Trade Credits under Imperfect Enforcement: A Theory with a Test on Chinese Experience

It is widely recognized that trade credit is an important financial mechanism, particularly in developing economies and transition economies where institutions are weak. This paper documents theoretical analysis and empirical accounts on what facilitates an effective supply of trade credit based on original surveys conducted in P.R. of China. Our theory predicts that trade volume and trade credit are increasing function of cash held by the buyer and enforcement technology of the seller. Furthermore, if the state sector’s enforcement technology is high, it has positive external effect to expand the volumes of trade credit and trades in the whole economy. From the data, we found that government made active commitment in enforcement of trade credit contract and the government owned firms are main supplier and receivers of trade credit, which suggest that enforcement by government and state sector were effective against presumptions in the previous literatures.

Financial Aspects of Transactions with FDI: Trade Credit Provision by SMEs in China

This paper will document financial aspects of transactions, and trade credit supply behavior with FDI among small and medium-sized enterprises(SMEs) based on two original surveys, conducted in four cities in China in 2003. The survey was designed to capture the nature of inter-firm transactions, trade credit and other financial conditions. Literature on FDI mainly refers to technology transfer, employment or investment. This paper focuses on the role and significance of FDI in the supply of trade credit due to its trade credit enforcement technology. Yanagawa, Ito and Watanabe [2006] developed a model which indicates that when a seller has higher enforcement technology or a buyer has richer liquidity, both trade credit and transaction volume will be increased. In this paper, we confirmed that FDI and G contributed to the provision of trade credit and had a positive external effect on trade credit enforcement towards China’s economy. (1) Sales towards FDI customers have the power to increase the trade credit ratio,even when controlling other factors such as choice of payment instrument, competitiveness, and expost default management. This implies that FDI does provide trade credit, not only because it has superior liquidity, but because it is also superior in terms of enforcement of trade credit repayment.(2) Cash constraints of the buyer influence the decisions concerning trade credit provided by the seller, as a model in Yanagawa, et al. [2006] predicted, and this implies that strategic default is a serious concern among SMEs in China. (3) Spillover effect exists in payment enforcement technology in transactions with FDI customers.

Separation of Control and Cash-Flow Rights of State Owned Listed Enterprises: Channels of Expropriation after the Discriminated Share Reform in China

Literature on agency problems arising between controlling and minority owners claim that separation of cash flow and control rights allows controllers to expropriate listed firms, and further that separation emerges when dual class shares or pyramiding corporate structures exist. Dual class share and pyramiding coexisted in listed companies of China until discriminated share reform was implemented in 2005. This paper presents a model of controller to expropriate behavior as well as empirical tests of expropriation via particular accounting items and pyramiding generated expropriation. Results show that expropriation is apparent for state controlled listed companies. While reforms have weakened the power to expropriate, separation remains and still generates expropriation. Size of expropriation is estimated to be 7 to 8 per cent of total asset at mean. If the "one share, one vote" principle were to be realized, asset inflation could be reduced by 13 percent.

Tax differentials and inflow of foreign direct investments : evidence from foreign operations of U.S. multinational companies

This paper concerns the measurement of the impact of tax differentials across countries on inflow of Foreign Direct Investment (FDI) by using comprehensive data on the foreign operations of U.S. multinational corporations that has been collected by the Bureau of Economic Analysis (BEA), the U.S. Department of Commerce. In particular, this research focuses on examining: (1) how responsive FDI locations are to tax differentials across countries, (2) how different the tax effect on FDI inflow is between developed and developing countries, and (3) whether investment location decisions have become more or less sensitive to tax differences between countries over time ranging from the late 1990s to the early 2000s. Estimation results suggest that high rates of corporate income taxation are associated with reduced foreign assets of U.S. multinational firms in all industries by decreasing the return to foreign asset investment. Further, foreign assets of U.S. multinationals in all industries have become more responsive to non-income tax differentials across countries than to income tax differences from 1999 to 2004. Empirical estimates also indicate that foreign investment by American firms is associated with higher tax sensitivity more in developed countries than in those that are developing.

Ex ante bargaining and ex post enforcement in trade credit supply: theory and evidence from China

If payment of goods is easily default, economic transaction may deeply suffer from the risk. This risky environment formed a mechanism that governs how economic transaction is realized, subsequently how trade credit is given. This paper distinguished ex ante bargaining and ex post enforcement, then modeled that bargaining power reduces trade credit ex ante, and ex post enforcement power and cash in hand of buyer can enhances both trade amount and trade credit in a presence of default risk. We modeled this relationship in order to organize findings from previous literature and from our original micro data on detailed transaction in China to consistently understand the mechanism governing trade credit. Then empirically tested a structure from the theoretical prediction with data. Results show that ex post enforcement power of seller mainly determines size of trade credit and trade amount, cash in hand of buyer can substitute with enforcement power; Bargaining power of seller is exercised to reduces trade credit and trade amount for avoiding default risk, but it simultaneously improves enforcement power as well. We found that ex post enforcement power consists of (ex ante) bargaining power on between two parties and intervention from the third party. However, its magnitude is far smaller than the direct impact to reduce trade credit and trade amount.

Chapter 5 Product Differentiation versus Geographical Differentiation: Evidence from the Pork Processing Industry in China

This chapter attempts to identify whether product differentiation or geographical differentiation is the main source of profit for firms in developing economies by employing a simple idea from the recently developed method of empirical industrial organization. Theoretically, location choice and product choice have been considered as analogues in differentiation, but in the real world, which of these strategies is chosen will result in an immense difference in firm behavior and in the development process of the industry. Development of the technique of empirical industrial organization enabled us to identify market outcomes with endogeneity. A typical case is the market outcome with differentiation, where price or product choice is endogenously determined. Our original survey contains data on market location, differences in product types, and price. The results show that product differentiation rather than geographical differentiation mitigates pressure on price competition, but 70 per cent secures geographical monopoly.

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.

Environmental consciousness, economic gain and consumer choice of energy efficient appliances in Thailand, China and India

In developing economies, consumption of electricity in residential and commercial sectors increased with economic development. In order to identify the factors for effective facilitation of standard and labeling programs, this article explores factors that affect consumer choice to energy-efficient products. Main findings are as follows: (1)Consumers in Thailand shows the highest awareness to environmental friendly concepts, followed by India and China.(2) Chosen labeled products include air-conditioners, TVs, refrigerators and washing machines, but not some popular products such as ceiling fans, electric fans or mobile phones. (3) Consumer who has higher energy conservation perception will buy energy efficient products.(4) Consumers in China, India and Thailand are sensitive to energy efficiency of products, primarily because they lead to less expenditure on electricity. (5) Labeling works to make levels of the energy efficiency of products more visible and thus helped consumers to choose the products.

Effectiveness of promoting energy efficiency in Thailand -- the case of air conditioners

This paper aims to identify the magnitude of energy efficiency improvement, which has been promoted through energy efficiency labeling and the Minimum Energy Performance Standard, and to compare this against the increase in the number of products and the average increase in cooling capacity. Air conditioners (ACs) are one of the major contributors to energy consumption in a household. To assess the magnitude of this factor, we developed a formula to decompose total energy consumption from ACs into the number of ACs, their average cooling capacity, and energy efficiency. In the case of ACs in Thailand, energy efficiency improvement has offset the increase in the average AC cooling capacity. However, energy consumption from ACs increases with the number of ACs.

Energy efficiency standard and labeling program and consumer welfare : a case of the air conditioner market in China

Improving energy efficiency is an unarguable emergent issue in developing economies and an energy efficiency standard and labeling program is an ideal mechanism to achieve this target. However, there is concern regarding whether the consumers will choose the highly energy efficient appliances because of its high price in consequence of the high cost. This paper estimates how the consumer responds to introduction of the energy efficiency standard and labeling program in China. To quantify evaluation by consumers, we estimated their consumer surplus and the benefits of products based on the estimated parameters of demand function. We found the following points. First, evaluation of energy efficiency labeling by the consumer is not monotonically correlated with the number of grades. The highest efficiency label (Label 1) is not evaluated to be no less higher than labels 2 and 3, and is sometimes lower than the least energy efficient label (Label UI). This goes against the design of policy intervention. Second, several governmental policies affects in mixed directions: the subsidies for energy saving policies to the highest degree of the labels contribute to expanding consumer welfare as the program was designed. However, the replacement for new appliances policies decreased the welfare.

Aplicaciones de filtrado adaptativo LMS para mejorar la respuesta de acelerómetros

El proyecto, “Aplicaciones de filtrado adaptativo LMS para mejorar la respuesta de acelerómetros”, se realizó con el objetivo de eliminar señales no deseadas de la señal de información procedentes de los acelerómetros para aplicaciones automovilísticas, mediante los algoritmos de los filtros adaptativos LMS. Dicho proyecto, está comprendido en tres áreas para su realización y ejecución, los cuales fueron ejecutados desde el inicio hasta el último día de trabajo. En la primera área de aplicación, diseñamos filtros paso bajo, paso alto, paso banda y paso banda eliminada, en lo que son los filtros de butterworth, filtros Chebyshev, de tipo uno como de tipo dos y filtros elípticos. Con esta primera parte, lo que se quiere es conocer, o en nuestro caso, recordar el entorno de Matlab, en sus distintas ecuaciones prediseñadas que nos ofrece el mencionado entorno, como también nos permite conocer un poco las características de estos filtros. Para posteriormente probar dichos filtros en el DSP. En la segunda etapa, y tras recordar un poco el entorno de Matlab, nos centramos en la elaboración y/o diseño de nuestro filtro adaptativo LMS; experimentado primero con Matlab, para como ya se dijo, entender y comprender el comportamiento del mismo. Cuando ya teníamos claro esta parte, procedimos a “cargar” el código en el DSP, compilarlo y depurarlo, realizando estas últimas acciones gracias al Visual DSP. Resaltaremos que durante esta segunda etapa se empezó a excitar las entradas del sistema, con señales provenientes del Cool Edit Pro, y además para saber cómo se comportaba el filtro adaptativo LMS, se utilizó señales provenientes de un generador de funciones, para obtener de esta manera un desfase entre las dos señales de entrada; aunque también se utilizó el propio Cool Edit Pro para obtener señales desfasadas, pero debido que la fase tres no podíamos usar el mencionado software, realizamos pruebas con el generador de funciones. Finalmente, en la tercera etapa, y tras comprobar el funcionamiento deseado de nuestro filtro adaptativo DSP con señales de entrada simuladas, pasamos a un laboratorio, en donde se utilizó señales provenientes del acelerómetro 4000A, y por supuesto, del generador de funciones; el cual sirvió para la formación de nuestra señal de referencia, que permitirá la eliminación de una de las frecuencias que se emitirá del acelerómetro. Por último, cabe resaltar que pudimos obtener un comportamiento del filtro adaptativo LMS adecuado, y como se esperaba. Realizamos pruebas, con señales de entrada desfasadas, y obtuvimos curiosas respuestas a la salida del sistema, como son que la frecuencia a eliminar, mientras más desfasado estén estas señales, mas se notaba. Solucionando este punto al aumentar el orden del filtro. Finalmente podemos concluir que pese a que los filtros digitales probados en la primera etapa son útiles, para tener una respuesta lo más ideal posible hay que tener en cuenta el orden del filtro, el cual debe ser muy alto para que las frecuencias próximas a la frecuencia de corte, no se atenúen. En cambio, en los filtros adaptativos LMS, si queremos por ejemplo, eliminar una señal de entre tres señales, sólo basta con introducir la frecuencia a eliminar, por una de las entradas del filtro, en concreto la señal de referencia. De esta manera, podemos eliminar una señal de entre estas tres, de manera que las otras dos, no se vean afectadas por el procedimiento. Abstract The project, "LMS adaptive filtering applications to improve the response of accelerometers" was conducted in order to remove unwanted signals from the information signal from the accelerometers for automotive applications using algorithms LMS adaptive filters. The project is comprised of three areas for implementation and execution, which were executed from the beginning until the last day. In the first area of application, we design low pass filters, high pass, band pass and band-stop, as the filters are Butterworth, Chebyshev filters, type one and type two and elliptic filters. In this first part, what we want is to know, or in our case, remember the Matlab environment, art in its various equations offered by the mentioned environment, as well as allows us to understand some of the characteristics of these filters. To further test these filters in the DSP. In the second stage, and recalling some Matlab environment, we focus on the development and design of our LMS adaptive filter; experimented first with Matlab, for as noted above, understand the behavior of the same. When it was clear this part, proceeded to "load" the code in the DSP, compile and debug, making these latest actions by the Visual DSP. Will highlight that during this second stage began to excite the system inputs, with signals from the Cool Edit Pro, and also for how he behaved the LMS adaptive filter was used signals from a function generator, to thereby obtain a gap between the two input signals, but also used Cool Edit Pro himself for phase signals, but due to phase three could not use such software, we test the function generator. Finally, in the third stage, and after checking the desired performance of our DSP adaptive filter with simulated input signals, we went to a laboratory, where we used signals from the accelerometer 4000A, and of course, the function generator, which was used for the formation of our reference signal, enabling the elimination of one of the frequencies to be emitted from the accelerometer. Note that they were able to obtain a behavior of the LMS adaptive filter suitable as expected. We test with outdated input signals, and got curious response to the output of the system, such as the frequency to remove, the more outdated are these signs, but noticeable. Solving this point with increasing the filter order. We can conclude that although proven digital filters in the first stage are useful, to have a perfect answer as possible must be taken into account the order of the filter, which should be very high for frequencies near the frequency cutting, not weakened. In contrast, in the LMS adaptive filters if we for example, remove a signal from among three signals, only enough to eliminate the frequency input on one of the inputs of the filter, namely the reference signal. Thus, we can remove a signal between these three, so that the other two, not affected by the procedure.

Sounding rocket experiment of bare electrodynamic tether system

An overview of asounding rocket S-520-25th, project on space tether technology experiment is presented.The project is prepared by an international research group consisting of Japanese,European,American,andAustralianresearchers.The sounding rocket will be assembled by the ISAS/JAXA and will be launched in the summer of 2009.