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Essays on International Economics
Nikolovová, Pavla ; Hanousek, Jan (advisor) ; Deardorff, Alan (referee) ; Schmitt, Nicolas (referee)
In the first chapter of this work I propose a simple theoretical model describing how the inflow of foreign direct investment (FDI) in a host country influences local competitors within the industry, and subsequently, what is the impact of this change on input sup- plying firms in the upstream sector. The model improves on existing theoretical work by incorporating two previously omitted factors: trade in intermediary goods and het- erogenous efficiency of firms. The main conclusion is that FDI inflow has a potential to increase the demand for intermediary goods, even though some of the old customers among the domestic firms are crowded out from the market. This effect is offset by the increased production of multinational enterprises (MNEs). In the second chapter, I discuss the fact that even though the presence of a foreign firm is considered to have strong potential to improve domestic economic conditions, including the performance of domestic firms within the sector where MNEs enter, empirical studies of the actual impact of FDI inflow on domestic firms present rather ambiguous results. I argue that this is due to some limitations of the most prevalently used methodology, which does not separate the FDI spillover effects from changes in the competitive environment faced by domestic firms. In my research, I...
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Measuring the Impact of Microfinance
Alimukhamedova, Nargiza ; Hanousek, Jan (advisor) ; Brown, Martin (referee) ; Ibragimov, Rustam (referee)
Microfinance emerged in the 1970's, aiming to help lift people out of poverty and promote economic growth by providing financial services to low-income households. Despite its global popularity, evidence supporting its net benefits is mixed; therefore, more comprehensive empirical testing is called for. This Dissertation aims to contribute to the on-going debate in microfinance in the following three dimensions: In the first chapter, the impact of microfinance on macro economies is analysed. Motivated by limited knowledge of the economy-wide effects of microfinance, we aim to measure its impact on economic growth, financial sector development and reductions in income inequality. Measuring aggregate effects including those on non- recipients of microfinance programs constitutes an important contribution. We identify the "promised" impact of microfinance on economic growth measured by real GDP per capita, financial intermediation captured by broad money per capita and income inequality measured by the Gini coefficient. We also estimate the reverse feedback of macro fundamentals on microfinance itself. To estimate the dynamic equations, we use panel vector autoregressions (VARs) based on Arellano-Bover's (1995)and Blundell-Bond's (1998) instrumental variable system estimator, which enables us to...
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Essays on Governance and Economic Performance
Kochanova, Anna ; Hanousek, Jan (advisor) ; Palda, Filip (referee) ; Domadenik, Polona (referee)
This thesis examines the relationship between governance and economic performance from different perspectives. It is also related to private sector and countries' economic development. In the first chapter I focus on bureaucratic corruption and examine how it affects firm performance in Central and Eastern European countries. While previous research relies on the data from the BEEPS (Business Environment and Enterprise Performance Survey) solely, which suffers from excessive non-reporting of firm performance, I combine the data on bribery practices from the BEEPS with reliable and large firm performance data from the Amadeus database. Focusing on within-firm variation, I find that a higher bribery level negatively affects both the sales and labor productivity growth of firms. Nevertheless, conditional on a given level of bureaucratic corruption in a narrowly defined local market, a higher unevenness of firms' bribing behavior within such a market appears to facilitate firm performance. The chance of receiving benefits from bribery may be one reason why corruption does not vanish in spite of its overall damaging effect. In the second chapter, coauthored with Vahagn Jerbashian, we concentrate on the diffusion of telecommunication technologies as an instrument of reduction the costs of entry....
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"Soft" Concepts in Economics: Essays on the Role of Non-Cognitive Skills and Cultural Values
Lauková, Lenka ; Hanousek, Jan (advisor) ; Večerník, Jiří (referee) ; Palda, Filip (referee)
The admission process into secondary schools in the Czech Republic involves a high risk of ending up at an undesired school if failing to be admitted to one's preferred school. With future career outcomes largely dependent on the type of secondary school, the secondary school application decision is an important one. Empirical evidence gathered in this chapter is based on data on pupils participating in the OECD's PISA project and suggests that the education of parents and cognitive abilities matter for a pupil's application decision. A unique dataset available for the Czech Republic enables the examination of the role of non-cognitive skills in the admission process, and these are found to have an impact on a pupil's decision as well. The significance and the magnitude of the effect differs across districts characterized by the level of uncertainty associated with the admission process. The results of the analysis show important gender differences. One of them is that while non-cognitive skills of females operate in accordance with intuitive expectations: higher uncertainty associated with the outcome of the admission process in the district increases the importance of non-cognitive abilities with respect to decision-making; the opposite is true for males. In following chapter, we employ the...
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Essays on Access to External Finance, Acquisitions and Productivity
Ondko, Peter ; Hanousek, Jan (advisor) ; Jovanovic, Boyan (referee) ; Ortiz-Molina, Hernan (referee)
This thesis consists of three chapters that are empirical investigations of classical questions in the financial and industrial economics literature on the influence of institutions and industry conditions on the firm's access to finance, the propensity to merge, and productivity. In the first chapter, coauthored with Jan Bena, we examine whether financial markets development facilitates the efficient allocation of resources. Using European micro-level data for 1996-2005, we show that firms in industries with high growth opportunities use more external finance in financially more developed countries. This result is particularly strong for firms that are more likely to be financially constrained and dependent on domestic financial markets, such as small and young firms. Our findings are robust to controlling for technological determinants of external finance needs and to using different proxies for growth opportunities. In the second chapter, I investigate the role of productivity in the selection of firms into acquisitions and whether acquisitions lead to productivity gains. Using matching methodology and a large dataset of domestic acquisitions among public and private firms in Europe over the period 1998-2008, I find that first, targets are under-performing before engaging in horizontal...
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Essays on Capital Structure Stability
Shamshur, Anastasiya ; Hanousek, Jan (advisor) ; Švejnar, Jan (referee) ; Estrin, Saul (referee)
Recent financial literature claims that capital structure of firms stays unchanged during the long periods of time. In my dissertation I investigate the question of capital structure stability from different angles. First chapter asks whether the macroeconomic volatility could be translated to capital structure adjustments. To answer this question I consider CEE countries during 1996 to 2006 period since those economies went through extensive economic changes including transition from central planning to market economy, large-scale privatization, and substantial economic reforms to become the EU member. Surprisingly, macroeconomic changes are not translated to capital structure changes. Therefore, second chapter focuses on causes of such puzzling behavior. I find that credit constraints firms face in obtaining finance are responsible for the observed pattern. Unconstrained firms are more active in adjusting their capital structure in response to economic changes. Moreover, firm's ownership plays an important role in explaining leverage of unconstrained firms. Third chapter studies changes in leverage in the context of M&As. I compare the leverage of both acquiring and acquired firms using difference-in-differences propensity score technique. I find that there is an increase in the leverage of...
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Essays on the Behavior of Agents in Financial Markets
Kopřiva, František ; Hanousek, Jan (advisor) ; Hasan, Iftekhar (referee) ; Vachadze, George (referee)
In the first chapter, I focus on the extent of information-driven trading originating from order flows to capture the behavior of the market makers on an emerging market. With my supervisor, we modified the classical Easley et al. (1996) model for the probability of informed trading using a jackknife approach in which trades of one particular market maker at a time are left out from the sum of all buys and sells. Using the estimates from the jackknife approach, for each market maker we test whether the order flows associated with the particular market maker behaved significantly different from the others. Data from the Prague Stock Exchange SPAD trading platform are used to demonstrate our methodology. Finding significant differences in the probability of informed trading computed from order flows, we conclude that order flows could reveal the extent of information-driven trading and could potentially be used by regulatory authorities to identify the suspicious behavior of market participants. In the second chapter I analyze the potential conflict of interest between associated analysts and brokers. In contrast to the existing literature, with my supervisor, we do not analyze prediction accuracy and/or biases in analyst recommendations. Instead we focus our analysis on brokers and examine whether...
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Essays on the Effective Market Dynamics
Novotný, Jan ; Hanousek, Jan (advisor) ; Kmenta, Jan (referee) ; Fidrmuc, Jarko (referee)
Essays on the Effective Market Dynamics Jan Novotný Abstract In the first chapter, I employ high frequency data to study extreme price changes (i.e., price jumps) in the Prague, Warsaw, Budapest, and Frankfurt stock market indexes from June 2003 to December 2010. I use the price jump index and normalized returns to analyze the distribution of extreme returns. The comparison of jump distributions across different frequencies, periods, up and down moves, and markets suggests a possible relationship with market micro-structure. I also show that the recent financial crisis resulted in an overall increase in volatility; however, this was not translated into an increase in the absolute number of jumps. In the second paper, I empirically analyze the price jump behavior of heavily traded US stocks during the recent financial crisis. Namely, I test the hypothesis that the collapse of Lehman Brothers caused no change in the price jump behavior. To accomplish this, I employ data on realized trades for 16 stocks and one ETF from the NYSE database. These data are at a 1-minute frequency and span the period from January 2008 to the end of July 2009. I employ five model-independent and three model-dependent price jump indicators to robustly assess the price jump behavior. The results confirm an increase in overall...
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Measurement of Economic Variables
Žlábková, Dana ; Hanousek, Jan (advisor) ; van Ark, Bart (referee) ; Hanushek, Eric A. (referee)
The basic concern of any empirical work is to employ statistical data that correspond to the notion of the theoretical variables in the model. The problems and economic consequences connected with the measurement of selected economic variables are the focus of this thesis. It consists of three chapters that in succession analyze the issues associated with the measurement of economic growth, multi-factor productivity and capital input into production. The first chapter looks into the differences among the growth rates of GDP per capita based on data from the three most commonly used databases, namely International Financial Statistics, World Development Indicators and Penn World Table. Using a wide international dataset, we find significant differences in the growth rates that are mainly due to the adjustment for cross-country comparability of GDP per capita levels. Importantly, these differences are correlated with the level of development. We replicate six recent studies of growth determinants and find their results sensitive to the choice of data. The second chapter analyses the sensitivity of calculated multi-factor productivity (MFP) growth to assumptions of growth accounting, concentrating on the measurement of quantity, composition and the respective shares of labor and capital inputs, and...
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