Confidence Building in Emerging Stock Markets

Investor confidence is a major determinant of financial integration for emerging markets and their stock prices. We investigate whether privatization also has a significant effect on emerging stock market development through the resolution of policy risk. We argue that a sustained privatization program represents a major test of political commitment to market oriented reforms and to safer private property rights. The evidence suggests that progress in privatization gradually leads to increased confidence as measured by perceived policy risk. Moreover, increased confidence has a strong effect on local market development and excess returns. We conclude that, while liberalization is a necessary condition for market development, the resolution of policy risk resulting from successful privatization has been an important source for the rapid growth of stock markets in emerging economies.http://deepblue.lib.umich.edu/bitstream/2027.42/39750/3/wp366.pd

Outside Finance, Dominant Investors and Strategic Transparency

This paper studies optimal financial contracts and product market competition under a strategic transparency decision. When firms seeking outside finance resort to actively monitored debt in order to commit against opportunistic behaviour, the dominant lender can influence corporate transparency. More transparency about a firm's competitive position has both strategic advantages and disadvantages: in general, transparency results in higher variability of profits and output. Thus lenders prefer less information dissemination, as this protects firms when in a weak competitive position, while equityholders prefer more disclosure to maximize profitability when in a strong position. We show that bank-controlled firms will be opaque, while shareholder- run firms prefer more transparency. In fact, we can predict a clustering of characteristics associated with bank dominance: opaqueness, low variability of profits, slightly reduced average profits, uncertainty about assets in place, and relatively high financing needs all should be observed jointly for bank controlled firms.corporate governance; transparency; bank finance; product market competition; capital structure

Confidence Building in Emerging Stock Markets

Investor confidence is a major determinant of financial integration for emerging markets and their stock prices. We investigate whether privatization also has a significant effect on emerging stock market development through the resolution of policy risk. We argue that a sustained privatization program represents a major test of political commitment to market oriented reforms and to safer private property rights. The evidence suggests that progress in privatization gradually leads to increased confidence as measured by perceived policy risk. Moreover, increased confidence has a strong effect on local market development and excess returns. We conclude that, while liberalization is a necessary condition for market development, the resolution of policy risk resulting from successful privatization has been an important source for the rapid growth of stock markets in emerging economies.

Mortgage Finance and Technological Change

We explore how house prices evolve under technological progress, when housing serves for consumption as well as store of value. Technological change leads to human capital substituting physical capital and manual labor. Reduced use of physical capital implies that firms have less tangible collateral to pledge for external finance. This results in lower business demand for credit and a decline in interest rates. Over time, savings are redirected to mortgage credit, where houses serve as collateral. Under fixed land supply, house prices rise in real terms. The combination of growing wage inequality and mortgage credit leads to high household leverage for low-skill workers, increasing default rates and foreclosures. Restraining mortgage borrowing is more effective than subsidies to limit mortgage defaults, by containing both leverage and house price appreciation. It also leads to lower interest rates, supporting more corporate investment and higher wages

Privatisation, political risk and stock market development in emerging economies

This paper investigates whether privatisation in emerging economies has a significant indirect effect on local stock market development through the resolution of political risk. We argue that a sustained privatisation programme represents a major political test which gradually resolves uncertainty over political commitment to a market-oriented policy as well as to regulatory and private property rights. We present evidence suggesting that progress in privatisation is correlated with improvements in perceived political risk. These gains tend to be gradual over the privatisation period and are significantly larger in privatising countries than in nonprivatising countries, suggesting that the resolution of such risk is endogenous to the privatisation process. Our analysis shows further that changes in political risk in general tend to have a strong effect on local stock market development and excess returns in emerging economies, suggesting that political risk is a priced factor. We conclude that the resolution of political risk resulting from successful privatisation has been an important source for the rapid growth of stock markets in emerging economies

Reliability and uncertainties of the analysis of an unstable rock slope performed on RPAS digital outcrop models: The case of the gallivaggio landslide (Western Alps, Italy)

A stability investigation based on Digital Outcrop Models (DOMs) acquired in emergency conditions by photogrammetric surveys based on Remote Piloted Aerial System (RPAS) was conducted on an unstable rock slope near Gallivaggio (Western Alps, Italy). The predicted mechanism of failure and volume of the unstable portion of the slope were successively verified on the DOMs acquired after the rockfall that effectively collapsed the May 29th, 2018. The comparison of the pre-and post-landslide 3D models shows that the estimated mode of failure was substantially correct. At the same time, the predicted volume of rock involved in the landslide was overestimated by around 10%. To verify if this error was due to the limited accuracy of the models georeferenced in emergency considering only the Global Navigation Satellite System/Inertial Measurement Unit (GNSS/IMU)-information of RPAS, several Ground Control Points (GCPs) were acquired after the failure. The analyses indicate that the instrumental error in the volume calculation due to the direct-georeferencing method is only of the 1.7%. In contrast, the significant part is due to the geological uncertainty in the reconstruction of the real irregular geometry of the invisible part of the failure surface. The results, however, confirm the satisfying relative accuracy of the direct-georeferenced DOMs, compatible with most geological and geoengineering purposes

PSI-based methodology to land subsidence mechanism recognition

Abstract. A methodology based on Persistent Scatterer Interferometry (PSI) is proposed in order to disentangle the contribution of different processes that act at different spatio-temporal scales in land subsidence (i.e. vadose zone processes as swelling/shrinkage of clay soils, soil consolidation and fluid extraction). The methodology was applied in different Italian geological contexts characterized by natural and anthropic processes (i.e. a Prealpine valley and the Po Plain in northern Italy)