Loan price modelling for local governments using risk premium analysis

Previous studies have highlighted the question of government loan interest as one of great current importance. Government borrowing levels are high, and reducing interest payments would generate savings to meet other spending needs and/or to lower taxation, thus supporting the sustainability of public finances. However, no previous study has presented a method for a local government to calculate its own credit risk and thus be in a position to negotiate lower interest rates on its borrowing. This article defines a financial model that enables local governments to estimate the interest rate payable on a bank loan, based on their credit risk premium, in accordance with the Basel II rules and the findings of our empirical study of large local governments.     

Can Operating Leverage Be the Cause of the Value Premium?

Recent theoretical models (Carlson, Fisher, and Giammarino, 2004) predict an association between the book-to-market equity ratio (BE/ME) and operating leverage in the cross-section. Consistent with these models, we find a positive association between BE/ME and the degree of operating leverage (DOL), between DOL and stock returns, and between DOL and systematic risk. Overall, our findings provide support for a risk-based explanation for the value premium that is consistent with existing theoretical models. The evolution of systematic risk associated with firm-level investment activity, rather than financial distress, seems to be the main determinant of the value premium.     

Is China Living a Minsky Moment? Between the “Lender of Last Resort” and the Chinese Shadow Financial System

After Lehman Brothers bankruptcy in 2008, the Central Bank of China (PBOC) created a big 1.8 trillion dollars package to boost the Chinese economy. It was a necessary key measure not only to prop up the economy, but also to try to preserve the two-digit growth of the GDP that existed before the Great Recession. The financial instability of international financial circuits made necessary the involvement of the central bank. Ten years later, China’s debt explosion went up during the financial crisis, from six to twenty-eight trillion dollars between 2007 and 2016. In other words, it went up from 148 to 260 percent of GDP during the same period. The goal of this article is to analyze whether China is living a “Minsky moment” or not, and what its implications are for international financial markets.     

Co-creation with clients of hotel services: the moderating role of top management support

Hotels can strengthen their competitiveness by expanding their innovation process beyond the boundaries of the firm to exploit the valuable knowledge and skills of their customers. This study examines the effects of new service (NS) co-creation with customers in the hotel industry on NS performance, as well as the moderating role of top management support. The research also explores the main barriers faced by hotels to co-create service innovations. Partial least squares structural equation modelling results indicate that Customer co-creation exerts a direct impact on NS market outcomes and NS development (NSD) speed, which in turn favours NS quality. NS quality translates into better NS customer-related outcomes as well as in improved NS market outcomes. Top management support enhances the effect of Customer co-creation on the NSD speed. The main barrier to NS co-creation in hotels is to find customers interested in devoting time to this activity or with the appropriate knowledge and experience.     

Project Management of Production Line Automation: A Comparative Analysis of Project Management in Brazil and Colombia

This article aims to evaluate the production line automation projects developed by Brazilian and Colombian companies from the Project Management perspective, through the analysis of the application degree of PMBOK processes, to understand how formal techniques are being employed in these countries and also to identify improvement opportunities, when necessary. Data were collected through a survey. The similarity index between the ten processes, with the highest application degree in the Brazilian and Colombian samples, was 70%. For the processes with the lowest application degree, the similarity index was 60%. No similar study was found in the literature.     

Economic growth and budgetary components: a panel assessment for the EU

In this article, we test to determine whether a reallocation of government budgetary components can enhance long-term GDP growth in a set of 15 EU countries. We apply panel data techniques to the period 1971–2006, and use three alternative dependent variables in a growth regression: economic growth, total factor productivity and labour productivity. Our results also identify the distortions induced by public expenditure in the private factors allocation. In particular, we detect a strong crowding-in effect associated to public investment, which has enhanced economic growth by boosting private investment. We also associate a dependence of productivity on public expenditure on social security.     

Population suburbanization in Barcelona, 1991–2005: Is its spatial structure changing?

The aim of this article is to determine whether population suburbanization is occurring in Barcelona and, if so, how it is organized spatially. This issue is addressed through an analysis of the spatial structure of the population of the Barcelona Metropolitan Region and its evolution between 1991 and 2005. The ultimate aim is to determine whether there is a process of population suburbanization during these 15 years and, if this is the case, whether it arises according to a dispersed or a polycentric model. The results are consistent with a polycentric model for 1991 and 2005. However, this spatial structure is changing because of the process of suburbanization, which is affecting both the central business district and subcenters. During this same period, it is found that the role played by transport infrastructure in determining the spatial structure is becoming stronger. Without considering this latter result, it would appear that the dispersed model would best describe the next spatial stage. On the other hand, if the role played by transport infrastructure is taken into consideration, the next spatial stage would be an accessibility model in which population concentrates along freeways and highways.     

THE NUMÉRAIRE PROPERTY AND LONG‐TERM GROWTH OPTIMALITY FOR DRAWDOWN‐CONSTRAINED INVESTMENTS

We consider the portfolio choice problem for a long‐run investor in a general continuous semimartingale model. We combine the decision criterion of pathwise growth optimality with a flexible specification of attitude toward risk, encoded by a linear drawdown constraint imposed on admissible wealth processes. We define the constrained numéraire property through the notion of expected relative return and prove that drawdown‐constrained numéraire portfolio exists and is unique, but may depend on the investment horizon. However, when sampled at the times of its maximum and asymptotically as the time‐horizon becomes distant, the drawdown‐constrained numéraire portfolio is given explicitly through a model‐independent transformation of the unconstrained numéraire portfolio. The asymptotically growth‐optimal strategy is obtained as limit of numéraire strategies on finite horizons.     

Environmental strategy and exports in medium,small and micro-enterprises

Growing corporate internationalization and the emergence of environmental concerns are two of the main trends in the business world. This paper analyzes whether strategies for environmental protection can help small and medium enterprises (SMEs) as they internationalize their activities through exports. Personal interviews were conducted with 123 general managers of exporting SMEs from the Spanish food industry. The results show a relationship between advanced environmental strategies and export intensity for the sampled firms. However, the size of firm plays a role in this relationship, as the relationship between advanced environmental strategies and exports is stronger with an increase in the size of the SMEs. Authors discuss implications of these results for practitioners and future research.     

Cross-Border Shopping: A Survey

The aim of this paper is to undertake a review of the most important literature on the phenomenon of fiscally induced cross-border shopping. Following the presentation of the principal theoretical models, the study concentrates on applied literature. Firstly, the elements common to the diverse applications are described, and then, a detailed analysis of the research undertaken into cross-border shopping for alcoholic drinks, tobacco, fuel, and lotteries is provided, concluding with a reference to the interaction between cross-border purchases and those effected over the internet. The results achieved by the empirical research coincide and support the principal result of the theoretical literature: the tax differentials between neighboring territories induce consumers to purchase in the territory where taxation is lower, on the condition that the tax saving compensates for the transport costs associated with the travel made by the purchaser in order to take advantage of the lower taxation.