CEEAplA Working Paper Series 2011
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- Estimating the impacts of eliminating fisheries subsidies on the small island economy of the AzoresPublication . Fortuna, Mário; Carvalho, Natacha; Rege, SameerSubsidies that reduce the costs incurred by fishers and increase profits for the industry can insulate fishers from economic signals, countering the economic incentive to stop fishing when it is unprofitable. Subsidies can thus be a major impediment to achieving economically productive fisheries, exacerbating overexploitation and delaying the necessary industry adjustments, particularly in the absence of effective management systems. Although some fisheries are profitable without government support, several studies have shown that many European fishing fleets are either running losses or returning low profits. In most cases operating costs are higher than gross revenue, resulting in a negative net contribution of fisheries to the economy, the deficit of which is largely funded by subsidies. Thus the cost of fishing to the public budget exceeds the total value of the catches. Recently, fishery subsidies have received much attention with a mounting literature on the urgent need to reduce capacity-enhancing subsidies and begin focusing on developing a profitable and sustainable industry that can adapt to changing economic and environmental conditions. Simple economic models showing how subsidies affect profits and therefore provide incentives for increased fishing effort have accompanied a number of overviews of subsidies published by leading intergovernmental and research institutions. A number of case studies have also illustrated the critical link between fleet capacity and subsidies and that some categories of subsidies are more distorting than others. However, most of the studies have been limited to estimating the value of these subsidies, and usually at the multinational or global level. None so far, to our knowledge, has estimated the economy-wide impact of reducing or eliminating fishing subsidies even though there is a growing consensus that subsidies should gradually be terminated. Moreover, the Fisheries Secretariat believes that capacity enhancing and fuel subsidies should be stopped immediately. Nonetheless, the new financial instrument of the CFP, the European Fisheries Fund (EFF 2007-2013), although an improvement on its previous homologous (FIFG 2000-2006), contains some ambiguous elements, which could open up for further increase of fishing capacity. A long-term approach is needed that encompasses more fundamental changes than using for example more efficient engines that initially reduce fuel consumption but in the long-run worsen the situation by contributing to increasing fishing effort on already overexploited stocks. On account of the global fisheries crises, highly subsidised fisheries and the anticipated reforms of the CFP, this study aims at estimating the impact of eliminating cost-reducing and capacity-enhancing fisheries subsidies on the Azorean economy. In particular, this study sets out to measure the impact of such a shock on various macro and micro variables pertaining to the regional economy using a dynamic CGE model based on a SAM for the Azores.
- Evaluation of the surrender and the minimum guaranteed rate of return options in life insurance productsPublication . Pimentel, Pedro; Pereira, RicardoThis paper aims to value a Guaranteed Investment Contract (GIC), offered by insurance companies, with a minimum rate of return and an option to surrender the contract (surrender option) at any time before the maturity date. The valuation framework uses a set of different models to value each one of these two options included on a GIC contract commercialized by a Portuguese financial group. We estimate that the surrender option value is around 1.18 percent of the net premium and that the value for the minimum guaranteed rate of return option varies between 0 an 7 percent, according to the used model.
- Empirical analysis of the Hsia option-pricing based model cost of capitalPublication . Neves, João C.; Pimentel, PedroThe cost of capital is a fundamental concept in strategic decisions such as capital investments, capital structure, new issues, mergers and acquisitions, spin-offs and other corporate restructurings. This paper explores empirically the option-based model developed by Hsia (1991) for estimating the cost of equity and the cost of capital of the firm. The composition of the sample in this exploratory study is all 17 non-financial companies listed in the Euronext Lisbon that are included in the market index PSI20. The Hsia model is used for estimating the cost of equity and the cost of capital of the firm for these 17 companies and is compared to the estimates obtained from the Capital Asset Pricing Model (CAPM) and the traditional weighted average cost of capital (WACC). The difference between the means of the cost of equity estimated by Hsia model and CAPM is not statistically significant at 1% level and their correlation of 46.2% is statistically significant at 1% level. However, the differences at the individual level are quite large. One of the limitations found in this study was the inconsistency on the computation of the cost of debt. The problem arise from the fact that the cost of debt do not follow the pattern expected in the theory, but we also find that the Hsia model is unable to deal with potential inconsistencies of the financial market.
- High Speed rail transport valuation and conjuncture shocksPublication . Couto, Gualter; Nunes, Cláudia; Pimentel, PedroIn the present paper we derive the optimal investment policy of investment in the high speed rail (HSR) project, under uncertainty, using the real options analysis (ROA) framework. We assume that the HSR demand, the main source of uncertainty, follows a geometric brownian motion with random jumps, complying with abrupt change of level caused by random events. The occurrence of such events is caused by external shocks. We assess the impact of these shocks in the HSR demand threshold, along with the investment opportunity value, and the option to differ. We consider several distributions for these jumps, and we compare with the base-line case (where exogeneous jumps are not considered).
- Situational leadership and professional nurses’ satisfaction : the example of hospitalsPublication . Batista, Maria da Graça Câmara; Furtado, Luis Carlos do Rego; Silva, FranciscoThe purpose of this study is to describe the leadership behaviors of head nurses and compare them with the perceptions of their direct employees (nurses). The study also aims to determine the various components of leadership that have an impact on job satisfaction. Using descriptive, inferential and correlational analysis, the study was conducted in two hospitals. All nurses with either management or care duties were invited to participate, with the exception of those who work in the operating blocks and outpatient units. The final sample was comprised of 266 individuals, including 22 head nurses and 244 staff nurses. The questionnaire was organized into three sections (1) Sample characterization; (2) Leadership Effectiveness and Adaptability Description (LEAD), with 12 questions to determine the components of situational leadership; and (3) Professional Satisfaction Indicator (PSI), consisting of 30 questions that identified the satisfaction level among respondents. Data were collected in May 2009. In both groups, the most expressive leadership styles, dominant and alternative, were the S2 (persuading) and S3 (sharing). Head nurses and staff both had relatively low levels of job satisfaction, although head nurses were generally more satisfied than staff nurses.
- The impact of leadership components on turnover intent : the case of nursesPublication . Batista, Maria da Graça Câmara; Furtado, Luis Carlos do Rego; Silva, FranciscoThis study aimed to identify nurses’ leadership behavior in management functions and determine if leadership has a direct impact on turnover intention or career abandonment. This descriptive and inferential study was conducted in two public hospitals. Head nurses and nurses in general and specialist health care were invited to participate, except those working in operating or clinical services. The final sample consisted of 266 individuals (22 head nurses and 244 staff nurses) that responded to a questionnaire, which was organized into three distinct sections: (1) sample characterization; (2) the Leadership Effectiveness and Adaptability Description (LEAD), which was used to determine the situational leadership components; and (3) four closed questions relating to different turnover intentions. Data was collected in May 2009. The most expressive leadership styles are the S2 (persuading) and S3 (sharing) in both groups. In terms of turnover, the results showed strong positive associations with profile S2-S3 and with effective adaptability. Leaders’ with S2- S3 profiles easily delegate tasks and enhance the functional and emotional development of their collaborators. Effective adaptabilities requires that chief nurses tailor their leadership style to the situation and environment they are working, allowing that their actions meet the expectations of their subordinates. These two dimensions contribute positively to nurses’ retention.
- Structuring the service encounter : a test of alternativesPublication . Batista, Maria da Graça Câmara; Cunha, Miguel Pina e; Rego, ArménioPurpose – This paper analyses the influence of three different forms of structuring the service encounter (standardization, spontaneity, minimal structure) on the perception of service quality and job satisfaction. Design/methodology/approach – A simulation of service interaction was elaborated, where individuals received different instructions related to the structure they should consider (standardization, spontaneity, minimal structure). This study was complemented by a correlational one that accessed the type of structure used and satisfaction with the service interaction. Findings − The results suggest that higher levels of job satisfaction and service quality exist when minimal structures are used. Research limitation/implications – The first part of the study is a simulation. Practical implications – The findings help practitioners make more informed choices concerning the structures they adopt to manage service encounters. Originality/value – The study empirically explores the application of minimal structures to the service encounter.
- Criação de empresas em Portugal e Espanha: análise comparativa com base nos dados do Banco MundialPublication . Sarmento, Elsa de Morais; Nunes, AlcinaDo Inquérito ao Empreendedorismo do Banco Mundial (WBGES 2008) resultou uma extensa base de dados de cerca de uma centena de países, baseada em dados dos registos notariais. Com base nesta fonte de informação, exploramse as trajectórias de evolução da criação de empresas entre 2000 e 2007 entre dois países geográfica e economicamente próximos, Portugal e Espanha, e destes países relativamente à União Europeia e à OCDE, bem como a outros países e fontes de informação. Análises anteriores, com base noutras fontes de informação, apontam para taxas de criação de empresas em Portugal superiores às de Espanha. Os dados do WBGES permitem validar essas conclusões. Porém, Portugal evidencia uma volatilidade superior no registo de empresas. Em 2001, o elevado acréscimo no registo de novas empresas representa um fenómeno isolado e específico para Portugal, não havendo paralelo nem nos países europeus da coesão, nem ao nível da média da União Europeia. O projecto Empresa na Hora não teve um impacto visível a nível do registo de empresas, considerando a evolução ao longo deste período. Por outro lado, Espanha detém uma densidade empresarial considerável, não só do total de empresas registadas, mas também do registo de novas empresas, apesar de Portugal apresentar taxas de crescimento médias superiores do registo de novas empresas, indiciando maiores taxas de sobrevivência empresarial que as existentes em Portugal. No entanto, de acordo com os dados dos registos de criação de empresas, apesar de Portugal e Espanha apresentarem densidades empresariais superiores à média da União Europeia e da OCDE, possuem taxas de registo de novas empresas relativamente mais baixas, o que leva a concluir por uma relativa menor dinâmica empresarial na criação de novas empresas. Finalmente, constata-se que as taxas de criação de empresas baseadas no WBGES 2008 são menos elevadas do que as obtidas quando se considera o universo de empresas economicamente activas. Este facto indica que análises comparativas de empreendedorismo não devem considerar isoladamente os dados oficiais de registo de empresas, devendo ser complementadas com outras fontes de informação, onde esteja representado o universo relevante de empresas que se encontrem efectivamente em actividade.
- A perspective on the symptoms and causes of the financial crisisPublication . Cabral, RicardoThis article identifies two paradoxes prior to the onset of the financial crisis: banking profits were at historically high levels despite the impending crisis; and though profits were high the profitability of financial intermediation was poor. Using a novel model of banking, it argues that large banks attained high profits through balance sheet expansion and growing mismatches between assets and liabilities. As a result, large banks’ financial leverage rose while their liquidity structure worsened, setting the conditions for a systemic banking crisis. Finally, this article argues that this conduct and performance was only possible due to misguided changes to the regulatory framework, specifically the Basel I Capital Accord and reductions in reserve requirements.
- Azorean savings banks and the 1929 economic crisisPublication . Lopes, Fernando Rosa Rodrigues; Dias, Fátima SequeiraWhat sets the Azorean banking system apart in the Portuguese context is the concentration of Caixas Económicas or Saving Banks accounting for half of these financial institutions in Portugal. These saving banks were promoted and had as shareholders mainly small and medium local traders and landlords with export business. This contrasts with the overwhelming concentration of big traders and traditional landlords as agents of international and national banks. These small institutions were the only network covering most of the islands and preceded the expansion of a national bank network of agencies created mostly after the Second World War. This article examines the effects of the 1929 crisis on the Azorean banking system which was generalized, and had deep and long-lasting effects, using unpublished data taken from the archive of Banco de Portugal. It is a case of contagion, typical of a banking crisis, affecting the credibility and confidence of all the institutions and leading to an interruption of payments for a period of over two years. Bankruptcies are limited to Caixa Bancária Raposo do Amaral and Caixa Económica Socorros Mútuos but the restructuring spreads over a ten year period. The contraction of monetary circulation caused by the banking crisis and the elimination of escudo insulano are also major contributing factors to the long and deep economic crisis that spread from 1929 to 1945. The banking crisis together with the protectionism of European markets and Portuguese colonial policies lead to the reorientation of the agro-export model to mainland Portuguese markets.
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