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on Corporate Finance |
| By: | Mustafa Recep Bilici; Saygin Cevik |
| Abstract: | This paper examines the effect of financial literacy level on cash holdings in Turkey. Utilizing the Methods of Payment Survey, which includes both financial literacy and cash-related data, we first investigate the fundamentals of financial literacy in Turkey. Based on the performance on financial literacy questions, we categorize respondents into three groups. Subsequently, we analyze how cash holding behavior differs among financial literacy groups. Our results reveal that financially literate respondents tend to hold less cash on hand and store more cash elsewhere. Moreover, card ownership increases through financial literacy and the change in payment behavior of financially literate respondents is more significant during Covid-19 pandemic. The results imply that promoting financial literacy may result in less cash usage at points of sale accompanied by the currency in circulation growth, due to the overwhelming effect of increased non-transactional demand following a positive change in financial literacy level. |
| Keywords: | Financial literacy, Money demand, Cash demand |
| JEL: | C50 E41 G53 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:2202&r= |
| By: | Özlem Dursun-de Neef (Goethe University Frankfurt); Steven Ongena (University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)); Gergana Tsonkova (Goethe University Frankfurt) |
| Abstract: | This paper studies the development of a firm’s Environmental, Social, and Governance (ESG) performance following the issuance of “green loans” earmarked for green projects versus “sustainable loans” to firms bench-marked by ESG criteria. Firms issuing green loans appear to be effective in shrinking their environmental emissions; however, they weaken in social performance indicated by a decrease in their human rights, community, and product responsibility scores. This implies that they prioritize their environmental goals, yet neglect their commitment towards their clients and society. Sustainable loans, on the other hand, we find to incentivize firms to improve their ESG performance by increasing their environmental and governance scores. Thus, the issuance of a sustainable loan surely precedes (and may consequentially signal) subsequent improvements in a firm’s overall ESG performance. |
| Keywords: | Green Loans; Sustainability Linked Loans; Environmental, Social, and Governance (ESG) Performance; Sustainable Finance |
| JEL: | G21 G32 M14 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp2242&r= |
| By: | Hugo Reis; Paulo M.M. Rodrigues; Filipe B. Caires |
| Abstract: | In this paper, we estimate a discrete-time hazard model to study firm survival in the Portuguese Tourism sector. This sector has experienced a remarkable performance over the last decades. When compared to other sectors, tourism firms are more likely to exit: (i) if they are young (less than 10 years of existence); and (ii) if they belong to the lower tail of the firm distribution (i.e. belong to the group of worse performers). Within tourism related sectors, we find that firms whose activities are offered mostly to tourists, such as travel agencies and hotels, are always among the best performers in terms of survival. Moreover, despite of Tourism being one of the most volatile sectors in periods of high uncertainty, results show a higher survival resilience among established tourism associated firms. |
| JEL: | C23 C55 L25 L83 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w202206&r= |
| By: | Evgeniya Dubinina (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Javier Garcia-Bernardo (Department of Methodology and Statistics, Utrecht University, Utrecht, Netherlands); Petr Jansky (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic) |
| Abstract: | The COVID-19 pandemic has affected most companies´ profits negatively, but other companies did exceptionally well, recording excess profits during the pandemic. In this paper we estimate the scale of these excess profits, their determinants, and the revenue potential of excess profits tax. To estimate excess profits, we develop a trend-adjusted average earnings methodology. We apply the methodology to the consolidated Orbis data to estimate that large multinational corporations (MNCs) with subsidiaries in the EU made excess profits of $447 billion in 2020 (41.7% of their total profits in 2020). We show that primary business activities is a key determinant of MNCs´ excess profits made during the COVID-19 pandemic. We show that manufacturing, information, and financial sectors are responsible for the majority of excess profits. With country-by-country reporting data we estimate the excess profits arising from each EU member state and find that EU member states could together raise $6 billion with an excess profits tax of 10%, an additional tax levied by governments on corporations’ excess profits. The research findings may be useful for policymakers in addressing the question of financing economic recovery from the COVID-19 pandemic. |
| Keywords: | excess profits; covid-19; multinational corporations; excess profits tax; european union |
| JEL: | H25 L11 L25 |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2022_13&r= |
| By: | Kick, Andreas; Rottmann, Horst |
| Abstract: | Banks have always played an ambivalent role in financial markets. On the one hand, they provide essential services for the market; on the other hand, problems in the banking sector can send shock waves through the entire economy. Given this prominent role, it is not surprising that Pereira and Rua (2018) found that the health of the banking sector exerts an influence on stock returns in the US. Understanding the relationship between banks and their impact on the asset prices of non-financials is essential to evaluate the risk emanating from an unhealthy banking sector and should be considered in new regulatory requirements. The aim of this study is to determine if the health of European banks is of such importance for the European stock market so that spillover effects are visible. Our results show that none of our banking-health variables have explanatory power on the cross-section of European stock returns. These findings contrast those for the US. The reasons may be manifold, from an unimportant liquidity provisioning channel over reduced room for actions due to regulatory requirements up to a moral hazard situation in Europe, where investors strongly rely on the governmental bailouts of distressed banks. |
| Keywords: | asset pricing,banking,spillover,errors-in-variables,individual stocks,distance-to-default |
| JEL: | G12 G21 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:hawdps:84&r= |
| By: | Padma Sharma |
| Abstract: | During banking crises, regulators must decide between bailouts or liquidations, neither of which are publicly popular. However, making a comprehensive assessment of regulators requires examining all their decisions against their dual objectives of preserving financial stability and discouraging moral hazard. I develop a Bayesian latent class model to assess regulators on these competing objectives and evaluate banking and savings and loan (S&L) regulators during the 1980s crises. I find that the banking authority (FDIC) conformed to these objectives whereas the S&L regulator (FSLIC), which subsequently became insolvent, deviated from them. Timely interventions based on this evaluation could have redressed the FSLIC’s decision structure and prevented losses to taxpayers. |
| Keywords: | Bank failures; Bank resolution; Bailout; Liquidation; Savings and loans crisis; Markov Chain Monte Carlo (MCMC); Federal Deposit Insurance Corporation; Federal Savings and Loans Insurance Corporation (FSLIC); Bayesian inference; Discrete data analysis; Latent class models |
| JEL: | C11 C38 G21 G33 G38 |
| Date: | 2022–05–10 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedkrw:94189&r= |
| By: | Enerelt Murakami |
| Abstract: | This paper investigates the determinants of financial inclusion in Mongolia – a country where persistent “reverse” gender gap in financial inclusion exists. When applying multivariate logistic models to nationally representative data, results show that women, and those who are more educated and older are more likely to be financially included. Women are four percentage points more likely than men to have access to formal finances; men are more likely to report barriers to finance and use informal finances. The Blinder-Oaxaca decomposition technique is employed to analyze the “reverse” gender disparity in financial inclusion. The results demonstrate that the disparity is largely due to coefficient effects that reflect behavioral or unobserved differences towards financial inclusion between men and women. |
| Keywords: | Financial inclusion, Gender, Mongolia |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:jic:wpaper:232&r= |
| By: | Byeongchan An; Robert M. Bushman; Anya V. Kleymenova; Rimmy E. Tomy |
| Abstract: | This paper studies the role banking supervision plays in improving access to credit for minorities by investigating how enforcement decisions and orders (EDOs) affect the bank borrower base. We find that, after an EDO's termination, banks significantly increase residential mortgage lending to minorities, even when the enforcement order is not issued for violations of fair lending laws. Our findings suggest that improvements in banks' internal credit assessment and compliance due to the enforcement process are associated with the expansion in lending to minority borrowers. Our findings highlight the indirect social benefits of bank enforcement and supervision. |
| Keywords: | Banking; Competition; Disclosure; Discrimination; Enforcement actions; Mortgage lending |
| JEL: | G21 G28 G38 |
| Date: | 2022–06–02 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2022-36&r= |