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Article
Publication date: 1 October 2003

Barry A. K. Rider

Discusses in a wideranging way the background to official regulation of markets, going back to 17th century Britain’s outlawing of stock‐jobbing, and the “blue sky” frauds…

Abstract

Discusses in a wideranging way the background to official regulation of markets, going back to 17th century Britain’s outlawing of stock‐jobbing, and the “blue sky” frauds in 19th/20th century USA; however, policy has generally been to avoid heavy‐handed interference as counter‐productive. Assesses how far this approach has changed in recent years and the chances of success for attacking terrorism through money laundering control. Moves on to the long history of economically motivated crime, corruption, smuggling and trafficking, and the impact of technology. Reviews finally the techniques of money laundering, relating it to the evasion of sanctions and embargoes, and the attempts to counter it and pursue the proceeds of crime, stressing the differences between terrorists and ordinary criminals.

Details

Journal of Financial Crime, vol. 10 no. 4
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 26 January 2021

Conglong Fang and Qinghua Shi

The purpose of this paper is to investigate how China's rural public pension affects farmers' formal borrowing, which has always been rationed.

Abstract

Purpose

The purpose of this paper is to investigate how China's rural public pension affects farmers' formal borrowing, which has always been rationed.

Design/methodology/approach

This paper uses a difference-in-difference (DID) estimation to evaluate the effect of the implementation of the New Rural Pension Scheme (NRPS) at the end of 2009 on farmers' formal borrowing.

Findings

The results show that the NRPS significantly reduces farmers' formal borrowing from rural credit cooperatives (RCCs). The effect is significant among the elderly, eastern China and high-income groups.

Originality/value

This study contributes to the literature by identifying another potential reason for rural formal credit shortage. Policymakers and rural formal financial institutions should consider the demand side problem of lending.

Details

China Finance Review International, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2044-1398

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Article
Publication date: 22 February 2021

Ishay Wolf and Jose Maria Caridad y Ocerin

This paper aims to analytically show that in an over-lapping-generation (OLG) model, low earning cohorts bear unwanted risk and absorb higher economic cost than high…

Abstract

Purpose

This paper aims to analytically show that in an over-lapping-generation (OLG) model, low earning cohorts bear unwanted risk and absorb higher economic cost than high earning cohorts do.

Design/methodology/approach

This paper aims to consider the individual's risk appetite, using a simple utility function, based on consumptions and discount rates in each period. This paper calibrates the model according to teh Israeli pension system as a representative of a small open developed organization for economic cooperation and development country. Israel is considered as unique case study in the pension landscape, as it implements almost pure defined contribution pension scheme with continuous trend of pension market capitalization (Giorno and Jacques, 2016). Hence, this study finds Israel suitable for examining the theoretical mix of pension scheme. That model enables exploring combined solutions for adequate old age benefits, involving the first and the second pension pillars, under fiscal constraints.

Findings

It comes out that for risk-averse individuals, the optimal degree of funding is negatively correlated to asset returns' volatility and positively correlated to earning decile level. The neglect of risk and individual's current earning level will thus overstate the contribution level and funded percentage from total contributions. Moreover, even in an economy with minimum government intervention, and highly developed private pension fund with high average of rate of return, the authors find it is optimal that the pension system contains a sizeable unfunded pillar. This paper innovates by revealing a socio-economic anomaly in design of mix pension systems in favor of high earning cohorts on the expense of economic loss of low earning cohorts.

Practical implications

The model presented in this paper could be implemented in countries with mix pension systems, as an alternative to public social transfers or means tested, alleviating poverty and inequality in old age. Additionally, this model could raise the public awareness of the financial sustainability of the unfunded pay-as-you-go pillar to diversify financial risk in pension systems, especially for low earning cohort in society.

Social implications

One area of research that is particularly relevant in this context concerns the issue of alleviating poverty and income inequality. It is often stressed that the prevention of old age poverty is among the central targets of well-designed pension system (Holzmann and Hinz, 2005). The conceptualization of minimum pension guarantee used in this composition allows to clearly capturing the notion of such a poverty and social targets as an integral part of the pension system rolls.

Originality/value

This paper innovates by revealing a socio-economic anomaly in design of mix pension systems in favor of high earning cohorts on the expense of economic loss of low earning cohorts. That comes to realize through the level of total contribution rates and funded share that are generally optimal for high earning cohorts but not for low earning cohorts. This paper identifies that the effect of anomaly is most significant in a market characterized with high income-inequality level. This paper finds that imposing intra-generational risk sharing instrument in the form of minimum pension guarantee can re-balance pension design among different earning cohorts. This solution demonstrates balancing effect on the entire economy.

Details

Journal of Financial Economic Policy, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1757-6385

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Book part
Publication date: 25 May 2021

Rasmiyya Sabir Gizi Abdullayeva

Introduction: The liberalization tendency in the economic system of most countries in the world exists in the last years. Our last research proves that in most cases…

Abstract

Introduction: The liberalization tendency in the economic system of most countries in the world exists in the last years. Our last research proves that in most cases liberalism gives a positive effect on social-economic development (including pension system). However, constructive potential of economic liberalism is not everlasting, it means, first at some stages there is a certain end for the liberalization of the economy. Secondly, after a certain level (before the last level) liberalism may bring out an imminent shortage (the market sinister) in the free market in a destructive way. That is why one of the essential (and very difficult) duties of economic science is to define effective ranges of liberalism (accordingly, government regulation) for each certain country during a specific time frame. One of the differences of the pension system from other social protected chains is that this system is capable to liberalize. Is it possible to measure the degree of the government regulation of the pension system? Unfortunately, this chapter has revealed that there is no such methodology. The author has created a methodology for the first time that allows to measure the degree of government regulation in the pension system. This methodology is called the Index of Liberalism (Dirigisme) of Pension System (IL(D)PS). By calculating IL(D)PS, the author finds out that the regulation degree (interval) of the pension system. Measurement of the degree of government regulation in the pension system allows evaluating the social consequences of the implemented reforms. IL(D)PS has been calculated on the basis of four indicators: (i) ratio of the private pension assets (%GDP); (ii) ratio of the public pension expenditures (%GDP); (iii) social security tax rates for employers; and (iv) restrictions for investment of the pension funds. At the initial stage IL(D)PS has been calculated for 31 countries. Among 31 countries, there are developed, emerging, post-socialist countries and countries known for their revolutionary reforms in the pension system. According to IL(D)PS, the most dirigiste (leftness) countries are France (0.868), Greece (0.732), Italy (730) and Azerbaijan (0.704). According to the IL(D)PS, the most liberal (rightness) countries are Australia (0.208), Denmark (0.223), the Netherlands (0.231) and Canada (0.237). In Azerbaijan, pension provision is under governmental monopoly (extreme dirigiste system). The private pension system in Azerbaijan has not been formed yet. Azerbaijan has a certain degree of liberalization of the pension system. Aim: The author wants to measure the degree of the government regulation in the pension system. Method: The author have performed correlation, analytical-statistical and cross-country analyze. Findings: The degree of the government regulation in the pension system has been measured in 31 countries.

Details

Contemporary Issues in Social Science
Type: Book
ISBN: 978-1-80043-931-3

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Article
Publication date: 15 June 2020

Filip Pertold and Lenka Lakotova

In this paper, the authors analyse a 2010 legal reform in the Czech Republic, which allowed retirees to simultaneously receive regular pension benefits and to work on a…

Abstract

Purpose

In this paper, the authors analyse a 2010 legal reform in the Czech Republic, which allowed retirees to simultaneously receive regular pension benefits and to work on a permanent contract for a period longer than one year. Previously, concurrence of employment and receipt of retirement benefits were only allowed in conjunction with a temporary work contract with a maximum duration of one year.

Design/methodology/approach

The authors employ the difference-in-differences method. The authors include only males in the analysis because it is not possible to identify the legal retirement age for women from available data. Men in the workforce 1–3 years prior to the statutory retirement age are in a control group, while men 1–3 years older are in a treatment group.

Findings

The authors show that the reform significantly increased the share of permanent contracts held by retirees (by 22.5–27.6 percentage points), though we do not find any aggregate short-term change in employment of retirees. Heterogeneity analysis shows a significant increase in the employment of retirees with only elementary school education (by 17.9 percentage points) and a significant decrease in the number of hours worked by retirees (by 2.5 h weekly for low-educated workers).

Practical implications

The policy conclusion is that the regulation of employment contract does not affect aggregate employment, but may improve employment of low skilled workers.

Originality/value

To the authors’ best knowledge, there are no studies directly analysing motivation of retirees by types of employment contracts. The authors, thus, add to the literature that studies dealing with the general fixed-term versus permanent contracts (Engellandt and Riphahn, 2003) and motivation to work.

Details

International Journal of Manpower, vol. 41 no. 5
Type: Research Article
ISSN: 0143-7720

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Article
Publication date: 1 April 2020

Pedro Gomes Vasconcelos and Nelson Leitão Paes

In an attempt to reduce tax distortions and increase economic efficiency, in 2002 and 2003 Brazil promoted changes in the PIS/COFINS tax, the main federal tax on…

Abstract

Purpose

In an attempt to reduce tax distortions and increase economic efficiency, in 2002 and 2003 Brazil promoted changes in the PIS/COFINS tax, the main federal tax on consumption. Thus, in addition to the old cumulative regime calculated on company revenues, the noncumulative regime was created with higher rates and the added value as a tax basis.

Design/methodology/approach

This paper analyzes the effects of the PIS/COFINS reform in a context of deindustrialization in the Brazilian economy, using a neoclassical model with two sectors.

Findings

The results suggest that after a small improvement in the aggregate economy in the short term, in the long term there was a worsening of the macroeconomic indicators. From the sector perspective, the PIS/COFINS reform may have contributed to the loss of industry participation in the Brazilian economy.

Originality/value

The study of the impact of the PIS/COFINS reform on industry through a neoclassical model is unprecedented in the national literature and contributes to the investigation of changes in the tax regime that occurred in the country.

Details

Journal of Economic Studies, vol. 48 no. 4
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 6 December 2019

Aaron Gilbert, Ayesha Scott and Shuohan Xu

International evidence of economies of scale in mutual funds is mixed. KiwiSaver offers an interesting opportunity to examine economies of scale given its growth from a…

Abstract

Purpose

International evidence of economies of scale in mutual funds is mixed. KiwiSaver offers an interesting opportunity to examine economies of scale given its growth from a new scheme with few members and low balances, where fund costs should be high, to a much larger scheme that should be cheaper to run. As a defined contribution superannuation scheme, fees play an important role in determining the eventual retirement savings members achieve. This paper aims to examine whether the anticipated economies of scale are passed onto members.

Design/methodology/approach

The authors use a sample of 267 KiwiSaver funds over 2013-2018 and relate fund fees to assets under management (AUM) and the number of participants using regression analysis and a translog cost function.

Findings

The authors find evidence to suggest funds are passing on cost savings. Specifically, the authors observe that fees increase slower as the number of members grows, suggesting economies of scale are driven by the number of members, but not the size of the assets being managed. All else held constant, a 1 per cent increase in fund participants increases fees by 0.93 per cent on average. In contrast, a 1 per cent increase in AUM results in effectively 1 per cent increase in fees, all else held constant.

Originality/value

While KiwiSaver has been an undeniable boost to the local funds management industry, regulators are increasingly under pressure to ensure fees are appropriate. In 11 years, New Zealand-based KiwiSaver has grown to over $50b in AUM, with over $400m in total fees per year. This paper provides evidence that economies of scale are partially present in the KiwiSaver sector, although not where it arguably counts: in the size of the AUM.

Details

Pacific Accounting Review, vol. 31 no. 4
Type: Research Article
ISSN: 0114-0582

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Article
Publication date: 27 November 2019

María del Carmen Valls Martínez, Salvador Cruz Rambaud and Emilio Abad Segura

The progressive aging of the population is suggesting that public pension plans should be increasingly supplemented by private savings schemes. Accordingly, this supposes…

Abstract

Purpose

The progressive aging of the population is suggesting that public pension plans should be increasingly supplemented by private savings schemes. Accordingly, this supposes the appearance of a wide range of innovative savings products to meet the varying needs of savers and financial institutions. In practice, most contracted savings operations are nonrandom, that is to say, all amounts involved in the transaction are sure as well as their respective maturities. Consequently, the purpose of this paper is to propose a savings operation which includes the randomness derived from the contingencies which suppose the eventual but unpredictable death of the saver and a person designated by him to receive the final agreed amount.

Design/methodology/approach

The methodology used in this paper is financial mathematics where the risk has been introduced as an element which defines the main characteristics of this novel saving operation.

Findings

The proposed model extends the range of savings products by describing an actual innovation with new practical applications with respect to the traditional models of saving. In this paper, the authors have proposed a new type of saving based on the contingency derived from the life expectancy of the saver, by raising an operation in which the commencement and conclusion of the savings period are random. These savings operations represent, undoubtedly, a novelty from a financial point of view.

Originality/value

The main added value of this paper is that these contingencies affect the periodic deposits in each period from the first to the last maturities of installments. Moreover, the different parameters of such random transactions are defined.

Details

The Journal of Risk Finance, vol. 20 no. 5
Type: Research Article
ISSN: 1526-5943

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Article
Publication date: 17 April 2020

Tomoki Kitamura and Kunio Nakashima

The purpose of this study is to examine the potential and cost of policy incentives for individuals to defer public pension (social security) claims.

Abstract

Purpose

The purpose of this study is to examine the potential and cost of policy incentives for individuals to defer public pension (social security) claims.

Design/methodology/approach

Using Internet survey experiments, the impacts of introducing three potential policies to defer public pension claims are examined: (1) a tax incentive for private term pension premiums, (2) a tax incentive for private term pension benefits and (3) a tax disincentive for financial asset holdings. Effectiveness of information provision regarding projection of future financial assets is also examined.

Findings

Tax incentives have a certain impact on deferment of public pension claims. Among incentives, increase of benefits is the most effective one. Providing information regarding future financial assets reduces incentives.

Originality/value

This study is original in measuring cost for delaying public pension claims according to incentives and information provision.

Details

Review of Behavioral Finance, vol. 13 no. 2
Type: Research Article
ISSN: 1940-5979

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Article
Publication date: 8 May 2017

Ferdi Celikay and Erdal Gumus

The purpose of this paper is to provide new empirical evidence on the relationship between social expenditure and poverty in Turkey.

Abstract

Purpose

The purpose of this paper is to provide new empirical evidence on the relationship between social expenditure and poverty in Turkey.

Design/methodology/approach

There are voluminous studies in the literature and many of which contain condradictory results. The authors use panel error correction models and employ Turkish statistical territorial units data (26 regions) covering the period 2004-2011 in the analysis.

Findings

The authors have found that in the short run, there is a negative relationship between social expenditure and poverty, as expected. In the long run, however, there exists a positive relation between them. The authors utilize expenditure on education as one component of social expenditure, and the authors obtain a negative relationship between education expenditure and poverty, both in the short run and in the long run.

Social implications

Poverty is an important social problem that more studies on this subject should examine various aspects and find policies to alleviate it.

Originality/value

Literature on poverty and social spending are growing and their results are contradictory. However, this paper clearly and significantly provides new empirical evidence on the effect of social spending on reducing poverty using Turkish data. This kind of study is hardly found for developing countries like Turkey. It contributes to the literature.

Details

International Journal of Social Economics, vol. 44 no. 5
Type: Research Article
ISSN: 0306-8293

Keywords

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