Competition of the mechanisms : how Chinese home appliance firms coped with default risk of trade credit?

During the transition period from a planned economy to a market economy in 1990s of China, there was a considerable accrual of deferred payment, and default due to inferior enforcement institutions. This is a very common phenomenon in the transition economies at that time. Interviews with home electronics appliance firms revealed that firms coped with this problem by adjusting their sales mechanisms (found four types), and the benefit of institutions was limited. A theoretical analysis claim that spot and integration are inferior to contracts, a contract with a rebate on volume and prepayment against an exclusive agent can realize the lowest cost and price. The empirical part showed that mechanisms converged into a mechanism with the rebate on volume an against exclusive agent and its price level is the lowest. The competition is the driving force of the convergence of mechanisms and improvement risk management capacity.

Risk sharing with Multilateral Financial Institutions in infrastructure and energy project financing : effect on capital relief for commercial banks

(Matsukawa and Habeck, 2007) analyse the main instruments for risk mitigation in infrastructure financing with Multilateral Financial Institutions (MFIs). Their review coincided with the global financial crisis of 2007-08, and is highly relevant in current times considering the sovereign debt crisis, the lack of available capital and the increases in bank regulation in Western economies. The current macroeconomic environment has seen a slowdown in the level of finance for infrastructure projects, as they pose a higher credit risk given their requirements for long term investments. The rationale for this work is to look for innovative solutions that are focused on the credit risk mitigation of infrastructure and energy projects whilst optimizing the economic capital allocation for commercial banks. This objective is achieved through risk-sharing with MFIs and looking for capital relief in project finance transactions. This research finds out the answer to the main question: "What is the impact of risk-sharing with MFIs on project finance transactions to increase their efficiency and viability?", and is developed from the perspective of a commercial bank assessing the economic capital used and analysing the relevant variables for it: Probability of Default, Loss Given Default and Recovery Rates, (Altman, 2010). An overview of project finance for the infrastructure and energy sectors in terms of the volume of transactions worldwide is outlined, along with a summary of risk-sharing financing with MFIs. A review of the current regulatory framework beneath risk-sharing in structured finance with MFIs is also analysed. From here, the impact of risk-sharing and the diversification effect in infrastructure and energy projects is assessed, from the perspective of economic capital allocation for a commercial bank. CreditMetrics (J. P. Morgan, 1997) is applied over an existing well diversified portfolio of project finance infrastructure and energy investments, working with the main risk capital measures: economic capital, RAROC, and EVA. The conclusions of this research show that economic capital allocation on a portfolio of project finance along with risk-sharing with MFIs have a huge impact on capital relief whilst increasing performance profitability for commercial banks. There is an outstanding diversification effect due to the portfolio, which is combined with risk mitigation and an improvement in recovery rates through Partial Credit Guarantees issued by MFIs. A stress test scenario analysis is applied to the current assumptions and credit risk model, considering a downgrade in the rating for the commercial bank (lender) and an increase of default in emerging countries, presenting a direct impact on economic capital, through an increase in expected loss and a decrease in performance profitability. Getting capital relief through risk-sharing makes it more viable for commercial banks to finance infrastructure and energy projects, with the beneficial effect of a direct impact of these investments on GDP growth and employment. The main contribution of this work is to promote a strategic economic capital allocation in infrastructure and energy financing through innovative risk-sharing with MFIs and economic pricing to create economic value added for banks, and to allow the financing of more infrastructure and energy projects. This work suggests several topics for further research in relation to issues analysed. (Matsukawa and Habeck, 2007) analizan los principales instrumentos de mitigación de riesgos en las Instituciones Financieras Multilaterales (IFMs) para la financiación de infraestructuras. Su presentación coincidió con el inicio de la crisis financiera en Agosto de 2007, y sus consecuencias persisten en la actualidad, destacando la deuda soberana en economías desarrolladas y los problemas capitalización de los bancos. Este entorno macroeconómico ha ralentizado la financiación de proyectos de infraestructuras. El actual trabajo de investigación tiene su motivación en la búsqueda de soluciones para la financiación de proyectos de infraestructuras y de energía, mitigando los riesgos inherentes, con el objeto de reducir el consumo de capital económico en los bancos financiadores. Este objetivo se alcanza compartiendo el riesgo de la financiación con IFMs, a través de estructuras de risk-sharing. La investigación responde la pregunta: "Cuál es el impacto de risk-sharing con IFMs, en la financiación de proyectos para aumentar su eficiencia y viabilidad?". El trabajo se desarrolla desde el enfoque de un banco comercial, estimando el consumo de capital económico en la financiación de proyectos y analizando las principales variables del riesgo de crédito, Probability of Default, Loss Given Default and Recovery Rates, (Altman, 2010). La investigación presenta las cifras globales de Project Finance en los sectores de infraestructuras y de energía, y analiza el marco regulatorio internacional en relación al consumo de capital económico en la financiación de proyectos en los que participan IFMs. A continuación, el trabajo modeliza una cartera real, bien diversificada, de Project Finance de infraestructuras y de energía, aplicando la metodología CreditMet- rics (J. P. Morgan, 1997). Su objeto es estimar el consumo de capital económico y la rentabilidad de la cartera de proyectos a través del RAROC y EVA. La modelización permite estimar el efecto diversificación y la liberación de capital económico consecuencia del risk-sharing. Los resultados muestran el enorme impacto del efecto diversificación de la cartera, así como de las garantías parciales de las IFMs que mitigan riesgos, mejoran el recovery rate de los proyectos y reducen el consumo de capital económico para el banco comercial, mientras aumentan la rentabilidad, RAROC, y crean valor económico, EVA. En escenarios económicos de inestabilidad, empeoramiento del rating de los bancos, aumentos de default en los proyectos y de correlación en las carteras, hay un impacto directo en el capital económico y en la pérdida de rentabilidad. La liberación de capital económico, como se plantea en la presente investigación, permitirá financiar más proyectos de infraestructuras y de energía, lo que repercutirá en un mayor crecimiento económico y creación de empleo. La principal contribución de este trabajo es promover la gestión activa del capital económico en la financiación de infraestructuras y de proyectos energéticos, a través de estructuras innovadoras de risk-sharing con IFMs y de creación de valor económico en los bancos comerciales, lo que mejoraría su eficiencia y capitalización. La aportación metodológica del trabajo se convierte por su originalidad en una contribución, que sugiere y facilita nuevas líneas de investigación académica en las principales variables del riesgo de crédito que afectan al capital económico en la financiación de proyectos.

The default mode network is functionally and structurally disrupted in amnestic mild cognitive impairment — a bimodal MEG–DTI study

Over the past years, several studies on Mild Cognitive Impairment (MCI) and Alzheimer's disease (AD) have reported Default Mode Network (DMN) deficits. This network is attracting increasing interest in the AD community, as it seems to play an important role in cognitive functioning and in beta amyloid deposition. Attention has been particularly drawn to how different DMN regions are connected using functional or structural connectivity. To this end, most studies have used functional Magnetic Resonance Imaging (fMRI), Positron Emission Tomography (PET) or Diffusion Tensor Imaging (DTI). In this study we evaluated (1) functional connectivity from resting state magnetoencephalography (MEG) and (2) structural connectivity from DTI in 26 MCI patients and 31 age-matched controls. Compared to controls, the DMN in the MCI group was functionally disrupted in the alpha band, while no differences were found for delta, theta, beta and gamma frequency bands. In addition, structural disconnection could be assessed through a decreased fractional anisotropy along tracts connecting different DMN regions. This suggests that the DMN functional and anatomical disconnection could represent a core feature of MCI.

Segregation of Heterotrimeric G Proteins in Cell Surface Microdomains: Gq Binds Caveolin to Concentrate in Caveolae, whereas Gi and Gs Target Lipid Rafts by Default

Select lipid-anchored proteins such as glycosylphosphatidylinositol (GPI)-anchored proteins and nonreceptor tyrosine kinases may preferentially partition into sphingomyelin-rich and cholesterol-rich plasmalemmal microdomains, thereby acquiring resistance to detergent extraction. Two such domains, caveolae and lipid rafts, are morphologically and biochemically distinct, contain many signaling molecules, and may function in compartmentalizing cell surface signaling. Subfractionation and confocal immunofluorescence microscopy reveal that, in lung tissue and in cultured endothelial and epithelial cells, heterotrimeric G proteins (Gi, Gq, Gs, and Gβγ) target discrete cell surface microdomains. Gq specifically concentrates in caveolae, whereas Gi and Gs concentrate much more in lipid rafts marked by GPI-anchored proteins (5′ nucleotidase and folate receptor). Gq, apparently without Gβγ subunits, stably associates with plasmalemmal and cytosolic caveolin. Gi and Gs interact with Gβγ subunits but not caveolin. Gi and Gs, unlike Gq, readily move out of caveolae. Thus, caveolin may function as a scaffold to trap, concentrate, and stabilize Gq preferentially within caveolae over lipid rafts. In N2a cells lacking caveolae and caveolin, Gq, Gi, and Gs all concentrate in lipid rafts as a complex with Gβγ. Without effective physiological interaction with caveolin, G proteins tend by default to segregate in lipid rafts. The ramifications of the segregated microdomain distribution and the Gq-caveolin complex without Gβγ for trafficking, signaling, and mechanotransduction are discussed.

Medial prefrontal cortex and self-referential mental activity: Relation to a default mode of brain function

Medial prefrontal cortex (MPFC) is among those brain regions having the highest baseline metabolic activity at rest and one that exhibits decreases from this baseline across a wide variety of goal-directed behaviors in functional imaging studies. This high metabolic rate and this behavior suggest the existence of an organized mode of default brain function, elements of which may be either attenuated or enhanced. Extant data suggest that these MPFC regions may contribute to the neural instantiation of aspects of the multifaceted “self.” We explore this important concept by targeting and manipulating elements of MPFC default state activity. In this functional magnetic resonance imaging (fMRI) study, subjects made two judgments, one self-referential, the other not, in response to affectively normed pictures: pleasant vs. unpleasant (an internally cued condition, ICC) and indoors vs. outdoors (an externally cued condition, ECC). The ICC was preferentially associated with activity increases along the dorsal MPFC. These increases were accompanied by decreases in both active task conditions in ventral MPFC. These results support the view that dorsal and ventral MPFC are differentially influenced by attentiondemanding tasks and explicitly self-referential tasks. The presence of self-referential mental activity appears to be associated with increases from the baseline in dorsal MPFC. Reductions in ventral MPFC occurred consistent with the fact that attention-demanding tasks attenuate emotional processing. We posit that both self-referential mental activity and emotional processing represent elements of the default state as represented by activity in MPFC. We suggest that a useful way to explore the neurobiology of the self is to explore the nature of default state activity.

Default taxonomy: Ernst Mayr’s view of the microbial world

This perspective is a response to a taxonomic proposal by E. Mayr [“Two empires or three?” (1998) Proc. Natl. Acad. Sci. USA 95, 9720–9723]. Mayr has suggested that the now accepted classification of life into three primary domains, Archaea, Bacteria, and Eucarya—originally proposed by myself and others—be abandoned in favor of the earlier Prokaryote–Eukaryote classification. Although the matter appears a taxonomic quibble, it is not that simple. At issue here are differing views as to the nature of biological classification, which are underlain by differing views as to what biology is and will be—matters of concern to all biologists.

Volatility spillovers in EMU sovereign bond markets

We analyse volatility spillovers in EMU sovereign bond markets. First, we examine the unconditional patterns during the full sample (April 1999-January 2014) using a measure recently proposed by Diebold and Yılmaz (2012). Second, we make use of a dynamic analysis to evaluate net directional volatility spillovers for each of the eleven countries under study, and to determine whether core and peripheral markets present differences. Finally, we apply a panel analysis to empirically investigate the determinants of net directional spillovers of this kind.

Fashions and fads in finance: contingent emulation and the political economy of sovereign wealth fund creation. IHS Political Science Series No. 131, July 2012

Sovereign wealth funds (SWFs), government-owned or managed investment vehicles, have proliferated at a remarkable rate over the past decade, even as political controversy has surrounded them. Why? The extant literature depicts the process of SWF creation as driven by functional imperatives associated with “excess” revenue and reserves accumulated from commodity booms and large current account surpluses. I argue that SWF creation also reflects in large part a process of contingent emulation in which first this policy has been constructed as appropriate for countries with given characteristics, and then when countries took on these characteristics, they followed their peers. Put simply, fashions and fads in finance matter for policy diffusion. I assess this argument using a new dataset on SWF creation that covers nearly 80 countries from 1984 to 2007. The results suggest peer-based contingent emulation has been a crucial factor shaping the decision of many countries to create a SWF, especially among fuel exporters. An earlier version of this paper was presented at the annual meeting of the American Political Science Association, Washington, DC, 2 – 5 September 2010. The author would like to thank Eric Neumayer for his many suggestions and comments on previous versions of the manuscript. The author would also like to thank Zachary Elkins for sharing data. Finally, the author would like to acknowledge the research assistance of Natali Bulamacioglu and Christopher Gandrud.

Reflections on the institutional balance, the Community Method and the interplay between jurisdictions after Lisbon. Research Papers in Law, 04/2012

[Introduction.] Over the last two years, not only inside but also outside the framework of the EU treaties, far reaching measures have been taken at the highest political level in order to address the financial and economic crisis in Europe and in particular the sovereign debt crisis in the Euro area. This has triggered debates forecasting the “renationalisation of European politics.” Herman Van Rompuy, the President of the European Council, countered the prediction that Europe is doomed because of such a renationalisation: “If national politics have a prominent place in our Union, why would this not strengthen it?” He took the view that not a renationalisation of European politics was at stake, but an Europeanization of national politics emphasising that post war Europe was never developed in contradiction with nation states.1 Indeed, the European project is based on a mobilisation of bundled, national forces which are of vital importance to a democratically structured and robust Union that is capable of acting in a globalised world. To that end, the Treaty of Lisbon created a legal basis. The new legal framework redefines the balance between the Union institutions and confirms the central role of the Community method in the EU legislative and judiciary process. This contribution critically discusses the development of the EU's institutional balance after the entry into force of the Treaty of Lisbon, with a particular emphasis on the use of the Community Method and the current interplay between national constitutional courts and the Court of Justice. This interplay has to date been characterised by suspicion and mistrust, rather than by a genuine dialogue between the pertinent judicial actors.