Credit rationing or overlending? An exploration into financing imperfection

Small and new firms are deemed to be unable to obtain sufficient bank loans. This idea finds a strong theoretical support in credit rationing theory. However, this is vigorously challenged by De Meza and Webb (1987, 2000) suggesting that firms can benefit from an excess of credit, i.e. overlending. Credit rationing or overlending? The contribution of this empirical article is twofold: to our knowledge, it is the first to make an attempt in measuring the relative importance of these two types of financing imperfection and to explore factors leading to one or the other. We exploit a rich panel data set on the access to bank credit for new French businesses during the mid-1990s. Our results show that credit rationing was not highly spread among French new firms. The story told by De Meza and Webb (1987) appears to be a much more realistic model. In addition, we identify factors, linked to the starter, the project or the industry, that are closely associated with credit rationing and/or overlending. Most factors enter into a consistent relation: when they are positively (negatively) associated with credit rationing, they are negatively (positively) associated with overlending.     

HEALTH INSURANCE AND LABOR FORCE PARTICIPATION: WHAT LEGAL RECOGNITION DOES FOR SAME‐SEX COUPLES

Using Current Population Survey data, I examine how same‐sex couples' labor force participation and health insurance coverage change as a result of their unions being legally recognized. The results indicate female same‐sex couples switch from arrangements where both members work to arrangements where only one member of the couple works. Being able to gain health insurance through a spouse's employer seems to play a major role in this change. Male same‐sex couples experience no change in their labor force participation or health insurance. (JEL J08, I13, J18)     

UK local authority attitudes to Park and Ride

Although the high level of implementation activity within the UK would suggest that bus-based Park and Ride (P&R) is a favoured policy option, little evidence exists which tests this assumption empirically or explores it in detail. In addition, a growing body of evidence indicates that P&R may increase the vehicle miles travelled (VMT) of its users. This paper reports on a recent survey of UK local authorities, both with and without current P&R provision, to understand the reasons behind its popularity and the level of recognition of its effectiveness in reducing car use. Particular consideration is given to the relationship between P&R and conventional public transport (particularly bus) services, as the transfer of passengers from these can have a significant impact on the effectiveness of P&R. The potential future growth of P&R is also addressed. The results suggest a number of divergences with the empirical evidence, particularly with regards the traffic effects of P&R. P&R is predicted to grow but there is support for implementing P&R in ways that may increase its effectiveness.     

The triple-edged sword of sensitivity of sales,cash flows,and debt to investments: Venture survival and capital investments

Drawing on reliable financial performance data of 192,855 venture-year observations, representing a total of 66,174 ventures with 8.13% of the ventures failing (5380 ventures), we find that neither sales-investment sensitivity nor cash-flow-investment sensitivity is associated with venture survival. However, debt-investment sensitivity lowers the hazard of failure. Sales-investment sensitivity and debt-investment sensitivity under munificence and dynamism lower the hazard of failure. However, cash-flow-investment sensitivity at high levels of dynamism or munificence does not influence the hazard of failure. The effect sizes are small but nonetheless meaningful. The findings have implications for ventures attempting to match performance and capital structure with investment.