Race, Debt and the Welfare State

In this article I explore how the figure of debt illuminates the racial politics of welfare in neoliberal Britain. I begin by giving a reading of the simultaneous unfolding of post-war race politics and the Beveridgean welfare state, and then turn to consider the interpellative appeal of neoliberal debt to minoritiSed subjects who have, in certain respects, been de facto excluded from prevailing models of welfare citizenship. In particular, this article considers the ways in which household debt might, even as it increases social inequality, simultaneously produce ideas about equality and futurity, as well as gesture towards the possibility of post-national forms of identity and belonging. If we are to challenge the lowest-common-denominator logics of ‘capitalist realism’ it is necessary to develop orientations to the economic that are as convincing as the popular stories that circulate about the operations of the neoliberal marketplace, and which are as meaningful as the social relations they play a part in constituting. Rather than reproduce the racialized model of welfare citizenship that is implicit to the ‘defence’ of the postwar welfare state, I suggest that there are elements of prevailing neoliberal market relations that might themselves serve as a more substantial basis for expressions of racial equality. There is, in other words, something that we can learn from neoliberal debt regimes in order to develop a more egalitarian future-oriented politics of social welfare and economic redistribution.

Effect of Earnings Volatility on Cost of Debt: The case of Swedish Limited Companies

The paper empirically tests the relationship between earnings volatility and cost of debt with a sample of more than 77,000 Swedish limited companies over the period 2006 to 2013 observing more than 677,000 firm years. As called upon by many researchers recently that there is very limited evidence of the association between earnings volatility and cost of debt this paper contributes greatly to the existing literature of earnings quality and debt contracts, especially on the consequence of earnings quality in the debt market. Earnings volatility is a proxy used for earnings quality while cost of debt is a component of debt contract. After controlling for firms’ profitability, liquidity, solvency, cashflow volatility, accruals volatility, sales volatility, business risk, financial risk and size this paper studies the effect of earnings volatility measured by standard deviation of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) on Cost of Debt. Overall finding suggests that lenders in Sweden does take earnings volatility into consideration while determining cost of debt for borrowers. But a deeper analysis of various industries suggest earnings volatility is not consistently used by lenders across all the industries. Lenders in Sweden are rather more sensitive to borrowers’ financial risk across all the industries. It may also be stated that larger borrowers tend to secure loans at a lower interest rate, the results are consistent with majority of the industries. Swedish debt market appears to be well prepared for financial crises as the debt crisis seems to have no or little adverse effect borrowers’ cost of capital. This study is the only empirical evidence to study the association between earnings volatility and cost of debt. Prior indirect research suggests earnings volatility has a negative effect on cost debt (i.e. an increase in earnings volatility will increase firm’s cost of debt). Our direct evidence from the Swedish debt market is consistent for some industries including media, real estate activities, transportation & warehousing, and other consumer services.

The impact of the Eurozone sovereign debt crisis on bond fund performance persistence: Evidence from a small market

We evaluate the impact of the Eurozone sovereign debt crisis on the performance and performance persistence of a survivorship bias-free sample of bond funds from a small market, identified as one of the most affected by this event, during the 2001–2012 period. Besides avoiding data mining, we also introduce a methodological innovation in assessing bond fund performance persistence. Our results show that bond funds underperform significantly both during crisis and non-crisis periods. Besides, we find strong evidence of performance persistence, for both short- and longer-term horizons, during non-crisis periods but not during the debt crisis. In this way, the persistence phenomenon in small markets seems to occur only during non-crisis periods and this is valuable information for bond fund investors to exploit.

Is the supply of long-term debt independent of the term premia? Evidence from Portugal

An important assumption in the statistical analysis of the financial market effects of the central bank’s large scale asset purchase program is that the "long-term debt stock variables were exogenous to term premia". We test this assumption for a small open economy in a currency union over the period 2000M3 to 2015M10, via the determinants of short- term financing relative to long-term financing. Empirical estimations indicate that the maturity composition of debt does not respond to the level of interest rate or to the term structure. These findings suggest a lower adherence to the cost minimization mandate of debt management. However, we find that volatility and relative market size respectively decrease and increase short-term financing relative to long-term financing, while it decreases with an increase in government indebtedness.

Interest rate (in)sensitivity of emerging market corporate debt : economic analysis based on 2002-2015 empirical evidence

Interest rate sensitivity assessment framework based on fixed income yield indexes is developed and applied to two types of emerging market corporate debt: investment grade and high yield exposures. Our research advances beyond the correlation analyses focused on co- movements in yields and/or spreads of risky and risk-free assets. We show that correlation- based analyses of interest rate sensitivity could appear rather inconclusive and, hence, we investigate the bottom line profit and loss of a hypothetical model portfolio of corporates. We consider historical data covering the period 2002 – 2015, which enable us to assess interest rate sensitivity of assets during the development, the apogee, and the aftermath of the global financial crisis. Based on empirical evidence, both for investment and speculative grades securities, we find that the emerging market corporates exhibit two different regimes of sensitivity to interest rate changes. We observe switching from a positive sensitivity under the normal market conditions to a negative one during distressed phases of business cycles. This research sheds light on how financial institutions may approach interest rate risk management, evidencing that even plain vanilla portfolios of emerging market corporates, which on average could appear rather insensitive to the interest rate risk in fact present a binary behavior of their interest rate sensitivities. Our findings allow banks and financial institutions for optimizing economic capital under Basel III regulatory capital rules.

Governed by the cycle : direct and inverted interest-rate sensitivity of emerging market corporate debt

An innovative approach to quantify interest rate sensitivities of emerging market corporates is proposed. Our focus is centered at price sensitivity of modeled investment grade and high yield portfolios to changes in the present value of modeled portfolios composed of safe-haven assets, which define risk-free interest rates. Our methodology is based on blended yield indexes. Modeled investment horizons are always kept above one year thus allowing to derive empirical implications for practical strategies of interest rate risk management in the banking book. As our study spans over the period 2002 – 2015, it covers interest rate sensitivity of assets under the pre-crisis, crisis, and post-crisis phases of the economic cycles. We demonstrate that the emerging market corporate bonds both, investment grade and high yield types, depending on the phase of a business cycle exhibit diverse regimes of sensitivity to interest rate changes. We observe switching from a direct positive sensitivity under the normal pre-crisis market conditions to an inverted negative sensitivity during distressed turmoil of the recent financial crisis, and than back to direct positive but weaker sensitivity under new normal post-crisis conjuncture. Our unusual blended yield-based approach allows us to present theoretical explanations of such phenomena from economics point of view and helps us to solve an old controversy regarding positive or negative responses of credit spreads to interest rates. We present numerical quantification of sensitivities, which corroborate with our conclusion that hedging of interest rate risk ought to be a dynamic process linked to the phases of business cycles as we evidence a binary-like behavior of interest rate sensitivities along the economic time. Our findings allow banks and financial institutions for approaching downside risk management and optimizing economic capital under Basel III regulatory capital rules.

Perpetual debt valuation: the net present value myopia

Would you prefer to receive a fixed rent for a period of 50 years, 75 years or perpetually? Well, if you have chosen the perpetual option, you are absolutely right. However, when considering a mathematical and financial approach, they may all end up roughly the same whenever the Net Present Value (NPV) is approximately identical. It makes common sense to choose the perpetual option even if the NPV exhibits myopia when computing the discount value of a fixed yearly rent. After a certain period, the discount value becomes approximately the same even when adding more yearly fixed rents. Corporations and governments issue perpetual bonds while recognizing these may not represent a very good financing strategy and thus implying that most of these issues are either callable or convertible on the issuer’s request. In approaching the existing perpetual debt related NPV myopia, this paper holds two main goals: firstly, we intend to study the behaviours of perpetual debt yields against other perpetual instruments and, secondly, we consider the financial methods for assessing the value of money before proposing a formula adjustment that might serve to overcome default NPV when evaluating fixed rents in perpetuity.

Perpetual debt valuation: the net present value myopia

Would you prefer to receive a fixed rent for a period of 50 years, 75 years or perpetually? Well, if you have chosen the perpetual option, you are absolutely right. However, when considering a mathematical and financial approach, they may all end up roughly the same whenever the Net Present Value (NPV) is approximately identical. It makes common sense to choose the perpetual option even if the NPV exhibits myopia when computing the discount value of a fixed yearly rent. After a certain period, the discount value becomes approximately the same even when adding more yearly fixed rents. Corporations and governments issue perpetual bonds while recognizing these may not represent a very good financing strategy and thus implying that most of these issues are either callable or convertible on the issuer’s request. In approaching the existing perpetual debt related NPV myopia, this paper holds two main goals: firstly, we intend to study the behaviours of perpetual debt yields against other perpetual instruments and, secondly, we consider the financial methods for assessing the value of money before proposing a formula adjustment that might serve to overcome default NPV when evaluating fixed rents in perpetuity.

How much are translation studies in debt to Soren Kierkegaard?

The significance of Jacques Derrida's philosophical contribution to translation studies is becoming more widely acknowledged, thanks to authors such as Lawrence Venuti, Kaisa Koskinen, Rosemary Arrojo, Lieven Tack and africa Vidal Claramonte. However, what remains unknown is the debt which Derrida owes to the thinking of SOren Kierkegaard. This article sets out this legacy for the purposes of presenting some basic principles of deconstruction and in order to further promote its dissemination in the area of translation studies. At the same time, this article aims to be both a tribute to the Danish philosopher and a recognition of his contribution to modern-day thinking. Ultimately, the objective of this piece of research is to demonstrate how the ramifications of Kierkegaard's ideas are still relevant and, to a certain extent, are present in the area of translation studies. Among other things, this article shows how notions which are so fundamental to Kierkegaardian thinking, such as subjectivity', decision', instant' or impossible' echo in several recent texts regarding translation studies.

The conditional performance of euro bond funds: evidence from Portugal during the debt crisis

This paper evaluates the performance of a survivorship bias-free data set of Portuguese funds investing in Euro-denominated bonds by using conditional models that consider the public information available to investors when the returns are generated. We find that bond funds underperform the market significantly and by an economically relevant magnitude. This underperformance cannot be explained by the expenses they charge. Our findings support the use of conditional performance evaluation models, since we find strong evidence of both time-varying risk and performance, dependent on the slope of the term structure and the inverse relative wealth variables. We also show that survivorship bias has a significant impact on performance estimates. Furthermore, during the European debt crisis, bond fund managers performed significantly better than in non-crisis periods and were able to achieve neutral performance. This improved performance throughout the crisis seems to be related to changes in funds’ investment styles.

Impact of Public Debt on Economic Growth in Advanced Economies

This paper examines the impact of public debt on the economic growth in advanced economies over a period of 1946 to 2009, using an econometric approach. The findings suggested an inverse relationship between public debt and economic growth in advanced economies. These relationships were found to be significant as well. Model results also show that the real GDP growth rate does not decline sharply whether the public debt-to-GDP ratio is lower than 220%. The public debt-to-GDP ratio elasticity of the real growth rate shows that an increase of 1% in public debt/GDP category above 120% decreases the real GDP growth rate in 1.13%. The negative effect of public debt is only stronger on the real GDP growth rate in advanced economies when the public debt-to-GDP ratio is above 220%. Finally, these findings lead us to reassess the austerity agenda, and the governments should devise new strategies for public debt management in advanced economies, taking into account their economic and financial performance.

Escaping the debt trap: peripheral countries in prolonged debt crises and how to exit

This thesis is an interdisciplinary piece of academic research, situated within Critical Theory but engaging with other disciplines, mainly Political Economy and Politics, to tackle the topic at hand; sovereign debt crises. The thesis deals with the Problem of Debt and, more specifically, the Problem of Prolonged Sovereign Debt Crises, which is described in this thesis as the phenomenon of the “Debt Trap”. The specific question that will occupy us in this thesis is why countries appear unable to exit these prolonged debt crises. By exiting a debt crisis, we mean here a state of affairs in which a country has managed to render its debt sustainable, regain its democratic sovereignty, achieve economic recovery and, what is more, mitigate adverse effects of the crisis, especially in what human development, social inequality and poverty rates are concerned. This question is tackled through the use of an interdisciplinary approach that combines critical theory perspectives -which are grouped in two paradigms, the Subjectivity paradigm and the genealogies of Capitalism paradigm- with financialisation literature. The purpose is to form an interdisciplinary intellectual framework that will allow us to analyse with a critical perspective the two case studies of the Greek crisis from 2009 to 2015 and the Argentinean crisis from 1983 to 2005. The aim of the thesis is to develop a theoretical framework that allows us to deconstruct the various ideological approaches to these two particular cases of Debt traps, including neoclassical and neoliberal approaches, Conservative and Keynesian approaches and uncover the political, economic and class relation that underpin the prolonged crises that the two countries have experienced.