Landmines, Poverty and Recovery: Instrumental Variables Evidence from Mozambique

The International Campaign to Ban Landmines production and use estimates that there are more than 80 billion landmines in the ground in more than 80 countries. Despite the scale of the problem and large investments by OECD countries to clear mines in low income countries, the economic consequences of landmine contamination have been so far unexamined by economists working on the economics of wars, perhaps due to the lack of data thus far. This paper exploits a unique dataset on landmine contamination intensity covering 126 Mozambican districts. Because landmines (unlike other weapons) are used as a weapon of choice to protect territories, the empirical strategy uses an indicator of distance to strategic borders as an instrumental variable to correct for selection in landmine placement. Instrumental variables estimates indicate a large effect of landmine contamination on poverty and consumption several years after the ceasefire. Hence, despite the very high cost to clear a mine a conservative costbenefit evaluation of the national demining program indicates that the program generates a large positive return.

The long-term impact of French settlement on education in Algeria

In settlement colonies, the economic systems, infrastructure and development projects of the settlers exclusively served their own needs. The disastrous outcomes of this discrimination became apparent in the post-colonial era particularly as regards education. In Algeria under French rule (1930-1962) education was almost exclusively reserved to French and other European settlers and as a consequence only ten per cent of Muslim Algerians were literate at independence. While the majority of the settlers left Algeria in 1962, the infrastructure remained. This paper exploits substantial regional variations in the non-Muslims proportion of the population on the eve of the war of independence (1954) in Algeria to evaluate the long term impact of colonial discrimination in public goods allocation on education levels. Using an instrumental variables approach to correct for endogeneous sorting of settlers and natives into regions my results indicate that settlement regions, which inherited a larger stock of infrastructure per capita at independence, have persistently higher literacy rates relative to extractive regions. However, these disparities tend to vanish over time probably as a result of the massive funds allocated to the education sector by the successive governments in the post-independence era.

Economic Consequences of Wars: Evidence from Landmine Contamination in Mozambique

This paper evaluates the economic returns to improved households access to infrastructure, public services and land in the context of a large landmineclearance program in post-war Mozambique. The International Campaign to Ban Landmines production and use estimates that there are more than 80 billion landmines in the ground in more than 80 countries. Despite the scale of the problem and large investments by OECD countries to clear mines in low income countries, the economic consequences of landmine contamination have been so far unexamined by economists working on the economics of wars, perhaps due to the lack of data thus far. The evaluation uses a unique dataset on landmine contamination intensity covering 126 Mozambican districts to evaluate the causal impact of landmine contamination on income and welfare. The method uses a difference-in-difference estimator to correct for selection in landmine placement. I find large and statistically significant effects of landmine contamination on poverty (in level and depth) and consumption per capita. Hence, the cost-benefit analysis indicates that despite the high cost to clear a mine under reasonable assumptions the program generates a positive return.war, poverty, landmines, difference-in-difference estimator, cost-benefit analysis

The Long Term Effect of Education Spending Decentralization on Human Capital in Spain

In 1980, seven out of the seventeen Spanish regions were devolved education spending responsibility. Using a difference-in-differences approach, which I show to be particularly credible in this context, I evaluate the long term effect of this reform on human capital. I find no robust evidence to corroborate the theoretically predicted benefits of decentralization.

3D mesh refinement procedure using the bisection and rivara algorithms with mesh quality assessment

Mesh refinement procedures for the solution of three dimensional problems are described. The computational\ud domain is represented by an assembly of tetrahedral elements and the mesh refinement is acheived by the bisection\ud and Rivara methods using an explicit mesh density function coupled with an automatic 3D mesh generator.\ud A couple of benchmark examples is used to compare the performance of both refinement methods in terms of mesh\ud and size qualities, number of generated elements and CPU time consume

Islamic vs. conventional banking : business model, efficiency and stability

This paper discusses Islamic banking products and interprets them in the context of financial intermediation theory. Anecdotal evidence shows that many of the conventional products can be redrafted as Sharia-compliant products, so that the differences are smaller than expected. Comparing conventional and Islamic banks and controlling for other bank and country characteristics, the authors find few significant differences in business orientation, efficiency, asset quality, or stability. While Islamic banks seem more cost-effective than conventional banks in a broad cross-country sample, this finding reverses in a sample of countries with both Islamic and conventional banks. However, conventional banks that operate in countries with a higher market share of Islamic banks are more cost-effective but less stable. There is also consistent evidence of higher capitalization of Islamic banks and this capital cushion plus higher liquidity reserves explains the relatively better performance of Islamic banks during the recent crisis.Banks&Banking Reform,Debt Markets,Access to Finance,Financial Intermediation,Bankruptcy and Resolution of Financial Distress

Bank capital : lessons from the financial crisis

Using a multi-country panel of banks, the authors study whether better capitalized banks fared better in terms of stock returns during the financial crisis. They differentiate among various types of capital ratios: the Basel risk-adjusted ratio; the leverage ratio; the Tier I and Tier II ratios; and the common equity ratio. They find several results: (i) before the crisis, differences in capital did not affect subsequent stock returns; (ii) during the crisis, higher capital resulted in better stock performance, most markedly for larger banks and less well-capitalized banks; (iii) the relationship between stock returns and capital is stronger when capital is measured by the leverage ratio rather than the risk-adjusted capital ratio; (iv) there is evidence that higher quality forms of capital, such as Tier 1 capital, were more relevant. They also examine the relationship between bank capitalization and credit default swap (CDS) spreads.Banks&Banking Reform,Access to Finance,Debt Markets,Economic Theory&Research,Banking Law

Payment systems, inside money and financial intermediation

This paper assesses the impact of introducing an efficient payment system on the amount of credit provided by the banking system. Two channels are investigated. First, innovations in wholesale payments technology enhance the security and speed of deposits as a payment medium for customers and therefore affect the split between holdings of cash and the holdings of deposits that can be intermediated by the banking system. Second, innovations in wholesale payments technology help establish well-functioning interbank markets for end-of-day funds, which reduces the need for banks to hold excess reserves. The authors examine these links empirically using payment system reforms in Eastern European countries as a laboratory. The analysis finds evidence that reforms led to a shift away from cash in favor of demand deposits and that this in turn enabled a prolonged credit expansion in the sample countries. By contrast, while payment system innovations also led to a reduction in excess reserves in some countries, this effect was not causal for the credit boom observed in these countries.Banks&Banking Reform,Debt Markets,Bankruptcy and Resolution of Financial Distress,Access to Finance,Currencies and Exchange Rates

Precautionary Hoarding of Liquidity and Inter-Bank Markets: Evidence from the Sub-prime Crisis

Using data on the behavior of large settlement banks in the UK and the Sterling Money Markets before and during the sub-prime crisis of 2007-08, we provide evidence of precautionary hoarding of liquidity and its e ect on inter-bank borrowing rates. Our evidence consists of three pieces. First, we document that liquidity holdings of the large settlement banks in the UK experienced on average a 30% increase in the period immediately following 9th August, 2007, the widely accepted date of money-market "freeze" during the sub-prime crisis. Second, we show that following this structural break, bank liquidity had a precautionary nature in that it rose on calendar days predicted to have a large amount of uctuations in payment and settlements activity and more so for banks that made larger losses during the crisis. Third, using the payment and settlements activity as an instrument, we establish a causal e ect of bank liquidity on overnight inter-bank rates, in both secured and unsecured markets, an e ect that is virtually absent in the period before the crisis. Importantly, precautionary hoardings by some settlement banks raised lending rates for all settlement banks, suggestive of a contagion-style systemic risk operating through inter-bank rates. Finally, variability in overnight inter-bank rates appears to have a ected rates and volumes in household as well as corporate lending

Precautionary Hoarding of Liquidity and Inter-Bank Markets: Evidencefrom the Sub-prime Crisis

We study the liquidity demand of large settlement banks in the UK and its eect on the Sterling Money Markets before and during the sub-prime crisis of 2007- 08. Liquidity holdings of large settlement banks experienced on average a 30% increase in the period immediately following 9th August, 2007, the day when money markets froze, igniting the crisis. Following this structural break, settlement bank liquidity had a precautionary nature in that it rose on calendar days with a large amount of payment activity and for banks with greater credit risk. We establish that the liquidity demand by settlement banks caused overnight inter-bank rates to rise, an eect virtually absent in the pre-crisis period. This liquidity eect on inter-bank rates occurred in both unsecured borrowing as well as borrowing secured by UK government bonds. Further, the eect was more strongly linked to lender risk than to borrower risk