nep-cfn New Economics Papers
on Corporate Finance
Issue of 2009‒11‒07
seven papers chosen by
Zelia Serrasqueiro
University of the Beira Interior

  1. Long Term Financing Decision at the Level of Companies By Dobrota Gabriela; Chirculescu Maria Felicia
  2. Electronic Banking Services in Economy Based on Knowledge By Rabontu Cecilia Irina
  3. The Role of Financial Institutions as Participants on the Capital Market in Terms of Globalization By Miroslav Gveroski; Aneta Risteska; Stevco Dimeski
  4. An alternative method for measuring financial frictions By Uluc Aysun
  5. Is the Stability of Leverage Ratios Determined by the Stability of the Economy? By Anastasiya Shamshur
  6. Microfinance tradeoffs : regulation, competition, and financing By Cull, Robert; Demirguc-Kunt, Asli; Morduch, Jonathan
  7. On financial derivatives and differential equations used in their assessment By Teselios, Delia; Albici, Mihaela

  1. By: Dobrota Gabriela; Chirculescu Maria Felicia (Constantin Brancusi University, Faculty of Economics, Romania)
    Abstract: Debates on the financing needs registered a firm levels were a constant concern of specialists but especially managers. Majority opinion is that the financing of investment must be made by sources having character of permanence. However, a problem whose answer is not easily determined is the degree to which it may use its own sources, borrowed or rented, to record the lowest financing cost. Since the shareholders require a higher remuneration of capital investments superior to those on the financial market, managers must seek to reduce the cost of borrowed capital and the growth rate of financial return. In this paper are presented issues relating to the structure and potential sources and funding the decision on cost related to each funding opportunities.
    Keywords: financing, firms, management, investments, reduction of the cost of borrowed capital
    JEL: D21
    Date: 2009–05
  2. By: Rabontu Cecilia Irina (Constantin Brancusi University, Faculty of Economics, Romania)
    Abstract: The term "electronic banking" or "ebanking" covers both computer and telephone banking. Using computer banking, a charity’s computer either dials directly into its bank's computer or gains access to the bank’s computer over the internet. Using telephone banking, the charity controls its bank accounts by giving the bank instructions over the telephone. Both computer and telephone banking involve the use of passwords which give access to the charity’s accounts. Technological innovation and competition among existing banking organizations have allowed a wider array of banking products and services to become accessible and delivered through the Internet. The rapid development of e-banking capabilities carries risks as well as benefits. The bankers are to recognize, address and manage banking institutions in a prudent manner according to the fundamental characteristics and challenges of e-banking services.
    Keywords: banking system, electronic banking, telephone banking, internet banking, internet-based payments
    JEL: G21 G24 D23 O11
    Date: 2009–05
  3. By: Miroslav Gveroski; Aneta Risteska (Faculty of Economy, Prilep, Republic of Macedonia); Stevco Dimeski (Stopanska Banka, Skopje, Republic of Macedonia)
    Abstract: Financial markets and institutions have a main role for national economy development. A lot of transactions which offer opportunities for making profit are realizing on the capital market as a segment of financial market. The paper includes analysis of the meaning and the role of financial institutions as participants on the capital market. At the end is the conclusion made by researching in way to help for increasing and developing the assignment and the role of financial institutions on the capital market in Republic of Macedonia.
    Keywords: capital market, financial institutions, economic development
    JEL: G21 G24
    Date: 2009–05
  4. By: Uluc Aysun (University of Connecticut)
    Abstract: Costly state verification models predict that the sensitivity of borrowing costs to financial leverage is positively related to the level of state verification costs (financial frictions). This paper constructs a measure of financial frictions that is consistent with this prediction of theory. Using bond deals from 47 countries, financial frictions are captured as the sensitivity of bond spreads to the issuing firms' financial leverage. This dynamic measure of financial frictions provides new insights into three characteristics of financial frictions. 1) In contrast to the inferences from widely-used measures, financial frictions display a large degree of variability, and have decreased over time. 2) The effect of financial frictions on private credit supply has decreased both in significance and magnitude over time. 3) Bankruptcy reforms, in general have not been effective in improving creditor/borrower rights.
    Keywords: financial frictions, leverage sensitivity, financial accelerator, bond deals.
    JEL: G15 K22
    Date: 2009–10
  5. By: Anastasiya Shamshur
    Abstract: The choice of capital structure by firms is a fundamental issue in financial literature. According to a recent finding, the capital structure of firms remains almost unchanged during their lives meaning that leverage ratios are significantly stable over time. The stability of leverage ratios is mainly generated by an unobserved firm-specific effect that is liable for the majority of variation in capital structure (Lemmon, Roberts, and Zender 2008). However, the study focuses on the US economy, which is relatively stable. I study how substantial changes in the economy affect the stability of firms' capital structure in transition countries. Specifically, I concentrate on Central and Eastern European economies that passed through transition from central planning to a market economy and privatization, the Russian financial crisis, and EU membership. In addition, I investigate whether the ownership structure of firms is responsible for the part of the unexplained variation in leverage.
    Keywords: Capital Structure, Financing Decisions, Eastern Europe
    JEL: G32 C23
    Date: 2009–09
  6. By: Cull, Robert; Demirguc-Kunt, Asli; Morduch, Jonathan
    Abstract: This paper describes important trade-offs that microfinance practitioners, donors, and regulators navigate. Drawing evidence from large, global surveys of microfinance institutions, the authors find a basic tension between meeting social goals and maximizing financial performance. For example, non-profit microfinance institutions make far smaller loans on average and serve more women as a fraction of customers than do commercialized microfinance banks, but their costs per dollar lent are also much higher. Potential trade-offs therefore arise when selecting contracting mechanisms, level of commercialization, rigor of regulation, and the extent of competition. Meaningful interventions in microfinance will require making deliberate choices - and thus embracing and weighing tradeoffs carefully.
    Keywords: Access to Finance,Debt Markets,Banks&Banking Reform,Emerging Markets,Rural Finance
    Date: 2009–10–01
  7. By: Teselios, Delia; Albici, Mihaela
    Abstract: This paper deals with the assessment of options on dividend paying stock and futures options. We start from the case of the underlying asset who does not generate dividend and then switch to an underlying asset which pays a continuous dividend yield. The final conditions and the boundary conditions added to a partial differential equation, allow an accurate determination of the solution.
    Keywords: differential equation; options on dividend paying stock; futures options; Black_Scholes’ model; Black’s model
    JEL: C00 C02
    Date: 2009–10–28

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