Giuseppe Coco | Università degli Studi di Firenze (University of Florence) (original) (raw)

Papers by Giuseppe Coco

Page 1. Giuseppe Coco and Giuseppe Pignataro University of Ban and Catholic University, Defap, Mi... more Page 1. Giuseppe Coco and Giuseppe Pignataro University of Ban and Catholic University, Defap, Milan ﺔﯾدﺎﺻﺗﻗﻻا تﺎﺳاردﻟا لﺎﺟﻣ ﻲﻓ ﺎﺑوروأ بوﻧﺟ ثوﺣﺑ 1 مﻗر لﻣﻋ ﺔﻗرو 26 Inequality of Opportunity in the Credit Market نﺎﻣﺗﺋﻻا قوﺳ ﻲﻓ صرﻔﻟا ؤﻓﺎﮐﺗ مدﻋ 1 لﺑﺎﻧﺳ ﺔطﺳاوﺑ ﺔﻘﯾﺛوﻟا هذھ ﺔﻣﺟرﺗ تﻣﺗ : نﯾﻣارﺟ ﺔﮐرﺷ نﻣ مﻋد ﻊﻣ ،ﺔﯾﺑرﻌﻟا نادﻟﺑﻟﻟ رﻐﺻﻷا لﯾوﻣﺗﻟا ﺔﮐﺑﺷ – لﯾﻣﺟ ﺔﺳﺳؤﻣ نﯾﺑ ﺔﮐرﺗﺷﻣ ﺔﯾﮐﻟﻣ تاذ ، ﺔﯾﻟوﺋﺳﻣﻟا ةدودﺣﻣ ﺔﮐرﺷ نﯾﻣارﺟ تﺎﯾﻻوﻟﺎﺑ ﺔﯾﮐﯾرﻣﻷا ةدﺣﺗﻣﻟا ﺔﻋوﻣﺟﻣو لﯾﻣﺟ فﯾطﻟﻟا دﺑﻋ رﻐﺻﻷا لﯾوﻣﺗﻟا لﻼﺧ نﻣ ﺔﯾﺑرﻌﻟا ﺔﻘطﻧﻣﻟا ﻲﻓ رﻘﻔﻟا لﯾﻟﻘﺗ ﺎﮭﻓدھ . “ “This ...

Series, 2020

This paper proposes the use of a new technique, the Stochastic Multicriteria Acceptability Analys... more This paper proposes the use of a new technique, the Stochastic Multicriteria Acceptability Analysis (SMAA), to evaluate education quality at school level out of the PISA multidimensional database. SMAA produces rankings with Monte Carlo Generation of weights to estimate the probability that each school is in a certain position of the aggregate ranking, thus avoiding any arbitrary intervention of researchers. We use the rankings in 4 waves of PISA assessment to compare SMAA outcomes with Benefit of Doubt (BoD), showing that di↵erentiation of weights matters. Considering the whole set of feasible weights by means of SMAA, we then estimate multidimensional inequality in education, and we disentangle inequality into a 'within' and a 'between' country component, in addition to a component due to overlapping, using the multidimensional ANOGI. We find that, over time, inequality within countries has increased substantially. Overlapping among countries, particularly in the upper part of the distribution has also increased quite substantially suggesting excellence is spreading among countries.

SSRN Electronic Journal, 2013

Can a bank increase its pro…t by subsidizing inactivity? This paper suggests this may occur, due ... more Can a bank increase its pro…t by subsidizing inactivity? This paper suggests this may occur, due to the presence of hidden information, in a monopolistic credit market. Rather than o¤ering credit in a pooling contract, a monopolist bank can sort borrowers through an appropriate subsidy to inactivity. Under some conditions, sorting may avoid the collapse of the market and increases the welfare of everybody. The bank increases its pro…ts, good borrowers bene…t from lower interest rates and bad potential borrowers from the subsidy. The subsidy policy however implies a cross subsidy between contracts and this is possible only under monopoly.

Questo articolo discute le ragioni della fragilita dell'economia del Mezzogiorno prima della ... more Questo articolo discute le ragioni della fragilita dell'economia del Mezzogiorno prima della grande crisi e l'aggravamento del divario negli anni 2008-14. Si dimostra che l'ulteriore divaricazione tra aree del paese non e un destino ineluttabile. Una strategia di politica industriale semplice e mirata alla minimizzazione delle intermediazioni clientelari ha dato risultati positivi nel triennio 2015-7. Per il futuro tuttavia una significativa convergenza si potra concretizzare solo a fronte di una ripresa di investimenti pubblici e privati in capitale fisico ed umano per i quali si esaminano alcune ipotesi concrete.

Journal of Banking & Finance, 2014

This paper investigates the role of unobservable wealth differences on credit market equilibrium,... more This paper investigates the role of unobservable wealth differences on credit market equilibrium, given there is also asymmetric information concerning effort preferences and choices. In equilibrium, poor but able entrepreneurs may subsidise the rich and incompetent or be excluded. As a result, investment may exceed or fall short of the optimal level. Low inequality may deliver conditions for perfect screening and an efficient level of investment. The equilibrium with cross subsidisation is consistent with otherwise puzzling empirical observations.

This paper examines the possibility that regulation actually increases a monopolistâ€™s cost-effi... more This paper examines the possibility that regulation actually increases a monopolistâ€™s cost-efficiency. When the firmâ€™s cost-reducing effort depends on the output supplied, a binding price-cap, by compelling the monopolist to produce more, finally results in lower costs. On the basis of a two-period asymmetric information model with a repeated choice of effort, the paper demonstrates that regulation increases efficiency when the elasticity of demand is sufficiently low, even assuming very conservative preferences and a very poor information set for the regulator. Moreover, contrary to previous findings and conventional wisdom, we find that a periodical rate base review exerts also a positive effect on future cost-reducing effort countervailing the well known ratchet effect.

In the face of past ambiguous results on growth effects of education when measured through school... more In the face of past ambiguous results on growth effects of education when measured through school attainment, some papers suggest that some countries may be unable to use productively their schooling output because of the scope of cronyism. We dig deeper and demonstrate that, in a stylized model, cronyism in the labour market, e.g. the ability to exert influence to gain high wage positions without merit, may impact heavily on the relationship between schooling inputs and cognitive skills, due to incentive effects. We then use a two-stage DEA approach to identify factors affecting inefficiency in education performance of OECD countries when the output is proxied by PISA scores. Along with other well known factors, a measure of corruption, our chosen proxy for cronyism, explains a substantial fraction of the inefficiency. This result suggests that, as in our model, in the presence of cronyism, incentives to cognitive skills acquisition are dampened. Analogously to developing countries...

This paper demonstrates that when a rationing equilibrium occurs in credit markets due to adverse... more This paper demonstrates that when a rationing equilibrium occurs in credit markets due to adverse selection effects of the interest rate, it is necessarily a multiple contracts (i.e. multiple interest rates) equilibrium with rationing at one contract. Some consequent arguments for a welfare improving role of usury laws, based on the possibility of increasing the share of low-risk projects carried out in equilibrium, are then examined.

We show how asymmetric information and borrowers' heterogeneity in wealth may produce equilib... more We show how asymmetric information and borrowers' heterogeneity in wealth may produce equilibria in which, due to decreasing absolute risk aversion, hard working poor borrowers subsidize richer borrowers. In particular, a model of adverse selection and moral hazard in a competitive credit market is developed with private information on borrowers' wealth. Because of the ambiguous effect of decreasing risk aversion on the willingness to post collateral, both separating and pooling equilibria are possible in principle. Under separation the poor borrowers bear the cost of separation in terms of excessive risk taking. In a more likely pooling equilibrium poor hard-working borrowers subsidize richer ones.

Credit market imperfections can prevent the poor from making profitable investments. Under asymme... more Credit market imperfections can prevent the poor from making profitable investments. Under asymmetric information observable features, such as wealth and collateral, play an important role in determining who gets credit, in violation of the Equality of Opportunity principle. We define equality of opportunity as the equal possibility of getting credit for a given aversion to effort. We first establish that, due to larger cross subsidization in high collateral classes of borrow- ers, richer individuals are more likely to get credit for a given aversion to effort. Our second result is that Inequality of Opportunity is associated with an inefficient allocation of resources among classes of borrowers. The marginal borrower in classes that post more collateral exerts less effort in equilibrium (and therefore produces lower aggregate surplus) than the marginal borrower in lower collateral classes. This suggests that public credit policies should be targeted at poorer classes of would be bo...

This paper demonstrates, in a dynamic model of monopoly regulation with price-cap, that a periodi... more This paper demonstrates, in a dynamic model of monopoly regulation with price-cap, that a periodical price review may increase productive efficiency. When the firm’s choice of costreducing effort depends on the output supplied, a revision allows the regulator to set more binding prices, thus inducing the monopolist to exert more cost-reducing effort in the future. In a continuous-time setting, we find the optimal timing for the review from a cost-efficiency point of view and the conditions under which, within a given concession period, a single full rate base review improves cost-efficiency, and by this route the optimal number of reviews. This number depends on the length of the concession period in relation to the slope of the demand function and the intensity of the disutility of effort. This result adds both a theoretical argument in favour of the practice of periodical reviews in price-cap regulation and provides regulators with a basis for the calculation of the optimal regula...

This paper shows that if moral hazard leads to credit rationing, an appropriate usury law must ra... more This paper shows that if moral hazard leads to credit rationing, an appropriate usury law must raise social welfare. Under market clearing, a usury law is always beneficial if funds are inelastically supplied. When entrepreneurial heterogeneity is introduced, an improvement arises even when the supply of funds is elastic. These results apply also in costly stateverification models and diversionary models of the credit market. Finally, a usury law proves useful in eliminating low-yielding projects when some entrepreneurs display excess optimism.

SSRN Electronic Journal

This paper examines the possibility that regulation actually increases a monopolist's cost-effici... more This paper examines the possibility that regulation actually increases a monopolist's cost-efficiency. When the firm's cost-reducing effort depends on the output supplied, a binding price-cap, by compelling the monopolist to produce more, finally results in lower costs. On the basis of a two-period asymmetric information model with a repeated choice of effort, the paper demonstrates that regulation increases efficiency when the elasticity of demand is sufficiently low, even assuming very conservative preferences and a very poor information set for the regulator. Moreover, contrary to previous findings and conventional wisdom, we find that a periodical rate base review exerts also a positive effect on future cost-reducing effort countervailing the well known ratchet effect.

Discussion Papers, 1998

This paper surveys existing explanations for the pervasive use of collateral in credit markets an... more This paper surveys existing explanations for the pervasive use of collateral in credit markets and relates them to the empirical evidence on the subject. Collateral may be used as a screening or an incentive device in markets characterized by various forms of asymmetric and biased information. The evidence is incompatible with the use of collateral as a signal of projects' quality, while broadly consistent with explanations based on its incentive properties and asymmetric evaluation of projects.

Research in Economics, Dec 1, 2004

This paper examines the possibility that price regulation increases a monopolist&amp;amp;... more This paper examines the possibility that price regulation increases a monopolist&amp;amp;#x27;s cost-efficiency. When the firm&amp;amp;#x27;s choice of cost-reducing effort depends on the output supplied, a binding price-cap, by compelling the monopolist to produce more, results in lower costs. On the basis of a two-period asymmetric information model, the paper demonstrates that price regulation increases efficiency when the elasticity of demand is sufficiently low, even assuming very conservative preferences of the regulator and asymmetric information. ...

Rivista Di Diritto Finanziario E Scienza Delle Finanze, 2002