Debt financing and tunneling of Chinese listed firms

Unique institutional structure of Chinese stock market often leads to the distortion of corporate financing behavior, which is a phenomenon widely documented in the literature. However, most previous studies in this field have concentrated on equity financing, especially rights offering, while ignoring debt financing as an important alternative. This paper examines the debt financing behavior of firms after making the decision to utilize rights offering. Empirical findings suggest that debt financing increases significantly after rights offering, which results in a higher leverage ratio. Changes in leverage are positively influenced by rights offering scale, which is consistent with the ＂money encirclement＂ hypothesis. Our evidence also indicates that with the increase in ownership concentration, the leverage also increases.     

Conditional Conservatism and Debt versus Equity Financing

Extant research suggests that conditional conservatism reduces information asymmetry between a firm and its shareholders as well as its debtholders. However, there is little evidence on whether conditional conservatism reduces information asymmetry differentially for shareholders and debtholders. We use the setting of a firm's choice between equity versus debt when it seeks a significant amount of external financing to examine this research question. We find that when firms raise a significant amount of external financing, the use of equity (versus debt) increases with the level of conservatism. We also find that the reduction in cost of equity associated with conservatism is greater for equity issuers than for debt issuers, but find no such difference when we examine cost of debt. In addition, we find that the positive effect of conservatism on the choice of equity issuance (versus debt issuance) is accentuated when the information asymmetry between the firm and its shareholders is more severe. Overall, our results suggest that conservatism reduces information asymmetry more between firms and shareholders than between firms and debtholders.     

The behavior of foreign currency holdings during currency crises: Causes and consequences

This paper evaluates the current literature on dollarization and finds it to be disappointing in its ability to explain many of the prevailling features of the dollarizations experiences in Latin America, Eastern Europe and the Former Soviet Union. The paper takes a different approach to the standard empirical studies, which usually extend a demand for money function to include international variables, by analyzing foreign currency holding behaviors in response to the sustainability and credibility of the exchange rate regime. The results are very promising and explain some of the previously unexplained phenomena which arise from dollarization.     

民营上市公司:融资偏好与股权融资效应

根据2006~2009年连续4年的融资结构数据,我国民营上市公司融资选择与"啄序理论"相反,即先外源后内源融资。在外源融资上,它们几乎不采用债券融资,偏好于商业信用、短期借款和股权融资;在内源与外源融资的选择上,总体上则更偏好于外源融资,且利用短期融资工具能力远强于利用长期融资工具的能力。同时,基于股权融资效应分析,实证得出股权融资对民营上市公司的业绩有负面影响,进而提出改善其融资结构的若干措施。     

A common currency for Russia and Byelorussia: Meeting the criteria of the optimum currency area theory

The articles discusses the readiness of Russia and Byelorussia for the introduction of a common currency in their territories and the theoretical basis for this introduction, as presented in the theory of optimum currency areas.     

A theory of international currency: Competition and discipline

We explicitly consider strategic interaction between governments to study currency competition and its effects on the circulation of currencies and welfare in a two-country two-currency search-theoretic model. Each government finances public goods by means of seigniorage. Compared with a regime with two local currencies, a regime with one international currency allows the issuer of the international currency to reduce the inflation tax while collecting more seigniorage, and forces the other issuer to raise the rate to compensate for a diminished tax base. However, the country with a local currency is sometimes constrained by an inflation discipline: the more open a country is, the stronger is the discipline. Strategic selection of equilibrium gives rise to a further inflation discipline: the larger country tries to have its currency circulate abroad, while the smaller country tries to prevent the circulation of Foreign currency.     

Speculative attacks and currency crises: The Mexican experience

By using data from the Mexican economy, this paper estimates a speculative attack model of currency crises in order to identify the role of macroeconomic fundamentals and early warning signals of a potential currency crisis. A deterioration in fundamentals appears to generate high one-step-ahead probabilities for the observed regime changes during the sample period 1982–1994. Particularly, foreign reserve losses, expansionary output, monetary and fiscal policies, an increase in inflation differentials and the share of short-term foreign currency-indexed debt, and an appreciation of the real exchange rate appear to have contributed to the speculative pressures and the associated regime changes.     

Employment in domestic plants and foreign affiliates: A note on the elasticity of substitution

Conclusions For a high-wage country like Austria, it is commonly expected that growing employment in foreign affiliates substitutes jobs at home. This paper provides a simple framework for estimating the determinants of relative labor demand (abroad in relation to that at home) bilaterally. It is based on the relationship of (dis)economies and transportation costs under the hypothesis that goods trade is an imperfect substitute for foreign production in the case of horizontal investments, while with respect to vertical investments, goods trade is solely dependent on relative market size. The estimates are based on bilateral industry-level data on foreign affiliates and the domestic activities of Austrian manufacturing firms, covering the period 1990–1996, the 10 most important host countries and 7 industrial sectors.     

地方政府债务对经济增长的影响——基于债务规模与债务结构的双重视角

在提出测算地方政府隐性债务新方法的基础上,基于所测算的数据,从债务规模和债务结构的双重视角,全面分析地方政府债务对经济增长的影响。结果表明:就债务规模而言,当地方政府债务率相对较低时,增加债务有助于促进经济增长,但是当地方政府债务率相对较高时,进一步增加债务对经济增长的推动作用将会减弱。就债务结构而言,当地方政府的隐性债务占比过高时,地方政府债务的扩张会对经济增长产生更为显著的负向影响,这主要是因为隐性债务对民间投资的挤出作用更强。因此,防范与化解地方政府债务风险,不应采取"一刀切"的策略,而应从债务规模和债务结构两个视角综合考量,为各地量身打造防范与化解债务风险的最优策略。     

Assessing Debt Sustainability in a Stochastic Environment: 200 Years of Dutch Debt and Deficit Management

When debt levels approach critical levels, tax payers may revolt against the associated debt service burden. Funding problems may arise in capital markets when lenders anticipate such revolts and refuse to participate in debt auctions. We provide a stochastic framework to assess whether such problems may arise and argue that the key to fiscal sustainability in a stochastic environment is a feedback rule from debt level shocks back to corresponding adjustments in the primary surplus. We show that such feedback rules narrow future distributions of debt–output ratios and so reduce crisis probabilities. We apply the methodology to Dutch debt and deficit data spanning two centuries. Our results strongly argue for the incorporation of rules stipulating tightening fiscal policy whenever debt stocks exceed previously agreed upon targets (like in the original Eurozone Stability pact).     

Econometric Analysis of External Debt Burdens of African Countries: Debt Rescheduling and Arrears of Interest

Abstract: The study is an empirical investigation of reasons why African countries are unable to meet their external debt commitments during 1980s and immediately thereafter. It identifies the factors responsible for both temporal and cross-country variations in interest arrears on long-term debts as well as the proportions of debts being rescheduled. Annual data over 1980-90 period for 39 African countries are employed and possible effects of various factors like the existing debt overhang; composition of external debts; external trade performances; foreign reserves position; foreign capital inflows; interest rate on the debts; level and growth of income; and other domestic economic indicators are tested for and confirmed. (JEL: F34; 055). Résumé: Il s'agit d'une étude empirique des raisons pour lesquelles les pays africains n'ont pas pu honorer leurs obligations au titre de la dette extérieure, dans les anneées 80 et les années suivantes. Elle identifie les facteurs responsables des variations temporelles et internationales des arriérés d'intérêts au titre des dettes à long terme ainsi que du rééchelonnement des dettes. Les données annuelles qui ont été utilisées sont celles couvrant la période 1980-90 pour 39 pays africains et les effets éventuels des différents facteurs (tels que l'encours actuel de la dette; la composition des dettes extérieures; les performances du commerce extérieur; la position des réserves en devises; les entrées de capitaux étrangers; les taux d'intérêt appliqués sur les dettes; le niveau et la croissance du revenu; et d'autres indicateurs économiques intérieurs) ont été testés et confirmés.     

Real currency appreciation in accession countries: Balassa-Samuelson and investment demand

The Balassa-Samuelson effect is often seen as the prime explanation of the continuous real appreciation of Central and East European (CEE) transition countries' currencies against their western counterparts. A simple model shows that productivity shocks work not only through a Balassa-type supply channel but also through an investment demand channel. Therefore, empirical evidence apparently in favour of Balassa-Samuelson effects may require a re-interpretation. The model is estimated for a panel of CEE countries. The results are consistent with the model palusibly explain the observed real appreciation and support the existence of the proposed investment demand channel. JEL no. F31, F41, C33 The paper represents the author's personal opinions and does not necessarily reflect the views of the Deutsche Bundesbank.     

借鉴和思考:国际贸易政策性融资剖析

剖析各国国际贸易政策性融资体制,可以理清其制度特征,为我国同类机构的运作提供有益借鉴,促使学界对国际贸易政策性融资方式的发展多加思考。     

Debt to Society: Asset Poverty and Prisoner Reentry

Every year, millions of people exit American jails and prisons and attempt to reintegrate into society. Ex-offenders face many obstacles during the transition. Scholars contend that securing employment is central to a successful transition. A job that allows an ex-offender to earn an income above the poverty line is especially significant, recent studies have shown. Consequently, many prisoner reentry initiatives are focused on expanding employment opportunities for ex-offenders. However, the almost exclusive emphasis on employment as the measurement of economic well-being is short-sighted because it ignores the importance of financial education and asset ownership. Prisoner reentry programs should include an emphasis on financial education in addition to an emphasis on employment as a means of reducing recidivism rates and improving the economic well-being of the ex-offenders and receiving communities. The paper concludes with a discussion of policy implications.     

The euro and its consequences: What makes a currency strong?

The creation of the Economic and Monetary Union (EMU) and the introduction of the euro was one of the great events in economic history after World War II. The basic attractiveness of the euro is its large and expanding transaction size and the independent central bank which pursues price stability as its primary goal. The basic strength of the dollar is the hysteresis effect based on economies of scale and network externalities. The conclusion in the paper is that at present the hysteresis effect dominates the sheer size effect and the dollar remains the key vehicle currency while the euro has established itself as the second most widely used currency in the world. The euro depreciated against the dollar in the first three years after its introduction. In the paper the euro weakness is explained by the positive growth differential in favor of the U.S. economy caused by the advance in IC-technology and a pick-up in total factor productivity. In the medium run, the outlook for the euro is favorable. The U.S. current account deficit is unsustainable and improvements require a substantial depreciation of the dollar.Distinguished Address presented at the Fifty-Fourth International Atlantic Economic Conference, Washington D.C., October 10–13, 2002.     

货币政策效果度量方法研究:理论综述与评价

~~货币政策效果度量方法研究:理论综述与评价@吴静$西南财经大学!经济法专业硕士研究生 @吴婷婷$西南财经大学!金融专业硕士研究生     

The choice of financing with public debt versus private debt: New evidence from Japan after critical binding regulations were removed

The complete removal of binding regulatory constraints on bond issuance till 1993 provides an opportunity ripe enough to test hypotheses on the choice of financing with public debt and bank debt, comparing with the partial deregulation of Japanese financial markets in the late 1980s. Regardless of further deregulation, there is a U-turning to bank debt in Japan's corporate financing as the 1990s’ recession prolonging. In particular, we find high quality Japanese firms leave banks to the bond market, while low quality firms U-turn to bank debt. We also provide new evidence that Japanese banks tend to lend loans to wealthy firms. Because of a shift from equity-linked bond to straight bond during 1993–1997, our study provides a complement to evidence on financing choices of equity-linked public debt versus bank debt with the late 1980s’ bull stock market.