DOES VENTURE CAPITAL REQUIRE AN ACTIVE STOCK MARKET?

The United States has both an active venture capital industry and well-developed stock markets. Japan and Germany have neither. The authors argue that this is no accident— that venture capital flourishes especially, and perhaps only , when venture capitalists can exit from successful portfolio companies through initial public offerings (IPOs), which in turn require an active stock market.
Understanding the link between the stock market and the venture capital market requires understanding the contractual arrangements between entrepreneurs and venture capital providers, particularly (1) the importance of exit by venture capitalists and (2) the implicit contract over control between venture capitalists and entrepreneurs created by the possibility of exit through an IPO. This possibility gives entrepreneurs a valuable option that, in the event they are successful, allows them to reacquire control of their enterprises from venture capitalists.     

Bank funds management in an efficient market

This paper discusses general principles for choosing bank assets and liabilities, for deciding on when to make a loan and what interest rate to charge, for pricing funds transfer services such as the handling of checks, for establishing compensating balance requirements, and for dealing with government regulation. The discussion assumes markets are efficient and deals first with an unregulated environment and then with policies in the face of regulatory constraints. Most of the policies which would be optimal in an unregulated environment will be optimal in the regulated environment such as in the U.S. today, because it is relatively easy to get around most of the regulations that are applied to banks by the use of non-deposit liabilities, compensating balances and negative checking accounts.     

Black Spaces/White Spaces: Black Lives,Leisure, and Life Politics

Racial neutrality does not exist within digital and virtual spaces. Our racialized identities are imported into these spaces, as are the ideologies of our respective societies. This reality begs the question, how do Black people situate themselves in digital White leisure spaces, especially when these spaces maintain and replicate off-line spaces of racial discrimination and overt racism? This article presents a background on Black Internet users and highlights how Black people have used digital spaces to counter and disrupt messages that perpetuate inaccurate stereotypes and social inequalities. Examples are offered to support this claim. This article underlines how behaviors of Black people in digital spaces can demonstrate the presence of Black leisure and highlight the realities of Black life. Finally, critical technocultural discourse analysis will be introduced as a technique for advancing this discussion within the context of race and leisure.     

DEMOGRAPHIC CHANGE AND INEQUALITY IN THE SIZE DISTRIBUTIONS OF LABOR AND NONLABOR INCOME

This paper utilizes a joint distribution model of labor and nonlabor income that allows us to analyze the impact of demographic change in the U.S. on the marginal distributions of these two income components over time. The beta distribution of the second kind is the hypothetical statistical distribution used in this study to approximate the observed income graduation. This distribution is sum stable which allows us to compare and contrast the marginal distributions in a consistent manner, a property most hypothesized functional forms of income distribution do not possess. We are in effect using a hyperparameter model to do our estimation. We examined the impact of changes over time in labor force participation and population on the marginal distributions of labor and nonlabor income. We disaggregated the variables by sex and age cohorts and found that changes in the age distribution and in the labor supply behavior of women in particular has had a significant effect on the marginal income distributions over time. We also found that the results vary when we examined overall changes in the labor force participation rate vis a vis changes in women's labor force participation separately. The findings are consistent for both income components.     

International capital market equilibrium with investment barriers

This paper outlines models of capital market equilibrium when there are explicit barriers to international investment in the form of a tax on holdings of assets in one country by residents of another country. There is a corresponding subsidy on short positions in foreign assets. Asset prices deviate from the predictions of the world capital asset pricing model. Investors do not hold a mixture of national market portfolios, but the mix of risky assets is the same for every investor in a country. Optimal portfolios tend to be heavy in domestic assets, and light in foreign assets. Tax free investors, however, tend to hold assets anywhere in the world that are taxed heavily. Estimates of the magnitude of the average tax (or the magnitude of effective barriers to international investment) can be made by comparing the average return on the minimum variance zero β portfolio, z, with the average across countries and time of the short-term interest rate. When barriers are ineffective, the expected return on portfolio z will be the average short-term interest rate, and the world capital asset pricing model will hold.     

Session Topic: Individual Investors and Mutual Funds

Summary . The modern theory of finance suggests that most investors should put part or all of their money into a “market portfolio” mixed with borrowing or lending. Empirical evidence generally supports the theory, but there are some unanswered questions about the composition of the best market portfolio, about the apparent attractiveness of low risk stocks relative to high risk stocks, and about ways of minimizing transaction costs. Attempts to create a fund based on these principles and to make it available to a large number of investors have uncovered some important problems. Legal costs due to government regulation, the costs of managing a fund, and especially the costs of selling it are all much higher than one might expect. Despite these problems, efforts to create such funds seem destined for eventual success.     

Intermediation and the equilibrium allocation of investment capital : Implications for economic development

We investigate several common assertions about intermediation and how it affects the allocation of investment capital. We use a model with adverse selection and costly state verification in which both debt contracts and credit rationing are observed. Intermediaries arise due to a comparative advantage in information acquisition. Relative to the situation absent intermediation, intermediaries reduce credit rationing and (inefficient) interest rate differentials. The model also shows how large interest rate differentials can be observed when financial markets are not integrated and how the volume of intermediation is affected by changes in the environment.