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Inter-university competition in different competitive environments
Full text linkAbstract. This study examines the policy effects adopted by the Ministry of Education, Culture, Sports, Science and Technology (MEXT), the regulatory authority, on Japanese higher education, the university. It analyze using data to analyse the effects of both regional development and the improvement of the quality of education. Three hypotheses were tested regarding the MEXT's policies on quality assurance, such as increasing the number of universities, diversification of education, regional development, accreditation systems and subsidies for private education, which the MEXT has been working on since the 2000s following the relaxation of the criteria for establishing universities. The results of analysis shows that the number of students choosing regional universities did not increase, only the number of regional universities increased. In addition, small regional universities have not been able to differentiate themselves. It was confirmed that small universities are fully competitive and that the improvement in the quality of education has not been a factor in increasing the number of students at regional universities.Keywords. Competition; University; Policy effect; Differentiation.JEL. M10; I21; I23; I26
The UK prudential regulation authority’s valuation principles for equity release
Full text linkIn recent years the UK Prudential Regulation Authority has been involved in an ongoing discussion with equity release firms over the principles to be used in the valuation of equity release mortgages. The UK regulator proposed a set of such principles in its Supervisory Statement SS 3/17. These principles mark a major step forward in equity release valuation methodology. They are based on elementary pricing economics, their validity is easily established and they are easy to apply. They can be used to provide a cross-check on any proposed set of valuations and so test the reliability of the underlying valuation model or its calibration.Keywords. Actuarial science; Black ’76 model; Equity release mortgage; No negative equity guarantee; Prudential regulation.JEL. G20; G30
Milton Friedman’s views on the interaction of monetary and fiscal policy
Full text linkThis paper first traces the evolution of Milton Friedman’s views on fiscal policy from his early acceptance of the prevailing Keynesian orthodoxy to his later adoption of an entirely contrary view that fiscal policy played almost no role in macroeconomic stabilization. Until the late 1940s or early 1950s Friedman believed that fiscal policy should be the primary tool of government policy in macroeconomic stabilisation – the management of real GDP growth and inflation. However, by 1953 he had shifted to the diametrically opposite view that fiscal policy played almost no role in macroeconomic stabilisation and that as a result policymakers should rely principally on monetary policy. Second, the paper explores some of the theoretical arguments Friedman used to defend his new position. Third, the paper takes up a challenge that Friedman himself proposed to assess the relative importance of monetary and fiscal policies by comparing a series of episodes when fiscal and monetary policies were acting either in the same direction or in opposite directions. All the examples cited confirm Friedman’s finding that monetary policy invariably dominated over fiscal policy in determining macroeconomic outcomes, and particularly when the two policies were acting in contrary directions.Keywords. Milton Friedman; Fiscal policy; Macroeconomic stabilization; Government policy; Monetary policy.JEL. E50; E60; O23
Personal income tax: Evidence from South Africa
Full text linkThe purpose of this paper was to assess the nationalities of Personal Income Tax (PIT) payers. This study used critical data from three sources – the South African census (Statistics South Africa (Stats SA)), tax assessments and IRP5s (South African Revenue Service (SARS)). IRP5 is a document that is known as an employee's tax certificate which outlines the employer/employee's related incomes, taxes, and related deductions at the end of each year. Statistical Analysis System (SAS) was used to analyse the data. This study found that 3.7 million assessed taxpayers were identified as contributors of PIT in 2011. Of these PIT payers, 3,681,325 (2,091,615 males and 1,589,710 females) were born in South Africa; 71,404 (46,986 males and 24,418 females) were not born in South Africa; and 37,486 (807 males, 339 females and 36,340 unknown) could not be identified as they had no South African identity document. Data used in this study originated from the results of a survey organized by Stats SA and tax assessments supplied by SARS specifically for the period 2001. The study attempted to shed light on the national identity of taxpayers working in South Africa. For comparison purposes, tax assessment data constitutes the originality of this study, as obtaining consistent estimates of earnings mobility remains a non-trivial task in the country.Keywords. Census; Tax assessment; IRP5; South Africa.JEL. C88; D31; H24
How is monetary policy transmitted to the human development index?
Full text linkAbstract. Identifying the monetary policy transmission channels to the Human Development Index (HDI) is a matter of great concern for analysts and economic policy decision takers, dealing with social welfare in the less developed countries. The exploration of those transmission mechanisms, using the conventional structural Autoregressive methodology, with Cameroon data from the World Bank, Beac and UNDP, on the period from 1990 to 2015, points out that HDI reacts significantly to the monetary policy impulses in a two years delay, through two channels: the “income-consumption channel” and “credit-consumption channel”. In addition, it appears that inflation has a negative effect on the HDI.Keywords. Monetary policy, Transmission channels, Human Development Index, Cameroun, VAR, Credit, Final consumption.JEL. E52, E58, E51, E54, O15, O23, D60
How do SMEs ensure a balanced financial structure despite bank credit rationing?
Full text linkThe aim of this article is to highlight ex-ante financial imbalance so as to propose means of funding the long and medium term needs of SMEs confronting excessive bank credit rationing in order to achieve a balanced financial structure. It is based on two surveys, the first one was carried out in 2011 on 70 Cameroonian SMEs; it enabled to highlight the frequency of occurrence of alternative funding methods for SMEs’ long and medium term needs. The second one was conducted between 2013 and 2016 on 452 SMEs in Cameroon; we resorted to the above-mentioned frequencies of occurrence to spotlight the funding methods used by SMEs in a context of bank credit rationing. We then brought out the mechanisms by which SMEs achieve financial equilibrium. So our first investigation pointed to the following constantly used funding methods: equity, tontines (savings and loan associations), help from relatives, microfinance institutions, bank loans, leasing. As for the second study, there are tontines (savings and loan associations), microfinance institutions, inter-company credit, help from relatives, help from friends, contributions from associates, leasing institutions, associations, capital increase. The results thus obtained could constitute a hopeful prospect in line with the models by Modigliani and Miller, Myers and Majluf, and Quintart for those showing interest in the funding of SMEs in a context of excessive credit rationing.Keywords. SME; Rationing; Structure.JEL. E50; G21; G24; N10; O16
The Greek letters: Scenario analysis with a reverse butterfly spread
Full text linkAbstract. The management of risk is the goal of a financial institution that sells an option to a client in the over-the-counter markets. In addition to monitoring risks such as Delta(), Gamma () and Vega(v), option traders often also carry out, a scenario analysis. The analysis involves calculating the gain or loss on their portfolio over a specified period under a variety of different scenarios. The time period chosen is likely to depend on the liquidity of the instrument. The scenarios can either be chose by management or generated by a model.Keywords. Financial institutions, Scenario analysis, Risk management, Portfolio management, Reverse butterfly spread.JEL. G2, G10, G11, G13, G17, H2
Monetary policy framework changes and the money demand function
Full text linkAbstract. This paper investigates whether the monetary policy framework has changed since the introduction of inflation targeting in Thailand. We analyze the changes in the model of monetary policy and estimate its effects by estimating the demand function for money. We obtain four results from our analysis. First, changes in the monetary policy framework did not change the model of the money demand function. Second, the adoption of inflation targeting policy leads to structural changes. Third, the effects of monetary policy changed with the adoption of inflation targeting policy. Interest rate elasticity is positive before the framework change but negative after the policy change. However, its value is weak. Fourth, the interest rate elasticities of M2 and r are stable and predictable. This is important because the domestic interest rate, not the exchange rate or the foreign interest rate, controls monetary policy. It can also be applied with the same money demand function as in advanced economies.Keywords. Monetary policy; Inflation targeting; Fully modified least square; Stability test.JEL. E50; E51; E52; E41