Market structure, performance, and efficiency of the Chinese banking sector

The Chinese banking system is evolving from a mono-bank system to one involving many banks of varied types and functions and there is a heated debate on whether competition can help to improve the performance and efficiency of the banks. This paper tests five hypotheses that have been proposed in the literature on the relationship between market structure, profitability, and efficiency using data envelopment analysis with a panel data of the 14 largest nationwide banks in China during the period of 1998–2007. The empirical results show clearly that neither the structure-conduct performance nor the efficient structure hypotheses hold in China. The strongest support is for the relative market power hypothesis that suggests that banks with differentiated services and products are those with higher market shares, and that they are able exercise their market power to obtain higher profits by setting higher prices. Technical efficiency has a significant effect upon bank profitability and the policy makers should promote further competition in the Chinese banking sector.     

国企二次改革与双层股权结构的运用

在经历了十年相对停滞后,国企改革再次被提上了日程,混合所有制企业将成为国企二次改革的重要突破口。但在国有资本不具有控股地位的情况下,混合所有制企业社会政策目标与经营目标之间的冲突凸显,如何达成二者之间的平衡关系到国企改革的成败。双层股权结构模式能够在实现国有资本淡出的同时,保有国家对特殊领域内的企业实施必要的控制,这与国企二次改革的核心任务相契合,可以通过适用对象、适用范围的限制,结合配套制度的完善,在将其风险降至最低的前提下加以运用。     

助学贷款的风险转移：贷款证券化

助学贷款的总体规模与我国高等教育发展的需求不匹配,贷款风险逐步显现,银行进一步放贷积极性不高.来源于资产证券化的助学贷款证券化这一金融创新工具,可以有效分散和转移风险,提高银行资产的流动性和盈利性,从而使银行积极主动地开展助学贷款业务,协调借贷双方的矛盾.助学贷款证券化作为一个新的金融创新工具,由于尚存在着制度体系不匹配的障碍,在国内金融市场上尚未真正起步.我国资本市场基本具备助学贷款证券化的条件,从资产证券化的本质特征以及我国助学贷款的开展潜能、外部投资环境等因素来看,我国实行助学贷款证券化符合我国现阶段的国情,具有良好的发展前景.建议政府出台相应政策与之匹配,让这一金融创新成果在我国资本市场得到迅速有效的实施.     

Market Structure and R∧D Joint Ventures: The Case of Product Innovations

Departing from the received fact that research joint venture agreements are allowed on the grounds of a permissive ruling, we study what conditions are necessary for venture partners to carry on RD cooperation to the marketing stage. We treat the case of product innovations exploitable with different usages in unconnected markets. Two main results appear: firms always have incentives for a distribution of varieties, but not always agree on the distribution of products. The condition for the last result to happen gives a useful rule for antitrust authorities relating the degree of sustitutability across varieties and the relative profitability of the markets.     

Comparative Study of Domestic and Foreign Bank Performance in Thailand: The Regression Analysis

This paper studies the performance of domestic and foreign banks in Thailand in terms of profitability and other characteristics after the East Asian financial crisis. The study is based on a micro bank-level panel data on financial statements by pooling cross-bank time-series data with the major balance sheet and income statement ratios for domestic and foreign banks in Thailand for 1995–2000. All banks were found to have reduced their credit exposure during the crisis years, and to have gradually improved their profitability during the post-crisis years. The results indicate that foreign bank profitability is higher than the average profitability of the domestic banks although importantly, in the post-crisis period, the gap between foreign and domestic profitability become closer. This shows some positive results of the financial restructuring program. Saovanee Chantapong (Ms) currently works as a senior economist at the Office of Macroeconomic Policy and Analysis. She received her ph.D. in Economics from the Faculty of Economics and Management at the University of Hannover (Germany) in 2005. Paper submitted to the International West-East Conference 2003: Accounting and Finance in Transition: European and Asian Experiences and Public Policy Considerations, London, 10–12 July 2003. This paper is a revised version of the Kiel Advanced Studies Working paper (May 2002) which was written when the author participated in Advanced Studies Programme (ASP) at the Kiel Institute for World Economics (IFW), Germany. The author is greatly indebted to Dr. Ralph Heinrich, her discussant and Dr. Claudia M. Buch for their valuable comments. The author would like to thank Bussaracum Petchclai and Augsupalee Watcharakiet, her colleagues at the Bank of Thailand for their great help. The paper has benefited from very helpful comments from Felix Hammermann, Om Prakash Mall and Paula Jaramillo. The author is also grateful to Prof. Dr. Lukas Menkhoff, Chair, the Institute of Monetary Economics, Faculty of Economics and Management, University of Hannover. The views expressed in this paper are entirely those of the author only and do not necessarily reflect those of the Bank of Thailand. Remaining errors are under the author’s responsibilities.     

Strategies to enhance price and quality competition in health care: lessons learned from tracking local markets

Drawing on observations from tracking changes in local health care markets over the past ten years, this article critiques two Federal Trade Commission and Department of Justice recommendations to enhance price and quality competition. First, we take issue with the notion that consumers, acting independently, will drive greater competition in health care markets. Rather we suggest an important role remains for trusted agents who can analyze inherently complex price and quality information and negotiate on consumers' behalf. With aggregated information identifying providers who deliver cost-effective care, consumers would be better positioned to respond to financial incentives about where to seek care and thereby drive more meaningful competition among providers to reduce costs and improve quality. Second, we take issue with the FTC/DOJ recommendation to provide more direct subsidies to prevent distortions in competition. In the current political environment, it is not practical to provide direct subsidies for all of the unfunded care that exists in health care markets today; instead, some interference with competition may be necessary to protect cross subsidies. Barriers can be reduced, though, by revising pricing policies that have resulted in marked disparities in the relative profitability of different services.     

An Examination of the Assumption that Adult Businesses Are Associated with Crime in Surrounding Areas: A Secondary Effects Study in Charlotte, North Carolina

Recent Supreme Court decisions have signaled the need for sound empirical studies of the secondary effects of adult businesses on the surrounding areas for use in conjunction with local zoning restrictions. This study seeks to determine whether a relationship exists between adult erotic dance clubs and negative secondary effects in the form of increased numbers of crimes reported in the areas surrounding the adult businesses, in Charlotte, North Carolina. For each of 20 businesses, a control site (matched on the basis of demographic characteristics related to crime risk) is compared for crime events over the period of three years (1998–2000) using data on crime incidents reported to the police. We find that the presence of an adult nightclub does not increase the number of crime incidents reported in localized areas surrounding the club (defined by circular areas of 500- and 1,000-foot radii) as compared to the number of crime incidents reported in comparable localized areas that do not contain such an adult business. Indeed, the analyses imply the opposite, namely, that the nearby areas surrounding the adult business sites have smaller numbers of reported crime incidents than do corresponding areas surrounding the three control sites studied. These findings are interpreted in terms of the business mandates of profitability and continuity of existence of the businesses.     

The consequences of deregulation: A comparison of the experiences of UK building societies with those of US Savings and Loan Associations

It has been estimated that deregulation of US S&Ls will cost the US taxpayer ￡500bn in terms of the compensation paid out for the resulting scandals and failures. In contrast, the deregulation of UK building societies, although initially followed by a series of scandals and losses of ￡1bn., eventually resulted in substantially increased profitability. The social effects in the UK have been quite different to those in the US. As a result of the increased importance placed on profitability as opposed to mutuality, many homeowners have had their properties repossessed, and investors been mis-soId unsuitable investments. However, UK building societies, by a mixture of good luck and judgement, have avoided the principal regulatory pitfalls, which beset the S&Ls in terms of bankruptcies and fraud. This paper seeks to explain these different post-deregulation experiences. It extends to the UK the looting model of Akerlof and Romer (1993) and the managerial diversion model of Nichols (1972) which went so far to explain and anticipate, respectively, the US experience. This revised version was published online in July 2006 with corrections to the Cover Date.     

MEASURING THE RATE OF RETURN FOR COMPETITION LAW

This paper focuses on the application and interpretation ofmeasures of rate of return for competition law. Amongst otherresults, we analyse how outsourcing and similar arrangementsimpact the rate of profitability and show that the measurementis more volatile the greater the rate of profit (suggestingthat the measures are most problematic when they are most needed).We identify and interpret the outsourcing arrangements thatprovide the lowest rate of profit and show that these arrangementshave a close relationship to net present value. Finally, weprovide suggestions to make profitability measures more informativefor competition law.     

Secured Financing of Intellectual Property Assets and the Reform of English Personal Property Security Law

The past three decades have seen a decline in traditional industriesin the United Kingdom and there has been a relative declinein the value of physical assets to the UK economy. At the sametime, the value of intangible assets seen in intellectual propertyrights have increased considerably. As such, IP rights representimportant assets for companies and often comprise the foundationfor market dominance and continued profitability. There is astructural uncertainty in the law relating to the use of IPas collateral for the purpose of raising debt finance and thismay impact upon the survival of firms with high ratios of intangibleto tangible assets. This article considers the proper goalsfor an effective credit and security regime in IP. It examinesthe significance of the availability of collateral to the lendingdecision and also considers whether the reluctance to maximisethe use of IP as security reflects inherent difficulties whicharise out of the nature of IP as economic assets. This has implicationsfor the reform of English personal property security law andthe development of bright line priority rules associated withArticle 9 of the US Uniform Commercial Code which is often citedas a model for reform of English law.     

An Objective Corruption Risk Index Using Public Procurement Data

In order to address the lack of reliable indicators of corruption, this article develops a composite indicator of high-level institutionalised corruption through a novel ‘Big Data’ approach. Using publicly available electronic public procurement records in Hungary, we identify “red flags” in the public procurement process and link them to restricted competition and recurrent contract award to the same company. We use this method to create a corruption indicator at contract level that can be aggregated to the level of individual organisations, sectors, regions and countries. Because electronic public procurement data is available in virtually all developed countries from about the mid-2000s, this method can generate a corruption index based on objective data that is consistent over time and across countries. We demonstrate the validity of the corruption risk index by showing that firms with higher corruption risk score had relatively higher profitability, higher ratio of contract value to initial estimated price, greater likelihood of politicians managing or owning them and greater likelihood of registration in tax havens, than firms with lower scores on the index. In the conclusion we discuss the uses of this data for academic research, investigative journalists, civil society groups and small and medium business.     

Diffusion as a Process of Creative Adoption

This paper elaborates an integrated framework for understanding diffusion as a process of creative adoptions in the business sector. Within the context of the economics of localized technological change, adoption is viewed as a complementary component of a broader process of adjusting the technology when unexpected events in the product and factor markets push firms towards a creative reaction. When the stock of adoptions exerts a suitable combined effect both on the gross profitability of adoption and on the costs of adoption, such that the net profitability of adoption and hence the rates of new adoption follow a quadratic path, the dynamics of creative adoption can engender a S-shaped diffusion process.     

Any-Willing-Provider laws: their financial effect on HMOs

Any-Willing-Provider (AWP) legislation requires that health plans accept any health care provider who agrees to conform to the plan's conditions, terms, and reimbursement rates. Many states have adopted such legislation, raising questions about its effect on the managed care market. Those favoring this legislation argue that it will reduce restrictions on choice of provider, while opponents argue that it will reduce competition by increasing administrative and medical costs for managed care plans. Using cross-sectional time-series data for the period 1992-1995 (the period during which many of these laws were enacted), this study investigates the effect that these laws have on HMO financial performance. Our results show that "all-provider" AWP laws have a very limited effect on the financial performance measures we examine. "Pharmacy" AWP laws have a more significant effect, but neither type of law appears to affect the overall profitability of HMOs.     

Elevated Risk of Arrest for Veteran's Administration Behavioral Health Service Recipients in Four Florida Counties

This paper examines the relative contribution of mental and substance abuse disorders to criminal justice involvement by examining the relative risk of arrest for three groups of adult male recipients of VA behavioral health care services. These groups include men served for both substance abuse and mental health, for only substance abuse, and for only mental health. The relative risk of multiple offences is compared to relative risk of a single offense for each group. Results indicated that relative risk of multiple arrests for the dual diagnosis group is substantially greater than for either of the single diagnosis groups, and greater than the relative risk for recipients of nonbehavioral health services. Relative risk of arrest for recipients of only mental health services is no different than the relative risk for other veterans living in the region under examination.     

USING COUNTY-BASED MARKETS TO SUPPORT AND FEDERAL RESERVE MARKETS TO IMPLEMENT BANK MERGER POLICY

In this paper, we consider three issues raised by the apparentinconsistency between the current research practice of usingcounty-based markets (Metropolitan Statistical Areas (MSAs)and non-MSA counties) to investigate the validity of the theoreticalunderpinnings of bank merger policy and the current regulatorypractice of using Federal Reserve (FR) banking markets, whichoften do not follow county lines, to implement that policy.Using a national sample of bank and thrift branch deposit data,we find that county-based areas cannot simply substitute forFR markets in the implementation of bank merger policy. Forexample, numerous potential mergers would raise competitiveissues in county-based areas, but not in FR markets, and viceversa. We also conclude that, because of the relative difficultyof assembling demographic data for non-county-based areas, itis impractical to consistently use FR markets in bank mergerpolicy research. However, we do find that, despite the inconsistenciesbetween the two types of markets, analysis that uses county-basedareas is relevant for bank merger policy that is implementedwith FR markets. For example, we find that profitability regressionresults using variables based on FR markets are similar to thosefound using variables based on MSAs and non-MSA counties.     

Young innovative companies: Are they high performers in transition economies? Evidence for Vietnam

We study the economic value of both embodied technological change and Research and Development (R&D) investment as proxies for the inputs of innovative activities conducted by Vietnamese firms. Our main focus is on the profitability of young innovative companies (YICs), private innovative companies (PICs), and small and young companies (SYCs). In particular, we test whether YICs could prove successful in fostering economic development through their technological change activities. Results show that (a) although YICs are more R&D intensive and innovative than PICs and SYCs, in general they do not produce equivalent performance; however those specific YICs focusing on technological change potentially outperform their counterparts, and (b) PICs are more capable than the other types of firms in translating their innovative effort to higher profitability.     

A Review of “Taking Back Eden: Eight Environmental Cases That Changed the World”

Abstract

The biological aspects of illegal harvests of threatened wildlife are outlined. It is shown that local agriculturalists are beneficiaries of illegal harvesting and that competition from agriculture exacerbates the extinction risk. Illegal harvesting of wildlife is driven by the profitability of the exercise, but law enforcement activity can deter poaching by reducing the associated expected profits. Law enforcement may be unable to limit illegal harvesting to levels threatened populations can sustain as a result of perverse consequences or strategic responses by poachers to law enforcement activity. Poaching activity is sensitive to the beliefs of participants about future prices and the availability of wildlife. Erroneous beliefs result in price collapses being observed. Integrating legal markets with increased local control of wildlife and punitive law enforcement strategies may be the most effective and efficient means to constrain illegal harvests.     

Peer violence perpetration among urban adolescents: dispelling the myth of the violent immigrant

Researchers have found an inverse relationship between immigrant status and violence perpetration. Most studies have examined Mexican immigrants, and few have assessed immigration factors other than nativity. Additionally, the majority have focused on the most serious forms of violence despite the fact that moderate violence is more common. Using data from the 2008 Boston Youth Survey, we generated prevalence estimates of peer violence perpetration across immigration related factors, examined whether risk factors for peer violence differed by these variables, and explored the contribution of risk factors to peer violence perpetration. Recent immigrants had a significantly lower prevalence of peer violence compared to each other generations/time in U.S. group. Known risk factors for violence perpetration varied by generation/time in U.S.: compared to other groups, recent immigrants were less likely to have used substances, and were more likely earn A's and B's in school. Recent immigrants had a significantly lower risk of violence perpetration relative to U.S.-born (RR = 0.35, 95% CI: 0.19, 0.62). Adjusting for known risk factors did not attenuate differences in risk. While immigrant youth had a lower risk of peer violence, the protective effect was diminished among immigrants who had resided in the U.S. for >4 years. This pattern demonstrates that negative assimilation occurs within the first generation, not just across generations. Results suggest that perpetration of violence worsens with increased time in the U.S. Research is needed to identify factors that contribute to the acquisition of behaviors such as violence among recently arrived immigrant youth.     

The profits of not-for-profit hospitals

This paper explores the profits of not-for-profit (NFP) hospitals and identifies the factors that determine whether such profits are adequate. A model which relates hospital charges to surpluses is used to derive NFP surplus from gross patient charges and operating costs. This is done to identify the items contributing to surpluses and to explore the dispersion of NFP surpluses. We first discuss why the literature is relatively silent on NFP profitability. We then present the model and use Tennessee hospital data to identify how its components vary by hospital type and through time. The dispersion of surpluses among NFPs is then examined. We next propose three rate of return measures of profitability and use these to relate NFP profits to select characteristics of hospitals and their environments. Several alternative profit levels of NFP are discussed, and the factors that are relevant to the issue of determining the adequate level of profit are identified. The paper ends with a plea for better data on NFP profits.