The Regulatory and Public Policy Agenda for Effective Intermediation in Post Socialist Economies

The advent of a market economy in formerly centralized economies has led to dramatic change in their financial sector, and the behavior of banking institutions. These firms must convert from de facto government agencies to credit evaluators, borrower monitors, and loan collectors. To perform these functions, substantial change has begun to transform the accounting, legal and property/bankruptcy laws in these economies. An equal change needs to occur in financial institution regulation. Financial system reforms must include a set of functions, procedures, and controls which collectively are referred to as a safety net for the system as a whole. A carefully constructed set of regulations appears necessary which will offset market imperfections without replacing them with a new bureaucratic structure. These regulations require trade-offs between stability and market discipline. In the end, however, no stability is offered by the removal or manipulation of market signals and the discipline of the price system.

Workshop Report: Advancing the Art of Analyzing Risks and Benefits of Dredged Material Management

The U.S. Army Corps of Engineers has been delegated responsibility for assuring the navigability of waters designated for that purpose in the United States. Dredging is among the activities required to fulfill this responsibility. In some places, the Corps finds difficulty in carrying out dredging projects because it lacks spaces where the sediments that must be removed (“dredged materials”) can be placed or otherwise managed. In these cases, the public has expressed concerns about the impacts of dredged materials on the environment, either underwater or on land (“upland”). Thus, the Corps often finds it necessary to be able to evaluate and describe the costs or risks and the benefits of the possible alternatives that may be available. Scientists and engineers at the Engineer Research and Development Center (ERDC) in Vicksburg, MS, are responsible for advising Corps District and Division project managers concerning methods to evaluate these risks and benefits. The ERDC asked Resources for the Future (RFF) to organize a workshop for key management and technical people within the Corps and selected outside experts to explore directions the Corps might take in order to improve those methods.dredging, risk, benefit, cost, analysis, characterization, accidents, mixtures, sediments, non-use benefits, decision tools

Applying Real Options Thinking to Information Security in Networked Organizations

An information security strategy of an organization participating in a networked business sets out the plans for designing a variety of actions that ensure confidentiality, availability, and integrity of company’s key information assets. The actions are concerned with authentication and nonrepudiation of authorized users of these assets. We assume that the primary objective of security efforts in a company is improving and sustaining resiliency, which means security contributes to the ability of an organization to withstand discontinuities and disruptive events, to get back to its normal operating state, and to adapt to ever changing risk environments. When companies collaborating in a value web view security as a business issue, risk assessment and cost-benefit analysis techniques are necessary and explicit part of their process of resource allocation and budgeting, no matter if security spendings are treated as capital investment or operating expenditures. This paper contributes to the application of quantitative approaches to assessing risks, costs, and benefits associated with the various components making up the security strategy of a company participating in value networks. We take a risk-based approach to determining what types of security a strategy should include and how much of each type is enough. We adopt a real-options-based perspective of security and make a proposal to value the extent to which alternative components in a security strategy contribute to organizational resiliency and protect key information assets from being impeded, disrupted, or destroyed

The Risk Premium for Equity: Explanations and Implications

The equity premium puzzle shows that using standard parameters and setup, the Consumption-based Capital Asset Pricing Model's (CCAPM's) prediction of the premium associated with systematic risk is out by an order of magnitude.The object of this paper is to consider the implications of each of the broad classes of explanations of the equity premium puzzle for resource allocation, welfare and policy.We argue that the most robust implications are those that flow directly from the high price of systematic risk and are therefore independent of the resolution of the puzzle.risk premium;equity capital;resource allocation;welfare;capital asset pricing

Project Monitoring and Banking Competition under Adverse Selection

We develop an analysis of ex ante monitoring of risky projects in banking. If protected from competition, banks are more concerned about not catching good risk projects when the perceived state of the economy improves, while they are more concerned about being induced to finance bad risk projects when conditions deteriorate. A monopoly bank provides the socially optimal ex ante monitoring of good risks, but is too conservative with regard to bad risks. Competition between banks is shown to undermine the incentives to avoid decision errors regarding both good and bad risk projects providing too limited monitoring effort from society's point of view. ZUSAMMENFASSUNG - (Projektsteuerung und Bankenwettbewerb bei adverser Selektion) In dem Beitrag wird ein Modell zur Auswahl von risikobehafteten Projekten durch Banken entwickelt. Wenn Banken vor Wettbewerb geschützt werden, dann legen sie unter guten wirtschaftlichen Bedingungen mehr Wert darauf sich keine Projekte mit gutem Risiko entgehen zu lassen, wohingegen sie, wenn sich die Bedingungen verschlechtern eher darauf achten keine schlechten Projekte zu finanzieren. Eine monopolistische Bank leistet die sozial-optimale Auswahl guter Risiken, aber die Selektion ist zu konservativ im Hinblick auf schlechte Risiken. Es wird gezeigt, daß Wettbewerb zwischen den Banken dazu führt, daß die Anreize fehlerhafte Entscheidung zu vermeiden sowohl im Hinblick auf Projekte mit guten als auch für Projekte mit schlechten Risiken zu gering sind. Die gesellschaftliche Wohlfahrt sinkt, weil Banken zu wenig in Projektauswahl investieren.bank monitoring; adverse selection; banking competition; banking crisis

Reason Maintenance - Conceptual Framework

This paper describes the conceptual framework for reason maintenance developed as part of WP2

Agriculture as an asset class: reshaping the South African farming sector

International audienc

Value indicators and monitoring in innovative PDM: A grounded approach

International audienceLong-term success of firms depends on the efficiency of their management of R&D projects. However, there is a gap between standard economic and strategic indicators and the high uncertainty, complexity of commitments, and organizational issues that can be observed in the more innovative R&D projects. This paper presents the results of an eighteen-month study in the R&D departments of Renault SAS, which aimed to develop a new monitoring approach of R&D projects. In partnership with R&D teams and managers, a first empirical research on a sample of 64 projects assessed a series of hypothesis about what could be an appropriate monitoring for highly innovative projects. Then, a new monitoring system was built, based on a triangular approach of the project status: economic performance (value and reliability of the value), strategic potential indicators, organizational impact and resource assessment. This paper describes this model and associated tools, as well as the research methodology used to implement them. This monitoring system is now used routinely in the company

Projectification of the Firm : the Renault Case

Many industrial firms are implementing fundamental changes in their organizations to increase the efficiency of their product development processes. Here we focus on the relations between project management models and the permanent organization and processes of the firm. The case of the French firm Renault is being studied. This firm implemented a transition, from a classical funtional organization in the 1960's to project coordination in the 1970's and autonomous and powerful project teams since 1989. Such advanced project management has deep and destabilising effects on the other permanent logics of the firm (task definitions, hierarchic regulations, carrier management, functions and suppliers relationship). Therefore a phase of "projectification" is now under way to adapt these permanent processes to the new context.project management, organization, organizational learning, automobile industry.

The Risk Premium for Equity: Implicatiosn for Resource Allocation, Welfare adn Policy

Analysis of the equity premium puzzle has focused on private sector capital markets. The object of this paper is to consider the welfare and policy implications of each of the broad classes of explanations of the equity premium puzzle. As would be expected, the greater the deviation from the first-best outcome implied by a given explanation of the equity premium puzzle, the more interventionist are the implied policy conclusions. Nevertheless, even explanations of the equity premium puzzle consistent with a general consumption-based asset pricing model have important welfare and policy implications.