Liquidity creation or de‐creation: evidence from US property and liability insurance industry

2013 ◽  
Vol 39 (10) ◽  
pp. 938-962 ◽  
Author(s):  
Byeongyong Paul Choi ◽  
Jin Park ◽  
Chia‐Ling Ho
Keyword(s):  
Insurance Industry ◽  
Content Type ◽  
Factors Affecting ◽  
Depository Institutions ◽  
Time Period ◽  
The Us ◽  
Financial Characteristics ◽  
Property And Liability Insurance ◽  
The Impact ◽  
The Relationship

PurposeThe purpose of this study is two‐fold. The first purpose is to properly measure the level of US property and liability (P/L) insurers liquidity creation, applying the liquidity creation measure developed by Berger and Bouwman. The second purpose is to identify factors affecting P/L insurers' liquidity creation using a regression. Particularly, this paper tests two competing hypotheses regarding the relationship between the level of capital and liquidity creation.Design/methodology/approachThe paper calculates liquidity creation for the US P/L insurers. First, the paper categorizes all items in assets, liabilities and surplus into liquid, semi‐liquid, or illiquid. This process is based on the ease, cost, and time for insurers to meet their contractual obligation to obtain liquid funds or to pay off their liability. The paper also constructs the regression model to test the impact of insurers' surplus level on liquidity creation while controlling for the firm‐specific variables. The paper examines this relationship for the time period between 1998 and 2007.FindingsContrary to the study of depository institutions, the paper reports that P/L insurers are liquidity destroyers than liquidity creators. This paper also provides that liquidity destruction varies over time and differs among insurers in different size. The total amount of liquidity destruction ranges from 47 to 58 percent of insurer total asset. In addition, the results of a regression show that insurer capital is negatively related to the level of liquidity creation. This provides implications that insurers with lower level of capital face more regulatory requirements and are forced to meet liquidity demand more.Practical implicationsThe level of liquidity creation and the trend of liquidity creation of P/L insurers are of particular interest to regulators and consumers because the level of liquidity creation as shown during the financial crisis has a significant adverse impact on the financial intermediaries.Originality/valueThe paper do not aware of any study that attempts to measure liquidity creation by insurers and its relationship with both organizational and financial characteristics. The paper reports that P/L insurers are, unlike depository institutions, liquidity destroyers. Whether or not P/L insurers create/destroy liquidity is an interesting economic question to shed light on the roles of P/L insurers as a financial intermediary.

China-US summit yields more strains than gains

2015 ◽  
Keyword(s):  
Presidential Election ◽  
Personal Data ◽  
Content Type ◽  
The Us ◽  
Us Government ◽  
International Image ◽  
Economic Slowdown ◽  
Government Workers ◽  
The Impact ◽  
The Relationship

Significance Several recent strains in the relationship guaranteed a tense official dialogue and tepid reception of Xi across Washington -- the impact of China's economic slowdown on the US stock market, accusations of Chinese cyber theft of US government workers' personal data, and continued maritime tensions. Impacts China's climate change commitments will improve its international image, but will not reduce tensions on other issues. Washington will impose sanctions if it believes China is breaking the new cybercrime agreement. US politics ahead of next year's presidential election will put more strain on China-US relations. Dialogue on the South China Sea is unlikely to bear fruit while Washington's policy is undecided.

scholarly journals IFRS adoption and firms’ opacity around the world: what factors affect this relationship?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Samuel Mongrut ◽  
Manuel Tello Marín ◽  
Maria del Carmen Torres Postigo ◽  
Darcy Fuenzalida O’Shee
Keyword(s):  
Design Methodology ◽  
Meta Analysis ◽  
Common Law ◽  
Content Type ◽  
Factors Affecting ◽  
Ifrs Adoption ◽  
Analysis Methodology ◽  
Moderating Factors ◽  
The Impact ◽  
The Relationship

Purpose This paper aims to identify what are the moderating factors affecting the relationship between firms’ adoption of international financial and reporting standards (IFRS) and the firm’s opacity. Design/methodology/approach This study uses the meta-analysis methodology from Hunter et al. (1982) to find if the mere IFRS adoption reduces firm’s opacity and a meta-regression from Stanley and Jarrell (1989) to identify the moderating factors that may influence this relationship. Findings Contrary to previous studies, this study finds a low, negative and nonsignificant correlation between IFRS adoption and firms’ opacity, but this relationship depends on the geographical region. Using 34 results from 28 studies from different continents published between 2005 and 2018 this study finds that IFRS adoption reduces opacity in countries with common law (COML) and with more authorities’ oversight and power to enforce the rules. Originality/value This study finds two institutional commonalities between different previous studies that intend to assess the impact of the IFRS adoption upon firms’ opacity: the legal system and the authorities’ oversight power.

scholarly journals The impact of COVID-19 on the standard & poor 500 index sectors: a multivariate generalized autoregressive conditional heteroscedasticity model

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Maha Elhini ◽  
Rasha Hammam
Keyword(s):  
Significant Relation ◽  
Content Type ◽  
Daily Return ◽  
Technology Sector ◽  
Time Period ◽  
The Us ◽  
Us Dollar ◽  
The Impact ◽  
Autoregressive Conditional Heteroscedasticity ◽  
Daily Returns

Purpose This paper aims to examine the impact of the daily growth rate of COVID-19 cases in the USA (COVIDg), the Federal Fund Rate (FFR) and the trade-weighted US dollar index (USDX) on S&P500 index daily returns and its 11 constituent sectors’ indices for the time period between January 22, 2020, until June 30, 2020. Design/methodology/approach The study uses the multivariate generalized autoregressive conditional heteroscedasticity (MGARCH) model to gauge the impacts over the whole period of study, as well as over two sub-periods; first, January 22, 2020, until March 30, 2020, reflecting uncertainty in the US markets and second, from April 1, 2020, until June 30, 2020, reflecting the lockdown. Findings Results of the MGARCH model reveal a negative and significant relation between COVIDg and S&P500 index daily returns over the first sub-period and the whole study period in the following sectors, namely, communications, consumer discretionary, consumer staples, health, technology and materials. Yet, COVIDg showed a positive and significant relation with S&P500 index daily returns during the second time period in the following sectors, namely, communication, consumer discretionary, financial, industrial, information technology (IT) and utilities. Besides, USDX showed a negative significant effect on S&P500 index daily returns and on the daily return on each of its 11 constituent sectors over the second sub-period and the whole period. Further, FFR showed a significant effect only in the second sub-period, specifically, a negative effect on the daily return of the financial sector and a positive effect on the daily return of the technology sector index. Nevertheless, FFR had a positive significant effect on the daily return of the utilities sector index for the whole period under study. Research limitations/implications The impact of the crisis on the S&P500 index can be assessed only with some limitations owing to available global data and the limited time frame of the lock-down. Practical implications The study proposes supporting a smooth, functioning and resilient financial system; increasing fiscal measures by the US Government to increase liquidity on constraints; measures by The Federal Reserve to alleviate US dollar funding shortages; support market integrity; ensure continuous transparency and sharing of information; support the health sector, as well as consumer-based sectors that faced demand shocks and facilitate investments in the technology sector. Originality/value The originality of this paper lies in the examination of the impact of the novel COVID-19 pandemic on each of the 11 sectors constituting the S&P500 index separately, reflecting how the main economic sectors formulating the US economy reacted to the shock during the peak time of the pandemic to observe a full picture of the economic consequences amid the pandemic.

Effects of comparability of promotions on inaction inertia

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Hsin-Hsien Liu ◽  
Hsuan-Yi Chou
Keyword(s):  
Design Methodology ◽  
Content Type ◽  
Factors Affecting ◽  
Future Studies ◽  
Incentive Compatible ◽  
Internal Mechanism ◽  
The Impact ◽  
The Relationship ◽  
Practical Implications ◽  
A Current

PurposeBased on mental accounting theory, this study explored whether the comparability of missed and subsequent promotional formats/frames affects inaction inertia.Design/methodology/approachFour experiments with imaginary and incentive-compatible designs were conducted to test the hypotheses.FindingsConsumers are more likely to express inaction inertia after having missed a comparable promotion than after having missed a noncomparable promotion. Devaluation of the promoted target mediates the impact of comparability on inaction inertia, while referent others' actions do not moderate the comparability effect. Finally, when consumers accept a subsequent inferior promotion, they prefer using a different payment format because it reduces comparability of the two promotions.Practical implicationsCompanies should use different promotional formats/frames to reduce comparability and inaction inertia when a new promotion is relatively inferior to a recent previous one. Companies should offer different payment options to help customers actively avoid comparing a current promotion with a missed promotion.Originality/valueThis study provides a more comprehensive conceptual structure for understanding the relationship between psychological comparability and inaction inertia. It provides insights into what actions companies should take to reduce inaction inertia. Furthermore, this study empirically tests the influence of multiple comparison referents, which provides a reference point for future studies on the factors affecting inaction inertia. A new method to examine whether consumers actively avoid comparisons is used, which clarifies the internal mechanism of inaction inertia.

Doping scandals in professional cycling: impact on primary team sponsor’s stock return

2016 ◽  
Vol 17 (1) ◽  
pp. 37-55 ◽  
Author(s):  
Karen Danylchuk ◽  
Jelmer Stegink ◽  
Katie Lebel
Keyword(s):  
Stock Returns ◽  
Stock Return ◽  
Grand Tour ◽  
Content Type ◽  
Time Period ◽  
Study Methodology ◽  
The Impact ◽  
The Relationship ◽  
Professional Cycling ◽  
Event Study Methodology

Purpose – The purpose of this paper is to examine the impact of doping scandals (n=25) in professional cycling Grand Tour events on the primary team sponsor’s daily stock return. Design/methodology/approach – Event study methodology. Findings – Overall it was found that during the time period and events under examination in this study doping scandals had no significant impact on the primary team sponsor’s stock returns. Originality/value – There is limited research to explain the economic impact of widespread doping in cycling and its commercial shareholders. This study addresses this gap by examining the relationship between doping scandals in professional cycling and the daily stock return of the involved team’s primary sponsor.

US infrastructure and farm bill spending can progress

2018 ◽  
Keyword(s):  
Rural Communities ◽  
Voter Turnout ◽  
House Of Representatives ◽  
Large Scale ◽  
Economic Implications ◽  
Content Type ◽  
Factors Affecting ◽  
The Us ◽  
Private Financing ◽  
The Impact

Subject Economic implications of the midterms. Significance The US elections this month enjoyed the highest voter turnout for midterms in more than a century and left the Republicans retaining control of the Senate and Democrats regaining the House of Representatives. Healthcare and immigration eclipsed the economy as the top factors affecting voters for the first time in a decade. Democrats did well in suburban districts, making about 75% of their gains in such areas. Republicans strengthened in rural communities despite the impact of the US-China trade dispute on agriculture. Impacts Trump can pursue trade policy changes despite a divided Congress -- making it more likely the tariffs will persist into 2019 or escalate. The House and Senate could join forces to approve a bill reducing prescription drug prices. The leaders of the House and Senate have met to discuss infrastructure but will struggle to attract large-scale private financing.

scholarly journals Impact of college education on incorporated and unincorporated self-employment: variations among African Americans and Hispanics

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Xuguang Guo ◽  
Wei Chen ◽  
Denis Iurchenko
Keyword(s):  
African Americans ◽  
Regression Models ◽  
College Education ◽  
Content Type ◽  
Logit Regression ◽  
Self Employment ◽  
The Us ◽  
Racial Variations ◽  
The Impact ◽  
The Relationship

PurposeThis study examines the impact of college education on incorporated and unincorporated self-employments. It specifically compares the effects on African Americans and Hispanics with the effects on Whites.Design/methodology/approachThe study sample was drawn from the US Current Population Survey between 1989 and 2018. Based on a sample size of 1,657,043 individuals, this study employed logit regression models to test the hypotheses. Racial variations were examined using African Americans and Hispanics as moderators.FindingsThe results suggest that college education increases incorporated self-employment and reduces unincorporated self-employment. The impact of college education on incorporated self-employment is stronger for African Americans and Hispanics than for Whites. In contrast, its effect on unincorporated self-employment is stronger for Whites than for African Americans and Hispanics.Research limitations/implicationsThe findings provide empirical evidence of how college experience changes the motivation of starting an incorporated or unincorporated business. The results suggest that college education impacts African Americans and Hispanics differently than Whites in pursuing their career path of entrepreneurship.Originality/valueIt is the first study that examines the relationship between college education and incorporated/unincorporated self-employment. It also sheds light on radical variations.

Broker-dealer leverage volatility and the US stock prices

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Khandokar Istiak
Keyword(s):  
Stock Market ◽  
Stock Prices ◽  
Asset Prices ◽  
Multivariate Garch ◽  
Content Type ◽  
The Us ◽  
Key Driver ◽  
First Moment ◽  
The Impact ◽  
The Relationship

Purpose Broker-dealer leverage volatility increases during booms and crisis periods, but its impact on stock prices is relatively unexplored. This paper aims to investigate whether broker-dealer leverage volatility is a key driver for stock prices. Design/methodology/approach This paper collects the US quarterly data of broker-dealer book leverage and three leading stock market indicators (S&P 500, DJIA and Nasdaq) for the period of 1967–2018. The research uses a multivariate GARCH-in-mean VAR to examine the impact of leverage volatility on each of the stock market indicators. A split-sample analysis (pre-1990 and post-1990) has also been performed to show the robustness of the result. Findings The research finds that broker-dealer leverage volatility does not have any significant impact on stock prices. Originality/value Broker-dealers are important financial intermediaries, and there is a huge literature exploring the relationship between their leverage and asset prices. But, the relationship between broker-dealer leverage volatility and asset prices is not explored yet. This study fills the gap and provides the first evidence that broker-dealer leverage volatility does not play any major role in the theory of stock pricing. The research proposes that the stock holding decisions of the investors should depend only on the first moment of leverage and not on the second moment of leverage. The study concludes that high broker-dealer leverage volatility is not a sinister signal for the US stock market.

The impact of partners’ technological diversification in joint patenting

2017 ◽  
Vol 55 (6) ◽  
pp. 1248-1264 ◽  
Author(s):  
Angelo Natalicchio ◽  
Antonio Messeni Petruzzelli ◽  
Achille Claudio Garavelli
Keyword(s):  
Content Type ◽  
Factors Affecting ◽  
Patent Classification ◽  
Technological Diversification ◽  
International Patent ◽  
The Us ◽  
Technological Impact ◽  
Research Organisations ◽  
Diversified Firms ◽  
The Impact

Purpose The purpose of this paper is to understand if and how the technological diversifications of collaborating firms and public research organisations (PROs) affect the technological impact of the resulting joint-patented innovations. Design/methodology/approach The authors conduct an analysis on a database of 590 dyadic joint patents, assigned to both firms and PROs, registered from 1976 to 2010 to the US Patent and Trademark Office and belonging to green technological classes, as defined by the International Patent Classification green inventory. Findings The study reveals that the assignees’ technological diversification has a significant influence on the impact of the patents jointly developed. Indeed, the results show that the most impactful joint patents result from collaborations involving technologically diversified firms. Research limitations/implications This research sheds further light on the establishment of R&D collaborations between firms and PROs to jointly innovate. Specifically, it provides a novel perspective to investigate the impact of joint patents, by focussing on the assignees’ technological profile. Practical implications The present work suggests that firms characterised by a higher degree of technological diversification are more likely to co-develop patent of higher technological impact, as resulting from collaboration with PROs. Originality/value This study investigates the factors affecting the impact of joint patents resulting from collaborations between firms and PROs. In particular, the present research focusses on the effect of a relevant characteristic of the partners, such as their technological diversification.

Liquidity transformation: an examination of US life insurers

2016 ◽  
Vol 42 (7) ◽  
pp. 618-634 ◽  
Author(s):  
Byeongyong Paul Choi ◽  
Jin Park ◽  
Chia-Ling Ho
Keyword(s):  
Regression Model ◽  
Life Insurance ◽  
Insurance Industry ◽  
Financial Fragility ◽  
Crowding Out ◽  
Content Type ◽  
Life Insurers ◽  
Life Insurance Industry ◽  
The Us ◽  
The Impact

Purpose – The purpose of this paper is twofold: first, this paper measures how much liquidity is transformed by the US life insurance industry for the sample period; and Second, this study tests the “risk absorption” hypothesis and “financial fragility-crowding out” hypothesis to identify the impact of capital on liquidity creation in the US life insurance industry. In addition, a regression model is conducted to explore the relationship between liquidity creation and other firm characteristics. Design/methodology/approach – In order to construct the liquidity creation measures, all assets and liabilities are classified as liquid, semi-liquid, or illiquid with appropriate weights to these classifications, which will then be combined to measure the amount of liquidity creation. In addition, a regression model is analyzed. The level of insurers’ liquidity creation is regressed on the capital ratio (surplus over total assets) and other financial and organizational variables to test two prevailing hypotheses. Findings – This paper finds that the US life insurers de-create liquidity. The authors provide that the amount of liquidity de-creation is related to the size of insurers such that liquidity de-creation has increased as assets grow and that large insurers de-create most of liquidity. The US life insurance industry de-created $2.1 trillion in liquidity, i.e., 43 percent of total industry assets, in 2008. The empirical results support the “financial fragility-crowding out” hypothesis. Life insurers’ liquidity de-creation is mainly caused by the large portion of liquid assets, which is required by regulation and capital is not a main factor of liquidity de-creation. Originality/value – There is no known study on the issue of liquidity creation by life insurers. Thus, the extent of liquidity creation by the life insurance industry, if any, is an empirical matter to investigate, but also an important matter to regulators and the academia since the products and business operations (e.g. asset portfolio and asset and liability management) of life insurers are different from those of property and liability insurers.

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