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Ron Michener takes issue with my approach to and analysis of colonial Virginia's paper money. He objects to how I calculate the paper money's asset present value when the paper money is hypothesized to be zero-coupon and interest-bearing bonds. He questions my data on the amount of Virginia's paper money in circulation, and he objects to the econometric treatment I apply to my model of that money's performance. He, however, presents no alternative data constructions, or any alternative explanations for the patterns in the data, nor does he present any alternative hypotheses or do any hypothesis testing to account for the level and movement in the value of Virginia's paper money. [ABSTRACT FROM AUTHOR]

Farley Grubb's recent article in the Financial History Review contains econometric results designed to support his theoretical propositions concerning the paper money of the American colonies. This comment demonstrates that some of his results are spurious and the rest are based on using incorrect testing procedures and incorrect critical values of test statistics. [ABSTRACT FROM AUTHOR]

Green bonds are relatively new in the financial market compared to other financial securities but are useful in financing environmentally friendly projects. Just like other financial securities, green bonds are affected by various factors, such as economic policy uncertainty. Our aim of this paper was to conduct a systematic literature review of the impact of economic policy uncertainty on green bonds. We sought to do a thorough analysis of the existing literature on the assessment of the impact of economic policy uncertainty on green bonds and the techniques used in assessing the impact. Our findings showed that economic policy uncertainty had a strong impact on the green bond, with its intensity varying by location. This impact tended to be more pronounced in periods of heightened uncertainty. Also, our findings highlighted that the assessment of the impact of economic policy uncertainty on green bonds gained popularity in 2019, with China emerging as a prominent contributor. However, other countries, such as Finland, even though they had few published papers, their citations signified the production of quality papers in this field. Additionally, we found that the application of the quantile analysis method was utilized by many recent studies, which signified its importance in this field. Our findings highlighted the importance of considering appropriate techniques in assessing the impact of economic policy uncertainty on green bonds while taking into account the paper quality. [ABSTRACT FROM AUTHOR]

This paper explores the emergence of sustainability-linked bonds (SLBs) as an innovative instrument to finance sustainability objectives. SLBs are any type of bond instrument for which the financial characteristics vary depending on whether the issuer achieves predefined sustainability objectives. SLBs were launched in 2019, represent 7% of labeled bonds, and now exceed USD 250 billion. In the context of the growth of sustainable finance and concerns of greenwashing, this paper asks whether SLBs are an effective mechanism to attract sustainable finance. Drawing on a complete revision of the literature and interviews with practitioners, the findings highlight the potential of SLBs to contribute to sustainability financing, especially in hard-to-abate sectors. Recommendations include defining standardized KPIs based on a materiality assessment, requesting SPTs to be supported by science, and tailored step-up mechanisms. The academic literature and experts converge in their description of greenwashing risks posed by SLBs, their signaling effect, and the lack of sophistication in SLB pricing, in particular the optionality represented by step-ups. The literature differs from the practitioners' perception on the existence of an issuance premium. Enhancing the design of SLBs represents an opportunity to add rigor to sustainable finance and better price externalities, where material topics have an explicit impact on the cost of funding. [ABSTRACT FROM AUTHOR]

Purpose: Green sukuk (GS) is an emerging financial tool that has gained momentum in recent years owing to increased attention being given to Islamic finance, socially responsible investing (SRI) and sustainability agendas. Yet, GS studies are fragmented, dispersed and lack comprehensive reviews. As a response to this gap in academia, this paper aims to synthesize the knowledge on GS into thematic clusters, providing a more comprehensive understanding of the subject and offering guidelines for future research. Design/methodology/approach: This study implemented a systematic literature review approach to analyse studies on GS that were published prior to and including June 2023. The PRISMA 2020 protocol was used in the sample selection process. A total of 62 peer-reviewed journal articles from six databases were identified and categorized into various themes. Findings: The results suggest that previous research has predominantly focused on the areas of GS advantages, drivers, market development and potential sectors, along with challenges and recommendations to improve the market. However, it was found that some other aspects, including GS pricing, performance and purchasing intention, require further research attention. The analysis also indicated that the use of theories in the GS context was limited, with only five theories employed in just four out of the 62 articles examined. Moreover, this paper's findings revealed that the studies employing quantitative and empirical analysis methods were limited to four articles. Geographically, most of the studies were conducted in Indonesia and Malaysia, while other countries with high-potential markets (e.g. GCC) had limited GS practices and studies. Practical implications: The results of this study have several practical implications. For investors, a review of GS will provide greater insight into the understanding of the GS market, helping them make better investment decisions. For policymakers, this paper empowers them with the knowledge to make informed decisions regarding GS markets by highlighting key recommendations identified in the literature. Finally, the proposed guidelines can be used in future research. Originality/value: While Green Bonds have received significant attention, there is a dearth of research on GS and those that exist are fragmented. A systematic literature review is necessary to identify knowledge gaps for future research. [ABSTRACT FROM AUTHOR]

Green bonds, a new green financial instrument, encourage enterprises to achieve high-quality development through green technology innovation. However, a lack of research is currently being conducted into the effect of green bond issuance in China. Can green bonds effectively empower enterprises to green innovation? What is the underlying mechanism? In the context of carbon-neutral strategies, it is significant to answer these questions scientifically. This paper uses a quasi-natural experiment of the launch of the green bond market in China in 2016 to conduct empirical studies based on the panel data of 1 558 non-financial Chinese-listed enterprises from 2015 to 2020 with the multi-period difference-in-difference model. The results show that ① issuing green bonds can significantly empower enterprises' green technology innovation. The empowering effect is mainly for green utility patents rather than green invention patents. This result remains after dynamic heterogeneity analysis, placebo test, and other tests. In addition, the effect has a lag. ② Heterogeneity tests show that this empowerment effect varies across enterprises with different property rights, industries, and regions. ③ In terms of the mechanism of action, green bonds can enhance enterprises' ability to innovate green technology by increasing the proportion of long-term loans and improving their debt structure. This paper broadens the relevant literature on the economic consequences of green bonds and the influencing factors of enterprises' green technology innovation and provides policy suggestions for further improving the analysis of green bonds. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of the introduction of inflation-linked bonds, which incur transaction costs when traded, on the monetary economy with sunspots. This paper shows that there always exists a certain range of positive transaction costs, where both monetary and bond markets are active. This implies that on top of governments, profit-seeking financial entrepreneurs also have the incentive to issue these bonds. This paper also displays how financial innovation on the indexed bond can be Kaldor improving, even if not necessarily Pareto improving. This finding indicates that together with lump-sum tax policies, the government can attain consensus among consumers on bond issuance. [ABSTRACT FROM AUTHOR]

This paper draws on the hands-on experience of HSBC in implementing distributed ledger technology (DLT)-based solutions through building its own proprietary tokenisation platform, HSBC Orion, and participating in various industry initiatives such the Hong Kong Monetary Authority (HKMA)'s inaugural tokenised green bond issuance. The paper highlights key considerations for building DLT-based solutions and provides a view of the future state of digital assets as the ecosystem continues to grow and evolve. [ABSTRACT FROM AUTHOR]

Following the pandemic, the EU has responded to the threat of a euro crisis flare-up by deactivating its fiscal framework and establishing the Recovery and Resilience Facility, drawing on joint European bonds to finance national investments. This paper seeks to explain these modifications to fiscal governance and asks whether they are an indication of European austerity making way for an alternative fiscal paradigm. Based on a neo-Gramscian approach, it discusses the policies as parts of competing political projects that are promoted or hindered by certain framework conditions. The paper undertakes a structured comparison of these framework conditions during the euro crisis and the current crisis. It finds that geoeconomic competition increases the demand for a more active fiscal policy, while political preferences and structural relations remained remarkably stable. As the current crisis is marked by high inflation, economic conditions are adverse to a fiscally expansive agenda. The findings do not suggest a lasting reorientation of European fiscal governance. Instead, the measures taken during the pandemic are interpreted as expressions of 'passive revolution' in which the EMU adapts elements of a fiscal integrative agenda to provide necessary fixes to its economic order while keeping its underlying fiscally restrictive features intact. [ABSTRACT FROM AUTHOR]

This paper draws on the hands-on experience of HSBC in implementing distributed ledger technology (DLT)-based solutions through building its own proprietary tokenisation platform, HSBC Orion, and participating in various industry initiatives such the Hong Kong Monetary Authority (HKMA)'s inaugural tokenised green bond issuance. The paper highlights key considerations for building DLT-based solutions and provides a view of the future state of digital assets as the ecosystem continues to grow and evolve. [ABSTRACT FROM AUTHOR]

In this paper, we introduce an interesting model-independent lower bound for the price of the Swiss Re Mortality Bond 2003 which was the first catastrophic mortality bond to be launched in the insurance market. This bond captures the behaviour of a well-defined mortality index to generate payoffs for bondholders. Pricing of catastrophic mortality bonds is an interesting problem and no closed form solution can be found in the existing literature. In our approach, we express the pay-off of such a bond in terms of the pay-off of an Asian put option in a manner similar to [2] and present an efficient modelindependent lower bound by making some very general assumptions. We carry out Monte Carlo simulations to estimate the bond price and illustrate the quality of the bound for a variety of models. [ABSTRACT FROM AUTHOR]

Purpose: This paper aims to explore the quantile-specific short- and long-term effects of economic policy uncertainty (EPU) on the efficiency of the green bond market. Design/methodology/approach: This study examines the long-term cointegration relationship and the short-term fluctuation relationship of EPU, WTI crude oil price (WTI) and European Union Allowances price (EUA) with the green bond market efficiency (GBE) using the quantile autoregressive distributed lag method. Additionally, the authors analyze the differences before and after the Covid-19 pandemic. Findings: EPU has a significant positive impact on the GBE before the outbreak. However, during the crisis period, the impact of EPU and WTI was greatly weakened, whereas the impact of EUA was strengthened. Practical implications: This paper demonstrates the dynamics of GBE and its influencing factors under different periods. The findings provide insights for market participants and policymakers to gain a clearer understanding of the green bond market. Originality/value: This paper extends the study of green bonds by quantifying the GBE and elucidating the nonlinear relationship between efficiency and independent variables at different quantiles over different periods. [ABSTRACT FROM AUTHOR]

This paper studies the issuing pricing character of green bonds with the evidence from China and further analyzes the reason why green factor affects bond issuing pricing by analyzing credit rating's intermediary effect and exploring the mediating of policy incentives and third-party green certification. Furthermore, heterogeneity analysis is conducted to analyze how green factor impacts on bond issuing pricing at different quantiles and for companies in different industries or with different ownership. The findings include: (1) Green factor generally reduces the issuance interest rate of green bonds, though this effect is not significant at the low quantiles or at the early development stage. (2) Green factor's impact on bond issuing pricing occurs partly by improving bond credit rating, fully by this way for companies in the construction industry, but directly for companies in other industries. (3) For non-state-owned companies, green factor has direct effect on bond issuing pricing, but this effect is not significant for state-owned companies. (4) Third-party green certification and incentive policies enhance the reducing effect of green factor on the issuance interest rate. This study provides a theoretical reference for environment-friendly investors, financiers with green projects and the regulators caring about green finance. [ABSTRACT FROM AUTHOR]

As the green bond market expands, an increasing number of Green Bond External Reviewers (hereafter 'GBER' or 'GBERs') have gained momentum among investors and financial regulators. A GBER enhances the credibility of green bonds and prevents greenwashing risk in the green bond market by reducing the information asymmetry between issuers and investors. China is the second largest issuer of green bonds in the world. The current Chinese GBER legal framework is insufficient to ensure green bond market sustainability. Our purpose in this paper is to analyze the inadequacies of the Chinese GBER regulatory framework and to provide suggestions for overcoming the potential challenges within it. A textual analysis of primary legal sources and secondary academic sources serves as the main research methodology in this study. This paper provides an in-depth analysis of China's GBER regulatory framework and addresses its shortcomings and weaknesses. Furthermore, given the evolving stage of the Chinese green bond market, this paper analyzes potential challenges for GBERs and proposes some suggestions to ensure high-quality reviews by GBERs. [ABSTRACT FROM AUTHOR]

The research literature has many examples of attempts to classify bond issuers into agency rating categories and to identify the key variables that contribute to bond rating differences. This study extends the classification literature to include public utility commercial paper issuers. [ABSTRACT FROM AUTHOR]

Purpose: This paper aims to examine the Canadian financial sector's reaction to opportunities and risks created by the green bond market in a low-carbon and climate-resilient (LCR) economy. Design/methodology/approach: The authors used a concurrent mixed methodological approach that undertakes an online survey and semistructured interviews with critical green bond market stakeholders. Findings: The most significant market driver in Canada is the reputational benefit for stakeholders, i.e. its ability to meet the high demand for sustainable finance and the marketing potential of its green credentials. The major market barriers are transactional costs, i.e. additional tracking required for reporting purposes, lack of market liquidity and identification of environmental impact or additionality. Canadian green bonds are also more likely to be evaluated on their green impact than their global market peers. Research limitations/implications: Limitations of this study include its focus on Canada, which may exclude or not apply to drivers and barriers in other green bond markets. Practical implications: The paper helps create an accounting-based conceptual framework for key motivations and barriers that affect financial decision-making regarding green bonds. Social implications: The authors identify economic and policy-related barriers and drivers for green bonds, addressing the financing gap for the LCR economy. Originality/value: To the best of the authors' knowledge, this study is the first to identify and compare Canadian green bond market drivers and barriers and to examine relevant stakeholder- and policy-related approaches that can be targeted to scale this market effectively. [ABSTRACT FROM AUTHOR]

This paper examines the dynamic linkages among economic policy uncertainty (EPU), the green bond market, the carbon market, and the macroeconomy using the time-varying parameter vector autoregressive (TVP-VAR) model with monthly data spanning from January 2016 to December 2021. Additionally, it assesses the robustness and accuracy of the empirical results through the Bayesian vector autoregressive (BVAR) model. The findings indicate that EPU negatively affects the green bond market in the short term but has a positive impact in the medium and long term. Conversely, EPU has a positive impact on the carbon market in the short term but a negative impact in the medium and long term. Furthermore, the green bond market negatively influences the carbon market in both the short and medium to long term. These results suggest that emerging markets, such as the green bond and carbon markets, are influenced by EPU. The adverse impact of the green bond market on the carbon market, however, contributes to expediting China's attainment of its low-carbon objectives. Appropriate economic policies can play a vital role in accelerating the transition to a low-carbon economy. The study also reveals that the US-China trade war has expedited the development of green capital markets in China, despite its impact on the green economic transition in the country. These findings provide insights for the government and investors to formulate suitable strategies for risk mitigation. [ABSTRACT FROM AUTHOR]

This paper utilizes a climate justice perspective to examine municipal green bonds (MGBs), a green-labelled debt instrument issued by subnational governmental entities, such as municipalities or cities, that determines financial, social and environmental redistributions in the context of climate change. This analysis focuses on the origins and financial construction of MGBs as the "descendant" of US municipal bonds and provides data on their recent diffusion in Africa and Latin America. It then draws connections with the lessons learned from critical analyses of US municipal bonds. The case study section explores one wastewater MGB of San Francisco (California) and creates material and theoretical connections with MGBs issued to finance water infrastructure in Mexico City (Mexico) and Cape Town (South Africa). The article concludes that the analysis and implementation of municipal green bonds needs a climate justice approach in order to recognize and address the production and reproduction of climate injustices. [ABSTRACT FROM AUTHOR]

Purpose: This paper aims to investigate the relationship between sustainable investments and a series of uncertainties from January 2014 to December 2021, including many economic and political turbulences and the COVID-19 pandemic. Design/methodology/approach: The authors use Rényi's transfer entropy method, a nonparametric flexible tool that considers both the center distribution and lower quantiles, capturing extreme rare events that give additional insights to analysis. Findings: The authors' results indicate significant bidirectional information transmissions between the crude oil volatility and sustainability indices. The authors report information flows between the cryptocurrency uncertainty and sustainability indices considering tail events. The results are essential for market participants making decisions during turbulent times. Originality/value: This paper is carried out for a variety of uncertainty measures and environmental, social and governance (ESG) portfolios of both developed and developing markets. It adds to literature in terms of methodology used. Rényi's transfer entropy methodology is first used to measure the relationship between uncertainties and ESG investments. [ABSTRACT FROM AUTHOR]

This paper proposes an aggregation scheme of subjective bond return expectations based on the historical accuracy of professional interest rate forecasters. We use disaggregated survey data on bond returns and document large disagreement in the cross-sectional distribution and persistence in forecast accuracy. Our aggregate subjective belief proxy outperforms equal weighting schemes, and its dynamics are significantly different from statistical forecasting models. With this measure in hand, we study the relationship between quantities of risk and subjective expectations of excess returns and demonstrate a strong link between the two, even if such a relationship is difficult to detect using realized returns. Authors have furnished an Internet Appendix , which is available on the Oxford University Press Web site next to the link to the final published paper online. [ABSTRACT FROM AUTHOR]

The imperative to achieve sustainable development in the face of accelerating urbanization has prompted an urgent re-evaluation of the role that municipalities play in driving environmentally conscious growth. This research paper delves into the critical nexus between municipalities and sustainable development in India, with a specific focus on the innovative financial instrument of green bonds. The study employs a comprehensive review of utility of Green Bonds in India and Internationally. Through this methodology, the paper seeks to shed light on the efficacy of green bonds in augmenting municipal initiatives towards sustainable urbanization. The findings of this research provide nuanced insights into the multifaceted roles that municipalities undertake in advancing sustainable development agendas. By analyzing the implementation of green bonds by municipalities in India and International countries, the paper discerns trends in the utilization of green finance for eco-centric urban projects. Moreover, it scrutinizes the influence of green bond proceeds on key sustainability indicators, such as reduction of greenhouse gas emissions, improved waste management, and enhanced green infrastructure. It also examines potential policy recommendations to overcome these impediments, thereby providing a roadmap for municipalities to more effectively leverage green bonds as a financial tool for sustainable urban development. In conclusion, this research contributes a comprehensive understanding of the pivotal role that municipalities play in advancing sustainable development and underscores the potential of green bonds as a transformative financial instrument in this endeavor. By providing review based in-depth research and practical insights, this paper offers valuable guidance for policymakers, urban planners, and financial institutions seeking to accelerate the transition towards more environmentally sustainable and resilient cities in India. [ABSTRACT FROM AUTHOR]

The green bond market has significantly improved in recent years thanks to the development of financial instruments and the rising climate change concerns. Given this backdrop, this paper investigates the effects of returns in different financial markets, i.e. the United States Treasury Bonds, the Standard & Poor's stock market, the United States Dollar, Gold, Crude Oil, and Bitcoin on the Green Bond returns (the Standard & Poor's Green Bond Index) from September 17, 2014, to September 1, 2022. The results from the robust linear and machine learning estimators indicate that the returns of the United States Treasury Bonds and the United States Dollar are negatively related to the Green Bond returns. Meanwhile, Gold returns positively affect Green Bond returns. The quantile regression estimations of Machado–Santos Silva also show that these findings are valid in different quantiles. The paper also discusses policy implications related to climate change and the development of financial instruments to promote green investments. [ABSTRACT FROM AUTHOR]

This paper examines the determinants of bond issuance in the Chinese market and the influence of capital structure—in particular direct debt finance—on firm performance and the cost of debt. The results reveal that institutional factors in the Chinese market, in particular the involvement of the financial authority permission process during bond issuance, enhance the credibility of firms that are able to successfully issue bonds. Empirical analysis of Chinese listed manufacturing firms over the period from 2010 to 2021 demonstrates that firms with higher outstanding levels of bonds perform better and face lower costs of both bond and nonbond direct finance. We interpret this as bond issuance approval serving as a signal to markets of an implicit government guarantee on firms that are approved to issue bonds. The agency problem is analyzed using propensity-score matching and Logit analysis, revealing a trade-off between the principal–agent conflict and conflicts of interest among different shareholders when power is very concentrated through CEO duality: the CEO simultaneously serves as the chairman of the board. In large firms, as measured by total assets, the cost-reducing effect of the principal–agent problem being mitigated by CEO duality outweighs the agency costs arising from conflicts of interest between large and small shareholders, leading to an increased likelihood of successful bond issuance. However, in large firms, as measured by market capitalization, where share ownership is likely more diversified, this effect diminishes. In conclusion, this paper posits that policymakers ought to investigate strategies for granting preferential treatment to high-growth, small to mid-sized enterprises, enabling them to secure funding through direct debt financing. [ABSTRACT FROM AUTHOR]

Purpose: The aim of this paper is to analyze the importance of finance for climate change. Design/methodology/approach: The paper attempts to answer the question: what is the meaning of finance in the processes related to environmental protection, what is the development trend in the field of the so-called instruments of green finance and what are the purposes of the particular instruments. The following research methods were used: literature review, desk research (UNCTAD reports, GIIN, Sustainable Debt, Green Finance in Poland,) and deductive reasoning. Findings: The market for green finance instruments is growing rapidly. For both green bonds and sustainable funds and impact investments, the growth rate in the number and value of instruments has been the highest in recent years. The analysis of investment directions indicates that they are related to activities concerning environmental protection or other aspects of sustainable development. Practical implications: The importance and need for creating conditions (legislative, technical, educational) for the development of green finance instrument market was indicated. Originality/value: The paper offers cognitive value as it contributes to the body of knowledge regarding the relevance of green in addressing climate change. [ABSTRACT FROM AUTHOR]

This paper explores why and how green bond investors apply environmental and financial morality. It analyses the coproduction of environmental and financial values in green bond markets using digital ethnography, industry literature and interviews with investors during 2019–2022. It analyses how green bond investors explain and narrate their diverse market practices in the balancing of financial and ethical returns, converging in an unstable space of mutual coproduction. The calculative practices and signalling of green virtue are performed in little machines of ethical inscription but are rarely either empirically validated or explicitly discussed. The green bond universe might appear stable, but its foundations are forged in long-standing intersectional assumptions, as it relies on, and reproduces, the historical structures of racial capitalism. The market practices described here are designed to help green bonds become a mainstream asset class. However, these are reproducing older discursive tropes and growth is elusive. [ABSTRACT FROM AUTHOR]

This paper investigates the market consequences of sovereign accounting errors, opening a new area of research on sovereign accounting quality in the accounting literature. Eurostat, a division of the European Commission, provides semiannual assessments of financial reports produced by the member states of the European Union (EU) and issues reservations that detail financial reporting errors. Using a sample of Eurostat reservation issuances across 28 EU countries from 2004 to 2018, we find that sovereign bond yields abnormally increase during a reservation announcement window, especially when a reservation explicitly mentions deficit or debt, when it quantifies the extent of the errors' financial impact, or when the errors relate to recent fiscal data. Consistent with a home bias after the release of negative news, we find that domestic holdings of sovereign debt increase after the issuance of a reservation. Overall, our evidence suggests that sovereign accounting errors have significant market consequences and raises further questions for future research in sovereign accounting quality. This paper was accepted by Ranjani Krishnan, accounting. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.00724. [ABSTRACT FROM AUTHOR]

This paper examines the impact of investor-paid rating agency on stock price crash risk. The findings reveal a substantial 127.6% reduction in the stock price crash risk for stocks tracked by investor-paid rating agency compared to those without such tracking. As for the mechanism, the following of investor-paid rating agency reduces earnings management, induces more negative information disclosure, and improves information disclosure quality. The impact of investor-paid rating agency is more pronounced in firms with poorer corporate governance. Further analysis indicates that the impact of investor-paid rating agency increases with the frequency of rating tracking and the rating difference between issuer-paid rating agency and investor-paid rating agency, while stock market reaction induced by investor-paid rating agency has little effect on the baseline result. Moreover, the tracking of investor-paid rating agency facilitates the information flow between the bond market and stock market, and improves analyst forecast performance. In summary, we suggest that investor-paid rating agency tracking acts as a valid passive monitoring mechanism to alleviate principal-agent problems and provide information on firms' downside risk. [ABSTRACT FROM AUTHOR]

For many countries, the systemic risk of local government debt is a matter of concern, but at present, there is little analysis in this area. The complex network based on information analysis provides an effective tool for analyzing the system risk between networks. This paper takes China as an example and takes the provincial urban investment bonds as the object for research. The regional network constructed with the interest rate data of urban investment bonds represents the overall systemic risk of these bonds. The main conclusions are as follows: provincial nodes in western and central areas (underdeveloped areas) are more important in the system, and they are more easier to form debt defaults. For an interconnected urban investment bond network, the higher the default risk of an individual, the greater the risk of the entire system. Finally, based on the indicators obtained from the provincial urban investment bond network model, this paper puts forward policy suggestions for the prevention of urban investment bond risks. [ABSTRACT FROM AUTHOR]

There have been several studies reported in the literature dealing with the valuation and the determinants of the premium on convertible bonds, see [1,2,3,5]. The phenomenon of liquidation of the convertible bonds seems to have received relatively scant attention and the theorists and practitioners alike are hard pressed to find cogent rationale for the voluntary conversion of convertible bonds. Once the share price exceeds the conversion price the holder of the convertible bond faces the decision either to convert it into shares or hold on to it until a later date. The paper by Mehta attempts to offer a rationale for this voluntary conversion of the convertible bonds taking place gradually over a period of time. He provides empirical data to indicate that voluntary conversion of convertible bonds does take place in the market and that it is gradual over time. After analyzing a number of possible reasons for voluntary conversion of the convertible bonds the author concludes that because of uncertain growth in share prices, the (convertible bond) CB holders hedge their position by selling the call option and where the price subsequently goes up they close their position by converting the CB assuming that this would be cheaper than the alternative of selling the CB and buying the shares in the market with the associated transaction costs and tax considerations taken into account. The paper rules out other motives of CB conversion such as the interest/dividend differential on the CB and its underlying equity on the grounds that it would be inconsistent with the gradual voluntary conversion of the CBs over time. The paper argues that voluntary conversion of CB can best be explained in terms of market imperfections and two of these imperfections considered by the author are taxes and transaction costs. [ABSTRACT FROM AUTHOR]

Evidence suggests that sovereign debt markets are not featured by perfect competition but power dynamics are a key determinant of market outcomes such as ex-post returns on sovereign bonds. In such environment, coordination within each side of the market matters. With the purpose of influencing the international debt architecture, private creditors have historically been fairly coordinated and their interests more aligned ex-ante. Sovereign debtors, however, have not. The power asymmetry that that entails has equity and efficiency implications, both ex-ante and ex-post. This paper analyzes asymmetries in collective action of each side of the sovereign debt market and the mechanisms through which it affects market outcomes. It also analyses the Cartagena Group's experience in the 1980s as a prominent historical case of greater borrower coordination and identifies mechanisms through which greater debtor coordination could be fostered. [ABSTRACT FROM AUTHOR]