COMPLEMENTARITY OF THE IMPACT OF ALTERNATIVE SERVICE CHANNELS ON BANK PERFORMANCE

Faced with intense competition, banks have deployed information technology (IT) to serve customers more efficiently and effectively in diverse ways. The challenge bank managers face is in utilizing alternative service channels to win customers and retain competitive advantages. This study investigates the impact of banks’ use of channel mix strategy. We show strong complementarities between traditional branch channel and IT-based self-service channels on performance. The value provided by a channel depends both on its own level of investment and investments in other channels. It can be misleading to examine channels independently or simply view each channel as a substitute for other channels. Even though different channels do substitute each other to some extent, migration of transactions from traditional channels to the IT-based channels may change customers’ overall demand such that it increases demand for all channels by transforming traditional channels to perform more value-added services or serve more profitable customers

Public infrastructure and private investment in the Middle East and North Africa

The authors examine the impact of public infrastructure on private capital formation in three countries of the Middle East and North Africa-Egypt, Jordan, and Tunisia. They highlight various channels through which public infrastructure may affect private investment. Then they describe their empirical framework, which is based on a vector autoregression (VAR) model that accounts for flows and (quality-adjusted) stocks of public infrastructure, private investment, as well as changes in output, private sector credit, and the real exchange rate. The authors propose two aggregate measures of the quality of public infrastructure and use principal components to derive a composite indicator. Their analysis suggests that public infrastructure has both"flow"and"stock"effects on private investment in Egypt, but only a"stock"effect in Jordan and Tunisia. But these effects are small and short-lived, reflecting the unfavorable environment for private investment in their sample of countries. Reducing unproductive public capital expenditure and improving quality must be accompanied by policy reforms aimed at limiting investment to infrastructure capital that crowds in the private sector and corrects for fundamental market failures. This will entail privatization and greater involvement of the private sector in infrastructure investment. While infrastructure (in the form of the provision of critical telecommunications, transport, and energy services) is important, other improvements in the environment in which domestic investment is conducted are crucial. These include the need to provide financing on adequate terms and guarantee a secure and efficient justice system.

Bonds and bridges : social and poverty

Using the lens of social capital-especially bridging or cross-cutting ties that cut across social groups and between social groups and government-provides new insights into policy design. Solidarity within social groups creates ties (bonding social capital) that bring people and resources together. In unequal societies, ties that cut across groups (bridging social capital) are essential for social cohesion and for poverty reduction. The nature of interaction between state and society is characterized as complementarity and substitution. When states are functional, the informal and formal work well together-for example, government support or community-based development. When states become dysfunctional, the informal institutions become a substitute and are reduced to serving a defensive or survival function. To move toward economic and social well-being, states must support inclusive development. Investments in the organizational capacity of the poor are critical. Interventions are also required to foster bridging ties across social groups-ethnic, religious, caste, or racial groups. Such interventions can stem from the state, private sector, or civil society and include: Changes in rules to include groups previously excluded from formal systems of finance, education, and governance, at all levels. Political pluralism and citizenship rights. Fairness before the law for all social groups together. Infrastructure that eases communication. Education, media, and public information policies that reinforce norms and values of tolerance and diversity.Social Capital,Public Health Promotion,Education and Society,Decentralization,Community Development and Empowerment,Poverty Assessment,National Governance,Governance Indicators,Social Capital,Community Development and Empowerment

Improving WASH Service Delivery in Protracted Crises: The Case of the Democratic Republic of Congo

Delivering Water, Sanitation and Hygiene (WASH) services during humanitarian emergencies and immediate recovery phases is essential for saving lives and responding to basic needs, yet choices about how WASH services are delivered can undermine future development and peace. Longer-term interventions can also overlook how they equip communities, households and government to prepare and respond to future emergencies. This is increasingly evident in protracted or recurrent crises, in which overlapping and cyclical phases of emergency, relief, recovery and development interventions coexist. In these contexts, practitioners and academics alike have acknowledged the problem of reconciling the fundamentally different institutional cultures, assumptions, values, structures and ways of working that characterise the humanitarian and the development communities.In this report, we analyse humanitarian and development approaches in a specific sector, in a particular country: WASH interventions in the Democratic Republic of Congo (DRC). We consider how and why siloes have arisen. We argue that the problem is not so much about filling a 'gap' between humanitarian and development siloes, but about aligning the principles and practices of both communities in specific contexts so that the overall response can meet changing needs and constraints. We identify a number of ways through which improved complementarity might be achieved, differentiating between national and sub-national levels

Financial Liberalisation and Stability of the Financial System in Emerging Markets: the institutional dimension of financial crises

Emerging economies, which have implemented since the end of the 80's a process of financial liberalisation, are confronted at the same time to banking crisis. The latter highlight the role played by the institutional framework in the process of financial liberalisation. The objective of this paper is to go through the usual alternative too much/ too little market in order to explain that the success of any liberalisation process relies on the complementarity between market and intermediation. The point is that the solution to financial instability is to be found within the institutional dynamics in which emerging economies may benefit from intermediation in order to enforce the market process.market and institutions, financial liberalisation, financial crisis, emerging markets

Innovation strategies, process and product innovations and growth: Firm-level evidence from Brazil.

Using World Bank ICS data from Brazilian manufacturing firms, this paper identifies innovation strategies of firms - in particular internal technology creation (make) and external technology acquisition (buy)- and their effect on successful process and product innovations. It also explores the importance of innovations for firm growth. Successful process and product innovations occur mostly through technology acquisition, mostly embodied in machinery and equipment, either alone or in combination with internal technology development. The option of only relying on internal development is less performing. The results indicate that innovative performance is an important driver for firm growth. It is particularly the combination of product and process innovations that significantly improves firm growth. Both innovation and growth performance are supported by access to finance. Skills of workforce and management matter, but not necessarily tertiary education levels. The impact of international linkages on innovative and growth performance is mixed.

Analysis of the BRIC Countries Technical Efficiency Patterns Using Stochastic Frontier Approach

This study investigates the technical efficiency of BRIC-countries (Brazil, Russia, India, China) at the disaggregated level of six economic activities using stochastic frontier approach. Technical efficiency scores and efficiency externalities effects of international trade and foreign direct investment inflows are estimated based on the panel of sixteen countries - G20 members - over the period from 1995 to 2009. The results suggest that foreign direct investment is a conduit of the positive technological spillovers in all sectors under analysis. Once controlling for the domestic level of the human capital that captures technology absorptive capacity, the positive effect of the international trade is observed in the industrial sector in general and manufacturing in particular, as well as in trade, hotels and restaurants. The positive impact of the human capital on the level of technical efficiency is significant for all sectors, except for the agriculture, and robust for two different measures of human capital

Trade through FDI: investing in services

The type of relationship between different modes of trading services internationally is of great interest, both for the academic literature and for liberalization policies under the GATS, because cross-border and commercial presence abroad might complement or substitute each other. This paper offers a consistent theoretical foundation for the application of the gravity model to services trade, using a composite demand model yielding testable hypothesis about that complementary or substitutive relationship and linking the results to market regulations as trade barriers. For the OECD countries over 1994-2004 a robust complementary effects in the short-run is found, reinforced in the long-run by an increased potential for cross-border imports bases on pervious FDI inflows, highlighting business, communication and financial services.Imports, services, panel data, substitution and complementary effects

Trade Diversification, Income, and Growth: What Do We Know?

Export diversification, international trade, Growth and employment

The domestic financial market and the trade liberalization outcome : the evidence from Sri Lanka

The authors developed a framework for analyzing the relationship between domestic financial markets and the effects of trade liberalization and applied it to Sri Lanka's experience between 1977 and 1987. They found that the domestic financial market significantly affects the outcome of trade liberalization. Because Sri Lanka deregulated its interest rates when it undertook the trade liberalization, this allowed those earning more from trade liberalization to hold financial assets rather than nontradables. The availability of savings and time deposits at attractive interest rates prevented the premature appreciation of the exchange rate, thus helping to maintain the competitiveness stimulated by trade liberalization. By reforming interest rates, removing credit ceilings, and increasing competition among banks, Sri Lanka helped increase private sector savings - which could be reallocated to the tradable sector. Unlike earlier studies on financial reform in Sri Lanka, this one finds that financial reforms have increased private savings in financial institutions, raised economywide financial intermediation ratios, and expanded credit to the private sector. More important, the authors find a statistically significant relationship between the financial intermediation ratio and the real exchange rate.Banks&Banking Reform,Financial Intermediation,Insurance&Risk Mitigation,Economic Theory&Research,Environmental Economics&Policies