Are Polish firms risk-averting or risk-loving? : evidence on demand uncertainty and the capital-labour ratio in a transition economy

This paper investigates the effect of demand uncertainty on the capital-labour ratio of non-financial firms in Poland in order to infer the firms’ risk behaviour. A generic model is used to characterise a utility maximising firm in a transition economy with demand uncertainty and imperfect competition. It is assumed that labour is completely variable and capital is quasi-fixed. The demand for capital, and hence the capital-labour ratio, derives from the optimisation of expected costs and the firm’s pricing and output decisions, and crucially depends on the sign of the covariance term i.e. the firm’s risk behaviour. The main proposition of the model is that if firms are risk-loving, an increase in demand uncertainty increases the capital-labour ratio, whereas the capital-labour ratio would decrease when a firm is risk-averting. The model is estimated using data from a cross-section of 148 non-financial firms in Poland. The results unambiguously show that there exists a significant positive relationship between demand uncertainty and the capital-labour ratio. This finding suggests that Polish firms are risk-lovers. The evidence may have important implications for the needed set of regulations and corporate governance in Poland as part of the necessary economic reform.

Are Polish firms risk-averting or risk-loving?:evidence on demand uncertainty and the capital-labour ratio in a transition economy

This paper investigates the effect of demand uncertainty on the capital-labour ratio of non-financial firms in Poland in order to infer the firms’ risk behaviour. A generic model is used to characterise a utility maximising firm in a transition economy with demand uncertainty and imperfect competition. It is assumed that labour is completely variable and capital is quasi-fixed. The demand for capital, and hence the capital-labour ratio, derives from the optimisation of expected costs and the firm’s pricing and output decisions, and crucially depends on the sign of the covariance term i.e. the firm’s risk behaviour. The main proposition of the model is that if firms are risk-loving, an increase in demand uncertainty increases the capital-labour ratio, whereas the capital-labour ratio would decrease when a firm is risk-averting. The model is estimated using data from a cross-section of 148 non-financial firms in Poland. The results unambiguously show that there exists a significant positive relationship between demand uncertainty and the capital-labour ratio. This finding suggests that Polish firms are risk-lovers. The evidence may have important implications for the needed set of regulations and corporate governance in Poland as part of the necessary economic reform

Relating destabilizing regions to known functional sites in proteins

Most methods for predicting functional sites in protein 3D structures, rely on information on related proteins and cannot be applied to proteins with no known relatives. Another limitation of these methods is the lack of a well annotated set of functional sites to use as benchmark for validating their predictions. Experimental findings and theoretical considerations suggest that residues involved in function often contribute unfavorably to the native state stability. We examine the possibility of systematically exploiting this intrinsic property to identify functional sites using an original procedure that detects destabilizing regions in protein structures. In addition, to relate destabilizing regions to known functional sites, a novel benchmark consisting of a diverse set of hand-curated protein functional sites is derived.Journal ArticleResearch Support, Non-U.S. Gov'tinfo:eu-repo/semantics/publishe

Does the group leader matter? The impact of monitoring activities and social ties of group leaders on the repayment performance of groupbased lending Eritrea

This paper analyzes whether the effects of monitoring and social ties of the group leader and other group members on repayment performance of groups differ, using data from an extensive questionnaire held in Eritrea among participants of 102 groups. We hypothesize that the monitoring activities and social ties of the group leader have a stronger positive impact on the repayment performance of groups. The results show that social ties of the group leader do have a positive effect on repayment performance of groups, whereas this is not true for social ties of other group members. We do not find evidence for the hypothesis that monitoring activities of the group leader have a stronger positive impact on group repayment performance. All variables measuring monitoring activities, either of the group leader or the other group members, are found to be statistically insignificant.

Collateral and Debt Maturity Choice. A Signaling Model

This paper derives optimal loan policies under asymmetric information where banks offer loan contracts of long and short duration, backed or unbacked with collateral. The main novelty of the paper is that it analyzes a setting in which high quality firms use collateral as a complementary device along with debt maturity to signal their superiority. The least-cost signaling equilibrium depends on the relative costs of the signaling devices, the difference in firm quality and the proportion of good firms in the market. Model simulations suggest a non-monotonic relationship between firm quality and debt maturity, in which high quality firms have both long-term secured debt and short-term secured or non-secured debt.

Violent conflict and behavior:A field experiment in Burundi

We use a series of field experiments in rural Burundi to examine the impact of exposure to conflict on social, risk, and time preferences. We find that conflict affects behavior: individuals exposed to violence display more altruistic behavior towards their neighbors, are more risk-seeking, and have higher discount rates. Large adverse shocks can thus alter savings and investments decisions, and potentially have long-run consequences—even if the shocks themselves are temporary