Determinants of banks’ capital structure in the Pre-Regulation Era

KIM ABILDGREN

EUROPEAN REVIEW OF ECONOMIC HISTORY, Volume 21, Issue 1

Abstract: The article explores the determinants of banks’ capital ratio in the Pre-Regulation Era where capital structure decisions were not influenced by deposit-insurance schemes, capital requirements, or high tax shields. The analysis builds on partial-adjustment capital-structure models estimated on the basis of panel data for all Danish commercial banks 1847–1919. The results suggest that banks with low levels of liquidity had a higher capital ratio in periods with financial instability. This enabled them to suffer larger losses and thereby reduce the risk of facing costs of financial distress. The article is the first bank-level study on capital structure in the Pre-Regulation Era.

Thomas Hodgskin, Socialist or Anti-Privilege Libertarian?

ALBERTO MINGARDI

JOURNAL DES ÉCONOMISTES ET DES ÉTUDES HUMAINES

Abstract: Thomas Hodgskin (1797–1869) is still studied as a forerunner of modern socialism: in fact, he is typically characterized as a prominent “Ricardian socialist”. Among the most influential of Hodgskin’s works was his pamphlet Labour Defended Against the Claims of Capital (1825a), thus prefiguring with its very title announces a denunciation of capitalism. Hodgskin’s work should be considered instead in its entirety, paying proper attention to its nuances. If Hodgskin indeed chastised “capitalism,” he meant precisely what we now call “crony capitalism.” He did not condemn the “higgling of the market,” which he thought should be the sole mechanism by which resources, including human labour, are allocated. But he saw clearly that legislative meddling served specific interests and often prevented market forces to emerge and blossom. If he was unfriendly towards the “capitalist” class, it was only because he saw them as disproportionally benefiting from the favour of political power. Hodgskin denounced the idle classes but did not want to substitute the market process with any alternative distributive scheme. He considered a sound understanding of an innovation-fostering economy incompatible with archaic distribution of privilege on the part of government. His work can help to clarify how embracing the market economy did and does not entail a defence of the status quo.

Machiavellian Experimentation

YINXI XIE & YANG XIE

JOURNAL OF COMPARATIVE ECONOMICS

Abstract: This paper proposes the following mechanism whereby polarization of beliefs could eliminate political gridlock instead of intensifying disagreement: the expectation of political payoffs from being proven correct by a policy failure could drive decision makers who do not believe in the new policy to agree to policy experimentation, because they are confident that the experiment will fail, thus increasing their political power. We formalize this mechanism in a collective decision making model in the presence of heterogeneous beliefs in which any decision other than the default option requires unanimity. We show that this consideration of political payoffs can eliminate the inefficiency caused by a unanimous consent requirement when beliefs are polarized, but could also create under-experimentation when two actors hold beliefs that differ only slightly from one another. We further show that this under-experimentation can be reduced when the political payoffs become endogenous. We illustrate the empirical relevance of the mechanism in two examples with historical narratives: we focus on the decision making process of the Chinese leadership during the country’s transition starting in the late 1970s, and we further apply the model to the disagreement within the leadership of the Allied Forces on the Western Front of World War II in the autumn of 1944.

Suffrage, labour markets and coalitions in colonial Virginia

ELENA NIKOLOVA & MILENA NIKOLOVA

EUROPEAN JOURNAL OF POLITICAL ECONOMY

Abstract: We study Virginia’s suffrage from the early-17th century until the American Revolution using an analytical narrative and econometric analysis of unique data on franchise restrictions. First, we hold that suffrage changes reflected labour market dynamics. Indeed, Virginia’s liberal institutions initially served to attract indentured servants from England who were needed in the labour-intensive tobacco farming but deteriorated once worker demand subsided and planters replaced white workers with slaves. Second, we argue that Virginia’s suffrage was also the result of political bargaining influenced by shifting societal coalitions. We show that new politically influential coalitions of freemen and then of small and large slave-holding farmers emerged in the second half of the 17th and early-18th centuries, respectively. These coalitions were instrumental in reversing the earlier democratic institution\s. Our main contribution stems from integrating the labour markets and bargaining/coalitions arguments, thus proving a novel theoretical and empirical explanation for institutional change.

A model of the beginnings of coinage in antiquity

JACQUES MELITZ

EUROPEAN REVIEW OF ECONOMIC HISTORY, Volume 21, Issue 1

Abstract: There have been important advances by archeologists and numismatists in recent decades in the study of the beginnings of coinage in Ionia, Lydia, and Greece before the fifth century B.C. This paper provides a model of the birth of coinage that brings these advances into a broad analysis of the subject-matter. It pulls together many factors that are often treated separately. In addition, the model yields one important new result. Contrary to popular assumption, early coinage was not highly profitable. The Lydian government and the Greek city-states provided an extremely wide array of denominations of coins in a single precious metal at considerable cost. Their willingness to bear this cost must have reflected a political strategy of promoting coinage. Such a political strategy would also be easy to explain. As a large payer and recipient of money in the form of precious metals, the government had much to gain from the spread of coinage in order to economize on transaction costs in its own affairs.

Does Situationism Threaten Free Will and Moral Responsibility?

MICHAEL MCKENNA & BRANDON WARMKE

JOURNAL OF MORAL PHILOSOPHY

Abstract: The situationist movement in social psychology has caused a considerable stir in philosophy. Much of this was prompted by the work of Gilbert Harman and John Doris. Both contended that familiar philosophical assumptions about the role of character in the explanation of action were not supported by experimental results. Most of the ensuing philosophical controversy has focused upon issues related to moral psychology and ethical theory. More recently, the influence of situationism has also given rise to questions regarding free will and moral responsibility. There is cause for concern that a range of situationist findings are in tension with the reasons-responsiveness putatively required for free will and moral responsibility. We develop and defend a response to the alleged situationist threat to free will and moral responsibility that we call pessimistic realism. We conclude on an optimistic note, exploring the possibility of strengthening our agency in the face of situational influences.

Mapping Religious Change in Latin America

NICOLÁS M. SOMMA, MATÍAS A. BARGSTED, & EDUARDO VALENZUELA

LATIN AMERICAN POLITICS AND SOCIETY, Volume 59, Issue 1

Abstract: Using Latinobarometer survey data, we study the evolution of religious identities among the adult populations of 17 Latin American countries between 1996 and 2013. We find several interesting patterns. First, the current religious landscape is highly dynamic and is becoming increasingly pluralist among a majority of countries. Changes derive not only from the growth of Evangelicals, as commonly assumed, but also from the sharp rise in irreligious individuals. Second, religious change cannot be convincingly explained by important theories such as secularization, religious economies, and anomie. However, the predictions derived from anomie theory seem more useful for understanding Evangelical growth. Finally, our cohort analysis indicates that aggregate religious change largely results from individual-level change across time—religious conversion and apostasy—rather than from generational replacement. Still, there are interesting variations across countries in that respect.