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We investigate the labor market effects of a loan guarantee program targeting French SMEs during the financial crisis. Exploiting differences in regional treatment intensity in a border discontinuity design, we uncover a central trade-off for such interventions. While the program has a positive impact on workers' employment and earnings trajectories that translates into positive aggregate employment effects, it dampens the worker reallocation toward more productive firms that happens following recessions, and particularly so for high-skill workers. This labor allocation effect is economically significant and translates into a reduction in aggregate productivity. [ABSTRACT FROM AUTHOR]

In the prepared article examines and analyzes the main problems of using a surety bond and other types of ensuring the fulfillment of obligations. Their interaction with hereditary legal relations is considered. In the plane of interaction of suretyship and inheritance, the author drew attention to the presence of personal elements in this type of provision, revealed what they consist of. According to the contract, the guarantor guarantees to the debtor’s creditor that the debtor will fulfill his obligation. The indication in the norm of the Civil Code of Ukraine that the guarantor vouches for the person of the debtor indicates the existence of the guaranty as a way of securing personal elements. The author proposes to understand this wording in such a way that the guarantor vouches for the fulfillment by the debtor himself, and not by some other person, being sure that the debtor will fulfill this obligation. Such a vision is manifested in the accessory nature of the scope of requirements to the guarantor, since in the event of a change in the obligation without the consent of the guarantor, as a result of which the scope of the debtor’s responsibility has increased, such a guarantor is responsible for the breach of the obligation by the debtor to the extent that existed before such a change in the obligation. A surety is qualitatively and essentially different from a pledge (mortgage), since the pledge is of a material nature and enjoys material protection. Suretyship refers to personal types of guaranteeing the performance of obligations, performed by a specific person, and legal succession to the suretyship is limited precisely taking into account its classification as a personal type of guarantee. This is important for inheritance under the principal obligation. The specificity of suretyship as a form of guaranteeing the fulfillment of an obligation indicates the presence of a significant specific weight of personal elements, which qualitatively distinguishes a suretyship from other types of security, in particular, a pledge. Personal elements accompany suretyship not only in terms of the scope of performance, but also in the area of legal succession, in particular in the event of the surety’s death. The presence of personal and even fiduciary elements in the suretyship limits succession to the obligation secured by the surety in the event of the borrower’s death. [ABSTRACT FROM AUTHOR]

Previous research on the financing of smaller innovative firms has established that being small per se creates problems in accessing finance, but being small and innovative adds another layer of difficulty. This new research explicitly questions whether the Covid-19 crisis has added to the debt access problems of an already disadvantaged group of firms. Using a unique Covid-19 period dataset of 9000 UK SMEs, we find that the most innovative firms had the highest demand for loans during the Covid-19 crisis and evidence that those firms trying to introduce new products and services faced more severe borrowing constraints. As the vast majority of Covid-19 loans in the UK were government guaranteed, we also find that several classes of innovative firms found it more difficult to access government supported loans. It was also not the case that those most impacted by the crisis had the most privileged access to government loan schemes despite a greater need for liquidity. These findings have potential implications for financing innovative firms in the post-Covid-19 world, such as proposing a specific innovation loan guarantee scheme with higher than conventional guarantee rates. [ABSTRACT FROM AUTHOR]

To stay competitive, firms regularly invest in innovation by supporting internal capital projects (funded and executed in-house) that explore new products and operational improvements. Each year, in a highly competitive process, managers from different functional units of the firm submit proposals (that include estimated costs and benefits) for such projects. Managers, because of their domain knowledge and expertise, are naturally better informed about the costs and benefits of their respective projects and can use this information strategically to secure funding. An example of such behavior is the under-reporting of the cost estimate of a project and subsequently requesting additional funding during the execution phase. Such strategic behavior not only affects the firm's ability to fund the best projects but is also costly. Motivated by this challenge of deciding the funding of such projects at a global agribusiness firm, we seek a mechanism that is both provably near-optimal for the firm and guarantees truthful reporting from managers. Our setting consists of a principal and multiple agents. In each time period, over an infinite horizon, each agent requests funding for a potential project from the principal. Before submitting his proposal, each agent privately estimates the project's cost and its benefit. If funded, each project is executed in one period. The principal's funding decisions are binary; that is, each project is either funded in full or not funded. The actual cost (benefit) of a funded project is realized on its completion and incurred (earned) by the principal. The agents earn utility from the experience and reputation gained in completing projects. In each period, the principal desires to keep the total spend below a budget but can borrow external money at a cost. Our main contribution is a practically appealing dynamic nonmonetary mechanism for internal capital allocation under which, for any ϵ>0 , (a) truth-telling forms an ϵ-Bayesian Nash equilibrium and (b) the principal's expected utility is within ϵ of the expected utility in the first-best setting. This paper was accepted by Karan Girotra, operations management. Supplemental Material: The online appendices and data files are available at https://doi.org/10.1287/mnsc.2022.01121. [ABSTRACT FROM AUTHOR]

The UK government underwrote more than 1.68 million business loans totalling £78.4bn during the COVID-19 pandemic. Given that the Bounce Back Loan (BBL) had a 100% guarantee and the Coronavirus Business Interruption Loan Scheme (CBILS) 80%, the public sector contingent liability is very large. In this article, we explore whether or not the recent and dramatic rises in UK inflation have prompted firms with COVID-19 BBL and CBILS guaranteed loans to repay their outstanding debt early (in advance of the full 6-year loan term as specified in the original loan agreement). Our results show that this was indeed the case with increasing inflation exerting a strong and positive effect on early loan repayment on both guarantee schemes. This is consistent with the firm's debt aversion and a desire to reduce existing debts in anticipation of a future economic recession, liquidity problems and high interest rates. [ABSTRACT FROM AUTHOR]

Energy security constitutes a pivotal determinant in safeguarding the seamless functioning of economies. This research endeavours to shed light on the underlying predilections and potential scopes for enhancement within China's provincial energy security policies. By delving into an array of policy documents procured from the esteemed Legal Information Network of Peking University, it offers a meticulous exploration. Employing sophisticated text analysis methodologies, the study constructs a two‐tier analytical framework, meticulously encapsulating both the policy instruments employed and the intricate processes of their execution. Leveraging the power of Nvivo 12 Plus software, pertinent policy contents are systematically coded, with those aligning with the defined analytical dimensions aggregated for frequency computations. Furthermore, a Policy Measurement and Categorization (PMC) index model is devised, harnessing word frequency statistical data to assign a quantitative assessment to the policies under scrutiny. The empirical results demonstrate a noteworthy disparity in the adoption of policy tools among various provinces, with command‐and‐control mechanisms, economic incentive structures, and societal engagement strategies emerging as the most recurrent policy types. Among the energy security policies scrutinized, approximately 84.85% were categorized as effective, while a smaller yet significant portion, 6.06%, was classified as outstanding. Despite the overall robustness of China's provincial energy security policies, the investigation identifies several avenues for further refinement. The study suggests that the government could bolster these measures through intensified focus on transformative adjustments to energy structures, augmentation of green loan guarantee systems, and fostering enhanced inter‐sectoral collaboration. These strategic enhancements may serve as key levers to propel China's provincial energy security policies towards even greater effectiveness and resilience. [ABSTRACT FROM AUTHOR]

We focus on analyzing the risk preferences of suppliers regarding two types of financing: partial credit guarantee (PCG) and trade credit financing (TCF). Using the conditional value-at-risk (CVaR) criterion, we study each supply chain member's equilibrium solution and optimal financing strategy under the assumption of demand distributions with an increasing failure rate. Initially, we present an analytical solution of the risk-averse supplier's wholesale price, and prove that the optimal wholesale price decreases in the risk-averse level and initial capital, and increases in the credit guarantee ratio. Furthermore, we derive optimal financing strategies for both the supplier and the retailer under various circumstances. However, it is important to note that the results reveal a potential trade-off associated with PCG. While risk-averse suppliers may be more inclined to provide PCG compared to risk-neutral suppliers, this financing option can negatively impact the supplier's utility and the expected profits of the retailers. Finally, we illustrate how the optimal financing strategies shift in response to changes in the risk-averse level and credit guarantee ratio, and present the win-win situations for the supplier and the retailer. [ABSTRACT FROM AUTHOR]

Both walk-in and online customers appear in many service systems such as restaurants. Online customers are often given a target time for pick up, and the quality of the food/beverage can degrade if it is ready before the arrival of online customers. This distinctive feature brings essential difficulties in the analysis and control of such systems. In "Technical Note: Asymptotically Optimal Control of Omnichannel Service Systems with Pick-up Guarantees," Gao, Huang, and Zhang study the optimal control problem of such service systems based on a two-class single server queueing model. The paper proposes a nearly-optimal policy that keeps the server idle when the queue of online customers drops below a threshold and there are no walk-in customers. Motivated by the recent popularity of omnichannel service systems, we analyze the joint admission and scheduling control of a queueing system with two classes of customers: online and walk-in. Unlike walk-in customers, online customers are given a target time for pick up upon placing an order. Thus, in addition to minimizing the waiting costs of walk-in customers and the rejection cost of both classes, we need to minimize the earliness and tardiness costs of online customers. Such a distinctive objective makes the control problem difficult to analyze. We develop a novel analysis by adopting the idea of proving H = λ G to establish an asymptotic relationship between the waiting time cost and the queue length cost under general control policies in the heavy-traffic regime. We also design a policy and show that it is asymptotically optimal. Funding: X. Gao's research is supported in part by the Hong Kong Research Grants Council [Grants 14201520, 14201421, and 14212522]. J. Huang's research is supported in part by the Hong Kong Research Grants Council [Grants 14500819, 14505820, and 14501621] and the National Natural Science Foundation of China [Grant 72222023]. J. Zhang's research is supported in part by the Hong Kong Research Grants Council [Grants 16208120 and 16214121]. [ABSTRACT FROM AUTHOR]

We study third-party loan guarantees in a model in which lenders can screen and sell loans before maturity when in need of liquidity. Loan guarantees improve market liquidity, reduce lending standards, and can have a positive overall welfare effect. Guarantees improve the average quality of nonguaranteed loans traded and thus, the market liquidity of these loans because of selection. This positive pecuniary externality provides a rationale for guarantee subsidies. Our results contribute to a debate about reforming government-sponsored mortgage guarantees by Fannie Mae and Freddie Mac, suggesting that the excessively high subsidies to these guarantees should be reduced but not completely eliminated. This paper was accepted by Kay Giesecke, finance. [ABSTRACT FROM AUTHOR]

Across the EU sectoral policies, a variety of instruments are used to foster investments and to transform Europe's productive capacities. Reading beyond the traditional bureaucratic and policy silos, this paper shows how such a composite repertoire of instruments crystalised, taking advantage of two complementary historical fieldworks. Using the sociological concept of 'age', we show how a European policy for productive investments emerged, supported by specific rationales and staff, to address episodes of budgetary constraints over investment policies. We first distinguish an 'age of infrastructure' (from the 1950s), where the first EEC bureaucrats in charge of these policies – mainly lawyers and engineers – designed loans strategies to continue reconstruction efforts, targeting heavy infrastructural investments in energy or transportation. Then, we show how in the 1970s context of rising budgetary tensions, economists urged their colleagues to take advantage of the Common Market to create European champions, through grants and co-financing, and by promoting SMEs as growth drivers: this marks the 'integrative age'. Finally, from the 1990s, bureaucrats with a background in finance reoriented PI policies to overcome so-called 'markets failures' through loans, guarantees and equity, initiating an 'age of leverage' in EU public action. Here, the global access to (publicly subsidized) finance and the rise of derisking activities became a new standard. By capturing the way these successive policy ages concatenated and gave the EU Investor State its current shape, our approach accounts for both stability and change in EU policies. [ABSTRACT FROM AUTHOR]

Copyright of Journal of Social Affairs is the property of Journal of Social Affairs and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The COVID-19 pandemic triggered a sudden drop in companies' sales and turnover, which resulted in serious liquidity and solvency problems. In an effort to cushion these unfavourable effects, a credit guarantee plan was launched in 2020 by the Spanish Government to mitigate the effects of COVID-19 by injecting firms with liquidity. This paper seeks to analyse the impact of this public policy on SMEs' optimal debt levels and to examine whether the allocation of this public funding has been efficiently targeted at those SMEs suffering temporary distress as a result of the pandemic. Based on a sample of 3,305 Spanish SMEs, our results show that the government's interventionist policy swelled excess debt levels – mainly due to the increase in excess long-term debt – and deviated them from the optimum. Moreover, although these public guarantees should mostly have been aimed at SMEs experiencing a temporary decline due to COVID-19, we find that these SMEs were the least likely to receive liquidity injections. [ABSTRACT FROM AUTHOR]

For a large class of demand models that allow for multiple consumer types, we present performance guarantees for simple nonpersonalized pricing heuristics relative to optimal personalized pricing. Our results demonstrate that in a general setting, the effectiveness of pricing along a positive vector depends on how the price vector aligns with optimal personalized price vectors. We propose two positive direction vectors: the "economic" and "robust" directions. The economic direction is a convex combination of the optimal personalized price vectors and aims to do well on average. The robust direction offers the best worst-case performance guarantee. By judiciously selecting pricing directions, our results also provide performance guarantees of simple pricing strategies relative to more sophisticated pricing strategies. In particular, we provide performance guarantees for nonpersonalized, optimal linear pricing relative to optimal nonlinear, personalized pricing. Our research also examines the performance of common heuristics for bundle pricing relative to optimal, personalized, bundle-size pricing. Our experiments show that performance often improves when consumer types are clustered and each cluster is offered a price direction. We compared the performance of the k-means clustering heuristic and the farthest point first clustering heuristic. Our findings indicated that k-means clustering has significantly superior performance on average. This suggests that businesses could potentially benefit from implementing k-means clustering in their pricing strategies. In conclusion, our study offers valuable insights and performance guarantees for various pricing strategies and their relative effectiveness. These findings could inform pricing decisions and potentially lead to improved outcomes for firms. This paper was accepted by Chung-Piaw Teo, optimization. Funding: This work was supported by Collaborative Research Funding (CRF) Hong Kong [Grant (CRF) C6032-21G], RGC Hong Kong [Grant 16502819], and Hong Kong University of Science and Technology. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2021.04173. [ABSTRACT FROM AUTHOR]

Under Next Generation EU (NGEU), the European Commission has issued bonded loans to finance an ambitious programme of modernisation in its Member States. These bonded loans are backed by a general guarantee from the EU budget enhanced by an increase in the contribution of the Member States to the EU's GNl-based own resources. This choice marks a discontinuity with the practice to issue unconditional and irrevocable guarantees arranged, at different degrees, under the EFSF and SURE bond issuances. The reasons for this choice can be found in the need to avoid setting a precedent justifying the issuance of joint debt instruments, variously backed by a guarantee of EU Member States. Nevertheless, the need to raise resources for the green and digital transition and the common defence might change this picture. [ABSTRACT FROM AUTHOR]

Banks guarantee international trade through letters of credit. This paper analyzes what happens to trade when the critical role of banks as trade guarantors is compromised. Using the case of the Greek capital controls in 2015, the events around which led to a massive loss of confidence in the domestic banking system, we show that firms whose operations were more dependent on domestic banks suffered a steep decline in imports and, subsequently, exports. This operated through letters of credit, which during the capital controls period had to be backed by firms' own cash collateral rather than the bank guarantee. As a result, cash-poor firms imported relatively less. Public intervention to guarantee transactions is shown to help mitigate some of the decline in imports. [ABSTRACT FROM AUTHOR]

Considering the influence of decision maker's risk preference degree on decision making, this paper employs CVaR risk measure criterion to facilitate decision making. The optimal decision making of supply chain finance under partial credit guarantee and blockchain technology empowerment is investigated. In addition, the CVaR decision models for supply chain finance under two scenarios of partial credit guarantee and blockchain technology empowerment are constructed. The inverse solving is conducted with the help of the Stackelberg model to find out the optimal ordering quantity, wholesale price, and interest rate. The influencing factors of decision making are investigated. This study shows that, within a certain risk‐averse range, the ordering quantity of retailers under the partial credit guarantee model is larger than that under the blockchain technology‐enabled model. In contrast, the conditional risk value of suppliers under the partial credit guarantee model is much smaller than that under the blockchain technology‐enabled model. In conclusion, the blockchain technology is beneficial to reduce supply chain finance risks. [ABSTRACT FROM AUTHOR]

A comparison of the performances of pension products that ignores long-term trends might significantly overestimate the long-term impact of volatility risks while underestimating the impact of persistent, low-frequency trends. This paper proposes a comparison making use of projection models based on the long-term risk–return tradeoff proposed by Campbell and Viceira (2005) to explicitly take into account slow-moving economic trends. In order to illustrate the approach and its implications, we discuss the capital protection provided by life-cycle target-date fund strategies and minimum guarantee strategies. [ABSTRACT FROM AUTHOR]

This paper studies a classic maximum entropy sampling problem (MESP), which aims to select the most informative principal submatrix of a prespecified size from a covariance matrix. MESP is widely applied to many areas, including healthcare, power systems, manufacturing, and data science. By investigating its Lagrangian dual and primal characterization, we derive a novel convex integer program for MESP and show that its continuous relaxation yields a near-optimal solution. The results motivate us to study efficient approximation algorithms and develop their approximation bounds for MESP, which improves the best known one in the literature. This paper studies a classic maximum entropy sampling problem (MESP), which aims to select the most informative principal submatrix of a prespecified size from a covariance matrix. By investigating its Lagrangian dual and primal characterization, we derive a novel convex integer program for MESP and show that its continuous relaxation yields a near-optimal solution. The results motivate us to develop a sampling algorithm and derive its approximation bound for MESP, which improves the best known bound in literature. We then provide an efficient deterministic implementation of the sampling algorithm with the same approximation bound. Besides, we investigate the widely used local search algorithm and prove its first known approximation bound for MESP. The proof techniques further inspire for us an efficient implementation of the local search algorithm. Our numerical experiments demonstrate that these approximation algorithms can efficiently solve medium-size and large-scale instances to near optimality. Finally, we extend the analyses to the A-optimal MESP, for which the objective is to minimize the trace of the inverse of the selected principal submatrix. Funding: This work was supported by the National Science Foundation Division of Information and Intelligent Systems [Grant 2246417] and Division of Civil, Mechanical and Manufacturing Innovation [Grant 2246414]. Supplemental Material: The e-companion is available at https://doi.org/10.1287/opre.2023.2488. [ABSTRACT FROM AUTHOR]

Mandatory credit allocation is a policy intervention to pressure banks to lend to certain sectors that otherwise unfettered finance would not give access to. While some would argue that mandatory credit allocation results in sub-optimal allocation of resources, it has been shown that such intervention results is socially desirable outcome. However, mandatory credit allocation should not be the responsibility of banks only, it must be supported with government guarantees. In the Philippines, there are three sectors in which mandatory credit allocation is given namely the agriculture sector, the micro, small and medium enterprises or MSME sector, and enterprises involved in innovation. In agriculture, the credit allocation is too big and therefore should be reviewed, in MSME too small and therefore should also be reviewed, and in innovation difficult to identify and impractical to implement. In all of these, the banks are left to shoulder the respective mission with practically no government support. Banks either comply or pay the penalty. [ABSTRACT FROM AUTHOR]

Using data between 2009 and 2020, we provide a detailed description of the borrowers within the Enterprise Finance Guarantee (EFG) loan portfolio, analyse time to default and how it differs across lender types. For limited companies, we match additional financial and non-financial data from public and proprietary databases and profile the characteristics of EFG companies within the population of limited companies. Employing hazard models we find loans granted to unincorporated businesses by the medium-sized financial institutions are associated with a much lower hazard than those provided by smaller local lending institutions and not-for-profit agencies. Moreover, we find some evidence that loans to limited companies, issued by the big UK banking groups, have a significantly lower default than those from medium-sized financial institutions. Large banks screen out high-risk firms. We argue that smaller lenders are able to price the risks rejected by the larger banks, using a wider range of credit information. JEL codes: G01, G21, L52, D25 [ABSTRACT FROM AUTHOR]

Copyright of Zeitschrift für Bankrecht und Bankwirtschaft is the property of De Gruyter and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The object of the analyzed topic deals with the limits and incidence of the criterion of proportionality in taking, maintaining or terminating insurance measures, offering several procedural remedies. The purpose of the study is to determine some criteria of objectivity and predictability incident to the taking and maintaining of precautionary measures, in order to prevent the abuse of law and the blocking of the use of the patrimony of the person concerned, criteria offered in a set of guarantees of a procedural-criminal nature, the observance of which constitutes a result obligation for the judicial bodies issuing the measure. The author carries out an analysis of the legal content of the protective measures in Romanian criminal procedural law from the perspective of the principles of ensuring the preemption of substantive European law and ensuring European public order, fundamental principles in the European and national normative construction, seeing in this legal order a standard capable of guaranteeing the defense concrete and effective of the rights of the procedural participants, drawing objective boundaries between them, the purpose being to increase the confidence of litigants in the judicial act. [ABSTRACT FROM AUTHOR]

Problem definition: We consider network revenue management problems with flexible products. We have a network of resources with limited capacities. To each customer arriving into the system, we offer an assortment of products. The customer chooses a product within the offered assortment or decides to leave without a purchase. The products are flexible in the sense that there are multiple possible combinations of resources that we can use to serve a customer with a purchase for a particular product. We refer to each such combination of resources as a route. The service provider chooses the route to serve a customer with a purchase for a particular product. Such flexible products occur, for example, when customers book at-home cleaning services but leave the timing of service to the company that provides the service. Our goal is to find a policy to decide which assortment of products to offer to each customer to maximize the total expected revenue, making sure that there are always feasible route assignments for the customers with purchased products. Methodology/results: We start by considering the case in which we make the route assignments at the end of the selling horizon. The dynamic programming formulation of the problem is significantly different from its analogue without flexible products as the state variable keeps track of the number of purchases for each product rather than the remaining capacity of each resource. Letting L be the maximum number of resources in a route, we give a policy that obtains at least 1/(1+L) fraction of the optimal total expected revenue. We extend our policy to the case in which we make the route assignments periodically over the selling horizon. Managerial implications: To our knowledge, the policy that we develop is the first with a performance guarantee under flexible products. Thus, our work constructs policies that can be implemented in practice under flexible products, also providing performance guarantees. Funding: The work of H. Topaloglu was partly funded by the National Science Foundation [Grant CMMI-1825406]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2022.0583. [ABSTRACT FROM AUTHOR]

Requisite variety theory posits that internal variety is essential to develop responses to external variety. Facing increased local competition local bank branches could lower the odds of Small Business Administration (SBA) loan defaults by increasing knowledge variety through variations in geographic distances and industries among SBA loans. Our analysis shows that although local competition increases the odds of default, variations in industries represented in the SBA portfolio, the variation in geographic distances among loans in the portfolio lowers the odds of default. Our study emphasizes the importance of requisite variety at the branch level and presents important implications for policymakers and practitioners in the third‐party loan guarantee milieu. [ABSTRACT FROM AUTHOR]

Building on the literature on individualistic culture and entrepreneurship, we use variation in a US county's frontier experience (rugged individualism) as a proxy for local individualism to explain variation in SBA loan default rates. For every 10-year increase in frontier experience in a county (ranging from 0 to 63 years between 1790 and 1890), the hazard of default was 0.964 times lower, a small but economically meaningful effect. The effects are more salient for sole proprietors and robust to economic shocks from neighbouring shale boom counties and placebo tests. The results indicate that expanding the eligibility requirements for SBA loans to include individuals from US counties with individualistic cultures may be beneficial. [ABSTRACT FROM AUTHOR]

Listed companies in China have provided large numbers of loan guarantees for borrowers in recent years. The loan guarantee size of A-share Main Board listed companies was about RMB 3.85 trillion at the end of 2017. On the one hand, loan guarantees help borrowers access debt financing, which promotes the development of capital markets. On the other hand, however, loan guarantees can increase the financial risks for guarantors. This study investigates the effects of loan guarantees on guarantors' accounting conservatism. Based on a large sample of listed companies from 2007 to 2017, we find that loan guarantees have a significant positive effects on guarantors' accounting conservatism. When firms provide loan guarantees for borrowers, they report more conservative accounting information. Moreover, the effect of loan guarantees on accounting conservatism varies by borrower. Listed companies report more conservative accounting information when they provide guarantees for non-subsidiaries rather than for subsidiaries. Among the companies providing guarantees for non-subsidiaries, the companies engage in higher levels of accounting conservatism when they guarantee the borrowing of controlling shareholders instead of the borrowing of non-controlling shareholders. [ABSTRACT FROM AUTHOR]

In this paper, we investigate the extent to which banks use public credit guaranteed loans for distant small business borrowers. Existing studies argue that when banks offer loans for these borrowers, the information asymmetry between them is often severe. These studies then empirically demonstrate how banks can mitigate this problem. We focus instead on the role of Japan's public credit guarantee scheme in mitigating these same information problems, an approach unaddressed in the literature. If banks offer credit guaranteed loans, they suffer few losses from borrower default because the public credit guarantee corporations (not the small business borrowers) make payments to the banks. Therefore, banks can offer loans to informationally opaque and distant borrowers. To conduct the econometric analysis, we use semiannual bank-region-level data from Japan, which allows us to control for several unobserved fixed effects. The results reveal that credit guarantee loan size is larger and the default rate higher when banks offer credit guaranteed loans to distant borrowers. These findings suggest that banks successfully mitigate the losses of distant lending using the public credit guarantee scheme, thereby providing a valuable contribution to the small business finance literature. [ABSTRACT FROM AUTHOR]

Copyright of Arts Magazine is the property of Thamar University and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

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]

We develop a model on bank risk and implicit government guarantees. This model concerns the willingness and capacity of implicit government guarantees. Using the Option Pricing Theory, we derive a mathematical formulation of maximizing the bank's net present value (NPV) with implicit government guarantees. Unlike previous work, both the loan portfolio and the bank's NPV are regarded as a combination of options underlying the risky project. We conduct comparative static analyses and numerical examples to examine how implicit government guarantees and capital control affect bank risk and its asset scale. The main insight of our analysis is that implicit government guarantees have some unintended consequences: (a) Inefficient and excessive risk taking (including bank's asset and overall risk); (b) Inefficient investment if there is no binding capacity constraint. We show that it is mainly due to the bank's excessive reliance on contingent assets. In addition, we demonstrate the ineffectiveness of capital constraint on risk control under certain circumstances. Therefore, we suggest that the gradual withdrawal of implicit government guarantees should be accompanied by multiple combinations of regulatory measures and proper institutional reform to avoid risk surges. [ABSTRACT FROM AUTHOR]

One of the tourism industries that contributes to national development is the hotel industry. The hotel business can support other businesses, whether it is the right place to hold meetings or cooperation agreements, it can also be a place to increase human resource competency through training. The hotel is also a means for family gatherings to relieve fatigue, a place to stay for delegations from fellow countries at state meetings. The existence of a hotel must of course be accompanied by excellent service, including cleanliness and quality of towels and linen for its guests. The presence of a laundry business service that serves hotel needs is very much needed. This business plan offers a premium laundry service specifically for 4 and 5 star hotels. PT. Luxury Indah Jaya (Luxury Laundry) not only offers towel and linen laundry services but also provides towel and linen rental and guarantees the availability of hotel needs. Luxury Laundry has an IFE score of 2.90 and an EFE score of 3.02, where Luxury Laundry's competitive strength is in the medium category based on the results of the Five Forces Portes Model analysis. Luxury Laundry's financial plan is prepared by considering capital requirements and all costs in running a business company. This research aims to analyze Luxury Laundry's financial planning. The method used in this research is qualitative analysis. [ABSTRACT FROM AUTHOR]

In project scheduling, the durations of activities are often uncertain. Delays may cause a massive disorganization if a large number of activities must be rescheduled. In "The Anchor-Robust Project Scheduling Problem," Bendotti, Chrétienne, Fouilhoux, and Pass-Lanneau propose a novel criterion for solution stability in project scheduling under processing times uncertainty. They define anchored jobs as jobs whose starting times can be guaranteed in a baseline schedule. Finding a project schedule with bounded makespan and a max-weight set of anchors is shown to be an NP-hard robust two-stage problem. Taking advantage of the combinatorial structure of project scheduling and budgeted uncertainty, the authors obtain a compact MIP formulation for the problem. Numerical results show that the obtained MIP outperforms standard techniques from the literature. They also showcase the practical interest of anchored jobs in project scheduling. In project scheduling with uncertain processing times, the decision maker often needs to compute a baseline schedule in advance while guaranteeing that some jobs will not be rescheduled later. Standard robust approaches either produce a schedule with a very large makespan or offer no guarantee on starting times of the jobs. The concept of anchor-robustness is introduced as a middle ground between these approaches. A subset of jobs is said to be anchored if the starting times of its jobs in the baseline schedule can be guaranteed. The Anchor-Robust Project Scheduling Problem (AnchRobPSP) is proposed as a robust two-stage problem to find a baseline schedule of bounded makespan and a max-weight subset of anchored jobs. AnchRobPSP is considered for several uncertainty sets, such as box or budgeted uncertainty sets. Dedicated graph models are presented. In particular, the existence of a compact mixed integer programming reformulation for budgeted uncertainty is proven. AnchRobPSP is shown to be NP-hard even for budgeted uncertainty. Polynomial and pseudopolynomial algorithms are devised for box uncertainty and special cases of budgeted uncertainty. According to numerical results, the proposed approaches solve large-scale instances and outperform classical affine decisions rules for AnchRobPSP. Insights on the price of anchor-robustness are given based on computations. [ABSTRACT FROM AUTHOR]

Copyright of Perspektiven der Wirtschaftspolitik is the property of De Gruyter and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

We analyze the preferences of 1180 German consumers for investment guarantees in financial products by means of choice-based conjoint and latent class analysis. Based on the segment-level partworth utility profiles, we then identify the most important investment guarantee features, analyze consumer demand in a realistic market setting, and test whether individual purchasing behavior can be explained by socioeconomic characteristics. Our results show that two buyer and two nonbuyer segments exist. Although their willingness to buy varies significantly, we document only a small degree of heterogeneity with respect to the individual guarantee attributes and levels. Across the sample, the guarantee period is most important, followed by the volatility of the underlying fund, and the up-front premium. Finally, we illustrate that particularly those socioeconomic characteristics with an impact on individuals' financial situation are promising predictors of their willingness to purchase investment guarantees. [ABSTRACT FROM AUTHOR]

Purpose: The aim of this study is to understand a family firm's choice of related-party transaction (RPT) types and analyze their value impacts to separate the abusive from benign RPTs. Design/methodology/approach: It uses a 10-year panel of BSE-listed 378 family (and 200 non-family) firms. The fixed effects, logit and difference-in-difference (DID) models help examine value effects, propensity and persistence of harmful RPTs. Findings: Loans/guarantees (irrespective of counterparties) destroy firm value. Capital asset RPTs decrease the firm value but enhance value when undertaken with holding parties. Operating RPTs increase firm value and profitability. They improve asset utilization and reduce discretionary expenses (especially when made with controlled entities). Family firms have larger loans/guarantees and capital asset volumes but have smaller operating RPTs than non-family firms. They are less likely to undertake loans/guarantees (and even operating RPTs) and more capital RPTs vis-à-vis non-family firms. Family firms persist with dubious loans/guarantees but hold back beneficial operating RPTs, despite RPTs being in investor cross-hairs amid the Satyam scam. Research limitations/implications: Rent extractability and counterparty incentives supplement each other. (1) The higher extractability of related-party loans and guarantees (RPLGs) dominates the lower extraction incentives of controlled parties. (2) Holding parties' bringing assets, providing a growth engine and adding value dominate their higher extraction incentives (3) The big gains to the operational efficiency come from operating RPTs with controlled parties, generally operating companies in the family house. (4) Dubious RPTs seem more integral to family firms' choices than non-family firms. (5) Counterparty incentives behind the divergent use of RPTs deserve more research attention. Future studies can give more attention to how family characteristics affect divergent motives behind RPTs. Practical implications: First, the study does not single out family firms for dubious use of all RPTs. Second, investors, auditors or creditors must pay close attention to RPLGs as a special expropriation mechanism. Third, operating RPTs (and capital RPTs with holding parties) benefit family firms. However, solid procedural safeguards are necessary. Overall, results may help clarify the dilemma Indian regulators face in balancing the abusive and business sides of RPTs. Originality/value: The study fills the gap by arguing why some RPTs may be dubious or benign and then shows how RPTs' misuse depends on counterparty types. It shows operating RPTs enhance operating efficiencies on several dimensions and that benefits may vary with counterparty types. It also presents the first evidence that family firms favor dubious RPTs more and efficient RPTs less than non-family firms. [ABSTRACT FROM AUTHOR]

Purpose: This study aims to provide a critique of the institutional framework of the National Asset Reconstruction Company Limited (NARCL), India's "bad bank." Design/methodology/approach: The approach followed is the development of an economic model of the gains to trade of an Asset Reconstruction Company. Findings: Using an economic model, the paper shows that the rules of the game create an uneven playing field and are likely to lead to a systematic overpricing of nonperforming loans (NPLs). While this might increase the upfront cash received by the bank, it will come at the cost of higher liabilities for the government on account of the sovereign guarantee that is part of the proposed structure. The overpricing is also likely to act as an obstacle to efforts aimed at the revival of the distressed company. The NARCL could become a warehouse for NPLs subverting the objective of reconstruction. Practical implications: Solutions to create a vibrant market for NPLs are proposed. Originality/value: The Indian case is unique in the sense that a bad bank backed by the government has been introduced after almost two decades of the existence of similar entities in the private sector. To the best of the author's knowledge, this paper is the first that addresses the design of such a market using economic modeling. [ABSTRACT FROM AUTHOR]

Copyright of KritV, CritQ, RCrit. Kritische Vierteljahresschrift für Gesetzgebung und Rechtswissenschaft / Critical Quarterly for Legislation & Law / Revue critique trimestrielle de jurisprudence et de législation is the property of Nomos Verlagsgesellschaft mbH & Co. KG and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper develops a principal-agent model with adverse selection to analyse firms' decisions between an existing carbon-intensive technology and a new low-carbon technology requiring an externally funded initial investment. We find that a Pigouvian emission tax alone may result in credit rationing and under-investment in low-carbon technologies. Combining the Pigouvian tax with interest subsidies or loan guarantees resolves credit rationing and yields a first-best outcome. An emission tax set above the Pigouvian level can also resolve credit rationing and, in some cases, yields a first-best outcome. If a carbon price is (politically) not feasible, intervention on the credit market alone can promote low-carbon development. However, such a policy yields a second-best outcome. The issue of credit rationing is temporary if the risks of low-carbon technologies decline. However, there are social costs of delay if credit rationing is not addressed. [ABSTRACT FROM AUTHOR]

This paper estimates the impact of public guarantees on crisis predictive indicators among small and mid-size enterprises (SMEs). We use a confidential database provided by the Italian Ministry of Economic Development on the universe of guarantees granted by the Central Guarantee Fund. We apply difference-in-difference regressions and propensity-score matching estimators to a sample of approximately 40,000 SMEs over the 2010–2018 period. We find that obtaining a public guarantee improves profitability both in the short- and medium-term. On the other hand, SMEs' financial health worsens in the short run, but financial burdens are alleviated 2 years after the issuance of a guarantee. The economic and financial effects of government-backed loans are amplified for micro-sized firms, companies operating in the service sector and direct guarantees. Our results can thus support public authorities in designing credit guarantee schemes capable of preventing SMEs' zombification and protecting them from the risk of debt overhang. Plain English Summary: Access to public credit guarantee schemes negatively impact SMEs' financial equilibrium, but their recovery occurs 2 years after guarantee issue. How does one select eligible firms to prevent zombification? Using a confidential dataset provided by the Italian Ministry of Economic Development on guarantees issued by the Central Guarantee Fund, we investigate this topic with an unprecedented level of salience. Our findings reveal the need for cautious interventions on firms in financial distress and for the introduction of stress tests to select beneficiaries. Our results show that specific guarantee lines could be applied for direct guarantees granted to micro-sized enterprises and companies operating in the service sector to maximize the additionality of public resources. This study has practical, policy and societal implications, guiding SMEs in their assessment of the overall medium-term effects of guarantees and policy-makers in their rethinking of guarantee schemes to resolve trade-offs between effectiveness and sustainability. [ABSTRACT FROM AUTHOR]

The article summarizes a study conducted by the SIIS Social Information and Research Service of the Eguía-Careaga Foundation for Oxfam Intermón. The objective of the study is to describe the functioning of wage supplements and identify the available evidence on their impact on the reduction of working poverty, access to employment, and wage determination. Wage supplements from various countries are mentioned, such as the United States, France, the United Kingdom, Belgium, the Netherlands, Sweden, Spain, and the Basque Country. These policies seek to reconcile support for low-income individuals and families with the promotion of their economic self-sufficiency through employment. Wage supplements, which are conditional cash transfers tied to employment, have gained relevance in recent years as a way to increase the incomes of low-wage workers and promote employment. These supplements can be independent of income guarantee benefits or linked to them. The article analyzes the extent of wage supplements in different countries, highlighting that in most European Union countries they were already widely extended before the 2007-2008 financial crisis. The impact of wage supplements on employment, wages, and poverty in different countries is also addressed. The text concludes that the design of wage supplements varies depending on the specific objective to be achieved, and it mentions employment-related conditions such as the minimum number of hours worked and minimum wage earnings as important elements in their design. The importance of administrative procedures in the effectiveness of these schemes is also discussed, and fiscal and benefit modalities for their implementation are mentioned. The article analyzes the effectiveness and contextual elements related to wage supplements. The design and management of wage supplements are also analyzed, focusing on their impact on poverty reduction and employment. The text examines wage supplements in the labor market and their impact on the accumulation of human capital. The complexity and effects of the income guarantee system in relation to benefit utilization and system legitimacy are also analyzed. The document provides a list of bibliographic references related to the design and impact of wage supplements and income guarantees in different countries. The document compiles a list of bibliographic references related to the topic of low wages and income guarantees. [Extracted from the article]

As environmental concerns continue to grow worldwide, the role of environmental policy in promoting sustainable development has become increasingly important. This study examines the impact of environmental policy on the innovation of small and medium-sized enterprises (SMEs) in China, a country where environmental regulation has been rapidly expanding in recent years. The analysis employs a regression model that controls for various firm-level and environmental factors that may affect innovation. A loan guarantee may boost an SME's chances of acquiring borrowed funds, the number of loans obtained, expenses, capital equipment expenditures, and TFP by 2%, 17.4%, 7.6%, 6.16%, and 5.26%, respectively. Furthermore, the influence of information networks on performance is examined. Environmental policy and open innovation activity, opposite transfer, investor interactions, and SMEs' success are all examined, with a focus on Chinese SMEs. The findings suggest that policymakers should consider designing more targeted and flexible environmental policies that provide incentives for SMEs to innovate and adopt sustainable practices, while minimizing potential negative impacts on their competitiveness and financial performance. [ABSTRACT FROM AUTHOR]

Optimizing Mobile Food Pantry Operations Under Demand Uncertainty Managing complex systems often involves making trade-offs between different objectives. A common example is seeking fairness guarantees in sequential resource allocation problems. For example, mobile food pantries are tasked with allocating resources under demand uncertainty with the goal of simultaneously minimizing inefficiency (leftover resources) and envy (deviations in allocations). In this work, we tackle a problem established from a partnership with the Food Bank of the Southern Tier in optimizing their mobile food-pantry operations. We provide an exact characterization of the achievable (envy, efficiency) pairs, showing that any algorithm achieving low envy must suffer from poor inefficiency and vice versa. We complement this exact characterization with a simple algorithm capable of achieving any desired point along the trade-off curve. We consider the problem of dividing limited resources to individuals arriving over T rounds. Each round has a random number of individuals arrive, and individuals can be characterized by their type (i.e., preferences over the different resources). A standard notion of fairness in this setting is that an allocation simultaneously satisfy envy-freeness and efficiency. The former is an individual guarantee, requiring that each agent prefers the agent's own allocation over the allocation of any other; in contrast, efficiency is a global property, requiring that the allocations clear the available resources. For divisible resources, when the number of individuals of each type are known up front, the desiderata are simultaneously achievable for a large class of utility functions. However, in an online setting when the number of individuals of each type are only revealed round by round, no policy can guarantee these desiderata simultaneously, and hence, the best one can do is to try and allocate so as to approximately satisfy the two properties. We show that, in the online setting, the two desired properties (envy-freeness and efficiency) are in direct contention in that any algorithm achieving additive counterfactual envy-freeness up to a factor of LT necessarily suffers an efficiency loss of at least 1 / L T . We complement this uncertainty principle with a simple algorithm, Guarded-Hope, which allocates resources based on an adaptive threshold policy and is able to achieve any fairness–efficiency point on this frontier. Our results provide guarantees for fair online resource allocation with high probability for multiple resource and multiple type settings. In simulation results, our algorithm provides allocations close to the optimal fair solution in hindsight, motivating its use in practical applications as the algorithm is able to adapt to any desired fairness efficiency trade-off. Funding: This work was supported by the National Science Foundation [Grants ECCS-1847393, DMS-1839346, CCF-1948256, and CNS-1955997] and the Army Research Laboratory [Grant W911NF-17-1-0094]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/opre.2022.2397. [ABSTRACT FROM AUTHOR]

We investigate the impact of two insurance mechanisms: loan guarantee insurance and yield insurance, on a capital‐constrained contract‐farming supply chain where the farmer is risk‐averse and faces yield uncertainty. Using the sequential model, we derive the farmer's optimal farm size, the agrodealer's optimal wholesale price and the insurance company's optimal premium rate. The result shows that under both insurance mechanisms, premium subsidies can promote the farmer to increase the farm size. However, we find that under loan guarantee insurance, when the premium subsidy is relatively high, the farmer's farm size increases with the poor harvest risk. Under yield insurance, the farmer's conditional value‐at‐risk (CVaR) value increases with respect to the premium subsidy rate. Under loan guarantee insurance, the premium rate increases with respect to the premium subsidy. As a result, the farmer's CVaR value decreases with respect to the premium subsidy rate when it is relatively high. Further analysis indicates that with the same government subsidy expenditure, the efficiency of premium subsidies to increase the farmer's production quantity is better under loan guarantee insurance mode, but the efficiency of premium subsidies to increase the farmer's CVaR value is better under yield insurance. [ABSTRACT FROM AUTHOR]