Financial Repression in a Natural Experiment: Loan Allocation and the Change in the Usury Laws in 1714

If financial deepening aids economic growth, then financial repression should be harmful. We use a natural experiment – the change in the English usury laws in 1714 – to analyze the effects of interest rate restrictions. We use a sample of individual loan transactions to demonstrate how the reduction of the legal maximum rate of interest affected the supply and demand for credit. Average loan size and minimum loan size increased strongly, and access to credit worsened for those with little ‘social capital.’ While we have no direct evidence that loans were misallocated, the discontinuity in loan receipts makes this highly likely. We conclude that financial repression can undermine the positive effects of financial deepening.

The Speed of the Financial Revolution: Evidence from Hoare’s Bank

Finance is important for development, yet the onset of modern economic growth in Britain lagged the British financial revolution by over a century. We present evidence from a new West-End London private bank to explain this delay. Hoare’s Bank loaned primarily to a highly select and well-born clientele, although it did not discriminate against “unknown” borrowers in the early 18th century. It could not extend credit more generally because of government restrictions (usury limits) and policies (frequent wars). Britain’s financial development could have aided growth substantially, had it not been for the rigidities and turmoil introduced by government interference.

A importância do sector microcrédito e o perfil do microempresário: Ilha de Santo Antão Cabo Verde

As microempresas desempenham um papel fundamental na promoção do emprego, na inovação, na criação de rendimentos e no desenvolvimento económico e social. Para os países em vias de desenvolvimento, crê-se que a dinamização das microempresas pode ser um instrumento privilegiado de promoção e combate à pobreza, na medida em que esta poderá ser a via para incentivar as camadas mais pobres das populações rurais e urbanas a criarem os seus próprios negócios e a providenciarem os seus próprios rendimentos. A criação e o crescimento das microempresas estão, todavia, condicionados por vários constrangimentos. A inexistência de capital inicial (Start-Up Capital) é apontada na literatura financeira como uma das mais relevantes. O recurso ao capital externo, como fonte de financiamento, dependerá, por sua vez, de vários factores. O presente estudo foi realizado em Santo Antão, a ilha mais a norte e a mais montanhosa do Arquipélago de Cabo Verde. O sector micro crédito chama atenção pelo facto de ser um instrumento de importância primordial para Cabo Verde e, particularmente, para a ilha de Santo Antão que possui uma estrutura económica e social muito vulnerável o que nos leva a compreender melhor, o funcionamento das microempresas, instaladas nos três municípios da Ilha (Paul, Ribeira Grande e Porto Novo). Ao longo do estudo definimos o perfil sócio económico do micro empresário Santantonense, com o objectivo de compreender e quantificar o contributo do sector para o desenvolvimento empresarial da ilha, sem esquecer os constrangimentos e dificuldades que se colocam aos micros empresários na procura de financiamento. O processo de recolha de informação foi efectuado com recurso a pesquisas de campo, a partir da elaboração e aplicação de entrevistas de uma forma semi-estruturada, no sentido de identificar as principais características/perfil do empresário. Os dados recolhidos pelas entrevistas têm por base uma apreciação crítica da gestão para melhor compreender e comparar as fragilidades existentes e analisar a capacidade de sucesso dos micros empresários. A configuração da actividade económica foi feita com base na análise quantitativa e qualitativa, dos dados obtidos na aplicação dos questionários. De igual modo, analisamos e comparamos os casos de sucesso e insucesso nas microempresas em estudo, casos de sucesso no que diz respeito aos benefícios de micro créditos para a redução da pobreza e do desemprego, de criação do auto-emprego, e da formação/informação aos micros empresários santantonenses. Nos casos de insucesso analisamos as causas que estiveram na sua origem assim como as consequências daí advenientes. Uma das constatações do estudo, como se verá pela análise dos dados, é que o micro empresário Santantonense, possui um baixo nível de escolaridade e que na sua maioria são mulheres. Um outro resultado evidenciado pelo estudo, é que há uma necessidade da política pública de desenvolvimento no sentido de definição de incentivos à criação e à promoção de micro negócios, atendendo às características demográficas e às necessidades específicas dos beneficiários. Micro enterprises perform a fundamental component in promoting employment, innovation, and earnings-generation and in socio-economic development. For countries en route to development, the belief is that the dynamic engine of the micro enterprises could be a privileged instrument to promote in the battle against poverty, in the hope that this could be the venue to incentivize the poorest of the rural and urban populations to create their own businesses and forecast their own earnings. The creation and the growth of micro enterprises is, however, conditional upon various constraints. The inexistence of initial capital is cited in financial literature as one of the more important. To resort to external capital as a financing source, is itself dependent on various factors. The current study was conducted in Santo Antão, the most northern and mountainous island in the Archipelago of Cape Verde. The micro credit´s sector calls attention to the fact that it is an essential instrument in Cape Verde, particularly in the island of Santo Antão which has an economic and social structure extremely vulnerable, leading us to a better understanding of how micro enterprises operate in the three municipalities of the Island (Paul, Ribeira Grande and Porto Novo). During the course of the study we defined the socio-economic character of the micro entrepreneur Santantonense, with the goal of understanding and quantifying the sector´s contribution to the Island´s entrepreneurial development, keeping in mind the contraints and difficulties that confront the entrepreneurs when seeking financing. The process for gathering the information was performed through field research, beginning with elaboration and application of interviews, designed to identify the entrepreneur´s major characteristics and the importance of micro credit for the island of Santo Antão. The data gathered through the interviews have un underlying basic and critic appreciation of management for a better understanding and comparing the existing fragilities and for analyzing the micro entrepreneurs´ capacity to succeed. The configuration of economic activities was designed based on quantitative and qualitative analysis from data obtained from the questionnaires. Likewise, we analyzed and compared the success and non-success cases of the micro enterprises in the study, success cases with respect to the benefits of micro credit in reducing poverty and unemployment, creation of self-employment, and the education/information for the micro entrepreneurs of Santo Antão. In the non-success cases we analyzed the original causes as well as the impending consequences. One of the study´s contentions, as the data analysis shows, is that micro entrepreneur of Santo Antão has a low level of education with the majority of them being women. In addition the study shows that there is a need for a public discourse in terms of defining and developing incentives for creating and promoting micro businesses given the demographic characteristics and the specific necessities of the beneficiaries.

Análise de Crédito e Avaliação de Riscos em Instituições Bancárias

É indubitável que o sistema financeiro é parte integrante de qualquer sociedade. Através da sua função de intermediação, as instituições financeiras recebem recursos dos agentes superavitários e emprestam aos agentes deficitários mediante promessa de pagamento futuro. Num banco, que tem intermediação financeira como sua principal actividade, o crédito consiste em disponibilizar ao cliente recursos em valores sob a forma de financiamento e ou empréstimo mediante uma promessa de pagamento numa data acordada entre as partes. A discussão e implementação dos acordos de BASILEIA, nomeadamente o Basileia II, veio dar uma nova forma a esse relacionamento sector bancário/clientes determinando as regras no que respeita a concessão de crédito e gestão de risco, estabelecendo os limites de crédito associado ao grau de risco das operações. Surge então, por parte das instituições uma maior preocupação em gerir o crédito e os riscos inerentes a cada operação, apostando em ferramentas e metodologias adequadas ao processo creditício. As instituições bancárias passam a criar departamentos de risco, colocando a gestão de crédito e de risco nas mãos de profissionais especializados, agindo sob regras e padrões internacionais uniformizados. There is no doubt that the financial system is an integral part of any society. Through their intermediary role, financial institutions receive funds from surplus agents and lend to deficit agents, with promises of future payment. Banks, with their primary activity being the financial intermediation, the credit is provided to customers in the form of funding or loans and a promise of payment on a date agreed between the parties. The discussion and implementation of the Basel Accord, Basel II in particular, has given a new form to that relationship banking/customer, setting out the rules regarding the granting of credit and risk management, establishing credit limits associated with the degree of risk of operations. Banking institutions got more and more concerned with credit and risk management, in all of their operations, using tools and methodologies that are designed to meet the needs of crediting processes. Banking institutions are creating departments of risk, putting the management of credit risk in the hands of trained professionals, acting under internationally uniform rules and standards

Processos de Reconhecimento, Mensuração e Contabilização do Rédito

O reconhecimento e mensuração do rédito tornaram-se cada vez mais complexos devido a factores como a concorrência internacional e a rápida evolução dos modelos empresariais. O rédito é a componente do rendimento proveniente da actividade operacional da empresa, daí ser de suprema importância determinar-se o momento em que o mesmo deve ser reconhecido bem como os critérios adequados para mensurá-lo. Neste trabalho debruçamo-nos sobre os processos de reconhecimento e mensuração do rédito. Este trabalho foi elaborado em duas partes, na primeira, efectuou-se uma revisão às normas de referência ao tratamento do rédito, com o objectivo de esclarecer algumas questões que suscitam grandes dúvidas, quer no meio académico, quer no meio profissional como é o exemplo do tratamento a dar ao rédito proveniente dos contratos de construção de imóveis numa empresa do ramo imobiliário. Na segunda parte do trabalho, elaborou-se um estudo de caso sobre a empresa TECNICIL Imobiliária, precisamente para verificar na prática o tratamento dado ao rédito proveniente dos acordos de construção levados a cabo por esta entidade. E desse estudo podemos concluir que a entidade não observa o tratamento prescrito pelas normas de referência, particularmente a IFRIC 15 – Acordos para Construção de Imóveis e IAS 18 – Rédito. There is no doubt that the financial system is an integral part of any society. Through their intermediary role, financial institutions receive funds from surplus agents and lend to deficit agents, with promises of future payment. Banks, with their primary activity being the financial intermediation, the credit is provided to customers in the form of funding or loans and a promise of payment on a date agreed between the parties. The discussion and implementation of the Basel Accord, Basel II in particular, has given a new form to that relationship banking/customer, setting out the rules regarding the granting of credit and risk management, establishing credit limits associated with the degree of risk of operations. Banking institutions got more and more concerned with credit and risk management, in all of their operations, using tools and methodologies that are designed to meet the needs of crediting processes. Banking institutions are creating departments of risk, putting the management of credit risk in the hands of trained professionals, acting under internationally uniform rules and standards.

Importância da Gestão de Créditos na gestão da Tesouraria das Empresas

A gestão de Crédito é um tema que vem chamando a atenção dos administradores, já que é considerado um instrumento de gestão muito importante no processo competitivo e para o equilíbrio das empresas. O estudo em causa tem como objectivo principal analisar a importância e os impactos da Gestão de Crédito na Tesouraria das empresas, através de um estudo de caso da empresa Electra, SA. Os resultados do estudo mostram que os problemas de tesouraria podem ser de natureza estrutural e conjuntural. A gestão de tesouraria de curto prazo é o mais importante instrumento de gestão financeira que avalia e controla a actividade corrente das empresas, permitindo em tempo oportuno a tomada de decisões, perspectivando uma gestão eficiente, o equilíbrio financeiro e a eficácia organizacional. O tema em estudo pretende realçar a importância que a gestão de créditos tem na gestão da tesouraria de curto prazo, já que este tem como principal função para além da gestão do realizável (créditos), a gestão do disponível, do stock, das dívidas a terceiros a curto prazo. Uma boa gestão de crédito (realizável) permite de uma forma directa ganhos de eficiência a nível da gestão do disponível, na gestão dos stocks e de forma indirecta influencia as decisões a nível da gestão das dívidas a terceiros de curto prazo. Credit management is a subject that has been growing in the administrator’s attention, as it’s considered to be a somewhat important management tool on the competitive process as well as on the company’s balance. The present case study on Electra S.A, aims for the importance and impact analysis of Credit Management on the company’s cashier. The study results demonstrate that the cashier issues can be structure and conjuncture related. The short term cashier management is the most important financial management tool, which assesses and controls the company’s current activity, enabling timely decision making process, foreseeing an efficient management, the financial equilibrium and the organization efficiency. This paper’s main goal is to enhance the credit management importance on the short term cashier management, as the latter’s main goal, apart from the credit management is to administer the availability, the stock and short term third party debts. A good credit management enables a direct efficiency improvement at the availability management level, on the stock management and indirectly influences the decisions taken at the short term third party debt management level.

A CONTABILIDADE E O REAL VALOR DAS EMPRESAS: FOCO NO CAPITAL INTELECTUAL

Este trabalho mostra que a contabilidade pode não estar a evidenciar o real valor do património das empresas (um dos seus objectivos), constatamos nos últimos tempos, que os relatórios fornecidos pela contabilidade financeira não retratam certas realidades das empresas, visto que o valor contabilístico se distancia cada vez mais do valor de mercado, principalmente nas empresas de alta tecnologia e serviços, assim sendo as demonstrações financeiras podem estar experimentando uma perda de relevância para a tomada de decisões de investimentos, de crédito e de gestão. Dentro deste contexto, ressaltamos a necessidade de a contabilidade evidenciar naquelas demonstrações tais informações para que possa divulgar aos vários utentes da informação o real valor da empresa. Visto que o Capital Intelectual é importante para as empresas, torna-se necessário relatar não só informações financeiras como também não financeiras. Este trabalho apresenta um estudo descritivo/quantitativo da empresa CVTelecom, com o objectivo de avaliar o grau de divulgação do Capital Intelectual na empresa. A principal constatação foi o seguinte: uma participação activa da empresa em divulgar o Capital Intelectual, uma forma não normalizada através da divulgação voluntária do Capital Intelectual cujo veículo de divulgação, é o Relatório de Gestão e o Balanço Social. This work shows that the Accounting cannot be evidencing the Real value of the patrimony of the enterprises (one of their objectives), we verified in the last times, that the reports supplied by the Financial Accounting don't portray certain realities of the enterprises, because the value Accounting of the enterprises go away more and more of his market value, mainly in the companies of high technology and services, soon the financial demonstrations are trying a loss of relevance for socket of decisions of investments, of credit and of administration. Inside of this context, we emphasized the need of the Accounting to evidence in the demonstrations such financial information so that it can publish to the several users of the information the Real value of the company. Because the Intellectual Capital is important for the enterprises, it becomes necessary to tell not only financial information as well as any financial. This work presents a descriptive-quantitative study of the enterprise CVtelecom, with the objective of evaluating the degree of popularization of the Intellectual Capital in the enterprise and the impact in the performance of this enterprise. The main verification was the following: A participation active of the company in publishing the Intellectual Capital in spite of being in a way no normalized but a voluntary popularization of the Intellectual Capital, whose popularization vehicle is the Report of Administration and the Social Swinging.

Equilibrium asset prices and savings of heterogeneous agents in the presence of incomplete markets and portfolio constraints

We study the quantitative properties of a dynamic general equilibrium model in which agents face both idiosyncratic and aggregate income risk, state-dependent borrowing constraints that bind in some but not all periods and markets are incomplete. Optimal individual consumption-savings plans and equilibrium asset prices are computed under various assumptions about income uncertainty. Then we investigate whether our general equilibrium model with incomplete markets replicates two empirical observations: the high correlation between individual consumption and individual income, and the equity premium puzzle. We find that, when the driving processes are calibrated according to the data from wage income in different sectors of the US economy, the results move in the direction of explaining these observations, but the model falls short of explaining the observed correlations quantitatively. If the incomes of agents are assumed independent of each other, the observations can be explained quantitatively.

Equities and inequality

Most US credit card holders revolve high-interest debt, often combined with substantial (i) asset accumulation by retirement, and (ii) low-rate liquid assets. Hyperbolic discounting can resolve only the former puzzle (Laibson et al., 2003). Bertaut and Haliassos (2002) proposed an 'accountant-shopper'framework for the latter. The current paper builds, solves, and simulates a fully-specified accountant-shopper model, to show that this framework canactually generate both types of co-existence, as well as target credit card utilization rates consistent with Gross and Souleles (2002). The benchmark model is compared to setups without self-control problems, with alternative mechanisms, and with impatient but fully rational shoppers.

Theoretical notes on bubbles and the current crisis

We explore a view of the crisis as a shock to investor sentiment that led to the collapse of abubble or pyramid scheme in financial markets. We embed this view in a standard model of thefinancial accelerator and explore its empirical and policy implications. In particular, we show howthe model can account for: (i) a gradual and protracted expansionary phase followed by a suddenand sharp recession; (ii) the connection (or lack of connection!) between financial and real economicactivity and; (iii) a fast and strong transmission of shocks across countries. We also use the modelto explore the role of fiscal policy.

Determining underlying macroeconomic fundamentals during emerging market crises: Are conditions as bad as they seem?

Emerging market crises are characterized by large swings in both macroeconomic fundamentalsand asset prices. The economic significance of observed movements in macroeconomicvariables is obscured by the brief and extreme nature of crises. In this paper we propose to study the macroeconomic consequences of crises by studying the behavior of effective fundamentals, constructed by studying the relative movements of stock prices during crises. We find that these effective fundamentals provide a different picture than that implied by observed fundamentals. First, asset prices often reflect expectations of improvement in fundamentals after the initial devaluations; specifically, effective depreciations are positive but not as large as the observed ones. Second, crises vary in their effect on credit market conditions, with investors expecting tightening of credit in some cases (Mexico 1994, Philippines 1997), but loosening of credit in others (Sweden 1992, Korea 1997, Brazil 1999).

Análise e Avaliação do Risco de Crédito Bancário nas PME’s – Utilização do modelo de rating

A análise de risco de crédito na actividade bancária é um tema bastante discutido no contexto das decisões das instituições financeiras. O presente estudo tem como objectivo demonstrar o processo de análise de crédito e avaliação do risco em instituições bancárias, evidenciando a utilização do modelo de rating. A implementação do acordo de Basileia veio dar uma nova forma ao relacionamento do sector bancário para com os seus clientes, estabelecendo regras no que respeita à concessão de crédito e avaliação do risco. Com isto as instituições passaram a ter uma maior preocupação em gerir o crédito e o risco inerentes a cada operação, apostando em ferramentas metodológicas adequadas ao processo creditício. As instituições bancárias acabaram por criar departamentos de risco, colocando a gestão de crédito e de risco nas mãos de profissionais especializados, agindo sobre regras e padrões internacionais uniformes. De realçar que o processo de análise de crédito envolve diversas etapas, cujo objectivo é avaliar o risco de incumprimento associado ao tomador de crédito, bem como suas consequências junto de quem concede o crédito. O rating de crédito é um instrumento cujo objectivo é atribuir uma nota que sintetiza o risco de incumprimento no pagamento de crédito, com o objectivo de reduzir a subjectividade associada ao processo de avaliação do risco. Da pesquisa realizada, constatou-se perante entrevistas junto das instituições bancárias locais que o modelo de rating ainda não é muito utilizado no nosso mercado bancário, e os que o utilizam tomam-no apenas como um indicador de risco. Segundo os entrevistados a realidade das PME’s Cabo-Verdianas não é adequada para a implementação de um modelo tão objectivo. The analysis of credit risk in banking activity is a widely discussed topic, and within the context of decisions of financial institutions. The present study aims to demonstrate the process of credit analysis and risk assessment in banking institutions, evidencing the use of internal rating model. The implementation of Basel II Accord has given a new shape to the relationship of the banking sector with its customers, establishing rules regarding the granting of credit and risk assessment. Consequently, institutions now have a greater concern in managing credit and the risk inherent to each transaction, relying on methodological tools that are appropriate to the credit process. The banks end up creating risk departments, placing credit risk management in the hands of skilled professionals that act conforming to international rules and standards. It should be noted that the credit analysis process involves several steps, aiming at assessing the default risk associated with credit borrower, and its consequences to whom grants credit. The credit rating is a process with the objective of assigning a grade, which summarizes the risk of default in payment of credit, in order to reduce the subjectivity associated with the process of risk assessment. The survey undertaken through interviews with local banking institutions showed that the rating model is not yet widely used in our banking market, and that the banks that actually use it, only do it as an indicator of risk. According to those interviewed, the reality of SMEs in Cape Verde is not suitable for the implementation of a model with such objectivity.

Crises and growth: A re-evaluation

We address the question of whether growth and welfare can be higher in crisis prone economies. First, we show that there is a robust empirical link between per-capita GDP growth and negative skewness of credit growth across countries with active financial markets. That is, countries that have experienced occasional crises have grown on average faster than countries with smooth credit conditions. We then present a two-sector endogenous growth model in which financial crises can occur, and analyze the relationship between financial fragility and growth. The underlying credit market imperfections generateborrowing constraints, bottlenecks and low growth. We show that under certain conditions endogenous real exchange rate risk arises and firms find it optimal to take on credit risk in the form of currency mismatch. Along such a risky path average growth is higher, but self-fulfilling crises occur occasionally. Furthermore, we establish conditions under which the adoption of credit risk is welfare improving and brings the allocation nearer to the Pareto optimal level. The design of the model is motivated by several features of recent crises: credit risk in the form of foreign currency denominated debt; costly crises that generate firesales and widespread bankruptcies; and asymmetric sectorial responses, wherethe nontradables sector falls more than the tradables sector in the wake of crises.

Targeting fertility and female participation through the income tax

We evaluate the effect of a 2003 reform in the Spanish income tax on fertility and the employment of mothers with small children. The reform introduced a tax credit for working mothers with children under the age of three, while also increasing child deductions for all households with children. Theoretically, given the interplay of these two components, the expected effect of the reform is ambiguous on both outcomes. We find that the combined reforms significantly increased both fertility (by almost five percent) and the employment rate of mothers with children under three (by two percent). These effects were more pronounced among less-educated women. In addition, to disentangle the impact of the two reform components, we use an earlier reform that increased child deductions in 1999. We find that the child deductions affect mothers employment negatively, which implies that the 2003 tax credit would have increased employment even more (up to five percent) in the absence of the change in child deductions.

Iowa Budget Report, Building on our Progress: Protecting our Priorities, 2009

*********** Some files are large and will take time to load. *********** Seven Files: 1)Report Cover, 2)Table of Contents, 3)Statewide Financial Summaries, 4)Department Budgets, 5)Capitol Projects, 6)Associated Financial Documents, 7)Budget Report. To Members of the 82nd General Assembly, As we begin the second year of our Administration, we are pleased to submit the Fiscal Year 2009 budget for the State of Iowa pursuant to Iowa Code Section 8.21 and our constitutional authority. This budget recognizes the progress that we began last year with improvements in education, economic development, energy independence, and health care; provides funding for new policy initiatives in these areas; and is based on fiscally sound budget practices. Building on last year’s accomplishments, our Fiscal Year 2009 General Fund budget proposes an additional $75 million for increasing teachers’ salaries as part of our goal to move Iowa closer to the national average. We lay the foundation for student achievement by recommending $32.1 million for pre-school education, and we also propose $177.5 million in total for community colleges and $726.2 million in total for Regents universities. To make our State more energy independent, our General Fund budget appropriates the second-year funding of $25 million for the new Iowa Power Fund. The newly established Office of Energy Independence will soon start making awards from the Power Fund. Apart from the budget, we will be making several proposals to implement the new State energy plan. We have pledged to expand the number of Iowans who have health-care coverage. As a result, we are recommending additional funding for enrollment growth in the State Children Health Insurance Program (SCHIP). These additional funds will help the State provide coverage for another 25 percent of children who are eligible but not yet enrolled in hawk-i and the Iowa Medicaid Program. To protect the safety of Iowans, we are recommending issuance of revenue bonds for approximately $260 million in net proceeds to build a new state penitentiary in Ft. Madison, renovate and expand the Women’s Correctional Institution at Mitchellville, upgrade kitchen facilities at the Rockwell City and Mt. Pleasant Correctional Institutions, and expand Community-Based Correctional Facilities in Ottumwa, Sioux City, Waterloo, and Des Moines. Additionally, we are including funding for developing a prototype program for providing parolees and low-risk offenders with mental health and drug abuse treatment and educational services to help them make a crime-free re-entry into our communities. As part of this Capitals Budget, we also propose using $20 million for the State’s matching share for building new facilities at the Iowa Veterans Home. Iowa Budget Report iv Fiscal Year 2009 Importantly, our budget continues to fully fund our State’s Reserve Funds to help buffer Iowa from any future economic downturn. We recommend reimbursing $78.2 million to the Property Tax Credit Fund as part of our multi-year proposal to correct bad budgeting practices and eventually restore $160.0 million to this Fund. To provide more transparency, we are transferring operational expenditures in the Rebuild Iowa Infrastructure Fund to the General Fund and expenditures from the Endowment for Healthy Iowans and Healthy Iowans Tobacco Trust Funds to the General Fund. We believe that Iowa has charted a new course of becoming energy independent, providing quality pre-school education, recognizing the importance of our teachers, and providing greater health coverage for children. Our Fiscal Year 2009 budget and policy priorities reflect our continuing faith in Iowa’s ability to be the best state in the nation. We look forward to working with you in a bi-partisan and all-inclusive manner to build on our progress and protect our priorities. Sincerely, Chester J. Culver Governor Patty Judge Lt. Governor