The Credibility Crisis in IS

A credibility crisis continues to plague the Information Systems (IS) discipline. For almost a decade, IS has struggled to obtain and maintain its stature as a highly-respected academic discipline. The recent demise of several IS programs around the world highlights the credibility crisis, as departments have been subsumed into other business disciplines, or worse yet, abandoned entirely. In a recent MIS Quarterly article, Gill and Bhattacherjee (2009) highlight some of the challenges facing IS: low student enrollments, research that is rarely discussed in our classrooms, and research that fails to make an impact in practice. While useful tactics in terms of research (Dennis et al., 2008), student recruitment (Koch and Kayworth, 2009; Looney and Akbulut, 2007), and pedagogy (Firth et al., 2008) have surfaced in the literature, a holistic strategy for addressing the credibility crisis has yet to emerge. This panel brings together a group of IS professors to offer their perspectives on a series of propositions about the Credibility Crisis in the IS Discipline, and engage in an animated debate with each other and the audience on their positions

Addressing the Credibility Crisis in IS

A credibility crisis continues to plague the information systems (IS) discipline. For decades IS has struggled to acquire and maintain its stature as a highly-respected academic discipline. The recent demise of several IS programs around the world highlights the credibility crisis, as departments have been subsumed into other business disciplines, or worse yet, abandoned entirely. In a recent MIS Quarterly article, Gill and Bhattacherjee [2009] highlight some of the challenges facing IS: low student enrollments, research that is rarely discussed in our classrooms, and research that fails to make an impact in practice. While useful tactics in terms of research [Dennis et al., 2006], student recruitment [Koch et al., 2010; Looney and Akbulut, 2007] and pedagogy [Firth et al., 2008] have surfaced, a holistic strategy for addressing the credibility crisis has yet to emerge. This article summarizes a panel discussion at the AMCIS 2010 conference, where a group of distinguished IS professors offered their unique perspectives on the challenges, origins, and solutions related to the current credibility crisis in IS

Inflation Persistance and Credibility in Turkey During the Nineties

This study assesses the credibility of disinflation programs in Turkey during the nineties, where several programs of reform took place. We investigate the credibility of these policies building on a previous research made by Agenor and Taylor (1993). The model is based on two assumptions: (i) inflation is a serially correlated process; (ii) the definition of a proxy that is able to measure the degree of credibility of a programme. The empirical results show that there was a sharp loss of credibility at the end of the 1991 and at the beginning of the 1994 and during the Asian crisis. The Program that the Central Bank implemented after the crisis was able to increase the level of credibility of the CBRT policies. Loss of credibility is registered during the end of the 1995, while various political events took place and during the 1997 following the world economic conditions and the outflow of capitals

The Credibility Crisis in IS: A Global Stakeholder Perspective

The purpose of this panel involves helping the IS community devise strategies for augmenting the field’s credibility. Representing different continents, educational systems, and roles, our panelists will provide a global perspective on IS credibility. Using stakeholder theory as an organizing framework, this panel will identify the key stakeholders that positively and negatively influence the IS discipline as well as strategies for leveraging these stakeholders. Spirited debates will occur concerning the role of regulators, funding sources, faculty, administrators, students, and employers in shaping the credibility of the IS discipline

The Credibility Crisis in IS: A Global Stakeholder Perspective

The field of information systems (IS) faces a credibility crisis, which threatens its stature as a highly-respected academic discipline (Firth, King, Koch, Looney, Pavlou, and Trauth, 2011; Winter and Butler, 2011; among others). This article summarizes a panel discussion at the ICIS 2011 Conference, where a group of distinguished IS professors offered their unique perspectives on the challenges, origins, and solutions related to the global credibility crisis in IS. Using stakeholder theory as an organizing framework, the panel session identifies the key stakeholders influencing the credibility of the IS discipline, as well as the challenges and opportunities facing IS programs worldwide

Exchange Rate Regime Credibility, the Agency Cost of Capital and Devaluation

When a country abandons a fixed, or target zone exchange regime it usually claims that the regime was "fundamentally" sound but that it was undermined by pernicious speculation. The validity of the claim is impossible to assess using only observable data-there always exists a future path of current account surpluses that would make the regime sound, and speculators' (investors'?) motives are unobservable. This paper analyzes the crucial role of imperfect credibility in a currency crisis with a stochastic dynamic rational expectations regime switch model. The exchange regime is sound, e.g., a currency board-the only market failure is that the Central Bank cannot make a credible commitment to maintain the regime. The paper has two innovations: (1) It specifies the cost of imperfect credibility, and (2) It quantifies the cost of imperfect credibility. Imperfect credibility generates small (but costly) average interest rate differentials. Imperfect credibility cannot generate large interest differentials, but a surprisingly small "fundamental" currency overvaluation added to the basic specification generates large interest rate differentials. The paper's main result- that a lack of credibility cannot generate large interest rate differentials in a sound regime-is robust. The model in the paper is stylized, but the results are rich. The policy maker (Central Bank) and investors optimize. Investors fear devaluation and the Bank cannot make a credible commitment to allay their fears. Investors demand an agency currency premium. There is no pernicious speculation-the premium fairly prices the country's assets but it increases the country's cost of capital. The Bank abandons the regime when the expected present value of the agency cost of capital outweighs the expected present value of the benefit from remaining in the regime. The model generates multiple rational expectations equilibria and a variety of patterns linking the exchange rate to the interest rate differential. I parameterized the model using estimates of the exchange rate process for Hong Kong. The model generated agency currency premiums average ½%. The model generated interest rate differentials are consistent with the interest differentials in Hong Kong before the Asian financial crisis in July of 1997. After July 1997 a lack of credibility is not sufficient to explain the observed interest rate differentials of 4-6%.balance of payments crisis, credibility, multiple equilibria

Public debt and currency crisis: how central bank opacity can make things bad?

This paper examines how the transparency in monetary policy decision can impact the likelihood of currency crisis in a simple open economy model with public debt. In the presence of opacity, it is found that if the debt is high, the government will devaluate and vice versa, and the self-fulfilling multiple equilibria solution disappears. Furthermore, the opacity reduces the threshold of public debt above which the government is considered as totally lacking the credibility in its pre-commitment to maintain fixed the exchange rate.central bank transparency, public debt, currency crisis, speculative attack

Self-fulfilling debt crises

We characterize the values of government debt and the debt's maturity structure under which financial crises brought on by a loss of confidence in the government can arise within a dynamic, stochastic general equilibrium model. We also characterize the optimal policy response of the government to the threat of such a crisis. We show that when the country's fundamentals place it inside the crisis zone, the government is motivated to reduce its debt and exit the crisis zone because this leads to an economic boom and a reduction in the interest rate on the government's debt. We show that this reduction may be quite gradual if debt is high or the probability of a crisis is low. We also show that, while lengthening the maturity of the debt can shrink the crisis zone, credibility-inducing policies can have perverse effects.Debt

The Credibility of Cabo Verde’s Currency Peg

This paper studies the credibility of the currency peg of Cape Verde (CV) by assessing the impact of economic fundamentals, our explanatory variables, on the stochastic properties of Exchange Market Pressure (EMP), the dependent variable, using EGARCH-M models. Our EMP descriptive analysis finds a substantial reduction in the number of crisis episodes and of (unconditional) volatility after the peg’s adoption. Moreover, our estimation results suggest that mean EMP is driven by fundamentals and that conditional variability is more sensitive to negative shocks. We also find evidence that the expected return from holding CV’s assets is lower under the currency peg for the same increase in monthly volatility. The reason is that the return’s composition is “more virtuous”, as it results from the strengthening of CV’s foreign reserve position and is not due to either a larger risk premium or favourable exchange rate movements. We take this to be a sign of the credibility of the peg, which apparently reflects the intertemporal credibility of CV’s economic policy and so has successfully withstood international markets’ scrutiny.