An alternative to statistical discrimination theory

This paper offers a new representation of discrimination on the job market based on the most recent findings in the socio-psychological academic literature about human behaviour. Put it simply, it is assumed that the agents prefer working with people like themselves. This "affinity" principle is modelled through a distance between an individual (the candidate for a job) and the staff of the firm. Contrary to the classical view according to which discrimination results from asymmetric information, this new model provides a rationale for the presence of discriminative attitudes on the job market even when full information is available on the skill levels of all candidates for a working position.

One Asset, Two Prices: The case of the Tsarist Repudiated Bonds

Prices of repudiated bonds are insightful but scarcely observed. Based on an original daily database, this paper compares the price evolution from January 6, 1916 to August 31, 1919 of a cross-listed (Paris and London) Tsarist bond repudiated by the Soviets on February 8, 1918. After its repudiation, the bond exhibits an important geographic price differential. This unusual phenomenon is attributed to the conjunction of war conditions excluding arbitrage and specific investors' expectations regarding bailouts by French and British governments. Furthermore, data from the pre-repudiation period show that the impossibility for arbitrage is not sufficient for driving the pricing differences.bonds, repudiation, sovereign debt, Russia

On mission drift in microfinance institutions

This paper sheds light on a poorly understood phenomenon in microfinance which is often referred to as "mission drift": A tendency reviewd by numerous microfinance institutions to extend larger average loan sizes in the process of scaling-up. . We argue that this phenomenon is not driven by transaction cost minimization alone. Instead, poverty-oriented microfinance institutions could potentially deviate from their mission by extending larger loan sizes neither because of "progressive lending" nor because of "cross-subsidization" but because of the interplay between their own mission, the cost differentials between poor and unbanked wealthier clients, and region-specific clientele parameters. In a simple one-period framework we pin down the conditions under which mission drift can emerge. Our framework shows that there is a thin line between mission drift and cross-subsidization, which in turn makes it difficult for empirical researchers to establish whether a microfinance institution has deviated from its poverty-reduction mission. This paper also suggests that institutions operating in regions which host a relatively small number of very poor individuals might be misleadingly perceived as deviating from their social objectives. Because existing empirical studies cannot differentiate between mission drift and cross-subsidization, these studies can potentially mislead donors and socially responsible investors pertaining resource allocation across institutions offering financial services to the poor. The difficulty in separating cross-subsidization and mission drift is discussed in light of the contrasting experiences between microfinance institutions operating in Latin America and South Asia.Microfinance; Loan Size; Mission Drift; Cross-subsidization

Crisis-Robust Bond Portfolios.

Asset allocation; bond market; volatility; portfolio management;

Prenatal Cigarette Smoking and Its Association With Childhood Asthma

Background: Cigarette smoking during pregnancy is a common practice and its impact on the development of the lungs of the ensuing child has proven to be detrimental. Recent studies have been done to determine whether prenatal smoking is associated with asthma in the resultant child. Five of the most pertinent studies on this topic will be evaluated using the Grading of Recommendations Assessment, Development, and Evaluation (GRADE) in this systematic review. Method: An exhaustive search of the medical literature was conducted through EBM Reviews, Medline, CINAHL, and PubMed databases which yielded five studies for final review. Results: Three cohort studies and two case control studies were reviewed. All studies obtained data by parental questionnaires or health registries but data was gathered either prospectively or retrospectively depending on study design. Smoking during pregnancy was associated with childhood asthma, current asthma, and wheezing as compared with children who had a prenatal environment free from cigarette smoke. Conclusion: Smoking during pregnancy is associated with childhood asthma and current asthma and there is a direct correlation between the amount of cigarettes smoked and the degree of damage. Combining the evidence for the outcomes of asthma and asthma-like symptoms via the GRADE criterion yielded a moderate quality of evidence, showing that the studies are of good quality and of value, but further research must be done to be confident in the magnitude of effect estimates and the accuracy of the results. Keywords: asthma, pregnancy, cigarette, smokin

Crises boursières, bulles spéculatives et raitionalité économique

In October 1987 the stock markets across the world witnessed an unprecedent crash of which both economists and financial analysts are still trying to under-stand the origin. One of the most controversial interpretations of this event is the speculative bubble hypothesis according to which long overvalued stock prices readjusted to realistic values in october 87. This interpretation is particularly interesting given that new "bubble" theories have been developed within the framework of rational expectations models during the last ten years. This paper presents a critical analysis of these theories and evaluates their potential for our understanding of the stock market crash

Is the Market Portfolio Efficient? A New Test to Revisit the Roll (1977) versus Levy and Roll (2010) Controversy

Levy and Roll (Review of Financial Studies, 2010) have recently revived the debate related to the market portfolio's efficiency suggesting that it may be mean-variance efficient after all. This paper develops an alternative test of portfolio mean-variance efficiency based on the realistic assumption that all assets are risky. The test is based on the vertical distance of a portfolio from the efficient frontier. Monte Carlo simulations show that our test outperforms the previous mean-variance efficiency tests for large samples since it produces smaller size distortions for comparable power. Our empirical application to the US equity market highlights that the market portfolio is not mean-variance efficient, and so invalidates the zerobeta CAPM.Efficient portfolio, mean-variance efficiency, efficiency test.

Bulles spéculatives et transmission d’information sur le marché d’un bien stockable

Nous étudions l’évolution du prix d’équilibre pour un bien stockable à titre spéculatif. L’impact des différents paramètres structurels sur l’amplitude des bulles spéculatives est mis en évidence. De plus le paramètre auxiliaire lié à la présence d’anticipations rationnelles est interprété comme une mesure de la confiance accordée par les agents à leurs propres anticipations. Lorsque les agents sont différenciés, notamment par le niveau de l’information dont ils disposent, nous montrons que tous les spéculateurs atteignant un seuil d’information forment les mêmes anticipations. De la sorte, on peut caractériser les cas où le marché est efficient.We are interested in the evolution of the equilibrium price of a stockable commodity which can be demanded for speculative purposes. Using a model "à la Grossman", we determine all the possible price evolutions and we analyse the effect of the structural parameters on the growth of speculative bubbles. The model can be extended to the case of agents having diverse informations. It is shown that, if they have a minimal level of information, they form necessarily the same equilibrium price expectations. Then it is possible to characterize the cases where the market is efficient

The Cost of Empowerment: Multiple Sources of Women’s Debt in Rural India

Poor women borrow from multiple sources. This study examines whether the source of debt matters for women’s role in household financial decisions. Drawing on a household survey from rural Tamil Nadu, we categorise women’s loans along the lines of accessibility and formality into ‘planned loans’ and ‘instant loans’. We find that ‘instant loans’ support women’s bargaining power in various types of household financial decisions, whereas ‘planned loans’ have no impact. This surprising result is better understood when the nature of ‘instant loans’ is examined – these are frequently usurious, involve coercive enforcement methods and are considered socially debasing. Hence women who use them perform a convenient role for their households and in return gain some negotiating power