Political Risk in Credit Evaluation: Empirical Studies and Survey Results

Financing trade between economic agents located in different countries is affected by many types of risks, resulting from incomplete information about the debtor, the problems of enforcing international contracts, or the prevalence of political and financial crises. Trade is important for economic development and the availability of trade finance is essential, especially for developing countries. Relatively few studies treat the topic of political risk, particularly in the context of international lending. This thesis explores new ground to identify links between political risk and international debt defaults. The core hypothesis of the study is that the default probability of debt increases with increasing political risk in the country of the borrower. The thesis consists of three essays that support the hypothesis from different angles of the credit evaluation process. The first essay takes the point of view of an international lender assessing the credit risk of a public borrower. The second investigates creditworthiness assessment of companies. The obtained results are substantiated in the third essay that deals with an extensive political risk survey among finance professionals in developing countries. The financial instruments of core interest are export credit guaranteed debt initiated between the Export Credit Agency of Finland and buyers in 145 countries between 1975 and 2006. Default events of the foreign credit counterparts are conditioned on country-specific macroeconomic variables, corporate-specific accounting information as well as political risk indicators from various international sources. Essay 1 examines debt issued to government controlled institutions and conditions public default events on traditional macroeconomic fundamentals, in addition to selected political and institutional risk factors. Confirming previous research, the study finds country indebtedness and the GDP growth rate to be significant indicators of public default. Further, it is shown that public defaults respond to various political risk factors. However, the impact of the risk varies between countries at different stages of economic development. Essay 2 proceeds by investigating political risk factors as conveivable drivers of corporate default and uses traditional accounting variables together with new political risk indicators in the credit evaluation of private debtors. The study finds links between corporate default and leverage, as well as between corporate default and the general investment climate and measeures of conflict in the debtor country. Essay 3 concludes the thesis by offering survey evidence on the impact of political risk on debt default, as perceived and experienced by 103 finance professionals in 38 developing countries. Taken together, the results of the thesis suggest that various forms of political risk are associated with international debt defaults and continue to pose great concerns for both international creditors and borrowers in developing countries. The study provides new insights on the importance of variable selection in country risk analysis, and shows how political risk is actually perceived and experienced in the riskier, often lower income countries of the global economy.

Characterisation and processing of amorphous binary mixtures with low glass transition temperature

The number of drug substances in formulation development in the pharmaceutical industry is increasing. Some of these are amorphous drugs and have glass transition below ambient temperature, and thus they are usually difficult to formulate and handle. One reason for this is the reduced viscosity, related to the stickiness of the drug, that makes them complicated to handle in unit operations. Thus, the aim in this thesis was to develop a new processing method for a sticky amorphous model material. Furthermore, model materials were characterised before and after formulation, using several characterisation methods, to understand more precisely the prerequisites for physical stability of amorphous state against crystallisation. The model materials used were monoclinic paracetamol and citric acid anhydrate. Amorphous materials were prepared by melt quenching or by ethanol evaporation methods. The melt blends were found to have slightly higher viscosity than the ethanol evaporated materials. However, melt produced materials crystallised more easily upon consecutive shearing than ethanol evaporated materials. The only material that did not crystallise during shearing was a 50/50 (w/w, %) blend regardless of the preparation method and it was physically stable at least two years in dry conditions. Shearing at varying temperatures was established to measure the physical stability of amorphous materials in processing and storage conditions. The actual physical stability of the blends was better than the pure amorphous materials at ambient temperature. Molecular mobility was not related to the physical stability of the amorphous blends, observed as crystallisation. Molecular mobility of the 50/50 blend derived from a spectral linewidth as a function of temperature using solid state NMR correlated better with the molecular mobility derived from a rheometer than that of differential scanning calorimetry data. Based on the results obtained, the effect of molecular interactions, thermodynamic driving force and miscibility of the blends are discussed as the key factors to stabilise the blends. The stickiness was found to be affected glass transition and viscosity. Ultrasound extrusion and cutting were successfully tested to increase the processability of sticky material. Furthermore, it was found to be possible to process the physically stable 50/50 blend in a supercooled liquid state instead of a glassy state. The method was not found to accelerate the crystallisation. This may open up new possibilities to process amorphous materials that are otherwise impossible to manufacture into solid dosage forms.

Language in Acquisition : Early Lexical Development and Associations between Lexicon and Grammar Findings from Full-Term and Very-Low-Birth-Weight Finnish Children

The aim was to analyse the growth and compositional development of the receptive and expressive lexicons between the ages 0,9 and 2;0 in the full-term (FT) and the very-low-birth-weight (VLBW) children who are acquiring Finnish. The associations between the expressive lexicon and grammar at 1;6 and 2;0 in the FT children were also studied. In addition, the language skills of the VLBW children at 2;0 were analysed, as well as the predictive value of early lexicon to the later language performance. Four groups took part in the studies: the longitudinal (N = 35) and cross-sectional (N = 146) samples of the FT children, and the longitudinal (N = 32) and cross-sectional (N = 66) samples of VLBW children. The data was gathered by applying of the structured parental rating method (the Finnish version of the Communicative Development Inventory), through analysis of the children´s spontaneous speech and by administering a a formal test (Reynell Developmental Language Scales). The FT children acquired their receptive lexicons earlier, at a faster rate and with larger individual variation than their expressive lexicons. The acquisition rate of the expressive lexicon increased from slow to faster in most children (91%). Highly parallel developmental paths for lexical semantic categories were detected in the receptive and expressive lexicons of the Finnish children when they were analysed in relation to the growth of the lexicon size, as described in the literature for children acquiring other languages. The emergence of grammar was closely associated with expressive lexical growth. The VLBW children acquired their receptive lexicons at a slower rate and had weaker language skills at 2;0 than the full-term children. The compositional development of both lexicons happened at a slower rate in the VLBW children when compared to the FT controls. However, when the compositional development was analysed in relation to the growth of lexicon size, this development occurred qualitatively in a nearly parallel manner in the VLBW children as in the FT children. Early receptive and expressive lexicon sizes were significantly associated with later language skills in both groups. The effect of the background variables (gender, length of the mother s basic education, birth weight) on the language development in the FT and the VLBW children differed. The results provide new information of early language acquisition by the Finnish FT and VLBW children. The results support the view that the early acquisition of the semantic lexical categories is related to lexicon growth. The current findings also propose that the early grammatical acquisition is closely related to the growth of expressive vocabulary size. The language development of the VLBW children should be followed in clinical work.

Agroforestry systems for sustainable livelihoods and improved land management in the East Usambara Mountains, Tanzania

Forest destruction for agriculture continues to be a major threat to the rich biological diversity in the East Usambara Mountains in the north-eastern corner of Tanzania. The highest ratio of endemic plant and animal species found on 100 km2 anywhere in the world is depending on the remaining natural forests. Forests are vitally important for the local population in many different ways, and nationally they are an important source of water and hydroelectricity. The soils, of low fertility and mostly acidic Ferrasols, mainly have the nutrients in the topsoil. After clear-cutting, the soils soon become poor when the topsoil is eroded. High-value cardamom is nowadays unsustainably cultivated in the natural forests of the East Usambaras. The general aim was to study the possibilities to develop new profitable and sustainable agroforestry systems for the benefit of the local people that could contribute to relieving the pressure on the remaining natural forests in the East Usambara Mountains. Results from a spice crop agroforestry trial, established in cooperation with a local farmer, showed a clear advantage of intercropping cardamom (Elettaria cardamomum) and black pepper (Piper nigrum) with trees, especially with Grevillea robusta. The nitrogen fixing tree species Gliricidia sepium also improved the nitrogen and organic matter content of the soil over levels found in the natural forest. With improved agroforestry methods for spice production the households generated as much as13 times the net income obtained with traditional forest cultivation practices. There are thus sustainable and profitable ways to cultivate spices as cash crops in well-managed homegardens. However, the farmers need stable markets, access to credit and comprehensive extension services. The soil fertility depletion should be reversed with organic manure application and an enabling policy environment for the smallholder-farming sector. Strong farmers organisations and equal rights to resources and decision-making are needed. Organic spices have an increasing demand, and their export would be profitable for these farmers. What is, however, most needed for a change is a political will of a government that understands the importance of agricultural and forestry development for poverty reduction.

Essays on Microcredit in Rural Bangladesh

This thesis is a collection of three essays on Bangladeshi microcredit. One of the essays examines the effect of microcredit on the cost of crime. The other two analyze the functioning mechanism of microcredit programs, i.e. credit allocation rules and credit recovery policy. In Essay 1, the demand for microcredit and its allocation rules is studied. Microcredit is claimed to be the most effective means of supplying credit to the poorest of the poor in rural Bangladesh. This fact has not yet been examined among households who demand microcredit. The results of this essay show that educated households are more likely to demand microcredit and its demand does not differ by sex. The results also show that microcredit programs follow different credit allocation rules for male and female applicants. Education is an essential characteristic for both sexes that credit programs consider in allocating credit. In Essay 2, the focus is to establish a link between microcredit and the incidence of rural crime in Bangladesh. The basic hypothesis is that microcredit programs jointly hold the group responsibility which provides an incentive for group members to protect each other from criminal gang in order to safeguard their own economic interests. The key finding of this essay is that the average cost of crime for non-borrowers is higher than that for borrowers. In particular, 10% increase in the credit reduces the costs of crime by 4.2%. The third essay analyzes the reasons of high repayment rate amid Bangladeshi microcredit programs. The existing literature argues that credit applicants are able to screen out the high risk applicants in the group formulation stage using their superior local information. In addition, due to the joint liability mechanism of the programs, group members monitor each others economic activities to ensure the minimal misuse of credit. The arguments in the literature are based on the assumption that once the credit is provided, credit programs have no further role in ensuring that repayments are honored by the group. In contrast, using survey data this essay documents that credit programs use in addition organizational pressures such as humiliation and harassment the non-payer to recover the unpaid installments. The results also show that the group mechanisms do not have a significant effect in recovering default dues.

The high- and low-activity forms of human plasma phospholipid transfer protein (PLTP)

Plasma phospholipid transfer protein (PLTP) plays a crucial role in high-density lipoprotein (HDL) metabolism and reverse cholesterol transport (RCT). It mediates the generation of pre-beta-HDL particles, enhances the cholesterol efflux from peripheral cells to pre-beta-HDL, and metabolically maintains the plasma HDL levels by facilitating the transfer of post-lipolytic surface remnants of triglyceride-rich lipoproteins to HDL. In addition to the antiatherogenic properties, recent findings indicate that PLTP has also proatherogenic characteristics, and that these opposite characteristics of PLTP are dependent on the site of PLTP expression and action. In human plasma, PLTP exists in a high-activity (HA-PLTP) and a low-activity form (LA-PLTP), which are associated with macromolecular complexes of different size and composition. The aims of this thesis were to isolate the two PLTP forms from human plasma, to characterize the molecular complexes in which the HA- and LA-PLTP reside, and to study the interactions of the PLTP forms with apolipoproteins (apo) and the ability of apolipoproteins to regulate PLTP activity. In addition, we aimed to study the distribution of the two PLTP forms in a Finnish population sample as well as to find possible regulatory factors for PLTP by investigating the influence of lipid and glucose metabolism on the balance between the HA- and LA-PLTP. For these purposes, an enzyme-linked immunosorbent assay (ELISA) capable of determining the serum total PLTP concentration and quantitating the two PLTP forms separately was developed. In this thesis, it was demonstrated that the HA-PLTP isolated from human plasma copurified with apoE, whereas the LA-PLTP formed a complex with apoA-I. The separation of these two PLTP forms was carried out by a dextran sulfate (DxSO4)-CaCl2 precipitation of plasma samples before the mass determination. A similar immunoreactivity of the two PLTP forms in the ELISA could be reached after a partial sample denaturation by SDS. Among normolipidemic Finnish individuals, the mean PLTP mass was 6.6 +/- 1.5 mg/l and the mean PLTP activity 6.6 +/- 1.7 umol/ml/h. Of the serum PLTP concentration, almost 50% represented HA-PLTP. The results indicate that plasma HDL levels could regulate PLTP concentration, while PLTP activity could be regulated by plasma triglyceride-rich very low-density lipoprotein (VLDL) concentration. Furthermore, new evidence is presented that PLTP could also play a role in glucose metabolism. Finally, both PLTP forms were found to interact with apoA-I, apoA-IV, and apoE. In addition, both apoE and apoA-IV, but not apoA-I, were capable of activating the LA-PLTP. These findings suggest that the distribution of the HA- and LA-PLTP in human plasma is subject to dynamic regulation by apolipoproteins.

Polymorphic low penetrance genes and breast cancer : The role of genes involved in metabolism of xenobiotics, estrogens and reactive oxygen species

Various endogenous and exogenous factors have been reported to increase the risk of breast cancer. Many of those are related to prolonged lifetime exposure to estrogens. Furthermore, a positive family history of breast cancer and certain benign breast diseases are known to increase the risk of breast cancer. The role of lifestyle factors, such as use of alcohol and smoking has been an area of intensive study. Alcohol has been found to increase the risk of breast cancer, whereas the role of smoking has remained obscure. A multitude of enzymes are involved in the metabolism of estrogens and xenobiotics including the carcinogens found in tobacco smoke. Many of the metabolic enzymes exhibit genetic polymorphisms that can lead to inter-individual differences in their abilities to modify hazardous substrates. Therefore, in presence of a given chemical exposure, one subgroup of women may be more susceptible to breast carcinogenesis, since they carry unfavourable forms of the polymorphic genes involved in the metabolism of the chemical. In this work, polymorphic genes encoding for cytochrome P450 (CYP) 1A1 and 1B1, N-acetyl transferase 2 (NAT2), sulfotransferase 1A1 (SULT1A1), manganese superoxide dismutase (MnSOD) and vitamin D receptor (VDR) were investigated in relation to breast cancer susceptibility in a Finnish population. CYP1A1, CYP1B1 and SULT1A1 are involved in the metabolism of both estrogens and xenobiotics, whereas NAT2 is involved only in the latter. MnSOD is an antioxidant enzyme protecting cells from oxidative damage. VDR, in turn, mediates the effects of the active form of vitamin D (1,25(OH)2D3, calcitriol) on maintenance of calcium homeostasis and it has anti-proliferative effects in many cancer cells. A 1.3-fold (95% CIs 1.01-1.73) increased risk of breast cancer was seen among women who carried the NAT2 slow acetylator genotype and a 1.5-fold (95% CI 1.1-2.0) risk was found in women with a MnSOD variant A allele containing genotypes compared to women with the NAT2 rapid acetylator genotype or to those with the MnSOD VV genotype, respectively. Instead, women with the VDR a allele containing genotypes were found to be at a decreased risk for breast cancer (OR 0.73; 95% CI 0.54-0.98) compared to women with the AA genotype. No significant overall associations were found between SULT1A1 or CYP genotypes and breast cancer risk, whereas a combination of the CYP1B1 432Val allele containing genotypes with the NAT2 slow acetylator genotypes posed a 1.5-fold (95% CI 1.03-2.24) increased risk. Moreover, NAT2 slow acetylator genotype was found to be confined to women with an advanced stage of breast cancer (stages III and IV). Further evidence for the association of xenobiotic metabolising genes with breast cancer risk was found when active smoking was taken into account. Women who smoked less than 10 cigarettes/day and carried at least one CYP1B1 432Val variant allele, were at 3.1-fold (95% CI 1.32-7.12) risk of breast cancer compared to women who smoked the same amount but did not carry the variant allele. Furthermore, the risk was significantly increased with increasing number of the CYP1B1 432Val alleles (p for trend 0.005). In addition, women who smoked less than 5 pack-years and carried the NAT2 slow acetylator genotype were at a 2.6-fold (95% CI 1.01-6.48) increased risk of breast cancer compared to women who smoked the same amount but carried the NAT2 rapid acetylator genotype. Furthermore, the combination of the CYP1B1 432Val allele and the NAT2 slow acetylator genotype increased the risk of breast cancer by 2.5-fold (95% CI 1.11-5.45) among ever smokers. Instead, the MnSOD A allele was found to be a risk factor among postmenopausal long-term smokers (>15 years of smoking) (OR 5.1; 95% CI 1.4-18.4) or among postmenopausal women who had smoked more than 10 cigarettes/day (OR 5.5; 95% CI 1.3-23.4) compared to women who had similar smoking habits but carried the MnSOD V/V genotype. Similarly, within subgroups of postmenopausal women who were using oral contraceptives, hormone replacement therapy or alcohol, women carrying the MnSOD A allele genotypes seemed to be at increased risk of breast cancer compared to women with the MnSOD V/V genotype. A positive family history of breast cancer and high parity were shown to be inversely associated with breast cancer risk among women carrying the VDR ApaI a allele or among premenopausal women carrying the SULT1A1*2 allele, respectively.

Microbial activities in boreal soils: Biodegradation of organic contaminants at low temperature and ammonia oxidation

This thesis deals with the response of biodegradation of selected anthropogenic organic contaminants and natural autochthonous organic matter to low temperature in boreal surface soils. Furthermore, the thesis describes activity, diversity and population size of autotrophic ammonia-oxidizing bacteria (AOB) in a boreal soil used for landfarming of oil-refinery wastes, and presents a new approach, in which the particular AOB were enriched and cultivated in situ from the landfarming soil onto cation exchange membranes. This thesis demonstrates that rhizosphere fraction of natural forest humus soil and agricultural clay loam soil from Helsinki Metropolitan area were capable of degrading of low to moderate concentrations (0.2 50 µg cm-3) of PCP, phenanthrene and 2,4,5-TCP at temperatures realistic to boreal climate (-2.5 to +15 °C). At the low temperatures, the biodegradation of PCP, phenanthrene and 2,4,5-TCP was more effective (Q10-values from 1.6 to 7.6) in the rhizosphere fraction of the forest soil than in the agricultural soil. Q10-values of endogenous soil respiration (carbon dioxide evolution) and selected hydrolytic enzyme activities (acetate-esterase, butyrate-esterase and β-glucosidase) in acid coniferous forest soil were 1.6 to 2.8 at temperatures from -3 to +30 °C. The results indicated that the temperature dependence of decomposition of natural autochthonous soil organic matter in the studied coniferous forest was only moderate. The numbers of AOB in the landfarming (sandy clay loam) soil were determined with quantitative polymerase chain reaction (real-time PCR) and with Most Probable Number (MPN) methods, and potential ammonium oxidation activity was measured with the chlorate inhibition technique. The results indicated presence of large and active AOB populations in the heavily oil-contaminated and urea-fertilised landfarming soil. Assessment of the populations of AOB with denaturing gradient gel electrophoresis (DGGE) profiling and sequence analysis of PCR-amplified 16S rRNA genes showed that Nitrosospira-like AOB in clusters 2 and 3 were predominant in the oily landfarming soil. This observation was supported by fluorescence in situ hybridization (FISH) analysis of the AOB grown on the soil-incubated cation-exchange membranes. The results of this thesis expand the suggested importance of Nitrosospira-like AOB in terrestrial environments to include chronically oil-contaminated soils.