Working Paper Multihoming in the market for payment media: Evidence from young Finnish consumers


 Rachel Newman
 2 years ago
 Views:
Transcription
1 econstor Der OpenAccessPublkatonsserver der ZBW LebnzInformatonszentrum Wrtschaft The Open Access Publcaton Server of the ZBW Lebnz Informaton Centre for Economcs Hyytnen, Ar; Takalo, Tuomas Workng Paper Multhomng n the market for payment meda: Evdence from young Fnnsh consumers ETLA Dscusson Papers, The Research Insttute of the Fnnsh Economy (ETLA), No. 893 Provded n Cooperaton wth: Research Insttute of the Fnnsh Economy (ETLA), Helsnk Suggested Ctaton: Hyytnen, Ar; Takalo, Tuomas (2004) : Multhomng n the market for payment meda: Evdence from young Fnnsh consumers, ETLA Dscusson Papers, The Research Insttute of the Fnnsh Economy (ETLA), No. 893 Ths Verson s avalable at: Nutzungsbedngungen: De ZBW räumt Ihnen als Nutzern/Nutzer das unentgeltlche, räumlch unbeschränkte und zetlch auf de Dauer des Schutzrechts beschränkte enfache Recht en, das ausgewählte Werk m Rahmen der unter nachzulesenden vollständgen Nutzungsbedngungen zu vervelfältgen, mt denen de Nutzern/der Nutzer sch durch de erste Nutzung enverstanden erklärt. Terms of use: The ZBW grants you, the user, the nonexclusve rght to use the selected work free of charge, terrtorally unrestrcted and wthn the tme lmt of the term of the property rghts accordng to the terms specfed at By the frst use of the selected work the user agrees and declares to comply wth these terms of use. zbw LebnzInformatonszentrum Wrtschaft Lebnz Informaton Centre for Economcs
2 ETLA ELINKEINOELÄMÄN TUTKIMUSLAITOS THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY Lönnrotnkatu 4 B Helsnk Fnland Tel Telefax World Wde Web: Keskusteluaheta Dscusson papers No. 893 Ar Hyytnen Tuomas Takalo MULTIHOMING IN THE MARKET FOR PAYMENT MEDIA: EVIDENCE FROM YOUNG FINNISH CONSUMERS Ths verson: 27th January, 2004 We would lke to thank Nel Gandal, Aja Leponen, Marko Tervö, Otto Tovanen and John Zysman as well as semnar partcpants at the Bank of Fnland, Helsnk School of Economcs, and Noka Corporaton for helpful comments. Ths research s a part of the wreless communcaton research program (breetla.org) of ETLA, the Research Insttute of the Fnnsh Economy and BRIE, the Berkeley Roundtable on the Internatonal Economy at the Unversty of Calforna at Berkeley. Hyytnen gratefully acknowledges fnancal support from Noka and the Natonal Technology Agency (Tekes). We would also lke to thank The Fnnsh Bankers Assocaton for provdng us wth the survey data and Vrp Andersson and Mka Pajarnen for research assstance. All opnons expressed are those of the authors. Addresses: Ar Hyytnen, Vstng research fellow, Unversty of Calforna, Berkeley. Permanent address: The Research Insttute of the Fnnsh Economy (ETLA), Etlateto Ltd, Lönnrotnkatu 4 B FIN Helsnk, Tel: , Fax: , Emal: Tuomas Takalo, Research Department, Bank of Fnland, P.O.Box 160. FIN Helsnk, Fnland. emal: ISSN
3 HYYTINEN, Ar TAKALO, Tuomas, MULTIHOMING IN THE MARKET FOR PAYMENT MEDIA: EVIDENCE FROM YOUNG FINNISH CON SUMERS. Helsnk: ETLA, Elnkenoelämän Tutkmuslatos, The Research Insttute of the Fnnsh Economy, 2004, 40 p. (Keskusteluaheta, Dscusson Papers, ISSN ; No. 893). ABSTRACT: We am at explanng why some consumers use only one medum when payng for ther pontofsale transactons, whle others multhome and use many. Usng data on young Fnnsh consumers, we fnd that one key determnant of multhomng behavor n the market for payment meda s consumer awareness. Our nstrumental varable estmates ndcate that the better nformed use tmes more payment meda than the less nformed. Because many payment method nnovatons are typcally frst used smultaneously wth the establshed methods, our results suggest that ncreasng consumer awareness could sgnfcantly speed up the adopton of new means of payment, such electronc money and moble payments. JEL: G200, E590. KEYWORDS: Payment meda, multhomng, consumer awareness, adopton of fnancal technology. HYYTINEN, Ar TAKALO, Tuomas, MULTIHOMING IN THE MARKET FOR PAYMENT MEDIA: EVIDENCE FROM YOUNG FINNISH CON SUMERS. Helsnk: ETLA, Elnkenoelämän Tutkmuslatos, The Research Insttute of the Fnnsh Economy, 2004, 40 s. (Keskusteluaheta, Dscusson Papers, ISSN ; No. 893). TIIVISTELMÄ: Tässä tutkmuksessa tarkastellaan stä, mks jotkut kuluttajsta käyttävät van yhtä maksuvälnettä ja toset kuluttajat mona maksuvälnetä maksaessaan pävttäsä ostoksaan. Käyttämällä anestoa nuorsta suomalassta kuluttajsta löydämme, että yks tärkemmstä maksuvälneden käyttöön vakuttavsta tekjöstä on kuluttajen ylenen tetosuus maksamseen lttyvstä kysymyksstä. Instrumenttmuuttujaestmonnt osottavat, että paremmn tetoset kuluttajat käyttävät kertaa useampaa maksuvälnettä kun vähemmän tetoset kuluttajat. Koska mona uusa maksuvälnetä käytetään usen aluks olemassa oleven maksuvälneden rnnalla, tuloksemme tukevat näkemystä, että kuluttajen tetosuuden lsäämnen maksamsesta ja maksuvälnestä vos nopeuttaa uusen maksuvälneden, kuten elektronsen rahan ja moblen maksuvälneden, käyttöönottoa. JEL: G200, E590. AVAINSANAT: Maksuvälneet, kuluttajen tetosuus, maksuvälneden käyttöönotto.
4
5 1 Introducton A strkng feature of the market of payment meda s that some consumers use only one medum, whle others adopt many and therefore multhome. The theoretcal lterature on multhomng (e.g., Rochet and Trole 2003) suggests that consumer multhomng s should be a key consderaton for merchants, snce t ntensfes payment platform competton over the merchants. Unfortunately, n partcular for the merchants but also for the ssuers of payment meda and monetary polcymakers, the determnants of multhomng n the market for payment meda are not well understood. 1 Monetary costs naturally hnder adopton of new payment methods (cf., e.g., Humphrey, Km, and Vale 2001), but relatvely lttle s known about the role of nonmonetary costs such as learnng and searchng costs as well as other costs arsng from mperfect consumer nformaton. The am of ths study s to nvestgate how severe a barrer to the dffuson of new payment meda such nonmonetary costs are. Our evdence from a random sample of young Fnnsh consumers suggests that the nonmonetary costs cannot be overlooked. In partcular, we argue and fnd that consumer awareness enhances multhomng. The economcs of ths postve relaton s that consumer awareness reduces learnng and searchng costs as well as mperfect consumer nformaton. It does so almost by defnton. Before we run nto emprcs and put consumer awareness nto specfc terms to quantfy ts effect, we formulate a theoretcal model of multhomng. In our model consumers multhome, because t reduces the tme cost of transactons. The negatve relaton arses because the more payment meda a consumer carres, the 1 In many other dmensons the lterature on payment systems and methods s qute extensve, as can be seen from the excellent surveys by Hancock and Humphrey (1998) and Drehmann, Goodhart, and Krueger (2002). The focus of earler research has often been
6 2 easer her access to a modern economy s accountng network n dfferent crcumstances. Balancng the tme cost of transactons aganst the monetary and nonmonetary costs of adoptng multple payment meda results n the optmal level of multhomng. The model also predcts that the optmal level of multhomng depends on consumer awareness, because the nonmonetary costs are nversely related to t. As we wll argue, multhomng s an ncreasngly relevant phenomenon n modern economes wth advanced accountng networks and payment markets. Because we beleve that Fnland s a good approxmaton of such an economy, we test the predctons of our model of multhomng usng Fnnsh data. We can also take advantage of some unque features of the survey data on young Fnnsh consumers avalable to us. The data contans drect measures of the pontofsale payng habts of consumers. The measures allow us to generate a dependent varable at the level of ndvdual consumers that dstngushes the pontofsale payng from settlng blls and the actual use of the payment meda from havng an access to them. As Guso and Jappell (2003) pont out n ther study of the consumer awareness and stock market partcpaton, consumer awareness can take many guses and be an elusve concept, for t can be both about the exstence and characterstcs of payment meda. We get a grp of t because the data ncludes a seres of questons capturng the consumers exposure to the provson of nformaton about fnancal servces and payment meda. The data also contans nstruments, whch allow us to control for the potental endogenety of consumer awareness.
7 3 Young consumers typcally show a great rate of adopton of new payment meda (Humphrey et al and Stx 2003). We can evaluate the mportance of both nonmonetary and monetary costs for ths segment of consumers n solaton. Our data supports the noton of multhomng, as more than half of the young Fnnsh customers n our sample multhome. Not surprsngly, we fnd that the monetary costs of adopton are also mportant for the young. But consumer awareness turns out to be at least equally mportant determnant of multhomng. Endogenety of consumer awareness cannot, however, be gnored, because we fnd that not controllng for the endogenety can severely bas the effect of consumer awareness downwards. Our nstrumental varable estmates ndcate that the better nformed use tmes more payment meda than the less nformed. The fndng suggests that ncreasng consumer awareness could speed up the adopton of payment method nnovatons, such electronc money and moble payments. The remander of the paper s organzed as follows: In the next secton, we descrbe some specal characterstcs of the Fnnsh market of payment meda that make Fnland a neat case for our study. In secton 3 we consder the theoretcal underpnnngs of our study. The emprcal mplementaton of the theoretcal model s explaned n secton 4. In secton 5 we descrbe our data and the constructon of varables. We go trough the basc estmatons, ther results, and robustness tests n secton 6. In secton 7 we address the potental endogenety of consumer awareness. The concludng secton (secton 8) ncludes a dscusson of the mplcatons of our fndngs for the adopton of new payment meda.
8 4 2 The Fnnsh Market for Payment Meda The Fnnsh market for payment meda s has some dstnctve propertes that smplfy the study of multhomng. 2 There are also some profound dfferences wth the oftenstuded US market of payment meda (see Ausubel 1991 and Humphrey, Pulley, and Vesala 2000 for a descrpton of the US market). The Fnnsh market for payment meda s relatvely advanced, for Fnns ncreasngly rely on accessng electronc payment networks n pontofsale payng. Checks are for example no longer used n consumer trade, whereas debt cards are ncreasngly popular. Varous surveys show that between 1999 and 2003, ther use as the most common way of payng for daly consumer goods and servces almost doubled from 17% to 30%. In 2002, they accounted for 2/3 of the value of the card payments. The use of cash s decreasng rapdly. Between 1999 and 2003, the use of cash as a way of payng for daly consumer goods and servces decreased by 18% (13 percentage ponts, to 58%). Although t stll s relatvely common n pontofsale transactons, the rato of currency n crculaton to GDP, about 1.8% n 2002, s n Fnland among the lowest n Europe. Moreover, the use of cash s almost nvarantly preceded by the use of an ATM: The entre currency n crculaton (2,4 bllon euros) goes through the ATMs seven tmes a year. There are two reasons for ths: Frst, vrtually everyone has a bankng account where ncomes are credted drectly and an ATM (compatble) card. The use of cash wthout frst accessng one s bank account va an ATM s a habt that s restrcted to the senor ctzens that have never learned to use ATMs. Second, the coverage of the ATM net 2 Most of the ndustry detals presented here are taken from surveys and other data that are avalable at The Fnnsh Bankers Assocaton wwwpages. For more nformaton, see
9 5 works s rather extensve n Fnland, and the networks of dfferent banks allow for roamng. 3 In Fnland the market for payment meda s concentrated, because the few man depost banks that domnate the bankng sector are the man ssuers of payment meda. Because the ssuers of payment meda are relatvely homogenous the payment meda, ther prcng, and the ways of provdng them wth customers tend to be smlar across the ssuers, at least after controllng for the bankng relatonshps of consumers. The prcng of the payment meda s also qute smple. At least one ATM or payment card s often automatcally attached to a bankng account as a part of a bankng servce package. As explaned by Kosknen (2001), the packages can nclude varous payment meda, whose prcng hence depends on the prcng of the bankng servce packages. Ther prcng n turn s ted to the age of a consumer. It s typcal that the basc packages are free of charge untl the age of 26. Last but not least, Fnns use ther cards prmarly for payng, not for accessng credt. For example, our data (descrbed more closely n secton 5.1) tells us that n 2002, 37% of the young had an outstandng credt balance, but only for 5% t orgnated from payment card borrowng (for 4% from credt cards). For the rest, the loan was ether a mortgage or a student loan. Borrowng va payment cards s drectly related to age even wthn the young. Instead of borrowng, the young have other motvatons to acqure a credt card, such as a Vsa or a Master Card. One of them s the desre to use t abroad n the pontofsale transactons. 3 The reason for the extensve ATM networks s that the Fnnsh bankng sector was heavly regulated untl the late 1980s. Because both depost and loan nterest rates were regulated, the bankng groups competed by the scope of ther servce network. The last phase of the servce competton was an ntroducton of ATMs. The deregulaton and the subsequent bankng crss of the early 1990s actually frst ntensfed the competton through ATM networks, because the banks replaced ther branches by a set of ATMs to cut down costs.
10 6 3 Multple Payment Methods n a Shoppng Tme Model 3.1 Two Observatons We buld our analyss of payment meda on two observatons. Frst, as also the studes by Humphrey, Pulley, and Vesala (1996, 2000) ndcate, an ncreasng fracton of all pontofsale purchases of goods and servces are pad for by means of sgnals to an accountng network. The wdespread use of the electronc payment meda means that there s less need for transfers of a tangble medum of exchange. But more substantally, even when the tangble medum s transferred, t s often preceded by a connecton to an ATM network. Indeed, Attanaso, Guso, and Japell (2002) fnd that the dffuson of ATM cards s the man factor explanng the shrnkng currency holdng. Because payng n cash practcally translates nto ownng and usng an ATM card, we nterpret an ATM card as yet another varety of a payment card. An ATM card s a payment card wth mproved securty and prvacy, but wth larger costs of debtng a buyer s account, because all physcal, monetary, and tme costs are borne by the cardholder pror to a transacton. Our second buldng block comes from the costs of transacton tme. We hypothesze that adoptng addtonal payment meda can reduce t. As Rochet and Trole (2003) demonstrate, the twosded feature of payment meda market easly leads to a stuaton where some merchants do not accept some payment meda that are accepted by other merchants. Thus, the broader s the set of payment meda a consumer carres, the easer s her access to the accountng network n varous crcumstances, snce she can more flexbly ntate debts and credts to her wealth accounts for transacton purposes. As a result, n countres lke Fnland where checks are no longer used n the pontofsale transactons, consumers effectvely choose an optmal number of varous cards to economze the transacton tme and assocated costs.
11 7 3.2 Implcatons of the Two Observatons The two observatons yeld two mplcatons. Frst, today s consumers choose the optmal number of payment meda rather than the optmal currency holdng. They fnd the optmal number,.e., the optmal level of multhomng, by weghtng the tme cost of transactons aganst the cost of adoptng multple payment meda. In other words, the tradeoff underlyng the demand for payment meda s deceptvely smlar to that behnd the demand for money n the classc BaumolTobn model (Baumol 1952, and Tobn 1956). We therefore take the key ngredents for our model from the modern varants of the BaumolTobn model by McCallum and Goodfrend (1987), Santomero and Seater (1996), Mullgan and SalaMartn (2000), and Attanaso et al. (2002). 4 Second, the margnal beneft of adoptng new payment cards s decreasng n a smlar manner as the margnal beneft of real cash balances n the Baumol Tobn model. Ths property arses, f the payment cards are heterogeneous n how effectvely they reduce shoppng tme and f consumers adopted them n ther preference order. Ths mplcaton may sound unfounded, because t assumes that the remanng characterstcs of payment cards are of second order mportance and because there s large lterature buldng on the varous dfferences between the payment cards (see, e.g., Shy and Tarkka 2002, and the references theren). Nonetheless, we have good reasons to thnk that for our purposes the assumpton s less restrctve than t seems to be from the outset: As Santomero and Seater (1996) suggest, payment meda can be hard to rank unambguously, because they dffer 4 Santomero and Seater (1996), n partcular, allow for several payment meda. In ther model obtanng a medum of exchange requres a separate trp to the bank for each medum and, accordngly, consumers choose the number of bankng trps separately for each payment medum. In contrast, our model bulds on the assumpton that consumers drectly choose the number of payment meda nstead of the number of bankng trps assocated wth each medum.
12 8 n many dmensons. Some are assocated wth foregone nterest, some nvolve longer processng costs, some provde more prvacy, some protect better for fraud and others for accdental losses. A typcal model ncorporates one or two dmensons but neglects the rest, both because of analytcal tractablty and because of the perceved dffcultes n dentfyng whch method outperforms the others and n what dmensons. Here we abstract from all these dfferences except for the effcency n reducng shoppng tme. Yet another reason why we can focus on the number of payment cards and on ther effectveness n generatng transacton servces s that technologcal progress may somewhat paradoxcally have rendered the payment meda more homogeneous. If checks are no longer used and f usng cash means usng an ATM card, the relevant choce set for consumers reduces to the set of avalable cards. At least ths stuaton essentally prevaled n Fnland under the perod where our data comes from. 3.3 Model Formulaton The abovementoned two mplcatons suggest that multhomng reduces the tme cost of transactons but ts margnal effect s decreasng. The followng Baumol Tobn type of technology determnng transacton tme captures formally ths dea: τ = γ T n 2 γ1 AT (1) where A s a technology parameter, T s the amount of transactons to be conducted, and γ 1 and γ 2 are parameters, and n s the prncpal varable of the nterest, the number of payment cards adopted by a consumer,.e., her level of multhomng. Buldng on ths technology, our goal s to derve a model of the determnaton of n that gudes our emprcs.
13 9 Let ω denote the tme cost of transactons (shadow value of tme), and ψ the monetary and nonmonetary cost of adoptng a new payment medum, whch s assumed to be fxed n the sense that t does not vary wth the number of adopted payment meda. The consumer chooses n so as to mnmze the sum of the costs of transacton tme, ω τ, and the total adopton costs, ψ n, subject to the transacton technology (1). Ignorng for brevty nteger problems, demand for payment meda s gven by γ 1+ γ 2 1+ γ 2 1 ω Aγ 1+ γ 2 2 n = T. (2a) ψ Equaton (2a) shows how the optmal level of multhomng s drectly related to the amount of transactons, T, and nversely related to the adopton cost, ψ. Our focus s on the adopton cost. The models of technology adopton by consumers suggest that the nonmonetary costs, e.g., searchng and learnng costs, prmarly arse from mperfect consumer nformaton. Because consumer awareness, denoted by a n what follows, reduces t and thus ψ almost by defnton, we assume that ψ = ψ( a) wth ψ '( a) < 0. It then mmedately follows from (2a) that n'( a ) > 0, that s, our model predcts that the optmal level of multhomng s drectly related to consumer awareness. 4 Emprcal Model of Multhomng 4.1 Consumer Heterogenety In practse both the adopton cost,ψ, and the amount of transactons, T, consst of several factors and probably vary across consumers. To allow for ths type of consumer heterogenety we rewrte (2a) as
14 10 1 ω Aγ + γ1+ γ 2 1 γ 2 2 n T 1+ γ 2 (2b) = ψ for each consumer = 1, 2,..., N. We follow Mullgan and SalaMartn (2000) and assume that ψ vares both wth observable and unobservable characterstcs of consumers. For example, ncome and fnancal wealth are observable n our data. Also many demographc and socoeconomc characterstcs such as gender, age and educaton, are observable to us. So s the awareness of consumer, a. The unobservable consumer heterogenety s defned as υ ln ψ x' δ + αa, (3) where δ s a column vector, and x' s a row vector that ncludes a constant and the observable consumer characterstcs except for awareness. The unobservable consumerspecfc component defned by (3) s by assumpton ndependently and dentcally dstrbuted wth the mean E[ υ ] = 0. In partcular, t s assumed to be ndependent of the amount of transactons, T, and the observable consumer characterstcs, x and a. Later we show that ths assumpton can to some extent be relaxed. After some manpulatons, we can substtute (3) for (2b) to obtan n 1 exp γ 2 [ lnωaγ + ( γ + γ ) lnt + αa x' δ υ ] = (4) Because ω and T are unobservable, we stll need to make two auxlary assumptons to arrve at an estmable model. Frst, as (4) already suggests, we assume that the tme cost of transactons, ω, does not vary across consumers condtonal on x. As a result, the frst term, lnωaγ 2, n the exponent functon can be subsumed nto x'.
15 11 Second, although we cannot drectly measure T, we can observe consumers ncome levels. An mplcaton of the standard consumpton functon relaton s that there s onetoone mappng from a consumer s ncome to her consumpton. We postulate that there s also onetoone mappng from the consumpton to T : the more one consumes, the more transactons need to be ntated. Such a relaton s ntutve and, accordngly, t has been mplctly assumed n the prevous lterature, e.g., n Mullgan and SalaMartn (2000) and Attasano et al. (2002). It follows that a consumer s ncome and the amount of transactons she carres out have onetoone relaton. We capture the relaton by assumng that T s a nonlnear functon of a consumer s ncome and her other characterstcs,.e., that T 2 ( 1INC + θ 2INC θ j xj ) = exp θ + j =, (5) 3 where INC denotes consumer s ncome level. The exponental specfcaton n (5) s chosen, because T s a count varable. Under our specfcaton, T could be the condtonal mean of a Posson densty, and hence an outcome of a count process. 5 Specfcaton (5) also ensures that the flow of transactons s postve. After substtutng (5) for (4) and usng the frst assumpton, we have n 2 ( 0a + π 1INC + π 2INC + π j xj ) ε = exp π =, (6) 3 j where υ ε exp 1+ γ 2 wth ( T, a, x ) = 1 E ε, π 0 α and, expect for π 0 1+ γ 2 and the constant, π ( γ + γ ) 1 2 j j j. 1+ γ θ δ 2 5 We could generalze ths condtonal mean to allow for multplcatve unobserved heterogenety, provded that the multplcatve component s d and ndependent of both the regressors and ν. The quaslkelhood methods for count data that we wll use would be robust to ths type of extenson (see Wooldrdge 1997 pp ). For smplcty, we do not pursue ths extenson.
16 Estmaton Issues Equaton (6) forms the gst of our emprcal model of multhomng, as t provdes us wth the condtonal mean of a regresson model. We use three methods to estmate the model and partcularly, π 0, the effect of consumer awareness on multhomng. As a benchmark we estmate a model wth a lnear mean functon usng OLS. The lnear model s easy to justfy even f the condtonal mean functon s gven by (6), because n practce the two specfcatons produce qualtatvely smlar estmates. 6 Because n > 0, we can also resort to the wdelyused log transformaton of the dependent varable when estmatng the parameters of the condtonal mean equaton (6). OLS estmaton of the resultng transformed model provdes us wth a second set of results. Fnally, we estmate the model usng the Posson quaslkelhood method and the robust HuberWhte varancecovarance matrx. The Posson quaslkelhood method has two advantages: Frst, the condtonal mean n (6) s convenently dentcal to the condtonal mean of a Posson (count) regresson model wth multplcatve unobserved heterogenety (see for example Wooldrdge 1997, pp and Cameron and Trved 1998, pp ). 7 Ths s advantageous, because the level of multhomng our dependent varable s defned as the number of dfferent payment meda a young consumer uses when payng for her purchases or consumpton of servces. An mplcaton of 6 The reason for the smlarty s that t can be shown usng a frstorder Taylor seres expanson of the condtonal mean around the sample mean of the dependent varable, n, that lnear mean slope coeffcents are approxmately n tmes exponental slope coeffcents (Cameron and Trved 1998, p. 89). 7 Ths generalzed count regresson has the property that the unobservables and observables are treated symmetrcally.
17 13 such a dependent varable s that we would have to model a count process, somethng that our condtonal mean equaton takes nto account by desgn. The second advantage s that we know from the results for generalzed count models that the consstency of estmaton requres only a correct specfcaton of the mean. Under the currently mantaned assumpton of exogenous consumer awareness, the Posson quasmaxmum lkelhood estmator wll yeld consstent estmates of the parameters of the condtonal mean functon, n partcular, π 0. Because we have specfed nether a varance functon nor the probablty densty functon for ε, the standard HuberWhte sandwch estmator can be used to obtan consstent estmates of the varancecovarance matrx (Wooldrdge 1997). 8 What s less convenent s that we cannot, as equaton (6) shows, wthout addtonal assumptons dentfy the structural parameters γ 2 and α from the coeffcent of a. Only the total effect of consumer awareness on multhomng can be quantfed from the data. Nonetheless, the structural dervaton of the model uncovers the theoretcal components of the total effect. 5 Data and Defnton of Varables 5.1 Data The Fnnsh Bankers Assocaton has commssoned a survey of young adults [n Fnnsh: Nuorsotutkmus ] n 1996, 2000 and The prmary am of the surveys has been to collect data on the consumpton habts of young Fnns and ther 8 By specfyng a mxng dstrbuton for ε, we could derve the exact margnal dstrbuton for the dependent varable. A twoparameter gamma dstrbuton would result n a Possongamma mxture,.e., the famlar negatve bnomal model for counts (Cameron and Trved 1998, pp ). However, because a specfc parametrc dstrbutonal assumpton for ε s at best a crude approxmaton, we follow a more general approach of usng the Posson quasmaxmum lkelhood method and the HuberWhte varancecovarance estmator. We return to ths ssue n the robustness tests n secton 5.2.
18 14 vews about bankng and fnancal products and servces. The data for our analyss comes from the survey conducted between the 21 st February and 5 th March, The survey was based on a random sample of 1004 young adults aged between 15 and 28. We use the entre sample, whch represents approxmately 1/900 of the total populaton n the age group. The data s rch n detal concernng the young adults demographc and socoeconomc characterstcs, fnancal affars, bankng relatonshps, and nformaton about bankng products and fnancal affars, ncludng payment meda. The data also ncludes nformaton about the use of varous payment meda n retal transactons. 5.2 Dependent Varable In ths study the dependent varable, n, s the number of dfferent payment meda a young consumer uses when payng for her purchases or consumpton of servces. The dependent varable summarzes the answers of the followng three related questons n the survey: 9 1) What s the most typcal way you pay for your purchases or consumpton of servces? ) cash, ) debt card, ) combned debtcredt card, v) credt card, v) debt or credt card ssued by a retaler, v) Vsa Electron, v) stored value card, v) GSM or WAP phone, x) by other means, how? (specfy); 2) What about the second most typcal way? Is t ) cash, ) debt card, ) combned debtcredt card, v) credt card, v) debt or credt card ssued 9 Translaton from Fnnsh by the authors.
19 15 by a retaler, v) Vsa Electron, v) stored value card, v) GSM or WAP phone, x) by other means, how? (specfy), x) there s no second way; 3) Do you stll use another ways to pay for your purchases or consumpton of servces? If yes, what are these? ) cash, ) debt card, ) combned debtcredt card, v) credt card, v) debt or credt card ssued by a retaler, v) Vsa Electron, v) stored value card, v) GSM or WAP phone, x) by other means, how? (specfy), x) there are no addtonal ways. Our method of countng of payment meda has some useful propertes. Frst, the three questons dentfy vrtually all the payment meda consumers could use when payng for consumpton or servces at the pontofsale n Fnland. Moreover, even f a payment medum was not properly dentfed, the respondents had three possbltes to dentfy such a medum by themselves. But no one dd. Thrd, all the questons concern actually usng a payment medum, not havng an access to t. We therefore need not to worry about card owners who never use ther cards even f they consttuted a sgnfcant fracton of card ownershp as, e.g., n Austra (see Stx 2003). Such phenomenon of sleepng cards can also exst n Fnland where, as mentoned n secton 2, almost every young has a bankng account n whch a payment card s automatcally attached as a part of a (free) bankng servce package. Yet another useful property of our data s that just before the questons of the use of payment meda n retal transactons were presented, the respondents had been asked about ther habts of payng for ther blls. Our count varable should thus capture the young adults payment habts n pontofsaletransactons nstead of ther bllpayng habts.
20 Consumer Awareness The prevous lterature unfortunately provdes lttle help n choosng a proxy for consumer awareness, a. We measure t based on a seres of questons ncluded n the survey that concern the provson of nformaton about payment meda. We code an ndcator varable that equals 1, f the respondent answered of havng ether receved or been offered a lot of nformaton about debt or credt cards, ways of payng blls, use of transacton accounts, or borrowng through credt cards; and zero otherwse. The ratonale for our defnton of a s that a consumer s awareness of the exstence and characterstcs of payment meda s lkely to be drectly related to the amount of nformaton the consumer has been offered about them. The amount should, n turn, be drectly related to the systematc and unsystematc forms of nformaton provson by the varous ssuers of payment meda. The currently mantaned assumpton of exogenous awareness requres that the exposure by consumer to the nformaton provson (as captured by a ) s not related to ε (the unobservable consumer heterogenety) after condtonng on the other observables (n ' x ). Although our measure of consumer awareness s certanly mperfect, we have several reasons to trust n t. Frst, n count models wth an exponental mean functon, the effect of an addtve measurement error n a rghthandsde varable s qualtatvely dentcal to that of unobserved heterogenety (Cameron and Trved 1998, pp ). Ths property means that our results based on the Posson quasmaxmum lkelhood estmator are robust to such a measurement error, provded that the measurement error s uncorrelated wth the regressors. Second, we show that our results hold n nstrumental varable estmatons that corrects for er
Can Auto Liability Insurance Purchases Signal Risk Attitude?
Internatonal Journal of Busness and Economcs, 2011, Vol. 10, No. 2, 159164 Can Auto Lablty Insurance Purchases Sgnal Rsk Atttude? ChuShu L Department of Internatonal Busness, Asa Unversty, Tawan ShengChang
More informationbenefit is 2, paid if the policyholder dies within the year, and probability of death within the year is ).
REVIEW OF RISK MANAGEMENT CONCEPTS LOSS DISTRIBUTIONS AND INSURANCE Loss and nsurance: When someone s subject to the rsk of ncurrng a fnancal loss, the loss s generally modeled usng a random varable or
More informationAn Alternative Way to Measure Private Equity Performance
An Alternatve Way to Measure Prvate Equty Performance Peter Todd Parlux Investment Technology LLC Summary Internal Rate of Return (IRR) s probably the most common way to measure the performance of prvate
More informationChapter 4 Financial Markets
Chapter 4 Fnancal Markets ECON2123 (Sprng 2012) 14 & 15.3.2012 (Tutoral 5) The demand for money Assumptons: There are only two assets n the fnancal market: money and bonds Prce s fxed and s gven, that
More informationCausal, Explanatory Forecasting. Analysis. Regression Analysis. Simple Linear Regression. Which is Independent? Forecasting
Causal, Explanatory Forecastng Assumes causeandeffect relatonshp between system nputs and ts output Forecastng wth Regresson Analyss Rchard S. Barr Inputs System Cause + Effect Relatonshp The job of
More informationNasdaq Iceland Bond Indices 01 April 2015
Nasdaq Iceland Bond Indces 01 Aprl 2015 Fxed duraton Indces Introducton Nasdaq Iceland (the Exchange) began calculatng ts current bond ndces n the begnnng of 2005. They were a response to recent changes
More informationQuestions that we may have about the variables
Antono Olmos, 01 Multple Regresson Problem: we want to determne the effect of Desre for control, Famly support, Number of frends, and Score on the BDI test on Perceved Support of Latno women. Dependent
More informationThe covariance is the two variable analog to the variance. The formula for the covariance between two variables is
Regresson Lectures So far we have talked only about statstcs that descrbe one varable. What we are gong to be dscussng for much of the remander of the course s relatonshps between two or more varables.
More informationStudy on CET4 Marks in China s Graded English Teaching
Study on CET4 Marks n Chna s Graded Englsh Teachng CHE We College of Foregn Studes, Shandong Insttute of Busness and Technology, P.R.Chna, 264005 Abstract: Ths paper deploys Logt model, and decomposes
More informationHOUSEHOLDS DEBT BURDEN: AN ANALYSIS BASED ON MICROECONOMIC DATA*
HOUSEHOLDS DEBT BURDEN: AN ANALYSIS BASED ON MICROECONOMIC DATA* Luísa Farnha** 1. INTRODUCTION The rapd growth n Portuguese households ndebtedness n the past few years ncreased the concerns that debt
More informationAnswer: A). There is a flatter IS curve in the high MPC economy. Original LM LM after increase in M. IS curve for low MPC economy
4.02 Quz Solutons Fall 2004 MultpleChoce Questons (30/00 ponts) Please, crcle the correct answer for each of the followng 0 multplechoce questons. For each queston, only one of the answers s correct.
More informationInequality and The Accounting Period. Quentin Wodon and Shlomo Yitzhaki. World Bank and Hebrew University. September 2001.
Inequalty and The Accountng Perod Quentn Wodon and Shlomo Ytzha World Ban and Hebrew Unversty September Abstract Income nequalty typcally declnes wth the length of tme taen nto account for measurement.
More informationAnalysis of Premium Liabilities for Australian Lines of Business
Summary of Analyss of Premum Labltes for Australan Lnes of Busness Emly Tao Honours Research Paper, The Unversty of Melbourne Emly Tao Acknowledgements I am grateful to the Australan Prudental Regulaton
More informationUnderstanding the Impact of Marketing Actions in Traditional Channels on the Internet: Evidence from a Large Scale Field Experiment
A research and educaton ntatve at the MT Sloan School of Management Understandng the mpact of Marketng Actons n Tradtonal Channels on the nternet: Evdence from a Large Scale Feld Experment Paper 216 Erc
More informationAn Empirical Study of Search Engine Advertising Effectiveness
An Emprcal Study of Search Engne Advertsng Effectveness Sanjog Msra, Smon School of Busness Unversty of Rochester Edeal Pnker, Smon School of Busness Unversty of Rochester Alan RmmKaufman, RmmKaufman
More informationGender differences in revealed risk taking: evidence from mutual fund investors
Economcs Letters 76 (2002) 151 158 www.elsever.com/ locate/ econbase Gender dfferences n revealed rsk takng: evdence from mutual fund nvestors a b c, * Peggy D. Dwyer, James H. Glkeson, John A. Lst a Unversty
More informationUsing Series to Analyze Financial Situations: Present Value
2.8 Usng Seres to Analyze Fnancal Stuatons: Present Value In the prevous secton, you learned how to calculate the amount, or future value, of an ordnary smple annuty. The amount s the sum of the accumulated
More informationSection 5.4 Annuities, Present Value, and Amortization
Secton 5.4 Annutes, Present Value, and Amortzaton Present Value In Secton 5.2, we saw that the present value of A dollars at nterest rate per perod for n perods s the amount that must be deposted today
More informationPRIVATE SCHOOL CHOICE: THE EFFECTS OF RELIGIOUS AFFILIATION AND PARTICIPATION
PRIVATE SCHOOL CHOICE: THE EFFECTS OF RELIIOUS AFFILIATION AND PARTICIPATION Danny CohenZada Department of Economcs, Benuron Unversty, BeerSheva 84105, Israel Wllam Sander Department of Economcs, DePaul
More information9.1 The Cumulative Sum Control Chart
Learnng Objectves 9.1 The Cumulatve Sum Control Chart 9.1.1 Basc Prncples: Cusum Control Chart for Montorng the Process Mean If s the target for the process mean, then the cumulatve sum control chart s
More informationPSYCHOLOGICAL RESEARCH (PYC 304C) Lecture 12
14 The Chsquared dstrbuton PSYCHOLOGICAL RESEARCH (PYC 304C) Lecture 1 If a normal varable X, havng mean µ and varance σ, s standardsed, the new varable Z has a mean 0 and varance 1. When ths standardsed
More informationDEFINING %COMPLETE IN MICROSOFT PROJECT
CelersSystems DEFINING %COMPLETE IN MICROSOFT PROJECT PREPARED BY James E Aksel, PMP, PMISP, MVP For Addtonal Informaton about Earned Value Management Systems and reportng, please contact: CelersSystems,
More informationSearching and Switching: Empirical estimates of consumer behaviour in regulated markets
Searchng and Swtchng: Emprcal estmates of consumer behavour n regulated markets Catherne Waddams Prce Centre for Competton Polcy, Unversty of East Angla Catherne Webster Centre for Competton Polcy, Unversty
More informationANALYZING THE RELATIONSHIPS BETWEEN QUALITY, TIME, AND COST IN PROJECT MANAGEMENT DECISION MAKING
ANALYZING THE RELATIONSHIPS BETWEEN QUALITY, TIME, AND COST IN PROJECT MANAGEMENT DECISION MAKING Matthew J. Lberatore, Department of Management and Operatons, Vllanova Unversty, Vllanova, PA 19085, 6105194390,
More informationStatistical Methods to Develop Rating Models
Statstcal Methods to Develop Ratng Models [Evelyn Hayden and Danel Porath, Österrechsche Natonalbank and Unversty of Appled Scences at Manz] Source: The Basel II Rsk Parameters Estmaton, Valdaton, and
More informationSimple Interest Loans (Section 5.1) :
Chapter 5 Fnance The frst part of ths revew wll explan the dfferent nterest and nvestment equatons you learned n secton 5.1 through 5.4 of your textbook and go through several examples. The second part
More informationTHE DISTRIBUTION OF LOAN PORTFOLIO VALUE * Oldrich Alfons Vasicek
HE DISRIBUION OF LOAN PORFOLIO VALUE * Oldrch Alfons Vascek he amount of captal necessary to support a portfolo of debt securtes depends on the probablty dstrbuton of the portfolo loss. Consder a portfolo
More informationMultivariate EWMA Control Chart
Multvarate EWMA Control Chart Summary The Multvarate EWMA Control Chart procedure creates control charts for two or more numerc varables. Examnng the varables n a multvarate sense s extremely mportant
More informationTrivial lump sum R5.0
Optons form Once you have flled n ths form, please return t wth your orgnal brth certfcate to: Premer PO Box 2067 Croydon CR90 9ND. Fll n ths form usng BLOCK CAPITALS and black nk. Mark all answers wth
More informationStaff Paper. Farm Savings Accounts: Examining Income Variability, Eligibility, and Benefits. Brent Gloy, Eddy LaDue, and Charles Cuykendall
SP 200502 August 2005 Staff Paper Department of Appled Economcs and Management Cornell Unversty, Ithaca, New York 148537801 USA Farm Savngs Accounts: Examnng Income Varablty, Elgblty, and Benefts Brent
More informationThe Probit Model. Alexander Spermann. SoSe 2009
The Probt Model Aleander Spermann Unversty of Freburg SoSe 009 Course outlne. Notaton and statstcal foundatons. Introducton to the Probt model 3. Applcaton 4. Coeffcents and margnal effects 5. Goodnessofft
More informationx f(x) 1 0.25 1 0.75 x 1 0 1 1 0.04 0.01 0.20 1 0.12 0.03 0.60
BIVARIATE DISTRIBUTIONS Let be a varable that assumes the values { 1,,..., n }. Then, a functon that epresses the relatve frequenc of these values s called a unvarate frequenc functon. It must be true
More informationTo manage leave, meeting institutional requirements and treating individual staff members fairly and consistently.
Corporate Polces & Procedures Human Resources  Document CPP216 Leave Management Frst Produced: Current Verson: Past Revsons: Revew Cycle: Apples From: 09/09/09 26/10/12 09/09/09 3 years Immedately Authorsaton:
More informationAn Evaluation of the Extended Logistic, Simple Logistic, and Gompertz Models for Forecasting Short Lifecycle Products and Services
An Evaluaton of the Extended Logstc, Smple Logstc, and Gompertz Models for Forecastng Short Lfecycle Products and Servces Charles V. Trappey a,1, Hsnyng Wu b a Professor (Management Scence), Natonal Chao
More informationIntroduction to Regression
Introducton to Regresson Regresson a means of predctng a dependent varable based one or more ndependent varables. Ths s done by fttng a lne or surface to the data ponts that mnmzes the total error. 
More informationThe Analysis of Covariance. ERSH 8310 Keppel and Wickens Chapter 15
The Analyss of Covarance ERSH 830 Keppel and Wckens Chapter 5 Today s Class Intal Consderatons Covarance and Lnear Regresson The Lnear Regresson Equaton TheAnalyss of Covarance Assumptons Underlyng the
More information7.5. Present Value of an Annuity. Investigate
7.5 Present Value of an Annuty Owen and Anna are approachng retrement and are puttng ther fnances n order. They have worked hard and nvested ther earnngs so that they now have a large amount of money on
More information! # %& ( ) +,../ 0 1 2 3 4 0 4 # 5##&.6 7% 8 # 0 4 2 #...
! # %& ( ) +,../ 0 1 2 3 4 0 4 # 5##&.6 7% 8 # 0 4 2 #... 9 Sheffeld Economc Research Paper Seres SERP Number: 2011010 ISSN 17498368 Sarah Brown, Aurora OrtzNúñez and Karl Taylor Educatonal loans and
More informationLatent Class Regression. Statistics for Psychosocial Research II: Structural Models December 4 and 6, 2006
Latent Class Regresson Statstcs for Psychosocal Research II: Structural Models December 4 and 6, 2006 Latent Class Regresson (LCR) What s t and when do we use t? Recall the standard latent class model
More informationI. SCOPE, APPLICABILITY AND PARAMETERS Scope
D Executve Board Annex 9 Page A/R ethodologcal Tool alculaton of the number of sample plots for measurements wthn A/R D project actvtes (Verson 0) I. SOPE, PIABIITY AD PARAETERS Scope. Ths tool s applcable
More informationForecasting the Direction and Strength of Stock Market Movement
Forecastng the Drecton and Strength of Stock Market Movement Jngwe Chen Mng Chen Nan Ye cjngwe@stanford.edu mchen5@stanford.edu nanye@stanford.edu Abstract  Stock market s one of the most complcated systems
More informationThe Current Employment Statistics (CES) survey,
Busness Brths and Deaths Impact of busness brths and deaths n the payroll survey The CES probabltybased sample redesgn accounts for most busness brth employment through the mputaton of busness deaths,
More informationDoes Higher Education Enhance Migration?
DISCUSSION PAPER SERIES IZA DP No. 7754 Does Hgher Educaton Enhance Mgraton? Mka Haapanen Petr Böckerman November 2013 Forschungsnsttut zur Zukunft der Arbet Insttute for the Study of Labor Does Hgher
More informationCourse outline. Financial Time Series Analysis. Overview. Data analysis. Predictive signal. Trading strategy
Fnancal Tme Seres Analyss Patrck McSharry patrck@mcsharry.net www.mcsharry.net Trnty Term 2014 Mathematcal Insttute Unversty of Oxford Course outlne 1. Data analyss, probablty, correlatons, vsualsaton
More informationCHAPTER 14 MORE ABOUT REGRESSION
CHAPTER 14 MORE ABOUT REGRESSION We learned n Chapter 5 that often a straght lne descrbes the pattern of a relatonshp between two quanttatve varables. For nstance, n Example 5.1 we explored the relatonshp
More informationLecture 3: Annuity. Study annuities whose payments form a geometric progression or a arithmetic progression.
Lecture 3: Annuty Goals: Learn contnuous annuty and perpetuty. Study annutes whose payments form a geometrc progresson or a arthmetc progresson. Dscuss yeld rates. Introduce Amortzaton Suggested Textbook
More informationTHE METHOD OF LEAST SQUARES THE METHOD OF LEAST SQUARES
The goal: to measure (determne) an unknown quantty x (the value of a RV X) Realsaton: n results: y 1, y 2,..., y j,..., y n, (the measured values of Y 1, Y 2,..., Y j,..., Y n ) every result s encumbered
More informationExhaustive Regression. An Exploration of RegressionBased Data Mining Techniques Using Super Computation
Exhaustve Regresson An Exploraton of RegressonBased Data Mnng Technques Usng Super Computaton Antony Daves, Ph.D. Assocate Professor of Economcs Duquesne Unversty Pttsburgh, PA 58 Research Fellow The
More informationCalculation of Sampling Weights
Perre Foy Statstcs Canada 4 Calculaton of Samplng Weghts 4.1 OVERVIEW The basc sample desgn used n TIMSS Populatons 1 and 2 was a twostage stratfed cluster desgn. 1 The frst stage conssted of a sample
More informationHARVARD John M. Olin Center for Law, Economics, and Business
HARVARD John M. Oln Center for Law, Economcs, and Busness ISSN 10456333 ASYMMETRIC INFORMATION AND LEARNING IN THE AUTOMOBILE INSURANCE MARKET Alma Cohen Dscusson Paper No. 371 6/2002 Harvard Law School
More informationModule 2 LOSSLESS IMAGE COMPRESSION SYSTEMS. Version 2 ECE IIT, Kharagpur
Module LOSSLESS IMAGE COMPRESSION SYSTEMS Lesson 3 Lossless Compresson: Huffman Codng Instructonal Objectves At the end of ths lesson, the students should be able to:. Defne and measure source entropy..
More informationFinancial Mathemetics
Fnancal Mathemetcs 15 Mathematcs Grade 12 Teacher Gude Fnancal Maths Seres Overvew In ths seres we am to show how Mathematcs can be used to support personal fnancal decsons. In ths seres we jon Tebogo,
More informationHeterogeneous Paths Through College: Detailed Patterns and Relationships with Graduation and Earnings
Heterogeneous Paths Through College: Detaled Patterns and Relatonshps wth Graduaton and Earnngs Rodney J. Andrews The Unversty of Texas at Dallas and the Texas Schools Project Jng L The Unversty of Tulsa
More informationFinancial Instability and Life Insurance Demand + Mahito Okura *
Fnancal Instablty and Lfe Insurance Demand + Mahto Okura * Norhro Kasuga ** Abstract Ths paper estmates prvate lfe nsurance and Kampo demand functons usng householdlevel data provded by the Postal Servces
More informationSTAMP DUTY ON SHARES AND ITS EFFECT ON SHARE PRICES
STAMP UTY ON SHARES AN ITS EFFECT ON SHARE PRICES Steve Bond Mke Hawkns Alexander Klemm THE INSTITUTE FOR FISCAL STUIES WP04/11 STAMP UTY ON SHARES AN ITS EFFECT ON SHARE PRICES Steve Bond (IFS and Unversty
More informationStress test for measuring insurance risks in nonlife insurance
PROMEMORIA Datum June 01 Fnansnspektonen Författare Bengt von Bahr, Younes Elonq and Erk Elvers Stress test for measurng nsurance rsks n nonlfe nsurance Summary Ths memo descrbes stress testng of nsurance
More informationAwareness and Stock Market Participation
WORKING PAPER NO. 110 Awareness and Stock Market Partcpaton Lug Guso and Tullo Jappell November 2003 Ths verson June 2004 Unversty of Naples Federco II Unversty of Salerno Boccon Unversty, Mlan CSEF 
More informationWhat is Candidate Sampling
What s Canddate Samplng Say we have a multclass or mult label problem where each tranng example ( x, T ) conssts of a context x a small (mult)set of target classes T out of a large unverse L of possble
More informationThe Analysis of Outliers in Statistical Data
THALES Project No. xxxx The Analyss of Outlers n Statstcal Data Research Team Chrysses Caron, Assocate Professor (P.I.) Vaslk Karot, Doctoral canddate Polychrons Economou, Chrstna Perrakou, Postgraduate
More informationLIFETIME INCOME OPTIONS
LIFETIME INCOME OPTIONS May 2011 by: Marca S. Wagner, Esq. The Wagner Law Group A Professonal Corporaton 99 Summer Street, 13 th Floor Boston, MA 02110 Tel: (617) 3575200 Fax: (617) 3575250 www.ersalawyers.com
More informationReturns to Experience in Mozambique: A Nonparametric Regression Approach
Returns to Experence n Mozambque: A Nonparametrc Regresson Approach Joel Muzma Conference Paper nº 27 Conferênca Inaugural do IESE Desafos para a nvestgação socal e económca em Moçambque 19 de Setembro
More informationCHAPTER 5 RELATIONSHIPS BETWEEN QUANTITATIVE VARIABLES
CHAPTER 5 RELATIONSHIPS BETWEEN QUANTITATIVE VARIABLES In ths chapter, we wll learn how to descrbe the relatonshp between two quanttatve varables. Remember (from Chapter 2) that the terms quanttatve varable
More informationQuality Adjustment of Secondhand Motor Vehicle Application of Hedonic Approach in Hong Kong s Consumer Price Index
Qualty Adustment of Secondhand Motor Vehcle Applcaton of Hedonc Approach n Hong Kong s Consumer Prce Index Prepared for the 14 th Meetng of the Ottawa Group on Prce Indces 20 22 May 2015, Tokyo, Japan
More informationCommunication Networks II Contents
8 / 1  Communcaton Networs II (Görg)  www.comnets.unbremen.de Communcaton Networs II Contents 1 Fundamentals of probablty theory 2 Traffc n communcaton networs 3 Stochastc & Marovan Processes (SP
More informationAn InterestOriented Network Evolution Mechanism for Online Communities
An InterestOrented Network Evoluton Mechansm for Onlne Communtes Cahong Sun and Xaopng Yang School of Informaton, Renmn Unversty of Chna, Bejng 100872, P.R. Chna {chsun,yang}@ruc.edu.cn Abstract. Onlne
More informationSolutions to First Midterm
rofessor Chrstano Economcs 3, Wnter 2004 Solutons to Frst Mdterm. Multple Choce. 2. (a) v. (b). (c) v. (d) v. (e). (f). (g) v. (a) The goods market s n equlbrum when total demand equals total producton,.e.
More information1. Measuring association using correlation and regression
How to measure assocaton I: Correlaton. 1. Measurng assocaton usng correlaton and regresson We often would lke to know how one varable, such as a mother's weght, s related to another varable, such as a
More informationDO LOSS FIRMS MANAGE EARNINGS AROUND SEASONED EQUITY OFFERINGS?
DO LOSS FIRMS MANAGE EARNINGS AROUND SEASONED EQUITY OFFERINGS? Fernando Comran, Unversty of San Francsco, School of Management, 2130 Fulton Street, CA 94117, Unted States, fcomran@usfca.edu Tatana Fedyk,
More informationMultiplePeriod Attribution: Residuals and Compounding
MultplePerod Attrbuton: Resduals and Compoundng Our revewer gave these authors full marks for dealng wth an ssue that performance measurers and vendors often regard as propretary nformaton. In 1994, Dens
More informationADVERSE SELECTION IN INSURANCE MARKETS: POLICYHOLDER EVIDENCE FROM THE U.K. ANNUITY MARKET *
ADVERSE SELECTION IN INSURANCE MARKETS: POLICYHOLDER EVIDENCE FROM THE U.K. ANNUITY MARKET * Amy Fnkelsten Harvard Unversty and NBER James Poterba MIT and NBER * We are grateful to Jeffrey Brown, PerreAndre
More informationThe impact of hard discount control mechanism on the discount volatility of UK closedend funds
Investment Management and Fnancal Innovatons, Volume 10, Issue 3, 2013 Ahmed F. Salhn (Egypt) The mpact of hard dscount control mechansm on the dscount volatlty of UK closedend funds Abstract The mpact
More informationWhen Talk is Free : The Effect of Tariff Structure on Usage under Two and ThreePart Tariffs
0 When Talk s Free : The Effect of Tarff Structure on Usage under Two and ThreePart Tarffs Eva Ascarza Ana Lambrecht Naufel Vlcassm July 2012 (Forthcomng at Journal of Marketng Research) Eva Ascarza
More informationThe OC Curve of Attribute Acceptance Plans
The OC Curve of Attrbute Acceptance Plans The Operatng Characterstc (OC) curve descrbes the probablty of acceptng a lot as a functon of the lot s qualty. Fgure 1 shows a typcal OC Curve. 10 8 6 4 1 3 4
More informationMAPP. MERIS level 3 cloud and water vapour products. Issue: 1. Revision: 0. Date: 9.12.1998. Function Name Organisation Signature Date
Ttel: Project: Doc. No.: MERIS level 3 cloud and water vapour products MAPP MAPPATBDClWVL3 Issue: 1 Revson: 0 Date: 9.12.1998 Functon Name Organsaton Sgnature Date Author: Bennartz FUB Preusker FUB Schüller
More informationRecurrence. 1 Definitions and main statements
Recurrence 1 Defntons and man statements Let X n, n = 0, 1, 2,... be a MC wth the state space S = (1, 2,...), transton probabltes p j = P {X n+1 = j X n = }, and the transton matrx P = (p j ),j S def.
More informationCovariatebased pricing of automobile insurance
Insurance Markets and Companes: Analyses and Actuaral Computatons, Volume 1, Issue 2, 2010 José Antono Ordaz (Span), María del Carmen Melgar (Span) Covaratebased prcng of automoble nsurance Abstract Ths
More informationIDENTIFICATION AND CORRECTION OF A COMMON ERROR IN GENERAL ANNUITY CALCULATIONS
IDENTIFICATION AND CORRECTION OF A COMMON ERROR IN GENERAL ANNUITY CALCULATIONS Chrs Deeley* Last revsed: September 22, 200 * Chrs Deeley s a Senor Lecturer n the School of Accountng, Charles Sturt Unversty,
More informationVasicek s Model of Distribution of Losses in a Large, Homogeneous Portfolio
Vascek s Model of Dstrbuton of Losses n a Large, Homogeneous Portfolo Stephen M Schaefer London Busness School Credt Rsk Electve Summer 2012 Vascek s Model Important method for calculatng dstrbuton of
More information2.4 Bivariate distributions
page 28 2.4 Bvarate dstrbutons 2.4.1 Defntons Let X and Y be dscrete r.v.s defned on the same probablty space (S, F, P). Instead of treatng them separately, t s often necessary to thnk of them actng together
More informationMacro Factors and Volatility of Treasury Bond Returns
Macro Factors and Volatlty of Treasury Bond Returns Jngzh Huang Department of Fnance Smeal Colleage of Busness Pennsylvana State Unversty Unversty Park, PA 16802, U.S.A. Le Lu School of Fnance Shangha
More informationWhose Private Benefits of Control. Owners or Managers?
Whose Prvate Benefts of Control Owners or Managers? Joon Ho Hwang Fnance Department Kelley School of Busness Indana Unversty 1309 East Tenth Street Bloomngton, IN 47405 johwang@ndana.edu August, 2004 ABSTRACT
More informationFinite Math Chapter 10: Study Guide and Solution to Problems
Fnte Math Chapter 10: Study Gude and Soluton to Problems Basc Formulas and Concepts 10.1 Interest Basc Concepts Interest A fee a bank pays you for money you depost nto a savngs account. Prncpal P The amount
More informationDo Banks Use Private Information from Consumer Accounts? Evidence of Relationship Lending in Credit Card Interest Rate Heterogeneity
Do Banks Use Prvate Informaton from Consumer Accounts? Evdence of Relatonshp Lendng n Credt Card Interest Rate Heterogenety Sougata Kerr, Stephen Cosslett, Luca Dunn December, 2004 Author nformaton: Kerr,
More informationSIMPLE LINEAR CORRELATION
SIMPLE LINEAR CORRELATION Smple lnear correlaton s a measure of the degree to whch two varables vary together, or a measure of the ntensty of the assocaton between two varables. Correlaton often s abused.
More informationCHAPTER 7 THE TWOVARIABLE REGRESSION MODEL: HYPOTHESIS TESTING
CHAPTER 7 THE TWOVARIABLE REGRESSION MODEL: HYPOTHESIS TESTING QUESTIONS 7.1. (a) In the regresson contet, the method of least squares estmates the regresson parameters n such a way that the sum of the
More informationTraditional versus Online Courses, Efforts, and Learning Performance
Tradtonal versus Onlne Courses, Efforts, and Learnng Performance KuangCheng Tseng, Department of Internatonal Trade, ChungYuan Chrstan Unversty, Tawan ShanYng Chu, Department of Internatonal Trade,
More informationCredit Limit Optimization (CLO) for Credit Cards
Credt Lmt Optmzaton (CLO) for Credt Cards Vay S. Desa CSCC IX, Ednburgh September 8, 2005 Copyrght 2003, SAS Insttute Inc. All rghts reserved. SAS Propretary Agenda Background Tradtonal approaches to credt
More informationChapter 8 Groupbased Lending and Adverse Selection: A Study on Risk Behavior and Group Formation 1
Chapter 8 Groupbased Lendng and Adverse Selecton: A Study on Rsk Behavor and Group Formaton 1 8.1 Introducton Ths chapter deals wth group formaton and the adverse selecton problem. In several theoretcal
More informationLuby s Alg. for Maximal Independent Sets using Pairwise Independence
Lecture Notes for Randomzed Algorthms Luby s Alg. for Maxmal Independent Sets usng Parwse Independence Last Updated by Erc Vgoda on February, 006 8. Maxmal Independent Sets For a graph G = (V, E), an ndependent
More informationImplied (risk neutral) probabilities, betting odds and prediction markets
Impled (rsk neutral) probabltes, bettng odds and predcton markets Fabrzo Caccafesta (Unversty of Rome "Tor Vergata") ABSTRACT  We show that the well known euvalence between the "fundamental theorem of
More informationAn empirical study for credit card approvals in the Greek banking sector
An emprcal study for credt card approvals n the Greek bankng sector Mara Mavr George Ioannou Bergamo, Italy 1721 May 2004 Management Scences Laboratory Department of Management Scence & Technology Athens
More informationTHE DETERMINANTS OF THE TUNISIAN BANKING INDUSTRY PROFITABILITY: PANEL EVIDENCE
THE DETERMINANTS OF THE TUNISIAN BANKING INDUSTRY PROFITABILITY: PANEL EVIDENCE Samy Ben Naceur ERF Research Fellow Department of Fnance Unversté Lbre de Tuns Avenue Khéreddne Pacha, 002 Tuns Emal : sbennaceur@eudoramal.com
More informationiavenue iavenue i i i iavenue iavenue iavenue
Saratoga Systems' enterprsewde Avenue CRM system s a comprehensve webenabled software soluton. Ths next generaton system enables you to effectvely manage and enhance your customer relatonshps n both
More informationThe Impact of Residential Density on Vehicle Usage and Energy Consumption *
The Impact of Resdental Densty on Vehcle Usage and Energy Consumpton * September 26, 2008 Forthcomng n the Journal of Urban Economcs Davd Brownstone (correspondng author) Department of Economcs 3151 Socal
More informationHYPOTHESIS TESTING OF PARAMETERS FOR ORDINARY LINEAR CIRCULAR REGRESSION
HYPOTHESIS TESTING OF PARAMETERS FOR ORDINARY LINEAR CIRCULAR REGRESSION Abdul Ghapor Hussn Centre for Foundaton Studes n Scence Unversty of Malaya 563 KUALA LUMPUR Emal: ghapor@umedumy Abstract Ths paper
More informationA Multistage Model of Loans and the Role of Relationships
A Multstage Model of Loans and the Role of Relatonshps Sugato Chakravarty, Purdue Unversty, and Tansel Ylmazer, Purdue Unversty Abstract The goal of ths paper s to further our understandng of how relatonshps
More informationSmall pots lump sum payment instruction
For customers Small pots lump sum payment nstructon Please read these notes before completng ths nstructon About ths nstructon Use ths nstructon f you re an ndvdual wth Aegon Retrement Choces Self Invested
More informationCriminal Justice System on Crime *
On the Impact of the NSW Crmnal Justce System on Crme * Dr Vasls Sarafds, Dscplne of Operatons Management and Econometrcs Unversty of Sydney * Ths presentaton s based on jont work wth Rchard Kelaher 1
More informationManagement Quality, Financial and Investment Policies, and. Asymmetric Information
Management Qualty, Fnancal and Investment Polces, and Asymmetrc Informaton Thomas J. Chemmanur * Imants Paegls ** and Karen Smonyan *** Current verson: December 2007 * Professor of Fnance, Carroll School
More informationCapital asset pricing model, arbitrage pricing theory and portfolio management
Captal asset prcng model, arbtrage prcng theory and portfolo management Vnod Kothar The captal asset prcng model (CAPM) s great n terms of ts understandng of rsk decomposton of rsk nto securtyspecfc rsk
More information