nep-cfn New Economics Papers
on Corporate Finance
Issue of 2005‒01‒09
six papers chosen by
Zelia Serrasqueiro
Universidade da Beira Interior

  1. Venture Capital Investment and Labor Market Performance: New Empirical Evidence for OECD Countries By Belke, Ansgar; Schaal, Andreas
  2. Credit Constraints and Determinants of the Cost of Capital in Vietnamese Manufacturing By John Rand
  3. Firm Financing in India: Recent Risks and Patterns By Inessa Love; Maria Soledad Martinez Peria
  4. Using an Asset-Based Approach to Identify Drivers of Sustainable Rural Growth and Poverty Reduction in Central America: A Conceptual Framework By Paul Siegel
  5. Creditos a PyMEs en Argentina: Racionamiento crediticio con oferta ilimitada de dinero By Agustin Filippo; Daniel Kostzer; Diego Schleser
  6. Structural VAR identification in asset markets using short-run market inefficiencies By Gultekin Isiklar

  1. By: Belke, Ansgar (University of Hohenheim and IZA Bonn); Schaal, Andreas (University of Hohenheim)
    Abstract: Anglo-Saxon countries have been successful in the 1990s concerning labor market performance compared to the former role models Germany and Japan. This reversal in relative economic performance might be related to idiosyncracies in financial markets with bank-based financial markets as in Germany and Japan being possibly inferior to stockmarket based financial markets in turbulent times and when approaching the economic frontier. A cleavage is related to venture capital markets which are flourishing on Anglo- Saxon but not on German type financial markets. Venture capital is crucial for financing structural change, new firms and innovations and therefore possibly also nowadays for employment growth.
    Keywords: labor markets, venture capital, unemployment, new economy, panel data analysis
    JEL: E22 E24 E44 G24 G32
    Date: 2004–12
  2. By: John Rand (Institute of Economics, University of Copenhagen)
    Abstract: This paper examines the extent to which borrowing constraints restrict firm access to credit and identifies individual, firm, and loan characteristics, which determine the cost of capital in Vietnamese manufacturing. Using direct information from a Vietnamese enterprise survey I show that 14 percent of the enterprises are credit constrained, and these enterprises would increase their debt holdings by 34 percent if borrowing constraints were relaxed. Moreover, it emerges that informal credit markets play an important role for fast growing firms. Enterprises do not appear to have the necessary time to go through the many administrative difficulties in the formal credit system if they want to "seize the day". Finally, collateralized loans face larger interest rates, explained by the significant influence of "policy lending" in Vietnamese credit markets.
    Keywords: financial markets; credit constraints; Vietnam
    JEL: O16 O53
    Date: 2004–12
  3. By: Inessa Love; Maria Soledad Martinez Peria (World Bank)
    Abstract: Using balance sheet information for nearly 6,000 firms between 1994–2003, Love and Martinez Peria investigate recent firm financing patterns in India. They document the overall use of debt and, in particular, the role of bank financing (short-term and long-term), trade credit, intra-business group borrowing, and foreign financing. The authors examine financing patterns over time and explore differences across firms by sector, age, ownership type, export orientation, and, in particular, size. In terms of trends, they find that while debt to asset ratios have been relatively stable, nominal debt growth has slowed down in recent years. At the same time, firms’ repayment capacity, as measured by the interest coverage ratio, has exhibited a U-shaped pattern falling during 1997–99 and recovering in recent years. Throughout the period of study, bank financing as a share of total debt has increased, while borrowing from nonbank financial institutions fell sharply. In terms of differences across firms, the most robust finding is that debt levels increase with firm size. Smaller firms have especially less debt relative to larger firms if they are young (below 10 years since incorporation), if they are in the manufacturing sector, and if they are located in Southern India. Furthermore, while the ratio of debt to assets has been relatively stable for large firms, the authors observe a significant decline for smaller firms. Overall, the findings presented provide suggestive (but not definite) evidence of stronger credit constraints for smaller firms. This paper—a product of the Finance Team, Development Research Group—is part of a larger effort in the department to study access to finance.
    Keywords: Domestic Finance
    Date: 2005–01–05
  4. By: Paul Siegel
    Abstract: The asset-based approach considers links between households’ productive, social, and locational assets; the policy, institutional, and risk context; household behavior as expressed in livelihood strategies; and well-being outcomes. For sustainable poverty reducing growth, it is critical to examine household asset portfolios and understand how assets interact with the context to influence the selection of livelihood strategies, which in turn determine well-being. Policy reforms can change the context and income-generating potential of assets. Investments can add new assets or increase the efficiency of existing household assets, and also improve households’ risk management capacity to protect assets. After all is said and done, a household’s asset portfolio will determine whether growth and poverty reduction can be achieved and sustained over time. The asset-based framework is amendable to different analytical techniques. Siegel suggests combining quantitative and qualitative spatial and household level analyses (and linked spatial and household level analyses) to deepen understanding of the complex relationships between assets, context, livelihood strategies, and well-being outcomes. This paper—a joint product of the Environmentally and Socially Sustainable Development Vice Presidency and the Rural Development Family, Latin America and the Caribbean Region—is part of a larger effort in the Bank to strengthen analyses and strategies for rural development, and address policy issues and investment priorities.
    Keywords: Agriculture; Poverty; Rural Development; Social Development
    Date: 2005–01–05
  5. By: Agustin Filippo (Universidad de Buenos Aires); Daniel Kostzer (Min. de Trabajo Universidad de Buenos Aires); Diego Schleser (Min. de Trabajo)
    Abstract: El sistema financiero argentino experimentó fuertes cambios durante la década de los noventa. Las nuevas reglas de la economía transformaron un sistema caracterizado por la “represión financiera” en otro, regido por el mercado y la competencia. Como resultado, aumentó la magnitud de los fondos intermediados, en un contexto de tasas de interés reales positivas e internacionalización de los flujos de capitales. La creciente articulación con las finanzas internacionales y la enunciación de nuevas modalidades de funcionamiento del sistema financiero hacían presagiar cambios significativos, tanto cuantitativos como cualitativos en la asignación de crédito al sector privado. Con el objetivo de examinar las condiciones de accesibilidad al crédito por parte de las empresas argentinas, este estudio avanzó en dos direcciones. Por un lado, fueron analizados los procesos de asignación de créditos que siguen los bancos comerciales. Por el otro, se estudiaron econométricamente las características de las empresas, a fin de detectar aquéllas que son exitosas en términos de acceso al crédito. Entre las conclusiones de este estudio, se muestra que el contexto de oferta casi ilimitada de dinero generado por las nuevas condiciones no fue acompañado de una mejor asignación del crédito a las empresas de menor tamaño relativo. Parecen ser válidos en el caso argentino, los criterios de racionamiento crediticio, descritos por la literatura económica.
    Keywords: firm loans, employment, crisis, Argentina, banks
    JEL: G
    Date: 2005–01–05
  6. By: Gultekin Isiklar (State University of New York at Albany)
    Abstract: We impose a structure on the short-run market inefficiencies in the asset markets and use this structure to identify a structural vector autoregressive model. This novel identification method is based on more reasonable assumptions than the standard approaches and also gives estimates for inefficiency measures in the markets, which are important on their own. Applying our method on the major European stock markets, we find that while the UK shocks were dominant in Europe until 1999, German innovations have been more important since 1999. We also find that the pattern of inefficiencies are consistent with the rational inattention model of Sims (2003).
    Keywords: Structural VAR; Overreaction and Underreaction; Stock Market
    JEL: C32 G15 D84
    Date: 2005–01–01

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