How do emerging debt market participants recognize firm internationalization?Evidence from effects on credit ratings

We explore the firm internationalization's impact on firm credit ratings in emerging economies. Adopting Chinese data from 2009 to 2018, we document that firm internationalization varies negatively with its credit ratings, indicating that emerging debt market participants are risk averse and prioritize the risks involved in firm internationalization endeavors. This association is amplified for firms operating in host countries with lower institutional quality, decreased cultural distance from home countries, and when firms do not hold tax haven subsidiaries. We observe that the main association is consistent when alternative dataset (India, Russia, and Brazil) or proxy (cost of debt) is applied.     

P2P网络借贷市场信用风险识别

近年来,P2P网络借贷市场成为我国金融领域的重灾区,各类问题层出不穷,不仅损害了投资者利益,而且严重扰乱了我国的金融秩序,深入研究P2P网络借贷市场存在的问题具有重要现实意义。P2P网络借贷市场是信息不对称最为严重的市场之一,对借款人信用风险进行识别是P2P网络借贷的关键环节。根据信用风险定价理论,借贷利率应该充分反映违约风险,通过检验借贷利率与违约风险之间的关系可以验证借贷市场信用风险识别机制的有效性。基于“人人贷”平台公开的历史交易数据对P2P网络借贷市场的信用风险识别问题进行实证研究,结果表明:借贷利率能部分反映借款人的信用风险,但在相同的利率水平下,其他指标与违约风险也存在显著性关系,表明相同的利率未对应相同的信用风险,平台的信用风险识别机制部分有效。进一步研究表明,在缺乏成熟、易用的个人征信产品的情况下,无论借款人、P2P平台,还是投资者,对信用风险影响因素的判断与实际情况都存在一定的偏差,工作经验丰富的借款人付出了过高的借贷成本,平台在判断收入对信用风险的影响方面出现了偏差,投资者则忽视了借款人学历的价值。建议打破个人征信数据壁垒,丰富个人征信产品,保护居民信用数据安全,以保障借贷市场的持续发展。     

Optimal tax and tariff policies with tax credits

This paper examines the optimal tax and tariff policies for a small open economy when mobile capital receives a tax credit for taxes paid to the host country. For a capital-importing country, a tax on capital equal to the source country tax rate (to capture tax revenue) combined with a subsidy to encourage capital imports is the optimal policy. Results are also derived for cases in which only one of the instruments can be varied. For a capital-exporting country that cannot reduce its capital tax rate, a subsidy to the sector using exported capital is desirable.     

The economic consequences of corporate tax rates reductions in the EU: Evidence using a computable general equilibrium model

In a globalised world, governments are eager to attract foreign investors by lowering corporate tax rates. Recent trends point towards a revival of a race to the bottom in corporate income tax (CIT) rates in developed economies. EU countries have been active in this respect. A generalised fall in CIT rate could prove detrimental to tax revenues and trigger increase in other taxes to meet fiscal policy objectives. However, it could also spur investment and growth and prove to be a good fiscal policy strategy if, as a result, the corporate tax base increases. The final economic and fiscal impact of a reduction in CIT rates is therefore unclear. Using a CGE model, we find that uncoordinated tax reforms significantly impact national economies and third‐country effects can be significant when large countries implement CIT rate cuts. Small countries are better off unilaterally reducing their CIT rate at the expense of other EU countries. We find that negative spillovers are mitigated when the country reducing its CIT rate restores its budget balance by cutting either public expenditures or social transfers. A larger degree of non‐EU capital mobility also tends to reduce the negative spillover effects of unilateral CIT rate reductions.     

Rating standards around the world: A puzzle?

Using panel data on S&P's credit ratings for firms from 63 countries over the 2000–2016 period, we uncover divergent patterns in the rating standards over time. Standards strengthen by 1.5 notches for U.S. firms and by 2.2 notches for other developed country firms, but weaken by 1.2 notches for emerging country firms. Default and credit spread tests show that standards tightening for U.S. and other developed country firms is likely unwarranted, whereas standards loosening for firms in emerging economies appears to be justified. This novel and puzzling evidence suggests that S&P does not adopt consistent global standards over time.     

Strategic Trade Policy through the Tax System

If conventional instruments of strategic trade policy are unavailable, the system of foreign profit taxation and transfer price guidelines may serve as surrogate policy instruments. In this paper, I consider a model where firms from two countries compete with each other on a market in a third country. Both firms have affiliates in the third country where (part of) the production takes place. I analyse optimal policy choices of the firms' residence countries aiming at strategically manipulating the competitiveness of their firms. I show that, first, countries prefer the tax exemption system over the tax credit system if there is no intra‐firm trade. Second, if the headquarters provide inputs for production in the affiliate, countries prefer the tax exemption system if the transfer price for these inputs is close to the headquarters' variable cost and if the residence country's tax rate is high. However, if transfer prices are high and the residence country's tax rate is low, I show that the tax credit system is an optimal tax policy choice for both countries. From a policy perspective, the view that the tax exemption system is generally the best policy response if domestic firms' competitiveness is a policy goal has to be qualified.     

Multinationals,Intra-Firm Trade and the Taxation of Foreign-Source Income

Most countries use the tax credit scheme instead of the tax deduction scheme to alleviate double taxation of foreign earnings. Under the tax deduction scheme, double taxation is alleviated by treating foreign taxes paid as business cost deductible against domestic income rather than allowing them to be credited against the taxes levied by the home country (as is the case under the tax credit system).This paper examines how the two tax systems affect trade between affiliates of a multinational firm.     

Global financial conditions,country spreads and macroeconomic fluctuations in emerging countries

This paper uses a panel structural vector autoregressive (VAR) model to investigate the extent to which global financial conditions, i.e., a global risk-free interest rate and global financial risk, and country spreads contribute to macroeconomic fluctuations in emerging countries. The main findings are: (1) global financial risk shocks explain about 20% of movements both in the country spread and in the aggregate activity in emerging economies. (2) The contribution of global risk-free interest rate shocks to macroeconomic fluctuations in emerging economies is negligible. Its role, which was emphasized in the literature, is taken up by global financial risk shocks. (3) Country spread shocks explain about 15 percent of the business cycles in emerging economies. (4) Interdependence between economic activity and the country spread is a key mechanism through which global financial shocks are transmitted to emerging economies.     

Volatility and growth in developing economies: some numerical results and empirical evidence

This paper analyzes the effect of volatility on growth in a developing economy facing an imperfect world capital market. The analysis comprises: (i) the development of a formal framework for assessing the role of risk on growth; (ii) numerical simulation; and (iii) empirical testing of the model, using data from 61 developing economies. We find that the model plausibly replicates the equilibrium of small stylized economies subject to external and internal sources of risk. We define a benchmark economy and study the effects of various sources of risk and borrowing costs on the equilibrium growth rate, its variability, and welfare. The numerical results obtained are intuitive and supported by empirical evidence.     

A Note on Credit Allocation,Income Distribution and the Circuit of Capital

This note considers the relationship between credit allocation and the class distribution of income in the Circuit of Capital. Production and consumption credit inject means of purchase into different phases of capitalist reproduction. Comparative‐dynamic analysis of steady‐state evolutions shows that in the dynamic terms of Circuit of Capital production and consumption credit respectively increase wage and profit shares of aggregate income. These findings hold more broadly for any setting where sectoral revenue elasticities of outlays are below unity. They also have direct policy relevance for advanced and middle‐income economies where household borrowing has been encouraged in attempts to support demand and growth.     

The impact of credit constraints on exporting firms: Evidence from the provision and subsequent removal of subsidised credit

We study the causal impact of credit constraints on exporters using a natural experiment provided by two policy changes in India, first in 1998 which made small‐scale firms eligible for subsidised direct credit, and a subsequent reversal in policy in 2000 wherein some of these firms lost their eligibility. Using firms that were not affected by these policy changes as our control group in each case, we find that credit expansion increased the growth rate of bank borrowing and had a positive effect on exports. The subsequent policy reversal in 2000 had no impact on the growth rate of bank borrowing or on exports.     

转轨制国家国内横向资本税竞争的模型分析

本文分析了转轨制国家国内地方政府间的资本税竞争,认为一定条件下的地方政府间资本税竞争可以在一定程度上提高全国居民的福利水平;不过,经济转轨初期的各地方政府似乎更愿意采取协同一致的税收政策,因为实行这样的税收政策对地方政府的自身利益较为有利。     

Pricing IMF liquidity provision: The value of the IMF liquidity commitment

This paper presents a market-based framework for pricing the International Monetary Fund's commitment to provide liquidity assistance, accounting for the credit risk and the insurance benefit involved in such operations. It is based on the isomorphic correspondence between Fund liquidity and common stock put options. The illustrative numerical examples show that the value of this liquidity guarantee could range between several and three hundreds basis points depending on the borrower's creditworthiness, the volatility of capital flows to the borrowing country, and the amount of funds potentially needed to meet the borrower's external obligations.     

Decentralized borrowing and centralized default

In the past, foreign borrowing by developing countries was comprised almost entirely of government borrowing. However, private firms and individuals in developing countries now borrow substantially from foreign lenders. It is often asserted that this surge in private sector borrowing generates excessive borrowing and frequent sovereign defaults in developing countries. This paper analyzes the impact of decentralized borrowing using a quantitative model in which private agents decide how much to borrow and the government decides whether to default. Relative to a model in which the government determines both the level of borrowing and whether to default, decentralized borrowing drives up aggregate credit costs and sovereign default risk, and reduces aggregate welfare. Interestingly, decentralized borrowing may lead to either too much or too little debt in equilibrium depending on the severity of default penalties.     

我国省际劳动、资本、消费有效税率的估算与比较

国际上衡量实际税收负担的一般方法为平均有效税率,采用这一国际通行方法,核算了1998－2012年我国各省级劳动、资本收入以及消费支出的平均有效税率,以反映这三种要素的真实负担情况,并将它与世界其它国家进行了比较研究。结果表明：各省劳动收入有效税率则呈上升态势,资本有效税率呈先下降再上升趋势,消费有效税率呈现不规则上升趋势;资本收入有效税率大大高于劳动收入和消费支出的有效税率;各省劳动和消费的有效税率还处于世界平均偏下水平,而资本有效税率处于世界平均偏上水平;地区比较来看,东部地区的劳动、资本、消费有效税率最大,西部次之,中部最低。表明西部地区的税负水平偏高,应该探索能够降低西部地区税负的有效途径,均衡地区之间的税收负担。     

Financing patterns in transition economies: Privatized former SOEs versus ab initio private firms

We employ 37,987 firms in 30 transition economies to investigate the relation between the origins of private firms and their financing patterns. We find that relative to ab initio (from the beginning) private firms, privatized former state-owned enterprises (SOEs) finance a higher proportion of their fixed assets from bank finance (especially from state-owned banks) and supplier credit. We argue that privatized former SOEs continue to benefit from the political and financial connections established during their SOE era. We document that country governance, financial development and legal origins play an important role in the financing patterns of privatized versus private firms.     

Consumer Credit Risk and Pricing

Previous academic studies viewed borrower rejection as a sign of market imperfections in the consumer credit markets, but this view was based upon the assumption that differences in the levels of borrower creditworthiness could not be accurately identified. Today, it is possible to differentiate between types of borrowers, and riskier borrowers can participate in credit markets if they are willing to pay relatively higher borrowing costs. Hence, a more critical issue concerning the performance of these markets should be whether loan prices correctly reflect the level of borrower credit risk. This paper reexamines consumer participation in credit markets looking specifically at issues related to the pricing of borrowers of different credit risk.     

Bank credit,public financial incentives,tax financial incentives and export performance during the global financial crisis

This paper investigates the extent to which access to credit, public financial incentives and tax financial incentives affect export performance using the EU-EFIGE/Bruegel-Unicredit data set, covering firms within Austria, France, Germany, Italy, Spain, Hungary and the UK during the 2008 global financial crisis. The results show that firms receiving credit or benefiting from public financial incentives display higher export intensity and export a greater number of product lines compared to those that did not, especially in countries with better access to credit and/or financial incentives during the crisis. Further, firms benefiting from tax financial incentives show a better export performance compared to those that did not, regardless of the degree of access to credit and/or financial incentives in the country in which they operate. In addition, the effect of access to credit and public finance incentives on export performance is found to be size-dependent, while the effect of tax financial incentives is not. We suggest that governments should promote publicly funded financial incentives along with conventional schemes, such as R&D subsidies, to promote exports, particularly during a period of financial crisis.     

Islamic financing and bank risks: The case of Malaysia

We examine whether Islamic financing can explain three important bank risks in a country with a dual banking system: credit risk, interest‐rate risk, and liquidity risk. Using Malaysian data, we find that commercial banks with Islamic financing have significantly lower credit and liquidity risks but significantly higher interest‐rate risk than banks without Islamic financing. There is also evidence that bank size is significantly related to credit risk; the proportion of loan sales to total liabilities and bank size are significant determinants of interest‐rate risk; and off‐balance‐sheet financing, the extent of securitization, loan volatility, bank capital, and bank size are statistically significantly related to liquidity risk. © 2005 Wiley Periodicals, Inc.     

The role of a municipality’s financial health in a firm’s siting decision

When deciding where to locate a new facility, a firm needs to consider the financial health of the municipality where its activities will take place. Unless it sites its facility in a financially viable community, a firm is putting a substantial investment at risk. Despite the importance of this issue, many firms pay insufficient attention to a municipality’s financial condition. Instead, they focus on matters such as the tax rate, the quality of the school system, or the absence of regulatory constraints. All of these features are important, but unless a municipality is financially healthy, they can evaporate before a company has attained its expected return on investment. There are 5 financial statements and 10 financial ratios that can be used to create a financial health template, which can help a firm to assess a municipality’s financial strength, or its counterpart financial weakness. The template goes beyond the debt-repayment focus of credit rating agencies to matters such as financial autonomy, cash flows, and borrowing capacity. We use data from three cities—Barcelona, Dublin, and Detroit (pre- and post-bankruptcy)—to demonstrate the template’s ability to facilitate comparisons among cities that are in different countries and that use different accounting systems.