nep-isf New Economics Papers
on Islamic Finance
Issue of 2022‒01‒24
four papers chosen by

  1. Development Finance and Distributive Politics: Comparing Chinese and World Bank Finance in sub-Saharan Africa By Tang, Keyi
  2. Financial projections in innovation selection: the role of scenario presentation, expertise, and risk By Avagyan, Vardan; Camacho, Nuno; Van der Stede, Wim; Stremersch, Stefan
  3. A Comparative Analysis: Chinese and Indian Exim Bank Finance in Ethiopia By Huang, Zhengli; Behuria, Pritish
  4. Railpolitik: Ethiopia's Rail Ambitions and Chinese Development Finance By Chen, Yunnan

  1. By: Tang, Keyi
    Abstract: When development finance becomes available to weak states, which parts of the state will receive the windfall gains? Development finance does not always reach the people who need it the most, both within and across countries. In this research, Keyi Tang examines how donors' preferences and recipient countries' regime types affect the subnational distribution of development finance. By combining a large-N analysis of Chinese and World Bank's loans and grants to 48 African countries between 2000-2012 and small-N case studies of a hybrid regime, Zambia, and an autocratic regime, Ethiopia, Keyi finds that domestic politics play a bigger role than donors' conditionality in development finance allocation. The more democratic a regime is, the more likely co-ethnic regions of the incumbent leader are to receive finance from both China and the World Bank. Democracy may not always help prevent clientelism but may actually facilitate it under weak institutions.
    Date: 2021
  2. By: Avagyan, Vardan; Camacho, Nuno; Van der Stede, Wim; Stremersch, Stefan
    Abstract: Innovation project selection is a decision of major relevance to firms. Errors in this decisionmay have serious consequences for firms, especially as many firms struggle with optimiz-ing innovation project selection decisions. In their pitches to innovation decision-makers,project teams invariably present financial projections on their innovation projects, whichoften include best- and worst-case scenario presentation. Despite the potential influencethe presentation of such financial projections has on firms’ innovation project selectiondecisions, this topic has not received sufficient attention in the literature. This study exam-ines the role of scenario presentation on financial projections in innovation project selec-tion by conducting two conjoint experiments among 2,425 managers and 11 follow-upinterviews with senior executives. First, the findings of this study suggest that firms shouldhelp project teams present small- rather than large-range scenarios. This is important for atleast the 57% of firms surveyed in this study where project teams are reported to present‘too wide’ and ‘too extreme’ scenarios. Second, firms seeking to promote transformationalinnovation in their innovation pipeline should make the presentation of small-range sce-narios required for an innovation proposal to be presented to a project selection commit-tee. This is relevant for 79% of surveyed firms that would like to select moretransformational than core innovation projects and especially for the half of which thatcurrently do not require scenario presentation. Third, project teams with less expertiseshould develop scenarios analytically rather than intuitively and convey the project’sstrategic merit to decision-makers to help increase innovation project selection likelihood
    Keywords: innovation; innovation project selection decisions; financial projections; finance; marketing-accounting interface; marketing-finance interface; new product development; scenario presentation
    JEL: M40 L81
    Date: 2021–10–27
  3. By: Huang, Zhengli; Behuria, Pritish
    Abstract: Zhengli Huang and Pritish Behuria examine projects financed by Indian and Chinese Exim Banks to analyze how the development financing of two 'emerging' donors – India and China – has evolved in Ethiopia. In India and China, Exim Banks work both as export credit agencies and other traditional development finance organizations, thereby blurring the boundary between development assistance and economic cooperation. The authors selected Ethiopia as it is a strategic partner for both countries, and existing literature has shown that the Ethiopian government is an outlier on the continent in employing its diplomatic relations to support strategic developmental goals.
    Date: 2021
  4. By: Chen, Yunnan
    Abstract: Explore Yunnan Chen's analysis of railway construction as a manifestation of China's economic statecraft in Africa. As African leaders have eagerly leveraged the railway sector, this paper looks through the lens of African agency to examine the case of Ethiopia's Chinese-financed railway projects, including the Addis- Djibouti Railway, contrasting it to Ethiopia's experience with subsequent European/Turkish financed projects. Chen shows the opportunities, missed and taken, by Ethiopian actors in leveraging external partners, focusing on areas of technology and skills transfer. Ultimately, the different financing arrangements entail different relationships—one politicized, one commercial—offering different scopes of bargaining power: while the political relationship offers greater flexibility regarding financing, the commercial project has been more successful for exercising agency in relation to contractors.
    Date: 2021

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