Corporate finance in general equilibrium models with incomplete markets: A survey

A Masters Thesis, presented as part of the requirements for the award of a Research Masters Degree in Economics from NOVA – School of Business and Economics

On project finance and the first road concession in Portugal

In broad sense, Project Financing1 as a mean of financing large scale infrastructural projects worldwide has had a steady growth in popularity for the last 20 years. This growth has been relatively unscathed from most economic cycles. However in the wake of the 2007 systemic Financial Crisis, Project Financing was also in trouble. The liquidity freeze and credit crunch that ensued affected all parties involved. Traditional Lenders, of this type of financial instrument, locked-in long-term contractual obligations, were severely hit with scarcity of funding compounded by rapidly increasing cost of funding. All the while, Banks were “rescued” by the concerted actions of Central Banks and other Multi-Lateral Agencies around the world but at the same time “stressed” by upcoming regulatory effort (Basel Committee). This impact resulted in specific changes to this type of long-term financing. Changes such as Commercial Banks’ increased risk aversion; pricing increase and maturities decrease of credit facilities; enforcement of Market Disruption Event clauses; partial responsibility for project risk by Multilateral Agencies; and adoption of utility-like availability payments in other industrial sectors such as transportation and even social infrastructure. To the extent possible, this report is then divided in three parts. First, it begins with a more instructional part, touching academic literature (theory) and giving the Banks perspective (practice), but mostly as an overview of Project Finance for awareness’ sake. The renowned Harvard Business School professor – Benjamin Esty, states2 that Project Finance is a “relatively unexplored territory for both empirical and theoretical research” which means that academic research efforts are lagging the practice of Project Finance. Second, the report presents a practical case regarding the first Road Concession in Portugal in 1998 ending with the lessons learned 10 years after Financial Close. Lastly, the report concludes with the analysis of the current trends and changes to the industry post Financial Crisis of the late 2000’s. To achieve this I’ll reference relevant papers, books on the subject, online articles and my own experience in the Project Finance Department at a major Portuguese Investment Bank. Regarding the latter, with the signing of a confidentiality agreement, I’m duly omitting sensitive and proprietary bank information.

Improving Millennium Bank's personal finance manager

Double Degree

A Study Of Chit Finance In Kerala With Special Emphasis On Kerala State Financial Enterprises Ltd.

Chit funds contribute to the value of financial markets in India particularly in Kerala. Chit finances with its unique features are of great significance especially as a savings cum borrowing avenue. The present study entitled “A Study of chit Finance in Kerala with special emphasis on Kerala State Financial Enterprises Ltd.” examines the socio-economic aspects of Chit schemes run by the private Chit Funds, KSFE, co-operatives, and informal Chit Funds. The study is an attempt to find the reasons for the growing popularity of Chit Funds as savings cum borrowings avenues even in the presence of various other avenues of savings and borrowings and also to understand how the Chit subscribers utilize the funds. The objectives of the present study are to examine the trends and pattern of growth of Chit Funds in the formal sector in Kerala, performance of KSFE as the only public sector Chit Fund company in India, preference for joining Chit Funds, estimate the cost and return on Chit Funds etc. is an indigenous financial instrument is complementary to modern financial techniques of savings and borrowings. KSFE is the dominant foremen in the chit business in Kerala, its weaknesses result in the non-attainment of certain objectives. Driven by the growing trend of privatization, KSFE needs to be innovative and competitive. It is also necessary that KSFE continue its leadership role by being more effective in being the harbinger of more efficiency, professionalism and good governance in the Chit Fund Industry. The growth and development of chit business by protecting the interests of both the subscribers and the foremen will therefore be most beneficial for any growing economy.

Sistema d'anàlisi financer: tresoreria amb eines Business Intelligence

El projecte tracte d' implementar una solució de Business Intelligence sota la plataforma Microsoft.Aquest projecte va destinat al Departament de Comptabilitat de l' Ajuntament de Cambrils, i està relacionat amb la funció del control de les despeses i els ingressos

Asymmetries in Business Cycles

Esta disertación busca estudiar los mecanismos de transmisión que vinculan el comportamiento de agentes y firmas con las asimetrías presentes en los ciclos económicos. Para lograr esto, se construyeron tres modelos DSGE. El en primer capítulo, el supuesto de función cuadrática simétrica de ajuste de la inversión fue removido, y el modelo canónico RBC fue reformulado suponiendo que des-invertir es más costoso que invertir una unidad de capital físico. En el segundo capítulo, la contribución más importante de esta disertación es presentada: la construcción de una función de utilidad general que anida aversión a la pérdida, aversión al riesgo y formación de hábitos, por medio de una función de transición suave. La razón para hacerlo así es el hecho de que los individuos son aversos a la pérdidad en recesiones, y son aversos al riesgo en auges. En el tercer capítulo, las asimetrías en los ciclos económicos son analizadas junto con ajuste asimétrico en precios y salarios en un contexto neokeynesiano, con el fin de encontrar una explicación teórica de la bien documentada asimetría presente en la Curva de Phillips.

Poor people and risky business

We try to explain why economic conflicts and illegal business often take place in poor countries. We use the concept of subsistence level of consumption (d) and assume a regular concave utility function for consumption levels higher than d. For consumption levels lower than d utility is constant and equal to zero. Under this framework poor agents are risk-lovers. This result helps to explain why economic conflicts are more likely to appear in poor economies and why poor agents are more willing to undertake illegal business.

Can British multinational enterprises finance economic development in South East Asia?

Purpose – The purpose of this paper is to shed new light on the debate about the role of foreign direct investment (FDI) and public policy in fostering economic development. Specifically, can the capital inflow of multinational enterprises (MNEs) and the ability of the subsidiaries to raise funds locally help promote development? This paper addresses this issue by examining the capital structure and financing sources of foreign subsidiaries of MNEs. Design/methodology/approach – This paper integrates the capital structure theories in finance with internalization theory in international business. It uses an original primary dataset collected by a survey of 101 foreign subsidiaries of British MNEs in six emerging economies in the ASEAN region. Findings – There are three significant findings. First, these subsidiaries rely heavily on internal funds generated within the MNEs and less on external debts raised in the host countries. Second, the foreign subsidiary's capital structure is influenced by the home country of origin of the parent firm and the parent firm's financing sources. Third, these subsidiaries have used the financial resources to develop business networks with local small and medium enterprises (SMEs) which contribute to economic development of the host countries. Originality/value – This paper examines the internal capital market within the MNE. It provides theoretical and empirical support for the capital structure theory of the hierarchy financing approach and also for internalization theory by addressing FDI inflows by MNEs and the raising of funds locally. These findings have important implications for public policy, namely the facilitation of MNE entry to encourage economic development.

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?

Micro finance programs: caring for those missed by formal social protection mechanism

In line with the current global trend of economic and social restructuring, it has become essential to address the issue of poverty and social protection for the poorer segment of the population who are not covered by formal social protection mechanisms. Micro finance institutions (MFIs) in developing countries have been working towards poverty alleviation and enhancing social protection for the last few decades. MFI’s provision of financial assistance to the poor has been instrumental in improving the overall quality of the impoverished. Based on an in-depth qualitative study conducted across three different types of NGOs (Non Governmental Organization) in the Philippines, this study found a relationship between micro finance programs and improved social protection. The study reveals that MFIs have the ability to make a positive impact on areas such as entrepreneurship, education, housing, job security and income generation.

Public finance and income redistribution in interwar Australia: towards a class analysis

In this paper I focus on a neglected aspect of Australian political history, the extent to which Australian governments actually redistributed income. The German sociologist Rudolf Goldscheid argued that 'the budget is the skeleton of the state stripped of all misleading ideologies'. In Australia a party that claimed to represent lower income earners, the Labor Party, was a major political force, but did Labor actually make a difference to the distribution of income across social classes, or did Labor's rhetoric of equity merely serve to incorporate workers into the capitalist system? A quantitative approach to the political history of labour may enable us to escape both nostalgia for old labourism (which the Howard years have encouraged) and a simple and undifferentiated rejection of labourism as a reformist agent of social integration.

This paper incorporates some material from a 2005 paper that examined overall expenditure patterns and taxation patterns across the states and Commonwealth from 1910 to 1940 but it goes beyond the aggregate approach of this paper to consider the extent which the varying patterns of taxation and public expenditure across Australia impacted on different social classes during the 1930s. It is very much a preliminary analysis based on existing compilations of taxation statistics. It is a static analysis and does not consider if nominally redistributive taxation and expenditure patterns might be rendered ineffective by consequent interstate migration.

Managing FM (support services): business risks in the healthcare sector

This paper presents research findings of 365 NHS Trust executives in the UK and builds on work carried out on risk perceptions and treatment in facilities management operations and business support activities in the NHS Trusts. The research utilises a business approach of viewing healthcare facilities not only as fixed “assets” occupying hospital sites and space, but it also considers them as that “tangible” part of the service chain process underpinning the provision of clinical services to both internal (departments or directorates) and external customers. The research found that customer satisfaction, service delivery certainty, customer involvement, service quality reliability, health and safety are highly rated by the NHS executives. The paper classifies healthcare related risk constructs into seven elements namely: customer care, corporate, legal, commercial finance and economics, business transfer, and facilities transmitted