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Vol. 8, Number 3, Sept 2011

The Time-Varying Nature of the Overreaction Effect: Evidence from the UK
Panagiotis Andrikopoulos, Arief Daynes and Paraskevas Pagas
De Montfort University, University of Portsmouth and University of Portsmouth, United Kingdom
Abstract Ɩ Full Text
Previous studies on the overreaction effect in the UK show that prior losers consistently outperform prior winners in the period 1975 to 1990. This paper extends current knowledge by assessing the above phenomenon in the UK market for the period 1987 to 2007. In contrast to earlier research, we produce evidence of a weak presence of the overreaction effect for the latest test period. Further, we show that, after adjusting for size, the overreaction effect almost disappears and any additional excess post-formation return to prior-losers is attributable to market cycles. This study implies that the presence of the overreaction effect in the UK stock market is time-varying and difficult to exploit in practice.
Keywords: Overreaction, stock market efficiency, small-size effect, time-variation, behavioral finance
JEL Classification: G14, G32

Analysts Earnings Forecasts Distribution
Henry Leung
The University of Sydney, Australia
Abstract Ɩ Full Text
Consensus measures on earnings forecasts such as the IBES mean and median are point estimates of sample distributions of analyst earnings forecasts. Often, these consensus measures serve as informational proxies for investors in their decision making process. This study utilises the Australian IBES earnings forecast data from 1988 through 2008 to show that analyst earnings forecast distributions are non-normal across the 20-year period. These results suggest the possibility of a more accurate surrogate consensus than the simple IBES mean and median. This, in turn, may have some bearing on those who generally employ analysts’ consensus earnings forecasts for stock valuation and modelling purposes.
Keywords: Analysts forecasts, earnings, forecast distribution, IBES, non-normality of forecasts, mean, median
JEL Classification: G43
Financial Intermediaries and Economic Development: Evidence on Transaction Costs of Borrowing by the Poor
Vighneswara Swamy and B.K. Tulasimala
Indian Business School-Hyderabad and University of Mysore, India
Abstract Ɩ Full Text
This study, while validating the increasing role for financial intermediaries in economic development, analyzes the importance of reducing the transaction costs for financial deepening and, consequently, economic growth. It shows that higher borrowing transaction costs for the poor in particular will retard the long-term growth of rural financial markets. Further, the empirical analysis based on our primary (survey) data indicates that the microfinance models of lending offer considerably lower costs of borrowing than those in regular models of direct lending by banks. The study suggests that microfinance model of lending can provide cost-efficient avenue for speedy financial development and, subsequently, economic growth.
Keywords: Transaction costs, banks, microfinance, nonprofit institutions, NGOs, economic development, financial markets, savings institutions, growth
JEL Classification: D23, G21, L31, O16, O43

Customer Adoption of Banking Technology in Private Banks of India
Bindiya Tater, Manish Tanwar and Krishna Murari
Suresh Gyan Vihar University-Jaipur, Rampuria Jain College and MITS University, India
Abstract Ɩ Full Text
This paper explores the perception of Indian customers towards the use of technologies with respect to such factors as convenience, privacy, security, ease of use, real time accessibility, and accurate record of varied transaction that enable customer’s adoption of Banking Technology. Other factors such as slow transfer speed, technical failure, frauds and unawareness among customers that make hindrance in adoption, are also tested. The results show that demographic variables such as gender, age, qualification and income play a positive role in adoption of banking technology. All the banks are using information technology as a strategic vehicle to stay competitive against other players. There is no significant difference between adoption rates of banking technologies by the customers of different private banks. The paper also shows that banking technology helps in increasing customer satisfaction, customer loyalty, improvised growth, and performance of the banks.
Keywords: Private banks, technical failures, ATM, branch, internet and mobile banking, Kruskal Wallis test, chi-square test
JEL Classification: G21

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