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Methodology for Empirical Analysis of Informal Institutions

Methodology for Empirical Analysis of Informal Institutions

Journal of Institutional Studies, , Vol. 12 (no. 3),

Informal institutions stay yet empirically under-investigated in the new institutional economics framework. The paper is devoted to the possible methodology of these researches’ development. The variants of informal institutions treatments are compared, and fruitfulness of their definition as institutions with unspecialized enforcement mechanism is substantiated. Relationship between informal institutions notion and notions of beliefs, subjective, descriptive, and injunctive norms, trust, values, and practices are analyzed. It is proved that these notions by some means or other are fraught with informal institutions, but are not any types of them. The structure of informal institution is suggested, which includes (1) rule description, (2) rule’s addressee parameters, (3) parameters of the sanctions that are applied to rule’s breakers. It is shown in the paper that any informal institution’s research includes the following stages: institution’s identification, its structure description, and its economic analysis. The elements of these stages, and possible analytical methods are characterized. It is stressed that informal institutions research built on mixed (qualitative and quantitative) methods.

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“Institutional Trap”: Both a Productive Concept and a Fine Metaphor

“Institutional Trap”: Both a Productive Concept and a Fine Metaphor

Journal of Institutional Studies, , Vol. 12 (no. 3),

This paper is a reaction to the polemical article by Andrei Vernikov, How much substance is there behind the concept of "Institutional Trap"? (Journal of Institutional Studies, 2020, 12(2), pp. 25–37). This article concludes that there is no necessary scientific rigor and constructiveness of the concept of "institutional trap" (IT), and therefore it is proposed to introduce a kind of academic ostracism in the form of a scientific moratorium on this concept in the form of its ban on the pages of academic journals and in the programs of training courses. The proposed article shows that the term IT has all the properties of strictness when defined at the verbal, i.e. the most generalized, level. At the same time, it is demonstrated that when switching to specific model constructions, the concept of IT acquires mathematical rigor and applied operationality, which is confirmed by a large number of IT models developed in Russia and abroad. The article also refutes A. Vernikov's Lemma, according to which there is no economic or social phenomenon in modern Russia that cannot be declared an "institutional trap". This is done using such striking counterexamples as the liquidity trap and the Malthusian trap, which do not fall under the definition of IT. Special attention is paid to identifying differences in terms of IT, "Institute dysfunction" and "lock-in effect". Typical errors in the use of the term IT are demonstrated and it is proved that the fault for this lies with the authors who produce errors, and not with the term that does not contain any specific flaws. The thesis is put forward that the purity of the terminological field of institutional analysis should be provided by the expert community at the stage of reviewing articles, and not by methods of prohibiting scientific concepts. It is concluded that the popularity of the term IT is due to the fact that it is both a strict scientific concept and a beautiful metaphor.

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Regional Development Agencies of The United Kingdom

Regional Development Agencies of The United Kingdom

Journal of Institutional Studies, , Vol. 12 (no. 3),

The article considers the experience of functioning of an important institution of regional development – regional development agencies (RDA) - on the example of three regions of Great Britain: Wales, Scotland and England. The features of their formation and development in the UK are studied, successes and failures are demonstrated, and their role in the development of regions is shown. A retrospective analysis of the activity of the RDA allowed us to establish their dependence on the ruling political party. Labourites, which is determined to increase government intervention in the economy, promotes the development of the RDA, while the conservative party, which is in favor of expanding the private sector, seeks to reduce their powers. One of the most striking proofs of this claim is the RDA of England, which was created during the labour government and for political reasons was completely eliminated by the conservatives in order to reduce budget spending, despite their effective work in certain regions of England. Another identified feature of the functioning of the RDA in the UK is that their effectiveness is inversely proportional to the level of development of the region: the more problems the region has, the more effective the activity of the RDA. Currently, in the regions of the UK under review, the RDA is only valid in Scotland. At the same time, the most effective is the activity of the Agency for the development of the Highlands and Islands of Scotland "Highlands and Islands Enterprise". The experience of the UK clearly demonstrates that when making a decision to use such an institution of economic growth as the RDA, an individual approach is necessary, taking into account the specifics of a particular region.

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The Effect of Financialization on Investment by Non-Financial Private Sector in Spain: an Empirical Analysis

The Effect of Financialization on Investment by Non-Financial Private Sector in Spain: an Empirical Analysis

Journal of Institutional Studies, , Vol. 12 (no. 3),

The authors of the paper start from the idea that financialization – that is, the strengthening of the role of financial markets, financial institutions, financial motives, financial incomes and financial payments – affects the norms of behavior of economic agents. Such an influence, in particular, consists in the fact that economic agents are increasingly guided by the short-term results of their activities. This is one of the most important causes of the adverse effects of financialization on physical investment. Unfortunately, this influence is not taken into account in the prevailing mainstream investment theories – proposed by D. Jorgenson and J. Tobin. The authors of the paper suggest that financialization – measured in the form of both growing financial incomes and growing interest and dividend payments – suppresses real investment activity. This hypothesis is tested on panel data of Spain's publicly quoted non-financial companies for the period 2005–2019. Similar studies were conducted on non-financial companies of some Western countries in English-language publications, but this analysis is carried out for the first time both on data from Spanish companies and in Russian. In general, the hypotheses put forward have been confirmed. Financial payments turned out to be negatively related to investments in fixed assets. The results obtained for companies of different sizes with respect to the influence of income from financial activities were as follows: for large companies there is a negative relationship between financial incomes and real investments, for small companies the relationship between these indicators is similar, although it was initially assumed that small firms will increase investment as their financial income grows. The study may help explain the weakening of investment activity in Spain in recent decades.

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Culture as A Factor Affecting Government Expenditure Efficiency in the Procurement System in Russia: an Empirical Analysis

Culture as A Factor Affecting Government Expenditure Efficiency in the Procurement System in Russia: an Empirical Analysis

Journal of Institutional Studies, , Vol. 12 (no. 3),

The impact of cultural drives upon expenditures efficiency in the contractual system of the Russian Federation is analyzed. Different methods applied in social sciences to factor in the role of informal institutions in economic development are shown. Cultural drivers, identified in international empirical studies, are highlighted that can influence economic performance. An algorithm to assess impact of informal institutions upon expenditures efficiency in public procurement is described. Correlation analysis of institutional environment and relative budget savings in the contractual system of the Russian Federation in 2011–2019 is performed. The assumptions on systemic influence of ethnic heterogeneity, religious compositions, the scale of corruption and electoral management culture upon efficient spending of public financial resources in public procurement at different levels through the government contractual system in Russia are verified by means of regression analysis. The trends are reviewed for three periods: the operation of № 94-FZ Federal Law “On procurement…” as well as the stages of modernization of the Russian contractual system under № 44-FZ Federal Law. Conclusions are made regarding the efficiency of regulations related to transition of procurement in the electronic form in terms of decreasing a negative impact of cultural factors upon procurement efficiency, and the importance of clarifying the concept of “public procurement efficiency” by the regulator.

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Institutional Specifics of Credit Risk Assessment for Russian Insurance Companies

Institutional Specifics of Credit Risk Assessment for Russian Insurance Companies

Journal of Institutional Studies, , Vol. 12 (no. 3),
 
The presence of specialized institutions serving insurance operations, the implementation of elements of insurance operations by experts or especial organizations are the institutional features of the insurance market, reflected in special legal regulation. One of the most important aspects of the formation of the institutional environment of the insurance market in the domestic environment is the formation of an effective regulatory environment and improvement of the prudential supervision system using new institutional norms based on the best management and supervisory practices. Among other things, the presence of such an environment helps to reduce transaction costs. The purpose of this article is to reveal the features of the new Russian regulation of the insurance market in terms of credit risk management. The article is aimed at examining the features of the new Russian regulations. The credit risk management lies at the core of any insurer’s activities since their own solvency depends on the ability of their contractors to meet liabilities. The credit risk is inherent in receivables, financial instruments investments and reinsurance. Since its presence is unavoidable, insurers arrange their internal systems to tackle the credit risk. At the same time the insurance regulators keep insurers’ solvency requirements and capital requirements for various risks including the credit risk up to date as the insurance markets develop further on. The article studies the European insurers’ credit risk assessment approach in line with Solvency II applicable as from Jan 1, 2016 and examines the requirements for the Russian insurers under the Cenral Bank’s Regulation 710- P stipulating to account for financial risks in calculating solvency margins starting Jan 1, 2021. The comparison analysis proves that new regulatory requirements are based on the global expertise, yet points out the distinctive national features stemming from the state of the domestic markets. Nonetheless, since Regulation 710-P is overall compatible with the global practice of credit risk assessment, we expect the Russian insurers to adapt to the new requirements quickly.

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Socio-Economic Predictors of Cancer

Socio-Economic Predictors of Cancer

Journal of Institutional Studies, , Vol. 12 (no. 3),

The article presents the results of the pilot phase of an interdisciplinary study of socio-demographic, economic, and professional predictors of malignant neoplasms to identify a typical portrait of a cancer patient, considering both clinical and non-clinical characteristics. Based on the basic methodology of health capital and specifying the methodological framework of the study, in particular, highlighting the concept of a healthy lifestyle, questionnaire cancer-screening, a new direction in the study of human capital – the concept of subjective well-being, as well as existing methods for assessing the quality of life of people with cancer (QOL-CS), the authors propose a new comprehensive tools for the diagnosis of socio-demographic, economic, professional predictors of malignant neoplasms, supplementing, in turn, the diagnosis of clinical predictors. The article presents the result of testing the proposed tools by conducting and analyzing an electronic questionnaire of 102 informants who are patients of the National Medical Research Center of Oncology (Rostov-on-Don). In the framework of the pilot study, the initial hypothesis was confirmed that the financial and economic situation of individuals, the type and nature of employment, the characteristics of their social and emotional well-being, satisfaction with working conditions, and social status can influence or act as catalysts for malignant neoplasms. A similar approach to explaining and managing health capital determines the priority and timeliness of the use of technologies that prevent the impact of negative factors and predictors as a direction for the development of preventive medicine.

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Institutional Change Within the Context of Digital Economy

Institutional Change Within the Context of Digital Economy

Journal of Institutional Studies, , Vol. 12 (no. 3),

Digital technologies including artificial intelligence, digital platforms, blockchain, Internet of things etc. have spread rapidly. The paper deals with the effects of these technologies on the quality of the institutional environment. A literature review is focused on the impact of digitalization on changing institutional environment both in Russia and abroad. The author identifies both the positive and negative effects of new and emerging digital trends, including related risks and threats for the economy. As recent literature shows, digital technologies affect institutional environment both directly and indirectly. Some of these effects include transaction cost reductions and hence destruction of existing institutional traps. When extrapolating this trend into the future, the problem of «death of institutions» evidently becomes an unlikely scenario. At the same time, the Coase theorem prediction is likely to manifest itself. Digital technologies may transform existing institutions and even destroy them. Institutional vacuum emerges in particular fields, with the new digital technologies remaining uninstitutionalized, and this factor may impede or constrain digitalization for a long time. The economic impact of digital technologies, as well as its consequences, are outlined. Qualitative institutional change which results in the digitizing processes are defined as involving institutions themselves, both existing and emerging, change in their efficiency, destruction of the existing institutional traps and emergence of the new ones, and occurrence of an institutional vacuum. Principles of institutional design are suggested as the tool for institutional adjustment within the context of the digital economy.

Views: 184

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