James T. Lindley

Measuring the extent of wage discrimination: a statistical test and a caveat

The traditional approach to measuring the extent of discrimination by decomposing group mean differences into endowment and residual differences implicitly treats estimated coefficients as deterministic. Since these estimates are affected by sampling variability, they are, in part, stochastic. Hence, procedures are available to test the statistical significance of these differences. This paper shows that Chow-type tests can be used as direct tests of the statistical significance of the residual difference. Further, it demonstrates that the application of these formal inferential statistical tests to models of wage and salary discrimination can lead to interpretations of the results which differ from earlier interpretations. Two studies, Blinder (1973) and Hirsch and Leppel (1982), are replicated and the testing criteria suggested in this paper is used to determine results. The conclusions of these earlier studies are not supported by the statistical analysis presented in this study. There is no statistica...

The hidden financial costs of ERP software

Purpose - The purpose of this paper is to detail how the adoption of enterprise resource planning (ERP) systems creates major distortions in the corporate decision-making process. Design/methodology/approach - The approach is to focus on the distortion in the capital – budgeting process of corporations emanating from the rigidity of ERP software. The rigidity negatively influences decision-making because ERP software often dictates that the firm must change its core business procedures and processes to fit the software. Findings - Lack of flexibility limits the introduction of new products, or targeting a new customer segment by increasing costs and imposing delays in implementation. Research limitations/implications - Firms would benefit from performing detailed analysis of the impact of ERP systems on their ability to make operational decisions. Originality/value - This paper focuses on the problem of decreased flexibility in making changes in the production and accounting components of the firm when purchasing and installing ERP systems that cannot accommodate minor or major changes in the corporation.

Investment policy, financing policy, and performance characteristics of de novo savings and loan associations☆

Abstract This paper develops a simultaneous equation model to investigate the investment policies, financing policies, and risk/return characteristics of de novo thrift institutions. A model to explain state entry rates for de novo institutions is also presented. Entry dates are significantly influenced by investment powers as the numbers of de novo charters are found to be significantly higher in states with the most liberal set of permissible activities. Economic growth and the demand for financial services also contributed to higher entry rates. Utilization of the liberal powers did not, however, contribute positively to returns. Firms with riskier asset portfolios were found to have lower realized returns. Efficiency in operations and strong capitalization were found to be positively associated with higher returns.

Credit card possesion and use: Changes over time

Abstract Changes over time in the consumers decision to possess and to use credit cards are examined using samples drawn from the Atlanta, Georgia area. Comparisons across time are made possible by a unique data set, which was generated by conducting surveys using the same instrument in 1971 and 1983. The decisions to hold bank, store, gasoline, general, or any credit card are examined separately. The decision to use a credit card is studied within the context of four types of purchases: gasoline, furniture, household goods, and clothing. Given the values of the explanatory variables, probit analysis is used to estimate the conditional probabilities of possession and use. Descriptive statistics for both the population and the sample indicate that the portion of those holding credit cards has increased over the period (with the exception of gasoline cards). However, the probit results indicate that the probability of holding a credit card in 1983 is lower than the probability in 1971 if the financial and demographic explanatory variables are held constant. This finding is consistent with the concept that credit cards are approaching their saturation point. While the growth in credit-card holders is declining, the use of credit cards has increased for furniture, clothing, and household goods purchases, but not for gasoline. Looking only at those who have a credit card, the intensity of use has increased for all purchases including gasoline.

The Effects of Unanticipated Macroeconomic News on Debt Markets

We examine the effects of unanticipated macroeconomic news on two interest rate futures using intraday data. The surprises are identified on the basis of their potential effects on debt markets (positive or negative) and by their size (large, medium, or small). The results show distinct ex-post return patterns associated with different categories of news surprises. For example, large surprises have the strongest immediate effects whereas negative surprises have the longest persisting effects. Tests that examine the separate effects of each announcement suggest that debt responses vary with the size and potential effect of the news surprise in each announcement. 2003 The Southern Finance Association and the Southwestern Finance Association.

An Anlaysis of the Weekend Effect within the Monthly Effect

This study analyzes the weekend effect in the first half and the second half of the month and finds a weekend effect: Fridays returns are significantly greater than Mondays returns. However, the spread between Mondays and Fridays returns shifts between the first half and the second half of the month. Consequently, a plausible explanation for the weekend effect should consider the shifting of Monday-Friday returns across the month. In addition, the 1982–1992 period does not exhibit a monthly effect or a weekend effect for the value-weighted index.

Excess reserves during the 1930s: Empirical estimates of the costs of converting unintended cash inventory into income-producing assets

It is often argued that the persistent amounts of excess reserves in the 1934–1941 period were sought either for protective liquidity or as a signal of bank safety to depositors. More recent explanations argue that these excess reserves were unintended inventory due to the high internal adjustment costs of converting reserves to income-producing assets. Our findings support the latter explanation and reveal high internal asset adjustment costs after 1933. Thus, a monetary policy focused on increasing reserves would have been ineffective. A successful monetary policy would be one that increased outside money.(JEL G210, G280, O420)

The reaction of financial markets to changes in FDIC policies on bank failures

The decade of the eighties was the most turbulent era for commercial banks since the Great Depression. Various bank-related events contributed to this agitation including deregulation, astronomical interest rates, massive bailouts, and great uncertainty. In this study the researchers examine the effects of these events on the cost of the leading source of funds for the banking industry during this period—purchased funds. The results indicate the pricing structure of the federal funds market reacts more to changes in Federal Reserve policy regarding monetary growth and economic stabilization activity than to particular bank problems.

The economics of dying: A misapplication of tools

ConclusionsUnlike McKenzie and Tullock, we do not know how personsshould treat their bodily organs or what is an “ideal exit.” That depends upon their utility goals, which are defined in output terms specific to the decision maker. We contend that the body is an input into the utility production process, and therefore, as with any input, it must be maintained and repaired at a level consistent with the output goals for maximization of utility. Thus, from this framework, it is quite consistent for a person to die with healthy organs without any thought of “belief in reincarnation” or the “desire to bequeath ones bodily organs to others,” or “religious values.” Self interest is all that must prevail.Also, the fact that there are interrelationships between the organs in the system, and at points these relationships take on fixed factor characteristics such that reduced levels of operation in one organ can create disorientation or coma or damage to other organs, means that the body cannot die as M-T suggest. Zero capacity for all organs at death is a technical impossibility as well as being inconsistent with the output goals of utility maximizers.

The Offsetting Debt of inside Money

The traditional view that there is not a price induced macro-economic wealth effect on inside money has been challenged by Boris Pesek and Thomas Saving (6). In their book, Pesek and Sav ing assert that what they call bank money (inside money) along with commodity money and fiat money is part of the net wealth of a community and, therefore, has a wealth effect on a macro economic level (6, p. 79, 102)7 Their assertion is based on their belief that so-called bank money is a bank asset instead of a liability. Don Patinkin, in a reply to Pesek and Saving, convincingly demonstrates as invalid their attempts to show bank money an asset of a bank, and further takes them to task for ignoring much of the contributing literature on the wealth effect (5). Although Patinkin clearly disproves Pesek and Savings con tentions, there is still a great deal of confusion con cerning money and wealth. This paper is an attempt to draw together some of the existing thoughts and to introduce some of my own thoughts on the topics. In Part I, it is shown that Pesek and Saving utilize the debt of the issuer rather than the debt of the private sector in discussing the off-setting debt leading to a rejection of Pesek and Savings positions that bank money is an asset of the bank. I shall also review the concept of the two categories of money, inside and outside, and show how the costs of producing and maintaining the supply of these monies vary. Part II analyzes the implications of Part I as to the wealth effect of in side money.