Barry Scholnick's research while affiliated with University of Alberta and other places
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Publications (47)
We examine whether relative income differences among peers can generate financial distress. Using lottery winnings as plausibly exogenous variations in the relative income of peers, we find that the dollar magnitude of a lottery win of one neighbor increases subsequent borrowing and bankruptcies among other neighbors. We also examine which factors...
We examine deals between listed firms and promoters who have been secretly hired to increase their stock prices. This behavior by the secret promoter is illegal (and leads to prosecution) but the actions of the hiring firm are legal. We use data from these prosecutions to analyze the behavior and motivations of the hiring firms. We find that secret...
We hypothesize that face-to-face communication between international business partners is a valuable mechanism for reducing transaction costs, even in contexts where electronic communication is pervasive. Specifically, we examine whether face-to-face interactions (as measured by international business travel) have greater impacts where transaction...
Background
We examined the association between personal bankruptcy filing and acute myocardial infarction (AMI) rates in Canada.
Methods
Between 2002 and 2009, aggregate and yearly bankruptcy and AMI rates were estimated for 1,155 forward sortation areas of Canada. Scatter plot and correlations were used to assess the association of the aggregate...
Face-to-face communication between international business partners is a valuable mechanism for reducing transaction costs, even in contexts where electronic communication is pervasive. This paper empirically examines whether face-to-face interactions (as measured by international business travel) have greater impacts where transaction costs are hig...
We are the first to examine whether exogenous shocks cause personal bankruptcy through the balance sheet channel and/or the income statement channel. For identification, we examine the effect of exogenous, politically motivated government payments on 200,000 Canadian bankruptcy filings. We find support for the balance sheet channel, in that receipt...
We are the first to show that the cost of personal bankruptcy filers traveling to their bankruptcy trustees affects bankruptcy choices. We use detailed balance sheet, income statement, and location data from 400,000 Canadian bankruptcies. To control for endogenous trustee selection, we use the location of local government offices as an instrument f...
We use data from the Federal Funds Futures market to show that exchange rates respond to only the surprise component of an actual US monetary policy change and we illustrate that failure to disentangle the surprise component from the actual monetary policy change can lead to an underestimation of the impact of monetary policy, or even to a false re...
Recent research finds that poorer individuals make financial mistakes when the decisions are difficult and rare. We examine who makes financial mistakes involving decisions that are easier and more frequent – specifically, the inadvertent failure to pay monthly credit card balances when sufficient funds are available. On the one hand poorer individ...
There are two types of stock price manipulation examined in the theoretical literature: (1) insider trading, which involves private information that is true and (2) the public spreading of fraudulent false information. While there is a large empirical literature on insider trading, this is the first empirical article to examine the impact of false,...
Following the 2008 crisis, a number of authors (e.g. Rajan, 2010; Acemoglu, 2011) have linked income inequality and debt to financial distress. The basic argument is that increasing inequality leads to higher debt levels of the poor, so that they can attempt to match the consumption of the rich, which in turn leads to financial distress (e.g. bankr...
A central policy question for dealing with financially distressed individuals is whether exogenous income increases (e.g. fiscal cash transfers) will help these individuals avoid default. If, for example, a financially distressed individual uses the fiscal cash transfer to pay down debt then bankruptcy may become less likely. However, if the indivi...
Includes bibliographical references. ISBN 1-55195-053-7 1. Alberta--Economic conditions--1945-1991. * 2. Alberta--
The “tradability revolution” in services has led to a dramatic expansion of offshore outsourcing of services, allowing firms to take advantage of lower production costs in foreign countries. However, production costs alone cannot explain the location determinants of offshore outsourcing of services. In this paper, we argue that minimizing transacti...
The “tradability revolution” in services has led to a dramatic expansion of offshore outsourcing of services, allowing firms to take advantage of lower production costs in foreign countries. However, production costs alone cannot explain the location determinants of offshore outsourcing of services. In this paper, we argue that minimizing transacti...
We examine whether the magnitude of an anticipated income change impacts consumption smoothing (i.e. the magnitude hypothesis). Even though this hypothesis has been discussed for almost 50 years, we are one of the first to provide formal statistical evidence to support it. We consider the natural experiment of an individual’s final mortgage payment...
We test the hypothesis that consumption smoothing occurs after large, but not small, expected future income shocks. Even though this hypothesis has often been discussed, formal evidence in support of it is rare. We use individual level, monthly, bank account data to examine how expected income shocks from final mortgage payments impact credit card...
There are two types of stock price manipulation examined in the theoretical literature: 1) insider trading, which involves private information that is true; and 2) the public spreading of false information. While there is a large empirical literature on insider trading, this is the first empirical paper to examine the impact of false public informa...
This paper provides a critical survey of the large and diffuse literature on credit cards, debit cards and ATMs. We argue that because there are still many outstanding issues and questions about the pricing, use and substitutability of these payment mechanisms, that there are significant further opportunities for research in these areas. A large nu...
Inattentive decision makers do not make full use of information available to them. Existing, psychologically based, explanations for inattention include the impact of competing stimuli and the salience of the decision. These existing explanations, however, do not predict whether richer or poorer individuals are more likely to be inattentive, since...
Two major perspectives can be construed in the literature concerning the nature of family owned businesses (FOBs). The first implies that these enterprises have unique characteristics of stewardship. FOB owners are said to care deeply about the long-term prospects of the business, in large part because their family's fortune, reputation and future...
This paper examines nominal price rigidities in an environment, e-commerce, where literal menu costs can be assumed not to exist. We argue that if we can empirically show that nominal rigidities do still exist in the e-commerce environment, then it implies that other kinds of costs besides menu costs, such as management costs, must be causing these...
This paper is the first in the literature to examine the determinants of US credit card penalty fees. Many critics of credit card fees – including a number of US Senators – have argued that credit card penalty fees reflect banks’ market share. Using a unique data set we find that fees are increasing in customer risk which supports the position of d...
This paper addresses whether exchange rates respond to changes in expectations of future U.S. monetary policy when no actual monetary policy changes occur. We employ data on Federal funds futures contracts for extracting a measure of policy expectations, control for the surprise element of macroeconomic news and policy developments, and analyze mor...
This paper uses a unique database to test the effect of ATM surcharges on larger versus smaller banks. Only nonbank ("foreign") users of ATMs pay ATM surcharges. Customers thus face incentives to switch accounts from smaller banks to larger banks in order to avoid high ATM surcharges. We find that, after we control for other bank factors, higher AT...
This paper is the first in the literature to examine the determinants of US credit card penalty fees. Many critics of credit card fees - including a number of US Senators - have argued that credit card penalty fees reflect banks' market share. Using a unique data set we find that fees are increasing in customer risk which supports the position of d...
Using price data from online book retailers, Amazon.com and Barnes and Noble.com, we show that nominal rigidities persist in an environment that is free from literal menu costs. Menu costs, therefore, are not the prime reason for nominal rigidities.
This paper investigates the use of ATM surcharges as a sategic device to increase bank profitability. We show that ATM surcharge changes can have both a direct effect on bank profitability and an indirect effect via customer switching and a related customer relationship effect. That is, customer switching results in an increase in the demand for ot...
Online book prices in USA and Canada convincingly reject the Law of One Price.
■ Relative competitiveness is almost completely determined by the exchange rate.
■ We conclude that extant frictions prevent the integration of the two national markets. We look into the possible causes of such friction and find that international shipping costs appear t...
This paper is the first to utilize the informational content embodied in Federal funds futures contracts for extracting day-to-day changes in expectations of future US monetary policy, in the context of a study of day-to-day exchange rate changes. We analyze more than 12 years of daily exchange rate data and show that continuous day-to-day changes...
Exchange Rate Expectations and Foreign Direct Investment Flows. — Theories about exchange rate expectations are difficult
to check empirically. We study FDI data to find indirect evidence on the formation of exchange rate expectations by foreign
direct investors. Using panel data techniques on exchange rate movements and FDI flows from the United S...
Competition among e-retailers is becoming increasingly intense and continuously narrowing margins. We examine the price competition between Amazon and Barnes & Noble to illustrate this. The key to survival, therefore, lies in rapidly expanding market size in one or both of two ways: expansion across product lines and international expansion. Althou...
While the emergence of e-commerce and the Internet has received huge attention in the business press, to date it has received scant attention in the academic international business literature, although some international business textbooks (for example Wild et al., 2001) have been published as ‘e-business editions’. Clearly, research is required on...
How borderless is the new economy? This paper addresses this question by examining the nature of price competition in books between a world leader in internet retailing, Amazon.com and the largest online retailer in Canada, Chapters.ca. The internet allows Canadian consumers to circumvent protectionist barriers by purchasing directly online from US...
Theories about exchange rate expectations are difficult to check empirically. We study FDI data to find indirect evidence on the formation of exchange rate expectations by foreign direct investors. Using panel data techniques on exchange rate movements and FDI flows from the USA to 20 OECD countries we find that skewness of devaluations has a robus...
Contrasting proposals have recently emerged concerning the need to regulate the Canadian credit card market. The National Liberal Caucus Task Force on Financial Services recommended that interest-rate ceilings be imposed on credit cards in Canada, while the MacKay Commission on Financial Services described the credit card industry as being subject...
Using panel data techniques, this paper shows that FDI flows are affected by skewness in exchange rate movements. This new finding is consistent with theory and evidence on the role of skewness in the finance literature. JEL Classification: F21 Keywords: Foreign direct investment; exchange rates; skewness. * Corresponding author. E-mail: barry.scho...
Studies of U.S. loan and deposit markets have found that consumer interest rates respond asymmetrically to changes in market rates. If this finding is repeated across many different consumer finance product markets, then it could have important implications for the transmission mechanism of monetary policy. This paper tests for significant interest...
This paper examines the rigidity of commercial bank interest rates, using evidence from Singapore and Malaysia. An asymmetric error correction technique is used to test whether mean adjustment lags are different when retail rates are above or below their equilibrium levels. It is concluded, in both countries, that the mean adjustment lag is shorter...
This study examines whether lending rates cleared the market for loans in Malaysia after interest rate liberalization. It is based on a theoretical model in which adverse selection and marginal cost pricing are brought together by the use of a quadratic loss function in the error correction format. This allows for the use of the cointegration metho...
Citations
... In addition, this paper also contributes to the microeconomic literature studying social interactions and household financial decision-making. 4 This literature has offered extensive evidence on peer effects in other contexts, for example, home purchases (Bailey et al. (2018a)), leverage choices (Bailey et al. (2019); Georgarakos et al. (2014)), electronic product adoption (Bailey et al. (2021)) and consumption (Agarwal et al. (2016); De Giorgi et al. ...
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... The credit cards services are gaining momentum with different consumers, as households and individuals struggle to qualify for or maintain other forms of debt. Lately, debt is deemed necessary to keep up with the cost of essential goods, yet loans are getting harder to acquire, hence people are turning to the less stringent option such as a credit card, to augment their income or to make ends meet (Bhattacharjee & Sharma, 2021;Çokgezen & Kuran, 2015;Massoud et al., 2011). Debt is also increasing, as lenders, wanting to elevate their market share and profit maximization, are encouraging loan officers to relax risk assessment criteria and randomly select marginally rejected applications to increase loan approvals (Verster et al., 2021;Asiedu, 2016;Karlan & Zinman, 2009). ...
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... The existing literature focuses on specific macro news announcements, including macroeconomic fundamentals, such as GDP, CPI, M2, target federal funds and net exports (Andersen et al., 2003(Andersen et al., , 2007Bauwens et al., 2005;Chen & Gau, 2010;Dominguez & Panthaki, 2006;Omrane & Savaşer, 2016, 2017; or monetary policies, such as interventions and interest rates (Conrad & Lamla, 2010;Fatum & Scholnick, 2008). Most likely, due to data limitations, a voluminous previous literature studied the impact of specific type of news announcements (Vlastakis & Markellos, 2012). ...
... Massoud et al. [17] studied OTC companies that hire promoters to engage in secret stock promotions to increase their stock price and trading volume. They find that the "promotions," or informal pump and dump schemes, coincide with trading by insiders. ...
... For example, Rindova and Kotha (1999) describe the brand development strategy that is used by Amazon. In addition, Chakrabarti and Scholnick (2002) suggest that economic rents do exist, explaining that shipping cost differentials between Chapters.ca and Amazon.com ...
Reference: The electronic law of one price (eLOP)
... This paper explores whether and how the relationship between debt and cardiovascular health varies by race, form of debt, and cohort. We focus on heart attack risk because heart disease is the leading cause of death in the U.S. (CDC, 2021) and there is a documented relationship between debt and cardiovascular diseases (Lippert et al., 2022;Savu et al., 2015;Sommer et al., 2015;Wolfe et al., 2022). Survival analyses of two cohorts surveyed in the Health and Retirement Study test whether secured and unsecured debt differentially predict heart attack risk for White and Black respondents across different economic contexts. ...
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... At an inter-firm level, relationship building with partners, client and supplier meetings, negotiations and business development, promotions and sales events, problem-solving, and attendance at conferences, conventions, and exhibitions have been identified as value-creating activities (e.g. Belenkiy & Riker, 2012;Liu, Scholnick, & Finn, 2017). Engaging with stakeholders such as governments, professional bodies, or trade associations also requires significant travel to international meetings and trade fairs ). ...
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... Will variations in bankruptcy frauds-destructive entrepreneurship-affect the selection mechanism, here defined as the aggregate bankruptcy volume? It is highly plausible; empirical studies have provided evidence of diffusion of personal bankruptcies to stakeholders (Miller 2015;Mikhed and Scholnick 2014;Scholnick 2014), and a theoretical explanation for bankruptcy diffusion in the corporate sector is provided by Gatti et al. (2006Gatti et al. ( , 2009), building a model on the credit interlinkages. In their model, macro-economic business cycles can be outcomes of a complicated interaction between firms and banks with heterogeneous conditions. ...
... Analysing the correlation between ATM service quality and customer satisfaction in the banking sector found that the better the quality of service, the better the satisfaction. Massoud, Saunders & Scholnick (2003), using the database from the 1996 -2001 period, analyzed the effect of ATM surcharges on large versus small banks found that ATM increases the market share of large deposit banks. ...
... A survey by Hastings et al. (2013a, b) reports widespread and avoidable consumer mistakes, some of them with non-negligible financial implications. On the borrowing side, Gross and Souleles (2002); Zinman (2009b, 2014); Agarwal et al. (2009);Scholnick et al. (2013); Agarwal et al. (2015a, b); Agarwal et al. (2015a, b); Gathergood and Weber (2017); and Ponce et al. (2017) show that credit card consumers could avoid a large share of costs relatively easily by allocating payment choices more efficiently. Gross and Souleles (2002) highlight the existence of low-interest checking account balances and high-interest credit card debt in tandem. ...
