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This study investigated the extent to which the low-risk anomaly is present in a pooled sample of nine African frontier equity markets from March 2004 to July 2023. Portfolio-level analysis was used to investigate the total stock returns of equally weighted quintile portfolios sorted on historical volatility. The presence of a monotonic relationship between historical volatility and subsequent returns was evaluated using monotonicity tests, controlling for possible mediating variables. The results revealed evidence of a statistically significant low-volatility premium, except during bull markets. These findings imply that investors can expect to earn higher returns by allocating to stocks with lower historical volatility, but only during bear markets. These results hold for realistic portfolio construction constraints, such as (il)liquidity and high transaction costs. [ABSTRACT FROM AUTHOR]

This paper investigates the effects of market power on income disparities when firm‐specific parameters are considered to test how they shape the gap between capital and labor earnings through their pricing decisions. The dataset consists of 2895 UK manufacturing and services firms over 2010–2019. The results provide the following insights: (a) There is a strong positive association between market power and income disparities across the market, (b) liquidity constraints exert a positive effect on the asset‐based disparities ratio, but a negative effect on the profit‐based ratio. The robustness of the results is also checked when market‐specific characteristics are included in the process. [ABSTRACT FROM AUTHOR]

Under the backdrop of global aging, the escalating number of elderly individuals in poor health poses a growing social burden and impacts economic development and social stability. A fundamental question arises as to whether the advancements of digital finance (DF) can effectively enhance the physical health of the elderly. This study aims to investigate the impact of DF on the physical health of the elderly by utilizing data from the China Health and Retirement Longitudinal Study (CHARLS) conducted in 2013, 2015, and 2018. The results reveal a significant positive impact of DF on enhancing the physical health of the elderly. Furthermore, the study demonstrates that this impact is particularly pronounced among the elderly with higher educational attainment, stronger intergenerational links, and those residing in central cities. A mechanism analysis further reveals that DF contributes to improving the physical health of the elderly by augmenting household disposable income, alleviating liquidity constraints, and enhancing the utilization of medical services. These findings offer valuable insights for the future development of DF and the implementation of policies promoting healthy aging and active aging. [ABSTRACT FROM AUTHOR]

This paper analyses the effect of the COVID-19 pandemic on household disposable income and household demand in the European Union (EU) during 2020, making use of the EU microsimulation model EUROMOD and nowcasting techniques. We show evidence of heterogeneity in the impact of the COVID-19 pandemic on the labour markets in EU Member States, with some countries hit substantially harder than others. Most EU Member States experience a large drop in market incomes, with poorer households bearing the brunt. Tax-benefit systems cushioned significantly the transmission of the shock to the disposable income and the household demand, with monetary compensation schemes playing a major role. Additionally, we show that monetary compensation schemes prevent a significant share of households from becoming liquidity constrained during the pandemic. [ABSTRACT FROM AUTHOR]

A significant proportion of the world's population has no access to grid-based electricity and so relies on off-grid lighting solutions. Rechargeable lamp technology is gaining popularity as an alternative off-grid lighting model in developing countries. In this paper, we explore consumer behavior and the operational inefficiencies that result under this model. Specifically, we are interested in (i) measuring the impact of inconvenience (of traveling to recharge the lamp) along with the impact of liquidity constraints (because of poverty) on lamp usage and (ii) evaluating the efficacy of strategies that address these factors. We build a structural model of consumers' recharge decisions that incorporates several operational features of the low-income regions. We conducted large-scale field experiments in Rwanda in partnership with a local rechargeable lamp operator and use the resultant data to estimate and test our model. We find that the complete removal of inconvenience and liquidity constraints from the current business model results in 73% and 126% increases in both recharges and revenue, thereby suggesting that these constraints are major sources of inefficiency. By implementing simple operations-based strategies—such as starting more recharge centers, visiting consumers periodically to collect their lamps for recharge, and allowing consumers to partially recharge their lamps and pay flexibly for the recharge—more than half the benefit of completely eliminating the inefficiencies can be attained. By contrast, the price- and capacity-based strategies that vary the economic variables (i.e., the amount paid per recharge and the amount of light obtained in return) but not the operational model perform far worse than the aforementioned strategies. Overall, our analysis emphasizes the importance of managing operations effectively even in markets with cash-constrained consumers, in which firms may have a natural tendency to focus more on reducing prices. This paper was accepted by Vishal Gaur, operations management. Funding: This work was supported by the International Growth Centre; Wharton School, University of Pennsylvania; and Institut Européen d'Administration des Affaires; The Environment and Energy Partnership; Grand Challenges Canada (Stars in Global Health); INSEAD's Emerging Markets Institute; INSEAD's Randomized Controlled Trials Laboratory; the INSEAD–Wharton Alliance, and International Growth Centre. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2023.4844. [ABSTRACT FROM AUTHOR]

Digital financial inclusion is essential for promoting regional development, but its impact on demographic change requires further investigation. Using data from the Chinese General Social Survey (CGSS) between 2012 and 2017, this study provides empirical evidence on how the growth of digital financial inclusion affects fertility intentions in China. The results indicate that a one percent increase in the provincial-level digital financial inclusion index is associated with a 0.136% increase in fertility intentions. These findings hold across different components of digital financial inclusion and are robust to instrumental variable approaches. Moreover, the study shows that the expansion of digital financial inclusion has a more significant effect on households in low-income groups, central and western regions of China, and women with low educational attainment. These results underscore the importance of digital financial inclusion in addressing population declines worldwide. [ABSTRACT FROM AUTHOR]

Under the backdrop of global aging, the escalating number of elderly individuals in poor health poses a growing social burden and impacts economic development and social stability. A fundamental question arises as to whether the advancements of digital finance (DF) can effectively enhance the physical health of the elderly. This study aims to investigate the impact of DF on the physical health of the elderly by utilizing data from the China Health and Retirement Longitudinal Study (CHARLS) conducted in 2013, 2015, and 2018. The results reveal a significant positive impact of DF on enhancing the physical health of the elderly. Furthermore, the study demonstrates that this impact is particularly pronounced among the elderly with higher educational attainment, stronger intergenerational links, and those residing in central cities. A mechanism analysis further reveals that DF contributes to improving the physical health of the elderly by augmenting household disposable income, alleviating liquidity constraints, and enhancing the utilization of medical services. These findings offer valuable insights for the future development of DF and the implementation of policies promoting healthy aging and active aging.

The object of this study is the financial difficulties that impacted the success of business owners in Hatfield, Gauteng province, South Africa. Compared to a global failure rate of 50 %, five out of every seven entrepreneurs in Hatfield, South Africa fail during the first year of operation. This study aimed at looking into the relationship between entrepreneur failure and financial literacy. The methodology employed in this study is interpretive philosophy-based qualitative research. An ethnographic research technique was also used to analyze the current economic condition of business owners in Hatfield. The population was sampled using non-probability purposive sampling techniques. Semi-structured interviews were used to gather the study’s leading source of data. The primary research results are thematically examined while also considering the secondary sources. Eliminating financial and liquidity constraints was listed as a goal of financial literacy. Findings garnered revealed that financial, liquidity and credit restrictions are the primary causes of business failures in Hatfield. The lack of financial resources for new businesses in Hatfield, as revealed, prompted several liquidity issues in Hatfield, and further lowers the growth rate of Hatfield businesses. It was discovered that Hatfield’s entrepreneurs usually experienced premature failure due to inadequate financial education and training. Impliedly, Hatfield business owners possessed poor cash management, defaulting on loan payments due to lack of financial education. Conversely, only few entrepreneurs and business owners in Hatfield, South Africa possess financial literacy competence with the necessary skills needed to better analyze their financial statements appropriately and increase profitability of their business. The practical implication of this finding is that, most entrepreneurs have high possibility to experience premature business liquidity when they have low or no financial literacy [ABSTRACT FROM AUTHOR]

In a model with endogenous female labour supply and wages, we show that liquidity constraints that prevent households from buying child care generate an inefficiency and amplify gender gaps in the labour market. We evaluate the relative merits of paid maternity leave, child care subsidies, and government loans in mitigating liquidity constraints and promoting gender equality. While an extension in the duration of the leave has ambiguous effects, child care subsidies and loans in the form of child care vouchers remove the liquidity constraints and reduce gender gaps in participation and wages. We illustrate the mechanisms at play in a numerical example using Spanish data. [ABSTRACT FROM AUTHOR]

Intertemporal savings strategies, such as bulk buying or accelerating purchase timing to take advantage of a good deal, provide long-term savings in exchange for an increase in immediate spending. Although households with limited financial resources stand to benefit the most from these strategies, they are less likely to make use of them. The authors provide causal evidence that liquidity constraints impede low-income households' ability to use these strategies, above and beyond the impact of other constraints. Exploiting recurring variation in household liquidity, this study shows that when low-income households have more liquidity, they partially catch up to higher-income households' ability to use intertemporal savings strategies. The findings provide guidance to marketing managers and researchers regarding targeted promotional design and measurement of deal-proneness. For policy makers, they suggest a new path for decreasing the higher prices low-income households have been documented to pay for everyday goods. Policies have traditionally focused on increasing financial literacy or access to supermarkets. Our work suggests that providing greater liquidity can help low-income households make better use of savings opportunities already available to them. [ABSTRACT FROM AUTHOR]

This paper sheds light on the relationship between liquidity constraints experienced by the head of the household (HOH) and their family members' labor supply. The study, focusing on the spillover effects between financial and labor markets, finds that when the HOH is liquidity constrained, unemployed family members join the labor market. While the overall tendency of family members is to choose self-employment versus salaried employment, the results show a heterogeneous impact on different family members. We find the impact of liquidity constraints to be the strongest on the labor market decisions of the spouses and children. Using the China Household Finance Survey (CHFS), the study contributes to the literature by presenting evidence on intra-household risk-sharing from a big emerging market economy where the family ties are tightly knit. [ABSTRACT FROM AUTHOR]

We analyze the decision of a firm to produce an input internally or to delegate the production to a better-informed supplier. The supplier can produce inputs of different qualities. As quality is not verifiable, a selfish supplier always produces the quality that minimizes his costs. A supplier that is motivated by reciprocity may instead produce the quality that maximizes the revenues of the buyer. Accordingly, reciprocity could increase the use of the market. To trigger reciprocal behavior the buyer must propose a contract that the seller perceives to be kind. We find that for reciprocal behavior to show up, it is enough that the supplier is moderately reciprocal. Lastly, we provide some intuitions about how our results change if the supplier is liquidity-constrained and must be granted non-negative profits in all circumstances. [ABSTRACT FROM AUTHOR]

Most economics research have concentrated on testing the quality–quantity (QQ) model through the relationship between family size and children's schooling. Much less effort has been given to comparing the child quality and child quantity income elasticities. Using the Thai household socioeconomic panel surveys, this paper examines the trade‐off between the quality and quantity of children by comparing the child quality and child quantity income elasticities. According to the theoretical prediction, the results showed that quality income elasticity was evidently higher than quantity income elasticity. Moreover, quality income elasticity was higher than quantity income elasticity even if permanent income was also controlled. [ABSTRACT FROM AUTHOR]

In this paper, we view an individual's annuitization decision as an American style call option whose underlying asset is financial wealth, which controls the distance to annuitization. We then derive a certain threshold of wealth over which the individual is optimal to annuitize all of her wealth. We particularly focus on the effects of liquidity constraints on the individual's optimal annuitization decision, concerning their effects on the optimal investment and consumption strategies. We show that the annuitization decision can be significantly affected by the extent to which individual borrowing is constrained. More specifically, the optimal decision is for the individual to annuitize earlier with the tighter liquidity constrains she is exposed to than initially planned. This is particularly relevant to today's pandemic situation especially with the growing concern about cutting credit limits.

This paper explores the impact and mechanisms of household debt on food expenditure. This study centers on panel data from the China Family Panel Studies (2012, 2014, and 2016) and employs a fixed-effect panel model to demonstrate that household debt can significantly reduce food expenditure share. In addition, this conclusion is quite robust regardless of changing index definitions, or the estimation method. Particularly, informal debt significantly decreases food expenditure share at home. This study postulates that a decline in the Engel's coefficient caused by debt may not coincide with improved household welfare. It concludes that the negative influence of debt on food expenditure is through two mechanisms: the asset-income effect and liquidity constraints. Finally, a finding aligns with the assertation of Banks et al. (79:527–539,1997) that the relationship between the Engel's coefficient and income will present an inverted U-shaped pattern during the rapid debt growth period in urban China. [ABSTRACT FROM AUTHOR]

Over its entire life, the Internal Revenue Code (like other tax systems) has never tried to tax economic income as such, because of the administrative and liquidity problems that arise from taxing any combination of values consumed and from appreciation (or depreciation) of capital stocks. Instead, the common practice limits tax occasions to a realization of income from sale or other disposition of property. Even then, if the proceeds of the transaction are not cash or marketable securities, as with many corporation reorganizations, taxation is deferred until these assets are converted in cash or marketable securities. Any effort to eliminate these twin filters by taxing income—and income regardless of realization—will overburden government agencies and private taxpayers, while reducing economic activity. A wealth tax scores even worse by these welfare measures, creating massive problems of evasion and enforcement that will reduce capital formation across the board in the effort to transfer wealth from the ultra-rich to everyone else. A simple tax structure with affordable rates is the only path to economic prosperity. [ABSTRACT FROM AUTHOR]

• Digital finance development can significantly enhance the level of equalization of educational opportunities. • The level of marketization affect the impact of digital finance development on the equalization of educational opportunities. • Liquidity constraints play a significant role in the impact of digital finance development on the equalization of educational opportunities. This paper focuses on micro-level Chinese households and empirically examines the impact of digital finance development on the equalization of educational opportunities, utilizing data from the China Family Panel Studies (CFPS). Empirical results indicate that digital finance development significantly enhances the level of equalization of educational opportunities. After a series of robustness checks, these conclusions remain valid. Further analysis reveals that the level of marketization and the individual liquidity constraint level of respondents play a significant moderating role in the positive impact of digital finance development on the equalization of educational opportunities. [ABSTRACT FROM AUTHOR]

In this article, digital inclusive finance positively determines the debt ratio of Chinese households. Through mechanism analysis, we clarify that digital inclusive finance affects household debt ratio by increasing household consumption and relaxing liquidity constraints. Further analysis suggests that digital inclusive finance inhibits household over-indebtedness. These findings imply the tradeoff between deleverage and over-indebtedness of Chinese household sector. [ABSTRACT FROM AUTHOR]

Market trends in many developing countries indicate that selling agricultural produce to itinerant traders at the farmgate has been rising, despite criticism that the practice preys on and exploits farmers. Using a cross-sectional data set of 525 households, we investigate the factors influencing participation in farmgate trading and its effects on agricultural productivity in western Kenya. We specifically consider the role of liquidity–related variables within a context of the perennial export crops, a contribution that has received less attention in literature. Our analysis reveals that variables related to demand for liquidity at the household level are strongly correlated with the selling of tea at the farmgate by smallholder tea farmers in the study area. The results also show that the household context (farmer's age, education and residence), farm characteristics (volume of output and age of tea plantation) and institutional variables (group membership and extension) are key determinants of household selling decisions. In addition, we find evidence that farmgate selling has a positive influence on crop productivity. We recommend strengthening of mechanisms that enable farmers to engage better with the existing market channels and encourage greater competition, in place of policies seeking to curtail the operations of farmgate traders. [ABSTRACT FROM AUTHOR]

One of the reasons to subsidise public transport is to improve the mobility of low-income groups by providing affordable public transport; however, the literature describes a situation whereby those with a low income are unable to afford the cheapest tickets per trip, i.e. travelcards, as they usually require a considerable up-front cost. In this study, we use a large dataset from the Swedish National Travel Survey to investigate whether, and if so how, income explains monthly travelcard possession among individuals for whom this would have been the least expensive option. We find a robust positive relationship between income and travelcard possession among low-income earners, indicating that those with a low income pay more to use public transport than more affluent individuals. As the accessibility of low-income groups is an important motivation for public transport subsidies, the findings from this study have important policy implications. [ABSTRACT FROM AUTHOR]

The existence of the phenomenon of twin's deficits in South Asian countries has now become a common characteristic from the last few decades. Their reliance on debt both external and domestic to bridge thesedeficits has been increasing continuously which results in mounting public debt burden. The positive effect of public debt burden in resource-scarce countries occurs if the debt is utilized optimally and properly in income-generating activities that enhance the productive capacity of the borrower country to repay the debt obligations and its servicing charges. The negative effect of debt works through two main channels, namely "debt overhang" and "crowding out". The present study aims to investigate the implication of debt overhang and liquidity constraints hypothesis in South Asian countries i.e.Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. For this purpose, a hybrid model has been developed and panel data of these countries from 1990 to 2020 has been used. The study uses standard panel data estimation techniques for the estimation of the results. The results obtained confirm the existence of debt overhang and liquidity constraints hypothesis in South Asian economies. Similarly, domestic debt also offsets economic growth and investment. The study suggests that bridging the twin's deficits through public borrowings is not a safe option and efforts will be made to minimize the expenditures and increase the revenues by adopting better strategies. [ABSTRACT FROM AUTHOR]

The existence of the phenomenon of twin's deficits in South Asian countries has now become a common characteristic from the last few decades. Their reliance on debt both external and domestic to bridge thesedeficits has been increasing continuously which results in mounting public debt burden. The positive effect of public debt burden in resource-scarce countries occurs if the debt is utilized optimally and properly in income-generating activities that enhance the productive capacity of the borrower country to repay the debt obligations and its servicing charges. The negative effect of debt works through two main channels, namely "debt overhang" and "crowding out". The present study aims to investigate the implication of debt overhang and liquidity constraints hypothesis in South Asian countries i.e.Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. For this purpose, a hybrid model has been developed and panel data of these countries from 1990 to 2020 has been used. The study uses standard panel data estimation techniques for the estimation of the results. The results obtained confirm the existence of debt overhang and liquidity constraints hypothesis in South Asian economies. Similarly, domestic debt also offsets economic growth and investment. The study suggests that bridging the twin's deficits through public borrowings is not a safe option and efforts will be made to minimize the expenditures and increase the revenues by adopting better strategies. [ABSTRACT FROM AUTHOR]

This paper analyses smallholder farmers' willingness to participate in crop insurance programs, using recent data from cocoa farmers in Ghana. Given the significance of output uncertainty and imperfect capital and insurance markets, we develop a theoretical framework to analyse how risk and ambiguity aversion, and liquidity constraints influence farmers' crop insurance participation decisions. We employ field experiments to elicit farmers' ambiguity and risk aversion, the stated preference approach to obtain information on farmers' willingness to participate in crop insurance programs, and a discrete choice model to examine the factors that influence their participation decisions. We find that risk preferences, ambiguity aversion, and liquidity constraints influence farmers' willingness to participate in crop insurance programs. The results also reveal that the probability of participating in crop insurance programs is positively influenced by wealth, trust and education of the farmers. [ABSTRACT FROM AUTHOR]

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The main scope of this study is to investigate the effects of competition and liquidity constraints on the cyclical behaviour of the markup ratio. In particular, 79 2‐digit NACE Rev.2 sectors across the UK manufacturing and services industry over 2008–2017 are taken into account in order to observe markup cyclicality and whether pricing decisions are significantly influenced by the degree of competition and liquidity restrictions. A panel VAR framework is used to take into account the presence of cross‐section dependence and heterogeneity amongst the regressors of the model. The empirical results provide the following significant insights: (a) the markup ratio across the UK sectors follows a countercyclical pattern, (b) concentrated sectors tend to charge countercyclical price–cost margins as they attempt to increase their market share in normal periods and (c) sectors with liquidity constrained firms charge countercyclical markups in order to substitute lack of funding with additional revenue. Complementary findings also suggest that more profitable firms charge procyclical markup ratios, thus validating predatory pricing strategies in more concentrated sectors. [ABSTRACT FROM AUTHOR]

This study aims to measure the impact of the share of non-Ricardian households on fiscal multipliers. We show that the share of non-Ricardian households in Hungary increased significantly after crisis began and explain why the plausible reason for this increase is the higher level of liquidity constraints during crisis. We also show that after crisis, when the share of non-Ricardians in Hungary was very high, the impact of government spending shocks on GDP was almost twice as strong as before the Great Recession. Thus, the results of the study indicate that there is some trade-off between the effectiveness of fiscal policy as a tool of GDP stabilization and household access to the credit market.

This paper extends Boyle and Guthrie (2003) to investigate the interdependent effects of asymmetric financing capacities and investment costs on investment timing decisions in a duopoly with a first-mover advantage. We demonstrate several novel findings. First, suffering a significant cost disadvantage, the supplier with a larger financing capacity can still be the leader when the risk of future funding shortfalls is relatively high. Second, a weaker supplier with a significant lower financing capacity and a small cost disadvantage can even be the leader under some degree of the risk of future funding shortfalls. In addition, the weaker supplier that is still more liquidity constrained cannot be the leader anymore as its financing capacity improves and closes to that of the rival. Third, only when the risk of future funding shortfalls is relatively low, small asymmetry of investment costs can make the rival’s preemption threat effective. Finally, higher project return volatility can lead to a change of the supplier’s role from a follower to a leader under some degree of the risk of future funding shortfalls, thereby lowering the supplier’s optimal investment trigger