports the hypothesis of consumer discrimination

discrimination in the rental housing market a field experiment on the internet this paper presents a field experiment on discrimination in the housing market using the internet as a research platform the procedure involved our creating three fictitious persons with distinct

the role of social capital in financial development to identify the effect of social capital on financial development we exploit social capital differences within italy in high social capital areas households are more likely to use checks invest less in cash and more in stock have higher access to institutional credit and make less use of informal credit the effect of social capital is stronger where legal enforcement is weaker and among less educated people these results are not driven by omitted environmental variables since we show that the behavior of movers is still affected by the level of social capital of the province where they were born

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

gender differences in bargaining outcomes a field experiment on discrimination abstract relying on a commonly used fixed offer bargaining script we examine gender differences in bargaining outcomes in a highly competitive and frequently used market the taxi market in lima peru our bargaining script secures that only the seller can change prices and terminate negotiations thus we are able to examine differences in the seller s entire path of negotiation and in the reservation price at which they are willing to trade we find that male and female passengers who use the same bargaining script are not treated equally men face higher initial prices final prices and rejection rates these differences are consistent with male drivers being more reluctant to give in to demanding negotiations by male passengers and with male passengers being perceived as having high valuations to identify whether taste based or statistical discrimination drives the inferior treatment of men we conduct an experiment where passengers send a signal on valuation before negotiating the signal eliminates gender differences and the response is shown only to be consistent with statistical discrimination thus in the limiting case of a highly competitive market with experienced traders we do not find evidence of taste based discrimination the differential observed is however consistent with statistical discrimination

a natural experiment on discrimination in elections abstract we exploit a natural experiment to study discrimination in elections in illinois republican presidential primaries voters vote for delegates bound to presidential candidates but delegates names convey information about their race and gender we identify discrimination from variation in vote totals among delegates bound to the same presidential candidate and who face the same voters examining delegate vote totals from 2000 to 2016 we estimate nonwhite delegates receive 9 fewer votes we find essentially no gender discrimination negligible incentives for statistical discrimination costs to preferred presidential candidates and heterogeneity are consistent with an interpretation of this behavior as taste based

deposit insurance around the world in the past two decades in a series of banking crises around the world banks have become systematically insolvent these crises have occurred in developed and developing economies alike to make such financial system breakdowns less likely and to limit their costs if they occur policymakers feel the need for financial safety nets these include such policies as implicit or explicit deposit insurance a lender of last resort function of the central bank bank insolvency resolution procedures and bank regulation and supervision of these policies explicit deposit insurance has been gaining popularity in recent years since the 1980s the number of countries with explicit deposit insurance schemes almost tripled with most oecd countries and an increasing number of developing economies adopting some form of explicit depositor protection in 1994 deposit insurance became the standard for the newly created single banking market of the european union establishing an explicit deposit insurance scheme became part of the generally accepted best practice advice given to developing economies

bringing institutions into performance persistence research exploring the impact of product financial and labor market institutions this study challenges the implicit assumption of homogeneity in national institutional environments made in past studies of firm performance persistence we propose that home country institutions matter we focus on the impact of formal institutions in the product financial and labor markets arguing that they affect the size of pools of exchange partners and the types of exchanges allowed and condoned ultimately these restrictions affect competitive intensity among firms and firm performance persistence using data for over 10 000 firms from 33 countries over a 10 year time frame we show that antitrust law strength a product market institution designed to prevent collusion among firms is associated with decreases in performance persistence unskilled labor market flexibility a labor market institution that reduces legal constraints imposed on residual claimants managers and owners to take necessary actions to maintain or enhance profitability is associated with increases in performance persistence product liability law effectiveness another product market institution and corporate control market development a financial market institution are positively associated with performance persistence only in the case of mnes the two remaining financial and labor market institutions public equity market development respectively skilled labor market availability have a positive respectively negative impact for domestic firms only

relationship banking liquidity and investment in the german industrialization close bank relationships are thought to ameliorate firms liquidity constraints a phenomenon frequently measured by liquidity sensitivity of investment using german firms during the formative years of universal banking 1903 1913 this paper shows that even controlling for selection bias investment is more sensitive to internal liquidity for bank networked firms than unattached firms the firm exhibiting the greatest liquidity sensitivity however faced no apparent liquidity constraint the findings yield two implications they support recent research rejecting a linear relationship between liquidity sensitivity and financing constraints and they suggest that relationship banking provides no consistent lessening of firms liquidity sensitivity

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

how important are banks for development national banks in the united states 1870 1900 abstract do banks matter for growth and if so how this paper examines the effects of national banks in the united states from 1870 to 1900 i use the discontinuity in entry caused by a large minimum size requirement to identify the effects of banking for the counties on the margin between getting a bank and not gaining a bank increased production per person by 10 national banks in rural areas improved agriculture over manufacturing moving counties toward geographic comparative advantage since these banks made few long term loans the evidence suggests that the provision of working capital and liquidity matters for growth

informed lending and security design we examine the role of security design when lenders make inefficient accept or reject decisions after screening projects lenders may be either too conservative in which case they reject positive npv projects or too aggressive in which case they accept negative npv projects in the first case the uniquely optimal security is debt in the second case it is levered equity in equilibrium profitable projects that are relatively likely to break even are financed with debt while less profitable projects are financed with equity highly profitable projects are financed by uninformed arm slength lenders professional lenders have specialized expertise in screening projects unlike the typical entrepreneur to whom they lend they have been exposed to a wide variety of projects in the past professional lenders have experienced loan officers and analysts who know precisely what information is relevant how to treat soft information such as management quality and how to weigh the various pieces of information in making a forecast of the project s cash flows and default risk this paper examines how securities should be optimally designed when lenders make inefficient accept or reject decisions after screening projects in our model screening generates an informative albeit private signal about the project s profitability high signals indicate a positive net present value npv and low signals indicate a negative npv where the project s npv is increasing

from the editors endogeneity in international business research this essay builds on the exposition by thomas et al and focuses on analyzing cause and effect in international business research we attempt to explain how endogeneity problems occur and why they are so prevalent in international business research in a non technical fashion we then discuss the importance of explicitly identifying how the chosen research design best approximates a randomized controlled experiment finally we provide some guidelines on achieving this goal and emphasize the practices that seem most relevant to jibs reviewers in evaluating high quality international business research

deposit insurance and financial development the authors examine the effect of different design features of deposit insurance on long run financial development defined to include the level of financial activity the stability of the banking sector and the quality of resource allocation their empirical analysis is guided by recent theories of banking regulation that employ an agency framework the authors examine the effect of deposit insurance on the size and volatility of the financial sector in a sample of fifty eight countries they find that generous deposit insurance leads to financial instability in lax regulatory environments but in sound regulatory environments deposit insurance does have the desired impact on financial development and growth thus countries introducing a deposit insurance scheme need to ensure that it is accompanied by a sound regulatory framework otherwise the scheme will likely lead to instability and deter financial development in weak regulatory environments policymakers should at least limit deposit insurance coverage

capital structure decisions during a firm s life cycle the study reported here examines the financing choices of small and medium sized firms i e those most vulnerable to information and incentive problems through the lens of the business life cycle we argue that the controversy in the empirical literature regarding the determinants of capital structure decisions is based on a failure to take into account the different degrees of information opacity and consequently firms characteristics and needs at specific stages of their life cycles the results show that in a bank oriented country firms tend to adopt specific financing strategies and a different hierarchy of financial decision making as they progress through the phases of their business life cycle contrary to conventional wisdom debt is shown to be fundamental to business activities in the early stages representing the first choice by contrast in the maturity stage firms re balance their capital structure gradually substituting debt for internal capital and for firms that have consolidated their business the pecking order theory shows a high degree of application this financial life cycle pattern seems to be homogeneous for different industries and consistent over time

entrepreneurship in and around institutional voids a case study from bangladesh abstract in many developing countries those living in poverty are unable to participate in markets due to the weakness or complete absence of supportive institutions this study examines in microcosm such institutional voids and illustrates the activities of an entrepreneurial actor in rural bangladesh aimed at addressing them the findings enable us to better understand why institutional voids originate and to unpack institutional processes in a setting characterized by extreme resource constraints and an institutional fabric that is rich but often at odds with market development we depict the crafting of new institutional arrangements as an ongoing process of bricolage and unveil its political nature as well as its potentially negative consequences

do field experiments on labor and housing markets overstate discrimination a re examination of the evidence since 2000 more than 80 field experiments across 23 countries consider the traditional dimensions of discrimination in labor and housing markets such as discrimination based on race these studies

does market oriented institutional change in an emerging economy make business group affiliated multinationals perform better an institution based view viewing market oriented institutional change as a two staged process we propose that the effects of market oriented institutional change on two organizational forms business group affiliated and independent firms are different depending on the stage of institutional change specifically we examine how the two distinct periods of market oriented institutional change that is institutional friction and institutional convergence affect business group affiliated firms and independent firms in their abilities to profit from international diversification using data on 140 korean manufacturing multinational firms from 1993 to 2003 we find that emerging economy firms face an international diversification discount a negative relationship between international diversification and firm performance we also find that business group affiliation affects the international diversification discount differently during the two periods of market oriented institutional change particularly when firm performance is measured by the market to book value mbv the moderating effect of business group affiliation on the relationship between international diversification and mbv is negative during the institutional frictions period but becomes positive during the institutional convergence period in the later stage of institutional change our findings warn against viewing market oriented institutional change as a discrete event highlighting the importance of recognizing the qualitatively distinctive nature of different periods of market oriented institutional change in future research

sex discrimination in restaurant hiring an audit study in an audit study of sex discrimination in hiring comparably matched pairs of men and women applied for jobs as waiters and waitresses at restaurants in philadelphia in high price restaurants where earnings are higher job applications from women had an estimated probability of receiving a job offer that was lower by about 0 4 and an estimated probability of receiving an interview that was lower by about 0 35 both estimated differentials are statistically significant additional evidence suggests that customer discrimination partly underlies the hiring discrimination

field experiments of discrimination in the market place controlled experiments using matched pairs of bogus transactors to test for discrimination in the marketplace have been conducted for over 30 years and have extended across 10 countries significant persistent and pervasive levels of discrimination have been found against non whites and women in labour housing and product markets rates of employment discrimination against non whites in excess of 25 have been measured in australia europe and north america a small number of experiments have also investigated employment discrimination against the disabled in britain and the netherlands and against older applicants in the united states

a positive theory of social entrepreneurship i propose a theory aimed at advancing scholarly research in social entrepreneurship by highlighting the key trade off between value creation and value capture and explaining when situations of simultaneous market and government failure may arise i suggest that social entrepreneurship is the pursuit of sustainable solutions to neglected problems with positive externalities i further discuss the situations in which problems with externalities are likely to be neglected and derive the central goal and logic of action of social entrepreneurs in contrast to commercial entrepreneurs overall this article provides a conceptual framework that allows understanding the growing phenomena of social entrepreneurship and its role in the functioning of modern society

mafia and public spending evidence on the fiscal multiplier from a quasi experiment a law issued to combat political corruption and mafia infiltration of city councils in italy has resulted in episodes of large unanticipated temporary contractions in local public spending using these episodes as instruments we estimate the output multiplier of spending cuts at provincial level controlling for national monetary and fiscal policy and holding the tax burden of local residents constant to be 1 5 assuming that lagged spending is exogenous to current output brings the estimate of the overall multiplier up to 1 9 these results suggest that local spending adjustment may be quite consequential for local activity jel d72 e62 h71 k42 the widespread resort to fiscal stimulus at the onset of the global crisis and more recently the emerging need to consolidate deficits in response to rising fiscal imbalances have revitalized the empirical debate on the transmission of fiscal policy the multiplier while the literature has mostly focused on aggregate effects at a national level several recent contributions reviewed below have called attention to the local dimension this shift in focus is motivated by specific policy questions combined with the opportunity to exploit institutional information to address econometric issues in identification 1

long lasting bank relationships and growth of firms a puzzling but consistent result in the empirical literature on banking is that firms with close bank ties do not grow faster than bank independent firms in this paper we reconsider the link between relationship lending and firm growth distinguishing firms by size and expansion contraction conditions the idea is that the beneficial effects of relationship lending on information asymmetries can be compensated by other negative capture risk and externality effects which make relational banks reluctant to support long term growth projects of client firms and that the strength of these compensating effects varies with firm size and health status we explore the influence of long lasting bank relationships on employment and asset growth of a large sample of italian firms the main finding is that relationship lending hampers the efforts of small firms to increase their size while it mitigates the negative growth of troubled medium large enterprises

the effects of information and competition on racial discrimination evidence from a field experiment abstract we study racial discrimination by simultaneously selling identical products on ebay in pairs of auctions posted under different racially identifying names we detect significant price differences which are indicative of in group biases white names receive higher prices for distinctively white products and black names receive higher prices for distinctively black products but price differences only emerge for sellers who have low ebay feedback scores in less competitive markets because the price differences dissipate as sellers accumulate credible reputations the patterns in the data are indicative of statistical discrimination overall the results suggest that mechanisms designed to reduce informational asymmetries and increased competition are both effective at reducing discrimination in online auctions

bank privatization finance and growth abstract this paper examines whether privatizing state owned banks improves finance and economic growth to do so we exploit regional banking variations in russia induced by the idiosyncratic creation of specialized banks in the last years of the soviet union 1988 91 that were subsequently privatized starting in 1999 private banks including surviving spetsbanks emerged as an important source of external finance for private firms and households we document that the regional concentration of spetsbanks in the early years of the russian federation is orthogonal to economic fundamentals that are related to growth after the emergence of bank finance results indicate that while privatized banking increased lending significantly it did not increase economic growth however privatization did increase growth when banks retained fewer political connections and when regional property rights were better protected highlighting the importance of both factors

escape from the usa government debt to gdp ratio country tax competitiveness and us oecd cross border m as statutory tax rates of a country do not reflect a country s true tax competitiveness we propose and show that government debt to gdp ratio govdebt of a country is a better proxy for its tax competitiveness using a comprehensive sample of 1 884 completed cross border acquisition transactions from the u s to other oecd countries we document that the u s target country govdebt difference is significantly and positively related to both deal announcement return and post deal tax saving of the acquirer the govdebt difference is also significantly and positively related to u s target country deal flow the findings remain robust when we control for the potential endogeneity of govdebt difference our findings strongly suggest that tax avoidance is an important driver of u s oecd cross border deal flow and it increases shareholder wealth for u s acquirers

market discipline and deposit insurance cross country evidence presented in this paper suggests that explicit deposit insurance reduces required deposit interest rates while at the same time it lowers market discipline on bank risk taking internationally deposit insurance schemes vary widely in their coverage funding and management this reflects that there are widely differing views on how deposit insurance should optimally be structured to inform this debate we use a newly constructed data set of deposit insurance design features to examine how different design features affect deposit interest rates and market discipline

household inequality entrepreneurial dynamism and corporate financing economic theories provide conflicting hypotheses on how wealth inequality affects entrepreneurial dynamism to empirically investigate its impact we construct local measures of household wealth inequality based on financial rents home equity and 1880 farmland we identify its effects on entrepreneurship by instrumenting it with land distribution under the 1862 homestead act or us states removal of death taxes wealth inequality decreases firm entry and exit and the proportion of high tech businesses across metropolitan statistical areas there is also less redistribution into public goods supportive of entrepreneurship such as schooling and the judiciary income per capita consequently grows more slowly

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

finance and the sources of growth the authors evaluate whether the level of development in the banking sector exerts a causal impact on economic growth and its sources total factor productivity growth physical capital accumulation and private saving they use 1 a pure cross country instrumental variable estimator to extract the exogenous component of banking development and 2 a new panel technique that controls for country specific effects and endogeneity they find that banks do exert a large causal impact on total factor productivity growth which feeds through to overall gdp gross domestic product growth the long run links between banking development and both capital growth and private savings are more tenuous

does local financial development matter we study the effects of differences in local financial development within an integrated financial market we construct a new indicator of financial development by estimating a regional effect on the probability that ceteris paribus a household is shut off from the credit market by using this indicator we find that financial development enhances the probability an individual starts his own business favors entry of new firms increases competition and promotes growth as predicted by theory these effects are weaker for larger firms which can more easily raise funds outside of the local area these effects are present even when we instrument our indicator with the structure of the local banking markets in 1936 which because of regulatory reasons affected the supply of credit in the following 50 years overall the results suggest local financial development is an important determinant of the economic success of an area even in an environment where there are no frictions to capital movements

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

investment cash flow sensitivities credit rationing and financing constraints in small and medium sized firms the controversy on whether investment cash flow sensitivity is a good indicator of financing constraints is still unsolved we apply a comprehensive approach by cross validating our analysis with both balance sheet and qualitative data on self declared credit rationing and financing constraints on a sample of mainly small and medium sized firms our qualitative information shows that self declared credit rationing is weakly related to both traditional a priori factors such as firm size age and location and lenders rational decisions taken on the basis of their credit risk models we use the qualitative information on firms which were denied additional credit to provide evidence relevant to the investment cash flow sensitivity debate the evidence shows that self declared credit rationing significantly discriminates between firms which possess or not such sensitivity while a priori criteria do not the same result does not apply when we consider the wider group of financially constrained firms which do not seem to have a higher investment cash flow sensitivity supporting the more recent empirical evidence in this direction