Bank Monitoring and Environmental Risk

Abstract:  Loan announcement effects for 152 Canadian companies are examined to investigate the efficiency of monitoring by banks facing lender environmental liability. Market reaction to the announcement of bank debt to 'environmental' firms is more positive and significant than for 'non-environmental' firms and, for firms in industries with a higher likelihood of experiencing spill events, is more positive and significant, reinforcing earlier results that establish a relationship between specific loan/borrower characteristics and announcement period excess returns and providing further evidence on the 'uniqueness' of bank loans by demonstrating the superior ability of banks to monitor corporate borrowers exposed to environmental liability.     

Effects of soil erosion on water quality and water uses in the upper Phong watershed.

The main objective of this paper is to simulate the effects of soil erosion on river water quality and on agricultural production as a result of the transformation of forestlands in the catchment of the upstream Phong River. Suspended solids carry down attached nutrients and agricultural chemicals causing water pollution in the downstream. There are four different types of land use in this simulation, namely forestlands, flatland and highland sugarcane plantation areas, and paddy fields. The highest mean annual amount of soil erosion is from paddy fields (585,700 tons/year), followed by highland (73,800 tons/year) and flatland (63,950 tons/year) sugarcane plantation areas and forestlands (41,800 tons/year), respectively. However, as most of paddy fields are located in a low land and are wet type cultivations, the soil erosion occurred has less impact on river water quality and its production compared to the soil erosion from the steeper slopes of highland plantation areas. Under the resource-based agriculture, the sugarcane production is mainly increased by expanding the plantation areas leading to a significant loss of topsoil and a considerable reduction of agricultural production. Soil erosion contributes to an increase in the average annual suspended solids concentration by 72 mg/l.     

Using an approximate kiefer-weiss solution for testing insect population densities

Summary A sequential testing procedure called 2-SPRT for the meanμ of the negative binomial distribution with known exponentk is presented. For any fixedμ ₀(μ ₁<μ ₀<μ ₂), the 2-SPRT provides an asymptotic solution to the modified Kiefer-Weiss problem. Determination ofμ ₀ such that the test provides an approximate solution to the Kiefer-Weiss problem is described. The behavior of the 2-SPRT and the Sequential Probability Ratio Test is investigated using Monte Carlo methods. The error probabilities and the average sample numbers are compared. All the computations were carried out on the Alabama Supercomputer.     

The effects of mergers on price and output: Two case studies from the airline industry

The literature on industrial organization contains very little direct evidence on the effects of actual mergers. This study estimates the effects of two recent airline mergers approved by the Department of Transportation over the objection of the Department of Justice. The merger of TWA and Ozark appears to have caused a slight increase in fares and a far greater reduction in service on city pairs out of St Louis. The merger of Northwest and Republic appears to have caused a significant increase in fares and a significant reduction in overall service on city pairs out of Minneapolis-St Paul.     

Two-Part Trade Policy under Imperfect Competition

In this paper we consider the potential gain of a government pursuing a two-part trade policy: an import license for entry, along with a per-unit tariff on imports. The model is a two-stage game of complete but imperfect information. In the first stage, the domestic government sets trade policy, while in the second stage the home and foreign producers behave as Cournot competitors. The paper demonstrates that the optimal trade policy depends upon the number of firms, the degree of heterogeneity in cost functions, and the degree of convexity in cost functions.