premuneration values and investments in matching markets we analyze a model in which agents make investments and then match into pairs to create a surplus the agents can make transfers to reallocate their pretransfer ownership claims on the surplus mailath postlewaite and samuelson 2013 showed that when investments are unobservable equilibrium investments are generally inecient in this paper we work with a more structured model that is suciently tractable to analyze the nature of the investment ineciencies we provide conditions under which investment is ineciently high or low and conditions under which changes in the pretransfer ownership claims on the surplus will be pareto improving as well as examine how the degree of heterogeneity on either side of the market aects investment eciency

limits of exact equilibria for capacity constrained sellers with costly search abstract this paper studies finite versions of competitive matching models in which sellers announce prices and buyers understand the relationship between price and probability of trade two equilibrium concepts are studied for finite games subgame perfect equilibrium and rational expectations equilibrium it is shown that the distribution of prices offered by sellers under both equilibrium concepts converges weakly to the same competitive equilibrium distribution of prices furthermore the payoffs that sellers face in both kinds of equilibrium have the market utility property in the limit journal of economic literature classification numbers c78 d41 d45

investments holdup and the form of market contracts the authors analyze incomplete contracts to induce efficient investment with exogenous switching costs fixed price contracts are efficient generate some rigidity in prices are renegotiated intermittently by possibly small amounts and when inflation is positive generate asymmetric responses to shocks all consistent with evidence on prices and wages with two sided specific investments efficiency requires prices to have sufficient escalator clauses to avoid renegotiation as observed in many long term contracts a third case with one sided specific investments can generate take or pay contracts and explain why firms sometimes pay for specific investments that appear to benefit employees directly

portfolio performance evaluation in a mean variance skewness framework abstract astronomical amounts of money are being invested in financial markets consequently the evaluation of portfolio performance has created a great deal of interest among practitioners as well as academic researchers the literature suggests that portfolio efficiency based on mean variance skewness is more desirable than the one based on mean variance however there are no well established procedures to measure efficiency in this framework mainly due to the computational difficulties the aim of this paper is to develop a portfolio performance measure based on mean variance skewness framework by utilizing a non parametric efficiency analysis tool namely data envelopment analysis

efficiency of mutual funds and portfolio performance measurement a non parametric approach abstract in finance portfolio performance assessment is an important area of research the two popular indices of performance are the jensen s alpha and the sharpe index however there are a number of shortcomings of the above measures that have been highlighted in the literature we propose a new measure of performance that seeks to address the limitations of the earlier indices the new index is calculated by employing a well known method in operations research called data envelopment analysis we show the benefits of the proposed approach and assess the performance of mutual funds we compare the results with traditional indices of performance an interesting result we obtain is that the mutual funds are all approximately mean variance efficient

marriage squeeze marriage age and the household savings rate in china abstract recent influential papers claim that single men s saving competition for marriage intensified by an increase in the male to female ratio in the pre marital cohort explains 60 percent of the rise of china s aggregate household savings rate in this paper we analyze whether the marriage competition remains a first order effect on saving when another margin of adjustment to sex ratio imbalance men s postponement of marriage is considered we construct a theoretical and quantitative life cycle model with a frictionless marriage market where a single man s rank is determined by his wealth and age by calibration we find that with the option to postpone marriage the response of the aggregate savings rate to the rising sex ratio is dampened by 45 percent moreover the model generates an unusual downward sloping age savings rate profile with young households saving more than their middle aged counterparts as observed in the data

the role of corruption culture and law in investment fund manager fees this article considers an international sample of venture capital and private equity funds to assess the role of law corruption and culture in setting fund manager fees with better legal conditions fixed fees are lower carried interest fees are higher clawbacks are less likely and share distributions are more likely countries with lower levels of corruption have lower fixed fees and higher performance fees and are less likely to have clawbacks and cash only distributions hofstede s measure of power distance is negatively related to fixed fees and the use of cash only distributions but positively related to performance fees and clawbacks overall the data strongly indicate that corruption culture and legal settings are much more significant in determining fees than fund manager characteristics and or market conditions

frontier based vs traditional mutual fund ratings a first backtesting analysis we explore the potential benefits of a series of existing and new non parametric convex and non convex frontier based fund rating models to summarize the information contained in the moments of the mutual fund price series limiting ourselves to the traditional mean variance portfolio setting we test in a simple backtesting setup whether these efficiency measures fare any better than more traditional financial performance measures in selecting promising investment opportunities the evidence points to a remarkable superior performance of these frontier models compared to most but not all traditional financial performance measures

competing premarital investments this paper studies premarital parental investments in children s wealth where spousal wealth is a public good in marriage by investing in their children s wealth parents increase the wealth of their children and the quality of the spouses that their children can marry in large marriage markets the hedonic return to investment internalizes all the external benefits of premarital investment in wealth so that the competitive equilibrium is efficient marriage market competition also increases investments in small marriage markets relative to no competition but equilibrium investments are not efficient

investment in schooling and the marriage market we present a model in which investment in schooling generates two kinds of returns the labor market return resulting from higher wages and a marriagemarket return defined as the impact of schooling on the marital surplus share one can extract men and women may have different incentives to invest in schooling because of different market wages or household roles this asymmetry can yield a mixed equilibrium with some educated individuals marrying uneducated spouses when the labor market returns to schooling rises home production demands less time and the traditional spousal labor division norms weaken more women may invest in schooling than men

relationship lending under asymmetric information a case of blocked entry abstract a national bank with a low cost of capital can choose to enter a two period credit market and compete with incumbent banks to supply relationship loans to de novo entrepreneurs under short term contracting the terms on loan contracts are determined by market competition in the current period in this setting we find that the second period competitive pressure the national bank exerts on the incumbent banks turns out to give the incumbent banks a first period advantage when trying to attract new clients as a result the low cost bank may be blocked from entering the market

human capital accumulation and the expansion of women s economic rights abstractbetween 1850 and 1920 most u s states enacted laws expanding the rights of married women to own and control their separate property and to own their market earnings the economic approach to property rights implies that as married women gain economic rights the incentive to invest in girls human capital will rise this prediction is tested by examining the impact of these legal changes on girls school attendance rates relative to boys state level census data are used to examine the effects of these changes on school attendance among all school aged children integrated public use microdata series data are used to examine their effect on school attendance among children ages 15 19 who are just beyond compulsory schooling ages consistent with hypothesized effects the empirical analysis shows that expanding women s economic rights resulted in higher relative rates of school attendance by girls and had the largest effect on the 15 19 age group

investment and competitive matching we study markets in which agents first make investments and are then matched into potentially productive partnerships equilibrium investments and the equilibrium matching will be efficient if agents can simultaneously negotiate investments and matches but we focus on markets in which agents must first sink their investments before matching additional equilibria may arise in this sunk investment setting even though our matching market is competitive these equilibria exhibit inefficiencies that we can interpret as coordination failures all allocations satisfying a constrained efficiency property are equilibria and the converse holds if preferences satisfy a separability condition we identify sufficient conditions most notably quasiconcave utilities for the investments of matched agents to satisfy an exchange efficiency property as well as sufficient conditions most notably a single crossing property for agents to be matched positive assortatively with these conditions then forming the core of sufficient conditions for the efficiency of equilibrium allocations

specialization and competition in marriage models abstract i present a marriage model that includes pre marital investments in human capital individuals expect the future role specialization in marriage the specialization effect but at the same time before marriage individuals have the incentive to invest in order to make themselves more attractive the competition effect the interaction of two effects generates multiple equilibria no equilibria are ex ante efficient when the benefits of role specialization exist the competition effect is a source of coordination failure in the match formation this result stands in contrast to those of other models in which the competition effect leads to efficiency in some equilibrium

education matching and the allocative value of romance societies are characterized by customs governing the allocation of non market goods such as marital partnerships we explore how such customs affect the educational investment decisions of young singles and the subsequent joint labour supply decisions of partnered couples we consider two separate matching paradigms for agents with heterogeneous abilities one where partners marry for money and the other where partners marry for romantic reasons orthogonal to productivity or debt these generate different investment incentives and therefore have a real impact on the market economy while marrying for money generates greater investment efficiency romantic matching generates greater allocative efficiency since more high ability individuals participate in the labour market the analysis offers the possibility of explaining cross country differences in educational investments and labour force participation based on matching regimes

pre match investment with frictions the paper explores an environment in which agents are motivated to make unproductive investments with the sole aim of improving their matching opportunities in contrast to existing work i add frictions by allowing the investment to be imperfectly observed the analysis allows for a deeper understanding of the trade off inherent in related models investments waste resources but facilitates more efficient matching patterns i show that greater frictions i do not always lead to inferior matching patterns and ii can force the economy into to a pareto preferred equilibrium

commitment lending under asymmetric information theory and tests on u k startup data u k business startup data is used to examine the role of contract parameters in solving the bank s problem of lending under asymmetric information margins are found to be a direct function of the probability of failure and an inverse function of security for given loan size consistently with collateral being invoked to solve the moral hazard problem business survival is also found to be enhanced by owner equity inputs for given debt again consistent with a requirement for owner financial inputs to enhance unobservable effort security rises along with loan size and survival chances a finding consistent with a a firm loan size effect larger borrowers have lower marginal admin cost to the bank and with b positive borrower self selection better borrowers offer collateral because they are less likely to experience forfeiture observable business characteristics are found to play an important intermediary role in the solution to the moral hazard problem more mature proprietors have more experience business commitment assets for borrowing and the willingness to use them for loan collateral their contract parameters reflect these facts

the benefits of lending relationships evidence from small business data this paper empirically examines how ties between a firm and its creditors affect the availability and cost of funds to the firm we analyze data collected in a survey of small firms by the small business administration the primary benefit of building close ties with an institutional creditor is that the availability of financing increases we find smaller effects on the price of credit attempts to widen the circle of relationships by borrowing from multiple lenders increases the price and reduces the availability of credit in sum relationships are valuable and appear to operate more through quantities rather than prices

does competition solve the hold up problem in an environment in which heterogeneous buyers and sellers undertake ex ante investments the presence of market competition for matches provides incentives for investment but may leave inefficiencies namely hold up and coordination problems this paper shows using an explicitly non cooperative model that when matching is assortative and investments precede market competition buyers investments are constrained efficient while sellers marginally underinvest with respect to what would be constrained efficient however the overall extent of this inefficiency may be large multiple equilibria may arise one equilibrium is characterized by efficient matches but there can be additional equilibria with coordination failures

the investment strategies of publicly sponsored venture capital funds abstract this paper investigates the effects of public ownership on the investment strategy of hybrid vc funds we exploit a unique dataset containing data for all of the venture capital funds in europe that received financial support from the european investment fund eif during the years 1998 2007 the dataset includes 179 vc funds that invested in 2482 companies we find that the level of public ownership shows a weak negative correlation with the likelihood of observing a write off and that a higher public share is associated with a longer duration for the investment the latter effect is more relevant for those investments that generate intermediate financial returns the results are robust to the introduction of controls at the target firm level and for financial market conditions

a theoretical analysis of optimal financing strategies for different types of capital constrained entrepreneurs in this paper we compare two alternative financing strategies that capital constrained entrepreneurs can adopt they can either wait until they raised enough money to complete their project the more conservative strategy or use limited resources to achieve some intermediate milestone before contacting large outside investors such as venture capitalists the more adventurous strategy we examine how the choice of financing strategy is affected by entrepreneurial types life style serial and pure profit maximizing entrepreneur we show that specific entrepreneurial characteristics may ultimately affect the shape of firms as they may pursue different strategies to achieve similar goals the paper generates a number of empirical predictions on security design the interplay between angel and venture capital finance and the professionalization of the venture capital market c 2006 elsevier inc all rights reserved

gender based price discrimination in matching markets this paper develops a new model to analyze price discrimination in matching markets where agents have private information about their respective qualities on the basis of signals car clothing club membership etc purchased from profit maximizing firms men and women form beliefs about each other s qualities the matching must then be stable in the following sense there cannot be a man and woman who are unmatched and who both believe they would be better off if they were matched with one another the model enables an analysis of the impact of third degree or gender based price discrimination on welfare when third degree price discrimination is not feasible the cost of eliciting private information is higher but a monopoly intermediary may have stronger incentives to implement an efficient allocation i show that gender based price discrimination is more likely to have a positive impact the more symmetric the matching environment is

perceived credit constraints in the european union the promotion and support of small and medium sized enterprises smes is an essential component of policies designed to help improve europe s economic performance a crucial issue is whether smes face difficulty obtaining bank loans using pre crisis survey data from 2005 and 2006 for nearly 3 500 smes firms with fewer than 250 employees in the european union eu we investigate the determinants of perceived bank loan accessibility at the firm level and at the country level based on hierarchical multi level binomial logit regressions our findings show that the youngest and smallest smes have the worst perception of access to bank loans the smes in nations with concentrated banking sectors are more positive about loan accessibility in addition a high fraction of foreign owned banks is associated with improved perception of loan accessibility in the eu 15 but not in the eu 10

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

competitive search equilibrium in this paper i construct an equilibrium for markets with frictions which is competitive in the sense that all agents are price takers and maximize utility subject to a set of market parameters i show that the equilibrium allocation is socially optimal i also show how the competitive search equilibrium can be achieved if employers with vacancies can advertise publicly the wages they pay

profit distribution and compensation structures in publicly and privately funded hybrid venture capital funds abstract policy makers have become increasingly concerned at the lack of risk capital available to new and early stage entrepreneurial ventures as a public response to a perceived market failure several governments have set up programs to channel equity finance to capital constrained but high potential young enterprises critically government support is often directed through the agency of private venture capital funds we examine the profit distribution and compensation structures used in these hybrid public private funds we appraise government policy makers ability to use these structures to improve the expected returns in market failure areas in order to attract private sector investors and professional managers to participate in these funds the results derived from our simulation study suggest that such asymmetric profit sharing models can only resolve relatively modest market failures unless the programs also manage to attract highly competent investors who are able to produce above average gross returns in market failure areas

incrementality of sme loan guarantees in many countries loan guarantee programs are important elements of government policy with respect to small and medium sized enterprises smes if loan guarantee schemes are to be effective a majority of firms obtaining assistance through such a scheme ought not to be able to obtain financing from existing sources a property known as incrementality or additionality this paper describes a new approach to measuring incrementality this work uses a two stage process to estimate the incrementality of loans made under the terms of the canada small business financing csbf program first a logistic regression based model of loan outcomes essentially a credit scoring model is estimated based on a large representative sample of smes the resulting model was consistent with prior expectations and exhibited high levels of goodness of fit the model was then employed to classify a sample of firms that had received loans under the terms of the loan guarantee scheme incremental loans ought to be classified as turndowns by the model hence the proportion of loan guarantee recipients that the model classified as turndowns is a direct measure of incrementality for the csbf loan guarantee program incrementality was estimated with 95 confidence as 74 8 9 0

crowdfunding and innovation entrepreneurs have started relying on crowdfunding to fund their investments this paper surveys the literature linking crowdfunding with innovation in entrepreneurial firms two distinct areas are discussed first crowdfunding has the potential to foster innovation by offering new sources of capital to innovation driven firms and thereby reduce the funding gap for innovative startups second crowdfunding offers a way for the crowd to participate in the innovation process by providing feedback to the entrepreneur this feedback can take various forms including providing ideas on the development of the product during and after the campaign in the spirit of crowdsourcing and providing valuable information on the future demand for the new product

marriage specialization and the gender division of labor we consider why the gender division of labor is so often enforced by custom and why customary gender divisions of labor generally involve both direction and prohibition in our formal model agents first learn skills and then enter the marriage market we show that wasteful behavior may emerge due to strategic incentives in specialization choice and human capital acquisition and that both problems may be mitigated through a customary gender division of labor this division is not pareto improving both the distributional effects and welfare gains of a customary gender division of labor decrease as opportunities for market exchange increase

truthtelling in matching markets we analyze a search and matching model with non transferable utility and asymmetric information randomly paired agents go through an evaluation phase at the end of which they discover each other s types and choose to match or not before deciding to enter this phase agents can communicate through cheap talk we provide conditions for this communication to be informative and we examine how it affects agents welfare we show that communication is pareto improving only when the matching is assortative in the absence of communication and left unchanged by information transmission

benefits of control capital structure and company growth this paper studies the influence of the private benefits of control on the capital structure and the growth of private companies it is argued that companies in which existing owners would lose more control if they expanded have smaller equity increases are more highly levered and grow more slowly the dataset covers 8 964 private uk companies with limited liability for up to 5 years potential loss of control is measured as the difference in the probability of winning a vote for the largest owner before and after a hypothetical equity increase consistent with the private benefits of control the results show that companies with a high potential loss of control do indeed have smaller equity increases use more debt and grow more slowly

a spillover based theory of credentialism i propose a model in which credentials such as diplomas are instrumentally valuable to workers the model avoids an important criticism of standard job market signalling models by tying a worker s wage to their output a worker s productivity is influenced by the skills of their co workers where such skills arise from an ability augmenting investment that is made prior to matching with co workers credentials allow workers to demonstrate their investment to the labour market thereby allowing them to match with high skill co workers in equilibrium despite the positive externality associated with a worker s investment i show how overinvestment is pervasive in equilibrium

in the name of the son and the daughter intergenerational mobility in the united states 1850 1940 this paper estimates historical intergenerational elasticities between fathers and children of both sexes in the united states using a novel empirical strategy the key insight of our approach is that the information about socioeconomic status conveyed by first names can be used to create pseudo links across generations we find that both father son and father daughter elasticities were flat during the nineteenth century increased sharply between 1900 and 1920 and declined slightly thereafter we discuss the role of regional disparities in economic development trends in inequality and returns to human capital and the marriage market in explaining these patterns jel d63 j12 j16 j24 j62 n31 n32 the degree to which economic status is passed along generations is key to under standing differences across societies and over time in the extent of inequality a low degree of intergenerational mobility can undermine the notion of equality of opportunity and may lead to persistent inequality recent research reveals that today intergenerational mobility in the united states is lower than in most other developed countries corak 2013 this finding stands in contrast with the national ethos of the united states as the land of unlimited opportunity was this view ever justified in this paper we provide a new perspective on the evolution of intergenerational mobility in the united states in the late nineteenth and early twentieth centuries we extend the existing literature by looking at the intergenerational elasticity in economic status between fathers and children of both sexes focusing only on father son cor relations may miss part of the picture daughters should be included if we want to know how the average well being of a generation correlates with that of their parents

stochastic dominance and expected utility survey and analysis while stochastic dominance has been employed in various forms as early as 1932 it has only been since 1969 1970 that the notion has been developed and extensively employed in the area of economics finance agriculture statistics marketing and operations research in this survey the first second and third order stochastic dominance rules are discussed with an emphasis on the development in the area since the 1980s

innis lecture hedonic equilibrium this paper describes hedonic equilibrium and shows how and why the concept has to be modified when characteristics of traders on both sides of the market are endogenous cet article decrit l equilibre hedonique et montre comment et pourquoi le concept doit etre modifie quand les caracteristiques des agents des deux cotes du marche sont endogenes

the latent demand for bank debt characterizing discouraged borrowers concerns that small firms encounter credit constraints are well entrenched in the literature despite widespread empirical evidence that a relatively small proportion of small firms have their loan applications rejected however many firms may be discouraged from applying for fear of rejection these businesses are the focus of this paper based on responses to a large scale postal survey of uk small and medium sized enterprises smes we find that twice as many businesses were discouraged from applying for a bank loan than had their loan request denied more particularly we observe a number of distinguishing characteristics of discouraged borrowers relative to applicants these include strategy sector prior entrepreneurial experience and banking relationships the implications of our findings for policy and future research are briefly discussed

diversification consistent data envelopment analysis with general deviation measures abstract we propose new efficiency tests which are based on traditional dea models and take into account portfolio diversification the goal is to identify the investment opportunities that perform well without specifying our attitude to risk we use general deviation measures as the inputs and return measures as the outputs we discuss the choice of the set of investment opportunities including portfolios with limited number of assets we compare the optimal values efficiency scores of all proposed tests leading to the relations between the sets of efficient opportunities strength of the tests is then discussed we test the efficiency of 25 world financial indices using new dea models with cvar deviation measures

the timing of education we study an assignment with investment model to highlight a tradeoff between investment in human capital before ex ante system and after ex post system matching on the labor market the ex post system is better at coordinating investment within firms whereas the ex ante system is better at reducing mismatches we further show that the ability to transfer surplus within firms affects mismatches and the relative performance of the two systems at high degrees of transferability they are equivalent but when transferability is very low the ex post system outperforms the ex ante system although with moderate transferability the reverse is true jel i21 i28 j31 j42

microfinance subsidies and local externalities we analyse equilibrium borrowers effort and the cost of microcredit loans in the presence of moral hazard project correlation and subsidies under group lending conditions our results show that under the assumption of endogenous effort project correlation has significant effects on borrowers effort only when it is determined by asymmetric positive or negative shocks these findings indicate that the well known negative effect of within group symmetric project correlation on group lending with joint liability disappears once endogenous effort is taken into account we also analyse the effects of subsidised lending and asymmetric correlation on the relative convenience in terms of borrowers effort of the alternative 1 between group lending and individual lending with notional collateral and 2 among three different market structures of the microfinance industry

data envelopment analysis models of investment funds abstract this paper develops theory missing in the sizable literature that uses data envelopment analysis to construct return risk ratios for investment funds it explores the production possibility set of the investment funds to identify an appropriate form of returns to scale it discusses what risk and return measures can justifiably be combined and how to deal with negative risks and identifies suitable sets of measures it identifies the problems of failing to deal with diversification and develops an iterative approximation procedure to deal with it it identifies relationships between diversification coherent measures of risk and stochastic dominance it shows how the iterative procedure makes a practical difference using monthly returns of 30 hedge funds over the same time period it discusses possible shortcomings of the procedure and offers directions for future research

portfolio selection in multidimensional general and partial moment space abstract this paper develops a general approach for the single period portfolio optimization problem in a multidimensional general and partial moment space a shortage function is defined that looks for possible increases in odd moments and decreases in even moments a main result is that this shortage function ensures sufficient conditions for global optimality it also forms a natural basis for developing tests on the influence of additional moments furthermore a link is made with an approximation of an arbitrary order of a general indirect utility function this non parametric efficiency measurement framework permits to differentiate mainly between portfolio efficiency and allocative efficiency finally information can in principle be inferred about the revealed risk aversion prudence temperance and other higher order risk characteristics of investors

hedonic prices and implicit markets estimating demand and supply functions for differentiated products in choosing the level of quality to purchase the buyer of a differentiated product also chooses a point on the marginal price schedule for that product hence in general the demand functions for product characteristics cannot be consistently estimated by ordinary least squares market equilibrium results in a matching of characteristics of demanders and suppliers this matching restricts the use of buyer and seller characteristics as instruments when estimating demand and supply functions for product characteristics the paper develops these issues a stochastic structure for hedonic equilibrium models is then proposed identification results are presented and estimation procedures are outlined

bundling governance mechanisms to efficiently organize small firm loans abstract bank loans are a common source of financing for small firms while scholars have examined specific conditions that affect small firm loan approval and interest rates practical questions remain about how these loans are structured to address characteristically acute challenges from asymmetric information this paper suggests collateral reputation and relationship banking each perform unique exchange organizing tasks and that small firms systematically use them in predictable combinations a multiple discriminant analysis of 796 small firm loans suggests four governance bundles are commonly employed in this setting the implications for managers focus on how loan governance mechanisms are most efficiently bundled together

the economics of small business finance the roles of private equity and debt markets in the financial growth cycle abstract this article examines the economics of financing small business in private equity and debt markets firms are viewed through a financial growth cycle paradigm in which different capital structures are optimal at different points in the cycle we show the sources of small business finance and how capital structure varies with firm size and age the interconnectedness of small firm finance is discussed along with the impact of the macroeconomic environment we also analyze a number of research and policy issues review the literature and suggest topics for future research

an equilibrium efficiency frontier data envelopment analysis approach for evaluating decision making units with fixed sum outputs abstract based on the minimal reduction strategy yang et al 2011 developed a fixed sum output data envelopment analysis fsodea approach to evaluate the performance of decision making units dmus with fixed sum outputs however in terms of such a strategy all dmus compete over fixed sum outputs with no memory that will result in differing efficient frontiers evaluations to address the problem in this study we propose an equilibrium efficiency frontier data envelopment analysis eefdea approach by which all dmus with fixed sum outputs can be evaluated based on a common platform or equilibrium efficient frontier the proposed approach can be divided into two stages stage 1 constructs a common evaluation platform via two strategies an extended minimal adjustment strategy and an equilibrium competition strategy the former ensures that original efficient dmus are still efficient guaranteeing the existence of a common evaluation platform the latter makes all dmus achieve a common equilibrium efficient frontier then based on the common equilibrium efficient frontier stage 2 evaluates all dmus with their original inputs and outputs finally we illustrate the proposed approach by using two numerical examples

pre matching gambles abstract this paper investigates pre matching gambles and provides a new reason to gamble matching concerns examples of pre matching gambles include occupational choices before the marriage market college major choices before the labor market and portfolio management before attracting future clients in the financial market i show that people make risky investments they would not have made if not for their subsequent participation in a competitive matching market a fundamental and unique feature of the competitive matching market which i call the competitive matching effect induces gambling the paper also illustrates the relationship between social efficiency and inequality in this setting and shows how progressive taxation eliminates social inefficiency reduces inequality and generates government revenue

why dowry payments declined with modernization in europe but are rising in india in contrast to most dowry oriented societies in which payments have declined with modernization those in india have undergone significant inflation over the last five decades this paper explains the difference between these two experiences by focusing on the role played by caste the theoretical model contrasts caste and non caste based societies in the former there exists an inherited component to status caste that is independent of wealth and in the latter wealth is the primary determinant of status modernization is assumed to involve two components increasing average wealth and increasing wealth dispersion within status or caste groups the paper shows that in caste based societies the increases in wealth dispersion that accompany modernization necessarily lead to increases in dowry payments whereas in non caste based societies increased dispersion has no real effect on dowry payments and increasing average wealth causes the payments to decline

simple monetary policy rules and exchange rate uncertainty abstract we analyze the performance and robustness of some common simple rules for monetary policy in a new keynesian open economy model under different assumptions about the exchange rate model adding the exchange rate to an optimized taylor rule that responds to cpi inflation gives only small improvements in terms of economic stability in most model configurations the taylor rule is also slightly more robust to uncertainty about the exchange rate model than are rules that respond to the rate of exchange rate depreciation our results thus indicate that the taylor rule is sufficient to stabilize a small open economy also under exchange rate model uncertainty

life expectancy and human capital investments evidence from maternal mortality declines longer life expectancy should encourage human capital accumulation since a longer time horizon increases the value of investments that pay out over time previous work has been unable to determine the empirical importance of this life expectancy effect due to the difficulty of isolating it from other effects of health on education we examine a sudden drop in maternal mortality risk in sri lanka between 1946 and 1953 which creates a sharp increase in life expectancy for school age girls without contemporaneous effects on health and which also allows for the use of boys as a control group using additional geographic variation we find that the 70 reduction in maternal mortality risk over the sample period increased female life expectancy at age 15 by 4 1 female literacy by 2 5 and female years of education by 4 0 authors

resampling dea estimates of investment fund performance abstract data envelopment analysis dea is attractive for comparing investment funds because it handles different characteristics of fund distribution and gives a way to rank funds there is substantial literature applying dea to funds based on the time series of funds returns this article looks at the issue of uncertainty in the resulting dea efficiency estimates investigating consistency and bias it uses the bootstrap to develop stochastic dea models for funds derive confidence intervals and develop techniques to compare and rank funds and represent the ranking it investigates how to deal with autocorrelation in the time series and considers models that deal with correlation in the funds returns

crowdfunding and innovation crowdfunding and innovation entrepreneurs have started relying on crowdfunding to fund their investments this paper surveys the literature linking crowdfunding with innovation in entrepreneurial firms two distinct areas are discussed first crowdfunding has the potential to foster innovation by offering new sources of capital to innovation driven firms and thereby reduce the funding gap for innovative startups second crowdfunding offers a way for the crowd to participate in the innovation process by providing feedback to the entrepreneur this feedback can take various forms including providing ideas on the development of the product during and after the campaign in the spirit of crowdsourcing and providing valuable information on the future demand for the new product

beauty vs earnings gender differences in earnings and priorities over spousal characteristics in a matching model abstract i develop a model of marriage matching where males and females care about two distinct characteristics of their spouse beauty and earnings each individual s beauty is exogenous but earnings depend on human capital investments made by each individual prior to entering the marriage market i show that even if males and females constitute ex ante identical populations with identical underlying preferences and equal access to human capital investment and labor market opportunities there can still exist an equilibrium where on average one gender invests more in human capital than the other and moreover members of one gender are more likely to prioritize beauty over earnings in a spouse while members of the other gender are more likely to prioritize a potential spouse s earnings over beauty

introduction funding gaps theoretical and empirical foundations of government policies to plug alleged business funding gaps are highly controversial but rarely subject to wide ranging in depth debate this symposium from major scholars in the field provides a counterbalance topics addressed cover the theory of lending under asymmetric information its implications for overlending relationship lending as a market solution to information asymmetries government emulation of private sector decision making to eliminate underprovision of high tech equity and theoretically based empirical work testing for funding deficiencies in the high tech sector despite the very different and potentially contradictory contributions the result is surprisingly a set of mutually agreed policy conclusions

too much investment a problem of asymmetric information this paper shows that under plausible assumptions the inability of lenders to discover all of the relevant characteristics of borrowers results in investment in excess of the socially efficient level raising the rate of interest above the free market level will restore optimality this conflicts with generally held views and is contrasted with the stiglitz weiss model it is shown that the assumptions which yield overinvestment support debt as the equilibrium method of finance however under the stiglitz weiss assumptions used to derive an underinvestment result equity is shown to be the equilibrium method of finance

asymmetric monetary policy and the yield curve we discuss the taylor rule near low inflation and interest rates using an additional option like term in the federal reserve s loss function i e the deflation put we extend the classic taylor rule to one with an asymmetric response that is more accommodative when the inflation rate is very low once calibrated this payoff profile gives an exact and easily communicable prescription for federal reserve policy under regimes of low inflation simple models of central bank behavior can produce highly complex yield curve shapes using the usual taylor rule and our proposed extension as building blocks we construct a robust framework for generating realistic yield curves and the evolution of the economy our main focus is the impact on the yield curve and the economy of the deflation put we find that for economies like the u s the deflation put reduces yields for all maturities we also find that in highly leveraged economies such as japan the consequence of an asymmetric deflation fighting policy may result in improved economic conditions but also raises the possibility of higher longterm yields as a consequence

transmission lags and optimal monetary policy abstract the credibility problems of monetary policy are enlarged by transmission lags whenever the welfare criterion consists of arguments with differing transmission lags if as usually argued prices react to monetary policy with a longer lag than output the discretionary bias is substantially increased under a consumer welfare maximizing policy criterion flexible inflation targeting in the prototype new keynesian model money growth targeting can significantly reduce the discretionary bias but is not robust to other specifications of welfare with higher valuation of output stability

a macro finance model of the term structure monetary policy and the economy this paper develops and estimates a macro finance model that combines a canonical affine no arbitrage finance specification of the term structure with standard macroeconomic aggregate relationships for output and inflation from this new empirical formulation we obtain several interesting results 1 the latent term structure factors from finance no arbitrage models appear to have important macroeconomic and monetary policy underpinnings 2 there is no evidence of monetary policy inertia or a slow partial adjustment of the policy interest rate by the federal reserve and 3 both forward looking and backward looking elements play important roles in macroeconomic dynamics

evaluation of credit guarantee policy using propensity score matching in this article we evaluate the effect of the credit guarantee policy by comparing a large sample of guaranteed firms and matched non guaranteed firms from 2000 to 2003 the sample firms are compared with respect to growth rates of different performance indicators including productivity sales employment investment r d wage level and the survival of firms in the post crisis period in order to avoid the selectivity problem propensity score matching methodologies are adopted results suggest that credit guarantees influenced significantly firms ability to maintain their size and increase their survival rate but not to increase their r d and investment and hence their growth in productivity moreover due to the adverse selection problem firms with lower productivity were receiving guarantees

matching and price competition we develop a model in which firms set impersonal salary levels before matching with workers wages fall relative to any competitive equilibrium while profits rise almost as much implying little inefficiency furthermore the best firms gain the most from the system while wages become compressed in light of our results we discuss the performance of alternative institutions and the recent antitrust case against the national resident matching program

dea frontier improvement and portfolio rebalancing an application of china mutual funds on considering sustainability information disclosure abstract data envelopment analysis dea has been a widely used methodology for evaluating the relative performance of portfolios extensive work has appeared for realizing the role of dea in the aspect of assessing portfolio performance and deriving the relative rankings however the role of providing realizable benchmarks is not fully explored in the existing literatures most importantly the dea based portfolio performance evaluation methods developed in the existing literatures can hardly provide support for fund managers in pursuing sustainability performance in this paper we first propose a dea frontier improvement approach under the mean variance framework this approach provides investor with a rebalancing strategy as well as an improved dea frontier which approximates the portfolio efficient frontier better than the traditional dea model does then this approach is extended to a general return risk framework our in sample simulation results verify the effectiveness of the proposed approach for a wide range of applications in addition the out of sample tests show that the rebalancing investment strategies can achieve higher sharpe ratios and sortino ratios than those of the original ones finally we apply the proposed approach to evaluate mutual fund performance in china with the consideration of sustainability information disclosure we construct a disclosure index to indicate the extent of sustainable information disclosure of each mutual fund the results show that the proposed approach provides not only investment recommendations but also references for constructing sustainable green funds

targeting inflation by forecast feedback rules in small open economies abstract we argue that in practice the inflation targeting strategy can be approximated by the interest rate responding to the unchanged interest rate forecast of inflation a method is developed to derive unchanged interest rate forecasts in forward looking models and evaluate the performance of the policy rule in an optimizing new keynesian model due to monacelli european central bank working paper series 227 estimated on uk data we find that the policy rule is less prone to generate a determinate rational expectations equilibrium if based on an unchanged interest rate compared to the rule consistent forecast both rules approximate the optimal commitment policy if the central bank attaches sufficient weight to inflation as opposed to output gap stabilization the optimal forecast feedback horizon is close to a year and a half and is largely independent of how much the central bank prefers inflation to output gap stability

on the existence of pure and mixed strategy nash equilibria in discontinuous games a game is better reply secure if for every nonequilibrium strategy x and every payoff vector limit u resulting from strategies approaching x some player i has a strategy yielding a payoff strictly above u i even if the others deviate slightly from x if strategy spaces are compact and convex payoffs are quasiconcave in the owner s strategy and the game is better reply secure then a pure strategy nash equilibrium exists better reply security holds in many economic games it also permits new results on the existence of symmetric and mixed strategy nash equilibria

the economics of consanguineous marriages the institution of consanguineous marriage a marriage contracted between close biological relatives has been a basic building block of many societies in different parts of the world this paper argues that the practice of consanguinity is closely related to the practice of dowry and that both arise in response to an agency problem between the families of a bride and a groom when marriage contracts are incomplete dowries transfer control rights to the party with the highest incentives to invest in a marriage when these transactions are costly however consanguinity can be a more appropriate response since it directly reduces the agency cost the paper s model predicts that dowry transfers are less likely to be observed in consanguineous unions it also emphasizes the effect of credit constraints on the relative prevalence of dowry payment and consanguinity an empirical analysis using data from bangladesh delivers robust results consistent with the predictions of the model

constant and variable returns to scale dea models for socially responsible investment funds abstract in order to evaluate the performance of socially responsible investment sri funds we propose some models which use data envelopment analysis dea and can be computed in all phases of the business cycle these models focus on the most crucial elements of an investment in mutual funds in the literature both constant and variable returns to scale dea models have been used to evaluate the performance of mutual funds we carry out an empirical investigation on european sri equity funds to test the presence of returns to scale rts another aspect taken into account by the empirical investigation is the measurement of the degree of social responsibility of sri equity funds in various european countries in addition we analyse the performance of the funds considered with the different dea models proposed which differ in the way the ethical objective is taken into account moreover the paper focuses on another crucial issue regarding socially responsible investing the comparison of the performances between sri and non sri funds the empirical study suggests that the ethical objective can be pursued without having to renounce financial rewards

love and taxes and matching institutions we study a setting with search frictions in the marriage market and with incomplete contracting inside the family everyone prefers a partner that has high income and is a perfect emotional match but compromises must often be struck a high income earner may abstain from marrying a low income earner even though they would be a perfect match emotionally because the highincome earner may dislike the implicit income redistribution implied by the marriage redistributive income taxation may ease this problem income matching institutions that secure that people largely from the same income groups meet each other can substitute for redistribution so that optimal redistribution is reduced we also introduce a divorce option redistributive taxation is shown both to further and stabilize marriage

efficient estimation of structural hedonic systems when a product or job is not homogeneous but instead embodies several different characteristics it is difficult to use price information about the product to learn anything about the structure of the supply and demand for the embodied characteristics s rosen 1974 highlighted this problem and suggested that the estimated slope of the price characteristic relation the marginal price could be used instead of standard prices in otherwise standard estimation of the supply and demand system however recently brown and h rosen 1982 brown 1983 and mendelsohn 1985 have pointed out that this method is applicable only when the marginal price depends on variables not found in the supply and demand equations in this paper we show that since the hedonic system matches consumers with high demand for the characteristic to firms with low costs of producing it exogenous variables from the supply equation are not valid instruments in the demand equation and vice versa therefore even when the brown rosen mendelsohn brm condition holds estimation of the identified system by standard simultaneous equations techniques will produce inconsistent estimates we then show that the system can be identified despite the absence of the standard instruments and develop an efficient estimator for the identified system since cross equation constraints make estimation of hedonic systems particularly vulnerable to specification error we also consider some specification tests in this section we consider a simple model with only one characteristic the extension to several characteristics is straightforward the basic model developed by rosen can be described as follows firms with different technologies produce products which provide consumers with varying levels of some characteristic z each consumer buys one unit of the good the product is such that an amount of z from two units of the good provides less utility than the same amount of z embodied in a single unit e g acceleration in a car safety in a job consumers

outside enterpreneurial capital this article investigates factors that affect rejection rates in applications for outside finance among different types of investors banks venture capital funds leasing firms factoring firms trade customers and suppliers partners and working shareholders private individuals and other sources taking into account the non randomness in a firm s decision to seek outside finance the data support the traditional pecking order theory further the data indicate that firms seeking capital are typically able to secure their requisite financing from at least one of the different available sources however external finance is often not available in the form that a firm would like this article engages with four interrelated empirical questions first what are the characteristics of privately held entrepreneurial firms that seek external outside finance and what drives the request for capital from the different potential sources of external finance banks venture capitalists private individuals leasing factoring suppliers customers partners working shareholders among other sources second what are the factors that lead to rejection or acceptance of requests for external finance given this non randomness in the types of firms that seek external finance in the spirit of heckman 1976 1979 third as various forms of financing are far from being perfect substitutes are there differences in the ability of firms to obtain capital from the different available sources fourth can firms obtain all of their desired capital from the different available sources even if it is not in the form they would like it is widely recognised that the decision to seek external finance and the type of financing sought is related to information asymmetries faced by investors regarding the entrepreneurial firm s quality see for example jensen and meckling 1976 1 where

the bargaining family revisited we suggest a family bargaining model where human capital investment decisions are made non cooperatively in a first stage while day to day allocation of time is determined later through nash bargaining but with non cooperative behaviour as the fall back one finding is that overinvestment in education may be even more of a problem in such a semi cooperative model than in a fully non cooperative one even though both the semi cooperative model and the fully non cooperative model predict overinvestment in education policy conclusions that follow from the two models are distinctly different jel classification d13 j24 les auteurs suggerent un modele de famille qui marchande ou les decisions d investissement en capital humain sont prises de maniere non cooperative dans un premier temps alors que l allocation du temps au jour le jour est determinee plus tard par un marchandage a la nash mais avec un comportement noncooperatif comme choix de second ordre on decouvre que le surinvestissement dans l education peut etre encore plus problematique dans un tel modele de semi cooperation que dans un modele de non cooperation meme si les deux modeles prevoient un surinves chtissement dans l education les conclusions au plan de la politique publique qui decoulent de ces deux modeles sont fort differentes

data envelopment analysis of mutual funds based on second order stochastic dominance abstract although data envelopment analysis dea has been extensively used to assess the performance of mutual funds mf most of the approaches overestimate the risk associated to the endogenous benchmark portfolio this is because in the conventional dea technology the risk of the target portfolio is computed as a linear combination of the risk of the assessed mf this neglects the important effects of portfolio diversification other approaches based on mean variance or mean variance skewness are non linear we propose to combine dea with stochastic dominance criteria thus in this paper six distinct dea like linear programming lp models are proposed for computing relative efficiency scores consistent in the sense of necessity with second order stochastic dominance ssd the aim is that being ssd efficient the obtained target portfolio should be an optimal benchmark for any rational risk averse investor the proposed models are compared with several related approaches from the literature

inequality and risk taking behaviour this paper investigates social in uences on attitudes to risk and ofiers an evolutionary explanation of risk taking by young low ranked males becker murphy and werning 2005 found that individuals about to participate in a status tournament may take fair gambles even though they are risk averse in both wealth and status here their model is generalised by use of the insight of hopkins and kornienko 2010 that in a tournament or status competition one can consider equality in terms of the status or rewards available as well as in initial endowments while becker et al found that risk taking is increasing in the equality of initial endowments it is found here that it is increasing in the inequality of rewards in the tournament further it is shown that the poorest will be risk loving if the lowest level of status awarded is su ciently low thus the disadvantaged in society rationally engage in risky behavior when social rewards are su ciently unequal finally as greater inequality in terms of social status induces gambling it can cause greater inequality of wealth

directed search on the job and the wage ladder we model a labor market where employed workers search on the job and firms direct workers search using wage offers and employment probabilities applicants observe all offers and face a trade off between wage and employment probability there is wage dispersion among workers even though all workers and jobs are homogeneous equilibrium wages form a ladder as workers optimally choose to climb the ladder one rung at a time this is because low wage applicants are relatively more sensitive to employment probability than to wage and thus forgo the opportunity to apply for a high wage with a lower chance of success

estimating the euler equation for output new keynesian macroeconomic models have generally emphasized that expectations of future output are a key factor in determining current output the theoretical motivation for such forward looking behavior relies on a straightforward generalization of the well known euler equation for consumption in this paper we use maximum likelihood and generalized method of moments gmm methods to explore the empirical importance of output expectations we find little evidence that rational expectations of future output help determine current output especially after taking into account the small sample bias in gmm

financial structure and the growing small firm theoretical underpinning and current evidence this paper introduces a special issue of small business economics on financing and small firm dynamics it establishes a general underpinning for the analysis of small firm financing over time this appeals to the control theoretic literature and permits the specification of master trajectories of key variables over time like output debt dividend and capital two trajectories for cheap debt and cheap equity respectively illustrate this type of analysis showing how financial structure can vary over time involving phases of growth consolidation and stationarity from this perspective six papers on small firm dynamics and finance are reviewed issues addressed include credit constraints funding shortages wealth as collateral financial structure target income modelling of start up and bank lending during financial liberalisation

information variables for monetary policy in an estimated structural model of the euro area a small scale new keynesian model for the euro area is estimated with maximum likelihood under the assumptions of imperfect information and discretionary monetary policy the estimated parametrization of this widely used dynamic stochastic model unveils the monetary authorities objectives and the information content of two indicator variables monetary aggregates and real unit labour costs the results highlight a significant policy concern about interest rate smoothing and inflation almost no concern for output gap stabilization emerges regarding indicator variables unit labour costs provide information on potential output that is helpful for stabilization policy no useful information role emerges for monetary aggregates

female migration for marriage implications from the land reform in rural tanzania summary using the longitudinal household panel data drawn from rural tanzania 1991 2004 this study investigates impacts of the land reform on women s marriage motivated relocation during the period under study several villages that initially banned a widow s land inheritance abolished this discrimination taking a differences in differences approach this study finds that the probability of males marrying in a village increased by altering its customary land inheritance rule in favor of widows in the light of the traditional system favoring exogamous and patrilocal marriage this finding indicates that females relocate at marriage in response to the favorable land tenure system at the destination

are business startups debt rationed using a large random sample of u k start ups and a rich data set the paper demonstrates that human capital is the true determinant of survival and that the correlation between financial capital and survival is spurious provision of finance is demand driven with banks supplying funds elastically and business requests governing take up firms self select for funds on the basis of the human capital endowments of the proprietors with better businesses more likely to borrow a reason why others have seemingly identified start up debt gaps may be the failure to test a sufficiently rich empirical model copyright 1996 by royal economic society

stochastic dominance and expected utility while stochastic dominance has been employed in various forms as early as 1932 it has only been since 1969 1970 that the notion has been developed and extensively employed in the area of economics

bertrand edgeworth oligopoly in large markets the relation between perfectly competitive and monopolistically competitive equilibria is analysed for a bertrand edgeworth model of a single market in which capacity constrained firms choose prices as strategies the market always has a nash equilibrium in pure or mixed strategies as the number of firms increases the corresponding equilibria converge in distribution to a perfectly competitive price this result provides a justification for perfect competition that is based on an explicit account of price formation however monopoly prices persist with a positive but vanishing probability regularity or well defined inverse demand functions are not required