DOES MANAGEMENT MATTER? EVIDENCE FROM INDIA Bloom, Nicholas; Eifert, Benn; Mahajan, Aprajit ...
The Quarterly journal of economics,
02/2013, Letnik:
128, Številka:
1
Journal Article
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A long-standing question is whether differences in management practices across firms can explain differences in productivity, especially in developing countries where these spreads appear ...particularly large. To investigate this, we ran a management field experiment on large Indian textile firms. We provided free consulting on management practices to randomly chosen treatment plants and compared their performance to a set of control plants. We find that adopting these management practices raised productivity by 17% in the first year through improved quality and efficiency and reduced inventory, and within three years led to the opening of more production plants. Why had the firms not adopted these profitable practices previously? Our results suggest that informational barriers were the primary factor explaining this lack of adoption. Also, because reallocation across firms appeared to be constrained by limits on managerial time, competition had not forced badly managed firms to exit.
We introduce liquidity frictions into an otherwise standard DSGE model with nominal and real rigidities and ask: can a shock to the liquidity of private paper lead to a collapse in short-term nominal ...interest rates and a recession like the one associated with the 2008 US financial crisis? Once the nominal interest rate reaches the zero bound, what are the effects of interventions in which the government provides liquidity in exchange for illiquid private paper? We find that the effects of the liquidity shock can be large, and show some numerical examples in which the liquidity facilities of the Federal Reserve prevented a repeat of the Great Depression in the period 2008-2009.
We analyze the effectiveness of consumer financial regulation by considering the 2009 Credit Card Accountability Responsibility and Disclosure (CARD) Act. We use a panel data set covering 160 million ...credit card accounts and a difference-in-differences research design that compares changes in outcomes over time for consumer credit cards, which were subject to the regulations, to changes for small business credit cards, which the law did not cover. We estimate that regulatory limits on credit card fees reduced overall borrowing costs by an annualized 1.6% of average daily balances, with a decline of more than 5.3% for consumers with FICO scores below 660. We find no evidence of an offsetting increase in interest charges or a reduction in the volume of credit. Taken together, we estimate that the CARD Act saved consumers $11.9 billion a year. We also analyze a nudge that disclosed the interest savings from paying off balances in 36 months rather than making minimum payments. We detect a small increase in the share of accounts making the 36-month payment value but no evidence of a change in overall payments.
This article examines the long‐term strategic adaptation activities top service firms use to respond to economic crisis. Based on a longitudinal dataset of 97 leading European service firms, it ...empirically conceptualizes three clusters or strategic types of organizational response to overcome long‐term financial strain experienced during 2008–2011, it tests the survivability of their strategic orientation and it assesses their relationship with organizational performance during the crisis (2008–2011) and in the post‐crisis period (2014–2016). Leading E.U. service firms that attempt to maximize adaptation by ‘Commitment‐to‐expansion’ (i.e., increase in R&D investment, strategic M&A and recruitment) ensure the long‐term survivability of their strategic orientation and generate growth in their operating profits, sales and market capitalization in contrast to service firms that implement cost‐oriented actions (layoffs and cutting back on R&D investment). These results extend the limited knowledge available on strategic adaptation in top E.U. service firms and provide insight into the role that different responses play in fostering recovery from ongoing economic and financial crisis, which have thus far remained empirically under‐researched.
I develop a model of agriculture on heterogeneous land to study the relation between trade, productivity, and welfare in Peru, where farmers face high internal and external trade costs. I quantify ...the model with new data on crop prices, yields, and land allocations. I then measure the effects of changes to trade opportunities. A policy of paving roads raises aggregate productivity (4.9%) and the median farmer’s welfare (2.7%), but increased competition from remote suppliers harms 20% of farmers. An increase in international grain prices spreads unevenly across regions, benefiting farmers but hurting urban consumers close to ports.
We investigate how investors price the fair value estimates of assets as required by Statement of Financial Accounting Standards No. 157 (SFAS 157) since the financial crisis in 2008. We observe that ...Level 3 fair value estimates are typically priced lower than Level 1 and Level 2 fair value estimates between 2008 and 2011. However, the difference between the pricing of the different estimates reduces over time, suggesting that as market conditions stabilize in the aftermath of the 2008 financial crisis, reliability concerns about Level 3 estimates dissipated to some extent. Next, we examine whether Level 3 gains affect the pricing of Level 3 estimates because managers have discretion to use Level 3 gains to manage earnings and asset values upwards. We find that differences in Level 3 gains do not lead investors to price Level 3 estimates differently. Finally, we find evidence that the pricing of the Level 1 and Level 2 fair value estimates of assets is lower for banks with lower capital adequacy. Overall, our study contributes to an improved understanding of the relation between valuation and fair value information.
This paper studies the dual role of risk managers and loan officers in a bank's organizational structure. Using 75,000 retail mortgage applications, I analyze the effect of risk-management ...involvement on loan default rates. The bank requires risk-management approval for loans that are considered risky based on hard information, using a sharp threshold that changes during the sample period. Using a regression discontinuity design and a difference-indifferences estimator, I am able to show that risk-management involvement reduces loan default rates by more than 50%. My findings suggest that a two-agent model can help to facilitate efficient screening decisions.
Using data from the Survey of Income and Program Participation (SIPP), we study the health insurance and labor market implications of the recent Affordable Care Act (ACA) provision that allows ...dependents to remain on parental policies until age 26. Our comparison of outcomes for young adults aged 19-25 with those who are older and younger, before and after the law, shows a high take-up of parental coverage, resulting in substantial reductions in uninsurance and other forms of coverage. We also find preliminary evidence of increased labor market flexibility in the form of reduced work hours.
This paper evaluates the impact of three different performance incentive schemes using data from a social experiment that randomized 88 Mexican high schools with over 40,000 students into three ...treatment groups and a control group. Treatment 1 provides individual incentives for performance on curriculum-based mathematics tests to students only, treatment 2 to teachers only, and treatment 3 gives both individual and group incentives to students, teachers, and school administrators. Program impact estimates reveal the largest average effects for treatment 3, smaller impacts for treatment 1, and no impact for treatment 2.
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