Legal and Institutional Determinants of Factoring in SMEs: Empirical Analysis across 25 European Countries

Weak protection of the rights of financiers intensifies agency problems in SME financing, inhibiting the optimal provision of credit necessary to grow and innovate. We use a survey data set of 4,348 SMEs from 25 European countries to analyze whether the use of factoring as a form of SME financing is less dependent on low quality of laws and institutions. We do so analyzing whether the use of factoring by SMEs differs across countries due to differences in the legal protection of creditors. Our findings indicate that firms operating in countries with legal environments that weakly protect the rights of creditors, with political instability or high enforcement costs, are more likely to use factoring. Managers of riskier and opaque companies operating in such inefficient environments can use the results of this study to better understand that there are suitable options to complement bank financing. Managers who seek loans can use the results to diversify their financing structure through the use of factoring. Since factoring can be used as a complement to bank loans or as a substitute for bank financing, it is important that policy makers take our results into account when revising policies concerning access to external financing.     

Makeshift markets and grassroots reponsibilization

ABSTRACT

Prior research has yielded insights into how market actors generate permanent, institutionalized structures. Investigate the emergence of a temporary marketplace, characterized by flexible socio-material constellations. We draw on ethnographic data collected within a refugee aid initiative, which assembled during the in 2015–2016, and was a response to the failure of institutional structures. We map out a process through which individuals are collectively moved to respond form social networks, and engage in market-making practices. We identify this process as the emergence of a “makeshift” market, and argue that it is a complementary form of institutional work, constituted by a grassroots process of responsibilization. We contribute to the literature on responsibilization and market dynamics by discussing (1) the emergence and decline of temporary and complementary marketplace structures and (2) mapping out a responsibilization process driven by moral outrage at the experiential level.     

Vaccination under pessimistic expectations in clinical trials and immunization campaigns

We provide one of the first formalizations of a vaccination campaign in a decision-theoretic framework. We analyze a model where an ambiguity-averse individual must decide how much effort to invest into prevention in the context of a rampant disease. We study how ambiguity aversion affects the effort and the estimation of the vaccine efficacy in clinical trials and immunization campaigns. We find that the behaviors of individuals participating in a clinical trial differ from individuals not participating. Individuals who are more optimistic toward vaccination participate more in trials. Their behaviors and efforts are also affected. As a result, because vaccine efficacy depends on unobserved behaviors and efforts, the biological effect of the vaccine becomes difficult to evaluate. During the scale-up phase of a vaccination campaign, provided that vaccine efficacy is established, we show that vaccine hesitancy may still be rational.