Financial Markets and Real Ecinomy: Four Essays in International Trade

Financial markets play an important role in an economy performing various functions like mobilizing and pooling savings, producing information about investment opportunities, screening and monitoring investments, implementation of corporate governance, diversification and management of risk. These functions influence saving rates, investment decisions, technological innovation and, therefore, have important implications for welfare. In my PhD dissertation I examine the interplay of financial and product markets by looking at different channels through which financial markets may influence an economy.My dissertation consists of four chapters. The first chapter is a co-authored work with Martin Strieborny, a PhD student from the University of Lausanne. The second chapter is a co-authored work with Melise Jaud, a PhD student from the Paris School of Economics. The third chapter is co-authored with both Melise Jaud and Martin Strieborny. The last chapter of my PhD dissertation is a single author paper.Chapter 1 of my PhD thesis analyzes the effect of financial development on growth of contract intensive industries. These industries intensively use intermediate inputs that neither can be sold on organized exchange, nor are reference-priced (Levchenko, 2007; Nunn, 2007). A typical example of a contract intensive industry would be an industry where an upstream supplier has to make investments in order to customize a product for needs of a downstream buyer. After the investment is made and the product is adjusted, the buyer may refuse to meet a commitment and trigger ex post renegotiation. Since the product is customized to the buyer's needs, the supplier cannot sell the product to a different buyer at the original price. This is referred in the literature as the holdup problem. As a consequence, the individually rational suppliers will underinvest into relationship-specific assets, hurting the downstream firms with negative consequences for aggregate growth. The standard way to mitigate the hold up problem is to write a binding contract and to rely on the legal enforcement by the state. However, even the most effective contract enforcement might fail to protect the supplier in tough times when the buyer lacks a reliable source of external financing. This suggests the potential role of financial intermediaries, banks in particular, in mitigating the incomplete contract problem. First, financial products like letters of credit and letters of guarantee can substantially decrease a risk and transaction costs of parties. Second, a bank loan can serve as a signal about a buyer's true financial situation, an upstream firm will be more willing undertake relationship-specific investment knowing that the business partner is creditworthy and will abstain from myopic behavior (Fama, 1985; von Thadden, 1995). Therefore, a well-developed financial (especially banking) system should disproportionately benefit contract intensive industries.The empirical test confirms this hypothesis. Indeed, contract intensive industries seem to grow faster in countries with a well developed financial system. Furthermore, this effect comes from a more developed banking sector rather than from a deeper stock market. These results are reaffirmed examining the effect of US bank deregulation on the growth of contract intensive industries in different states. Beyond an overall pro-growth effect, the bank deregulation seems to disproportionately benefit the industries requiring relationship-specific investments from their suppliers.Chapter 2 of my PhD focuses on the role of the financial sector in promoting exports of developing countries. In particular, it investigates how credit constraints affect the ability of firms operating in agri-food sectors of developing countries to keep exporting to foreign markets.Trade in high-value agri-food products from developing countries has expanded enormously over the last two decades offering opportunities for development. However, trade in agri-food is governed by a growing array of standards. Sanitary and Phytosanitary standards (SPS) and technical regulations impose additional sunk, fixed and operating costs along the firms' export life. Such costs may be detrimental to firms' survival, "pricing out" producers that cannot comply. The existence of these costs suggests a potential role of credit constraints in shaping the duration of trade relationships on foreign markets. A well-developed financial system provides the funds to exporters necessary to adjust production processes in order to meet quality and quantity requirements in foreign markets and to maintain long-standing trade relationships. The products with higher needs for financing should benefit the most from a well functioning financial system. This differential effect calls for a difference-in-difference approach initially proposed by Rajan and Zingales (1998). As a proxy for demand for financing of agri-food products, the sanitary risk index developed by Jaud et al. (2009) is used. The empirical literature on standards and norms show high costs of compliance, both variable and fixed, for high-value food products (Garcia-Martinez and Poole, 2004; Maskus et al., 2005). The sanitary risk index reflects the propensity of products to fail health and safety controls on the European Union (EU) market. Given the high costs of compliance, the sanitary risk index captures the demand for external financing to comply with such regulations.The prediction is empirically tested examining the export survival of different agri-food products from firms operating in Ghana, Mali, Malawi, Senegal and Tanzania. The results suggest that agri-food products that require more financing to keep up with food safety regulation of the destination market, indeed sustain longer in foreign market, when they are exported from countries with better developed financial markets.Chapter 3 analyzes the link between financial markets and efficiency of resource allocation in an economy. Producing and exporting products inconsistent with a country's factor endowments constitutes a serious misallocation of funds, which undermines competitiveness of the economy and inhibits its long term growth. In this chapter, inefficient exporting patterns are analyzed through the lens of the agency theories from the corporate finance literature. Managers may pursue projects with negative net present values because their perquisites or even their job might depend on them. Exporting activities are particularly prone to this problem. Business related to foreign markets involves both high levels of additional spending and strong incentives for managers to overinvest. Rational managers might have incentives to push for exports that use country's scarce factors which is suboptimal from a social point of view. Export subsidies might further skew the incentives towards inefficient exporting. Management can divert the export subsidies into investments promoting inefficient exporting.Corporate finance literature stresses the disciplining role of outside debt in counteracting the internal pressures to divert such "free cash flow" into unprofitable investments. Managers can lose both their reputation and the control of "their" firm if the unpaid external debt triggers a bankruptcy procedure. The threat of possible failure to satisfy debt service payments pushes the managers toward an efficient use of available resources (Jensen, 1986; Stulz, 1990; Hart and Moore, 1995). The main sources of debt financing in the most countries are banks. The disciplining role of banks might be especially important in the countries suffering from insufficient judicial quality. Banks, in pursuing their rights, rely on comparatively simple legal interventions that can be implemented even by mediocre courts. In addition to their disciplining role, banks can promote efficient exporting patterns in a more direct way by relaxing credit constraints of producers, through screening, identifying and investing in the most profitable investment projects. Therefore, a well-developed domestic financial system, and particular banking system, would help to push a country's exports towards products congruent with its comparative advantage.This prediction is tested looking at the survival of different product categories exported to US market. Products are identified according to the Euclidian distance between their revealed factor intensity and the country's factor endowments. The results suggest that products suffering from a comparative disadvantage (labour-intensive products from capital-abundant countries) survive less on the competitive US market. This pattern is stronger if the exporting country has a well-developed banking system. Thus, a strong banking sector promotes exports consistent with a country comparative advantage.Chapter 4 of my PhD thesis further examines the role of financial markets in fostering efficient resource allocation in an economy. In particular, the allocative efficiency hypothesis is investigated in the context of equity market liberalization.Many empirical studies document a positive and significant effect of financial liberalization on growth (Levchenko et al. 2009; Quinn and Toyoda 2009; Bekaert et al., 2005). However, the decrease in the cost of capital and the associated growth in investment appears rather modest in comparison to the large GDP growth effect (Bekaert and Harvey, 2005; Henry, 2000, 2003). Therefore, financial liberalization may have a positive impact on growth through its effect on the allocation of funds across firms and sectors.Free access to international capital markets allows the largest and most profitable domestic firms to borrow funds in foreign markets (Rajan and Zingales, 2003). As domestic banks loose some of their best clients, they reoptimize their lending practices seeking new clients among small and younger industrial firms. These firms are likely to be more risky than large and established companies. Screening of customers becomes prevalent as the return to screening rises. Banks, ceteris paribus, tend to focus on firms operating in comparative-advantage sectors because they are better risks. Firms in comparative-disadvantage sectors finding it harder to finance their entry into or survival in export markets either exit or refrain from entering export markets. On aggregate, one should therefore expect to see less entry, more exit, and shorter survival on export markets in those sectors after financial liberalization.The paper investigates the effect of financial liberalization on a country's export pattern by comparing the dynamics of entry and exit of different products in a country export portfolio before and after financial liberalization.The results suggest that products that lie far from the country's comparative advantage set tend to disappear relatively faster from the country's export portfolio following the liberalization of financial markets. In other words, financial liberalization tends to rebalance the composition of a country's export portfolio towards the products that intensively use the economy's abundant factors.

Non-assisted versus neuro-navigated and XperCT-guided external ventricular catheter placement: a comparative cadaver study.

BACKGROUND AND PURPOSE: Accurate placement of an external ventricular drain (EVD) for the treatment of hydrocephalus is of paramount importance for its functionality and in order to minimize morbidity and complications. The aim of this study was to compare two different drain insertion assistance tools with the traditional free-hand anatomical landmark method, and to measure efficacy, safety and precision. METHODS: Ten cadaver heads were prepared by opening large bone windows centered on Kocher's points on both sides. Nineteen physicians, divided in two groups (trainees and board certified neurosurgeons) performed EVD insertions. The target for the ventricular drain tip was the ipsilateral foramen of Monro. Each participant inserted the external ventricular catheter in three different ways: 1) free-hand by anatomical landmarks, 2) neuronavigation-assisted (NN), and 3) XperCT-guided (XCT). The number of ventricular hits and dangerous trajectories; time to proceed; radiation exposure of patients and physicians; distance of the catheter tip to target and size of deviations projected in the orthogonal plans were measured and compared. RESULTS: Insertion using XCT increased the probability of ventricular puncture from 69.2 to 90.2 % (p = 0.02). Non-assisted placements were significantly less precise (catheter tip to target distance 14.3 ± 7.4 mm versus 9.6 ± 7.2 mm, p = 0.0003). The insertion time to proceed increased from 3.04 ± 2.06 min. to 7.3 ± 3.6 min. (p < 0.001). The X-ray exposure for XCT was 32.23 mSv, but could be reduced to 13.9 mSv if patients were initially imaged in the hybrid-operating suite. No supplementary radiation exposure is needed for NN if patients are imaged according to a navigation protocol initially. CONCLUSION: This ex vivo study demonstrates a significantly improved accuracy and safety using either NN or XCT-assisted methods. Therefore, efforts should be undertaken to implement these new technologies into daily clinical practice. However, the accuracy versus urgency of an EVD placement has to be balanced, as the image-guided insertion technique will implicate a longer preparation time due to a specific image acquisition and trajectory planning.

Characteristics of infections associated with external ventricular drains of cerebrospinal fluid.

OBJECTIVES: Manifestations of external ventricular drain (EVD) - associated infections overlap with those of the underlying neurosurgical conditions. We analyzed characteristics of EVD-associated infections. METHODS: We included patients aged ≥18 years with EVD-associated infections from 1997 to 2008, using modified CDC criteria for nosocomial infections. Hospital charts were reviewed retrospectively and the in-hospital outcome was evaluated. RESULTS: Forty-eight patients with EVD-associated infections were included (median age, 52 years, range 20-74 years). The median EVD-indwelling time was 7 days (range, 1-39 days) and EVD-associated infection occurred 6 days after insertion (range, 1-17 days). In 23% of patients, meningitis occurred 1-10 days after EVD removal. Fever >38 °C was present in 79% of patients, but Glasgow Coma Scale (GCS) scores were reduced in only 29%, and headache, vomiting and/or neck stiffness were present in only 31%. The median cerebrospinal fluid (CSF) leukocyte count was higher at onset of EVD-associated infection than at EVD insertion (175 × 10(6)/l versus 46 × 10(6)/l, p = 0.021), but other CSF parameters did not differ significantly. The most commonly implicated organisms were coagulase-negative staphylococci (63%) and Propionibacterium acnes (15%). CONCLUSIONS: Fever and increased CSF leukocytes should raise the suspicion of EVD-associated infection, which may occur up to 10 days after removal of EVD.

First-line chemotherapy with local treatment can prevent external-beam irradiation and enucleation in low-stage intraocular retinoblastoma.

PURPOSE: To evaluate the efficacy of first-line chemotherapy (CT) in preventing external-beam radiotherapy (EBR) and/or enucleation in patients with retinoblastoma (Rbl). PATIENTS AND METHODS: Twenty-four patients with newly diagnosed unilateral or bilateral Rbl received CT associated with local treatment (LT). Two to five courses of etoposide and carboplatin were administered at 3- to 4-week intervals, depending on tumor response, and were completed each time by LT. RESULTS: Tumor response was observed in all eyes. Twenty-one of 24 patients showed a complete response (CR) that persisted at a median follow-up (FU) of 31 months (range, 4 to 41 months). Among the three patients who relapsed, two were lost to FU and one died of progressive disease. CR was achieved by CT and LT alone in 15 (71.4%) of 21 patients with less advanced disease (groups I to III). Six other patients with advanced disease (groups IV and V) experienced treatment failure and needed salvage treatment by EBR and/or enucleation. The difference between the two patient groups with regard to disease stage was statistically significant (P <.0001). EBR could be avoided in 13 (68.4%) of 19 patients, who presented with groups I to III (15 eyes) and group V (one eye) disease, whereas enucleation could be avoided in only two (40%) of five. CONCLUSION: CT combined with intensive LT is effective in patients with groups I to III Rbl, permitting the avoidance of EBR in the majority of these young children and, thus, reducing the risk of long-term sequelae. This is in contrast with the disappointing results for patients with groups IV and V Rbl, in whom EBR and/or enucleation was needed.

The 'help' question doesn't help when screening for major depression : external validation of the three-question screening test for primary care patients managed for physical complaints

La dépression majeure est fréquente chez les patients qui consultent un cabinet de médecine générale. Elle reste toutefois difficile à diagnostiquer car elle est souvent masquée par une ou plusieurs plaintes physiques qui sont l'unique motif de consultation. Pour aider le médecin généraliste à démasquer ce trouble, un test de dépistage composé de deux questions a été développé et validé. Ce test indique une probabilité accrue de dépression si le patient répond positivement à au moins une des deux questions suivantes : « Est-ce que, durant le mois qui a précédé, vous vous êtes senti(e) triste, déprimé(e), désespéré(e) ? » et « Durant le mois qui a précédé, avez-vous ressenti un manque d'intérêt et de plaisir dans la plupart des activités que d'habitude vous appréciez ? ». Une troisième question, ajoutée aux deux questions ci-dessus, a été proposée récemment afin d'améliorer les performances de ce test de dépistage. Cette troisième question rend le test négatif si le patient répond négativement à la question suivante : « Souhaitez-vous de l'aide pour cela ? ». Une étude avait indiqué que l'ajout de la question supplémentaire améliorait la spécificité du test sans réduire sa sensibilité. Objectifs Il s'agissait de décrire la performance de deux tests de dépistage de la dépression majeure, composés, respectivement, de deux et de trois questions, dans une population de patients consultant dans un cabinet de médecine générale pour une plainte physique, et de les valider. Méthode Les réponses aux questions des tests de dépistage de la dépression dans la population de la cohorte SODA (Somatisation, Depression, Anxiety) ont été utilisées. Il s'agissait de patients de plus de 18 ans, sélectionnés aléatoirement, consultant pour au moins une plainte physique auprès de 24 médecins généralistes de Suisse Romande, réexaminés une année après l'inclusion dans la cohorte. Le questionnaire validé « Full Patient Health Questionnaire » a été utilisé, le même jour, pour diagnostiquer une dépression majeure. Ce résultat a été utilisé pour évaluer les performances des deux tests de dépistage en calculant la sensibilité et la spécificité, notamment. Résultats Les données de 724 / 937 patients inclus ont pu être utilisées. Un diagnostic de dépression majeure a été posé chez 9.5% des patients (n = 69). La sensibilité et la spécificité des deux questions de dépistage étaient de 91.3% (IC95% : 81.4-96.4%) et 65.0% (IC95% : 61.2-68.6%), respectivement. En ajoutant la troisième question, la sensibilité des deux questions de dépistage a diminué à 59.4% (IC95% : 47.0-70.9%) et la spécificité a augmenté à 88.2% (IC95% : 85.4-90.5%). Conclusions L'utilisation des deux questions pour le dépistage de la dépression majeure est associée à une haute sensibilité et à une basse spécificité chez des patients se présentant en cabinet de médecine générale pour une plainte physique. En ajoutant la troisième question, la spécificité augmente, mais la sensibilité diminue. Ainsi, en ajoutant la troisième question, quatre patients dépressifs majeurs sur dix ne sont pas détectés, alors que seulement un patient sur dix n'est pas détecté avec les deux questions de dépistage. Notre étude montre que le test composé de deux questions reste une méthode de choix pour le dépistage de la dépression majeure et que l'ajout de la troisième question n'est pas recommandée. Celle-ci reste toutefois pertinente dans l'incitation au dialogue sur le sujet de la dépression entre le médecin et son patient.

Perineal stapled prolapse resection for external rectal prolapse: is it worthwhile in the long-term?

BACKGROUND: Perineal stapled prolapse (PSP) resection is a novel operation for treating external rectal prolapse. However, no long-term results have been reported in the literature. This study analyses the long-term recurrence rate, functional outcome, and morbidity associated with PSP resection. METHODS: Nine consecutive patients undergoing PSP resection between 2007 and 2011 were prospectively followed. Surgery was performed by the same surgeons in a standardised technique. Recurrence rate, functional outcome, and complication grade were prospectively assessed. RESULTS: All 9 patients undergoing PSP resection were investigated. The median age was 72 years (range 25-88 years). No intraoperative complications occurred. Faecal incontinence, preoperatively present in 2 patients, worsened postoperatively in one patient (Vaizey 18-22). One patient developed new-onset faecal incontinence (Vaizey 18). The median obstructive defecation syndrome score decreased postoperatively significantly from 11 (median; range 8-13) to 5 (median; range 4-8) (p < 0.005). At a median follow-up of 40 months (range 14-58 months), the prolapse recurrence rate was 44 % (4/9 patients). CONCLUSIONS: The PSP resection is a fast and safe procedure associated with low morbidity. However, the poor long-term functional outcome and the recurrence rate of 44 % warrant a cautious patient selection.

Mechanical external work and recovery at preferred walking speed in obese subjects

PURPOSE: The aim of this study was to compare the mechanical external work (per kg) and pendular energy transduction at preferred walking speed (PWS) in obese versus normal body mass subjects to investigate whether obese adults adopt energy conserving gait mechanics. METHODS: The mechanical external work (Wext) and the fraction of mechanical energy recovered by the pendular mechanism (Rstep) were computed using kinematic data acquired by an optoelectronic system and were compared in 30 obese (OG; body mass index [BMI] = 39.6 +/- 0.6 kg m(-2); 29.5 +/- 1.3 yr) and 19 normal body mass adults (NG; BMI = 21.4 +/- 0.5 kg m(-2); 31.2 +/- 1.2 yr) walking at PWS. RESULTS: PWS was significantly lower in OG (1.18 +/- 0.02 m s(-1)) than in NG (1.33 +/- 0.02 m s(-1); P <or= 0.001). There was no significant difference in Wext per unit mass between groups (OG: 0.36 +/- 0.03 J kg(-1) m(-1); NG: 0.31 +/- 0.02 J kg(-1) m(-1); P = 0.12). Rstep was significantly lower in OG (68.4% +/- 2.0%) compared with NG (74.4% +/- 1.0%; P = 0.01). In OG only, Wext per unit mass was positively correlated with PWS (r = 0.57; P < 0.001). CONCLUSION: Obese adults do not appear to alter their gait to improve pendular energy transduction and may select slower PWS to reduce mechanical and metabolic work.

Hypoglycémie chez des patients porteurs de pompe a insuline [Hypoglycemia in patients treated with an external insulin pump].

Hypoglycemia is a potentially serious complication of insulin therapy. Some insulin-dependent diabetic patients can benefit from continuous subcutaneous insulin infusion therapy (an "insulin pump"), which in most case improves glycemia control and decreases the occurrence of hypoglycemic episodes. However, such events may occur, particularly during initial treatment phases or pregnancy. Severe hypoglycemia is mainly managed by stopping the insulin pump and insuring an adequate carbohydrate intake. Patients with insulin pumps and their entourage should receive specific instruction in the adjustment of pump flow in the presence of dysglycemia-inducing circumstances (illness, physical exertion), as well as in anticipation of high-risk situations, such as motor-vehicle driving.

The cognitive errors and coping patterns of child molesters as assessed by external observers: a pilot study

Cognitive errors (CE) and coping strategies (CS) are the focus of most cognitive-behavioral treatments for incarcerated child molesters. Several studies have reported differences in CEs and CSs between child molesters and controls. However, the vast majority of these studies assessed cognitive errors and coping using questionnaires, which are known to present a number of important limitations. This pilot study aimed to compare the CEs and CSs of N = 17 incarcerated child abusers and N = 12 controls using observer-rated methods, namely the Cognitive Error Rating Scale (CERS; Drapeau et al., 2005) and the Coping Action Pattern Rating Scale (CAPRS; Perry, Drapeau, & Dunkley, 2005). Results showed that child molesters presented more cognitive errors, in particular positive selective abstraction, and lower coping functioning, such as escape strategies. Treatment and research implications, including the use of observer-rated methods, are discussed.

The effect of patient, provider and financing regulations on the intensity of ambulatory physical therapy episodes : a multilevel analysis based on routinely available data

Background: Many studies have found considerable variations in the resource intensity of physical therapy episodes. Although they have identified several patient-and provider-related factors, few studies have examined their relative explanatory power. We sought to quantify the contribution of patients and providers to these differences and examine how effective Swiss regulations are (nine-session ceiling per prescription and bonus for first treatments). Methods: Our sample consisted of 87,866 first physical therapy episodes performed by 3,365 physiotherapists based on referrals by 6,131 physicians. We modeled the number of visits per episode using a multilevel log linear regression with crossed random effects for physiotherapists and physicians and with fixed effects for cantons. The three-level explanatory variables were patient, physiotherapist and physician characteristics. Results: The median number of sessions was nine (interquartile range 6-13). Physical therapy use increased with age, women, higher health care costs, lower deductibles, surgery and specific conditions. Use rose with the share of nine-session episodes among physiotherapists or physicians, but fell with the share of new treatments. Geographical area had no influence. Most of the variance was explained at the patient level, but the available factors explained only 4% thereof. Physiotherapists and physicians explained only 6% and 5% respectively of the variance, although the available factors explained most of this variance. Regulations were the most powerful factors. Conclusion: Against the backdrop of abundant physical therapy supply, Swiss financial regulations did not restrict utilization. Given that patient-related factors explained most of the variance, this group should be subject to closer scrutiny. Moreover, further research is needed on the determinants of patient demand.

The "help" question doesn't help when screening for major depression: external validation of the three-question screening test for primary care patients managed for physical complaints.

BACKGROUND: Major depression, although frequent in primary care, is commonly hidden behind multiple physical complaints that are often the first and only reason for patient consultation. Major depression can be screened by two validated questions that are easier to use in primary care than the full DSM-IV criteria. A third question, called the "help" question, improves the specificity without apparently decreasing the sensitivity of this screening procedure. We validated the abbreviated screening procedure for major depression with and without the "help" question in primary care patients managed for a physical complaint. METHODS: This diagnostic accuracy study used data from a cohort study called SODA (for SOmatisation Depression Anxiety ) conducted by 24 general practitioners (GPs) in western Switzerland that included patients over 18 years of age with at least one physical complaint at index consultation. Major depression was identified with the full Patient Health Questionnaire. GPs were asked to screen patients for major depression with the three screening questions one year after inclusion. RESULTS: Out of 937 patients with at least one physical complaint, 751 were eligible one year after index consultation. Major depression was diagnosed in 69/724 (9.5%) patients. The sensitivity and specificity of the two-question method alone were 91.3% (95% confidence interval 81.4-96.4%) and 65.0% (95% confidence interval 61.2-68.6%), respectively. Adding the "help" question decreased the sensitivity (59.4% ; 95% confidence interval 47.0-70.9%) but improved the specificity (88.2% ; 95% confidence interval 85.4-90.5%) of the three-question method. CONCLUSIONS: The use of two screening questions for major depression was associated with high sensitivity and low specificity in primary care patients presenting a physical complaint. Adding the "help" question improved the specificity but clearly decreased the sensitivity; when using the "help" question; four out of ten patients with depression will be missed, compared to only one out of ten with the two-question method. Therefore, the "help" question is not useful as a screening question, but may help discussing management strategies.