Suchergebnisse

AbstractRecent literature focuses on liquidity provision as a unique service provided by financial intermediaries. In this paper, we address why commercial banks dominate the provision of these services. Liquidity provision in lending is reflected in offering loan commitments. We argue that commercial banks have a unique advantage in providing this form of liquidity. This unique advantage derives from their access to deposit insurance, and perhaps to a lesser degree, their access to the discount window of the Federal Reserve System. We empirically examine business loans offered by commercial banks, investment banks, and insurance companies. We show that commercial banks have a comparative advantage in offering loan commitments with fixed‐formula floating interest rates. Other major financial intermediaries such as investment banks favor bridge loans for corporate restructuring, and insurance companies favor longer term fixed interest rate spot loans. These results are consistent with commercial banks' unique corporate lending role (that of liquidity provision) deriving from their access to fixed‐price deposit insurance.

AbstractWe confirm previous findings that both large‐cap and small‐cap stock returns in the US exhibit a presidential cycle pattern, i.e. returns are significantly higher in the last 2 years than in the first 2 years of the presidential term. We attempt to examine if this presidential cycle pattern can be explained away by the traditional business cycle proxies, namely the term spread (TERM), dividend yield (D/P), and default spread (DEF). Our motivation arises from the political business cycle theory that monetary and fiscal measures undertaken by presidents are usually translated into the business cycle. We find that the presidential cycle has explanatory power beyond business conditions proxies shown to be important in explaining stock returns. Tests of slope parameters show that stock returns are less sensitive to only the D/P during the last 2 years of the presidential term. The presidential cycle effect prevails even after controlling for the party in power and the incumbent versus nonincumbent presidents.

AbstractThis paper tests the hypothesis that the small‐firm effect can be explained on the basis of investor preference for positive skewness. Traditional stochastic dominance methodology is extended to consider portfolios including variable weights of investment in a riskless asset. Including a riskless asset provides the result that small‐firm portfolios stochastically dominate all other portfolios. This result, which is derived on the basis of 19 years of monthly returns, indicates that the small‐firm effect cannot be fully attributed to tax effects, benchmark error, or incorrect assumptions of the CAPM about investor risk aversion.

AbstractThis paper develops a new methodology for evaluating the impact of economic events on bond yields. Term structure information and implicit forward rates are used to generate expected bond yields, and the difference between actual and expected yields is interpreted as the information effect of the event. The methodology is applied to two studies of municipal default: the New York City default and the more recent Washington Public Power Supply System (WPPSS) default. The analysis provides evidence that the New York City default did have a significant impact on the interest cost of municipal financing in general. In the case of WPPSS, however, there is no indication of a significant default impact.

AbstractThis study examines the effect of current and expected interest rate changes on bank equity values and attempts to reconcile the conflicting findings of previous research regarding this issue. A multiple index market model of bank security returns is specified and estimated. The results confirm the existence of an interest rate effect on bank stocks that is not explained by returns on the market portfolio. In addition, bank stock returns appear to be sensitive to an interest rate forecast error.

AbstractAs children start attending school they are more likely to face situations where they have to autonomously learn about novel object categories (e.g. by reading a picture book with descriptions of novel animals). Such autonomous observational category learning (OCL) gradually complements interactive feedback‐based category learning (FBCL), where a child hypothesizes about the nature of a novel object, acts based on his prediction, and then receives feedback indicating the correctness of his prediction. Here we tested OCL and FBCL skills of elementary school children and adults. In both conditions, participants performed complex rule‐based categorization tasks that required associating novel objects with novel category‐labels. We expected children to perform better in FBCL tasks than in OCL tasks, whereas adults to be skilled in both tasks. As hypothesized, in early‐phase learning children performed better in FBCL tasks than in OCL tasks. Unexpectedly, adults performed somewhat better in OCL tasks. Early‐phase FBCL performance in the two age groups was matched, but the OCL performance of adults was higher than that of children. In late‐phase learning there was only an age group main effect (adults > children). Moreover, performance in post‐learning categorization tasks, that did not require label recollection, indicated that in FBCL tasks children were likely to directly learn the associations between an object and a category label, whereas in the OCL tasks they were likely to first learn which feature‐dimensions were relevant. These findings shed light on developmental changes in cognitive control and learning mechanisms. Implications for educational settings are discussed.

AbstractUsing functional magnetic resonance imaging (fMRI), we examined the process of language specialization in the brain by comparing developmental changes in two contrastive orthographies: Chinese and English. In a visual word rhyming judgment task, we found a significant interaction between age and language in left inferior parietal lobule and left superior temporal gyrus, which was due to greater developmental increases in English than in Chinese. Moreover, we found that higher skill only in English children was correlated with greater activation in left inferior parietal lobule. These findings suggest that the regions associated with phonological processing are essential in English reading development. We also found greater developmental increases in English than in Chinese in left inferior temporal gyrus, suggesting refinement of this region for fine‐grained word form recognition. In contrast, greater developmental increases in Chinese than in English were found in right middle occipital gyrus, suggesting the importance of holistic visual‐orthographic analysis in Chinese reading acquisition. Our results suggest that the brain adapts to the special features of the orthography by engaging relevant brain regions to a greater degree over development.

AbstractMastering single‐digit arithmetic during school years is commonly thought to depend upon an increasing reliance on verbally memorized facts. An alternative model, however, posits that fluency in single‐digit arithmetic might also be achieved via the increasing use of efficient calculation procedures. To test between these hypotheses, we used a cross‐sectional design to measure the neural activity associated with single‐digit subtraction and multiplication in 34 children from 2nd to 7th grade. The neural correlates of language and numerical processing were also identified in each child via localizer scans. Although multiplication and subtraction were undistinguishable in terms of behavior, we found a striking developmental dissociation in their neural correlates. First, we observed grade‐related increases of activity for multiplication, but not for subtraction, in a language‐related region of the left temporal cortex. Second, we found grade‐related increases of activity for subtraction, but not for multiplication, in a region of the right parietal cortex involved in the procedural manipulation of numerical quantities. The present results suggest that fluency in simple arithmetic in children may be achieved by both increasing reliance on verbal retrieval and by greater use of efficient quantity‐based procedures, depending on the operation.

AbstractWe examined the relation of parental socioeconomic status (SES) to the neural bases of subtraction in school‐age children (9‐ to 12‐year‐olds). We independently localized brain regions subserving verbal versus visuo‐spatial representations to determine whether the parental SES‐related differences in children's reliance on these neural representations vary as a function of math skill. At higher SES levels, higher skill was associated with greater recruitment of the left temporal cortex, identified by the verbal localizer. At lower SES levels, higher skill was associated with greater recruitment of right parietal cortex, identified by the visuo‐spatial localizer. This suggests that depending on parental SES, children engage different neural systems to solve subtraction problems. Furthermore, SES was related to the activation in the left temporal and frontal cortex during the independent verbal localizer task, but it was not related to activation during the independent visuo‐spatial localizer task. Differences in activation during the verbal localizer task in turn were related to differences in activation during the subtraction task in right parietal cortex. The relation was stronger at lower SES levels. This result suggests that SES‐related differences in the visuo‐spatial regions during subtraction might be based in SES‐related verbal differences.

AbstractTheoretical rationale for the purchase or sale of portfolio insurance has been developed in prior works, but the relative preference structure for insured portfolios has not been examined empirically. This paper provides empirical evidence about performance of insured portfolios constructed from listed put and call options, their underlying stocks, and treasury bills. Efficient portfolios are identified using rules of stochastic dominance and stochastic dominance with a riskless asset from randomly created portfolios. The results illustrate the importance of put and call options to create portfolios containing an insurance component, since insured portfolios represent the majority of dominant assets.

AbstractLow socioeconomic status (SES) has been repeatedly linked with decreased academic achievement, including lower reading outcomes. Some lower SES children do show skills and scores commensurate with those of their higher SES peers, but whether their abilities stem from the same systems as high SES children or are based on divergent strategies is unknown. We here investigated a potential interactive relationship between SES and real‐word reading skill in the white matter in 42 typically developing children. SES was determined based on parental education; reading skill and age were not significantly related to SES. There was a significant neural interaction: Clusters in the bilateral inferior longitudinal fasciculus (ILF), left superior longitudinal fasciculus, and left corticospinal tract demonstrated interactive skill–SES relationships in fractional anisotropy. Follow‐up analyses demonstrated that higher SES children showed a positive relationship between fractional anisotropy, reflecting tract coherence, and reading skill in left hemisphere tract clusters, whereas lower SES children showed a positive relationship in the right hemisphere homologues. Broadly, the ILF has been demonstrated to support orthographic skill on the left and more general visuospatial processing on the right, so high reading achievement in lower SES children may rely on supplementary visuospatial processing more than for higher SES readers. This pattern is consistent with previous work reporting low SES children's environments to include less rich verbal experience, which may lead them to disproportionately draw on visuospatial skills for success. Further, these results indicate that group SES differences may be best described by an adaptive, not a deficit, model.

Abstract Age‐related differences (9‐ to 15‐year‐olds) in the neural correlates of mapping from phonology to orthography were examined with functional magnetic resonance imaging (fMRI). Participants were asked to determine if two spoken words had the same spelling for the rime (corresponding letters after the first consonant or consonant cluster). Some of the word pairs had conflicting orthography and phonology (e.g. jazz‐has, pint‐mint) whereas other pairs had non‐conflicting information (e.g. press‐list, gate‐hate) (see Table 1). There were age‐related increases in activation for lexical processing (across conflicting and non‐conflicting conditions) in left inferior parietal lobule, suggesting that older children have a more elaborated system for mapping between phonology and orthography that includes connections at different grain sizes (e.g. phonemes, onset‐rimes, syllables). In addition, we found that the conflicting conditions had lower accuracy, slower reaction time and greater activation in left inferior frontal gyrus as compared to non‐conflicting conditions. Higher accuracy was also correlated with greater activation in left inferior frontal gyrus for the most difficult conflicting condition (e.g. jazz‐has). The finding of both a conflict effect and a correlation with accuracy in left inferior frontal gyrus suggests that this region may be involved in resolving the conflict between orthographic and phonological representations.

Lexical rhyme conditions varying in their degree of phonological–orthographic consistency








Similar orthography
Dissimilar orthography




Similar
O+P+
O‐P+


Phonology
gate‐hate
*
jazz‐has


Dissimilar
O+P‐
O‐P‐


Phonology
*
pint‐mint
press‐list





Note: * Phonological–orthographic conflicting conditions, in which phonological information (whether the two words rhyme) conflicts with orthographic information (whether the two words are spelled the same beginning with the first vowel).

AbstractSocioeconomic status (SES) has been shown to influence language skills, with children of lower SES backgrounds performing worse on language assessments compared to their higher SES peers. While there is abundant behavioral research on the effects of SES, whether there are differences in the neural mechanisms used to support language skill is less established. In this study, we examined the relation between maternal education (ME), a component of SES, and neural mechanisms of language. We focused on Kindergarten children, at the beginning of formal reading education, and on a pre‐reading skill, phonological awareness—the ability to distinguish or manipulate the sounds of language. We determined ME‐related differences in neural activity by examining a skill‐matched sample of typically achieving 5‐year‐old children as they performed a rhyme judgment task. We examined brain lateralization in two language processing regions, the inferior frontal gyrus (IFG) and superior temporal gyrus (STG). In the IFG, lateralization was related to ME but not skill: children with low ME showed bilateral activation compared to children with higher ME who showed leftward lateralization. In the STG, there was a skill by ME interaction on lateralization, such that children with high ME showed a positive relation between rightward lateralization and skill and children with low ME showed a positive relation between leftward lateralization and skill. Thus, we demonstrated ME is related to differences in neural recruitment during language processing, yet this difference in recruitment is not indicative of a deficit in linguistic processing in Kindergarten children.