Can Bank Lines of Credit Protect REITs against a Credit Crisis?

In a tight credit market, the primary concern of most real estate investment trusts (REITs) is the ability to access capital and maintain adequate liquidity. Bank lines of credit or loan commitments, which are legally binding contracts arranged to provide debt at the call of the borrowers under prespecified terms, have been theorized to provide insurance protection against a credit crisis. This article examines whether bank lines of credit can indeed provide some insurance for REITs and allow them to access credit during bad times. Covering three credit crunch events, both the origination and utilization patterns of commitment loans by 275 REITs publicly traded between 1992 and 2007 are analyzed. We find that bank lines of credit insulated REITs from credit rationing at both the broad market level as well as at the firm level. However, the insurance value is qualified in the case of smaller and risky firms which may not get to extend their credit limit or draw down on their existing credit lines in a credit crisis.     

Heterogeneous Agents and the Indifference Pricing of Property Index Linked Swaps

Swap spreads predicted by the traditional risk-neutral valuation models are much lower than the quoted market spreads for property index linked swaps (Patel and Pereira, Journal of Real Estate Finance and Economics, 36:5–21, 2008). This paper attempts to develop a utility indifference-based model for evaluating the reservation spreads of swap receivers and payers based on the principle of expected wealth utility equivalence rather than the traditional risk-neutral argument. Under the proposed model framework, this paper addresses the determination of the swap spreads. When the incompleteness of real estate markets and heterogeneity of representative agents are taken into consideration, it is shown that the agents’ risk preferences and heterogeneous beliefs about expected future property returns are the remarkable determinants for the swap spreads. Our model also identifies market power and the settlement rules in the event of counterparty default as important factors in determining the swap spreads. Our model provides a possible interpretation for the difference between the spreads predicted by the traditional models and the actual market spreads.     

Unconventional monetary policy and the dollar–euro exchange rate: first results from time-series analysis

This article examines the impact on the US dollar–euro (USD–EUR) exchange rate of the unconventional monetary policy conducted by the US Federal Reserve (Fed) and the European Central Bank (ECB). To that end, we make use of time-series analysis to obtain a reasonable long-run and short run representation of the data generation process and use dummy variables to study how announcements about monetary policy changes can affect the USD–EUR exchange rate. Our results indicate that the announcement and subsequent implementation of such measures by the ECB would have caused an appreciation of the dollar, while those by the Fed would have caused a depreciation of the dollar.     

Technology transfer in East Asia and its implications for regional cooperation∗

The importance of technology in economic development is indisputable. A large part of the developmental process in East Asian countries has been greatly accelerated by the transfer of technology from developed countries. This paper, based on detailed data obtained from selected samples of about 100 companies in Korea, Taiwan, Singapore, Malaysia, Thailand, and Indonesia, examines several key determinants of the process of acquisition, assimilation and internalization of imported technology in business enterprises. Drawing on the findings, this paper also suggests several implications for regional cooperation in enhancing the process of technology transfer in East Asia.     

On the concept of appropriate technology for less industrialized countries

A questionnaire-survey, based on notions of external dependence and passive receipt of technology, was addressed to a group of technical and development experts to investigate why the manufacturing technologies applied in the LIC's are considered inappropriate for their resources and conditions. The results are preliminary and cannot be statistically validated, but constitute suggestive and important evidence which raises serious doubts on the validity of conventional wisdom in this field. There are strong indications that LIC's are not generally mere passive recipients of technologies developed in IC's—many instances of technological development carried out in some of these countries were reported and the imported technologies are usually adapted to local conditions. The “inappropriateness” of some industrial technologies was due to factors such as: (a) Inadequate response to market requirements; (b) failure to use and/or adapt to the local supply of materials; (c) failure to adapt to a smaller scale of production; (d) insufficient use of labor due to price distortions and other restrictions; (e) import of unsuitable machinery; (f) selection of unsuitable technology due to restrictions on the acquisition of technology.     

An examination of recreational divers' underwater behaviour by attitude–behaviour theories

The increasing demand for dive tourism activities has resulted in concerns over scuba divers' incremental impacts on the underwater marine environment. Hence, there is a need to better understand the antecedents of scuba divers' underwater behaviour. This study applied theory of planned behaviour (TPB) and norm activation theory (NAT) of altruistic behaviour in examining the relationship between diving attitude, perceived behavioural control, subjective norms and personal norms (PNs) with responsible underwater behaviour among scuba divers. Using the combination of purposeful and convenience samplings, data were collected from divers (N?=?413) who visited the top five most attractive islands in Malaysia. The results supported the use of TPB as a basis for explaining the underwater behaviour of divers. Among the four constructs examined, attitude and PNs were found to be of paramount importance in influencing pro-environmental behaviour. This study also validated the exploratory dimensions that constitute the measurement constructs for scuba diving attitude and responsible underwater behaviour. Scuba diving stakeholders should emphasise continuous education and an integrated programme of marine conservation to enhance divers' attitude and personal commitment towards pro-environmental behaviour. These are crucial for the sustainability of the scuba diving industry.     

Mortgagor Motivations in Prepayments for Adjustable Rate Mortgages

This paper provides the first rigorous analysis of residential adjustable mortgage prepayment using individual ARM mortgage data in Singapore. The prepayment rate for residential mortgages is low and is dominated more by macroeconomic factors than mortgage–specific factors. Specifically, the prepayment rate is increasing in residential property prices, but decreasing in income as proxied by GDP and volatility in mortgage rates. There is weak evidence to suggest that prepayment is increasing in the borrower's age, mortgage rate hikes, cash–availability variables and sentiments of the stock market, and decreasing in the price premium over valuation, payment–to–income ratio, loan–to–value ratio, loan term and floor level of the property.