Ex-post Implementation Research Articles

Banking FinTech and stock market volatility? The BIZUM case

This paper investigates whether and how the adoption of FinTech by incumbent banks affects their stock price volatility. BIZUM, a Spanish FinTech real-time digital payment solution was adopted by incumbent banks in 2016 and therefore provides new evidence of real-world ex-post implementation. The results indicate that the adoption of BIZUM by incumbent banks had a significant effect, reducing their stock price volatility after it was launched. This finding suggests that investors were informed of and acknowledged the advantages of BIZUM, thus, use their adoption of FinTech Start-up strategy to offset adverse market circumstances. This paper provides insights for investors and international institutions regarding the role of the pricing of banking related assets, implications for incumbent banks whose portfolios are exposed to investments in disruptive technology and for banking regulators and authorities vis-à-vis risk related considerations of the adoption by banks of FinTech strategies.

Menu mechanisms

We investigate menu mechanisms: dynamic mechanisms where at each history, an agent selects from a menu of his possible assignments. We consider both ex-post implementation and full implementation for a strengthening of dominance that covers off-path histories, and provide conditions under which menu mechanisms provide these implementations of rules. Our results cover a variety of environments, including matching with contracts, labor markets, auctions, school choice, marriage, object allocation, and elections.

Execution issues with FPO policy's operational guidelines

A majority of public policy assessments focus on either policy formulation or ex-post implementation evaluation, leaving the policymaking black box untouched. Stakeholder engagement on the nitty-gritty specifics of guidelines is also essential for improved policy execution. The current situations affect policy-making consultations and may result in low stakeholder buy-in. The operational principles for supporting 10,000 Farmer Producer Organizations (FPOs) by further 2 years are highlighted in this article, which is an innovation of a recent significant policy document in Indian agriculture. Through a detailed e-survey, key stakeholders, representatives from FPOs and their federations, sponsoring and training organisations, donors, and other ecosystem players with significant experience working with FPOs were invited to participate and express their views on the policy document. The report includes e-survey findings that reveal a high level of participation and enthusiasm for the new policy. In the new programme, there is a clear endorsement of the long-term goal, as well as milestone-based assistance and improved financial arrangements.

Ex-post implementation with social preferences

The current literature on mechanism design in models with social preferences discusses social-preference-robust mechanisms, i.e., mechanisms that are implementable in any environment with social preferences. The literature also discusses payoff-information-robust mechanisms, i.e., mechanisms that are implementable for any belief and higher-order beliefs of the agents about the payoff types of the other agents. In the present paper, I address the question of whether deterministic mechanisms that are robust in both of these dimensions exist. I consider environments where each agent holds private information about his personal payoff and about the existence and extent of his social preferences. In such environments, a mechanism is robust in both dimensions only if it is ex-post implementable, i.e., only if incentive compatibility holds for every realization of payoff signals and for every realization of social preferences. I show that ex-post implementation of deterministic mechanisms is impossible in such environments; i.e., deterministic mechanisms that are both social-preference-robust and payoff-information-robust do not exist.

<b>p</b>-dominant Implementation

We introduce and study a partial implementation notion, which we term p-dominant implementation, where p ∈ [0, 1]^N and N is the number of agents. When agents have interdependent valuation, this notion captures robustness to strategic uncertainty, contrasting with ex-post implementation. The corresponding solution concept generalizes p-dominant equilibrium (Morris et al., 1995) to games with incomplete information so as to be employed in the mechanism design problem. The incentive compatibility (p-DIC) condition requires each agent i find it optimal to truthfully report his/her type as long as the opponents are believed to do so with probability at least pi. In the quasilinear environment with one-dimensional payoff type spaces, we completely characterize p-dominant implementable allocation rules for any p. In the special case of agents with private valuation, we find that p-dominant implementable allocation rule is completely characterized by p-monotonicity of allocation rule. On the other hand, when agents’ valuation is interdependent, the condition is necessary but not sufficient. The complete characterization involves a stronger version of monotonicity of marginal benefit of reporting a higher type) with respect to agent’s true type for any report-indistinguishable reporting strategies of the opponents. Especially, with continuous types and interdependent valuation, the condition requires that any p-dominant implementable allocation rule to be 0-dominant implementable; we show that an allocation rule is p-dominant implementable for p ≪ 1 if and only if it satisfies ex-post monotonicity and additive separability. As an application of our result, we also study constrained efficient allocation that is 0-dominant implementable. We find that when there are two agents, the constrained efficient auction is a discriminatory posted-price mechanism, where the planner determines one and only one agent to whom the planner tries to sell the item.

The first impact of EU regulation on non-financial disclosure: An exploratory analysis in the oil & gas sector

Directive 2014/95, in force since 2017, is the first European step that requires companies to provide mandatory non-financial information (NFI). The regulation concerns sustainability information with the policy goal of increased accountability and comparability among European “public interest entities” on that matters. According to the framework of Regulatory Integrated Assessment (RIA), the study compares the disclosure before and after the Directive application considering the content (what) and the location of the information in companies’ reports (where). Content analysis is applied to both financial and non-financial reports to create a disclosure scoring index and an overlapping one. Thus to compare the ex-ante analysis to the ex-post by a quantitative scoring system. The research contributes to the debate on the regulatory policy evaluation examining whether the ex-post assessment reveals a change in companies’ reporting behaviour about non-financial information, i.e. if the regulation achieves its policy objectives of improving sustainability disclosure. Findings show differences between the ex-ante and the ex-post phase: after the enforcement of the Directive there is an increase in the degree of disclosure (what) and a reduction in the level of overlap (where), with more companies choosing “embedded” reports. These results are a preliminary step in the regulatory policy evaluation and they answer to the request of more studies on the ex-post implementation review of regulation.

Future accessibility impacts of transport policy scenarios: Equity and sensitivity to travel time thresholds for Bus Rapid Transit expansion in Rio de Janeiro

The accessibility impacts of transport projects ex-post implementation are generally evaluated using cumulative opportunity measures based on a single travel time threshold. Fewer studies have explored how accessibility appraisal of transport plans can be used to evaluate policy scenarios and their impacts for different social groups or examined whether the results of project appraisals are sensitive to the time threshold of choice. This paper analyzes how different scenarios of full and partial implementation of the TransBrasil BRT project in Rio de Janeiro (Brazil) will likely impact the number of jobs accessible to the population of different income levels. The analysis is conducted under various travel time thresholds of 30, 60, 90 and 120 min to test whether the results are sensitive to the boundary effect of the modifiable temporal unit problem (MTUP). Compared to a partial operation scenario, the full implementation of TransBrasil that extends this corridor into the city center would lead to higher accessibility gains due to network effects of connecting this BRT to other transport modes. Nonetheless, the size of the accessibility impacts of the proposed BRT as well as its distribution across income classes would significantly change depending on the time threshold chosen for the accessibility analysis. Considering cut-off times of 30 or 60 min, both scenarios of TransBrasil would lead to higher accessibility impacts in general and particularly for low-income groups, moving Rio towards a more equitable transportation system. However, under longer thresholds of 90 and 120 min, an evaluation of this project would find much smaller accessibility gains more evenly distributed by income levels. The paper highlights how time threshold choice in cumulative opportunity measures can have important but overlooked implications for policy evaluation and it calls for further research on the MTUP in future transport and mobility studies.

Ex-Ante Evaluation of the Accessibility Impacts of Transport Policy Scenarios: Equity and Sensitivity to Travel Time Thresholds for Bus Rapid Transit Expansion in Rio De Janeiro

The accessibility impacts of transport projects ex-post implementation are generally evaluated using cumulative opportunity measures based on a single travel time threshold. Fewer studies have explored how accessibility appraisal of transport plans can be used to evaluate policy scenarios and their impacts for different social groups or examined whether the results of project appraisals are sensitive to the time threshold of choice. This paper analyzes how different scenarios of full and partial implementation of the TransBrasil BRT project in Rio de Janeiro (Brazil) will likely impact the number of jobs accessible to the population of different income levels. The analysis is conducted under various travel time thresholds of 30, 60, 90 and 120 minutes to test whether the results are sensitive to the boundary effect of the modifiable temporal unit problem (MTUP). Compared to a partial operation scenario, the full implementation of TransBrasil that extends this corridor into the city center would lead to higher accessibility gains due to network effects of connecting this BRT to other transport modes. Nonetheless, the size of the accessibility impacts of the proposed BRT as well as its distribution across income classes would significantly change depending on the time threshold chosen for the accessibility analysis. Considering cut-off times of 30 or 60 minutes, both scenarios of TransBrasil would lead to higher accessibility impacts in general and particularly for low-income groups, moving Rio towards a more equitable transportation system. However, under longer thresholds of 90 and 120 minutes, an evaluation of this project would find much smaller accessibility gains more evenly distributed by income levels. The paper highlights how time threshold choice in cumulative opportunity measures can have important but overlooked implications for policy evaluation and it calls for further research on the MTUP in future transport and mobility studies.

IFRS 9 for Financial Institutions The Case for IFRS and FINREP Taxonomies A Conceptual Gap Analysis

Main topic: A tsunami of regulations since the 2013 financial crisis is steering toward’s Europe’s financial service sector. At the same time the accounting standard for financial institutions core products the financial instruments will be changing. Whenever such new accounting and reporting standards are issued by the IASB (International Accounting Standards Board) and this includes also footnotes, those disclosures become increasingly relevant. The reason for that is that the footnote disclosure represent an important source of information to provide transparency and enable the investor to understand the ex-post implementation business impact. In this paper the focus will be on those new footnote disclosures. As disclosures according to IFRS 9 become compulsary by 2018, the existing IFRS Taxonomy for IFRS 9 already developed by the IFRS Foundation, represents a suitable and objective framework to assess IFRS 9 impact on disclosures at an early stage. The specific goal of this paper is to perform a conceptual gap analysis considering the IFRS 9 taxonomy issued by the IASB and the Financial Reporting (FinRep) taxonomy on IFRS 9 issued by the European Banking Authority (EBA). In general, the IFRS Taxonomy is not used very much in practice. This is not understandable as several advantages relate to the IFRS taxonomy: principle-based accounting standard does very often not define specifically disclosure rules for each and every topic, therefore to derive reporting elements would very difficult to accomplish. A robust taxonomy development and governance process leading to the IFRS taxonomy simplifies the task of interpretations and the actual expression of reporting elements.The IASB started to perform a review process of the XBRL Due Process in 2013. As a result the development of the IFRS taxonomy should become part of the general due process of the financial reporting standards. Due to these changes it is expected that the importance of the IFRS taxonomy will be growing. The FinRep taxonomy has become mandatory since 2014 for all banks within Europe, to fulfill the regulatory reporting requirements according to the Capital Requirements Directive (CRR) IV.Results: Even though the disclosures for external reporting and for regulatory reporting are based on the same accounting framework International Financial Reporting Standards Boards (IFRS), differences can be observed with regard to disclosures, which are partly material. These differences become transparent when analysing IFRS- and FinRep-taxonomy reporting elements. This is caused by the principle-based IFRS, which enable scope of interpretation and the different objectives of the IASB and the banking supervision. Whereas the IASB follows the objective to develop industry non-specific international financial reporting standards, the banking supervision core focus lies on the banking industry. The EBA follows specific information requests with the FinRep taxonomy in the role as banking supervisory. The IASB intends to provide decision useful information for investors. Nevertheless these two taxonomies provide the possibility for a starting point for the harmonization and the development of common practice disclosures, which could counteract against heterogeneous financial reporting and the issue of “information overload”.

IFRS 9 for Banking Industry the Case for IFRS and FINREP Taxonomies, Critical Asessment (Abstimmbarkeit von Anhangangaben nach IFRS 9 und 7 mit dem Meldewesen: Perspektive der IFRS-Taxonomie)

Manuscript Type: Theoretical Main topic: A tsunami of regulations since the 2013 financial crisis is steering toward’s Europe’s financial service sector. At the same time the accounting standard for financial institutions core products the financial instruments will be changing. Whenever such new accounting and reporting standards are issued by the IASB (International Accounting Standards Board) and this includes also footnotes, those disclosures become increasingly relevant. The reason for that is that the footnote disclosure represent an important source of information to provide transparency and enable the investor to understand the ex-post implementation business impact. In this paper the focus will be on those new footnote disclosures. As disclosures according to IFRS 9 become compulsary by 2018, the existing IFRS Taxonomy for IFRS 9 al-ready developed by the IFRS Foundation, represents a suitable and objective framework to assess IFRS 9 im-pact on disclosures at an early stage. The specific goal of this paper is to perform a conceptual gap analysis considering the IFRS 9 taxonomy issued by the IASB and the Financial Reporting (FinRep) taxonomy on IFRS 9 issued by the European Banking Authority (EBA). In general, the IFRS Taxonomy is not used very much in practice. This is not understandable as several advantages relate to the IFRS Taxonomy: principle-based accounting standard does very often not define specifically disclosure rules for each and every topic, therefore to derive reporting elements would very difficult to accomplish. A robust taxonomy development and governance process leading to the IFRS Taxonomy simplifies the task of interpretations and the actual expression of reporting elements. The IASB started to perform a review process of the XBRL Due Process in 2013. As a result the development of the IFRS Taxonomy should become part of the general due process of the financial reporting standards. Due to these changes it is expected that the importance of the IFRS Taxonomy will be growing. The FinRep Taxonomy has become mandatory since 2014 for all banks within Europe, to fulfill the regulatory reporting requirements according to the Capital Requirements Directive (CRR) IV. Results: Even though the disclosures for external reporting and for regulatory reporting are based on the same accounting framework the International Financial Reporting Standards (IFRS), differences can be observed with regard to disclosures, which are partly material. These differences become transparent when analysing IFRS- and FinRep-Taxonomy reporting elements. This is caused by the principle-based IFRS, which enable scope of interpretation and the different objectives of the IASB and the banking supervision. Whereas the IASB follows the objective to develop industry non-specific international financial reporting standards, the banking supervision core focus lies on the banking industry. The EBA follows specific information re-quests with the FinRep Taxonomy in the role as banking supervisory. The IASB intends to provide decision useful information for investors. Nevertheless these two taxonomies provide the possibility for a starting point for the harmonization and the development of common practice disclosures, which could counteract against a heterogeneous financial reporting and the issue of “information overload”.

Finite supermodular design with interdependent valuations

This paper studies supermodular mechanism design in environments with arbitrary (finite) type spaces and interdependent valuations. In these environments, the designer may have to use Bayesian equilibrium as a solution concept, because ex-post implementation may not be possible. We propose direct (Bayesian) mechanisms that are robust to certain forms of bounded rationality while controlling for equilibrium multiplicity. In quasi-linear environments with informational and allocative externalities, we show that any Bayesian mechanism that implements a social choice function can be converted into a supermodular mechanism that also implements the original decision rule. The proposed supermodular mechanism can be chosen in a way that minimizes the size of the equilibrium set, and we provide two sets of sufficient conditions to this effect. This is followed by conditions for supermodular implementation in unique equilibrium.

Locally robust implementation and its limits

We study a notion of locally robust implementation that captures the idea that the planner may know agents’beliefs well, but not perfectly. Locally robust implementation is a weaker concept than ex-post implementation, but we show that no regular allocation function is locally robust implementable in generic settings with quasi-linear utility, interdependent and bilinear

L'évaluation préalable dans les contrats de partenariat

La comparaison de solutions contractuelles alternatives est obligatoire, en France, pour justifier le recours au contrat de partenariat. La question se pose alors des fondements d’une telle comparaison. La théorie des coûts de transaction fournit des outils particulièrement éclairants pour examiner la pertinence relative des procédures mises en œuvre à cet effet. Cet article s’appuie sur cette théorie et sa confrontation à des évaluations existantes pour explorer un certain nombre de pistes susceptibles de rapprocher les conditions de signature et d’exécution des marchés des termes résultant de l’évaluation préalable.

Non-Financial Performance Measures as Coordination Devices

This paper investigates how non-financial performance measures (NPMs) can be used to encourage cooperation across divisions. The implementation of a project often requires joint efforts by multiple divisions. However, privately informed division managers sometimes find it in their self-interest to forgo profitable joint projects or to underinvest in relationship-specific assets that would increase the projects' profitability. By treating the implementation of a joint project (e.g., a major process improvement or new product development) as an NPM, we show that paying the division managers discrete bonuses tied to this NPM improves the efficiency of project implementation and upfront investments. We derive in detail how the optimal implementation bonus trades off distortions in ex-post implementation and ex-ante investments. In a dynamic version of the base model with learning-by-doing, we develop a fast-track theory of bonus payments: conditional on a project being implemented early on, the implementation bonus in subsequent periods will be higher than if the earlier project had not been implemented.

SUPPLY CHAIN MANAGEMENT SOFTWARE SYSTEMS INTEGRATION AND VERSION UPGRADES: VENDOR AND CUSTOMER BASED FRAMEWORK

Integration and upgrade phases of an information systems project are as critical to an organization as the first time the system is implemented. In order to make the ex-post implementation of an IT project completely successful and sustain the adopted information systems, the basic definition of success needs to be extended to include customer satisfaction factors as well as vendor capabilities. This study focuses on identifying the key elements that managers consider when making the decision to upgrade and integrate supply chain management systems that are already in use. We present a framework on both vendor and customer perspectives in the evaluation of supply chain management software systems integration and version upgrades.

Ex-post implementation and preference aggregation via potentials

We introduce several notions of potentials for mechanism design problems with interdependent values, and relate them to implementation in ex-post equilibrium. Whereas ex-post implementation is closely linked to the ordinal concept of best-alternative potentials, the celebrated Vickrey–Clarke–Groves mechanism corresponds to the stronger notion of a cardinal potential: agents agree not only on the best alternative, but also on the quantitative differences between all alternatives. We characterize all valuations that allow for cardinal potentials, and use this characterization for: (1) Identifying valuations for which ex-post implementation is possible; (2) Identifying classes of valuations for which all ex-post implementable choice rules correspond to cardinal potentials. The latter allows us to extend to interdependent valuations a result for dominant strategy implementation in private values settings, due to Roberts (The Characterization of Implementable Choice Rules, North-Holland, Amsterdam, 1979).

Posterior implementation vs ex-post implementation

Posterior implementation is a weaker concept than ex-post implementation. It requires that agents' strategies are optimal against others' strategies, given the precise information made available by the mechanism. Whereas ex-post implementation is generically impossible, we show by example that this need not be the case for posterior implementation.