Asymmetric information, credit market condition, and entrepreneurial finance

The issue of imperfect information plays a much more important role in financing “informationally opaque” small businesses than in financing large companies.1 This chapter examines the asymmetric information issue in entrepreneurial finance from two perspectives: the effects of relationship lending and the impacts of credit market concentration on entrepreneurial financial behavior. These two perspectives are strongly linked to each other via the asymmetric information issue in entrepreneurial finance. Existing literature has recognized the important role played by relationship lending in alleviating the problem of asymmetric information. However, mixed empirical results have been reported. For example, it has been found that the development of relationship lending can improve the availability of finance for small businesses borrowers (Petersen and Rajan, 1994) and reduce the costs of finance (Berger and Udell, 1995). Meanwhile, with monopoly power, banks may extract rents, in terms of charging higher-than-market interest rates, from small businesscustomers who have very concentrated banking relationships (Ongena and Smith, 2001). In addition, both favorable and unfavorable effects of credit market concentration on financing small businesses have been acknowledged. Small business borrowers may have to pay a higher-than-market price on loans (Degryse and Ongena, 2005) and are more likely to be financially constrained (Cetorelli, 2004) than in competitive markets. On the other hand, empirical studies have shown that market concentration create a strong motive for lenders to invest in private information from small business customers, and therefore a concentrated market is more efficient in terms of private information acquisition (Han et al., 2009b). The objective of this chapter is to investigate, by reviewing existing literature, the role played by relationship lending and the effects of market concentration on financing entrepreneurial businesses that are supposed to be informationally opaque. In the first section we review literature on the important role played by asymmetric information in entrepreneurial finance from two perspectives: asymmetric information and relationship lending, and the theoretical modeling of asymmetric information. Then we examine the relationship between capital market conditions and entrepreneurial finance and attempt to answer two questions: Why is the capital market condition important for entrepreneurial finance? and What are the effects of capital market conditions on entrepreneurial financial behavior in terms of discouraged borrowers, cash holding, and the availability and costs of finance?

From molecules to neural morphology: understanding neuroinflammation in autism spectrum condition

Growing evidence points toward a critical role for early (prenatal) atypical neurodevelopmental processes in the aetiology of autism spectrum condition (ASC). One such process that could impact early neural development is inflammation. We review the evidence for atypical expression of molecular markers in the amniotic fluid, serum, cerebrospinal fluid (CSF), and the brain parenchyma that suggest a role for inflammation in the emergence of ASC. This is complemented with a number of neuroimaging and neuropathological studies describing microglial activation. Implications for treatment are discussed.

Plastic and evolutionary responses to heat stress in a temperate dung fly: negative correlation between basal and induced heat tolerance?

Extreme weather events such as heat waves are becoming more frequent and intense. Populations can cope with elevated heat stress by evolving higher basal heat tolerance (evolutionary response) and/or stronger induced heat tolerance (plastic response). However, there is ongoing debate about whether basal and induced heat tolerance are negatively correlated and whether adaptive potential in heat tolerance is sufficient under ongoing climate warming. To evaluate the evolutionary potential of basal and induced heat tolerance, we performed experimental evolution on a temperate source 4 population of the dung fly Sepsis punctum. Offspring of flies adapted to three thermal selection regimes (Hot, Cold and Reference) were subjected to acute heat stress after having been exposed to either a hot-acclimation or non-acclimation pretreatment. As different traits may respond differently to temperature stress, several physiological and life history traits were assessed. Condition dependence of the response was evaluated by exposing juveniles to different levels of developmental (food restriction/rearing density) stress. Heat knockdown times were highest, whereas acclimation effects were lowest in the Hot selection regime, indicating a negative association between basal and induced heat tolerance. However, survival, adult longevity, fecundity and fertility did not show such a pattern. Acclimation had positive effects in heat-shocked flies, but in the absence of heat stress hot-acclimated flies had reduced life spans relative to nonacclimated ones, thereby revealing a potential cost of acclimation. Moreover, body size positively affected heat tolerance and unstressed individuals were less prone to heat stress than stressed flies, offering support for energetic costs associated with heat tolerance. Overall, our results indicate that heat tolerance of temperate insects can evolve under rising temperatures, but this response could be limited by a negative relationship between basal and induced thermotolerance, and may involve some but not other fitness-related traits.

Activation of G-protein-coupled receptor 30 is sufficient to enhance spatial recognition memory in ovariectomized rats

In ovariectomized rats, administration of estradiol, or selective estrogen receptor agonists that activate either the alpha or beta isoforms, have been shown to enhance spatial cognition on a variety of learning and memory tasks, including those that capitalize on the preference of rats to seek out novelty. Although the effects of the putative estrogen G-protein-coupled receptor 30 (GPR30) on hippocampus-based tasks have been reported using food-motivated tasks, the effects of activation of GPR30 receptors on tasks that depend on the preference of rats to seek out spatial novelty remain to be determined. Therefore, the aim of the current study was to determine if short-term treatment of ovariectomized rats with G-1, an agonist for GPR30, would mimic the effects on spatial recognition memory observed following short-term estradiol treatment. In Experiment 1, ovariectomized rats treated with a low dose (1mug) of estradiol 48h and 24h prior to the information trial of a Y-maze task exhibited a preference for the arm associated with the novel environment on the retention trial conducted 48h later. In Experiment 2, treatment of ovariectomized rats with G-1 (25mug) 48h and 24h prior to the information trial of a Y-maze task resulted in a greater preference for the arm associated with the novel environment on the retention trial. Collectively, the results indicated that short-term treatment of ovariectomized rats with a GPR30 agonist was sufficient to enhance spatial recognition memory, an effect that also occurred following short-term treatment with a low dose of estradiol.