an immediate and sharp decrease in the net attributable income. Banco de España reported an almost immediate compliance to the new requirements by June 2012, indicating an immediate effect on lending by Spanish banks as well. The Mexican subsidiaries of the Spanish banks are only partially financed by customer deposits (the figure for 2012 was 44% and 53% for BBVA and Santander respectively), a feature that makes them susceptible to funding availability at the headquarters in Spain. Three channels are proposed to explain the drop in lending by the Spanish banks in the aftermath of the increase in capital requirements. First, the increase in loan-loss provisions could have acted as a signal of the true value of the bank and acted as a negative liquidity shock for the banks in the wholesale credit market. Second, loan-loss provisions could have negatively affected the amount of leverage in the balance sheet of the banks and, since equity financing is expensive at times of crises, banks would have no option but to retract parts of their lending portfolio. Third, it is also possible that that new provision rules, though applicable to holdings of Spanish real estate assets, also affected the provisions held by Spanish banks for housing credit loans in Mexico, as was done by Santander in Brazil and Chile. I remain agnostic as to the strength of these three channels.
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is the natural policy response to these underlying ine¢ ciencies however, is not clear. Direct subsidies (e.g. tax exemptions) to projects with negative private pre-tax value but important positive externalities, for instance, seem a more natural and straightforward alternative to this particular ine¢ ciency. We study the optimal design of a PDB in the context of a model where banks use a costly screening technology to make credit decisions, and where they face at least some competition. Credit underprovision arises in this context as the result of the inability of banks to appropriate the full bene…ts of projects. High value projects are rationed out of credit because of this reason, leading to an ine¢ cient allocation of resources to lending. PDBs could thus play a central role in the …nancing of high value projects. Under…nancing of high value projects, and the implication that these are optimal targets of PDB programs, contrast with the usual emphasis on relatively weak projects. A PDB is a natural policy alternative in this context, where the under- lying ine¢ ciency resides in the banking relationship. A central contribution of this research is thus to provide a rationale for PDBs stemming from ine¢ - ciencies in the banks’supply of credit, while previous justi…cations of PDBs activity were based on the limitations of the demand for loans. Along the way, our model puts forward a novel source of ine¢ ciencies in the provision of credit, and brings implications regarding the optimal design of a PDB. In particular, we ask: 1) what types of …rms, if any, should be the target of particular public support programs?; 2) should the public …nancing of …rms take the form of direct or indirect lending? 3) if it takes the form of indirect lending, should the PDB lend to private banks at subsidized rates, or rather provide public guarantees (i.e. loss sharing)?
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the firm’s stock price in equilibrium. My partial equilibrium model in Subsection 2.3 bears close resemblance with Besanko and Kanatas (1993). Repullo and Suárez (2000) consider a competitive equilibrium model of lender-borrower relationships where some firms may obtain loan from market and bank investors. Banks enjoy comparative advantage in monitoring over the market. They show that a rise in the risk-free rate reduces aggregate investment and widens the the interest rate spread. An important difference between the current model and that of Repullo and Suárez (2000) is that I consider an economy where each individual posses certain amount of market power. Incorporating principal-agent relationship into a two-sided matching model is of recent interest. Ackerberg and Botticini (2002) analyze the landlord-tenant contracts in renaissance Tuscany, and show that traditional view of more risk averse tenants getting fixed rent contracts may be reversed due to the nature of endogenous matching between the landlords and the tenants. A few other works have considered endogenous matching between principals and agents in a contracting environment. Besley and Ghatak (2005) analyze the sorting of mo- tivated agents into mission-oriented firms. Chakraborty and Citanna (2005) show that, due to endogenous sorting effects, less wealth-constrained individuals choose to take up projects in which incentive problems are more important. Dam and Pérez-Castrillo (2006) also charac- terize a principal-agent economy in the presence of two-sided matching. Von Lilienfeld-Toal and Mookherjee (2007) consider matching between homogeneous principals and heterogeneous agents, and analyze the distributional impacts of a change in the personal bankruptcy law. The differences in the outside option has also been treated by Cantala (2004) where some individuals already have employment, and seek better jobs.
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Table 4 displays the statistical results from estimating the model with telephone mainlines per 1000 as the dependent variable. Model 1 is the baseline using variables such as lagged telephone mainlines, stock market development, credit market development, FDI, trade openness, telephone cost, electricity consumption, and log of GDP per capita. The model captures the process of diﬀusion because the coeﬃcient of the lagged depen- dent variable proves signiﬁcant. The analysis also shows that both stock market development and credit mar- ket development are positively associated with ICT diﬀusion measured by telephone mainlines. In particular, a percentage point increase in stock market development increases the diﬀusion of telephone mainlines by 0.49 percentage points. Similarly, a percentage point increase in credit to the private sector as a percentage of GDP increases telephone mainlines diﬀusion by 0.28 percentage points. As expected, GDP per capita, FDI, lag of telephone mainlines, and trade openness are all positive and signiﬁcant. The cost of telephone calls has an insigniﬁcant negative relationship with the diﬀusion of telephones. Per capita electricity consumption and tele- phone cost are both positive but not signiﬁcant. Population enters with a highly signiﬁcant positive sign. FDI, trade openness and GDP per capita are all positive and signiﬁcant.
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This paper shows how weather shocks that are hard to record in credit histories or to include in credit scores, can lead to the exclusion of farmers from access to credit. I study coffee farmers in Colombia who use loans from a large agricultural bank to finance production. I use exogenous variation from rainfall and rich administrative data at the loan level to estimate the effect of weather variability on different credit market outcomes. I find that negative weather shocks lead to lower loan repayment and to lower credit scores reported to credit bureaus. Affected farmers also have lower credit scores in the future and are more likely to be denied on subsequent loan applications. The effects on credit scores and loan denial are persistent and can last up to five years. I then present evidence that the resulting exclusion from credit markets is costly because many excluded farmers would be able to repay future loans. Specifically, I show that affected farmers’ income and repayment recover faster than credit scores and access to credit. In sum, weather variability can entail a welfare cost not just to farmers but also to lenders, since it leads to the denial of loans that could be repaid. 1
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Financial frictions play a crucial role in explaining how …rms adjust to short term macro- economic ‡uctuations. We …nd, for the case of Colombia, that potential scarring e¤ects of recessions are likely boosted by credit market imperfections. While we …nd throughout a family of empirical speci…cations that low productivity plants are the most likely to exit the market, there are further di¤erences across plant exit probabilities explained by the degree of access to …nancial markets. Particularly in bad times, plants in constrained …rms exhibit a larger exit probability than plants with similar market fundamentals but belonging to unconstrained …rms. Our results point at aggregate TFP losses from reces- sions. In particular, during a recession, credit constrained units may be forced to leave the market despite being more productive than some of their surviving but unconstrained counterparts. We …nd that plants forced out of the market by recessions are close to 13 log points more productive, and aggregate productivity after a …ve-year recession is 1.2 log points lower, in presence of credit constraints than in their absence.
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We want to clarify some issues related to the interpretation of these results. Petersen and Rajan divide firm characteristics into investment opportunities, which should reduce credit availability, and measures of cash flow, which should increase it. They admit that the dividing line is not always clear, and the effect may be a priori ambiguous, e.g. return over assets and sales over assets can be considered either as measures of internal cash flow, or as measures of investment opportunities. However, these distinctions may not matter at all: if banks see this characteristic of larger investment opportunities, they may be willing to lend more. Indeed, as Galindo, Schiantarelli, and Weiss (2001) show, an efficient financial system will try to channel funds to firms with more profitable investment opportunities. The proxies they use for investment opportunities are precisely return over assets and sales over assets, precisely the variables that Petersen and Rajan consider might reduce credit availability. As far as these investment opportunities are common knowledge to both parts, because they can be inferred from the accounting statements of firms, this should increase the supply of funds coming from profit maximizing financial institutions. Hence, these arguments should lead one to expect return over assets and sales over assets to unambiguously increase the availability of credit, exactly what happens in our estimates.
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Sascha Albers was our teacher the class Business in the European Union. In this class, we learned how to do business in the EU. For taking this class, we were accompanied by a group of 34 Americans. We learned what are the characteristics of the business in the most famous countries in Europe. Furthermore, we were divided into ten teams (Americans included) and we realized a presentation about some of the most important topics in Europe. In addition, at the end of June, we will take an exam about all the content of the subject. It is important to mention that we did not use this class for our market because it was not related to it sufficiently.
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We have learned that regulatory liberalizations are not necessarily defining events for market integration. Indeed, we should be careful to distinguish between the concepts of liberalization and integration. For example, a country might pass a law that seemingly drops all barriers to foreign participation in local capital markets. This is a liberalization – but it might not be an effective liberalization that results in market integration. Indeed, there are two possibilities in this example. First, the market might have been integrated before the regulatory liberalization. That is, foreigners might have had the ability to access the market through other means, such as country funds and depository receipts. Second, the liberalization might have little or no effect because either foreign investors do not believe the regulatory reforms will be long lasting or other market imperfections exist that keep them out of the market.
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Other traditional models are the one from Altman (1968) who developed a popular model to forecast the probability of a company going bankrupt; the one from Argenti (1983) whose aim is to determine the probability of insolvency using variables related to management and control; the Credit – men model proposed by Wall (1928) has the aim to determine the position of a company with respect to other companies operating within the same sector; the Edminster (1972) is a more complex model than the Credit-men because it selects those companies which are similar in certain parameters, while it excludes those which do not meet those parameters; or the Conan and Holder (1979) model, developed in France through the use of discriminant analysis to determine the probability of a company to suspend its interest payments.
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Com hem vist fins ara, el finançament alternatiu te importants diferencies amb el finançament tradicional, d’entre elles podem destacar, la desintermediació, ja que posa en contacte de manera directa a inversors i prestataris, amb el estalvi de costos que comporta; la major transparència, ja que tant el inversors con els prestataris disposen de molta mes informació i la major rapidesa dels procediments d’avaluació i estudi de les operacions. De totes maneres això no vol dir que els procediments d’avaluació i estudi de les operacions siguin menys rigorosos o fiables que els que acostumen a fer la banca tradicional. De fet, el processos que integren el Credit Management son centrals i fonamentals per a qualsevol projecte relacionat amb el finançament de tercers, ja siguin empreses o particulars.
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Las redes neuronales se consideran dentro de los modelos de inteligencia artificial. Tratan de imitar al sistema nervioso, de modo que construyen sistemas con cierto grado de inteligencia. La red est´a formada por una serie de procesadores simples denominados nodos, que se encuentran interconectados entre s´ı. La finalidad de cada nodo consiste en dar respuesta a una determinada se˜ nal de entrada, para obtener una salida. El enfoque de credit scoring consiste en considerar como nodos de entrada las caracter´ısticas o variables de la operaci´on de cr´edito. Y el nodo de salida ser´ıa la variable respuesta definida como la probabilidad de ser pr´estamo malo [Cant´on et al. (2010)].
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Report Content Within the scope of the project Perubiodiverso, an initiative supported by the State Secretariat for Economic Affairs (SECO) and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH (german cooperation), in con- vention with the Ministry of Foreign Trade and Tourism (MINCETUR), the Peru Export and Tourism Promotion Board (Promperu) and the Ministry of the Environment (MINAM), SIPPO is mandated to support Peruvian companies in accessing the European market.
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Perhaps the best example stems from The Commodity Futures Modernization Act of 2000, a United States legislation which expressly forbade the drafting of legislation relating to financial derivatives, allowing everything to be done with them. In the last century, lenders studied the creditworthiness of credit concessions extensively, especially home mortgages, since long-term loans carry greater risks and require greater control. With the law approbation and the lack of a rating agencies correct functioning, subprime mortgage loans began to be camouflaged among the financial derivatives that ended up being sold to investors as safe assets. Due to this, the controls in the credit concession began to be reduced in order to sell these assets and obtain greater profits or even simply to maintain the position in front of the competition.
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From the perspective of the policymaker, financial policies of SMEs seek to moderate the disadvantages that arise in the credit market for the firms in this sector. These disadvantages include transaction costs and information asymmetries between the financial backers and the business. In response to the heightened restrictions on access to credit, governments have designed public policies that encourage entrepreneurs to finance SMEs and that promote innovation. PARKER (2009) separates the most important programmes present in almost all countries into four categories: i) loan guarantee schemes (one of the best-known and longest- establish finance policy); ii) interest subsidies, iii) policies to promote equity finance (e.g., regulatory policies to reduce the cost of new issues and secondary market transactions and to increase the supply of venture capital funds or taxation policies, and iv) innovation policies and entrepreneurship (e.g., U.S.- Small Business Innovation Research (SBIR); Japan - Small Creative Business Promotion Law). Moreover, these financial policies can serve as instruments for regional growth. According to CORNET (2009), regional growth is not an exogenous phenomenon, but rather, it depends on the ability of the local businesses to perform and generate income.
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In Chapter 1 we have chosen a model, already proposed in previous literature, which jointly describes interest rates under a two-factor Gaussian framework and default inten- sities in a one-factor Cox-Ingersoll-Ross (CIR) setup. We have proposed a new calibration method that uses market information when describing the dynamics of credit spreads. Such method, simple and easy to implement, was satisfactorily tested in two rather dif- ferent economic scenarios. Finally, we checked the impact of accurately describing credit dynamics when computing counterparty valuation adjustments. Values of CVA-DVA may differ significantly with respect to those calculated using widespread simplifications such as static default probabilities, even in simple interest rate products. This result suggests that probably such simplifying assumptions will gradually disappear in practice, as banks will migrate to more accurate frameworks that allow them to properly valuate derivatives. Chapter 2 has dealt with the model risk of CVA calculations under the framework presented in Chapter 1, a recent demand by regulatory bodies. We have addressed model risk in two dimensions. First, we questioned the modeling of the joint distribution of defaults. When calculating my CVA-DVA, two credit qualities are involved: mine and that of my counterparty. Depending on our mutual dependencies, counterparty valuation adjustments can vary. While in Chapter 1 we had assigned a given value to such depen- dency, in Chapter 2 we designed a methodology to provide confidence intervals for this correlation, and checked its importance when computing CVA-DVA.
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to be found in the motivation behind the creation of these securitized mortgage assets. As noted above, the shift in dominance in the market from thrift institutions to private financial institutions shifted the market from one of “buy and hold” the mortgage for the income generated by the difference between deposit rates and lending rates to one of “trade” the securitized mortgage assets to generate income from the difference between buying and selling prices. While the savings and loan banker was on the golf course, he was presumably gaining information about his clients and potential borrowers. His major function was to assess the creditworthiness of his clients in order to reduce the default rate on his lending. On the other hand, the broker-dealer is only interested in turnover and trading volume. Since income is earned on the spread between the buying and the selling price and rapid turnover, credit assessment is not the major concern. Indeed, as noted by Ranieri (2000), the aim of securitization was to create an asset that could be traded without requiring credit assessment. Rather, it is the marketability of the asset that is crucial. This is why it was so important to create a bond with fixed coupon and maturity from the mass of differentiated mortgages that could be sold as a substitute for corporate bonds.
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The criterion chosen to select the bank and the cooperative has been creditworthiness, as it is one of the most important aspects in society to choose a trust an any other entity. For that reason, the bank chosen is “Banco Santader” and credit union has been Caja Rural del Sur, after many studies , both entities are classified as solvent entities. This information is available through the official website of Bamkimia, a leader that compares banking products, which shows a ranking of Spanish banks by credit rating, or entirely by agency Moody’s Fitch Ratings or Standard & Poor ` s.
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This definition incorporates the sense of the "support" of the groups to the credit institution that the SRI mentioned, but in a much more concrete way, because it no longer emphasizes success, which can be a very abstract concept, but goals, decisions or policies of the credit institution. Thus, this definition goes beyond the "support" part of stakeholder because, first, the relationship is not a one-way, but a two-way relationship that takes into account both the outcome of strategies and the policies employed to achieve them. Secondly, this definition of stakeholders contains not only the people that facilitate or hinder business, but also the credit institution, which is seen as a group that can help or hinder the achievement of the stakeholders’ interests, rights or property. In addition, A. B. Carroll (1999) gives the following definition:
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The third category analyzes the potential effect on prices of information about trading in stock exchanges. This includes splits announcements, exchange listings and block trades. The study of stock splits and their effect on prices is a classic since Fama et al. (1969). Grinblatt et al. (1984) show stock prices, on average, react positively to stock split announcements. Similar results were replicated by Asquith, Healy and Palepu (1989) and Ikenberry and Rammath (2002), among others. Ikenberry, Rankine and Stice (1996) suggest splits realign prices to a lower trading range and that the market underreacts to split announcements. However, we may find evidence against this anomaly, too ―e.g., Byun and Rozeff (2003). Regarding block trades, Kraus and Stoll (1972b) and Scholes (1972) provided early evidence that prices react efficiently to the information conveyed in the sale of large blocks of shares. Subsequent literature in support of the efficient hypothesis includes Easley and O’Hara (1987) and Fama (1990). The study of price effects following a stock exchange listing announcement ―i.e., the inclusion of a given stock in a particular selective or sectorial index― was pioneered by Dharan and Ikenberry (1995). Doidge, Karolyi and Stulz (2004) find that foreign firms listed in the U.S. are valued significantly higher than non-cross-listed firms from the same country. They suggest that a U.S. listing reduces the extent to which controlling shareholders can engage in expropriation, which would increase the firm’s ability to take advantage of growth opportunities.
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