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.

Estimation of the Spatial Weights Matrix under Structural Constraints

While estimates of models with spatial interaction are very sensitive to the choice of spatial weights, considerable uncertainty surrounds de nition of spatial weights in most studies with cross-section dependence. We show that, in the spatial error model the spatial weights matrix is only partially identi ed, and is fully identifi ed under the structural constraint of symmetry. For the spatial error model, we propose a new methodology for estimation of spatial weights under the assumption of symmetric spatial weights, with extensions to other important spatial models. The methodology is applied to regional housing markets in the UK, providing an estimated spatial weights matrix that generates several new hypotheses about the economic and socio-cultural drivers of spatial di¤usion in housing demand.

Pecuniary Externality through Credit Constraints: Two Examples without Uncertainty

This paper is a contribution to the growing literature on constrained inefficiencies in economies with financial frictions. The purpose is to present two simple examples, inspired by the stochastic models in Gersbach-Rochet (2012) and Lorenzoni (2008), of deterministic environments in which such inefficiencies arise through credit constraints. Common to both examples is a pecuniary externality, which operates through an asset price. In the second example, a simple transfer between two groups of agents can bring about a Pareto improvement. In a first best economy, there are no pecuniary externalities because marginal productivities are equalised. But when agents face credit constraints, there is a wedge between their marginal productivities and those of the non-credit-constrained agents. The wedge is the source of the pecuniary externality: economies with these kinds of imperfections in credit markets are not second-best efficient. This is akin to the constrained inefficiency of an economy with incomplete markets, as in Geanakoplos and Polemarchakis (1986).

The response of the external finance premium in Asian corporate bond markets to financial characteristics, financial constraints and two financial crises

Empirical investigation of the external finance premium has been conducted on the margin between internal finance and bank borrowing or equities but little attention has been given to corporate bonds, especially for the emerging Asian market. In this paper, we hypothesize that balance sheet indicators of creditworthiness could affect the external finance premium for bonds as they do for premia in other markets. Using bond-specific and firm-specific data for China, Hong Kong, Indonesia, Korea, Philippines, Singapore and Thailand during 1995-2009 we find that firms with better financial health face lower external finance premia in all countries. When we introduce firm-level heterogeneity, we show that financial variables appear to be both statistically and quantitatively more important for financially constrained firms. Finally, when we examine the effects of the 1997-98 Asian crisis and the 2007-09 global financial crisis, we find that the sensitivity of the premium is greater for constrained firms during the Asian crisis compared to other times.

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.

Traffic forecasts under uncertainty and capacity constraints

Traffic forecasts provide essential input for the appraisal of transport investment projects. However, according to recent empirical evidence, long-term predictions are subject to high levels of uncertainty. This paper quantifies uncertainty in traffic forecasts for the tolled motorway network in Spain. Uncertainty is quantified in the form of a confidence interval for the traffic forecast that includes both model uncertainty and input uncertainty. We apply a stochastic simulation process based on bootstrapping techniques. Furthermore, the paper proposes a new methodology to account for capacity constraints in long-term traffic forecasts. Specifically, we suggest a dynamic model in which the speed of adjustment is related to the ratio between the actual traffic flow and the maximum capacity of the motorway. This methodology is applied to a specific public policy that consists of suppressing the toll on a certain motorway section before the concession expires.

The Role of supply constraints in multiplier analysis

Multiplier analysis based upon the information contained in Leontief's inverse is undoubtedly part of the core of the input-output methodology and numerous applications an extensions have been developed that exploit its informational content. Nonetheless there are some implicit theoretical assumptions whose implications have perhaps not been fully assessed. This is the case of the 'excess capacity' assumption. Because of this assumption resources are available as needed to adjust production to new equilibrium states. In real world applications, however, new resources are scarce and costly. Supply constraints kick in and hence resource allocation needs to take them into account to really assess the effect of government policies. Using a closed general equilibrium model that incorporates supply constraints, we perform some simple numerical exercises and proceed to derive a 'constrained' multiplier matrix that can be compared with the standard 'unrestricted' multiplier matrix. Results show that the effectiveness of expenditure policies hinges critically on whether or not supply constraints are considered.

Implementation of IPM programs on European greenhouse tomato production areas: Tools and constraints

Whiteflies and whitefly-transmitted viruses are some of the major constraints on European tomato production. The main objectives of this study were to: identify where and why whiteflies are a major limitation on tomato crops; collect information about whiteflies and associated viruses; determine the available management tools; and identify key knowledge gaps and research priorities. This study was conducted within the framework of ENDURE (European Network for Durable Exploitation of Crop Protection Strategies). Two whitefly species are the main pests of tomato in Europe: Bemisia tabaci and Trialeurodes vaporariorum. Trialeurodes vaporariorum is widespread to all areas where greenhouse industry is present, and B. tabaci has invaded, since the early 1990’s, all the subtropical and tropical areas. Biotypes B and Q of B. tabaci are widespread and especially problematic. Other key tomato pests are Aculops lycopersici, Helicoverpa armigera, Frankliniella occidentalis, and leaf miners. Tomato crops are particularly susceptible to viruses causingTomato yellow leaf curl disease (TYLCD). High incidences of this disease are associated to high pressure of its vector, B. tabaci. The ranked importance of B. tabaci established in this study correlates with the levels of insecticide use, showing B. tabaci as one of the principal drivers behind chemical control. Confirmed cases of resistance to almost all insecticides have been reported. Integrated Pest Management based on biological control (IPM-BC) is applied in all the surveyed regions and identified as the strategy using fewer insecticides. Other IPM components include greenhouse netting and TYLCD-tolerant tomato cultivars. Sampling techniques differ between regions, where decisions are generally based upon whitefly densities and do not relate to control strategies or growing cycles. For population monitoring and control, whitefly species are always identified. In Europe IPM-BC is the recommended strategy for a sustainable tomato production. The IPM-BC approach is mainly based on inoculative releases of the parasitoids Eretmocerus mundus and Encarsia formosa and/or the polyphagous predators Macrolophus caliginosus and Nesidiocoris tenuis. However, some limitations for a wider implementation have been identified: lack of biological solutions for some pests, costs of beneficials, low farmer confidence, costs of technical advice, and low pest injury thresholds. Research priorities to promote and improve IPM-BC are proposed on the following domains: (i) emergence and invasion of new whitefly-transmitted viruses; (ii) relevance of B. tabaci biotypes regarding insecticide resistance; (iii) biochemistry and genetics of plant resistance; (iv) economic thresholds and sampling techniques of whiteflies for decision making; and (v) conservation and management of native whitefly natural enemies and improvement of biological control of other tomato pests.

Opportunities and constraints in schistosomiasis vaccine development: infection characteristics and industry realities

The notes provided in this article relate to two components of the development of vaccines against schistosomiasis: (1) The characteristics of schistosome infections (eg. features of the schistosome life cycle), and the parasite itself, that have implications for vaccination strategies; (2) The characteristics of the biopharmaceutical industry that have implications for product development. As will be seen, these two topic areas are not vastly disparate.

Geodynamic reconstructions of the South America-Antarctica plate system

The South America-Antarctica plate system shows many oceanic accretionary systems and subduction zones that initiated and then stopped. To better apprehend the evolution of the system, geodynamic reconstructions (global) have been created from Jurassic (165 Ma) to present, following the techniques used at the University of Lausanne. However, additional synthetic magnetic anomalies were used to refine the geodynamics between 33 Ma and present. The reconstructions show the break up of Gondwana with oceanisation between South America (SAM) and Antarctica (ANT), together with the break off of `Andean' geodynamical units (GDUs). We propose that oceanisation occurs also east and south of the Scotian GDUs. Andean GDUs collide with other GDUs crossing the Pacific. The west coast of SAM and ANT undergo a subsequent collision with all those GDUs between 103 Ma and 84 Ma, and the Antarctic Peninsula also collides with Tierra del Fuego. The SAM-ANT plate boundary experienced a series of extension and shortening with large strike-slip component, culminating with intra-oceanic subduction leading to the presence of the `V-' and anomalies in the Weddell Sea. From 84 Ma, a transpressive collision takes place in the Scotia region, with active margin to the east. As subduction propagates northwards into an old and dense oceanic crust, slab roll-back initiates, giving rise to the western Scotia Sea and the Powell Basin opening. The Drake Passage opens. As the Scotian GDUs migrate eastwards, there is enough space for them to spread and allow a north-south divergence with a spreading axis acting simultaneously with the western Scotia ridge. Discovery Bank stops the migration of South Orkney and `collides with' the SAM-ANT spreading axis, while the northern Scotian GDUs are blocked against the Falkland Plateau and the North-East Georgia Rise. The western and central Scotia and the Powell Basin spreading axes must cease, and the ridge jumps to create the South Sandwich Islands Sea. The Tierra del Fuego-Patagonia region has always experienced mid-oceanic ridge subduction since 84 Ma. Slab window location is also presented (57-0 Ma), because of its important implication for heat flux and magmatism. (C) 2011 Elsevier Ltd. All rights reserved.

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.

Compositional Constraints in the Extremely GC-poor Genome of Plasmodium falciparum

We have analyzed the compositional properties of coding (protein encoding) and non-coding sequences of Plasmodium falciparum, a unicellular parasite characterized by an extremely AT-rich genome. GC% levels, base and dinucleotide frequencies were studied. We found that among the various factors that contribute to the properties of the sequences analyzed, the most relevant are the compositional constraints which operate on the whole genome

Liquid line of descent of a basanitic liquid at 1.5 GPa: Constraints for metasomatic vein formation

The metasomatism observed in the oceanic and continental lithosphere is generally interpreted to represent a continuous differentiation process forming anhydrous and hydrous veins plus a cryptic enrichment in the surrounding peridotite. In order to constrain the mechanisms of vein formation and potentially clarify the nature and origin of the initial metasomatic agent, we performed a series of high-pressure experiments simulating the liquid line of descent of a basanitic magma differentiating within continental or mature oceanic lithosphere. This series of experiments has been conducted in an end-loaded piston cylinder apparatus starting from an initial hydrous ne-normative basanite at 1.5 GPa and temperature varying between 1,250 and 980°C. Near-pure fractional crystallization process was achieved in a stepwise manner in 30°C temperature steps and starting compositions corresponding to the liquid composition of the previous, higher-temperature glass composition. Liquids evolve progressively from basanite to peralkaline, aluminum-rich compositions without significant SiO2 variation. The resulting cumulates are characterized by an anhydrous clinopyroxene + olivine assemblage at high temperature (1,250-1,160°C), while at lower temperature (1,130-980°C), hydrous cumulates with dominantly amphibole + minor clinopyroxene, spinel, ilmenite, titanomagnetite and apatite (1,130-980°C) are formed. This new data set supports the interpretation that anhydrous and hydrous metasomatic veins could be produced during continuous differentiation processes of primary, hydrous alkaline magmas at high pressure. However, the comparison between the cumulates generated by the fractional crystallization from an initial ne-normative liquid or from hy-normative initial compositions (hawaiite or picrobasalt) indicates that for all hydrous liquids, the different phases formed upon differentiation are mostly similar even though the proportions of hydrous versus anhydrous minerals could vary significantly. This suggests that the formation of amphibole-bearing metasomatic veins observed in the lithospheric mantle could be linked to the differentiation of initial liquids ranging from ne-normative to hy-normative in composition. The present study does not resolve the question whether the metasomatism observed in lithospheric mantle is a precursor or a consequence of alkaline magmatism; however, it confirms that the percolation and differentiation of a liquid produced by a low degree of partial melting of a source similar or slightly more enriched than depleted MORB mantle could generate hydrous metasomatic veins interpreted as a potential source for alkaline magmatism by various authors.