Macro-prudential regulation of credit booms and busts -- the case of Poland

The last several years before the global downturn of 2008-2009 saw rapid credit growth in Poland. The credit-to-gross domestic product ratio rose from about 25 percent in 2004 to close to 50 percent in 2009. Such an expansionitself might potentially be a source of risks to financial stability, but it was also coupled with relatively new phenomena, such as massive foreign currency lending. Thanks to the pro-active attitude of the Polish authorities and sound economic fundamentals, the risks largely have not materialized. Since 2006 the financial supervisor has addressed in its recommendations for banks the problem of foreign exchange lending, which contributed to the high quality of the portfolio. Before the economy slowed down, the Polish Financial Supervisory Authority persuaded banks to accumulate an additional capital buffer that helped protect them from the negative consequences of the downturn. Some regulatory concepts that had been put into place in Poland in the previous years, including quantitative liquidity requirements, are now being implemented globally. The Polish Financial Supervisory Authority participates in international debates on a new regulatory regime for the financial system. The major message the authority intends to convey is that all new regulations must be tailored carefully. Regulators should make an effort to ensure that the benefits of enhanced quality of the capital base or the countercyclical buffer are not compromised by international overregulation that could undermine national authorities'ability to pursue effective country-specific policies.Banks&Banking Reform,Debt Markets,Access to Finance,Bankruptcy and Resolution of Financial Distress,Emerging Markets

Sustainability innovation systems (SIS): IT Investments and Stages of Sustainability Maturity

We synthesize a new longitudinal framework for investing in IT assets to support sustainability and to prescribe specific investments for each stage of sustainability. This framework provides an IT investment plan for organizations that supports the five stages of sustainability and will positively moderate the relationship between an organization’s ability to traverse the stages of sustainability and organizational innovation. We propose that there is an innovation payoff at each stage and support that proposition with exemplars from the literature. To highlight their key role in supporting sustainability driven innovation, we choose to call these IT investments Sustainability Innovation Systems (SIS)

Beyond the Workplace: "Upstream" Business Practices and Labor Standards in the Global Electronics Industry

Despite decades of debate and efforts to improve global labor standards, multiple problems still persist. Whether arguing for a more active role for the state, persuading firms to adopt codes of conduct, improving monitoring and sanctioning processes or seeking a higher degree of commitment between supply chain actors, scholars still lack an adequate explanation for why labor problems do not show improvement. Existing theories, while they will help, are not sufficient to solve this issue because they are focused on the production side of markets—the result both of an intellectual and policy bias towards production and the tendency to look for solutions where problems occur. Using a case study of Hewlett-Packard’s (HP) supply chain, qualitative and quantitative data from field visits to plants in South East Asia and a unique dataset of HP’s code of conduct audits, we demonstrate that even under the most-likely conditions that favor previous theories of labor standards, code of conduct violations, in particular excess working hours, exhibit widespread persistence. Having explained this, we demonstrate that this persistence is the product of a set of policies and practices designed and implemented upstream by global buyers and their lead suppliers

The Macroeconomics of Delegated Management

We are interested in the macroeconomic implications of the separation of ownership and control. An alternative decentralized interpretation of the stochastic growth model is proposed, one where shareholders hire a self-interested manager who is in charge of the firm's hiring and investment decisions. Delegation is seen to give rise to a generic conflict of interests between shareholders and managers. This conflict fundamentally results from the different income base of the two types of agents, once aggregate market clearing conditions are taken into account. An optimal contract exists resulting in an observational equivalence between the delegated management economy and the standard representative agent business cycle model. The optimal contract, however, appears to be miles away from standard practice: the manager's remuneration is tied to the firm's total income net of investment expenses, abstracting totally from wage costs. In order to align the interest of a manager more conventionally remunerated on the basis of the firm's operating results to those of stockholder-workers, the manager must be made nearly risk neutral. We show the limited power of convex contracts to accomplish this goal and the necessity, if the manager is too risk averse (log or higher than log), of considerably downplaying the incentive features of his remuneration. The difficulty in reconciling the viewpoints of a manager with powers of delegation and of a representative firm owner casts doubt on the descriptive validity of the macro-dynamics highlighted in the representative agent macroeconomic model.business cycles; delegated management; contracting

The Internationalization of Global Start-Ups: Understanding the Role of Serial Entrepreneurs

Using qualitative methodology, we aim to understand how serial entrepreneurs can foster the development of born-global ventures. We consider a born-global start-up as the final stage of the learning process for a serial entrepreneur, advancing propositions regarding the importance of prior entrepreneurial experience – in terms of knowledge acquisition, identification and exploitation of opportunities, social networks development – for bornglobal venture creation and growth. We verify that the serial entrepreneur’s previous entrepreneurial experiences could substitute for the lack of knowledge, opportunity recognition and social networks of a born-global start-up. Thus, we recognize the necessity of a shift in the unit of analysis, from born-global start-up to a global serial entrepreneur. Moreover, we suggest to follow a dynamic approach when the born-global start-up issue is discussed since we expect that the entrepreneur’s learning process evolves over time in relation to their quality of previous experiences.born-global, international new ventures, entrepreneurship, serial entrepreneur, internationalization, social network, entrepreneurial experience, opportunity identification, opportunity exploration, longitudinal case study.

Bank intermediation and persistent liquidity effects in the presence of a frictionless bond market

An “expansionary” monetary policy that increases the growth rate of bank reserves is generally believed by policy makers to induce a “liquidity effect”, or a persistent decline in short-term nominal interest rates, that stimulates real activity. Christiano, et al. (1991,1995,1997) have incorporated this feature of the economy into equilibrium business cycle models by introducing a commercial bank that acquires deposits from households and channels those funds to firms, which use them to fund their working capital expenses. Bank deposits are the only interest-bearing financial asset available to households, and bank loans are the only source of working capital finance available to firms. To obtain a liquidity effect in response to an unanticipated reserves injection, those models rely on an information friction whereby households precommit to a liquid asset position prior to the monetary shock. In practice, the capital markets are a major source of working capital finance, and U.S. data indicate that bank financing as a share of total short-term working capital finance is countercyclical. This paper extends this literature by introducing a bond market that allows for nonintermediated loans directly from households to firms, and examines the information friction that could induce liquidity effects and countercyclicality in the degree of bank intermediation of working capital finance. The results indicate: (i) “sticky prices” are neither necessary nor sufficient to induce a liquidity effect; (ii) deposit precommitment by households along with a presetting of the deposit rate by banks does induce persistent liquidity effects, but results in excess volatility of consumption and investment; (iii) minimizing the deposit precommitment, while maintaining the preset deposit rate induces a weaker liquidity effect that is more in line with the data, without the excess volatility in consumption and investment; and (iv) the share of bank intermediation in working capital finance is countercyclical in all cases, including the absence of an information friction.Bonds ; Liquidity (Economics) ; Banks and banking

An Online project & portfolio management application: Implementing project selction and prioritization model to reolve priority conflicts and to build strong linkages between projects and the strategic plan

This Capstone Project will address two important problems. The first problem concerns resolving priority conflicts over the projects among the managers in an organization and the second problem concerns the gap between the projects and the organizational strategies. To complete this project, I have developed an online project and portfolio management application by using the software development life cycle methodology and project management methodology. The outcome of this project is a software product that helps in obtaining a general consensus as to which project has the highest priority. This priority awareness helps in resolving conflicts among the managers. This product will force organizations to use the consistent computerized model, the model that helps the organizations to select and prioritize the projects based on their goals and strategic plans