Analysing the effect of excess cash accumulation on financial decisions

In this current moment of crisis it is very important for firms to hold a suitable amount of cash. But it is also very important to analyse how this amount of cash affects firm value. Here an in-depth study is made of the determination of firm value centring our attention on the problem of excess cash accumulation. This article adds important value to the existing literature since, employing the panel data methodology in the sample of Spanish nonfinancial firms, it identifies whether excess cash holding affects firm value in general, and investment, financing and dividend decisions in particular. The results show how asymmetric information among the economic agents of the firm affects the cash reserves. In particular, shareholders could penalize the investment made by these firms and consider the positive effect that the debt in particular and the dividend policies exert on the firm. Moreover, the results reveal the importance of financial flexibility as opposed to the arguments provided by agency theory.     

区域中心城市创新生态圈要素架构、生态特征与运行机制

区域中心城市创新生态圈以生物学为隐喻,注重发挥创新主体的能动作用,能够放大区域中心城市发展优势。在回顾创新生态圈理论渊源的基础上,界定区域中心城市创新生态圈内涵,明确创新生态圈要素构成;以企业聚集发展为逻辑起点,探讨区域中心城市创新生态圈生态特征;基于生态学、创新理论等跨学科知识,构建区域中心城市创新生态圈演进模型,探究其运行机制。研究认为,区域中心城市创新生态圈具有开放式协同、动态自调节、多样性共生、自组织演化等生态特征,其运行机制由协同共生机制、风险识别与防控机制、利益分配机制和环境匹配机制共同组成。     

Do capital flows drive credit growth and consumption in Central and Eastern Europe?

Domestic credit expansion in CEE economies, fuelled in part by foreign capital inflows, helped increase household welfare before the 2008 financial crisis caused a contraction across the region. How strong are the linkages between the current account, domestic credit and consumer spending? This study compiles a quarterly dataset of domestic credit as a share of GDP for 11 CEE European Union members and isolates structural breaks in the series’ growth rates that often align with the 2008 crisis. Vector autoregressive methods, particularly impulse response functions, show that increased current-account deficits lead to increased consumption in six of the 11 countries and increased credit growth in three, and that shocks to credit growth increase consumption in six countries. Capital inflows significantly increase consumption through domestic credit in Slovenia, while the Baltics show a large share of significant effects.     

Credit card cash‐out as informal financing: Evidence from China

Using a proprietary account‐level database from a commercial bank in China, we document that credit card holders can ease their credit constraints through the practice of cash‐out based on bogus transactions using credit cards. We find that such behaviour might be beneficial to both cardholders and banks. First, we find that a 1% increase in the cumulative number of credit card cash‐out transactions lowers the probability of default by 9.59%. Second, for private businesses, a 1% increase in the number of abnormal cash‐out transactions lowers overdue risk by 13.45%. Third, by lowering the overdue risk, the card‐issuing bank earns a larger profit. Our results are consistent with the notion that unconventional credit card cash‐out can mitigate the extent of capital misallocation in emerging markets.     

Investment opportunities and cash holdings of firms: an empirical study on Korean firms

We find that the cash flow sensitivity of cash holdings of firms whose investment opportunities are lower is significantly higher by examining a panel data of 898 Korean firms for 1999–2014. The cash flow sensitivity of investment is also found to be lower in case of low investment opportunity. Both findings suggest that firms decide to hold cash in response to an increase in cash flow when they do not have a good investment opportunity. Precautionary motive because of financial constraints and uncertainty, and agency problems, however, are not associated with the cash flow sensitivity of cash holdings. These findings imply that it is necessary to develop new investment opportunities to encourage firms to spend more cash in Korea.     

CASH TRANSFERS,INTERGENERATIONAL MOBILITY,AND THE PROCESS OF DEVELOPMENT

We examine how cash transfers affect an individual's education investment, intergenerational mobility, and economic growth. We find that providing larger transfer amounts to higher ability children is desirable to foster growth if the economy has relatively low wage inequality.     

Capital account flows,consumption ratios and the middle‐income trap

The existing literature suggests that it is important to understand the factors that may slow the transition of an economy from middle to high income. Many factors have been suggested as promoting or retarding economic growth, but little attention has been paid to the roles of the capital account and consumption ratio. Using panel regressions involving 48 countries over the 1950–2013 period as well as employing extreme bounds analysis, we find that foreign investment outflows are associated with a mature economy and that there is an optimal consumption ratio that must be surpassed to break out of middle‐income status. These findings are robust to an extreme bounds analysis incorporating a wide range of variables potentially related to growth performance.     

Globalization, Financial Volatility and Monetary Policy

Recently it has often been claimed that globalization eases the job of central banks as it helps to tame inflation. This is used to argue that central banks (particularly the ECB, referring to the objectives as laid down in the EU Treaty) could or should reduce their efforts in the fight against inflation in favor of supporting the general economic policies of the governments. This paper takes a critical look at this argument, pointing to the structural changes associated with globalization and to the corresponding increase in uncertainty by which the central banks are affected. As an example of this, the increase in financial volatility is analyzed and explained as the result of optimal portfolio allocation, and its implications for monetary policy are discussed.     

Sustainable and Excessive Current Account Deficits

Both the Mexican crisis of 1994–95 and the Asian financial crisis of 1997–98 have been preceded by large current account deficits run by the affected economies. External deficits are often assumed to play an important role in the propagation of financial crises in emerging markets. Policymakers are faced with a new challenge: that of resisting or accepting the large current account deficits that may result from heavy private capital inflows. This paper aims at providing some guidance:First, the Lawson Doctrine – according to which current account deficits that result from a shift in private-sector behaviour should not be a public policy concern – has been discredited by recent currency crises in Latin America and Asia. Second, define the size of current account deficits that should be sustainable in the long run. Third, the intertemporal approach to the current account does not provide a reliable benchmark to define when deficits become excessive. Fourth, large external deficits should be resisted if unsustainable currency appreciation, excessive risk-taking in the banking system and a sharp private spending boom are seen to coincide.     

火电项目融资的现金流量风险评价——基于探索图的指标体系

已有关于火电项目风险的研究基本未重点考察现金流量风险。本文从火电项目融资的角度出发,发现现金流量风险的重要性,尝试性地运用复杂科学管理系统思维的工具——探索图,为火电项目的建设期、试生产期和生产运营期分别建立风险评估指标体系,并用动态模糊评价方法确定每期和全过程的现金流量风险程度,为火电项目融资决策提供依据。