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.

Policy initiatives and firms’ access to external finance: Evidence from a panel of emerging Asian economies

This paper analyses the impact of policy initiatives co-ordinated by Asian national governments on firms' access to external finance, using a unique firm-level database of eight Asian countries- Hong Kong SAR, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan and Thailand over the period of 1996-2012. Using a difference-indifferences approach and controlling for firm-level and macroeconomic factors, the results show a significant impact of policy on firms' access to external finance. After splitting firms into constrained and unconstrained, using several criteria, the results document that unconstrained firms benefited significantly in obtaining external finance, compared to their constrained counterparts. Finally, we show that the increase in access to external finance after the policy initiative helped firms to raise their investment spending, especially for unconstrained firms.

Small firms, growth and financial constraints

This paper analyses the impact of different sources of finance on the growth of firms. Using panel data from Spanish manufacturing firms for the period 2000-2006, we investigate the effects of internal and external finances on firm growth. In particular, we examine three dimensions of these financial sources: a) the performance of the firms’ capital structure in accordance with firm size; b) the effects of internal and external financial sources on growth performance; c) the combined effect of equity, external debt and cash flow on firm growth. We find that low-growth firms are sensitive to cash flow and short-term bank debt, while high-growth firms are more sensitive to long-term debt. Furthermore, equity capital seems to reduce barriers to external finance. Our main conclusion is that during the start-up phase, firms are unable to increase their financial leverage and so their capital structure fails to promote correct investment strategies. However, as their equity capital increases, alternative financial mechanisms, in particular long-term debt, become available, which have a positive impact on firm growth.

A stable and 40Ar/39Ar isotope study of a major thrust in the Helvetic nappes (Swiss Alps) - Evidence for fluid-flow and constraints on nappe kinematics

Stable isotope and Ar-40/Ar-39 measurements,were made on samples associated with a major tectonic discontinuity in the Helvetic Alps, the basal thrust of the Diablerets nappe (external zone of the Alpine Belt) in order to determine both the importance of fluids in this thrust zone and the timing of thrusting. A systematic decrease in the delta(18)O values (up to 6 parts per thousand) of calcite, quartz, and white mica exists within a 10- to 70-m-wide zone over a distance of 37 km along the thrust, and they become more pronounced toward the root of the nappe. A similar decrease in the delta(13)C values of calcite is observed only in the deepest sections (up to 3 parts per thousand). The delta D-SMOW (SMOW = standard mean ocean water) values of white mica are -54 parts per thousand +/- 8 parts per thousand (n = 22) and are independent of the distance from the thrust. These variations are interpreted to reflect syntectonic solution reprecipitation during fluid passage along the thrust. The calculated delta(18)O and delta D values (versus SMOW) for the fluid in equilibrium with the analyzed minerals is 12 parts per thousand to 16 parts per thousand and -30 parts per thousand to +5 parts per thousand, respectively, for assumed temperatures of 250 to 450 degrees C. The isotopic and structural data are consistent with fluids derived from the deep-seated roots of the Helvetic nappes where large volumes of Mesozoic sediments were metamorphosed to the amphibolite facies, It is suggested that connate and metamorphic waters, overpressured by rapid tectonic burial in a subductive system escaped by upward infiltration along moderately dipping pathways until they reached the main shear zone at the base of the moving pile, where they were channeled toward the surface, This model also explains the mechanism by which large amounts of fluid were removed from the Mesozoic sediments during Alpine metamorphism. White mica Ar-49/Ar-39 ages vary from 27 Ma far from the Diablerets thrust to 15 Ma along the thrust. An older component is observed in micas far from the thrust, interpreted as a detrital signature, and indicates that regional metamorphic temperatures were less than about 350 degrees C. The;plateau and near plateau ages nearest the thrust are consistent with either neocrystallization of white mica or argon loss by recrystallization during thrusting, which may have been enhanced in the zones of highest fluid flow. The 15 Ma Ar-40/Ar-39 age plateau measured on white mica sampled exactly on the thrust surface dates the end of both fluid flow and tectonic transport.

Financial constraints and the failure of innovation projects

Theoretical and empirical approaches have stressed the existence of financial constraints in innovative activities of firms. This paper analyses the role of financial obstacles on the likelihood of abandoning an innovation project. Although a large number of innovation projects are abandoned before their completion, the empirical evidence has focused on the determinants of innovation while failed projects have received little attention. Our analysis differentiates between internal and external barriers on the probability of abandoning a project and we examine whether the effects are different depending on the stage of the innovation process. In the empirical analysis carried out for a panel data of potential innovative Spanish firms for the period 2004-2010, we use a bivariate probit model to take into account the simultaneity of financial constraints and the decision to abandon an innovation project. Our results show that financial constraints most affect the probability of abandoning an innovation project during the concept stage and that low-technological manufacturing and non-KIS service sectors are more sensitive to financial constraints.

Financial constraints and the failure of innovation projects

Theoretical and empirical approaches have stressed the existence of financial constraints in innovative activities of firms. This paper analyses the role of financial obstacles on the likelihood of abandoning an innovation project. Although a large number of innovation projects are abandoned before their completion, the empirical evidence has focused on the determinants of innovation while failed projects have received little attention. Our analysis differentiates between internal and external barriers on the probability of abandoning a project and we examine whether the effects are different depending on the stage of the innovation process. In the empirical analysis carried out for a panel data of potential innovative Spanish firms for the period 2004-2010, we use a bivariate probit model to take into account the simultaneity of financial constraints and the decision to abandon an innovation project. Our results show that financial constraints most affect the probability of abandoning an innovation project during the concept stage and that low-technological manufacturing and non-KIS service sectors are more sensitive to financial constraints. Keywords: barriers to innovation, failure of innovation projects, financial constraints JEL Classifications: O31, D21

Detrital zircon and micropalaeontological ages as new constraints for the lowermost tectonic unit (Talea Ori unit) of Crete, Greece

The Talea Ori unit is the lowermost known tectonic unit of Crete and the most external part of the Hellenides. Its stratigraphy ranges from Late Carboniferous to Oligocene and outcrops of the lower part are only known in the Talea Ori mountains (central Crete). In this area, a black sandstone at the base of the Galinos Beds, thought to be the oldest formation, contains zircons which were dated using the single grain evaporation method. The majority of these grains yielded Late Carboniferous ages (Variscan), while a small group yielded Early Proterozoic ages. The age distribution of these zircons suggests that, at the Carboniferous-Permian boundary, not much of the older North Gondwanan basement was exposed and that a river system carried detrital material from the Variscan belt towards the forming Neotethyan rift. Additionally, higher up in the stratigraphy benthic foraminifers (miliolids) were found in clasts from a conglomerate which was so far thought to be of Early Triassic age [Epting, M., Kudrass, H.-R., Leppig, U., Schaffer, A., 1972. Geologie der Talea Ori/Kreta. N. Jb. Geol. Palaont. Abh. 141, 259-285.]. These miliolids belong to the species Hoyenella inconstans [Michalik, J., Jendrejakova, O., Borza, K., 1979. Some new foraminifera species of the Fatra-Formation (Uppermost Triassic) in the West Carpathians. Geol. Carpath. 30 (1), 61-91.], thus attributing a Late Triassic (Carnian-Norian?) maximal age to this conglomerate. The carbonate platform from which the miliolids-bearing clasts come is not known. The presence to the north of a continuous hemipelagic record from the Carboniferous to the Triassic (Phyllite-Quartzite and Tripali units), attributed to the Palaeotethys realm, allows the Talea Ori unit and its lateral equivalents (the Ionian zone) to be assigned to the westward continuation of the Cimmerian block and therefore to the northern margin of the East Mediterranean Neotethys ocean. (c) 2006 Elsevier B.V. All rights reserved.

Stable isotope (C, O, S) systematics of the mercury mineralization at Idrija, Slovenia: constraints on fluid source and alteration processes

The world-class Idrija mercury deposit (western Slovenia) is hosted by highly deformed Permocarboniferous to Middle Triassic sedimentary rocks within a complex tectonic structure at the transition between the External Dinarides and the Southern Alps. Concordant and discordant mineralization formed concomitant with Middle Triassic bimodal volcanism in an aborted rift. A multiple isotopic (C, O, S) investigation of host rocks and ore minerals was performed to put constraints on the source and composition of the fluid, and the hydrothermal alteration. The distributions of the delta(13)C and delta(18)O values of host and gangue carbonates are indicative of a fracture-controlled hydrothermal system, with locally high fluid-rock ratios. Quantitative modeling of the delta(13)C and delta(18)O covariation for host carbonates during temperature dependent fluid-rock interaction, and concomitant precipitation of void-filling dolomites points to a slightly acidic hydrothermal fluid (delta(13)Capproximate to-4parts per thousand and delta(18)Oapproximate to+10parts per thousand), which most likely evolved during isotopic exchange with carbonates under low fluid/rock ratios. The delta(34)S values of hydrothermal and sedimentary sulfur minerals were used to re-evaluate the previously proposed magmatic and evaporitic sulfur sources for the mineralization, and to assess the importance of other possible sulfur sources such as the contemporaneous seawater sulfate, sedimentary pyrite, and organic sulfur compounds. The delta(34)S values of the sulfides show a large variation at deposit down to hand-specimen scale. They range for cinnabar and pyrite from -19.1 to +22.8parts per thousand, and from -22.4 to +59.6parts per thousand, respectively, suggesting mixing of sulfur from different sources. The peak of delta(34)S values of cinnabar and pyrite close to 0parts per thousand is compatible with ore sulfur derived dominantly from a magmatic fluid and/or from hydrothermal leaching of basement rocks. The similar stratigraphic trends of the delta(34)S values of both cinnabar and pyrite suggest a minor contribution of sedimentary sulfur (pyrite and organic sulfur) to the ore formation. Some of the positive delta(34)S values are probably derived from thermochemical reduction of evaporitic and contemporaneous seawater sulfates.

Keeping the balance? Management of oxidative stress, body mass and reproduction under energetic constraints by dispersing and philopatric collared flycatchers.

Dispersal, i.e. individual movement between breeding sites, is a key process for metapopulation dynamics and gene flow. Its success can be modulated by phenotypic differences between dispersing and philopatric individuals, or dispersal syndromes. However, the environmental (external) and physiological (internal) constraints underlying such syndromes remain poorly known. This project aimed at clarifying the impact of environmental variation and oxidative constraints, linked to the reactive oxygen species produced during respiration, on phenotypes associated to dispersal in a passerine bird, the collared flycatcher Ficedula albicollis. Energetic demand was experimentally (i) increased through a wing load manipulation or (ii) relieved through food supplementation. The oxidative balance of breeding flycatchers was influenced by complex interactions of dispersal status and extrinsic factors (breeding density, year, experimental treatments). Interestingly, antioxidant capacity was influenced both by permanent individual differences and by food availability, whereas measures of pro-oxidants were highly variables within individuals. Environmental variation and energetic constraints also modulated the differences in reproduction associated with dispersal: dispersing and philopatric birds differ in their management of the oxidative balance when it is competing with reproductive investment. This thesis highlights that reaction norms, rather than fixed differences, often shape traits associated to dispersal. ----- Le déplacement d'un individu entre sites de reproduction, ou dispersion, est un processus clé pour la dynamique des métapopulations et les flux de gènes. Son succès peut être modulé par des différences de phénotype, ou syndromes de dispersion. Cependant, les contraintes environnementales et physiologiques qui sous-tendent ces syndromes restent mal connues. Ce projet vise à clarifier l'impact des variations environnementales et des contraintes oxydatives (liées aux espèces réactives de l'oxygène produites durant la respiration) sur les phénotypes associés à la dispersion chez un passereau, le gobemouche à collier Ficedula albicollis. La demande énergétique a été expérimentalement (i) augmentée en manipulant la surface alaire ou (ii) diminuée par une supplémentation en nourriture. L'équilibre oxydo-réducteur des gobemouches en reproduction est influencé par des interactions complexes entre statut de dispersion et facteurs extrinsèques (densité de couples reproducteurs, année, traitement expérimental). La capacité antioxydante dépend principalement de différences permanentes entre individus, alors que les pro-oxydants présentent de grandes variations intra-individu. Environnement et contraintes énergétiques modulent aussi les différences de reproduction liées à la dispersion : les oiseaux dispersants et philopatriques diffèrent dans leur gestion de l'équilibre oxydo-réducteur lorsqu'il est en compétition avec l'investissement reproducteur. Ce travail souligne que les traits associés à la dispersion sont souvent déterminés par des normes de réaction à l'environnement et non des différences fixées entre individus.

On Innovative Search: the use of internal and external sources of innovation among Finnish innovators

This dissertation explores the use of internal and external sources of knowledge in modern innovation processes. It builds on a framework that combines theories such as a behavioural theory of the firm, the evolutionary theory of economic change, and modern approaches to strategic management. It follows the recent increase in innovation research focusing on the firm-level examination of innovative activities instead of traditional industry-level determinants. The innovation process is seen as a problem- and slack- driven search process, which can take several directions in terms of organizational boundaries in the pursuit of new knowledge and other resources. It thus draws on recent models of technological change, according to which firms nowadays should build their innovative activities on both internal and external sources of innovation rather than relying solely on internal resources. Four different research questions are addressed, all of which are empirically investigated via a rich dataset covering Finnish innovators collected by Statistics Finland. Firstly, the study examines how the nature of problems shapes the direction of any search for new knowledge. In general it demonstrates that the nature of the problem does affect the direction of the search, although under resource constraints firms tend to use external rather than internal sources of knowledge. At the same time, it shows that those firms that are constrained in terms of finance seem to search both internally and externally. Secondly, the dissertation investigates the relationships between different kinds of internal and external sources of knowledge in an attempt to find out where firms should direct their search in order to exploit the potential of a distributed innovation process. The concept of complementarities is applied in this context. The third research question concerns how the use of external knowledge sources – openness to external knowledge – influences the financial performance of firms. Given the many advantages of openness presented in the current literature, the focus is on how it shapes profitability. The results reveal a curvilinear relationship between profitability and openness (taking an inverted U-shape), the implication being that it pays to be open up to a certain point, but being too open to external sources may be detrimental to financial performance. Finally, the dissertation addresses some challenges in CISbased innovation research that have received relatively little attention in prior studies. The general aim is to underline the fact that comprehensive understanding of the complex process of technological change requires the constant development of methodological approaches (in terms of data and measures, for example). All the empirical analyses included in the dissertation are based on the Finnish CIS (Finnish Innovation Survey 1998-2000).

Dual resource transfers and interruption in external debt service

Externai debt service requires a dual resource transfer. Trade surpluses have to be generated in order to make foreign exchange revenues available for debt repayment. In addition, with developing countries' externai debt being largely a public liability, debt service requires that resources can be effectively transferred from the private to the public sector. This paper derives a statistical model for dealing with dual constraints in the presence of binary dependent variables and applies it to the dual resource transfer problem. The results from the estimation of the model for a sample of 31 middle-income developing countries in the period of 1980 to 1990, strongly support the hypothesis that both externai and fiscal constraints are important in explaining externai debt service disruptions.

Firm financial constraints and the impact of monetary policy: evidence from financial conglomerates

Building on recent evidence on the functioning of internal capital markets in financial conglomerates, this paper conducts a novel test of the balance sheet channel of monetary policy. It does so by comparing monetary policy responses of small banks that are affiliated with the same bank holding company, and this arguably face similar constraints in accessing internal/external sources of funds, but that operate in different geographical regions, and thus face different pools of borrowers. Because these subsidiaries typically concentrate their lending with small local businesses, we can use cross-sectional differences in state-level economic indicators at the time of changes of monetary policy to study whether or not the strength of borrowers' balance sheets influences the response of bank lending. We find evidence that the negative response of bank loan growth to a monetary contraction is significantly stronger when borrowers have 'weak balance sheets. Our evidence suggests that the monetary authority should consider the amplification effects that financial constraints play following changes in basic interest rates and the role of financial conglomerates in the transmission of monetary policy.

Financial constraints on economic development: Theory and policy for developing countries

This article contains a theoretical and policy analysis of the financial constraints on economic development in developing countries. Following a Keynesian interpretation, it concludes that financial policies are needed to relieve these constraints, given the natural tendency of financial systems to operate in ways that are dysfunctional to economic development. It then proposes three lines of policy that take account of the special characteristics of developing countries: resource allocation policies targeted at segments of strategic importance for economic and financial development; policies to control financial and external fragility; and compensatory policies of a more interventionist cast, in particular directed credit programmes for both public- and private-sector lending to complement resource allocation policies, and countercyclical regulatory barriers so that fragility can be better controlled.