Financial Information Credibility,Legal Environment,and SMEs’ Access to Finance

Abstract

There remains academic debate on the association between credible financial information and small firms’ access to diversified sources of finance. This study investigates the role of credible financial information and its interaction with a country’s legal and regulatory environment on the access of small- and medium-sized enterprises (SMEs) to diversified sources of finance in 129 developing countries. The findings indicate positive impacts of financial information quality and a country’s legal and regulatory environment on small firms’ access to diversified sources of finance. SMEs operating in a weak legal and regulatory environment benefit more from providing credible financial information. The findings are robust after controlling for the endogeneity of firms audit decision using a two-stage instrumental variable method. Our evidence suggests that firms’ credible signaling of the quality of their financial information helps reduce the adverse selection problem for finance suppliers, increasing small firms’ access to diversified sources of finance.     

Gazprom’s LNG offensive: a demonstration of monopoly strength or impetus for Russian gas sector reform?

Gazprom enjoys a dominant and privileged position in the Russian energy sector, and indeed in the economy as a whole. This article analyses the company’s failure to achieve the Russian state’s objectives for the country to become a force in the global LNG (liquefied natural gas) market. Has it weakened the company’s standing relative to other industry players and the authorities, with the possibility that they could unleash broader reforms in the Russian gas sector? Short-term political and economic considerations may slow progress towards a radical outcome, with Gazprom’s importance as a domestic and foreign policy tool providing some protection at a time of uncertainty for the Kremlin, but in the longer term it may well be the case that the liberalisation of LNG exports in December 2013 comes to be seen as the first step in a much broader reorganisation of the Russian gas sector.     

Marking Time: An Analysis of Youth Hours of Work and Study in Urban Mexico

This paper argues that a more complex view of work and schooling is critical to poor countries as they implement policies to increase educational attainment. In this analysis of 12–17‐year‐old girls and boys in urban Mexico, we expand the traditional approach in two dimensions by (1) moving from an analysis of participation to one of hours of participation, and (2) broadening the definition of work to include youth's household responsibilities.     

Tax Policies and Informal Employment: The Asian Experience

This paper develops and estimates a model linking tax policies to the size of the informal sector. Our results suggest that informal employment responds to the strength of enforcement and, to a lesser extent, to tax rates. Looking across sectors, we find service sector informal employment responds to both changes in tax rates and enforcement, while manufacturing sector informal employment responds only to enforcement. Quantitatively, changes in enforcement affect the manufacturing informal sector more than the service sector. These results are robust to various measures of informal employment and hold for other countries outside of Asia as well. Since informal employment (and hence output) is related to a country's GDP, these results suggest that policy makers should consider the effect of their policies on the size of the informal sector.
JEL classification : O 17; O 53; H 26     

Exchange Rate Volatility and Exports: New Empirical Evidence from the Emerging East Asian Economies

This paper examines the impact of bilateral real exchange rate volatility on real exports of five emerging East Asian countries among themselves as well as to 13 industrialised countries. We recognise the specificity of the exports between the emerging East Asian and industrialised countries and employ a generalised gravity model. In the empirical analysis we use a panel comprising 25 years of quarterly data and perform unit‐root and cointegration tests to verify the long‐run relationship among the variables. The results provide strong evidence that exchange rate volatility has a negative impact on the exports of emerging East Asian countries. In addition, the results suggest that the pattern of bilateral exports is influenced by third‐country variables. An increase in the price competitiveness of other emerging East Asian countries has a negative impact on a country’s exports to a destination market, but the magnitude of the impact is relatively small. These results are robust across different estimation techniques and do not depend on the variable chosen to proxy exchange rate uncertainty. The results of the GMM‐IV estimation also confirm the negative impact of exchange rate volatility on exports and suggest that this negative relationship is not driven by simultaneous causality bias.     

The Influence of Government Policies on Informal Labor: Implications for Long-Run Growth

Using cross-sectional data from industrialized and developing economies, we examine long-run growth regressions linking government policies, informal employment and real GDP per worker. We find that changes in government policies of taxation and enforcement significantly affect growth in the informal sector. Further, we show that increases (decreases) in informal employment significantly and negatively (positively) affect a country's growth rate of real GDP per worker. The empirical link between government policies, informal employment and real GDP per worker holds irrespective of a country's development. On average, changes in government policies, through their effect on the size of the informal sector, account for 6 percent of the growth rate of real GDP per worker between 1960 and 1990.     

The presidential power of unilateral action

In this article we highlight a formal basis for presidentialpower that has gone largely unappreciated to this point, buthas become so pivotal to presidential leadership and so centralto an understanding of presidential power that it virtuallydefines what is distinctively modern about the modern presidency.This is the president's formal capacity to act unilaterallyand thus to make law on his own. Our central purpose is to setout a theory of this aspect of presidential power. We arguethat the president's powers of unilateral action are a forcein American politics precisely because they are not specifiedin the Constitution. They derive their strength and resiliencefrom the ambiguity of the contract. We also argue that presidentshave incentives to push this ambiguity relentlessly to expandtheir own powers - and that, for reasons rooted in the natureof their institutions, neither Congress nor the courts are likelyto stop them. We are currently in the midst of a research projectto collect comprehensive data for testing this theory - dataon what presidents have done, as well as on how Congress andthe courts have responded. Here we provide a brief history ofunilateral action, with special attention to the themes of ourtheoretical argument. We also make use of some early data toemerge from our project. For now it appears that the theoryis well supported by the available evidence. This is a workin progress, however, and more is clearly needed before definitiveconclusions can be justified.