Bridging the Risk Management Gap: Adopting the Factor Endogenous Behaviour Aggregation (FEBA) Approach Beyond Banking

While the banking sector has long been at the forefront of risk management practices, other service industries often lag behind. This disparity is particularly evident in sectors where value-oriented management is crucial for maintaining competitiveness. This article focuses on the development and application of the Factor Endogenous Behaviour Aggregation (FEBA) approach in service industries such as healthcare and health resorts. In these sectors, risk management is typically handled on an ad hoc basis due to the absence of stringent regulatory requirements. Understanding and managing customer loyalty is crucial for sustained profitability and growth. In this context, the SOL (Satisfaction Outcome Loyalty) Solution, proposed by Sokolov (2015), emerges as a pivotal tool for quantifying various risks within the Service Profit Chain. The SOL Solution provides a structured approach to quantify risks associated with employee performance, customer satisfaction, and loyalty. By assigning numerical values to these risks, companies can better understand their impact on profitability. This quantification allows businesses to prioritize actions that will have the most significant positive impact on customer loyalty and profitability. The tool also enables predictive analysis, helping businesses foresee potential risks and opportunities by analyzing trends and patterns. *The approach was set up in “Interaction between market and credit risk: Focus on the endogeneity of aggregate risk” and mentioned in Roubini Global Economic Digest as “Advance in Credit Risk Management”

Information on Cancer Prevalence and Oncologic Insurance Take-up

We study whether oncological insurance demand can be boosted by providing information on the likelihood of developing cancer at some point over the consumer’s lifetime. We conducted a lab- in-the-field hypothetical choice experiment on oncological insurance with adults aged 40-68 of middle to high socioeconomic status in Lima, Peru. A random subset of participants received information on the likelihood of developing cancer before the age of 75. Participants were offered partial and full insurance options. Information increased take-up for full insurance by 18 percentage points (33% of the control group rate) but did not affect demand for partial insurance. Treatment effect arose mostly from participants who do not live with an oncology patient at home, but are roughly constant by education, sex, and age. Our stylized model suggests that this effect is driven by consumers with low present bias. Our findings suggest that in developing countries, where information about the probability of developing cancer during one’s lifetime is not widely known, providing this information can boost demand for insurance, but that present- bias can hinder this effect

Financial Performance and Innovation: Evidence from United States 1998 - 2023

This study explores the relationship between R&D intensity, as a measure of innovation, and financial performance among S&P 500 companies over 100 quarters from 1998 to 2023, including multiple crisis periods. It challenges the conventional wisdom that larger companies are more prone to innovate, using a comprehensive dataset across various industries. The analysis reveals diverse associations between innovation and key financial indicators such as firm size, assets, EBITDA, and tangibility. Our findings underscore the importance of innovation in enhancing firm competitiveness and market positioning, highlighting the effectiveness of countercyclical innovation policies. This research contributes to the debate on the role of R&D investments in driving firm value, offering new insights for both academic and policy discussions

Global Perspectives on Fiscal Policy and Labor Income-Leisure Choices: Theoretical and Practical Insights

In macroeconomic literature, fiscal policy is considered a powerful tool to achieve sustainable development, full employment, and social well-being in developed and developing societies. For this, public authority uses expansionary and contractionary tax policies to achieve stable growth and employment environment for the stable labor market. This study theoretically and empirically investigates the problem of inference on income-leisure labor preference. Also, it considers the impact of tax and expenditure structure on labor choices, regarding working hours under the assumption of neoclassical theory. We use quantile regression analysis to investigate the data set for worldwide, high, and lowincome countries from 2000 to 2022, for the macro-level analysis based on the empirical investigation of 123 countries cross-section panel. The outcomes show that, when the fiscal authorities impose a regressive form of taxes, it may hurt the labor wages and distribution of income-leisure preferences or the welfare of labor. Similarly, non-labor income hurts labor utility through a large volume of development expenditure. However, when the progressive form of taxes is imposed it may improve the labor utility, while on the other side, when fiscal authority disburses the development expenditure it may support the non-labor income through the provision of public goods and services. For practice, the empirical results of quantile regression show that government expenditure has a positive while tax hurts labor supply. Fiscal policy in low-income countries has provided an alternative outcome

Income Inequality and Aggregate Demand

This paper investigates the relationship between income inequality and aggregate demand. It is shown empirically, that increases in income inequality are associated with decreased aggregate consumption. The analysis reveals a systematic difference in the relationship between income inequality and consumption expenditure across consumption categories In a theoretical analysis, the effect of an exogenous skill-biased technological change on equilibrium prices and expenditure shares is derived for the case of homothetic CES preferences and the case of non-homothetic CES preferences. In both cases, equilibrium prices and expenditure shares are affected via a supply-side channel. In the case of non-homothetic CES preferences, they are also affected via a demand-side channel, due to changes in income inequality. The comparison of model predictions under homothetic and non-homothetic preferences results in estimation equations that allow testing for non-homotheticity in consumption data. Empirical results indicate that preferences are indeed non-homothetic. Furthermore, the non-homothetic CES preferences are well suited to explain the distinct pattern observed between consumption categories and income inequality. In addition, a quantification of the novel demand-side channel is done to determine its direction and size. The results suggest, that the demand-side channel ameliorates exogenous changes in income inequality and is non-trivial in size

大学中退の逐次意思決定モデルの構造推定

Using the four-year academic records of 301 male students who enrolled in a specific department at a certain university in April 2016, this paper estimates the structural parameters of a sequential decision model of college dropout and conducts a counterfactual analysis. A well-known method for structural estimation of a dynamic discrete choice model is the Conditional Choice Probability (CCP) method, which recovers the integrated value function from a nonparametric estimate of the reduced-form dropout probability function (CCP function) and constructs a correction term to be added to a binary logit model of staying/dropout to ensure consistent estimation of the structural parameters. The CCP method is especially easy to apply to optimal stopping models, given the value of stopping (expected lifetime earnings after dropout). If dropouts are rare, however, ML estimation of the binary logit model may fail due to complete separation. To avoid this problem, this paper considers a modification of the CCP method, which uses a nonparametric estimate of the log odds ratio of staying/dropout as the dependent variable to apply the least squares method. Monte Carlo experiments show that precise estimation of the structural parameters requires precise estimation of the reduced-form CCP function, which requires a large sample since some states may rarely occur in optimal stopping models. Indeed, precise estimation of the structural parameters was difficult with our data. Nevertheless, given the discount factor and the scale parameter, certain counterfactual behaviors are identifiable independently from the remaining structural parameters. As an example, this paper estimates the effect of four-year tuition subsidies on the dropout probability of the male students in our data. The results show that a tuition subsidy of 100,000 yen per semester reduces the four-year cumulative dropout probability by approximately 2.2%. However, the lower cumulative dropout probability is due to later dropout decisions, and does not necessarily imply a higher graduation probability

Fiscal policy, interest rate and the manufacturing sector performance in Nigeria

In this paper, the influence of fiscal policy (government expenditure and taxation) and interest rate on the manufacturing sector of the Nigerian economy was explored for the period 1981 to 2021. The study utilized the autoregressive distributed lag (ARDL) model approach since some of our variables were integrated at level and others at first difference, and the bounds test reporting the existence of long run relationship in the model. Findings of the study in tudy indicated that in the short run, government expenditure and its one-period lag exerted a negative and significant influence on manufacturing sector performance; value added tax exerted a positive and significant effect on manufacturing sector performance while its one-period lag exerted a negative and significant effect; and interest rate exerted a positive and significant effect on manufacturing sector performance. In the long run, government expenditure put forth a negative but insignificant effect on manufacturing sector performance; while value added tax and interest rate exert positive and significant effect. In the disaggregated model, recurrent expenditure exerts a negative and significant effect; capital expenditure exerted a positive and significant effect; value added tax exerted a negative and significant effect; and interest rate put forth a positive and significant influence on manufacturing sector performance. The study recommended that there is need for a reduction in the cost of governance as a huge proportion of public spending is used in running the government other than being utilized in stirring critical sectors that could stir manufacturing sector performance

Geoeconomics of a New Eurasia during the Fourth Industrial Revolution: The Role of China’s Innovation System, BRI and Sanctions from the Global North

Abstract: At least since Halford Mackinder’s work, The Geographic Pivot of the History, geopolitical analysis has identified the Eurasian landmass as a key prize in geopolitics. Historically, the post-revolutionary work by the Russian emigres presented a conservative Russian perspective on Eurasia. Recent developments, however, are more complex and invite us to analyze the intimate connections between economics and geopolitics---particularly, energy, technology, innovation systems and transportation corridors among other sectors. Innovation system of China will perhaps play a critical role along with the Russian innovation system in building a New (East) Eurasia during the new cold war. We can subsume under the expression Geoeconomics this intersection of international economics and geopolitics. Geoeconomics is developing as a field of inquiry and policy guidance in Global Security Studies, Global Political Economy and International Politics. Geoeconomics requires us to think in terms of new and old transportation corridors, international trade and finance, economic development or maldevelopment in a complex unevenly developed world of political economy and great power rivalry. As an overall framework, I develop a new modified form of realism which we might call critical trans-neoclassical realism (CTNR). Consistent with this somewhat novel theory, in our complex, uneven world of international competition, technological innovation needs to be reconceptualized as a complex dynamic system with national systems facing imperatives of both competition and cooperation. There is thus a call for increased efficiency. But this might neglect urgent needs for equity and thus could lead to greater polarization and overlook the critical needs of large numbers of people. In order to combine efficiency with equity in building the New Eurasia, I present a nonlinear complex dynamic systems model of innovation for China---applicable to Russia and other Eurasian countries--- within which both efficiency and equity can be addressed. For specificity and for facilitating concrete analysis during the still unfolding fourth industrial revolution, digital technologies based on semiconductor material foundation and the development of Artificial Intelligence (AI) are analyzed for China. Our framework of combining efficiency and equity in specific ways used for such concrete applications can be called socially embedded capabilities enhancing national innovation system or SECENIS. The Chinese SECENIS that is being built for the 21st century has important regional and geoeconomic implications for the future. The Chinese path shows that innovation systems are critical in building a region such as the New Eurasia. Russia is also trying to follow such a path. Other (East) Eurasian countries will need to follow such a strategy if they are to benefit from the New Eurasian and expanded BRICS arrangements

Resilience and Renewal: Tracing Bangladesh's Path from Adversity to Economic Emergence

This paper conducts an in-depth analysis of the various economic and social determinants that have shaped Bangladesh's developmental journey. It traces the country's evolution, from its pre-independence struggles to its post-independence recovery, resilience, and eventual emergence as a development success story. The study investigates Bangladesh’s transformation from a war-torn, least-developed country into a rapidly growing middle-income economy, emphasizing key elements such as the macroeconomic policy framework, trade and investment environment, agricultural technology adoption, and remittance inflows. The paper also examines demographic shifts, education, healthcare, gender dynamics, and urbanization's effects on social transformation. Additionally, the study highlights ongoing challenges, including poverty, inequality, environmental sustainability, and governance, alongside the need for technological innovation. Through this comprehensive exploration, the paper aims to identify the policies that facilitated Bangladesh's past growth and those necessary to sustain and enhance future progress

Impacts of capital intensity on family formation and gender equality in Vietnam

We examine whether changes in capital intensity from Vietnamese firms during 1999-2019 influence family formation and gender inequality, using panel data of communes. We use the recorded trajectories of cyclones to create a damage index as an instrumental variable. We find that higher capital intensity is associated with a higher share of single people and a lower share of families with multiple generations living together. Also, women prepared for high capital intensity industries by increasing their educational attainment. However, the results also indicate the sex ratio at birth is more skewed in communes with high capital intensity