Home Menu
icon-menu-close.svg

Faculty & Research

Faculty & Research

Research Productive

Show result

Clear
Search Query :
Area :
Search Query :
3894 items in total found

Working Papers | 1991

Role of Futures Trading in Facilitating Commodity Exports

Naik Gopal and Aneja Ajay

In India, since its beginning in 1921 futures trading has been subjected to frequent intervention by the government in terms of allowing, banning and restricting its operation. As the debate on their utility for the economy as a whole, especially in terms of price stabilization, continues, the government is hesitant to encourage futures trading. The usefulness of futures markets are being reexamined in the light of its positive effects on international trade. Futures market seems to help exporters by way of reducing the risk of dishonor of contracts in the domestic market, reducing transaction cost due to liquidity and standardization, better market information and so on. However, unless the exporters are assured that in the long run they do not incur losses by participating in the futures market, they will not participate in the trading on price stabilization should not be negative. This study examined the issues of exporters' profitability from trading in castor seed futures and price stabilization effect to assess whether futures trading should be encouraged for enhancing exports. The results indicate that the castor oil exporters would not have incurred losses if they had consistently participated in the futures market. In fact they would have benefited by following certain trading strategies. The price stabilization test results also indicated that price stabilization effect is stronger than the destabilization effect. This is more so during high price years. These results indicate that futures trading can be beneficially used for export promotion.

Read More

Working Papers | 1991

Distributive Justice with Externalities and Public Goods

Lahiri Somdeb

We analyze in this paper the distribution of a fixed amount of perfectly devisable private goods among a fixed number of agents and with a certain portion of the private goods allocated for the creation of public goods. Each agent's preferences exhibit a type of consumption externality made precise in the paper, and we focus our attention on the existence of efficient and egalitarian allocations of the goods.

Read More

Working Papers | 1991

Quasi-Social Products with Legal Implications: A Case of Insurance Marketing

Durgaprasad D and Moorthy Ravi C

Developing countries are characterised by an under informed public and low understanding of action-outcome relationships. As a result the society as a whole ends up sub optimising its welfare. In such an environment marketing of specific products/services takes on a special significance, i.e., it needs to have a developmental content. In the case of products with a legal content and of a quasi social nature, such as insurance, changing the existing 'mindset' of the target consumer may require unconventional organisational responses. The following case and notes attempt to illustrate on such instance in the Indian environment.

Read More

Working Papers | 1991

Indian Convertible Bonds with Unspecified Terms: An Empirical Study

Samir K. Barua, T. Madhavan, and Jayanth R. Varma

Indian convertible bonds have two peculiar features that make them possibly unique in the world: a) the bonds are compulsorily converted into equity without any option, and b) the conversion terms are not specified at the time of issue but are left to be determined subsequently by the Controller of Capital Issues (CCI) who is the government functionary regulating capital issues in India. A naive model would say that the market simply forms an estimate of the likely conversion terms and then values the bond as if these terms were prespecified. This paper examines the market prices of one of the largest issues of Indian convertible bonds with unspecified terms. The empirical investigation convincingly rejects the naive model and demonstrates that changes in the markets expectation of the conversion terms are a significant factor affecting the pricing relationship. These changes are significantly correlated with the stock price itself. We do not, however, find any evidence that the market expects the CCI to adjust the conversion terms on the basis of the actual market price to protect the bondholder. But, there is strong evidence that changes in expected conversion terms affect the share price through the dilution effect. Since the unspecified terms have only added to the uncertainty of the bondholders without giving them any perceived benefits we recommend that this system should be abolished. In a companion paper, Barua and Varma (1991) present a theoretical valuation model for the Indian convertible bonds with unspecified terms. The empirical results in this paper confirm the predictions of that model.

Go to link
Read More

Working Papers | 1991

A Test for Strategic Planning Related to Management

Das P, Misra Sasi B, and Mishra Rama K

Ability to find parsimonious solutions to problems, make good judgments and decision relate to intelligent functioning of human. These are particularly significant functions of managerial work. However, standard intelligence tests and aptitudes tests of one sort or another predominantly measure the ability to code information, to store it, and retrieve it when necessary. Whereas these abilities are necessary for academic and scholastic success, what counts outside the scholastic environment of classrooms is the former (i.e. ability to make decisions etc.). This, in essence, is called “planning”. The research reported here includes the development of a test of “planning” that is contextually relevant for management and examines its psychometric properties.

Read More

Working Papers | 1991

Is the BSE Sensitive Index Better than the National Index?

Jayanth R. Varma

Stock price indices are used extensively by investors, brokers and portfolio managers as a general indicator of the stock market conditions. They are also used extensively in finance theory notably in operationalizing the popular Capital Asset Pricing Model (CAPM). In recent years, the indices published by the Bombay Stock Exchange (BSE) - the Sensitive Index (Sensex) of 30 scrips in Bombay and the 100 share National Index (Natex) - have become extremely popular with academics and practitioners alike. Anecdotal evidence suggests that the Sensex is by far the more popular index among brokers and lay investors while the Natex is the index of choice among mutual funds, professional investors, foreign investment agencies and academics. This paper studies the two BSE indices and their inter-relationship. The analysis in this paper indicates: 1. The Natex is a sluggish index which responds too slowly to market conditions. Changes which are reflected in the Sensex on any day are completely reflected in the Natex only by the next day. 2 Sensex is more volatile than Natex, but this difference is accounted for by two factors - (a) the autocorrelation of the Natex which conceals the true volatility of Natex, and (b) a higher beta of Sensex relative to Sensex. Therefore, the excess volatility of Sensex is not a matter of serious concern. In many applications, however, the higher beta of Sensex is worrisome, but it is easy to correct for it. The conclusion, therefore, is that those who follow the Natex because of its greater comprehensiveness and theoretical appeal may be mistaken. The Sensex needs to be taken more seriously as a sound market index. The observed deficiencies of the Natex raise several disturbing questions for finance theorists and researchers. Is the market for the less well traded securities in the market inefficient? Do the scrips constituting the Sensex lead the other scrips? If so, can this relationship be used to make extra normal returns? Does the Bombay market lead other exchanges which are also represented in the Natex? These issues call for further research.

Read More

Working Papers | 1991

Indian Convertible Bonds with Unspecified Terms: A Valuation Model

Samir K. Barua and Jayanth R. Varma

Indian convertible bonds have two peculiar features that make them possibly unique in the world: a) the bonds are compulsorily converted into equity without any option, and b) the conversion terms are not specified at the time of issue but are left to be determined subsequently by the Controller of Capital Issues (CCI) who is the government functionary regulating capital issues in India. An naïve model would say that the market simply forms and estimate of the likely conversion terms and then values the bond as if these terms were prespecified. However, the empirical investigation reported in a companion paper, Barua, Madhavan and Varma (1991) convincingly rejects the naïve model and makes a more sophisticated model necessary. In this paper, we use the general theory of derivative securities (Cox, Ingersoll and Ross, 1985) to obtain a closed form expression for the value of the Indian convertible bond. The testable implications derived from our model are in sharp contrast to those of the naïve model and are consistent with the empirical results in Barua, Madhavan and Varma (1991). Though the valuation formula contains an unobservable state variable, the crucial functional parameters of the pricing relationship can be estimated, allowing the investor to measure and manage his risk. We derive the hedge ratios which an investor needs to control his risk exposure. An investor in Indian convertibles cannot, however, protect himself from both sources of risk (firm value risk and conversion ratio risk) with a single hedge ratio. This is an important difference between the Indian convertible and the ordinary convertible bond.

Go to link
Read More

Working Papers | 1991

Negotiating Strategies and Skills - 1 A Sociological Study of the Paradigms in the Management of Industrial Relations in the Indian Context - Current Scenario and Future Directions

Joseph Jerome

This paper on the sociological analysis of paradigms in the management of industrial relations lays the foundation for a series of papers on Negotiating strategies and skills. The underlying paradigms in industrial relations choice making determine the choice of methods for decision-making, problem solving or conflict resolution in this sphere of management activity. Subsequent papers in this series will argue that the modalities of negotiations as a method for conflict resolution are also determined by the paradigms identified in this paper.

Read More

Working Papers | 1991

Valid Inequalities and Facets for the Capacitated Lot-Sizing Problem with Changeover Costs

Sastry Trilochan

We study a scheduling problem with costs and capacity constraints. The problem is NP-complete and combinatorial algorithms have not been very successful. We identify a general class of facets which subsumes as a special case all facets described earlier. We also develop a cutting plane based procedure for the dynamic version of the problem, and solve problem instances with up to 1200 integer variables to optimality without resorting to branch and bound procedures.

Read More

Working Papers | 1991

Indian Technology Policy: Use of New & Traditional Technologies

Moulik T K

The debate on Technology Policy in India is not a recent phenomenon. The Indian Technology Policy has tried to maintain a balance between the anti-modern technological view of Gandhian philosophy and new modern technologies. The net result is pluralization of society in terms of benefits gained by different parts of society from different levels of technologies.

Read More
IIMA