are price limits really bad for equity markets despite widely documented criticisms price limit rules are present in many equity markets around the world using a game theoretic model we argue that if the cost of monitoring a market is high price limit rules are beneficial empirical tests based on a cross section of 43 equity markets across five continents support our theoretical prediction we find that the probability of the existence of price limit rules is greater in markets that incur higher monitoring costs due to poorer business disclosure more corruption and less efficiency in legal regulatory and technological environments

financial inclusion and poverty a tale of forty five thousand households abstractusing a new nationally representative survey data covering approximately 45 000 indian households we examine the effects of financial inclusion on poverty we construct a multidimensional

implementing r d policies an analysis of spain s pharmaceutical research program we analyze spain s national pharmaceutical research program using detailed firm level data we find differences between ex ante announced evaluation criteria and ex post implementation this suggests that judging r d programs on their design rather than their implementation may be misleading we also uncover that the apparent discrimination against non european firms can be interpreted as a premium to having local production facilities overall the program values firms on the basis of criteria such as r d investment and patent spending consistent with empirically tested measures of innovative activity 2004 elsevier b v all rights reserved

input subsidy programs in sub saharan africa a synthesis of recent evidence input subsidy programs have once again become a major plank of agricultural development strategies in africa ten african governments spend roughly us 1 billion annually on input subsidy programs isps amounting to 28 6 of their public expenditures on agriculture this article reviews the microlevel evidence on isps undertaken since the mid 2000s we examine the characteristics of subsidy beneficiaries crop response rates to fertilizer application and their influence on the performance of subsidy programs the impacts of subsidy programs on national fertilizer use and the development of commercial input distribution systems and finally the impact of isps on food price levels and poverty rates the weight of the evidence indicates that the costs of the programs generally outweigh their benefits findings from other developing areas with a higher proportion of crop area under irrigation and with lower fertilizer prices factors that should provide higher returns to fertilizer subsidies than in africa indicate that at least a partial reallocation of expenditures from fertilizer subsidies to r d and infrastructure would provide higher returns to agricultural growth and poverty reduction however because isps enable governments to demonstrate tangible support to constituents they are likely to remain on the african landscape for the foreseeable future hence the study identifies ways in which benefits can be enhanced through changes in implementation modalities and complementary investments within a holistic agricultural intensification strategy among the most important of these are efforts to reduce the crowding out of commercial fertilizer distribution systems and programs to improve soil fertility to enable farmers to use fertilizer more efficiently the challenges associated with achieving these gains are likely to be formidable

modelling asset returns under price limits with mixture of truncated gaussian distribution in this paper we propose to use the mixture of truncated gaussian distribution in modelling the financial asset return distribution under price limits theoretically while retaining many convenie

do regulations work a comprehensive analysis of price limits and trading restrictions in experimental asset markets with deterministic and stochastic fundamental values abstract we examine how traders react to two prominent stock market regulations under a constant fundamental value fv process price limits and trading restrictions significantly reduce the price level and mispricing size when traders are inexperienced under a markov process fv there is no evidence for these regulations to reduce mispricing the novel markov process also serves as a testbed for several financial hypotheses related to the regulations we find that price limits do not improve reactions to market news and the binding of price limits magnifies the momentum in the price movements these findings suggest that the scope of these regulations is limited and that they can backfire in some market environments

how effective are fiscal incentives for r d a review of the evidence this paper surveys the econometric evidence on the effectiveness of fiscal incentives for r d we describe the effects of tax systems in oecd countries on the user cost of r d the current position changes over time and across different firms in different countries we describe and criticize the methodologies used to evaluate the effect of the tax system on

mainstreaming microfinance social performance management or mission drift summary what scope is there for the pursuit of explicit development goals in the context of increasing integration of specialized microfinance and commercial banking sectors this question and the idea of mission drift is first analyzed using a model that distinguishes between institutions financial and social performance possibilities preferences and assessment systems the model is used to review findings from action research with an international sample of poverty oriented microfinance institutions that suggest some simple steps for improved social performance management it is then used to illustrate the relationship between social and financial performance more widely across the retail financial services sector and to offer pointers for more policy analysis at this level

informal credit markets in india informal financial markets those which are not regulated or monitored by the banking authorities account for much of business credit in developing countries these unregulated informal credit markets icm are important both in their own right as part of each country s financial system and because of their reciprocal relations with growing enterprises and the regulated financial sector in order to study the operations of some of these markets in detail in urban commercial settings we conducted an extended survey of some of the informal credit markets of india 2 based in some cases on centuries of operation these markets proved to be important in the functioning of the contemporary economy indigenous style bankers belonging to particular ethnic communities and castes formerly provided the full range of banking services to their clients 3 with the rise of modern western style banking the indigenous bankers either have transformed themselves to serve sectors such as wholesale trade not well served by the modern sector or provide services which the modern bankers cannot provide though any estimate is very approximate it seems that informal credit markets account for as much as 20 of commercial credit outstanding in the various markets surveyed we began by surveying the gujeratis some of whom still practice their traditional form of full service banking in their homeland of gujerat and adjoining bombay the shikarpuris or multanis originally full service bankers in sind who now provide commercial credit in various other centers the chettiars in south india the rastogis in uttar pradesh and the marwaris especially in eastern india 4 but our surveys revealed that a wide range of ethnic groups were now involved in informal credit markets and the more meaningful differentiations

markets and institutions in financial intermediation national characteristics as determinants abstract given the importance of financial intermediation and the rise of globalization there is little prior research on how national preferences for financial intermediation markets versus institutions are determined by cultural legal and other national characteristics using panel analysis for data on a recent 8 year period for 30 countries this paper documents that national preferences for market financing increase with political stability societal openness economic inequality and equity market concentration and decreases with regulatory quality and ambiguity aversion we confirm with robustness tests that our result for regulatory quality is independent of differences in national wealth and that our result for political stability is independent of both wealth and political legitimacy these results should be of much interest to managers scholars regulators and policy makers

is public r d a complement or substitute for private r d a review of the econometric evidence is public r d spending complementary and thus additional to private r d spending or does it substitute for and tend to crowd out private r d conflicting answers are given to this question we survey the body of available econometric evidence accumulated over the past 35 years a framework for analysis of the problem is developed to help organize and summarize the findings of econometric studies based on time series and cross section data from various levels of aggregation laboratory firm industry country the findings overall are ambivalent and the existing literature as a whole is subject to the criticism that the nature of the experiment s that the investigators envisage is not adequately specified we conclude by offering suggestions for improving future empirical research on this issue

r d production structure and rates of return in the u s japanese and german manufacturing sectors a non separable dynamic factor demand model abstract the focus of this paper is an analysis of the production structure the demand for factor inputs and the rates of return in the manufacturing sector of three major industrialized countries the united states japan and germany the analysis is based on a dynamic factor demand model with two variable inputs labor and materials and two quasi fixed inputs capital and rd also for all countries the speed of adjustment for capital is found to be higher than that for r d

individualism and stock price crash risk employing a sample of 26 473 firms across 42 countries from 1990 to 2013 we find that firms located in countries with higher individualism have higher stock price crash risk furthermore individualism can be transmitted by foreign investors from overseas markets to influence local firms crash risk and can exacerbate the impact of firm risk taking and earnings management on crash risk moreover the positive relation between individualism and crash risk is amplified during the global financial crisis and attenuated by enhanced country level financial information transparency and the adoption of international financial reporting standards

bank credit risk grain production and the indian economy we generate measures of banking risk across indian states and examine the relationship between banking risk and economic production in india we find that banking risk co moves with total grain pro

transitory price changes and price limit rules evidence from the tokyo stock exchange we compare the volatility of 24 hour returns computed from the opening and closing prices of a diverse sample of tokyo stock exchange tse stocks we find that volatility at the open is greater than volatility at the close only for the most actively traded tse stocks daytime and overnight return covariances suggest that the volatility patterns are explained by the effect of implicit bid ask spreads at the open and partial price adjustment at the close both of which are related to the intensity of trading our results challenge the view that open to open returns are more volatile than close to close returns for stocks in general and are consistent with the hypothesis that tse price limit rules have a significant impact on the dynamics of security prices

the impact of formal finance on the rural economy of india india has systematically pursued a supply led approach to increasing agricultural credit its objectives have been to replace moneylenders to relieve farmers of indebtedness and to achieve higher levels of agricultural credit investment and output india s success in replacing moneylenders has been outstanding between 1951 and 1971 their share of rural credit appears to have dropped from more than 80 percent to 36 percent it may have dropped to as low as 16 percent by 1981 but that estimate is disputed still institutional credit is far from reaching all farmers only about a quarter of cultivators borrow and no more than 2 percent take out long term loans most small farmers have little access to credit and long term credit goes mostly to large farmers overall farm debt has probably not increased sharply in real terms as formal credit has primarily substituted for credit from other sources moreover with the rapid growth of commercial banks in the 1970s the system mobilized more deposits than it lent in rural areas in 1981 of course enhanced deposit services are a useful service of the rural population but one must ask what has been the impact of heavy rural credit and better financial services on agricultural investment production and rural incomes the authors econometric results suggest that the rapid expansion of commercial banks in rural areas has had a substantially positive effect on rural nonfarm employment and output the availability of better banking facilities appears to have overcome one of the obstacles to locating nonfarm activities in rural areas expanded rural finance has had less of an effect on output and employment in agriculture than in the nonfarm sector the effect on crop output has not been great despite the fact that credit to agricluture has greatly increased the use of fertilizer and private investment in machines and livestock there has been more impact on inputs than on output so the additional capital investment has been more important in substituting for agriclutural labor than in increasing crop output but overall rural credit and expansion of the rural financial system have had a positive effect on rural wages creating nonfarm jobs has apparently added more to total employment than the substitution of capital for labor has subtracted it in agriculture so wages have risen even for agricultural workers albeit modestly the supply led approach to agricultural credit that has been pursued for three decades has clearly benefited current borrowers and farm households formerly indebted to moneylenders it has also spurred fertilizer use and investment in agriculture it has been less successful in generating viable institutions and has failed to generate agricultural employment the policy s costs to india s government have been high as portfolio losses associated with poor repayment ultimately have to be borne by the government or one of its institutions under optimistic assumptions the benefits of the agricultural income are at best no more than 13 percent higher than the cost to the government of the extra agricultural credit if assumptions about the cost of supplying the credit and about repayment rates are less optimistic the social costs and the costs to the government of providing the credit would have exceeded the benefits in agricultural income the expansion of commercial banks to rural areas paid off in nonfarm growth employment and rural wages the question is could these benefits have been achieved without imposing agricultural credit targets on the commercial banks and credit cooperatives or did the commercial banks expand only because they were forced to lend to agriculture the authors could not answer these questions with the data at hand

the impact of farm credit in pakistan both informal and formal loans matter in agriculture however formal lenders provide many more production loans than informal lenders often at a cost mostly loan default cost higher than what they can recover for example the agricultural development bank of pakistan adbp providing about 90 of formal loans in rural areas incurs high loan default costs yet like other governments the government of pakistan supports the formal scheme on the grounds that lending to agriculture is a high risk activity because of covariate risk hence such policies are often based on a market failure argument as farm credit schemes are subsidised policy makers must know if these schemes are worth supporting using a recent large household survey data from rural pakistan rural financial market studies or rfms we have attempted to estimate the effectiveness of the adbp as a credit delivery institution a two stage method that takes the endogeneity of borrowing into account is used to estimate credit impact results reveal that adbp contributes to household welfare and that its impact is higher for smallholders than for large holders nevertheless large holders receive the bulk of adbp finance the adbp is thus not a cost effective institution in delivering rural finance its cost effectiveness can be improved by reducing its loan default cost and partially by targeting smallholders in agriculture where credit yields better results

wealth weather risk and the composition and profitability of agricultural investments despite the growing evidence that farmers in low income environments are risk averse there has been little empirical evidence on the importance of risk in shaping the actual allocation of production resources among farmers differentiated by wealth the authors use panel data on investments in rural india to examine how the composition of productive and nonproductive asset holdings varies across farmers with different levels of total wealth and across farmers facing different degrees of weather risk income variability is a prominent feature of the experience of rural agents in low income countries the authors report evidence based on measures of rainfall variability that the agricultural investment portfolio behavior of farmers in such settings reflects risk aversion due evidently to limitations on consumption soothing mechanisms such as crop insurance or credit markets the authors results suggest that uninsured weather risk is a significant cause of lower efficiency and lower average incomes a one standard deviation decrease in weather risk measured by the standard deviation of the timing of the rainy season would raise average profits by up to 35 percent among farmers in the lowest wealth quartile moreover rainfall variability induces a more unequal distribution of average incomes for a given distribution of wealth wealthier farmers are willing to absorb significant risk without giving up profits to reduce production risk smaller farmers have to invest their limited wealth in ways that reduce their exposure to risk at the cost of lower profit rates the authors found that at high levels of rainfall variability differences in rates of profit per unit of agricultural assets were similar across classes of wealth but over the sample range of rainfall variability these rates of profit were always higher for the poorer farmers than for the wealthier ones suggesting that the disadvantages of small farmers in risk diffusion are more than offset by their labor cost advantage

rural financial markets in developing countries their use and abuse until recently the use of agricultural credit as a developmental tool seemed clear and straightforward most concerned people believed that increases in the volume of cheap credit were necessary to boost agricultural production and that the rural poor could be brought into the mainstream of development through supervised credit programs it seemed that certain ideal types of rural credit institutions offered the promise of meeting farmers credit needs and that experience in the industrialized countries with cooperatives and specialized agricultural finance institutions could be effectively transplanted to low income countries this collection of readings highlights facets of rural financial markets that have often been neglected in discussions of agricultural credit in developing countries it moves beyond a narrow concern with the simple provision of credit to a broad consideration of the performance of rural financial markets and of ways to improve the quality and range of financial services for low income farmers it reflects new thinking on the design administration evaluation and policy framework of rural finance and credit programs in developing countries

how does the call market method affect price efficiency evidence from the singapore stock market abstract on august 21 2000 the singapore exchange sgx adopted the call market method to open and close the market while the remainder of the day s trading continued to rely on the continuous auction method the call method significantly improved the price discovery process and market quality a positive spillover effect is observed from the opening and closing calls day end price manipulation also declined after the introduction of the call market method however the beneficial impact from the call market method is asymmetric benefiting liquid stocks more than illiquid stocks

market quality changes in the london stock market this paper examines the impact that the introduction of a closing call auction had on market quality at the london stock exchange using estimates from the partial adjustment with noise model of amihud and mendelson amihud y mendelson h 1987 trading mechanisms and stock returns an empirical investigation journal of finance 42 533 553 we show that opening and closing market quality improved for participating stocks when we stratify our sample securities into five groups based on trading activity we find that the least active securities experience the greatest improvements to market quality a control sample of stocks are not characterized by discernable changes to market quality

price limit performance evidence from the tokyo stock exchange price limit advocates claim that price limits decrease stock price volatility counter overreaction and do not interfere with trading activity conversely price limit critics claim that price limits cause higher volatility levels on subsequent days volatility spillover hypothesis prevent prices from efficiently reaching their equilibrium level delayed price discovery hypothesis and interfere with trading due to limitations imposed by price limits trading interference hypothesis empirical research does not provide conclusive support for either positions we examine the tokyo stock exchange price limit system to test these hypotheses our evidence supports all three hypotheses suggesting that price limits may be ineffective

post independence india a case of finance led industrialization abstract this paper examines whether financial intermediaries have played a leading role in influencing india s economic performance after describing the evolution and functions of the financial sector we construct a set of vector autoregressive var and vector error correction models vecm to evaluate the strength and direction of the links between measures of formal intermediation and various economic aggregates the results suggest that i the financial sector was instrumental in promoting aggregate investment and output but also in the steady shift toward industry that has characterized india s development ii the operative channel was one of debt accumulation rather than improvements in total factor productivity and iii its contributions went beyond the passive support of fiscal policy

stock price manipulation it is generally agreed that speculators can make profits from insider trading or from the release of false information both forms of stock price manipulation have now been made illegal in this article the authors ask whether it is possible to make profits from a different kind of manipulation in which an uninformed speculator simply buys and sells shares they show that in a rational expectations framework where all agents maximize expected utility it is possible for an uninformed manipulator to make a profit provided investors attach a positive probability to the manipulator being an informed trader article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

the use of a levy grant system as an alternative to tax based incentives to r d abstract in this paper the effectiveness of an r d levy grant system is considered it is shown that in theory such a scheme can lead to increases in r d and or correct sub optimal allocations to r d in a free market economy operation of such a system is compared with that of a tax based incentive scheme taking account of the experience of the uk with regard to a levy grant system used to stimulate training

empowering rural people for their own development abstract this elmhirst lecture first discusses the features of the institutional environment which allow rural people in low income countries to design plan and implement their own rural development these are divided into two broad groups the institutional environment for rural development environment for the private sector communities and civil society local government and sector institutions and the many factors governing profitability of investment in agriculture while in many poor countries the institutional environment has improved over the last 20 years the most poorly performing countries still have by far the poorest environment for local government in the world within an empowering institutional environment the rate of agricultural and rural development is determined by investments of many different types that in turn depend primarily on the profitability of agriculture the paper discusses the large number of factors which determine profitability few of these are under the direct control of farmers or agricultural sector institutions but depend on governance and investments in other sectors such as trade and transport in many of the poorest countries there has been considerable improvement in macro economic management and sector policies over the past 20 years but progress in international and intra regional trade policies in agricultural trade policies in transport infrastructure and in agricultural research and extension have been limited

the existence of pareto superior price limits this paper examines the welfare effects of futures price limits under a simple form of market incompleteness when prices become volatile shocks to liquidity and fundamentals may occur between the time investors decide to trade and the time their orders are executed this gives rise to implementation risk that cannot be transferred with contingent claims we show that price limits partially insure implementation risk hhen price fluctuations are driven by news about fundamentals judiciously chosen price limits can be ex ante pareto superior to unconstrained trade when liquidity shocks are large price limits benefit hedgers but harm some speculators jel d60 g20

formal informal sector interaction in rural credit markets abstract the majority of small cultivators in the less developed countries are not regarded as credit worthy by the formal sector financial institutions and are forced to borrow from the moneylenders in the informal credit market this paper shows that when such borrowers differ in their likelihood of default and the moneylenders are asymmetrically informed about the client specific degree of risk the policy of providing cheap credit through the formal sector can generate adverse composition effects which worsen the terms of credit and the availability of loans in the informal sector

do r d tax credits work evidence from an international panel of countries 1979 1994 this paper examines the impact of fiscal incentives on the level of rd and just under a 10 per cent rise in r d in the long run

the productivity of agricultural credit in india this study examines the nature of the relationship between formal agricultural credit and agricultural gross domestic product gdp in india specifically the role of the former in supporting agricultural growth using state level panel data covering the period 1995 1996 to 2011 2012 the study uses a mediation analysis framework to map the pathways through which institutional credit relates to agricultural gdp relying on a control function approach to tackle the problem of endogeneity the findings from the analysis suggest that over this period all the inputs are highly responsive to an increase in institutional credit to agriculture a 10 increase in credit flow in nominal terms leads to an increase by 1 7 in fertilizers n p k consumption in physical quantities 5 1 increase in the tonnes of pesticides 10 8 increase in tractor purchases overall it seems quite clear that input use is sensitive to credit flow whereas gdp of agriculture is not credit seems therefore to be an enabling input but one whose effectiveness is undermined by low technical efficiency and productivity

behavioural and material determinants of production relations in agriculture in this essay we develop a framework for analysing the major institutions governing the production and exchange of output and the primary factors of production in rural areas the analysis incorporates general considerations of risk and information constraints jointly with the principal material attributes of agriculture and of agricultural production factors the framework is used to analyse barriers to the existence of the major intertemporal and factor markets it is applied specifically to land scarce environments for which it provides an internally consistent explanation for many of the well documented institutional features of such settings in addition the analysis provides new implications for among other phenomena the inter relationships among ownership holdings operational scale family size and factor productivity for the scarcity of animal rental markets and use of animals as collateral for the renting out of land by small landowners and for the existence of plantations for certain crops

agricultural technology and farm nonfarm growth linkages abstract agricultural growth stimulates rural nonfarm activity by boosting demand for production inputs and consumer goods but different kinds of agricultural technology promote different patterns of nonfarm linkages to explore how key features of agricultural technology affect growth in the rural nonfarm economy this paper reviews an array of cross section and time series evidence bearing on the dynamics of the rural nonfarm economy then using consumption and production parameters associated with different agricultural technologies it introduces a simple model which isolates the effects of different technologies on nonfarm growth linkages

a review of bubbles and crashes in experimental asset markets this paper discusses the literature on bubbles and crashes in the most commonly used experimental asset market design introduced by smith et al it documents the main findings based on the results from 41 published papers 3 book chapters and 20 working papers

do rural banks matter evidence from the indian social banking experiment lack of access to finance is often cited as a key reason why poor people remain poor this paper uses data on the indian rural branch expansion program to provide empirial evidence on this issue between 1977 and 1990 the indian central bank mandated that a commercial bank can open a branch in a location with one or more bank branches only if it opens four in locations with no bank branches we show that between 1977 and 1990 this rule caused banks to open relatively more rural branches in indian states with lower initial financial development the reverse is true outside this period we exploit this fact to identify the impact of opening a rural bank on poverty and output our estimates suggest that the indian rural branch expansion program significantly lowered rural poverty and increased non agricultural output

a theory of price limits in futures markets abstract the existence of price limits in certain futures markets is explained by demonstrating that price limits may act as a partial substitute for margin requirements in ensuring contract performance their effectiveness is a decreasing function of the amount of information available to traders about the equilibrium futures price which is unobservable in the event of a limit move and the theory predicts that no limits will exist in the markets for financial futures actual limits are broadly consistent with the theory his interpretation plausible as it was was totally misleading with the dangerous verisimilitude of a theory which will fit all or nearly all the facts and yet more entirely miss the truth by a mere accident then would a frank perplexity heritage v sackville west