'Narrow' banking proposals would separate insured deposits from most types of bank lending. Using data from large U.S. banks, the authors examine the extent to which narrow banking proposals are likely to result in increased production costs. Production costs will rise for nonjoint provision of deposit and loan services if there are cost complementarities in producing the two outputs jointly or if joint production enables banks to spread their fixed costs more effectively. Unlike standard cost function approaches, the authors' methods allow them to estimate the fixed-cost and cost-complementarity effects separately. They find the net production cost consequences of narrow banking to be negligible. Copyright 1993 by University of Chicago Press.

The Role of Fixed Costs and Cost Complementarities in Determining Scope Economies and the Cost of Narrow Banking Proposals

The view that macroeconomic adjustment disproportionately hurts the poor in Africa has become commonplace. The popular media and the nongovernmental aid community frequently express this view in critiques of bank funded economic reform programs. Yet the evidence on which the claim has been based is flimsy and anecdotal. The emergence of more convincing data, from detailed household surveys in Africa, provides an opportunity to set the record straight. The evidence from six African countries reviewed in this article demonstrates that poverty was more likely to decline in those that improved their macroeconomic balances than in those that did not. The critical factor is economic growth. The economy grew more rapidly and poverty declined faster in countries that improved macroeconomic balances, depreciating the real effective exchange rate. Changes in the real exchange rate also immediately and favorably affected rural incomes, benefiting the poor both directly and indirectly. But the findings also highlighted three causes for policy concern. First, many African governments have yet to display a real commitment to macroeconomic reform; second, the poorest of the poor have not benefited from recent growth in some countries; and, third, the prospects for the poor are not rosy unless there is more investment in human capital and better targeting of social spending.

Macroeconomic adjustment and poverty in africa: an emerging picture

Payments for environmental services (PES), the non-provisioning part of ecosystem services, target alignment of microeconomic incentives for land users with meso- and macroeconomic societal costs and benefits of their choices across stakeholders and scales. They can interfere with or complement social norms and rights-based approaches at generic (land-use planning) and individual (tenure, use rights) levels; they interact with macroeconomic policies influencing the drivers to which individual agents respond. In many developing country contexts, community scale factors strongly influence land users' decisions, whereas unclear land rights complicate the use of market-based instruments. PES concepts need to adapt. Multiple paradigms have emerged within the broad PES domain. Evidence suggests that forms of “coinvestment in stewardship” (CIS) alongside rights are the preferred entry point. Commodification of environmental services (ES) and ES markets might evolve later on, but require strong government regulat...

https://www.annualreviews.org/doi/pdf/10.1146/annurev-environ-042511-150526

Payments for Environmental Services: Evolution Toward Efficient and Fair Incentives for Multifunctional Landscapes

The Evolution of the International Economic Order.

Virtually all studies of bank cost efficiency have used stock measures of banking output. The effects on time-series estimates of total factor productivity and cross-sectional estimates of scale economies are contrasted using both stock (value of deposit and loan balances) and flow (number of deposit and loan transactions) measures. While productivity growth differs between these two output measures over the last 20 years, it is similar over the last decade, but in all cases is quite low. For scale economies, slightly U-shaped average costs are found, with the output stock measure giving the better fit.

Flow versus stock indicators of banking output: Effects on productivity and scale economy measurement

Poverty and Inequality in Latin America

Few economic relationships have been as scrutinized as that between SNA measures of national product, investment and consumption, and welfare. The present paper contrasts SNA economic production and welfare to total production and welfare within the Walrasian framework of usefulness and costliness. An evaluation of deductions and additions to the SNA made by Nordhaus-Tobin, Zolotas, Richard and Nancy Ruggles, Kendrick, Eisner and Jorgenson-Fraumeni, in their research on extended product and income accounts and improved indicators of welfare reveals numerous unresolved analytical and measurement issues; and reaffirms the usefulness of the SNA as a fundamental, initial, welfare indicator.

Misuse and use of national accounts as a welfare indicator: selected analytical and measurement issues

As is widely recognized both in the literature and by the practitioners, the treatment of financial intermediaries has been one of the most controversial issues in national accounting. This has been so largely because no one up to now has been able to define the output of banks and other financial intermediaries. In the present paper, a theory of services in general and of financial services in particular is used to demonstrate that financial intermediaries produce at least six commodity type services. Furthermore, it is argued that in order to solve the banking imputation problem it is necessary to separate the theory of interest rates from the theory of financial services and examine the interdependence between them. The gross interest rate must be unbundled because it contains three distinct components. These are, first, the pure interest rate, which reflects payment for a factor-type service; second, payments for six commodity-type services, which reflect the output of financial intermediaries; and, third, payments for unilateral transfers. The new unbundled approach is contrasted to the old bundle approach used and/or advocated by standard economic theory, the SNA, Sunga and the Ruggleses. Furthermore, it is recommended that payments for the pure interest rate be considered as part of income of the paying enterprise or sector while payments for financial services by enterprises to other enterprises should be considered as intermediate purchases.

The treatment of interest and financial intermediaries in the national accounts: the old “bundle” versus the new “unbundle” approach

According to the present paper, absolute poverty and relative inequality have persisted in Latin America as a result of mutually reinforcing, and unfair, patterns of distribution of final private, broad, and total consumption and income. Furthermore, it is argued that the prevailing pattern, characterized by a vicious circle of distributive injustice in both consumption and income (production), can be broken only by mesoeconomic, sectoral constitutions and, thus, by public policies that uphold the principles of justice, freedom, and equality - on both the consumption and income (production) sides.

Markos J. Mamalakis

Papers

Poverty and Inequality in Latin America

Misuse and use of national accounts as a welfare indicator: selected analytical and measurement issues

The treatment of interest and financial intermediaries in the national accounts: the old “bundle” versus the new “unbundle” approach

Poverty and Inequality in Latin America: Mesoeconomic Dimensions of Justice and Entitlements

A North-South Dilemma: The Need and Limits of Conditionalities in the Americas