"...as long as the music is playing, you've got to get up and dance. We're still dancing." /Financial Times in July 2007: Charles Prince, Citigroup (former) chief executive/
The document summarizes and discusses three papers on the relationship between financial frictions, capital misallocation, and productivity. All three papers find different and innovative empirical evidence on this relationship. The discussion focuses on reconciling the different results, addressing open questions, and identifying areas where more work is needed, such as understanding differences between countries and the roles of banks, firm financial constraints, and credit supply shocks.
This document discusses mezzanine capital as an alternative source of financing for small and medium enterprises (SMEs) to address financing gaps. It analyzes mezzanine financing instruments, including private placements and public market options, noting development varies across Europe. Mezzanine capital combines features of debt and equity, offering advantages for both firms and investors. However, SMEs still face barriers to accessing traditional financing. The document evaluates how mezzanine capital could help cover financing needs, while acknowledging challenges, especially given the effects of the financial crisis in restricting SME financing options.
Isabelle Roland - The Aggregate Eects of Credit Market Frictions: Evidence f...Structuralpolicyanalysis
This document presents the key findings of a study that develops a theoretical framework to quantify the impact of credit market frictions on aggregate output and productivity. The study assesses these impacts using firm-level data on employment and default risk from UK administrative surveys. The main findings are:
1) Credit market frictions substantially depressed UK output between 2004-2012, reducing it by 3-5% annually on average. This impact worsened during the financial crisis and lingered thereafter.
2) Credit frictions can explain 11-18% of the fall in UK productivity between 2008-2009 and 13-23% of the post-crisis productivity gap in 2012.
3) The results are mainly
Filippos Petroulakis - Discussion on “Financial frictions and within firm per...Structuralpolicyanalysis
This document summarizes discussions from a conference on financial factors and productivity. It discusses three papers that found credit frictions have significant negative impacts on firm productivity. More bank forbearance during crises leads to less "cleansing" of unproductive firms but also less growth after crises. While bank recapitalization aims to strengthen banks, it can also act like forbearance. The document discusses reconciling these results and their implications for policies that preserve credit supply.
The document summarizes discussions from three papers presented at a conference on weak productivity and the role of financial factors and policies.
The first two papers examine the real effects of credit constraints on firms during the global financial crisis. One finds that investment declined more for highly leveraged firms borrowing from weak banks. The other finds higher exit rates for firms borrowing from weak banks, especially highly leveraged and more productive firms. The document discusses potential drivers of these results and suggestions for further analysis.
The third paper analyzes how monetary policy shocks that flatten the yield curve can negatively impact productivity growth by reducing efficient reallocation of factors across sectors. The document questions the theoretical basis and interpretations of this finding, noting little interest rate variability
Garry Young - Are credit and capital misallocated? Comments by Garry YoungStructuralpolicyanalysis
While impaired banks after the financial crisis likely led to higher credit costs and forbearance on existing loans, contributing to weaker productivity, the paper argues this does not fully explain the UK's productivity slowdown for several reasons: (1) productivity weakness has persisted longer than the crisis, (2) it is widespread across industries, not just bank-dependent ones, (3) forbearance does not correlate with productivity weakness, and (4) evidence points more to "within-firm" effects than reduced reallocation. Alternative explanations of persistent weak demand may better explain most of the productivity gap.
Ana Gouveia - Financial Policies, financial systems and productivity - Discus...Structuralpolicyanalysis
This document summarizes discussions from a conference on weak productivity and the role of financial factors and policies. It discusses four academic papers and their findings. The first paper finds that restricted credit availability due to the financial crisis led to increased business failure, especially for highly leveraged firms. The second paper finds that weak banks and high firm leverage reduced investment, and this effect was stronger for firms linked to weak banks with high rollover risk. The third paper finds that loose monetary policy increased productivity growth by alleviating credit constraints, while quantitative easing reduced productivity growth. The document then discusses insights from research on Portugal, including definitions of weak banks, mechanisms like the link between weak banks and zombie firms, non-linear effects of leverage on investment
1) The document examines how government intervention in the banking sector during financial crises affects long-term productivity.
2) It finds that higher regulatory forbearance (allowing struggling banks to remain open) reduces short-term economic losses but is negatively associated with post-crisis productivity growth, as it allows inefficient firms to remain in operation.
3) In contrast, tougher policies like bank restructuring that force struggling banks to close are found to yield higher long-term job creation, wages, and economic growth, suggesting financial crises can "cleanse" economies of inefficient firms and banks when governments take a stricter approach.
The document summarizes and discusses three papers on the relationship between financial frictions, capital misallocation, and productivity. All three papers find different and innovative empirical evidence on this relationship. The discussion focuses on reconciling the different results, addressing open questions, and identifying areas where more work is needed, such as understanding differences between countries and the roles of banks, firm financial constraints, and credit supply shocks.
This document discusses mezzanine capital as an alternative source of financing for small and medium enterprises (SMEs) to address financing gaps. It analyzes mezzanine financing instruments, including private placements and public market options, noting development varies across Europe. Mezzanine capital combines features of debt and equity, offering advantages for both firms and investors. However, SMEs still face barriers to accessing traditional financing. The document evaluates how mezzanine capital could help cover financing needs, while acknowledging challenges, especially given the effects of the financial crisis in restricting SME financing options.
Isabelle Roland - The Aggregate Eects of Credit Market Frictions: Evidence f...Structuralpolicyanalysis
This document presents the key findings of a study that develops a theoretical framework to quantify the impact of credit market frictions on aggregate output and productivity. The study assesses these impacts using firm-level data on employment and default risk from UK administrative surveys. The main findings are:
1) Credit market frictions substantially depressed UK output between 2004-2012, reducing it by 3-5% annually on average. This impact worsened during the financial crisis and lingered thereafter.
2) Credit frictions can explain 11-18% of the fall in UK productivity between 2008-2009 and 13-23% of the post-crisis productivity gap in 2012.
3) The results are mainly
Filippos Petroulakis - Discussion on “Financial frictions and within firm per...Structuralpolicyanalysis
This document summarizes discussions from a conference on financial factors and productivity. It discusses three papers that found credit frictions have significant negative impacts on firm productivity. More bank forbearance during crises leads to less "cleansing" of unproductive firms but also less growth after crises. While bank recapitalization aims to strengthen banks, it can also act like forbearance. The document discusses reconciling these results and their implications for policies that preserve credit supply.
The document summarizes discussions from three papers presented at a conference on weak productivity and the role of financial factors and policies.
The first two papers examine the real effects of credit constraints on firms during the global financial crisis. One finds that investment declined more for highly leveraged firms borrowing from weak banks. The other finds higher exit rates for firms borrowing from weak banks, especially highly leveraged and more productive firms. The document discusses potential drivers of these results and suggestions for further analysis.
The third paper analyzes how monetary policy shocks that flatten the yield curve can negatively impact productivity growth by reducing efficient reallocation of factors across sectors. The document questions the theoretical basis and interpretations of this finding, noting little interest rate variability
Garry Young - Are credit and capital misallocated? Comments by Garry YoungStructuralpolicyanalysis
While impaired banks after the financial crisis likely led to higher credit costs and forbearance on existing loans, contributing to weaker productivity, the paper argues this does not fully explain the UK's productivity slowdown for several reasons: (1) productivity weakness has persisted longer than the crisis, (2) it is widespread across industries, not just bank-dependent ones, (3) forbearance does not correlate with productivity weakness, and (4) evidence points more to "within-firm" effects than reduced reallocation. Alternative explanations of persistent weak demand may better explain most of the productivity gap.
Ana Gouveia - Financial Policies, financial systems and productivity - Discus...Structuralpolicyanalysis
This document summarizes discussions from a conference on weak productivity and the role of financial factors and policies. It discusses four academic papers and their findings. The first paper finds that restricted credit availability due to the financial crisis led to increased business failure, especially for highly leveraged firms. The second paper finds that weak banks and high firm leverage reduced investment, and this effect was stronger for firms linked to weak banks with high rollover risk. The third paper finds that loose monetary policy increased productivity growth by alleviating credit constraints, while quantitative easing reduced productivity growth. The document then discusses insights from research on Portugal, including definitions of weak banks, mechanisms like the link between weak banks and zombie firms, non-linear effects of leverage on investment
1) The document examines how government intervention in the banking sector during financial crises affects long-term productivity.
2) It finds that higher regulatory forbearance (allowing struggling banks to remain open) reduces short-term economic losses but is negatively associated with post-crisis productivity growth, as it allows inefficient firms to remain in operation.
3) In contrast, tougher policies like bank restructuring that force struggling banks to close are found to yield higher long-term job creation, wages, and economic growth, suggesting financial crises can "cleanse" economies of inefficient firms and banks when governments take a stricter approach.
Dan Andrews - Breaking the shackles:Zombie Firms, Weak Banks and Depressed Re...Structuralpolicyanalysis
1) The document discusses evidence that zombie firms, which are firms that are financially distressed but remain in operation, are more likely to be connected to weak banks.
2) It finds that zombie firms are more likely to be clients of banks that are in poorer financial health, as measured by various indicators of bank balance sheet strength. This is consistent with the hypothesis that weak banks continue to support zombie firms through forbearance to avoid realizing losses.
3) It also discusses how insolvency regimes that make corporate restructuring more difficult can strengthen banks' incentives to engage in forbearance with zombie firms. The negative relationship between bank health and zombie firms is stronger in countries with less restructuring-friendly insolvency
Here is our recent revision webinar on commercial banks and the UK economy. We look at how commercial banks made a profit (or loss!) and consider the factors that affect how much they can lend out.
Global Powers of Consumer Products 2013Melih ÖZCANLI
Global Powers of Consumer Products 2013
Engaging the connected customer
by Deloitte, 2013
The opportunity for consumer products companies to manage their brands online, engage with consumers at an individual level, and drive sales through digital channels is significant. The question is how to do it well. Take a look at this year's report to see which consumer goods companies are on the Top 250 list. Then keep reading to see what approaches the industry is likely to take to engage this new, digitally empowered consumer.
Find out which companies are where on this year's Top 250 list by downloading the complete report.
1) Financial booms can misallocate resources and sap productivity by shifting labor to less productive sectors, costing advanced economies annually during and after a typical credit boom.
2) Credit booms are associated with declines in the allocation component of labor productivity growth, indicating misallocation of resources to less productive sectors. Productivity stagnates after financial crises due to previous misallocations.
3) The share of "zombie" firms, which have interest expenses that exceed operating profits for long periods, has risen over time and these firms survive longer. As nominal interest rates have declined following financial crises, zombies have risen and survived longer.
The document summarizes research on business risks faced by small and medium enterprises (SMEs) in selected regions of Slovakia. It conducted surveys of SMEs in Bratislava, Trencin and Zilina regions in 2013 to understand their perceptions of current business risks. The research tested hypotheses about differences in perceived risks between the regions. It found that most businesses viewed market risk as the key risk, but SMEs in Bratislava saw it as less intense than those in other regions. It also found that while all businesses were negatively impacted by the financial crisis, profits and profitability declined less for Bratislava firms. SMEs in Bratislava also displayed higher levels of business
The document summarizes and comments on three papers related to the impact of financial constraints on productivity. The papers find both positive and negative impacts of financial constraints. At the firm level, constraints negatively impact incumbent firms' productivity but positively impact productivity through cleansing effects. At the industry level, constraints have an inverted U-shaped impact on productivity. At the country level, constraints primarily influence productivity through cleansing mechanisms, though the relationship is complex and circular between productivity, interest rates, and other factors.
Assessing the effect of liquidity on profitability of commercial banks in kenyaAlexander Decker
This document discusses factors that affect the profitability of commercial banks in Kenya. It provides background on the banking sector in Kenya and reviews various theories on factors that influence bank profitability, including market power theory, efficiency structure theory, and the Modigliani-Miller theorem. The study aimed to determine the effect of internal factors like liquidity on the profitability of commercial banks in Kenya. It found that liquidity has a statistically significant and positive relationship with bank profitability.
This paper introduces an imperfectly competitive banking sector into a DSGE model to study the role of credit supply factors in business cycle fluctuations in the euro area. Banks issue loans to households and firms, obtain funding via deposits, and accumulate capital from retained earnings. Margins on loans depend on bank capital ratios and interest rate stickiness. Estimating the model with euro area data from 1999-2008, the paper finds that:
1) Shocks originating in the banking sector explain most of the output fall in 2008, while macroeconomic shocks played a smaller role.
2) An unexpected reduction in bank capital can significantly impact the real economy, especially investment.
3) Financial frictions amplify monetary policy effects,
This document summarizes research on the impact of debt crisis on corporate firm performance in Slovakia. It finds that 91% of changes in debt ratios of firms with 3000-3999 employees can be explained by changes in variables like profit, assets, and debt to EBITDA. A comparison of 2010 and 2013 data showed an increase in firm assets. The conclusion is that firms need to make timely changes to improve financial performance during a debt crisis.
Greece ranks 100 out of 183 economies on the ease of doing business. While it ranks relatively high on dealing with construction permits (41), it lags in areas like starting a business (135), registering property (150), and protecting investors (155). The country performs better on indicators like procedures and time to export but scores poorly on costs associated with getting electricity, paying more taxes than most comparator economies, and having weak legal rights for creditors. Overall, Greece has work to do in simplifying regulatory processes and strengthening legal protections to facilitate business development.
1) Weak and unproductive "zombie" firms are absorbing an increasing share of resources in many countries, dragging down productivity growth.
2) Insolvency regimes that reduce barriers to the exit or restructuring of failing firms can help revive productivity by reallocating resources to more productive uses. Financial reforms to strengthen banks can also help address zombie firms.
3) Such reforms will increase job churn, so they should be accompanied by active labor market policies to support displaced workers' reemployment. Combining exit policy, financial, and labor market reforms can make a substantial contribution to restoring productivity growth.
The Financial Recession that hit British economy recently resulted in severe unemployment and job loss across UK. The Recession did have many implications on the British labour market. This paper will have an insight into the implications of Recession on graduate labour market in UK. The data provided by the Association of Graduate Recruiters, Office for National Statistics and High Fliers Research Limited on graduate recruitment market in UK was used to carry out the study. The study will be based on the comparison of graduate recruitment market in the years 2009 and 2010. The comparison of graduate recruitment market will be based on the analysis of graduate labour market for the years 2009 and 2010. This paper will try predicting whether the year 2010 is a favourable year for graduates or not. It will also have an insight into the attitude of students towards recession and will provide necessary recommendations.
This document provides an overview and analysis of the global economic outlook and its implications for retailers. It discusses how the ongoing crisis in the Eurozone has caused economic slowdowns around the world, including in the US, China, and other large economies. If the issues in Europe are not resolved, there is a risk of sovereign defaults that could lead to a collapse of the Eurozone with severe global economic consequences. The outlook suggests a modest acceleration in the US economy but continued structural changes, while China appears to be avoiding a hard landing through stimulus measures.
2014.11.28 - NAEC Group Meeting_Adrian Blundell-WignallOECD_NAEC
The document discusses several issues related to finance and the economy. It notes that financial deregulation and innovation led to the 2008 liquidity crisis due to complex derivatives and relationships between counterparties. Since then, derivatives have shifted from banks to shadow banks. There has also been an emerging market bubble in corporate credit as investors seek yield. The document raises concerns about liquidity risks if interest rates rise or demand slows, given the shift away from banks as liquidity providers. It argues that new approaches are needed to encourage long-term, sustainable investment by non-banks.
This document summarizes a theoretical model examining the effects of small regional banks on local economic growth. The model shows that small regional banks are more effective than large interregional banks at promoting economic growth in underdeveloped regions. This is because small regional banks have lower screening and monitoring costs of local borrowers compared to large banks. The model is then empirically tested using bank and regional economic data from Germany, finding that small regional banks play an important role in enhancing economic development in less developed German regions.
This document provides a summary of the global economic outlook and trends for retailers to consider. It discusses slowing economic growth in many leading markets in 2012. In Europe, government spending cuts and debt issues are weakening economies and confidence. In the US, uncertainty around fiscal policy is hurting markets. China is also slowing after monetary tightening. Some positives for retailers include potential margin improvements from lower commodity prices and inflation in some countries. Long term global growth prospects remain strong, especially in emerging markets.
Monday September 10 2012 - Top 10 Risk Management NewsCompliance LLC
This document summarizes key points from a speech given by Charles L. Evans, President and CEO of the Federal Reserve Bank of Chicago, on the global economic outlook and monetary policy implications. The speech discusses:
1) Tepid growth forecasts for the US and global economies in the next few years due to ongoing effects of the financial crisis.
2) Downside risks to the outlook from the European debt crisis and potential US fiscal cliff, which could further slow the economic recovery.
3) Implications of sluggish advanced economy growth for Asian economies that rely on exports to the US and Europe.
4) Low inflation expectations and projections that inflation will remain near the Fed's 2% target despite
This document summarizes a dissertation that examines the extent to which government bailouts during the 2008 financial crisis distorted competition in the European banking sector. It begins with an introduction that provides background on the crisis and vast state aid provided to banks. It then outlines the methodology, literature review, theoretical framework, and analysis that will be used to assess if bailed out banks gained competitive advantages through lower funding costs. The dissertation aims to determine if bailouts undermined competition by benefiting some banks over others.
In this issue…
…we feature the following markets:
USA – with a spotlight on the chemicals and metals sectors
Belgium – with a spotlight on the construction and automotive/transport sectors
The Netherlands
Finland
Czech Republic
Slovakia
Romania
Atradius Collections sees a marked increase in its caseload
Dan Andrews - Breaking the shackles:Zombie Firms, Weak Banks and Depressed Re...Structuralpolicyanalysis
1) The document discusses evidence that zombie firms, which are firms that are financially distressed but remain in operation, are more likely to be connected to weak banks.
2) It finds that zombie firms are more likely to be clients of banks that are in poorer financial health, as measured by various indicators of bank balance sheet strength. This is consistent with the hypothesis that weak banks continue to support zombie firms through forbearance to avoid realizing losses.
3) It also discusses how insolvency regimes that make corporate restructuring more difficult can strengthen banks' incentives to engage in forbearance with zombie firms. The negative relationship between bank health and zombie firms is stronger in countries with less restructuring-friendly insolvency
Here is our recent revision webinar on commercial banks and the UK economy. We look at how commercial banks made a profit (or loss!) and consider the factors that affect how much they can lend out.
Global Powers of Consumer Products 2013Melih ÖZCANLI
Global Powers of Consumer Products 2013
Engaging the connected customer
by Deloitte, 2013
The opportunity for consumer products companies to manage their brands online, engage with consumers at an individual level, and drive sales through digital channels is significant. The question is how to do it well. Take a look at this year's report to see which consumer goods companies are on the Top 250 list. Then keep reading to see what approaches the industry is likely to take to engage this new, digitally empowered consumer.
Find out which companies are where on this year's Top 250 list by downloading the complete report.
1) Financial booms can misallocate resources and sap productivity by shifting labor to less productive sectors, costing advanced economies annually during and after a typical credit boom.
2) Credit booms are associated with declines in the allocation component of labor productivity growth, indicating misallocation of resources to less productive sectors. Productivity stagnates after financial crises due to previous misallocations.
3) The share of "zombie" firms, which have interest expenses that exceed operating profits for long periods, has risen over time and these firms survive longer. As nominal interest rates have declined following financial crises, zombies have risen and survived longer.
The document summarizes research on business risks faced by small and medium enterprises (SMEs) in selected regions of Slovakia. It conducted surveys of SMEs in Bratislava, Trencin and Zilina regions in 2013 to understand their perceptions of current business risks. The research tested hypotheses about differences in perceived risks between the regions. It found that most businesses viewed market risk as the key risk, but SMEs in Bratislava saw it as less intense than those in other regions. It also found that while all businesses were negatively impacted by the financial crisis, profits and profitability declined less for Bratislava firms. SMEs in Bratislava also displayed higher levels of business
The document summarizes and comments on three papers related to the impact of financial constraints on productivity. The papers find both positive and negative impacts of financial constraints. At the firm level, constraints negatively impact incumbent firms' productivity but positively impact productivity through cleansing effects. At the industry level, constraints have an inverted U-shaped impact on productivity. At the country level, constraints primarily influence productivity through cleansing mechanisms, though the relationship is complex and circular between productivity, interest rates, and other factors.
Assessing the effect of liquidity on profitability of commercial banks in kenyaAlexander Decker
This document discusses factors that affect the profitability of commercial banks in Kenya. It provides background on the banking sector in Kenya and reviews various theories on factors that influence bank profitability, including market power theory, efficiency structure theory, and the Modigliani-Miller theorem. The study aimed to determine the effect of internal factors like liquidity on the profitability of commercial banks in Kenya. It found that liquidity has a statistically significant and positive relationship with bank profitability.
This paper introduces an imperfectly competitive banking sector into a DSGE model to study the role of credit supply factors in business cycle fluctuations in the euro area. Banks issue loans to households and firms, obtain funding via deposits, and accumulate capital from retained earnings. Margins on loans depend on bank capital ratios and interest rate stickiness. Estimating the model with euro area data from 1999-2008, the paper finds that:
1) Shocks originating in the banking sector explain most of the output fall in 2008, while macroeconomic shocks played a smaller role.
2) An unexpected reduction in bank capital can significantly impact the real economy, especially investment.
3) Financial frictions amplify monetary policy effects,
This document summarizes research on the impact of debt crisis on corporate firm performance in Slovakia. It finds that 91% of changes in debt ratios of firms with 3000-3999 employees can be explained by changes in variables like profit, assets, and debt to EBITDA. A comparison of 2010 and 2013 data showed an increase in firm assets. The conclusion is that firms need to make timely changes to improve financial performance during a debt crisis.
Greece ranks 100 out of 183 economies on the ease of doing business. While it ranks relatively high on dealing with construction permits (41), it lags in areas like starting a business (135), registering property (150), and protecting investors (155). The country performs better on indicators like procedures and time to export but scores poorly on costs associated with getting electricity, paying more taxes than most comparator economies, and having weak legal rights for creditors. Overall, Greece has work to do in simplifying regulatory processes and strengthening legal protections to facilitate business development.
1) Weak and unproductive "zombie" firms are absorbing an increasing share of resources in many countries, dragging down productivity growth.
2) Insolvency regimes that reduce barriers to the exit or restructuring of failing firms can help revive productivity by reallocating resources to more productive uses. Financial reforms to strengthen banks can also help address zombie firms.
3) Such reforms will increase job churn, so they should be accompanied by active labor market policies to support displaced workers' reemployment. Combining exit policy, financial, and labor market reforms can make a substantial contribution to restoring productivity growth.
The Financial Recession that hit British economy recently resulted in severe unemployment and job loss across UK. The Recession did have many implications on the British labour market. This paper will have an insight into the implications of Recession on graduate labour market in UK. The data provided by the Association of Graduate Recruiters, Office for National Statistics and High Fliers Research Limited on graduate recruitment market in UK was used to carry out the study. The study will be based on the comparison of graduate recruitment market in the years 2009 and 2010. The comparison of graduate recruitment market will be based on the analysis of graduate labour market for the years 2009 and 2010. This paper will try predicting whether the year 2010 is a favourable year for graduates or not. It will also have an insight into the attitude of students towards recession and will provide necessary recommendations.
This document provides an overview and analysis of the global economic outlook and its implications for retailers. It discusses how the ongoing crisis in the Eurozone has caused economic slowdowns around the world, including in the US, China, and other large economies. If the issues in Europe are not resolved, there is a risk of sovereign defaults that could lead to a collapse of the Eurozone with severe global economic consequences. The outlook suggests a modest acceleration in the US economy but continued structural changes, while China appears to be avoiding a hard landing through stimulus measures.
2014.11.28 - NAEC Group Meeting_Adrian Blundell-WignallOECD_NAEC
The document discusses several issues related to finance and the economy. It notes that financial deregulation and innovation led to the 2008 liquidity crisis due to complex derivatives and relationships between counterparties. Since then, derivatives have shifted from banks to shadow banks. There has also been an emerging market bubble in corporate credit as investors seek yield. The document raises concerns about liquidity risks if interest rates rise or demand slows, given the shift away from banks as liquidity providers. It argues that new approaches are needed to encourage long-term, sustainable investment by non-banks.
This document summarizes a theoretical model examining the effects of small regional banks on local economic growth. The model shows that small regional banks are more effective than large interregional banks at promoting economic growth in underdeveloped regions. This is because small regional banks have lower screening and monitoring costs of local borrowers compared to large banks. The model is then empirically tested using bank and regional economic data from Germany, finding that small regional banks play an important role in enhancing economic development in less developed German regions.
This document provides a summary of the global economic outlook and trends for retailers to consider. It discusses slowing economic growth in many leading markets in 2012. In Europe, government spending cuts and debt issues are weakening economies and confidence. In the US, uncertainty around fiscal policy is hurting markets. China is also slowing after monetary tightening. Some positives for retailers include potential margin improvements from lower commodity prices and inflation in some countries. Long term global growth prospects remain strong, especially in emerging markets.
Monday September 10 2012 - Top 10 Risk Management NewsCompliance LLC
This document summarizes key points from a speech given by Charles L. Evans, President and CEO of the Federal Reserve Bank of Chicago, on the global economic outlook and monetary policy implications. The speech discusses:
1) Tepid growth forecasts for the US and global economies in the next few years due to ongoing effects of the financial crisis.
2) Downside risks to the outlook from the European debt crisis and potential US fiscal cliff, which could further slow the economic recovery.
3) Implications of sluggish advanced economy growth for Asian economies that rely on exports to the US and Europe.
4) Low inflation expectations and projections that inflation will remain near the Fed's 2% target despite
This document summarizes a dissertation that examines the extent to which government bailouts during the 2008 financial crisis distorted competition in the European banking sector. It begins with an introduction that provides background on the crisis and vast state aid provided to banks. It then outlines the methodology, literature review, theoretical framework, and analysis that will be used to assess if bailed out banks gained competitive advantages through lower funding costs. The dissertation aims to determine if bailouts undermined competition by benefiting some banks over others.
In this issue…
…we feature the following markets:
USA – with a spotlight on the chemicals and metals sectors
Belgium – with a spotlight on the construction and automotive/transport sectors
The Netherlands
Finland
Czech Republic
Slovakia
Romania
Atradius Collections sees a marked increase in its caseload
La presentación es de Yenny Patricia Hernández Miño, quien nació el 1 de febrero de 1994 en Tuquerres. Realizó sus estudios primarios en la Escuela Rural Mixta El Consuelo de Chillanquer y su secundaria en la Institución Técnico Comercial San José. Sus intereses profesionales son realizarse como profesional en contabilidad y finanzas y aspirar a tener un excelente desempeño laboral y posiblemente formar su propia empresa. Le gusta escuchar música y compartir con su familia.
keuntungan dan kerugian dari SOSMED(MediaSosial)iqbalsyhfkr
Twitter memiliki batasan karakter tweet yang pendek dan banyak simbol yang harus diingat penggunanya. Google Plus kurang populer dan penggunanya berkurang. Facebook sering mengubah tampilan. Instagram hanya memungkinkan video pendek dan foto kecil. Youtube memiliki konten yang tidak berguna atau pornografi yang diunggah secara bebas.
SUNY Presentation Interplay Between ADA, FMLA and WC (1)John C. Farruggio
This document discusses the interplay between the Family Medical Leave Act (FMLA), Americans with Disabilities Act (ADA), and workers' compensation laws. It provides examples of how leaves required by each law may overlap and notes important differences. FMLA provides unpaid leave for qualified employees' own or family members' serious health conditions. The ADA requires accommodations that allow disabled employees to perform essential job functions. Workers' compensation provides benefits for work-related injuries but does not determine ADA coverage. Employers must consider an employee's rights under each law separately and coordinate appropriate actions.
The document discusses various shot types used in media production including close-ups, mid shots, two shots, over the shoulder shots, long shots, high angle shots, low angle shots, Dutch tilt shots, and point of view shots. Close-ups tightly frame a character's face to show expressions, while mid shots capture them from the waist up. Two shots show the relationship between two characters. Over the shoulder shots allow viewing other scene elements behind a character. Long shots set the scene, while high and low angles create a sense of power dynamics between characters. Dutch tilts and point of view shots offer unique perspectives.
Paul Crumby has extensive experience as an adjunct instructor and lecturer teaching political science courses at several universities. He holds a Ph.D. in Government from Claremont Graduate University and has published articles on topics including social security, aging, and the American political system. Crumby has also worked in business, conducting training and facilitating quality improvement programs, and has political experience managing a campaign finance director role.
Academic Statement Jasmine Logue September 2015Jasmine Logue
This academic statement summarizes the undergraduate coursework and performance of Jasmine Logue from 2011 to 2015 at the University of New South Wales. It shows that she majored in International Relations as part of an Arts/Law degree. Over the course of her studies, she completed 242 credit units with an overall weighted average mark of 81.5. She received several prizes for academic excellence from the Faculty of Arts and Social Sciences.
The document is a power point presentation about excretion in humans. It contains the following key points:
1) Sweat and urine are the two main ways the human body removes waste. Each person produces about 1 liter of sweat daily through pores in their skin.
2) Sweat contains water and salt and helps regulate body temperature. Urine contains water and dissolved wastes from the blood that are filtered out by the kidneys.
3) The kidneys, ureters, bladder, and urethra work together to remove urine from the body. The kidneys filter wastes from the blood into urine.
This short document promotes the creation of Haiku Deck presentations on SlideShare by stating that the reader may feel inspired to create their own presentation. It provides a call to action by telling the reader to get started making a Haiku Deck presentation on SlideShare.
Yenny Patricia Hernández Miño nació el 1 de febrero de 1994 en Tuquerres, Colombia. Recibió su educación primaria en la Escuela Rural Mixta El Consuelo de Chillanuer y su educación secundaria en la Institución Técnico Comercial San José. Sus intereses profesionales incluyen el desarrollo como profesional en contabilidad y finanzas y la posibilidad de formar su propia empresa. Le gusta escuchar música y compartir tiempo con su familia y amigos cercanos.
Este documento describe la importancia de la estimulación temprana en los primeros años de vida de un niño. La falta de estimulación puede dañar el desarrollo físico y mental del niño de forma irreparable. La estimulación temprana busca enriquecer el medio ambiente del niño para lograr el máximo desarrollo a través de la estimulación en áreas como el movimiento, la percepción, el lenguaje y las habilidades sociales. El desarrollo del sistema nervioso depende de factores genéticos, ambientales y
The document describes Learn Business Up-Skill (LBU), a multi-level marketing company that sells beauty, fashion, and household products. LBU operates internationally and provides business opportunities for distributors to earn income. The compensation plan includes direct referral commissions, team bonuses, sales commissions, and rewards like cars for high-performing distributors. LBU aims to combine online shopping and network marketing by launching an e-commerce platform.
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Financial crisis of 2008
1. The Financial Crisis of 2008
"...as long as the music is playing, you've got to get up and dance. We're still dancing."
/Financial Times in July 2007: Charles Prince, Citigroup (former) chief executive/
Author: Attila Németh
14.05.2013.
2. Index
Introduction …………………………………………………………………………………………………………………………………………………… 1.
The impacts of the crisis on the small and medium enterprises ………………………………………………………………………. 1.
Financing
………………………………………………………………………………………………………………………………………………………… 3.
Payment discipline …………………………………………………………………………………………………………………………………………. 5.
The impact of the state …………………………………………………………………………………………………………………………………… 7.
Success factors of enterprises in the crisis ………………………………………………………………………………………………………. 8.
Conclusion ……………………………………………………………………………………………………………………………………………………… 9.
Bibliography …………………………………………………………………………………………………………………………………………………… 10.
3. Introduction
The manifestation of financial crises may be different, but the essential features are the same. Therefore it is not by
chance that many tend to find similarities between the Great Depression of 1929-33, the Stock Market Crash of 1987,
the Financial Crisis of 1998 (the collapse of LTCM), the Japanese Crisis of the 1990s, the Swedish Crisis of 1991, the
Asian Crisis of 1997 and the crisis of 2008. The question is not whether there are or there will be abuses, but rather
the rate of variation. Some think that, due to the accelerated flow of information and interlocks, globalized markets
will result in the rapid spread of crises and their destructive effects will probably be greater.
The impacts of the crisis on the small and medium enterprises
Small and medium enterprises (hereinafter referred to as SMEs) play a crucial role in employment, making income and
they are the engines of innovation and development. They account for the half of employment in the OECD countries,
99% of the companies belong to the SME sector and 92% of them are microenterprises. Therefore, the typical
European company is a microenterprise. 84% of jobs were made by SMEs in the EU between 2002 and 2007. This rate
is higher than their role in employment (67%), however, productivity is lower in these jobs. It is proven by the fact that
SMEs produced 52% of the added value, which is lower than their rate of employment. (Source: Audretsch et al.
[2009] p13)
Table 1: Sectoral rate of enterprises in EU-27 in 2007
Sector
Number of enterprises
average number
of employees
per enterprise
small and
medium
enterprises
big
enterprises
total
mining 22,000 300 22,300 37
processing industry 2,357,000 19,000 2,376,000 15
electricity, gas and water supply 29,000 1100 30,100 56
building industry 2,914,000 2500 2,916,500 5
trade, reparation 6,491,000 6600 6,497,600 5
accommodation, service, catering 1,729,000 1300 1,730,300 5
transpont, storage, telecommunication 1,243,000 3500 1,246,500 10
real estate, economic services 5,625,000 8500 5,633,500 5
total 20,409,000 43,000 20,452,000 6
Source: Audretsch et al.[2009] p13
The rate of SMEs, as opposed to big enterprises, is the highest in catering and the building industry, the lowest in
mining and public utility services. The rate of SMEs is the highest in the services sector: trade and reparation (32%), as
opposed to big enterprises, where most of them deal with industrial production (44%). (Source: Audretsch et al.
[2009] 23. p30)
Turbulences set off from the interbank markets and spread during the crisis that started in the summer of 2007. The
1.
4. confidential crisis and the expensive bank sources force the banks to center on the more reliable clients and cut
credits (credit crunch), which may highly affect SMEs. Therefore, SMEs highly depend on the impacts of the crisis, but
are more sensitive from other aspects.
Main reasons as defined by OECD:
• they cannot decrease their activities, they are already small enterprises,
• they cannot diversify their activities, since they are usually too small for that,
• they cannot obtain outer sources from the capital markets, so they need loans (while their credit rating is
low, if they have any),
• they have fewer financing options.
There exists another aspect in the literature (for example Narjoko and Hill [2007]): SMEs can respond more flexibly to
environmental changes (provided their structure is less bureaucratic and hierarchic, they can develop and introduce
new products much faster), so they have a better chance of survival in crises. According to this aspect, a crisis can
generate innovation and may force enterprises to develop new products and discover new markets.
Therefore, the crisis affects SMEs better, but it gives a better chance to innovative enterprises to grow faster and get
new markets.
A GALLUP research on the financing situation of SMEs [2009] showed that 48% of enterprises on the territory of EU-27
had reported a fall in income and 51% a fall in profits (because 36% of them had a rise in labor costs and 49% claimed
to have higher raw material and energy costs). The most affected enterprises are located in Lithuania (80% of the
enterprises had lower revenues) and Ireland (78%), while two thirds of the enterprises suffered drops in revenues in
Bulgaria, Latvia, Spain and Estonia (between 66 and 71 %). The biggest losses were generally made by medium
enterprises. 29% of the enterprises reported a fall in the number of clients. Cosh et al. [2009] received similar replies
when they asked British enterprises what makes them fail most to reach their business objectives. 39% of the
respondents found that the loss of clients is the most serious factor in failing to reach their business objectives (Table
4), as opposed to the 17-19% who considered the greatest limitation to be the financial opportunity or cost. The
difference is even more obtrusive if we compare these results with the results of a research made with the same
enterprises in 2004, since in the "normal" period almost the same number of enterprises considered financing the
greatest restrain as during the crisis.
Table 4: What makes British enterprises fail to reach their business objectives? Source: Cosh et al. [2009] p7
Table 4: What makes British enterprises fail to reach their business objectives?
Availability or cost of resources of growth 2004 2008
barely restrains 50 42
little restrains 31 39
considerably restrains 19 19
Availability or cost of bank account credits
barely restrains 61 46
little restrains 25 36
considerably restrains 14 17
The pace of market demand growth
barely restrains 37 19
little restrains 37 42
considerably restrains 26 39
Cosh et al. [2009] p7
All in all, it seems that the decreasing demand is a key phenomenon of the crisis, making the biggest problem for most
SMEs.
2.
5. Financing
There are several examples for the interdependency of output, the cash quantity and cyclic movements of credit
financing in the professional literature.
Bordo and Haubrich [2009] argue that, having examined the crises in the USA since 1873, although financial crises
always result in the fall in output, they will be more serious and longer if loans are less available.
OECD [2009] collected why banks provide more limited loans following the crisis starting in 2007:
• SMEs have bad prospects since they are more sensitive to the crisis (they are forced into quality),
• it is more difficult for the banks themselves to gain sources (the panic in the interbank markets results in
higher capital costs),
• and at the same time, most of the banks try to improve their balance. As a result, loans are only given to the
most reliable clients, meaning that "normal" practices of credit provision return.
Table 6 shows the result of bank loan claims in Q1 of 2009 in the eurozone. A relatively little proportion of enterprises
did not claim any loan at all to avoid refusal. Most of the enterprises received the whole amount requested. It is clear
from the figures that it is micro-enterprises that do not favor loans and they have the most refusals.
Table 6: Requests for bank loans and the results in the eurozone (Q1 of 2009) Source: ECB[2009]
ECB[2009]
As it can be seen from the table (Table 7) compiled by ECB [2009] the stricter conditions of financing have
considerable impact on, i.e. raise the non-interest fees and deposits and decrease the credit limits and the length of
the loans. Clearly, these stricter measures do not necessarily have a greater impact on SMEs, since a relatively greater
proportion of big enterprises experienced a rise in interests and non-interest fees than SMEs. The credit limits are
higher for big enterprises and they are not so much affected by higher deposits. It is worth focusing on the fact within
SMEs, micro-enterprises were mostly affected by the changes.
Table 6: Requests for bank loans and the results in the eurozone (Q1 of 2009)
requested
did not request
fearing refusal
did not request
due to the lack
of own sources
did not
request for
other
reasons
do not
know/no
reply
number of
enterprises
big
enterprises
33.70% 1.20% 37.80% 24.70% 2.70% 1,876
SMEs 28.10% 5.10% 37.50% 28.00% 1.40% 4.215
out of
which:
micro 25.20% 6.70% 35.70% 31.20% 1.30% 1,965
small 29.30% 4.00% 38.10% 26.80% 1.70% 1,269
medium 32.30% 3.10% 40.30% 23.00% 1.30% 981
total 29.80% 3.90% 37.60% 27.00% 1.80% 6091
request
wholly
accepted
request partly
accepted
requested, then
cancelled
request due to
the costs
requested,
but refused
do not
know/no
reply
number of
enterprises
big
enterprises
72.30% 13.10% 0.00% 5.20% 6.40% 631
SMEs 60.40% 16.90% 4.20% 12.00% 6.50% 1,185
out of
which:
micro 53.40% 16.70% 5.70% 17.70% 6.40% 496
small 62.00% 17.30% 4.50% 8.80% 7.40% 372
medium 69.30% 16.80% 1.40% 6.90% 5.60% 317
total 64.50% 16.60% 2.70% 9.60% 6.50% 1,816
3.
6. Talking of other financing options, OECD [2009b] mentions that investing capital does not primarily work under these
conditions, since the funds can hardly invest sources and cannot follow the usual exit strategies (stock sales etc.) and it
is difficult to find suitable projects.
Payment discipline
4.
7. Another problem is that SMEs have a worse payment discipline, forcing them into an even worse situation, since apart
from the fall of demand (cumulation of stocks) it most decreases their functioning capital, making liquidity problems.
This fact can make functioning enterprises insolvent (OECD[2009b]).
According to the figures shown by Ferri and Kang [1999], as part of the Asian crisis, the number of bankruptcies, delays
and refusals reached historical heights alike.
Table 10: percentage of accounts delayed and refused
A similar process takes place during the crisis of 2008, see figures of OECD[2009b], where 43 of Belgian enterprises
reported payment delays (14% responded by delaying their own payments), while in the Netherlands 50% of
enterprises reported that delayed payments posed a problem for them. 38% of the enterprises in Britain (Cosh et al.
[2009]) found that they had to spend more time and/or money on checking the customers' credit standing.
Most enterprises lacking payment discipline are small businesses; while the authors find it possible that the delayed
payment practices of bigger enterprises may force business partners to behave similarly. Looking at each sector,
enterprises in the building industry are more likely to be less disciplined than other sectors in the processing industry.
Summarizing the changes of the environment, the fall of demand is considerable, having the greatest impact on SMEs.
Besides, in most countries, the serious problems are posed by worsening payment disciplines, active capital problems
and limited outside financing opportunities. The problems of each country are summarized in table 11.
Table 11: Crisis experience and its expected impact of the crisis on SMEs in OECD countries
5.
8. More European enterprises invested from loans.
Table 12: What was the loan spent on (in the previous 2 years) (percentage of enterprises that mentioned)? Source:
ECB[2009]
The number of bankruptcies is highest in the industrial sector (38%), followed by the trade sector (30.4%), services
(16.6%) and building industry (14.9%). (Gregory et al.[2002])
As Table 14 shows, there was a considerable fall in the processing industry of the EU than the building industry.
However, the proportion of SMEs are higher in the building industry than in the processing industry, which can be the
result of the fact that SMEs are more badly hit by a smaller fall. Source: Eurostat
6.
9. The impact of the state
In addition to demand activation (consumption packages, infrastructure development, tax policy) and intervention in
the labor market (cut employment taxes and social security contributions), the ways of supporting measures to
finance SMEs (OECD [2009b]) are the following:
• at the time of recapitalization of the banks, funding the SMEs is required as a condition, or state guarantees
are provided in other ways to the credits granted to SMEs (no good practices);
• sale is supported by export credits and insurances, factoring options, etc.;
• payment discipline of the state is improved. It may be the form of immediate or monthly VAT refund (in the
Czech Republic, France, Spain) and quicker payment of state orders (30-day term suggested by the European
Commission, 10-day term tackled by the United Kingdom);
• longer term credits enhancing investments, accelerated possibilities of depreciation;
• perks encouraging employment making employees enable to receive full salaries even for part time workers;
• tax cuts, which may include corporation tax or temporary VAT cut as (the United Kingdom).
Table 16 shows the measures taken in different countries. Source: OECD [2009b] p38
OECD [2009b] p38
a. Monitoring means increased control (occasionally on a monthly basis) by the state on the credit activity of the banks recapitalized by the state. In
case of mediation a state body tends to encourage the agreement between the enterprises (mostly SMEs) and aided banks,
However, OECD is worried about the reduced credit placement to banks that were recapitalized with this condition,
Table 16: Steps made by governments and international organizations to relieve the impacts of the crisis on SMEs
measures supporting sales, cash flow and working
capital
advancing SMEs to get liquidity
encouraging
investment-
friendly
measures
confirmation
of the capital
position
ease of
working
capital
shortage
mitigation
and cut of
tax
payments
export
mitigation
mitigation and
acceleration of
state
payments
establishment of
credit and
guarantee
options
mediation
and
monitoring
(a)
OECD countries
Australia 轟
Austria mediation
Belgium
the Czech Republic
Denmark
the USA monitoring
the UK
Finland
France mediation
Greece
the Netherlands
Japan
Canada
Korea
Luxembourg
Hungary
Mexico
Germany
Italy monitoring
Spain
Switzerland
New Zealand
EC
non OECD countries
Brazil
Chile
Estonia
Russia
Romania
Slovenia
Thailand
international organizations
EIB
7.
10. therefore an increased monitoring activity is advised. Turin Round Table organized by OECD (OECD[2009a]) preferably
advised the reduction of not profit sensitive taxes as SMEs more badly affected by them.
Success factors of enterprises in the crisis
Based on enterprises in Indonesia, Narjoko and Hill [2007] studied the factors determining the success and survival of
an enterprise during the Asian crisis. Their results showed that the performance is improved mainly by foreign
ownership and the export experience during the crisis, but it is worse if the size of the enterprises is bigger. On the
other hand, bigger enterprises performed better during the time of recovery. However, bigger enterprises had better
chances of survival during the crisis as well as the time of recovery.
Note that the research made by GALLUP [2009] shows that the revenue was more likely to increase in case of
innovative enterprises than non-innovative ones (17% vs. 25%). This fact seems to support the idea that the crisis may
give opportunities for certain enterprises, which is also confirmed by the growth over 20% that innovative enterprises
expect in 2 years after the crisis (table 18). Cosh et al.[2009] found similar differences: 66% of British innovative
enterprises expected the growth of revenue contrary to the 43% of non-innovative ones.
Table 18: Annual growth of revenue in 2009 for 2 years in advance
8.
11. Conclusion
The related literature makes it clear that the most influential impact is the fall in demand, which deteriorates the
efficiency of SMEs. What makes the situation more serious is that payment terms are longer and payments are
delayed, which is the second most serious impact. Therefore, enterprises have to make greater efforts to select
solvent and secure partners. Active capital problems can be fatal if outside sources are limited, seriously affecting
SMEs that spend most of their loans on active capital financing. Governmental measures are mostly concentrated on
improving financing: the most frequent steps to support SMEs are providing credit opportunities and guarantees (or
extending the existing ones). Besides, they are often backed by export supports and lower taxes. It is inspiring that
the sector is able to recover from a 30% drop very soon, based on the example of the Asian crisis.
Based on recent experiences, innovative SMEs have a better chance to create new markets following a crisis.
9.
12. Bibliography
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