Vlad Manole

Trade openness and income – a re-examination

This study uses a new, innovative measure of trade protection and finds that less trade protection is associated with higher income per capita, using data from 131 developed and developing countries.

A Cross-Country Nonparametric Analysis of Bahrain`s Banking System

Abstract Bahrains financial sector development strategy succeeded in building a leading regional banking center, which has become one of the main engines of growth and sources of employment. Based on bank level productivity estimates obtained using non-parametric estimation, the paper concludes that Bahrain continues to occupy a front-runner position among sample GCC countries. Results also reveal that: (i) banks in Bahrain still lag behind their Singaporean counterparts (included in the study as a benchmark), and (ii) there is strong competition from other countries in the region. The results appear to be robust with respect to changes in the sample size and model specifications.

A Cross-Country Non-Parametric Analysis of Bahrain's Banking Sector

Bahrains financial sector development strategy succeeded in building a leading regional banking center, which has become one of the main engines of growth and sources of employment. Although the simulations conducted in the paper suggest that the banking sector in Bahrain continues to occupy a front-runner position among those in a sample of member countries of the Gulf Cooperation Council, they also reveal that: (i) as expected, banks in Bahrain still lag behind their Singaporean counterparts, and (ii) there is strong competition from other countries in the region. The paper also finds that in terms of scale efficiency, the banks in Bahrain operate at the same level as banks in Singapore and their closest competitors in Qatar and the United Arab Emirates. The results appear to be robust with respect to changes in the sample size and model specifications.

Choosing Formulas for Market Access Negotiation: Efficiency and Market Access Considerations

An important issue in multilateral trade negotiations is the approach taken to reduce tariffs. The authors believe that there are important advantages in formula approaches and survey a range of options between the sharply top-down Swiss formula and proportional cuts in tariffs. Over the range the authors consider, they find that the economic efficiency impacts for the importer are not greatly influenced by the extent to which higher tariffs face bigger cuts. However, top-down approaches appear to be more effective in reducing tariff escalation, and provide greater market access gains to poor countries.

Foreign direct investment spillovers and firms' access to credit

Using a unique data set from the Czech Republic for 1994–2003, this study examines the relationship between technological spillovers from foreign direct investment (FDI) and firms’ access to external finance. The empirical analysis indicates that overall, Czech firms benefit little from technological spillovers from FDI. However, a closer look at the financing of domestic firms suggests that firms that have access to external finance enjoy larger benefits from the presence of foreign firms in their own industry or in downstream industries, through increased productivity. The results highlight the importance of financial-sector development and access to external financing to increasing the productivity and competitiveness of domestic firms through technological spillovers from FDI. Our finding suggests that well-developed financial markets may be needed in order to take full advantage of the benefits associated with FDI inflows.

Sovereign Risk and Deposit Dynamics; Evidence from Europe

ABSTRACT The unprecedented expansion of sovereign balance sheets since the beginning of the global crisis has given a new meaning to the term sovereign risk. Developments in Europe since early 2010 revealed new challenges for the functioning of private banks in an environment of heightened sovereign risk and may have contributed to deleveraging. The article uses an innovative way of measuring the perception of sovereign risk and its impact. Using an extension of a common market discipline framework, it shows that exposure to sovereign risk may have limited the ability of banks in Europe to collect deposits. Potential identification issues between deposits and bank efficiency are controlled by using data envelopment analysis (DEA). The results are robust to inclusion of conventional measures of bank performance and the sector-wide holdings of foreign sovereign debt.

Migration and Diversity: Human versus Social Capital

This paper examines the welfare implications associated with different degrees of diversity or similarity between migrants and natives under both migration and trade. We use a general equilibrium model of migration, human capital and social capital and find that there are three equilibrium solutions: an internal one with half the population of each country migrating to the other country, and two corner solutions where everyone ends up in one of the two countries. The internal solution is unstable and is unlikely to be reached under different levels of human capital across the two countries. The corner solutions are stable and will be reached under most circumstances. If there are human capital differences across the two populations, everyone ends up in the country with the highest initial level of human capital. Welfare under any of the equilibrium solutions rises with the diversity in human capital and decreases with the diversity in social capital between migrants and natives. Trade and both migration solutions reduce inequality between the populations of the two countries by the same amount. In addition, trade and migration are not equivalent if social capital is present: the highest welfare is obtained with migration under the corner solution, the second highest welfare is obtained with trade, and the lowest welfare is obtained with migration under the internal solution. The first two solutions (third solution) raise (may raise or reduce) welfare relative to the no-migration case.

Bank distress and firms’ investment during the Great Recession - evidence from Ireland

ABSTRACT This article investigates the impact of bank distress on firms’ performance using unique data during the Great Recession for Ireland. The results show that bank distress, measured as banks’ credit default swap spreads (CDS), has negatively and statistically significantly affected firms’ investment expenditures. Interestingly, firms with access to alternative sources of external finance are not impacted by bank distress. The results are robust to accounting for external finance dependence, demand and trade sensitivities, which affect firm performance and the demand for credit.

Investment climate, foreign networks and exporting – evidence from Africa

This paper investigates the impact of investment climate variables and foreign networks on the exporting decisions of African firms. We use data from the World Bank Investment Climate Surveys for over 7000 firms in 24 Sub-Saharan African countries. The results highlight the crucial role of the access to, and the quality of, investment climate characteristics – infrastructure, external finance and telecommunications for Sub-Saharan African firms’ exporting propensities. Our results show that improving the investment climate to the level of best performers in the sample will considerably increase the propensity of domestic firms to export. The paper also finds that foreign networks have a significantly positive impact on firms’ export propensities.

A Cross-Country Nonparametric Analysis of Bahrain's Banking System

Bahrain`s financial sector development strategy succeeded in building a leading regional banking center, which has become one of the main engines of growth and sources of employment. Although the simulations conducted in the paper suggest that the banking sector in Bahrain continues to occupy a front-runner position among those in a sample of member countries of the Gulf Cooperation Council, they also reveal that: (i) as expected, banks in Bahrain still lag behind their Singaporean counterparts, and (ii) there is strong competition from other countries in the region. The paper also finds that in terms of scale efficiency, the banks in Bahrain operate at the same level as banks in Singapore and their closest competitors in Qatar and the United Arab Emirates. The results appear to be robust with respect to changes in the sample size and model specifications.