Commercial Debt Research Articles

Between moral and commercial debt: Israel, Holocaust compensation, and the Conference on German External Debt, 1951–52

ABSTRACT In early March 1951, the Chancellor of West Germany, Konrad Adenauer, announced to the three Western powers occupying his country – the United States, Great Britain, and France – that his government was ready to acquiesce to their demands and settle the external debts Germany had accumulated before and after World War II. This announcement was made at roughly the same time that Israel presented its claim for reparations, which was added onto two other kinds of compensation claims the Jewish world had been already promoting in the aftermath of the Holocaust: claims for restitution of property and personal indemnification. The Israeli Ministry of Foreign Affairs (IMFA) was gravely worried about the possibility that West Germany would not be able to settle its moral debt to the Jewish people and the Jewish state due to the need to repay its commercial debts in the international arena. The present article examines the policy implemented by Israel with the aim of avoiding such a scenario.

The role of refundable accommodation deposits in financing aged care capital expenditure: Views from the sector

Residential aged care providers rely on refundable accommodation deposits (RADs) to finance capital expenditure, but changing consumer accommodation payment preferences may reduce their access. Our study evaluated the potential impact of a significant reduction in provider RAD balances. We surveyed 300 providers across Australia in 2020 and conducted focus groups and interviews with stakeholder executives, to develop key themes using an inductive constant comparative method couched within grounded theory. We found preferences for RADs vary across providers, with those seeking to undertake capital expenditure mostly preferring RADs. Stakeholder views suggested RADs facilitate low cost capital investment for some providers and allow banks to offer more debt to more providers. However, stakeholders suggested RADs may also create a more volatile financial structure and impose barriers to entry for equity. Stakeholders suggested a significant and sustained reduction in RADs would negatively impact capital expenditure and increase provider financial risk. Our study proposes that government intervention to stop a significant reduction in provider RAD balances should only occur if access to care is threatened. Intervention options could include enforcing liquidity and capital adequacy requirements, increasing investor returns to attract more equity and facilitate more commercial debt and establishing a government backed accommodation capital facility. JEL Classification: D14, G41, G51, G53, I18

Fiscal Fatigue, Public Debt Structure and Sustainability: A DSGE Model for West African Economic and Monetary Union

The present paper simulates several financing schemes for scaling-up public investment while stabilizing debt in WAEMU countries experiencing fiscal fatigue. We construct a DSGE model of a small open economy that incorporates the behaviour of four types of agents: firms, households, government, and the Central Bank. The analysis assumes that when the government faces fiscal fatigue, it can turn to debt to finance the scaling-up of public investment. To ensure long-term debt sustainability, fiscal adjustments are consistently implemented through transfers and/or taxes, subject to respective caps and floors. Simulations indicate that, in the presence of natural resource revenues, scaling up public investment is feasible using concessional borrowing only or by incorporating additional external commercial or domestic borrowing while maintaining debt sustainability. Otherwise, external commercial debt appears to carry more risk.

DECLARING THE BANKRUPTCY OF THE DECEASED IN ARAB LAWS

A bankruptcy lawsuit is a procedural lawsuit to prove that a merchant has stopped paying a commercial debt due to a disturbance in his financial position, which exposes his creditors to danger, and to seize all his money in preparation for selling it to pay off the creditors debts. Therefore, it has economic and social effects. However, it guarantees the rights of creditors, even if the original is to declare the bankruptcy of the merchant who is unable to pay his debts. However, the question is: Is it permissible to file a bankruptcy lawsuit against the bankrupt merchant who is dead? Therefore, this study aimed to identify the legal procedures for declaring a deceased merchant bankrupt in Arab legislation. The study used the comparative descriptive analytical approach by tracking and analyzing the rules for declaring a dead merchant bankrupt. The most important recommendation is the necessity of presenting the judicial precedents related to the subject of the study to benefit from them.

Infrastructure financing in Africa

We explore current development and constraints on infrastructure financing in Africa. We examine how infrastructure development in African countries affects ownership and capital structure choices of private and public–private partnership infrastructure projects. Using data from 33 African countries over 17 years, our findings suggest that infrastructure projects in African countries with better infrastructure development tend to have more private investment, more long-term investment, and they tend to use more debt financing, including more commercial debt, and less equity in their capital structure. For the least developed African countries, where debt financing is scarce, equity investment is vital for infrastructure financing.

Profiting from Slavery and Emancipation: Compensation, Capital, and Collateral in Nineteenth-Century Senegal

The relationship between capitalism and slavery has been contentious because, in the Atlantic economy, enslaved people functioned as commodities, as labor, and as assets. The transition away from the Atlantic slave-trading system across the nineteenth century affected the stakeholders in these economic functions differently. Compensated emancipation in Senegal provides an opportunity for thinking about the possibilities and limitations of compensation in facilitating capital's continuity. This article traces how individuals who had invested in enslaved labor managed the transition of emancipation and reinvested their compensation claims. It explores how the process of compensation addressed the problem of commercial debt in ways that allowed for a continuity of many of Senegal's urban business elite and their family firms through the end of the nineteenth century.

Profit: Concept and Stipulations in Islamic Commercial Debt financing

The detailed fiqh rulings on financial transaction contracts, including forward sale contracts, provide the rules, controls and characteristics of permissible commercial debt financing and clearly defines the fundamental differences between it and ribā-based debt financing.

Orchestrating finance with Material Adverse Changes?

AbstractFrom a legal and economic perspective, the global financial crisis, terrorist attacks, wars, natural catastrophes, and COVID-19 all have one thing in common: they are potentially ‘material adverse change’ events. Such events are unpredictable and have severe consequences for the global economy. To help manage the fallout from such negative events, businesses in economically valuable and complex deals, such as debt financing or mergers and acquisition (M&A) agreements, include special contractual risk allocation provisions, called Material Adverse Change/Effect (MAC) clauses. The COVID-19 crisis has had a drastic effect on M&A and debt financing deals, often leading to renegotiation and sometimes to litigation of these agreements based on MAC clauses. Termination of such transactions via MAC clauses poses serious risks, including those of causing a domino-effect in the market.The effects of MAC clauses in debt finance (as opposed to M&A deals), however, have been largely overlooked both in law and in finance. This paper is the first to investigate the pre-contractual (ex-ante) and contractual (ex-post) effects of MAC clauses in commercial debt financing agreements. It proposes a novel Multifunctional Effect Approach of MAC clauses in debt finance. This paper aims to explain why the commercial parties attach high importance to these vague and uncertain MAC clauses in debt financing agreements but hardly ever rely on them. First, the paper argues that apart from acceleration of the credit facilities, MAC clauses have various beneficial effects, such as screening. Secondly, MAC clauses should be regarded not only as mechanisms to solve information asymmetry but also have the following effects: improving governance, decoupling debt, providing restructuring impulses, countering uncertainty, signalling with acceleration. Potentially, MAC clauses also have the effect of a penalty default rule. The paper finds that despite these functions, the potential of MAC clauses in debt finance is not fully utilised, due to the unique characteristics of debt finance. This significantly undermines the efficiency of MAC clauses in debt finance, as lenders overprotect themselves by additionally relying on other contractual protection mechanisms and risk offsetting strategies for more efficiency.

Causes of Late Payment of Commercial Debt and Challenges of Working Capital to Small and Medium Enterprises (SMES) in the Construction Industry of Zamfara State, Nigeria

Causes of Late Payment of Commercial Debt and Challenges of Working Capital to Small and Medium Enterprises (SMES) in the Construction Industry of Zamfara State, Nigeria

Analisis Pengaruh Tingkat Harga Saham, Return Saham, dan Volume Perdagangan Saham terhadap Stock Split ISSI Periode 2015– 2020

For companies that collect funds from the public through capital from capital market, it can be used to meet capital needs and finance the company’s operation. So that company is expected not to rely on commercial debt financing both from within the country and abroad. With stock split, it is hoped that it will increase investors’ interest in buying affordable shares. This study aims to determine whether the stock split has an effect on stock prices, trading volume, and stock return. The method used by the researcher uses quantitative secondary data methods by using descriptive statistical data test, then use the kolgomorov smirnov normality test, and using theaverage paired sample test. The results of this research is that: 1) stock price have a significant effect after the stock split occurs, 2) while the trading volume has no significant effect after the stock split occours, 3) then stock return has a siginificant impact before and after the stock split because it is expected to have a positive impact for issuers and investors.

Analisis Pengaruh Tingkat Harga Saham, Return Saham, dan Volume Perdagangan Saham terhadap Stock Split ISSI Periode 2015– 2020

For companies that collect funds from the public through capital from capital market, it can be used to meet capital needs and finance the company’s operation. So that company is expected not to rely on commercial debt financing both from within the country and abroad. With stock split, it is hoped that it will increase investors’ interest in buying affordable shares. This study aims to determine whether the stock split has an effect on stock prices, trading volume, and stock return. The method used by the researcher uses quantitative secondary data methods by using descriptive statistical data test, then use the kolgomorov smirnov normality test, and using theaverage paired sample test. The results of this research is that: 1) stock price have a significant effect after the stock split occurs, 2) while the trading volume has no significant effect after the stock split occours, 3) then stock return has a siginificant impact before and after the stock split because it is expected to have a positive impact for issuers and investors.

Commercial and banking credit network in Uruguay

We build a commercial credit network, identify the most central economic sectors in terms of commercial debt, and provide a more complete idea of total indebtedness and financial interlinks between firms and banks in Uruguay. “Commerce,” “manufacturing,” and “transportation, storage, and communication” are the most central sectors in the commercial credit network. In a stress testing exercise, “transportation, storage, and communication” and “hotels and restaurants” are deeply affected in all cases. These sectors are the most exposed in terms of contagion. “Commerce” and “manufacturing” are central and have the highest level of indebtedness, but they have a large amount of liquid assets, which allows them to overcome shocks from other sectors. The results highlight the importance of having a good estimation of commercial credit interlinks for financial stability analysis.

Preferred and non-preferred creditors

International financial institutions (IFIs) generally enjoy preferred creditors treatment (PCT). Although PCT rarely appears in legal contracts, when sovereigns restructure bilateral or commercial debts they normally pay IFIs in full. This paper presents a model where a creditor, such as an IFI, that can commit to lend limited amounts at the risk-free rate and can refrain from lending into arrears is always repaid and adds value. The analysis suggests that IFIs and market lenders can both enhance welfare, even if banning commercial borrowing can sometimes be optimal. To maintain their status, preferred lenders should offer low cost financing in volumes that are consistent with countries' incentives to repay even in bad states. This suggests such lenders should not differentiate lending interest rates according to risk and should not participate in the restructuring of commercial debt.

Analysis Of The Impact Of Covid-19 On The Financial Statements Of Companies In BIST 100 By Ratio Method

Covid-19 tüm dünya ekonomilerini etkilemesi nedeniyle çok farklı alanlarda birçok çalışmaya konu olmuştur. Bu çalışmaların temel olarak iki kısıtı bulunmaktadır. Bunlardan biri, salgının başlamasından itibaren geçen sürenin kısalığı nedeniyle elde yeteri kadar veri olmaması, diğeri de, salgının boyutu, yayılma alanı ve ne zaman biteceğine ilişkin belirsizliktir. Bu çalışmanın amacı, Covid-19’un etkilerini, BIST 100 şirketlerinin mali tabloları üzerinden oran yöntemi ile analiz etmektir. BIST 100’de yer alan 84 şirket kapsama dahil edilmiş, banka, sigorta, leasing şirketleri ile sektör bazında tek olan ve özel hesap dönemine tabi şirketler dahil edilmemiştir. Çalışmada kullanılan veriler, Kamuyu Aydınlatma Platformu’ndan (KAP) elde edilmiş olup, elde edilen veriler karşılaştırmaya ve analize uygun hale getirildikten sonra, Microsoft (MS) Excel bilgisayar yazılımı yardımı ile analiz edilmiştir. Çalışma Covid-19’un mali tablolar üzerindeki etkisini oran yöntemiyle analiz eden ilk çalışma olup, şirket ve sektör sayısı itibariyle en geniş kapsamlı olanıdır. Analiz sonucunda, enerji, imalat, toptan ve perakende sektörlerinde likidite oranlarında iyileşme olurken, diğer sektörlerde bozulma olduğu, mali yapı oranları açısından, imalat, teknoloji, ulaştırma ve haberleşme sektörlerindeki oranların geçen yıla göre daha iyi olduğu, varlık kullanım oranlarının toptan ve perakende sektörü hariç hepsinde bozulduğu, enerji, teknoloji, toptan ve perakende sektörü hariç diğer sektörlerde, dönem karlarının düştüğü, teknoloji sektörü dışında tüm sektörlerde ticari borç ödeme süreleri ile alacak tahsil sürelerinin uzadığı tespit edilmiştir. Özetle, Covid-19’un BIST 100’de yer alan şirketlerin mali tablo oranlarını etkilediği ve bu bulguların yapılan diğer çalışmalarla uyumlu olduğu sonucuna ulaşılmıştır.

Institutional and Economic Determinants of Regional Public Debt in Spain

We analyze from an empirical point of view the evolution and determinants of Spanish regional public debt. Spain offers an interesting case study because of its high level of fiscal decentralization, implemented gradually during the past four decades, the parallel entry into force of a number of national fiscal rules in that period, and the heterogeneity of its regions, both in terms of economic fundamentals and some institutional features. Our main findings are the following: (i) on average, over the sample of study, regional governments’ fiscal policies reacted to public debt increase; (ii) fiscal rules played a limited role in controlling debt surges; (iii) a higher degree of regional fiscal coresponsibility tends to be linked to more subdued debt dynamics; (iv) market disciple has encouraged some fiscal restraint at the regional level; and (v) increases in public commercial debt have affected the standard debt.

Sovereign Risk after Sovereign Restructuring. Private and Official Defaults

This paper studies the relationship between sovereign debt default and sovereign credit risk by taking into account the depth of a debt restructuring and by distinguishing between commercial and official debt. We take different proxies for credit risk measures, such as rating agencies and institutional investors’ratings as well as bond yield spreads (EMBIG). By controlling for both the occurrence and the magnitude of debt defaults, we  nd that commercial and official defaults are associated to different outcomes. Private defaults seem to involve some reputational costs up to seven years since the last agreement, while official defaulters are not affected (or may even benefit) by the restructuring episodes. Using the Synthetic Control Method, we fi nd further evidence for the heterogeneity of the economic impact of debt restructurings, confi rming that official and private defaults may have different costs and then induce selective defaults.

A novel approach to the sustainable financing of the global restoration of degraded agricultural land

Humanity must find ways to feed an expanding human population. This requires maintaining the productivity of agricultural land, although much of it is increasingly degraded. Many trillions of dollars will be needed to address land degradation globally, but there has been little discussion about how to sustainably finance major global initiatives such as the UN Decade of ecosystem restoration. We suggest that existing financing instruments (government grants and commercial loans) have two limitations. First, the size of the problem is so substantial that contemporary approaches have no real prospects of adequately addressing the issue. Second, even if grants and loans had the potential in terms of prospective magnitude, in many instances they would be inequitable, regressive and/or have high risks for farm properties. We examine an alternate financing instrument, revenue-contingent loans (RCL), which potentially has subsidy-reducing properties for government budgets, and thus the capacity for more broadly-based public sector engagement with agricultural land remediation. RCL can substantially diminish borrowing risks and hardship for farm properties. Unlike commercial debt, repayments under RCL are not time-based but instead occur when a farm business can afford to make them. This is important as remediation of farmland degradation can be a medium to long-term process, and hence loan repayments need to parallel the time that it takes for the benefits of restoration to accrue to a farm business. Using income data from Australian agriculture, we illustrate empirically the repayment effects of a hypothetical RCL, focusing on the consequences for a government’s budget, the time stream of repayments for farms differing in revenue streams, and the benefits of income-smoothing. Our results underscore the potential benefits of RCL for the financing of land restoration investments, for both farmers and taxpayers. RCL could be made operational without significant costs to government budgets and within acceptable time frames.

Cost efficiency and financial situation of local governments in the Canary Isles during the recession

This paper examines cost efficiency in the Spanish municipal public sector, in a specific geographic area (the Canary Isles, Spain), with respect to financial condition and different types of municipal debt. The study focuses on municipalities dependent on tourism and on the consequences to them of the Great Recession, doing so via a two-stage analysis. In the first, the order-m method is used to evaluate the cost efficiency of 77 Canary Isles municipalities, for the period 2008-12. In the second stage, we examine the effect produced on cost efficiency by different types of borrowing (long term, short term, financial and commercial) together with other financial, economic, political and quality variables, using the model developed by Simar and Wilson (2007), based on a truncated bootstrap regression with panel data. Empirical analysis shows that in times of crisis there is a significant relationship between the components of financial condition and cost efficiency. In conclusion, municipal cost efficiency increases with commercial debt, but decreases with financial debt. Furthermore, certain socioeconomic variables affect the levels of cost efficiency. Este trabajo examina la eficiencia de costes para el caso particular del sector público municipal español, concretamente, para el caso de los municipios canarios, poniendo especial énfasis en áreas relacionadas con la condición financiera y diferentes tipologías de deuda, teniendo en cuenta las características propias que estos municipios poseen, como un índice turístico elevado. En primer lugar, se utiliza el método de orden m para evaluar la eficiencia de costes de 77 municipios de las Islas Canarias, para el período 2008-12. En la segunda etapa, examinamos el efecto producido en la eficiencia de costes por diferentes tipologías de endeudamiento (largo plazo, corto plazo, financiero y comercial) junto con otras variables financieras, económicas, políticas y de calidad, utilizando el modelo desarrollado por Simar y Wilson (2007), basado en una regresión truncada con datos de panel. Nuestro análisis empírico muestra que en tiempos de crisis existe una relación significativa entre los componentes de la condición financiera y la eficiencia de costes. En particular, concluye que mientras la eficiencia de los costes municipales aumenta con la deuda comercial, disminuye con la deuda financiera. Además, mostramos que ciertas variables socioeconómicas afectan los niveles de eficiencia de costes.

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The official (public) and commercial debt in the practice of external borrowing of the states: the ratio and the legal status

The official (public) and commercial debt in the practice of external borrowing of the states: the ratio and the legal status