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Article
Publication date: 21 March 2019

Lukasz Prorokowski, Hubert Prorokowski and Georgette Bongfen Nteh

This paper aims to analyse the recent changes to the Pillar 2 regulatory-prescribed methodologies to classify and calculate credit concentration risk. Focussing on the…

Abstract

Purpose

This paper aims to analyse the recent changes to the Pillar 2 regulatory-prescribed methodologies to classify and calculate credit concentration risk. Focussing on the Prudential Regulation Authority’s (PRA) methodologies, the paper tests the susceptibility to bias of the Herfindahl–Hirscham Index (HHI). The empirical tests serve to assess the assumption that the regulatory classification of exposures within the geographical concentration is subject to potential misuse that would undermine the PRA’s objective of obtaining risk sensitivity and improved banking competition.

Design/methodology/approach

Using the credit exposure data from three global banks, the HHI methodology is applied to the portfolio of geographically classified exposures, replicating the regulatory exercise of reporting credit concentration risk under Pillar 2. In doing so, the validity of the aforementioned assumption is tested by simulating the PRA’s Pillar 2 regulatory submission exercise with different scenarios, under which the credit exposures are assigned to different geographical regions.

Findings

The paper empirically shows that changing the geographical mapping of the Eastern European EU member states can result in a substantial reduction of the Pillar 2 credit concentration risk capital add-on. These empirical findings hold only for the banks with large exposures to Eastern Europe and Central Asia. The paper reports no material impact for the well-diversified credit portfolios of global banks.

Originality/value

This paper reviews the PRA-prescribed methodologies and the Pillar 2 regulatory guidance for calculating the capital add-on for the single name, sector and geographical credit concentration risk. In doing so, this paper becomes the first to test the assumptions that the regulatory guidance around the geographical breakdown of credit exposures is subject to potential abuse because of the ambiguity of the regulations.

Details

Journal of Financial Regulation and Compliance, vol. 27 no. 3
Type: Research Article
ISSN: 1358-1988

Keywords

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Book part
Publication date: 19 October 2020

Heng Chen and Matthew Strathearn

This research aims to empirically analyze the spatial bank branch network in Canada. The authors study the market structure (both industrial and geographic concentrations

Abstract

This research aims to empirically analyze the spatial bank branch network in Canada. The authors study the market structure (both industrial and geographic concentrations) via its own or adjacent postal areas. The empirical framework of this study considers branch density (the ratio of the total number of branches to area size) by employing a spatial two-way fixed effects model. The main finding of this study is that there are no effects associated with market structure, however, there are strong spatial within and nearby effects associated with the socioeconomic variables. In addition, the authors also study the effect of spatial competition from rival banks: they find that large banks and small banks tend to avoid markets dominated by their competitors.

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Article
Publication date: 20 November 2017

Liang Wang

The purpose of this paper is to theorize how the industry life cycle unfolds differently across places and how economic agglomeration varies over time.

Abstract

Purpose

The purpose of this paper is to theorize how the industry life cycle unfolds differently across places and how economic agglomeration varies over time.

Design/methodology/approach

The paper relies on literature review and conceptual analysis.

Findings

It generates a dynamic geographic concentration model (i.e. an industry’s degree of geographic concentration drops in the growth stage, rises in the mature stage, and drops again in the new growth stage) and a localized industry life-cycle model (i.e. temporal dynamics differ between the center and the periphery).

Originality/value

It makes contribution by theorizing that the extent to which an industry is geographically concentrated changes over time, and by demonstrating how an industry’s center and periphery may experience different temporal dynamics.

Details

Journal of Strategy and Management, vol. 10 no. 4
Type: Research Article
ISSN: 1755-425X

Keywords

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Book part
Publication date: 12 September 2017

Tay T. R. Koo and Andreas Papatheodorou

Airports and urban developments in their vicinity constitute a highly specialized type of agglomeration based on air connectivity that epitomizes the importance of…

Abstract

Airports and urban developments in their vicinity constitute a highly specialized type of agglomeration based on air connectivity that epitomizes the importance of mobility in the modern service economy. However, in a frictionless world of backyard capitalism and perfect competition, such agglomeration of civil aviation services would not have been necessary. Thus, concepts such as imperfect markets, path dependence, and cumulative causation may be alternatively used to explain the spatial aspects of airport developments. Focusing on “second-nature” concentration, the “new geographical economics” (NGE) literature offers a potential theoretical framework that organizes these concepts into a coherent economic framework. This chapter aims to highlight the unique relevance of the NGE approach in developing an economics-based understanding of the spatial distribution of airports. Drawing from the existing NGE knowledge-base, this conceptual chapter explains that the NGE approach can be adopted as a micro-foundation to show how the spatial aspects of airport development, including core-periphery dynamics of regional disparity and parity, can emerge from economic mechanisms. The chapter concludes with potential implications for airport economics and regional policy, along with the discussion of some of the main critiques of the theory.

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Article
Publication date: 1 February 1987

James Love

The issue of export instability exerts an enduring fascination for economists with an interest in the area of economic development. Over several decades a voluminous…

Abstract

The issue of export instability exerts an enduring fascination for economists with an interest in the area of economic development. Over several decades a voluminous literature has emerged embracing debates on the domestic consequences and on the causes of export instability. The purpose here is to examine these debates and an attempt is made to set out different theoretical stances, to classify and examine empirical findings, and to indicate the directions in which the debates have moved. Such a statement of a review article's purpose is, of course, incomplete without more specific delineation of the boundaries within which the general objectives are pursued. Here that delineation has three facets.

Details

Journal of Economic Studies, vol. 14 no. 2
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 14 November 2016

Thang V. Nguyen, Garry D. Bruton and Binh T. Nguyen

The purpose of this paper is to examine whether competitor concentration relates to better customer acceptance of the firm’s offerings and better networking of the firm…

Abstract

Purpose

The purpose of this paper is to examine whether competitor concentration relates to better customer acceptance of the firm’s offerings and better networking of the firm with competitors and government officials.

Design/methodology/approach

The research is conducted in the context of the transition economy of Vietnam, using a combination of methods. Qualitative interviews are followed by a survey of 199 small firms in Hanoi, Vietnam. Since competitor concentration is count data, Poisson regression is used to test the relationship between networking, customer acceptance, and competitor concentration.

Findings

The results show that locating in a competitor concentration area improves customer acceptance of the firm’s offerings and increases networking with competitors, while decreasing networking with government officials. Competitor concentration does not help improve firm performance.

Research limitations/implications

A sample of 199 businesses in the food, furniture, and jewelry sectors in Hanoi may not be representative of all private businesses in Vietnam. The use of cross-sectional data could not establish causational relationships among variables.

Practical implications

Small firms in transition economies should be aware of the trade-offs between initial customer acceptance and negative consequences of being in a competitor concentrated area. Thus, once the firm’s offerings are generally accepted by customers, the firm may consider moving out of competitor concentration areas to expand and differentiate.

Originality/value

This paper points out that in the absence of effective market institutions, businesses want to be located near a concentration of similar firms as a means of gaining initial customer acceptance. This initial acceptance does not necessarily help firms improve business performance beyond the firm’s survival.

Details

Asia Pacific Journal of Marketing and Logistics, vol. 28 no. 5
Type: Research Article
ISSN: 1355-5855

Keywords

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Article
Publication date: 9 March 2020

Dong Wu, Xiaobo Wu, Haojun Zhou and Mingu Kang

This paper represents an empirical study of how geographic proximity influences the search advantage and the transfer problem of interfirm networks.

Abstract

Purpose

This paper represents an empirical study of how geographic proximity influences the search advantage and the transfer problem of interfirm networks.

Design/methodology/approach

By using the data collected from 226 Chinese manufacturing firms, this study examines the proposed hypotheses.

Findings

The authors’ findings suggest that (1) geographic proximity is an important antecedent for promoting knowledge transfer, whereas it lowers the degree of knowledge novelty; and (2) geographic proximity also moderates the effects of interfirm networks on knowledge novelty and knowledge transfer.

Originality/value

This study contributes the literature of interfirm network and provides practical implications by addressing the ways in which manufacturing firms can promote knowledge transfer and acquire novel knowledge.

Details

Industrial Management & Data Systems, vol. 120 no. 5
Type: Research Article
ISSN: 0263-5577

Keywords

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Article
Publication date: 1 November 2011

Andrew James Crawley and Stephen Hill

The purpose of this paper is to examine changes in manufacturing agglomeration in a small open economy over the last decade. This is done during a time when manufacturing…

Abstract

Purpose

The purpose of this paper is to examine changes in manufacturing agglomeration in a small open economy over the last decade. This is done during a time when manufacturing in most developed countries is in relative decline.

Design/methodology/approach

This work adapts the methodology developed by De Propris to measure the relative level of manufacturing agglomeration across space and time. It combines different measures utilising the location quotient technique, thereby allowing the relative strengths of manufacturing in different areas to be compared with the national (UK) level. The work goes further by also calculating the EG index to compare the levels of concentration and specialisation.

Findings

This research shows that manufacturing agglomeration has increased in Wales at a time when manufacturing employment is decreasing. Concentration and specialisation have continued to increase across the last decade despite manufacturing's steady decline.

Originality/value

This work details for the first time the relative intensity of agglomeration across space and time in a small open economy. This is often neglected in other economic “cluster” work but may be key to understanding economic development in the twenty‐first century.

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Book part
Publication date: 19 October 2020

Abstract

Details

The Econometrics of Networks
Type: Book
ISBN: 978-1-83867-576-9

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Article
Publication date: 27 July 2018

Nimruji Jammulamadaka and Kamalika Chakraborty

This paper aims to examine the geographic distribution of social enterprises at the local sub-district level in one Indian state.

Abstract

Purpose

This paper aims to examine the geographic distribution of social enterprises at the local sub-district level in one Indian state.

Design/methodology/approach

This paper adopts a multimethod approach. The exploratory phase involved interviews and analysis of social enterprise distribution at the national level. Phase 2 involved mapping the distribution of social enterprises at the sub-district level in one state. Distribution around established social enterprises was plotted using latitude–longitude positions. Grounded theory approach to analysing qualitative data was adopted to identify the mechanism for agglomeration.

Findings

Social entrepreneurship sees the entrepreneurial problems as solving universalized social problems abstracting them out of the geo-historical and political economic context of the social problem. This study shows that solving a social problem is itself implicated in a social–historical organizational context of aid giving within developing countries. Networks of resources that early enterprises enable draw newer organizations toward them and lead to the formation of clusters. While such clusters might improve chances of enterprise survival, the phenomenon inadvertently leads to a new kind of inequity, as areas with fewer social enterprises lack the organizational infrastructure necessary for delivery of welfare.

Research limitations/implications

Research in social enterprises needs to pay more attention to the context of the enterprises or society in addition to its current focus on universal social problems. Social enterprises themselves could be new sources of inequity in terms of the organizational infrastructure they represent.

Originality/value

Policymakers need to make directed efforts that respond not only to social problems but also to the socio-historic-organizational contexts where the problems are being solved and seeding the entrepreneurial effort in those spaces.

Details

Social Enterprise Journal, vol. 14 no. 3
Type: Research Article
ISSN: 1750-8614

Keywords

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