Investment and financing constraints in China: does working capital management make a difference?

We use a panel of over 120,000 Chinese firms of different ownership types over the period 2000-2007 to analyze the linkages between investment in fixed and working capital and financing constraints. We find that those firms characterized by high working capital display high sensitivities of investment in working capital to cash flow (WKS) and low sensitivities of investment in fixed capital to cash flow (FKS). We then construct and analyze firm-level FKS and WKS measures and find that, despite severe external financing constraints, those firms with low FKS and high WKS exhibit the highest fixed investment rates. This suggests that good working capital management may help firms to alleviate the effects of financing constraints on fixed investment.

Saving and Re-building Lives: an Analysis of the Determinants of Disaster Relief

We analyse both theoretically and empirically, the factors that influence the amount of humanitarian aid which countries receive when they are struck by natural disasters. Our investigation particularly distinguishes between immediate disaster relief which helps the survival of victims and long term humanitarian aid given towards reconstruction and rehabilitation. The theoretical model is able to make predictions as well as explain some of the peculiarities in the empirical results. The empirical analysis, making use of some useful data sources, show that both short and long term humanitarian aid increase with number of people killed, financial loss and level of corruption, while GDP per capita has no effect. Number of people affected had no effect on short term aid, but significantly increased long term aid. Both types of aid increased if the natural disaster was an earthquake, tsunami or drought. In addition, short term aid increases in response to a flood while long term aid increases in response to storms.