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Article

Younès Mouatassim

The purpose of this paper is to introduce the zero‐modified distributions in the calculation of operational value‐at‐risk.

Abstract

Purpose

The purpose of this paper is to introduce the zero‐modified distributions in the calculation of operational value‐at‐risk.

Design/methodology/approach

This kind of distributions is preferred when excess of zeroes is observed. In operational risk, this phenomenon may be due to the scarcity of data, the existence of extreme values and/or the threshold from which banks start to collect losses. In this article, the paper focuses on the analysis of damage to physical assets.

Findings

The results show that basic Poisson distribution underestimates the dispersion, and then leads to the underestimation of the capital charge. However, zero‐modified Poisson distributions perform well the frequency. In addition, basic negative binomial and its related zero‐modified distributions, in their turn, offer a good prediction of count events. To choose the distribution that suits better the frequency, the paper uses the Vuong's test. Its results indicate that zero‐modified Poisson distributions, basic negative binomial and its related zero‐modified distributions are equivalent. This conclusion is confirmed by the capital charge calculated since the differences between the six aggregations are not significant except that of basic Poisson distribution.

Originality/value

Recently, the zero‐modified formulations are widely used in many fields because of the low frequency of the events. This article aims to describe the frequency of operational risk using zero‐modified distributions.

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Article

Wenbo Zhu, Yongfu Chen, Zhihao Zheng, Jing Zhao, Guojing Li and Wei Si

China has experienced a fast economic growth and shown a significant rise in income inequality in the past decades. During the same period, fluid milk consumption in urban…

Abstract

Purpose

China has experienced a fast economic growth and shown a significant rise in income inequality in the past decades. During the same period, fluid milk consumption in urban areas has rapidly expanded. The objective of this paper is to analyze and simulate the influence of income distribution changes on fluid milk consumption of households in urban China.

Design/methodology/approach

This study applies an inverse hyperbolic sine (IHS) double-hurdle model to modeling at-home fluid milk consumption of households across different income strata based on a sample of 11,861 urban households in five provinces in China, and simulating the impact of changing income distribution, including five income growth patterns, on fluid milk consumption of total households as well as specific household groups.

Findings

The fluid milk consumption in urban China will continue to increase, with the unconditional income elasticity being 0.334 for the full sample and 0.347, 0.335 and 0.162 for the low-, middle-, and high-income groups, respectively. The simulation results show an evidence that, compared with distribution-neutral and disparity-enlarging income growth patterns, a rising income equality would lead to a more significant increase in fluid milk consumption. And the inequality-reducing income growth pattern has a larger impact on fluid milk consumption of households with seniors and no children, as well as households having no local urban household registration (hukou).

Practical implications

The government should strengthen the supply measures of fluid milk in urban areas, enlarge domestic dairy production, and diversify the sources of milk imports. It is also necessary to subsidize low-income families, especially households with seniors or households migrated from other areas without getting local urban hukou, which could simultaneously improve nutritional benefits and alleviate financial pressures.

Originality/value

A simulation considering the evolution of income distribution as well as different household groups is conducted. Widely distributed data with a large sample size and detailed demographic information are used. The problems of zero consumption and non-normal distribution are addressed by the IHS double-hurdle model.

Details

China Agricultural Economic Review, vol. 12 no. 4
Type: Research Article
ISSN: 1756-137X

Keywords

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Article

Genanew Bekele, Reza H. Chowdhury and Ananth Rao

The purpose of this paper is to consider borrower-specific characteristics to understand the factors affecting both the probability and quantum of loan default by…

Abstract

Purpose

The purpose of this paper is to consider borrower-specific characteristics to understand the factors affecting both the probability and quantum of loan default by individual borrowers under Islamic and conventional banking.

Design/methodology/approach

Borrower-specific characteristics that explain the probability of default may not necessarily be similar factors that determine the quantum of default. The authors therefore apply a Box-Cox double hurdle model to treat both the probability and quantum of default in a two-step approach. The authors also explain the differences in default risk and quantum of default between Islamic and conventional banking borrowers from their behavioral perspectives following the Sharia principles in financial transactions between lenders and borrowers. The authors use borrower-specific information of two separate bank branches of the United Arab Emirates that solely deal with either Islamic or conventional banking products.

Findings

The paper demonstrates that the probability of default and the quantum of default appear to be influenced by different set of client-specific factors. The results suggest that the probability of default does not vary significantly between Islamic and conventional banking borrowers. The evidence also shows that Islamic banking defaulters, compared to those in conventional banking, repay a large quantum of overdue when their financial leverage improves. However, they do not tend to reduce their outstanding quantum of overdue faster than conventional banking defaulters.

Research limitations/implications

Availability of data from only two bank branches may limit the explanatory power of empirical findings.

Practical implications

The study findings will enable the Islamic and conventional banks to appropriately address Basel Capital requirements based on the borrowers’ behavior.

Social implications

The study findings have the potential for Islamic and conventional financing institutions to be more flexible with equity in their lending practices.

Originality/value

Religious beliefs are crucial in borrower’s default behavior in Islamic banking.

Details

Review of Behavioral Finance, vol. 8 no. 2
Type: Research Article
ISSN: 1940-5979

Keywords

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Article

Sanjay Tolani, Ananth Rao, Genanew B. Worku and Mohamed Osman

The purpose of this paper is to analyze significant determinants to assess the probability of insureds’ intent to buy (ITB) insurance and willingness to pay (WTP) quantum…

Abstract

Purpose

The purpose of this paper is to analyze significant determinants to assess the probability of insureds’ intent to buy (ITB) insurance and willingness to pay (WTP) quantum of dollars for security benefits.

Design/methodology/approach

The authors use the Double Hurdle Model (DHM) and Neural Network (NN) architecture to analyze the insureds’ behavior for ITB and WTP. The authors apply these frameworks to all the 503 insureds of a branch of a leading insurer in the United Arab Emirates.

Findings

The DHM identified age, loans & liabilities, body mass index, travel outside the UAE, salary and country of origin (Middle Eastern and African) as significant determinants to predict WTP for social security benefits. In addition to these determinants, NN architecture identified insurance replacement, holding multiple citizenship, age of parents, mortgages, country of origin: Americas, length of travel, income of previous year and medical conditions of insured as additional important determinants to predict WTP for social security benefits; thus, NN is found to be superior to DHM due to its lowest RMSE and AIC in the holdout sample and also its flexibility and no assumptions unlike econometric models.

Research limitations/implications

Insureds’ data used from one UAE Branch limit the generalizability of empirical findings.

Practical implications

The study findings will enable the insurers to appropriately design the insurance products that match the insurers’ behavior of ITB and WTP for social security benefits.

Social implications

The study findings have the potential for insurance institutions to be more flexible in their insurance practices through public–private partnerships.

Originality/value

This is the authors’ original research work.

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Article

Rashid Mehmood and Jie A. Lu

Markov chains and queuing theory are widely used analysis, optimization and decision‐making tools in many areas of science and engineering. Real life systems could be…

Abstract

Purpose

Markov chains and queuing theory are widely used analysis, optimization and decision‐making tools in many areas of science and engineering. Real life systems could be modelled and analysed for their steady‐state and time‐dependent behaviour. Performance measures such as blocking probability of a system can be calculated by computing the probability distributions. A major hurdle in the applicability of these tools to complex large problems is the curse of dimensionality problem because models for even trivial real life systems comprise millions of states and hence require large computational resources. This paper describes the various computational dimensions in Markov chains modelling and briefly reports on the author's experiences and developed techniques to combat the curse of dimensionality problem.

Design/methodology/approach

The paper formulates the Markovian modelling problem mathematically and shows, using case studies, that it poses both storage and computational time challenges when applied to the analysis of large complex systems.

Findings

The paper demonstrates using intelligent storage techniques, and concurrent and parallel computing methods that it is possible to solve very large systems on a single or multiple computers.

Originality/value

The paper has developed an interesting case study to motivate the reader and have computed and visualised data for steady‐state analysis of the system performance for a set of seven scenarios. The developed methods reviewed in this paper allow efficient solution of very large Markov chains. Contemporary methods for the solution of Markov chains cannot solve Markov models of the sizes considered in this paper using similar computing machines.

Details

Journal of Manufacturing Technology Management, vol. 22 no. 6
Type: Research Article
ISSN: 1741-038X

Keywords

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Article

Andrew Potter, Robert Mason and Chandra Lalwani

The paper aims to analyse the reasons behind the leadership shown by a case study retailer through the introduction of factory gate pricing (FGP) within the grocery…

Abstract

Purpose

The paper aims to analyse the reasons behind the leadership shown by a case study retailer through the introduction of factory gate pricing (FGP) within the grocery sector. Further, there is an evaluation of the transport management techniques used to support FGP and the operational benefits gained.

Design/methodology/approach

The research is based around a single case study of a UK grocery retailer, which has adopted FGP. A range of data sources has been collected during a project with the retailer. Techniques used include process mapping, interviews, workshops and company presentations.

Findings

Strategically, the introduction of FGP has provided economies for the retailer strengthening its position in the market. Four main transport management techniques have been deployed to achieve this, generating reductions in transport and inventory costs while improving customer service levels. There are also some issues that need addressing, in relation to the need for a single point of control, who manages this point and the technological capabilities of transport providers.

Research limitations/implications

Only a single case study is presented, and the research was carried out during the early phase of implementation.

Practical implications

FGP requires a certain degree of scale to be effective, and should complement current processes within a business. There is a need to manage relationship issues with suppliers and transport providers.

Originality/value

The paper presents a detailed case study of FGP within the grocery sector, which is more complex than previous application of the concept. The strategic rationale for pioneering FGP is considered, along with its tactical deployment and operational benefits. Concerns are also highlighted, to provide a balanced evaluation.

Details

International Journal of Retail & Distribution Management, vol. 35 no. 10
Type: Research Article
ISSN: 0959-0552

Keywords

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Case study

Subhalaxmi Mohapatra and Subhadip Roy

Srikumar Misra founded Milk Mantra as a milk producing and selling company in the state of Odisha, India in 2010. The company subsequently diversified into milk-based…

Abstract

Synopsis

Srikumar Misra founded Milk Mantra as a milk producing and selling company in the state of Odisha, India in 2010. The company subsequently diversified into milk-based products such as yogurt and cottage cheese and spread its foray into the neighboring states. In 2014, the company had to overcome a few challenges from the macro environment as well as think of a marketing and communication strategy to gain competitive advantage.

Research methodology

The case is based on the primary research and has been developed using interviews of the company representatives and documents made available from the company. Wherever required, written permission has been obtained from the company representatives.

Relevant courses and levels

This case could be a part of the Marketing Management course in a graduate/undergraduate program in Business Management. The case could also be a part of a Brand Management or Integrated Marketing Communications course in the same program for specialized subjects such as branding a generic product or brand communications. This case could also be used for a short discussion in a distribution and logistics course.

Theoretical bases

The specific topics, which could be facilitated through this case, are the 4 Ps of marketing, distribution and marketing strategy. The case also relies on the theories of branding and marketing communication.

Details

The CASE Journal, vol. 13 no. 3
Type: Case Study
ISSN: 1544-9106

Keywords

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Article

ALAN SLATER

For decades distribution has been like a ‘sleeping giant’, content to carry on as in the past. Now it has received an awakening triggered by the information technology…

Abstract

For decades distribution has been like a ‘sleeping giant’, content to carry on as in the past. Now it has received an awakening triggered by the information technology revolution. The result has been reduced costs and improved customer service. Alan Slater, managing consultant at Price Waterhouse discusses the importance of distribution information.

Details

Logistics World, vol. 1 no. 3
Type: Research Article
ISSN: 0953-2137

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Article

Ashok K. Mishra and Valerian O. Pede

The purpose of this study is to first examine the factors affecting the intra-household perception of climate change. Second, the study investigates the impact of the…

Abstract

Purpose

The purpose of this study is to first examine the factors affecting the intra-household perception of climate change. Second, the study investigates the impact of the perception of climatic stress on the operators’ and spouses’ intra-household adaptation strategies (farm and household financial strategies).

Design/methodology/approach

The study uses household survey data from Vietnam’s Mekong Delta. The study uses probit and negative binomial count data approaches to evaluate the empirical model.

Findings

Results confirm the existence of intra-household gender differences in the adaptation strategies. The authors found that although spouses perceive climatic stress, they are less likely to adapt to such stresses when it comes farming enterprise, but more likely to adapt to household financial strategies. In contrast, farm operators, in the presence of climatic stresses, undertake both farm and household finance adaptation strategies.

Practical implications

Investment in climate smart agriculture can help households in managing climatic stresses.

Originality/value

A farmer in Asia, and Vietnam in particular, faces significant risks from climatic changes. In Vietnam, agriculture is easily affected by natural disasters and climatic changes. This study provides insights into the perception of climatic changes by operators and spouses in Vietnam’s Mekong Delta. Perceived changes in the climate have a greater impact on women because they typically lack the necessary tools to adapt to climate change. The current findings could be useful in managing climatic risk in Vietnam’s Mekong Delta and be helpful to policymakers in designing risk management strategies in response to climatic changes.

Details

International Journal of Climate Change Strategies and Management, vol. 9 no. 4
Type: Research Article
ISSN: 1756-8692

Keywords

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Article

Beth Ann Fiedler and Robert J. Bebber

The purpose of this paper is to establish historic regulatory conditions and priority national characteristics eliciting outstanding best practices in clinical trial…

Abstract

Purpose

The purpose of this paper is to establish historic regulatory conditions and priority national characteristics eliciting outstanding best practices in clinical trial regulatory systems, towards global health objectives through targeted economic development.

Design/methodology/approach

Exploratory review of clinical trial processes of three industrialized nations with similar democratic processes – Japan, the UK and the USA – in order to determine the efficacy of international clinical trials.

Findings

Outstanding best practices in national vaccine clinical trials can guide the international economic development, manufacturing and distribution policy strategies necessary to form the basis of a cross‐cultural global delivery system.

Originality/value

This study's contribution to academic literature is threefold: first, it reviews established fundamental clinical trial processes for Japan, the UK and the USA; second, it distinguishes similarities and differences to determine best practices; and third, it suggests changes in regulatory vaccine clinical trials towards achieving global health objectives.

Details

International Journal of Pharmaceutical and Healthcare Marketing, vol. 7 no. 2
Type: Research Article
ISSN: 1750-6123

Keywords

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