Lender of Last Resort and Bank Closure Policy

During the last decades a consensus has emerged that it is impossible to disentangle liquidity shocks from solvency shocks. As a consequence the classical lender of last resort rules, as defined by Thornton and Bagehot, based on lending to solvent illiquid institutions appear ill-suited to this environment. We summarize here the main contributions that have developed considering this new paradigm and discuss how institutional features relating to bank closure policy influences lender of last resort and other safety net issues. We devote particular emphasis to the analysis of systemic risk and contagion in banking and the role of the lender of last resort to prevent it.lender of last resort, systemic risk, contagion, bank closure, liquidity, discount window

Banking Regulation and Prompt Corrective Action

We explore the rationale for regulatory rules that prohibit banks from developing some of their natural activities when their capital level is low, as epitomized by the US Prompt Corrective Action (PCA). This paper is built on two insights. First, in a moral hazard setting, capital requirement regulation may force banks to hold a large fraction of safe assets which, in turn, may lower their incentives to monitor risky assets. Second, agency problems may be more severe in certain asset classes than in others. Taken together, these two ideas explain why, surprisingly, capital regulation, which may cope with risk and adverse selection, is unable to address issues related to moral hazard. Hence, instead of forcing banks to hold a large fraction of safe assets, prohibiting some types of investment and allowing ample scope of investment on others may be the only way to preserve incentives and guarantee funding. In particular, providing incentives to monitor investments in the most opaque asset classes may prove to be excessively costly in terms of the required capital and thus inefficient. We show that the optimal capital regulation consists of a rule that a) allows well capitalized banks to freely invest any amount in any risky asset, b) prohibits banks with intermediate levels of capital to invest in the most opaque risky assets, and c) prohibits undercapitalized banks to invest in any risky asset.banking, prudential regulation, moral hazard

Acetoacetate based thermosets prepared by dual-Michael addition reactions

A novel set of dual-curable multiacetoacetate-multiacrylate-divinyl sulfone ternary materials with versatile and manipulable properties are presented. In contrast to common dual-curing systems, the first stage polymer herein consists of a densely crosslinked, high Tg network as a result of base-catalyzed multiacetoacetate-divinyl sulfone Michael addition. A more flexible secondary network forms after base-catalyzed Michael addition of remaining multiacetoacetate to multiacrylate. Curing is truly sequential as the rates of the two Michael additions are significantly different. Curing kinetics were analyzed using differential scanning calorimetry (DSC) and Fourier-transform infrared (FTIR). The materials at each curing stage were characterized using dynamic mechanical analysis (DMA) and SEM. Although some phase separation was observed in certain formulations, the incompatibilities were minimized when the molar percentage of the acetoacetate-divinyl sulfone polymer network was above 75%. Furthermore, the environmental scanning electron microscopy (ESEM) images of these materials show that the more flexible acetoacetate-acrylate phase is dispersed in the form of polymeric spheres within the rigid acetoacetate-divinyl sulfone matrix. This unique dual microstructure can potentially render these materials highly resilient in applications requiring densely crosslinked polymer architectures with enhanced toughnesPostprint (published version

Socioeconomic indicators for a multidimensional farm system typology in a forest management model – methodology and some resultsEL – METHODOLOGY AND SOME RESULTS

In the Mediterranean forests there is a diversity of agro-forest farms, with different management objectives and socioeconomic characteristics, which need to be accounted in forest management models. Therefore, the following paper presents a proposal of indicators to characterize socioeconomically the farms located within these forests in order to define typologies. Different information sources were analysed and social and economical key indicators defined. The typology created is based on four key indicators which result in 54 typologies. The indicators were applied to the Forest Intervention Zone (FIZ) Arade-Alte/S. B.Messines, using the official statistics complemented with a survey. Results show that the dominant farm type is the Small Scale-Singular producer- Forest- Family labour farm. The resulting simulations of different profit scenarios using a forest management model for the FIZ revealed the applicability of the methodology proposed to the objective.Socioeconomic indicators; Farms’ typologies, Algarve; Forest management model.

Local polynomial regression with truncated or censored response

Truncation or censoring of the response variable in a regression model is a problem in many applications, e.g. when the response is insurance claims or the durations of unemployment spells. We introduce a local polynomial re­gression estimator which can deal with such truncated or censored responses. For this purpose, we use local versions of the STLS and SCLS estimators of Powell (1986) and the QME estimator of Lee (1993) and Laitila (2001). The asymptotic properties of our estimators, and the conditions under which they are valid, are given. In addition, a simulation study is presented to investigate the finite sample properties of our proposals.Non-parametric regression; truncation; censoring; asymptotic properties