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Increasingly adverse climatic conditions have created greater systematic risk for companies throughout the global economy. Few studies have directly examined the consequences of climate-related risk on financing choices by publicly listed firms across the globe. We attempt to do so using the Global Climate Risk Index compiled and published by Germanwatch (Kreft & Eckstein, 2014), which captures at the country level the extent of losses from extreme weather events. As expected, we find the likelihood of loss from major storms, flooding, heat waves, etc. to be associated with lower and more volatile earnings and cash flows. Consistent with policies that attempt to moderate such effects, we show that firms located in countries characterized by more severe weather are likelier to hold more cash so as to build financial slack and thereby organizational resilience to climatic threats. Those firms also tend to have less short-term debt but more long-term debt, and to be less likely to distribute cash dividends. In addition, we find that certain industries are less vulnerable to extreme weather and so face less climate-related risk. Our results are robust to using an instrumental variable approach, a propensity-score-matched sample, and path analysis, and remain unchanged when we consider an alternative measure of climate risk. Finally, our conclusions are invariant to the timing of financial crises that can affect different countries at different times.

This paper empirically examines how real estate risk impacts corporate investment and financing decisions. Using a panel of United States firms from 1985 to 2013, we document that real estate risk is negatively associated with firms’ long-term investments and long-term external financing in equity and debt. The results are robust to different risk measurements and in particular salient during the financial crisis period when the endogeneity between risk and investment is less of a concern. The effect on firm leverage, however, depends on risk measures. Overall, in contrast to previously documented positive effects of the real estate value, real estate risk exposure exhibits mostly the opposite effects on investment, financing and capital structure. This difference is consistent with option value determinants. Findings in this paper shed new lights on the impact of real estate holding on corporate decisions, offer a new explanation for the underperformance of hedge funds’ real estate strategies, and confirm the theoretical predictions in Deng et al. (2015).

This paper, using a large panel of UK manufacturing firms, empirically examines firms’ financing decisions under risk. The results reveal that while idiosyncratic risk affects changes in debt negatively, it affects both the issuance of new equity and the use of retained earnings positively. The results also suggest that in periods of high macroeconomic risk, the use of new debt, equity financing, and retained earnings declines. Finally, the analysis provides evidence that both types of risk also have a significant and negative influence on changes in firms’ target leverage.

A huge body of research has addressed the impact of corporate social performance (CSP) on corporate financial performance. However, prior literature provides only limited evidence of the impact of CSP on firm risk. The aim of this paper is to investigate the impact of CSP operationalized by environmental, social, and governance factors on market-based firm risk in Europe. Three risk measures are analyzed: systematic, idiosyncratic, and total risk. On the basis of a large European panel dataset of 8752 firm-year observations covering the period 2002–2014, we find that a higher CSP decreases total and idiosyncratic risk. Looking at the three dimensions of CSP, we show that social performance has a significantly negative effect on all three risk measures. Environmental performance generally decreases idiosyncratic risk, whereas total risk and systematic risk are only affected in environmentally sensitive industries. In contrast, we cannot detect a significant effect of corporate governance performance on firm risk. Our findings suggest that a higher CSP and a higher performance regarding the social dimension in particular have the potential to increase firm value through lower firm risk. Overall, our evidence fosters the assumption that there is a business case to be made for corporate social responsibility.

The objectives of this research are to investigate resource loss effects from flooding and to provide recommendations on disaster risk reduction policies. This research utilized a dynamic computable general equilibrium (CGE) model, which found that losses of resources had major negative impacts on real gross domestic product (GDP). Transitioning from national catastrophe insurance fund to an international risk pooling approach is discussed, and as the Global Catastrophe Risk Insurance Facility has not yet been established, our proposal suggests the Association of Southeast Asian Nations plus three (ASEAN + 3) Catastrophe Risk Insurance Facility (ACRIF) and the Association of Southeast Asian Nations plus three catastrophic bonds (ASEAN + 3 CAT bonds) as effective means of reducing fiscal liabilities arising from natural disasters, also effectively enhancing disaster risk reduction. These tools are complementary to Catastrophe Risk Swaps which are innovative global financial adaptation strategies designed to make communities and governments more resilient to disaster damages. They are ex-ante risk financing tools and sources of liquidity for damage restoration and economic recovery, which facilitates flexibility among the Association of Southeast Asian Nations plus three (ASEAN + 3) and other governments requiring special assistance. Most importantly, utilization of insurance and catastrophic bonds promotes the achievement of set objectives of global adaptation strategies, sustainable economic growth, and climate resilient development.

This paper exploits a comprehensive data set on business credit decisions to examine the importance of financing constraints for the evolution of the firm size distribution. The survey of small business finances provides information on whether a firm was in need of external financing. Firms without access to external financing—either because they were denied credit or because they did not apply for credit because they expected to be denied credit—are significantly smaller. To tighten the link between financing constraints and firm dynamics, I estimate the effect of financing constraints on subsequent employment growth and find that firms without access to external financing exhibit up to 3.5 % points lower annual employment growth than do their unconstrained counterparts. These findings suggest that financing constraints are a potentially important factor for understanding firm dynamics.

The IPCC Special Report on Managing Risk of Extreme Events to Advance Climate Adaptation (SREX report; IPCC 2012) as well as the contribution of working group II to the IPCC fifth assessment report (IPCC 2014a, b; hereafter, WGII AR5) have been important milestones marking the confluence of the fields of climate adaptation and risk managment. Both reports underscore the importance of taking a risk perspective in order to assess the different dimensions of threats linked to climate change. In addition, the enhanced linkages between disaster risk management and climate change adaptation also demonstrate that climate change is contributing to increasing climate extremes and significantly exacerbating adverse impacts. At the same time, the SREX report and the WGII AR5 point out that many non-climatic factors are fundamentally shaping the vulnerability of societies exposed to climate change related hazards; some of these issues deserve additional attention and scholarly debate. This special issue reflects on core issues as well as gaps and open questions identified in both reports, such as: (i) how to define and differentiate extreme events and extreme impacts, (ii) what is the role of vulnerability for assessments of climate-related risks, (iii) how do different types of urbanization influence risks in the context of climate change, and (iv) how to develop scenarios for vulnerability and risk in order to complement existing climate change scenarios. In addition the role of risk financing instruments generally, and micro-insurance in particular as tools for complementing risk reduction and adaptation as part of comprehensive risk management is explored.

Understanding and evaluating disaster risk due to natural hazard events such as earthquakes creates powerful incentives for countries to develop planning options and tools to reduce potential damages. The use of models for earthquake risk evaluation allows obtaining outputs such as the loss exceedance curve, the expected annual loss and the probable maximum loss, which are probabilistic metrics useful for risk analyses, for designing strategies for risk reduction and mitigation, for emergency response strategies and for risk financing. This article presents, based on probabilistic risk models, the design and implementation of a risk transfer instrument to cover the private buildings of the city of Manizales, Colombia. This voluntary collective instrument provides financial protection to both, the estate tax payers and the low-income homeowners through a cross-subsidy strategy; besides, it promotes not only the insurance culture but also the solidarity of the community. The city administration and the insurance industry are promoting this program using the mechanism of the property tax payment. This collective insurance helps the government to access key resources for low-income householders recovery and improve disaster risk management at local level.

The International Panel on Climate Change (IPCC) has called for a new balance between reducing the risks from climate extremes and transferring them (for example, through insurance) as means for effectively preparing for and managing disaster impacts in a changing climate. This paper elaborates on this balance with an overview of disaster risk financing mechanisms and how they contribute to disaster risk reduction and climate change adaptation in developing countries. We suggest a risk management approach that targets risk reduction and risk financing to different layers of risk, including a layer that represents a possible limit to adaptation. By reviewing traditional post-disaster financial arrangements, such as government compensation, and non-traditional pre-disaster instruments, such as index-based insurance, we show how risk financing can complement and stimulate risk reduction. We discuss the benefits of financial instruments, including the provision of post-disaster finances for recovery and pre-disaster security necessary for climate adaptation and poverty reduction. These benefits come at a cost, and we discuss the risks, challenges, and future prospects of risk financing in developing countries.

Why do private firms grow vibrantly in transition economies despite their limited access to formal financing? This study underscores the importance of informal financing in facilitating the growth of private firms in China. Drawing from the institutional economics argument, we posit that informal financing, in the form of underground financing and trade credit, substitutes formal financing in providing financial assistance and capital to private firms in China. We further posit that the effects of two kinds of informal financing vary across provinces with different levels of institutional development, and complement each other by supporting firms in different industries. We test our arguments with a sample of 284 private firms in 19 cities in China. The results generally support the value-added effects of alternative financing and its coexistence with formal financing. Our study contributes to the literature by highlighting informal financing as a void-filling institution in the capital markets in China.

Entrepreneurial activity by new ventures is an important driver of economic growth. Yet obtaining sufficient and/or appropriate financial means often represents a considerable challenge to entrepreneurs. Notably, reliable empirical evidence on financing patterns of young enterprises in Germany has so far been scarce. Using data from the KfW/ZEW Start-up Panel, a new large-scale dataset of newly founded ventures, we provide a comprehensive overview of financing structures and their firm- and owner-related drivers in German start-ups within the first months of their existence. Conceptually, we find pecking-order theory to hold for new ventures in Germany, although individual motives lead to partially deviant financing patterns. Moreover, our findings indicate that the extent of financing and the choice of capital sources are both driven by a multitude of firm as well as owner characteristics.

This paper investigates the economic impact of the Canada Small Business Financing Program (CSBFP) using the 2004 edition of the Survey on Financing of Small and Medium Enterprises. To avoid the usual self-selection problem associated with voluntary participation in such programs, the financing behavior of the business and its intention to grow are used as control variables. Based on this analysis, participation in the CSBFP would have increased growth in salary, employment and revenues by 12, 12, and 7 percentage points, respectively, between 2004 and 2006. Furthermore, CSBFP would have induced around 5,000 jobs, approximately 3.8% of those created in that time span by small private businesses.

This study analyzes the impact of financing structure on Islamic banks’ insolvency risk exposure. By analyzing four models, we find that an increase in real estate financing decreases insolvency risk; however, an increasing concentration of financing structure increases insolvency risk. We discover that increasing the stability of the financing structure reduces risk in the short term, but not in the medium term. Interestingly, our findings show that the level of insolvency risk exposure during the 1997 Asian financial crisis was lower than it was for the overall period, whereas it is higher than the overall average in the ongoing global economic crisis. Thus, regulatory bodies, policymakers, and market players in the Islamic banking industry should take appropriate action to in manage the insolvency risk of Islamic banks.

Increasing losses from weather related extreme events coupled with limited coping capacity suggest a need for strong adaptation commitments, of which public sector responses to adjustments to actual and expected climate stimuli are key. The European Commission has started to address this need in the emerging European Union (EU) climate adaptation strategy; yet, a specific rationale for adaptation interventions has not clearly been identified, and the economic case for adaptation to extremes remains vague. Basing the diagnosis on economic welfare theory and an empirical analysis of the current EU and member states’ roles in managing disaster risk, we discuss how and where the public sector may intervene for managing climate variability and change. We restrict our analysis to financial disaster management, a domain of adaptation intervention, which is of key concern for the EU adaptation strategy. We analyse three areas of public sector interventions, supporting national insurance systems, providing compensation to the affected post event as well as intergovernmental loss sharing through the EU solidarity fund, according to the three government functions of allocation, distribution, and stabilization suggested by welfare theory, and suggest room for improvement.

In this paper, we study the management of financial risks of a custom manufacturer in the specialty chemicals industry arising from increased volatility of profits caused by market uncertainty and growing competitive pressure due to globalization. We argue that such risk management can be established either by creating and utilizing flexibility or by adjusting the risk preferences. Using a model-based approach, we operationalize flexibility and risk preferences to show their effects on the profit/risk and the decision making of a firm through a stylized example motivated by the specialty chemicals business.

Risks associated with the development and implementation of Renewable Energy (RE) technologies are a major concern both in terms of financing for manufacturers and for the financing viability of projects. Insurance is often perceived as a mandatory and costly cover to secure financing for a project and is rarely considered as a way of improving the overall financing conditions and perspectives. For certain RE projects, such as wind farm or biomass, the use of probabilistic models integrating quantifiable risks in the financing context provides a better overview of the risk potential impacts and the insurance merits. The purpose of this approach is to appraise the most efficient insurance package for the project. The probability distribution of the project cash flows, including risk assumptions, allows one to assess the merits of various insurance options and in particular to test their benefits on the rating of debt and financial covenants. This modelling approach provides a good indicator of the potential risk impacts for RE projects and is also a useful tool to determine the optimum allocation of risks, costs and reserves between the various parties involved in such a project. The Geneva Papers (2008) 33, 147–152. doi:10.1057/palgrave.gpp.2510156

The current study delves into the post-loss financing options MG Rover (MGR) could have used, in addition to the UK government bridging loan, before its collapse in 2005. An examination of the pre-bankruptcy state of MGR was carried out, and it confirms the existence of high security holder agency costs arising from debt overhang and adverse selection problems. In addition, the findings show that due to steep private information costs and negative trend in earnings, the use of equity, debt, government loans and contingent financing as post-loss funding vehicles was not an optimal financial decision in markets where capital is rationed. In this case, the existence of both trade debt and legacy costs made it difficult for potential investors to assess the full value of MGR's assets, before debt retirement. Issuing low priced risky securities would have imposed a net loss on existing securities and made them unattractive to investors. A conclusion reached is that the only way of addressing post-loss risk financing problems at MGR was either through issuing securities whose value was least sensitive to revelation of ultimate information or through bankruptcy which is what they rightly did.

International business activity has to adapt to a number of new challenges, including higher temperatures and flood risks. The adaptation process will depend partly on the development of new forms of risk analysis for decision-making. This paper identifies statistically significant differences in regional temperature risk profiles, and develops climate change risk rankings for 11 regions of the globe. The methodology is based on a univariate time series analysis of regional mean temperatures, and takes into account the extent to which extreme temperature events cluster together, an important factor in weather-related risk analysis. The implications of the empirical results are discussed, with particular reference to the insurance and reinsurance markets. Journal of International Business Studies (2007) 38, 474–480. doi:10.1057/palgrave.jibs.8400266

In this paper, we compared the availability of different types of financing sources to address the issue of capital availability to entrepreneurial propensity and we scru- tinise the influence of business costs by utilising a new com- posite index using data from the World Bank's Doing Business Database. The availability of three types of financing sources was analysed: traditional debt financing, venture capital financing, and informal investments. The study's findings show that only informal investments have statistically significant influence on entrepreneurial propensity. Regulatory business costs were found to deter opportunity driven entrepreneurship, but had no impact on necessity entrepreneurship.

This paper asks whether the transfer of risk from banking to non-banking institutions, such as insurers, has reduced risk for the financial system as a whole or merely shifted it to less transparent sectors. If the latter is the case, then it may be that new forms of risk and vulnerability are being introduced into the global financial system. The Geneva Papers (2005) 30, 121–127. doi:10.1057/palgrave.gpp.2510004

The literature provides conflicting evidence on the relation between corporate international activity and the cost and level of debt financing. Based on this evidence, we explore the impact of firm internationalization on debt financing. Using a market based sample of U.S. firms, we find significant evidence of a non monotonic relation between firm international activity and both the cost and level of debt financing. Specifically, we find that, contrary to prior research, firm international activity is, on average, associated with a 13% reduction in the cost of debt financing and a 30% increase in firm leverage.

At the dawn of the new millennium, risk management is taking a different route. International corporations as well as (re-)insurance companies are increasingly turning their focus to shareholder value and the optimization of their company’s value, based primarily on return on capital and the stability and growth of future earnings. The industrial insurance market has experienced a transition from regulated national markets (product and price regulation) towards almost total deregulation. One consequence is the convergence between the insurance and banking industries often referred to as bancassurance. The result is the rapid development of new solutions for the financing of various aspects of risk. Insurance programmes have started to extend their coverage to risks that have traditionally not been insurable. Capital market products such as options, swaps and bonds, which were the domain of banks, have been adopted for the transfer of underwriting risk. Industrial insurance companies have started to place non-life underwriting risks directly into the capital market, such as earthquake and storm securitization. Across North America and increasingly in Europe and Asia, (re-)insurers are striving to extend their product range into the sphere of alternative risk transfer (ART). They are using new financial engineering techniques to release hidden values on companies’ balance sheets, aiming to serve their clients better and to afford themselves more flexibility in dealing with the marketplace of the 21 st century. The recent development and the expected increase in alternative risk financing allow large multinational corporations to choose freely from national and global markets and challenge industrial insurance companies to excel in the development of products which provide risk management solutions. Risk managers today are faced with an ever-greater range of risks, which demand new innovative solutions. International companies are exposed to various kinds of risk. Traditionally, the risk manager was responsible for looking after operating risks, whereas it was the chief financial officer (CFO)’s responsibility to deal with financial risks. Finally, it was the chief executive(CEO)’s task to handle business risk by developinga successful strategyto compete in the market. It is therefore not surprising, that although every individual developed the ‘‘right’’ strategy for one risk, the overall, company-wide risk strategy was sub-optimal. This approach often resulted in internal conflicts between the various strategies. Today, international companies are primarily concerned with protecting their bottom-line earnings and balance sheets against all non-core business risk. They are also looking for innovative ways to raise

An in-depth interviewing approach was used to explore the risk thinking of entrepreneurs in small firms and their risk management practices. Five aspects of personal explanatory style and general concern for measurement were assessed. The following risk management practices were considered: the extent to which they adopted risk identification and risk evaluation processes; the degree to which they practised retained risk management practices of ignoring risk, risk avoidance and catastrophe planning; and the balance of proactive vs reactive and control vs knowledge-based styles of risk management in their businesses. Significant statistical relationships were found between the decision tendencies of the entrepreneurs and the risk management practices in their enterprises. The need for risk management theory and practice to recognise small business practices is highlighted.

This paper focuses on the empirical assessment of determinants and effects of financing constraints at the firm level. Using a standard model of credit rationing based on asymmetric information firm age and size are found to be factors which should influence the probability of financing constraints. Improving business conditions strengthen the degree of informational asymmetry. A unique panel of firm data for Germany, including direct information on financing constraints, is used for the econometric analysis. Firms' size and improving business conditions are found to have a significant effect. Furthermore, a significant impact on investment and R&D expenditures cannot be rejected.

In this paper, using sample data of Chinese A-share listed companies between 2007 and 2011, we measure accounting conservatism by adopting the index C_SCORE of Khan and Watts (2007) and current accruals (CACC) of Givoly and Hayn (2000) while conducting correlation analyses, paired tests, and multiple regression analyses. The results show that (1) accounting conservatism exists in equity financing oriented listed companies, bank loan oriented listed companies, and public bond oriented listed companies; and (2) there is a significant difference in accounting conservatism between the different groups of companies. The bank loan oriented group shows the highest level of accounting conservatism, followed by the equity financing oriented group and then the public bond oriented group.

A recent survey in UK has highlighted the large discrepancy between the insured and uninsured costs of losses, demonstrating that the true cost of risk is much higher than previous estimates. Risk is never totally transferred by insurance, and if insureds recognise that they retain a partial ownership of the risk there is a greater likelihood that there will be better loss control. The paper promotes the concept of “risk partnership” as a more correct representation of the contract between insurer and insured than the more generally used term of “risk transfer”.

This paper demonstrates the importance of jointly considering financing and technology choices when making manufacturing investments. We show that considerable value can be added to investments through financing decisions, and that the gains due to financing are sensitive to technology choice. A model of financing and technology choice is presented that considers differences in cost structure and product flexibility, and applies it to an example involving flexible manufacturing systems (FMSs). Three main results emerge. First, optimal financing decisions are different for different technologies and the choice of technology can change when financing and technology decisions are made simultaneously. Second, if one technology's fixed and variable costs are lower or its initial investment higher than another technology's the former has higher value added due to financing. Since empirical data shows that FMS and conventional technologies have this pattern, ignoring the benefits of debt financing leads to undervaluation of new technology. Third, product flexibility can add considerable value through its effect on financing decisions because product flexibility reduces variability of cash flows. A major conclusion is that financing and technology choice are long-term strategic decisions that should be made jointly. Firms that make these decisions separately, not considering the effect of one on the other, may make suboptimal technology decisions.

Welfare state arrangements not only mitigate income risk, they also create new types of risks; we may call them “policy-induced risks”. In some cases, market risk is replaced by the risk of changes in politically determined rules, “rule instability” for short. In other cases, welfare state arrangements change the character of market risk, and may even increase it. I call this “policy-induced market risk”

Paul Freeman offers an important contribution to understanding the specific needs of developing countries in mitigating the effects of natural catastrophes. Freeman succinctly recaps the potentially dramatic and disastrous impacts of these events, but the real contribution is in making explicit the roles and interests of international financial institutions like the World Bank and in articulating a taxonomy for understanding risks faced by governments in developing countries. He then applies standard economic analysis to these risks considering the particular role of new risk-hedging instruments that have developed over the past several years. While no specific solutions or recommendations are offered, the paper does offer insights into how risk-transfer mechanisms might provide efficient solutions for some categories of developing-country risks, and how they may not be appropriate for all risk types. The application of a traditional risk management framework is helpful for delineating issues, constituents, and incentives. Freeman uses the simple framework of risk identification, risk ownership, techniques for risk mitigation, and mechanisms for risk transfer and risk financing, including an analysis of the costs, as opposed to the benefits, of risk transfer. As is usual in this framework, issues of information quality and asymmetry, moral hazard, adverse selection, and degree of risk aversion are critical. One particular argument advanced by Freeman (drawing on the work of Arrow) is that governments are typically thought of as risk-neutral. If that is the case, then the government itself will be the most efficient at managing the risk and there is "no theoretical justification for them to engage is risk-shifting transactions like hedging". Freeman's proposition is that while this may hold for developed countries, this need not be the case for developing countries, where the size of a natural catastrophe, relative to the size and wealth of the economy, could swamp the ability of a government to self-finance the event through internal sources (i.e. taxation). Hurricane Mitch is used as an example. The storm caused damage in Honduras equivalent to one year's gross domestic product. For countries vulnerable to such events, having risk-averse preferences may be desirable. Thus, risk-shifting may be appropriate. Freeman's proposition is practical and reflects the economic and risk realities facing the developing world. Freeman identifies three classes of risks faced by governments: (1) risks created by governmental investment decisions, especially those related to physical infrastructure; (2) risks assumed for other economic agents in the economy particularly where there are market failures; and (3) risks associated with the governmental role as protector of the poor. Presuming that governments from developing countries ought to be risk-averse, Freeman

The purpose of this paper is to bring together the ideas of those who currently practice the many different forms of risk management on a global basis. These forms include guidance of public policy on macro risks, risk financing and insurance for many larger commercial organizations, managing credit, currency and interest rate risks for financial institutions, plus other extensions of risk management including security, quality control, and quality assurance in a health-care environment.

During the 1980s a fairly active market developed in the private placement of limited recourse project financing. Although this form of financing is gaining in importance, we know very little about it. This article presents a theoretical analysis of project financing. In the model of the firm presented, outstanding risky debt gives rise to agency costs of underinvestment that are offset by the benefit of debt-related tax shields. The tradeoff specifies the optimal leverage for a firm. Within this framework, we consider the optimality of financing a new project with a nonrecourse project financing arrangement. We derive implications for 1) the characteristics of a new venture that will be project financed, 2) the wealth gains from project financing over that of financing with straight debt, and 3) the optimal allocation of debt across the different assets (the sponsor firm vs. the new venture). It is shown that a project financing arrangement, where the debt is optimally allocated to the sponsor firm and the new venture, increases value by reducing agency costs and increasing the value of tax shields (compared to the case of straight debt financing). The optimal allocation of debt in project financing involves assigning to the sponsor firm and the new venture debt levels equal to their individual optimal capital structures. Several testable empirical implications in finance and accounting are developed.

Professor Jorion’s book provides a comprehensive treatment of the concept of Value at Risk, tailored towards the needs of professionals and MBA students. Much emphasis is put on the implementation and use of Value at Risk in a risk management framework as well as the Basel regulations. The book also points the reader toward more advanced topics. The new sections outlining applications of extreme value theory, principal component analysis, copulas and the Basel II rule sets are very welcome additions to the previous editions. The author has divided the treatment of Value at Risk into six parts, all building upon each other. Part I provides an overview of markets and risk factors for financial institutions. The author takes a historical approach to motivate Value at Risk while highlighting several high profile failures and shortcomings of risk management. He also introduces the reader to the evolution of the Basel frameworks. The second and third parts make up the core pieces of the book. Part II, “Building Blocks,” provides the reader with techniques to estimate Value at Risk, including nonparametric and parametric methods. The emphasis thereby is always on application—something the target audience will know to appreciate. Professor Jorion also discusses estimation uncertainty and the need for backtesting obtained Value at Risk figures. Drawing from portfolio theory, the impact of correlation/diversification and the modeling of such are addressed. New to the third edition is a section on multivariate models. In particular, dimension reduction techniques such as factor models, principal components and copulas are also outlined. The third part, called “Value-at-Risk Systems,” focuses directly on the implementation of Value at Risk as part of risk management. Analytical, marginal and sim

This study presents a framework to delineate financing the small firm. Special consideration is given to small firms' unique financing sources such as trade and bank credit, entrepreneur's own resources, informal investment, and venture capital. The small firm has limited or no access to many traditional debt and equity markets that supply long term financing to the corporate world, and therefore operates in segmented and imperfect financial markets. The links between small firms' financing opportunities and managerial goals are traced from the start-up stage through establishing a mature firm. As the small firm matures, it operates in a broader financial market. This study establishes the foundation for future empirical research.