Roberta Adami

The Leverage Effect on Stock Returns

This paper examines the relation between abnormal stock returns and leverage. Expanding on Modigliani and Miller’s (1958) Proposition II, abnormal returns are estimated using the asset pricing models of Sharpe and Lintner (the traditional Capital Asset Pricing Model, CAPM), of Fama and French and of Carhart. The findings indicate that returns are decreasing in firm leverage. This paper tests this relation empirically with other risk factors and finds that the results remain robust. The results show that leverage is a firm characteristic that loads on a risk factor. This evidence suggests that leverage should be priced as a risk factor and requires adequate incorporation into common asset pricing models.

Pension reforms and saving for retirement: comparing the United Kingdom and Italy

Increasing longevity and falling fertility rates have prompted European policymakers to shift the responsibility for retirement funding to individuals. Governments, independently of their political ideologies, are committed to sustainable pension systems by encouraging private saving for retirement. This article uses a quantitative approach to investigate individual saving behaviour in Italy and in the UK and present evidence of the factors determining saving for retirement in the two countries. We question whether differences in pension policies and attitudes are accentuated or lessened by common demographic and social factors and examine the possibility of cross-national saving policies. Our analysis suggests that cohorts identified by homogeneous demographic features present converging perceptions across both countries, by acknowledging the need to save for retirement and the insecurity of future state pensions. However, our findings also show that English respondents make use of private saving for their retirement significantly more than their Italian counterparts.

Welfare Systems and Adequacy of Pension Benefits in Europe

During the post-war years many European countries have implemented far-reaching but diverse pension systems with the objective of providing those in retirement with adequate incomes. In this study, we explore the link between pension systems and the adequacy of retirement income. We analyse the mix of public and private pensions and consider the impact of different policies on poverty rates amongst pensioners. We suggest that only a few European countries have been successful in providing combinations of private and public pensions that improve the adequacy of retirement income.

Saving for Retirement: A Review of Ethnic Minorities in the UK

This article examines the saving behaviour of ethnic minorities in the UK. Within the context of pension planning, we investigate saving for retirement patterns in relation to ethnicity, gender and age. We use data from the Family Resources Survey (FRS) to analyse employment status, income, saving types and levels. Although we find profound heterogeneity, ethnic minorities show higher levels of unemployment, lower income and consistently lower levels of saving for retirement compared to our white control group. Disadvantages of ethnic minorities during their working life persist, especially for women, although to a lesser extent than in the past, and continue to affect private savings and prospective retirement income. Indian and Chinese men have experienced the greatest improvements in terms of employment status and income and this is reflected in higher levels of saving for retirement since the mid 1990s.

The effect of labour earnings on post retirement income

Purpose - The purpose of this paper is to investigate how changes in the distribution of pre retirement labour earnings affect post-retirement income in the UK. Design/methodology/approach - The authors estimate a PROBIT model and perform a counterfactual simulation to assess the effects of changes in the earnings distributions on pensions in the UK. The paper uses data from the British Household Panel Survey (BHPS). Findings - The distribution of labour earnings before retirement plays a considerable role in the pension distribution of current retirees, particularly for low and medium incomes in the period 1991-2007 for the UK. Improvements in Social Security have lifted many out of poverty; however there is still a gender gap as it is found that the current system of public and private schemes has not substantially improved pension income dispersion among women. On the other hand, changes in labour earning distributions have benefited more poor female pensioners than male. Originality/value - The paper uses BHPS data, which is a longitudinal panel of survey questions made to UK households between 1991 and 2007. The level of detail of such data allows the study of the complete distributions of pre and post retirement income rather than focussing only on some measures of dispersion.

Retirement saving in the UK: a life-cycle analysis

This paper aims to study long-term savings accumulation in the UK. The authors use cross-sectional information from the extensive data set of the Family Resources Survey to compare long-term saving amongst different ethnic groups with the control group, the native population. The paper reflects on whether different groups are more likely to suffer poverty in retirement.,In this analysis, the authors apply the life-cycle framework to explain saving profiles. This theoretical model has been used extensively in the field of economics and can be applied to empirical studies to examine changes in income and saving patterns over the life-course. The framework contends that individuals make savings decisions to smooth consumption over different phases of their life-cycle.,The findings indicate that socio-economic factors are key elements in determining whether individuals plan for retirement if factors are controlled for the differences in saving behaviours between ethnic minorities and the control population decrease considerably. Asian women, with good education and social standing, display greater saving rates than the control group, while the socio-economic disadvantage suffered especially by Pakistani and Bangladeshi women is key to their inability to save long-term. High levels of poverty in retirement are more likely to be caused by the interaction of low levels of education, part-time work and long spells of unemployment than by ethnicity.,The important contribution to the debate on savings by ethnic minorities is the extension of the life-cycle model to specific sections of the population and to proffer new insights into their saving/dis-saving patterns and ultimately their welfare in retirement.

Ethnic Minorities Saving in the UK: A Life-Cycle Analysis

In this paper, we apply the life-cycle framework to study saving accumulation and de-cumulation among ethnic minorities in the UK. Our findings reflect large variations between ethnic groups in terms of socio-economic characteristics and saving accumulation during the working life as well as in retirement, with gender, income and education as the most important factors in determining saving behaviours. The Pakistani and Bangladeshi ethnic groups in particular, show greater disadvantage in the workplace, which reflects negatively on their labour income and saving patterns. Although many ethnic minority groups show positive savings at the start of their working lives, the disadvantage experienced in employment has a profound effect on their ability to save for the long-term.