Financial systems and mechanisms of growth in different conditions of country risk

This article uses panel data from 1976 to 2003 to investigate the ways in which banking and stock markets influence economic growth in situations of high and low country risk. The mean and Standard Deviation (SD) of country risk are adopted to classify 28 countries into Low Risk Low Volatility (LRLV) and High Risk High Volatility (HRHV) subgroups. Through the technique of error correction-based panel co-integration developed by Westerlund (2007), several results are obtained. First, LRLV countries can expand the capitalization of stock market to enhance long-term economic growth. Second, HRHV countries, on the other hand, use two distinct strategies to promote long-term economic growth. Initially they develop their equity markets, which promote economic growth directly. Strengthened equity markets, in turn, aid in the development of credit markets, which subsequently brings an economic boom. Finally, regardless of selected subgroups, the contribution of stock market capitalization to economic growth appears to be substantially larger than that of bank credit, highlighting the importance of stock markets.

Estimating the equity risk premium for economies in the Asian region

The Equity Risk Premium (ERP) is widely used in economic and financial analysis, yet it is difficult to find empirical estimates of the ERP that are generally accepted. The paucity of data in Asian economies exacerbates the problems of estimation. This study estimates the ERP for the larger market-orientated Asian economies and compares the estimates with those of the United States. Surprisingly, of the seven economies examined, the ERP of four cannot be statistically differentiated from that of the United States.

The relationship between sustainability and the value of office buildings

There is an increasing body of evidence to suggest that the development of sustainability in office buildings and the acceptance of these buildings in the broader property market is increasing. However a gap still remains between the value of sustainability and the value of the building from an International Valuation Standards Committee (IVSC) definition of market value. Current literature is limited in the investigation of the impact of sustainable criteria on value component when undertaking a valuation of a commercial office building. Whilst substantial advances have been made in sustainable design and construction aspects, as well as reducing implementation costs and enhancing benefits associated with sustainability, there appears to be inherent barriers in adopting sustainability in the valuation process for the property industry.

This paper examines the limited previous research into the elements of sustainable criteria that impact upon property value, and in turn should be reflected in traditional valuation methods. The immaturity of the property market for sustainable building is such that current valuation methods do not appear to have significant evidential proof of increased property value through sales or lease evidence for sustainable buildings. Furthermore, this lack of market evidence makes it inherently difficult for valuers to assess the real market value of sustainable buildings through current valuation methodology. In other words, the level of risk associated with incorporating different levels of sustainability into office buildings appears difficult to measure using a market value perspective in today’s property market. Accordingly this paper examines current research that has been undertaken to identify particular sustainable criteria that potentially affects the value of a sustainable building. For example, previous research suggests that sustainable criteria impact upon the valuation equation through rental growth, depreciation, risk premium and cash flow. This paper also examines how other studies have viewed the impact of sustainable criteria and how they are weighted within the valuation equation. The discussion provides an insight into the rapidly evolving area of sustainability and office buildings with emphasis placed on the valuation process that seeks to assess a hypothetical purchaser’s perspective of this relationship.

Modeling volatility and changes in the swap spread

We investigate the determinants of changes in U.S. interest rate swap spreads using a model that explicitly allows for volatility interactions between swaps of different terms to maturity. Changes in the swap spread are found to be positively related to interest rate volatility, to changes in the default risk premium in the corporate bond market, and to changes in the liquidity premium for government securities. Swap spread changes are negatively related to changes in the level of interest rates and changes in the slope of the term structure. We also find that there is a strong and significant volatility interaction among spreads for swaps of different maturities and that the process for the conditional variance of the spread is highly persistent across all maturities.

An empirical study of the world price of sustainability

The core goal of this study is to empirically investigate whether there is a “world price” of corporate sustainability. This is assessed in the context of standard asset pricing models—in particular, by asking whether a risk premium attaches to a sustainability factor after controlling for the Fama–French factors. Both time-series and cross-sectional tests are formulated and applied. The results show that (1) global Fama–French factors have strong power to explain global equity returns and (2) sustainability investments have no significant impact on global equity returns. The absence of a significant relationship between sustainability and returns implies that large institutional investors are free to implement sustainability mandates without fear of breaching their fiduciary duties from realising negative returns due to incorporating a sustainability investment process.

What determines the yen swap spread?

We investigate if Japanese yen denominated interest rate swap spreads price risks in addition to liquidity and default risk. These additional risks include: the time-varying correlation between interest rates of different types and maturities; business cycle risk; and market skewness risk. Our analysis, over a number of different maturities and sample periods, supports the existence of an additional risk premium. We also show that the time-varying correlation between short term market interest rates (e.g., TIBOR) and the longer term Government bond yield (e.g., Gensaki) is of particular importance. Japanese yen swap spreads are shown to contain both pro-cyclical and counter-cyclical elements of business cycle risk, positive risk premia for skewness risk and variable risk premia for correlation risk (between fixed and floating interest rates).

Farmland prices, structural breaks and panel data

Previous time series evidence has indicated that farmland prices and cash rents are not cointegrated, a finding at odds with the present value model of farmland prices. We argue that this failure to find cointegration may be due to low power of tests and to the presence of structural change representing a shifting risk premium on farmland investments. To accommodate this possibility, we use panel unit root and cointegration methods that are more powerful than conventional time series methods and allow for breaks in the cointegration relationship. Our results, based on a large panel covering 31 US states between 1960 and 2000, suggest that the present value model of farmland prices cannot be rejected. © Oxford University Press and Foundation for the European Review of Agricultural Economics 2007; all rights reserved.

International market selection model for large Chinese contractors

An increasing number of construction contractors are actively participating in international markets. One of the most fundamental issues confronting contractors moving offshore is where to do business. Although international market selection is a much studied topic, the market choices made by construction firms have attracted little attention. This paper aims to identify factors that influence internationalmarket selection and to develop an international market selection model for construction firms. The market entry choices of 39 large international Chinese contractors across 87 countries were investigated through logistic regression analysis. The results indicate that international contractors prefer to enter countries with large market potential, small culture distance, and, surprisingly, high country risk and high competitive intensity. Moreover, large, experienced contractors are more willing to compete in international markets. Contrary to generally accepted belief, geographic distance is not revealed to have any significant influence on international market selections by Chinese contractors. This paper will be of interest to contractors considering international market selection as part of their global expansion strategy.

Role of index bonds in an optimal dynamic asset allocation model with real subsistence consumption

We investigate the role of index bonds in a dynamic consumption and asset allocation model where the rate of real consumption at any given time cannot fall below a fixed level. An explicit form of the optimal consumption and portfolio rule for a class of Constant Relative Risk Aversion (CRRA) utility functions is derived. Consumption increases above the subsistence level only when wealth exceeds a threshold value. Risky investments in equity and nominal bonds are initially proportional to the excess of wealth over a lower bound, and then increase nonlinearly with wealth. The desirability of investing in the risky assets are related to the agent’s risk preference, the equity premium, and the inflation risk premium. The demand for index bonds is also obtained. The results should be useful for the management of defined benefit pension funds, university endowments, and other portfolios which have a withdrawal pre-commitment in real terms.

A risk worth taking: perceived risk as moderator of satisfaction, loyalty, and willingness-to-pay premium price

This research investigates the moderating role of perceived risk in the relationship between satisfaction, loyalty, and willingness to pay premium price (WTP). A total of 364 respondents were recruited from Amazon's Mechanical Turk panel. Financial, social, performance, and psychological risks have significant negative effects on the relationship between satisfaction and WTP, whereas only financial risks have significant negative effects on the relationship between loyalty and WTP. Using moderated mediation analysis, we found that the mediating effects of loyalty diminish significantly in high social risk conditions and diminish completely in high financial risk conditions.

Understanding the role of mediating risk factors and proxy effects in the association between socio-economic status and untreated hypertension

The association between socio-economic status (SES) and untreated hypertension varies according to a country's level of development and racial/ethnic group. We sought to confirm this variation in women from China and the United States (US) as well as to investigate the impact of SES on several mediating risk factors. We also investigate the extent to which SES explains racial/ethnic differences in untreated hypertension in the US. We used cross-sectional data from 1814 non-pregnant women in China (China Health and Nutrition Survey (CHNS), 1997) and 3266 non-pregnant women in the United States (National Health and Nutrition Examination Survey (NHANES III), 1988–1994) respectively. A variety of statistical modelling techniques was used to predict untreated hypertension as a function of several mediating factors and to simulate the impact of changes in SES. The age-adjusted prevalence of untreated hypertension was significantly higher (p<0.01) for low-income White and Black women compared to Mexican American or Chinese women. Untreated hypertension was not significantly associated with income or education in Mexican Americans or women in China. Obesity and light physical activity had the largest mediating effect on the association between SES and untreated hypertension for all racial/ethnic groups. However, this effect was not as strong as the proxy effect of income and education. SES did not completely explain racial/ethnic differences in hypertension in the US. While SES was more strongly associated with hypertension in Blacks than Whites, Blacks were still 1.97 (95% CI 1.47–2.64) times more likely to have untreated hypertension than Whites after adjusting for SES differences. The association between SES and untreated hypertension varied by country and racial/ethnic group. An important explanation for this variation was the differential effect of SES on mediating risk factors. SES disparities between Whites and Blacks in the US partly explain differences in the prevalence of untreated hypertension between these racial/ethnic groups.

Risk factors for surgically treated benign prostatic hyperplasia in Western Australia

Objective: To determine the relationship between personal, hormonal and lifestyle risk factors and surgically treated benign prostatic hyperplasia (BPH). Materials and methods: A population-based case–control study was conducted in Western Australia (WA) on men aged 40–75 years who were surgically treated at public and private hospitals for BPH during 2001–2002. Controls were recruited from the WA electoral roll. Cases and controls were compared with regard to demographic and lifestyle factors and proxy measures of hormonal status using logistic regression. Data were available for 398 cases and 471 controls. Results: No associations with BPH were found for family history of prostate cancer in father or brother, serving in the military in a combat area, pattern of baldness, smoking status, obesity, alcohol intake and occupational physical activity. The only inverse relationship was observed with heavy alcohol drinking (>30 g/day), however, this was not statistically significant. An increased risk of BPH, not statistically significant, was observed for British-born men compared to Australian born and for history of vasectomy. The analysis was repeated after excluding 28% of controls with moderate and severe symptoms of BPH and 7% of cases with mild symptoms prior to surgery, and our results remained essentially unchanged. Conclusions:The results suggest that there are few risk factors for BPH although perhaps country of birth, vasectomy and heavy alcohol consumption may be considered further.

HIV discrimination : integrating the results from a six-country situational anaylsis in the Asia Pacific

The findings of the six independent studies on institutional forms of HIV discrimination in the Asia Pacific presented in this Special Issue of AIDS Care are integrated. At first glance, the general pattern of the results across the study sites suggests that discrimination is most pertinent in the domain of 'practice' rather than in the domains of law or institutional policy. On closer analysis, however, utilising the qualitative data, this conclusion does not take sufficient account of the cultural context within which the interpersonal interaction (practice) between the health carers and people living with HIV/AIDS occurs. Limitations on the use of anti-discrimination legislations and protective written policies for reducing discrimination in these contexts are discussed. The need for alternative approaches to thinking about discrimination intervention is raised and this is done through a consideration of the strategy of universal precautions.

An Asia Pacific six-country study on HIV-related discrimination : introduction

This paper outlines a six-country study of institutionalised forms of HIV/AIDS-related discrimination in the Asia-Pacific region. Although recognised as a barrier to disease prevention and treatment, very limited data are available on the effects of institutionalised HIV-related stigma and discrimination. Understanding the forms of discrimination within the institutions where they occur is the first step to identifying effective ways of promoting compassionate, non-discriminatory treatment of PLWHA. Thus, the goal of this research project was to document institutional discrimination against PLWHA, as guided by the UNAIDS Protocol for the Identification of Discrimination Against People Living with HIV (2000), in six Asian countries: India, Thailand, Philippines, China, Vietnam and Indonesia. As a precursor to the six individual studies, this paper provides a brief overview of the literature on HIV discrimination, and then describes the UNAIDS Protocol and the shared methodological considerations relevant to all of the study sites. Commonalities in sampling, procedures and analysis are also discussed.

A cross-national comparison of risk and protective factors for adolescent substance use : the United States and Australia

Purpose
To compare risk and protective factors that influence youth substance use in Australia and the United States. The two countries have different policy orientations toward substance use: Australia has adopted harm-reduction policies, and the United States has adopted abstinence-focused polices.

Methods
Cross-sectional survey data were collected from independent samples of adolescents in the states of Maine (N = 16,861; 53% female, 7% Non-white) and Oregon (N = 15,542; 51% female, 24% Non-white) in the United States and Victoria in Australia (N = 8442; 54% Female, 11% Non-white) in 1998 (Maine and Oregon) and 1999 (Victoria). Chi-square tests, t-tests, effect size comparisons, and logistic regression analyses that accounted for age and gender were used to investigate cross-national similarities and differences in: (a) rates of cigarette, alcohol, and marijuana use; (b) levels of risk and protective factors; and (c) magnitudes of associations between risk and protective factors and substance use.

Results
More adolescents in Victoria reported using cigarettes and alcohol, whereas more of the U.S. adolescents reported using marijuana. Exposure to risk and protective factors was generally similar in the cross-national samples. However, adolescents in Maine and Oregon perceived handguns to be more readily available, reported more participation in religious activities, and were higher in sensation-seeking and social skills; and adolescents in Victoria had more favorable attitudes toward drug use and reported community norms and parental attitudes more favorable to drug use. Most of the risk and protective factors were strongly associated with substance use to a similar degree in Victoria, Maine, and Oregon. However, among adolescents in Maine and Oregon peer/individual risk and protective factors associated with social detachment were more strongly related to substance use, and among adolescents in Victoria, family protective factors were less strongly related to alcohol use.

Conclusions
Inter-country influences on youth substance use are generally similar despite different policy directions. Existing differences suggest that the abstinence policy context is associated with higher levels of illicit drug use and stronger relations between individual indicators of social detachment and substance use, whereas the harm reduction policy context is related to more cigarette and alcohol use, possibly from exposure to normative influences that are more tolerant of youth drug use.