nep-cfn New Economics Papers
on Corporate Finance
Issue of 2006‒03‒05
thirteen papers chosen by
Zelia Serrasqueiro
Universidade da Beira Interior

  1. Testing the Trade-off and Pecking Order Theory: Some UK Evidence By Viet Anh Dang
  2. Debt maturity of Italian firms By Silvia Magri
  3. Debt Maturity, Risk, and Asymmetric Information By Marco Espinosa-Vega; Allen N. Berger; W. Scott Frame; Nathan H. Miller
  4. The END: A New Indicator of Financial and Nonfinancial Corporate Sector Vulnerability By Toni Gravelle; Jorge A. Chan-Lau
  5. Remittances, Financial Development, and Growth By Paola Giuliano; Marta Ruiz-Arranz
  6. Does Subsidising the Cost of Capital Help the Poorest? An Analysis of Saving Opportunities in Group Lending By Kumar Aniket
  7. Financial Globalization and Fiscal Perfomance in Emerging Markets By David Hauner; Manmohan S. Kumar
  8. Monitoring and Commitment in Bank Lending Behavior By Rodolphe Blavy
  9. Financial Sector Conditionality: Is Tougher Better? By Alessandro Giustiniani; Roger P. Kronenberg
  10. FIRST: A Market-Based Approach to Evaluate Financial System Risk and Stability By Renzo G. Avesani
  11. Financial Sector Projections and Stress Testing in Financial Programming: A New Framework By Antonio Garcia Pascual; Ritu Basu; Nada Choueiri
  12. Option pricing and spikes in volatility: theoretical and empirical analysis By Paola Zerilli
  13. Pricing the Credit Risk of Secured Debt and Financial Leasing By Marco Realdon

  1. By: Viet Anh Dang (Leeds University Business School)
    Date: 2005–09–03
  2. By: Silvia Magri (Banca d’Italia)
    Abstract: In this paper we test different theories on debt maturity that can be ascribed to either the demand or the supply side of the market. Firm risk, asymmetric information, agency costs are all aspects that should be considered in the analysis. We also include leverage in the firm decision process regarding debt maturity, relying on a simultaneous equations approach. Among Italian industrial firms, theories based on lenders using debt maturity to address information problems and default risk seem to have strong explanatory power. The demand side of the market appears to be less important in determining debt maturity. The role of the supply side of the market is confirmed when considering legal enforcement of loan contracts. Where legal enforcement is low, the negative consequences of asymmetric information are worse for lenders and this explains why they give more importance to asymmetric information proxies in determining debt maturity.
    Keywords: corporate finance, debt maturity, legal enforcement
    JEL: G32 K40 L14
    Date: 2006–01
  3. By: Marco Espinosa-Vega; Allen N. Berger; W. Scott Frame; Nathan H. Miller
    Keywords: Debt , Risk premium , Banks , Credit , Economic models ,
    Date: 2005–10–27
  4. By: Toni Gravelle; Jorge A. Chan-Lau
    Keywords: Risk premium , Korea, Republic of , Malaysia , Thailand , Credit , Financial sector ,
    Date: 2005–12–22
  5. By: Paola Giuliano; Marta Ruiz-Arranz
    Keywords: Workers remittances , Financial systems , Economic growth , Investment ,
    Date: 2005–12–23
  6. By: Kumar Aniket
    Abstract: This paper shows that subsidising the cost of capital restricts the ability of the poorest to participate in the group lending mechanisms that include saving opportunities. We document the group lending mechanism used by a typical microfinance lender in Haryana, India. Individuals can participate in the group either as a borrower or a saver. The lender requires that the borrower partly self-finance their project with their own cash wealth. Consequently, a borrower requires a minimum amount of cash wealth to borrow. The poorest participate in the group by co-financing the borrower's project with their meagre savings. In return, they obtain higher than market returns on their savings. Subsidising the cost of capital reduces the cash wealth required to participate in the group as a borrower. Conversely, it increases the cash wealth required to participate as a saver, thus curtailing the opportunity for the poorest to enrich themselves.
    Keywords: Group Lending, Microfinance, Savings, Outreach
    JEL: D82 G20 O12 O2
  7. By: David Hauner; Manmohan S. Kumar
    Keywords: Emerging markets , Fiscal reforms , Fiscal management , Globalization , Interest rate differential , Financial stability ,
    Date: 2005–11–28
  8. By: Rodolphe Blavy
    Keywords: Banking , Bank credit , Bank supervision ,
    Date: 2005–12–13
  9. By: Alessandro Giustiniani; Roger P. Kronenberg
    Keywords: Conditionality , Fund , Financial sector ,
    Date: 2005–12–21
  10. By: Renzo G. Avesani
    Keywords: Risk premium , Markets , Credit , Financial institutions , Financial stability , Global financial stability report , Financial systems ,
    Date: 2005–12–22
  11. By: Antonio Garcia Pascual; Ritu Basu; Nada Choueiri
    Keywords: Financial sector , Financial programs , Financial institutions , Exchange rate policy surveillance , Fund ,
    Date: 2006–02–08
  12. By: Paola Zerilli (University of York)
    Date: 2005–09–03
  13. By: Marco Realdon
    Abstract: This paper presents closed form solutions to price secured bank loans and financial leases subject to default risk. Secured debt fair credit spreads always increase in the debtor's default probability, whereas financial leasing fair credit spreads may well decrease in the lessee's default probability and even be negative. The reason is that the lessor, unlike the secured lender, can gain from the lessee's default, especially when the leasing contract envisages initial prepayments or the lessee's terminal options to either purchase the leased asset or to extend the lease maturity. This result, which critically depends on contractual and bankruptcy code provisions, can explain some of the empirical evidence and the use of financial leases as an alternative to secured bank lending to finance small, risky and relatively opaque firms.
    Keywords: default risk, secured debt, debt valuation, collateral asset, leasing valuation, leasing options
    JEL: G13 G33
    Date: 2005–11

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