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;

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.

Female Managers in Hybrid Organizations: Evidence from Financial Cooperatives in Senegal

This paper brings new insights on gender interaction in the management of hybrid organizations. Our database comes from Union des Mutuelles du Partenariat pour la Mobilisation de l’Epargne et du Crédit au Sénégal (UM-PAMECAS), a Senegalese network made of 38 financial cooperatives providing 419,602 members with micro-loans. We use fixed-effect panel estimation to analyze the interplay of female/male-dominated boards with female/male managers. The regressions explain the average loan size and the proportion of loans granted to women. Our results show that male managers mitigate the social orientation of female-dominated boards. In contrast, female managers tend to enhance this orientation. More puzzling is the influence of female managers associated with male-dominated boards. In this case, the presence of a female manager increases the average loan size and reduces the proportion of loans granted to women. In sum, female managers tend to align their objectives on those of the local board even though their hierarchy is at the central level. They avoid as much as possible conflicts with their local board members

Gender Biases in Bank Lending: Lessons from Microcredit in France

The evidence on gender discrimination in lending remains controversial. To capture gender biases in banks' loan allocations, we observe the impact on the applicants of a microfinance institution (MFI) and exploit the natural experiment of a regulatory change imposing a strict EUR 10,000 loan ceiling on microcredit. Descriptive statistics indicate that the presence of the ceiling is associated both with bank-MFI co-financing and with harsher treatment of female borrowers. To investigate causal links, we develop an econometric approach that addresses the concerns of selection biases, multicollinearity, and endogeneity. Our empirical findings suggest that the change in the MFI's gender-related attitude was triggered by banks through co-financing. Hence, we speculate that co-financing pushes ceiling-constrained MFIs to import whatever biases in loan granting that the banks are prone to. Overall, this paper stresses that apparently benign regulations such as loan ceilings can significantly harm the women's empowerment efforts made by MFIs

Microfinance and gender:issues, challenges and the road ahead

This special collection examines the claim that microfinance promotes gender equality. The focus is on three areas of the debate: first, the question of how successful microfinance has been in empowering women; second, whether and how negative gender discrimination operates within the sector; third, how power relations within and beyond the household shape the context and outcomes of microfinance initiatives. The papers in this collection demonstrate the divergence of circumstances and emphasise the need to go beyond the past searches for a simple narrative regarding the impact of microfinance. Rather, as the sector evolves and is incorporated into the mainstream financial system, the challenge ahead for researchers is to marshal the evidence on gendered dynamics to ensure that the gains made are built on through deeper understanding of why impact outcomes and processes differ and use this to inform new initiatives to further gender equality