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Article
Publication date: 9 November 2012

Marta Coelho

Unrealistic optimism is a well‐documented psychological phenomenon. The purpose of this paper is to discuss the meaning of being “unrealistically optimistic”. This bias has…

Abstract

Purpose

Unrealistic optimism is a well‐documented psychological phenomenon. The purpose of this paper is to discuss the meaning of being “unrealistically optimistic”. This bias has important implications in many economic and managerial contexts and the authors present evidence of it. Although the policy and welfare implications of such a widespread phenomenon are vast, they have been largely neglected by policy makers. The authors propose conservative paternalistic measures.

Design/methodology/approach

Critical review of existing literature on Unrealistic Optimism. Analyses of some relevant variables of the mortgage and corporate credit markets in Portugal and Spain.

Findings

The authors point to evidence and argue that Unrealistic Optimism may well have been at play in the recent behaviour of mortgage and corporate credit markets in Portugal and Spain.

Practical implications

Because ignoring such biases may simply lead borrowers and financial institutions down a real road to ruin, it is important to discuss paternalistic policies that may mitigate them. The paper therefore presents a conservative approach to paternalistic measures that policy makers should consider adopting.

Originality/value

The paper shows the link between irrational behaviour and mortgage and corporate credit markets in Portugal and Spain and suggests paternalistic policies that should be encouraged.

Details

Management Research: Journal of the Iberoamerican Academy of Management, vol. 10 no. 3
Type: Research Article
ISSN: 1536-5433

Keywords

Abstract

Details

Strategic Business Models: Idealism and Realism in Strategy
Type: Book
ISBN: 978-1-78756-709-2

Book part
Publication date: 26 April 2014

Michael D. Bordo and John Landon-Lane

In this paper we investigate the relationship between loose monetary policy, low inflation, and easy bank credit and house price booms.

Abstract

Purpose

In this paper we investigate the relationship between loose monetary policy, low inflation, and easy bank credit and house price booms.

Method

Using a panel of 11 OECD countries from 1920 to 2011 we estimate a panel VAR in order to identify loose monetary policy shocks, low inflation shocks, bank credit shocks, and house price shocks.

Findings

We show that during boom periods there is a heightened impact of all three “policy” shocks with the bank credit shock playing an important role. However, when we look at individual house price boom episodes the cause of the price boom is not so clear. The evidence suggests that the house price boom that occurred in the United States during the 1990s and 2000s was not due to easy bank credit.

Research limitations/implications

Shocks from the shadow banking system are not separately identified. These are incorporated into the fourth “catch-all” shock.

Practical implications

Our evidence on housing price booms that expansionary monetary policy is a significant trigger buttresses the case for central banks following stable monetary policies based on well understood and credible rules.

Originality/value of paper

This paper uses historical evidence to evaluate the relative importance of three main causes of house price booms. Our results bring into question the commonly held view that loose bank credit was to blame for the U.S. house price bubble of the later 1990s.

Details

Macroeconomic Analysis and International Finance
Type: Book
ISBN: 978-1-78350-756-6

Keywords

Book part
Publication date: 20 March 2001

Abstract

Details

Edwin Seligman's Lectures on Public Finance, 1927/1928
Type: Book
ISBN: 978-1-84950-073-9

Article
Publication date: 1 November 1997

James R. Barth, Daniel E. Nolle and Tara N. Rice

The purpose of this paper is to compare and contrast the structure, regulation, and performance of banks in the EU and G‐10 countries. This enables one to identify any significant…

1215

Abstract

The purpose of this paper is to compare and contrast the structure, regulation, and performance of banks in the EU and G‐10 countries. This enables one to identify any significant differences in the structure of banking in the nineteen separate countries comprising these two groups. The regulatory, supervisory, and deposit‐insurance environment in which banks operate in each of these countries is also compared and contrasted. This enables one to identify any significant differences in the regulatory environment that may help explain the structure of banking in the various countries. Beyond this, the effect of the overall structural and regulatory environment on individual bank performance is investigated in order to evaluate the appropriateness of existing regulations in individual countries and any proposals for reforming them. Hence, an exploratory empirical analysis based upon a sample of banks in the different countries is conducted to assess the effect of the different “regulatory regimes” on the performance of individual banks, controlling for various bank‐specific and country‐specific factors that may also affect bank performance. In this way, the paper attempts to contribute to an assessment of the appropriate balance between market and regulatory discipline to ensure that banks have sufficient opportunities to compete prudently and profitability in a competitive and global financial marketplace. In the process of conducting such an assessment, the paper necessarily provides information as to whether the U.S. is “out‐of‐step” with banking developments in other industrial countries.

Details

Managerial Finance, vol. 23 no. 11
Type: Research Article
ISSN: 0307-4358

Book part
Publication date: 1 July 2015

Marcel Aloy and Gilles Dufrénot

This chapter proposes a comparative analysis of the monetary policies undertaken by the Federal Reserve Board and the European Central Bank after the 2008 subprime crisis. We…

Abstract

This chapter proposes a comparative analysis of the monetary policies undertaken by the Federal Reserve Board and the European Central Bank after the 2008 subprime crisis. We point out the twin nature of the financial crises in Europe in comparison with the US crises: in addition to the role of bank funding, the euro area countries have also experienced a structural problem of balance of payment disequilibria. This explains why in the early stages of the subprime crisis, the Fed has succeeded in tackling the illiquidity problems facing the banking sector, while the ECB did not. The Fed could then focus on tackling the recession in the real sector by adopting quantitative easing policies to exert downward pressure on the long-term interest-rate. In the euro area quantitative easing policies came later, in 2013. Even the forward guidance policies have been different between the two central banks. Unlike the ECB, the Fed has gone through diverse forward guidance policies: qualitative, calendar-based, and state-contingent. The chapter proposes a new survey of the monetary policies after the subprime crisis by comparing two strategies in different contexts: the United States and the euro area.

Details

Monetary Policy in the Context of the Financial Crisis: New Challenges and Lessons
Type: Book
ISBN: 978-1-78441-779-6

Keywords

Article
Publication date: 1 March 1992

MCB is not a company to rest on its laurels. In the vernacular of modern‐day management literature, the company can rightly claim to be a learning organization; one that seeks to…

4549

Abstract

MCB is not a company to rest on its laurels. In the vernacular of modern‐day management literature, the company can rightly claim to be a learning organization; one that seeks to regenerate and develop itself in accordance with current trends, most notably those in customer and market requirements.

Details

European Business Review, vol. 92 no. 3
Type: Research Article
ISSN: 0955-534X

Article
Publication date: 23 November 2021

Nuno Moutinho, Carlos Francisco Alves and Francisco Martins

This study aims to analyse the effect of borrower’s countries on syndicated loan spreads, featuring countries according to institutional factors, namely, financial systems and

Abstract

Purpose

This study aims to analyse the effect of borrower’s countries on syndicated loan spreads, featuring countries according to institutional factors, namely, financial systems and corporate governance systems.

Design/methodology/approach

This study is an empirical investigation based on a unique sample of more than 85,000 syndicated loans from 122 countries. The paper uses standard and two-stage least squares regression analysis to test whether the types of financial and corporate governance systems affect loan spreads.

Findings

The paper finds that borrowers from countries with financial systems oriented towards the banking-based paradigm pay lower interest rate spreads than those from countries with financial systems oriented towards the market-based paradigm. In addition, there is evidence that borrowers from countries with more developed financial systems pay lower spreads. The results also show that borrowers from countries with an Anglo-Saxon governance system pay higher spreads than borrowers from countries with a Continental governance system.

Research limitations/implications

This study does not consider potential promiscuous relationships that can arise at the ownership structure and governance level between banks and borrowers and may affect loan spreads.

Practical implications

This study suggests that financial and corporate governance systems are essential factors in the financial intermediation process. Furthermore, the evidence indicates that corporates with higher potential agency costs and higher potential information asymmetry are requested to pay higher spreads. Therefore, the opportunities to such corporates invest optimally tend to be scarcer.

Originality/value

The paper highlights the impact of institutional factors on the cost of financing, characterising the countries according to the type of financial system and the type of corporate governance system. The study finds that borrowers from countries with bank-based financial systems pay lower interest rate spreads than those from countries with market-based financial systems. The paper also highlights how the level of financial development affects the cost of financing. The paper focusses on non-financial firms, unlike financial firms, which have been the focus of several empirical studies on topics relating to the cost of funding and corporate governance.

Details

Corporate Governance: The International Journal of Business in Society, vol. 22 no. 4
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 1 May 1983

In the last four years, since Volume I of this Bibliography first appeared, there has been an explosion of literature in all the main functional areas of business. This wealth of…

16237

Abstract

In the last four years, since Volume I of this Bibliography first appeared, there has been an explosion of literature in all the main functional areas of business. This wealth of material poses problems for the researcher in management studies — and, of course, for the librarian: uncovering what has been written in any one area is not an easy task. This volume aims to help the librarian and the researcher overcome some of the immediate problems of identification of material. It is an annotated bibliography of management, drawing on the wide variety of literature produced by MCB University Press. Over the last four years, MCB University Press has produced an extensive range of books and serial publications covering most of the established and many of the developing areas of management. This volume, in conjunction with Volume I, provides a guide to all the material published so far.

Details

Management Decision, vol. 21 no. 5
Type: Research Article
ISSN: 0025-1747

Keywords

Article
Publication date: 5 April 2022

Maria Elisabete Neves, Daniela Almeida and Elisabete S. Vieira

The main objective of this work is to show that the traditional specific characteristics of companies as well as cultural and religious dimensions can influence the leverage of…

Abstract

Purpose

The main objective of this work is to show that the traditional specific characteristics of companies as well as cultural and religious dimensions can influence the leverage of companies in different macro-environmental systems.

Design/methodology/approach

To achieve this aim, the authors have used data from 1.568 firms from 7 European countries between 2010 and 2016, and the models were estimated by using panel data methodology, specifically the generalized method of moments (GMM) estimation method by Arellano and Bover (1995) and Blundell and Bond (1998).

Findings

Overall, the empirical results point out that the cultural moderating factors are essential in determining companies' capital structure, regardless of the country's legal origin. The study results also show that traditional variables, intrinsic to management, macroeconomic environment and religion, have a central role in capital structure, namely for the civilian countries.

Originality/value

As far as the authors know, this is the first work that uses, in addition to the traditional specific characteristics of companies, cultural dimensions and religion, as determinants of debt levels, in different legal systems for Europe.

Details

Cross Cultural & Strategic Management, vol. 29 no. 3
Type: Research Article
ISSN: 2059-5794

Keywords

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