Relevance Of Credit Research Articles

Product Innovation, Credit Constraints, and Trade Credit: Evidence from a Cross-country Study

This paper studies the relationship between trade credit and innovation. Although trade credit is well researched in the finance literature, its link to innovation has been neglected in prior research. We argue that innovative small and medium-sized enterprises (SMEs) are more likely to use trade credit than non-innovative SMEs because of credit constraints and that business partners may have incentives to offer trade credit especially to SMEs with product innovations. The relationship between product innovation and trade credit is empirically examined using a sample of SMEs from 15 European countries. The results of an econometric analysis confirm a positive relationship between innovation and trade credit. In particular, SMEs with product innovations have a higher probability of using trade credit than other SMEs. Moreover, the results suggest that the effect of product innovation is only statistically significant if SMEs report that access to financing or cost of financing are obstacles for the operation and growth of their businesses. Hence, the results point to the relevance of trade credit as a source of short-term external finance for innovative SMEs that are credit constrained. Copyright © 2011 John Wiley & Sons, Ltd.

Legislative Demands and Economic Realities: Company and Group Accounts Compared

In a lot of countries, not only one but several sets of accounts have to be prepared and disclosed by (holding) companies. This paper inquires into possibly different economic functions of these sets of accounts by looking at the German dual financial reporting system, in which company (single) and group (consolidated) accounts have to be made public. Using a large number of accounting- and market-based metrics, we test whether single and group accounts display different properties and - if so - whether this finding can be explained by different economic roles played by both sets of accounts. Indeed, properties are found to largely differ. However, there is no evidence for single accounts being equally or more useful than group accounts in valuation and contracting or in other economic functions such as determining dividend policy or credit relevance. Moreover, single accounts also do not play an incremental role in fulfilling these functions. Our results indicate that the factual role of single accounts is to compute taxable income. We do not consider this as an economic function in its own right but a legal requirement that possibly can be achieved by less costly means than disclosing an own set of accounts following distinct accounting rules.

Fair-value pension accounting

We compare the value and credit relevance of financial statements under fair-value and smoothing (SFAS-87) models of pension accounting. While fair-value improves the credit relevance of the balance sheet, it does not improve its value relevance. Further, fair-value impairs both the value and credit relevance of the income statement and the combined financial statements unless transitory gains and losses (G&L) are separated from more persistent income components. Overall, our results suggest there are no informational benefits to adopting a fair-value pension accounting model.

Fair-Value Pension Accounting

We compare the value and credit relevance of financial statements under fair-value and smoothing (SFAS-87) models of pension accounting. The fair-value model does not improve the value relevance of the balance sheet and may impair that of income and the combined financial statements, unless transitory unrealized gains and losses (G&L) are disaggregated from more persistent income components. Further, the fair-value model improves the credit relevance of the balance sheet but impairs that of income and the combined financial statements, unless G&L is separated from other income components. Overall, our results suggest there are no informational benefits to adopting a fair-value pension accounting model.

Informal credit markets and economic development in Taiwan

Taiwan is a case which shows how informal credit markets help to compensate for the limitations of the formal financial system, especially in satisfying the needs of medium and small enterprises. Government regulations and policies affect the way participants in informal credit markets solve selection, enforcement and incentive problems. Recent changes demonstrate the continued resilience and relevance of informal credit markets during a process of financial liberalization.

Financial Structure, Bank Lending Rates, and the Transmission Mechanism of Monetary Policy

The stickiness of bank lending rates with respect to money market rates is often regarded as an obstacle to the smooth transmission of monetary policy impulses. Yet, no systematic measure of the different degree of lending rate stickiness across countries has been attempted. This paper provides such a measure. It also relates the different degree of lending rate stickiness to structural features of the financial system, such as the existence of barriers to competition, the degree of development of financial markets, and the ownership structure of the banking system. Thus, the paper provides further evidence on the relationship between structural financial policies and monetary policy, as well as on the relevance of credit markets for the monetary policy transmission mechanism. The role of administered discount rates in speeding up the adjustment of lending rates is also discussed.

Financial Structure, Bank Lending Rates, and the Transmission Mechanism of Monetary Policy

The stickiness of bank lending rates with respect to money market rates is often regarded as an obstacle to the smooth transmission of monetary policy impulses. Yet, no systematic measure of the different degree of lending rate stickiness across countries has been attempted. This paper provides such a measure. It also relates the different degree of lending rate stickiness to structural features of the financial system, such as the existence of barriers to competition, the degree of development of financial markets, and the ownership structure of the banking system. Thus, the paper provides further evidence on the relationship between structural financial policies and monetary policy, as well as on the relevance of credit markets for the monetary policy transmission mechanism. The role of administered discount rates in speeding up the adjustment of lending rates is also discussed.

Financial Structure, Bank Lending Rates, and the Transmission Mechanism of Monetary Policy

The stickiness of bank lending rates with respect to money market rates is often regarded as an obstacle to the smooth transmission of monetary policy impulses. Yet, no systematic measure of the different degree of lending rate stickiness across countries has been attempted. This paper provides such a measure. It also relates the different degree of lending rate stickiness to structural features of the financial system, such as the existence of barriers to competition, the degree of development of financial markets, and the ownership structure of the banking system. Thus, the paper provides further evidence on the relationship between structural financial policies and monetary policy, as well as on the relevance of credit markets for the monetary policy transmission mechanism. The role of administered discount rates in speeding up the. adjustment of lending rates is also discussed.

Ancora sul credito di ultima istanza

Among the preventative surveillance measures on financial intermediation and the management of cases of formal insolvency of intermediaries are the defences against instability through the lender of last resort, a classic theme of central banking. At least three aspects of this issue, dating far back and yet still very relevant today, require further investigation: the relevance of credit of last resort today and in perspective, the criteria by which it should be modelled and the full adaptation of Italy’s institutional structure to these criteria. In this context, the author provides analysis. JEL Codes: E52 Keywords: last-resort credit