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1 – 10 of over 12000Lukasz 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 Prudential…
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.
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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) via its…
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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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.
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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 mobility in the…
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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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…
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.
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 with…
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.
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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.
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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 in most…
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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Rakesh B. Sambharya, Abdul A. Rasheed and Farok J. Contractor
There is considerable variation in the extent of globalization across industries. The authors attempt to identify the structural conditions of the industry that lead to these…
Abstract
Purpose
There is considerable variation in the extent of globalization across industries. The authors attempt to identify the structural conditions of the industry that lead to these variations.
Design/methodology/approach
Based on a sample of 33 manufacturing industries over the nine-year period from 2007 to 2016, the authors test for antecedents of industry globalization.
Findings
The authors find that industry globalization is positively affected by medium levels of barriers to entry, industry competition, industry assistance, low and mediums levels of capital intensity, industry concentration and industry regulation and negatively affected by low levels of technological change and industry assistance. In addition, the life cycle stage of the industry has an impact on the level of globalization with the growth stage having the highest level of globalization.
Research limitations/implications
First, the major limitation of the paper is that the authors rely entirely on trade data to measure the level of industry globalization. The authors did not have a choice because foreign direct investment (FDI) data are available only at the country level. Second, given that globalization can occur at the country, industry and firm levels, the focus on industry-level structural characteristics alone may be seen as a limitation.
Practical implications
The results of the study can provide guidance to practicing managers to apply industry analysis for predicting the potential for and direction of globalization of their industries. This will enable them to formulate appropriate strategies to cope with global competition.
Social implications
The study has important public policy implications. National governments have many levers at their command that can be used to influence the structural characteristics of industries, such as industry regulation, industry assistance and industry concentration. They can selectively use these levers to either facilitate or impede globalization.
Originality/value
Much of the empirical focus of prior research on globalization has been on countries, rather than industries, as the unit of analysis. There is clearly variation in the extent of globalization across industries with some industries highly integrated while others remain primarily local or regional. Based on a novel approach to measure the extent of globalization at the industry level, the authors identify its antecedents. The value of the paper lies in the fact that the analysis of 33 manufacturing industries over a ten-year period shows that the structural characteristics of the industries drive their extent of globalization.
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