Debt Relations Research Articles

The Effect of Debt to Equity Ratio and Return on Equity on Stock Return with Dividend Policy as Intervening Variables in Subsectors Property and Real Estate on Bei

The aims of this study are to investigate the effect of Debt to Equity Ratio and Return on Equity on stock returns with dividend policy as an intervening variable on the property and real estate companies in Indonesia. We collected annual data for eighteen property and real estate companies in Indonesia from the Indonesia Stock Exchange over the period of 2014-2018. We applied multiple linear regression model using SPSS and the Sobel test. Our analysis results found that Debt to Equity Ratio (DER), Return on Equity (ROE), and Dividend Payout Ratio (DPR) have a positive and significant affect on stock returns, both partially nor jointly. Furthermore, the result of Sobel test revealed Dividend Payout ratio (DPR) can be mediate the relationship of Debt to Equity Ratio (DER) and and Return on Equity (ROE) on stock returns. Based on these findings, we concluded that Debt to Equity Ratio (DER) and Return on Equity (ROE) have direct and indirect effects on Stock Return in 18 Indonesia’s property and real estate companies.

Sustainability of Public Debt:An Analytical Framework

Sustainability is a term that has been used with increasing frequency in the academic literature and recent multilateral policy discussions. Taking note of the crises in different countries heading for a debt trap, it is necessary to look at the right combination of fiscal parameters and growth to achieve sustainability and stable development. Fiscal prudence involves exercise of good judgment, common sense and even caution in the conduct of fiscal policies, especially on the expenditure front. This paper deals with finding: (a) debt-GDP threshold which will support to find out at what threshold level there is nonlinear relationship between debt and GDP, (b) sustainability indicators which gives the overall depiction of the fiscal side which guides for fiscal prudence policies, and (c) Markov regime switching model which explains the relationship of debt and growth. The period of study is from 1980 to 2016 and it is with respect to the central government.

Student debt and wellbeing: a research agenda

ABSTRACTWith levels of student debt unprecedented and rising in many democracies, growing attention has been given by academics and practitioners to its possible effects for student wellbeing. This article makes three contributions to this debate. First, it offers a critical review of literature that considers the relationship of student debt and wellbeing to open up discussion about the dimensions, limitations and possibilities of the field. Second, the paper points to potential avenues for future research about student debt and wellbeing by considering indicative comments made by New Zealand university students as part of a series of in-depth interviews. Third, the article makes a practical contribution to current debates about the tuition ‘fees free’ policy in New Zealand. We argue that developing a more robust understanding of how student debt affects wellbeing may help to broaden and reinvigorate academic and public debate about student debt.

Effects of Corporate Governance and Capital Structure on Firms’ Performance: Evidence from Major Sectors of Pakistan

This study aims to examine the effects of corporate governance and capital structure on firm’s performance. Panel pooled regression method were applied on annual data of two major sectors: automobile & fertilizers from 2006 to 2016. Findings show that board size have positive relationship & audit committee has negative relationship with profitability of automobile sector and vice versa for fertilizers sector. Capital structure is measured by current ratio, debt to equity, short term & long term debt whereas profitability is measured by ROA and ROE. Positive relation of current ratio and profitability of both sectors is observed and the negative relationship of debt to equity of both the sectors has been observed whereas short and long-term debt has no significant relationship in fertil- izers sector. The results should be of great importance to investors, creditors, financial analysts and academicians especially after global financial crisis and collapses of giant organizations worldwide.

Impact of Fiscal Deficit and Government Debt on Interest Rate in Pakistan

The current study was conducted in the year 2014 in Pakistan to investigate the impact of fiscal deficit and government debt on the interest rate. Data on selected macroeconomic variables like fiscal deficit, government debt, GDP per capita, money supply and volume of trade etc. from the year 1990 to 2012. The study also has tried to find out that how the interest rate in the country is affected by the government debt and fiscal deficit. Augmented Dickey-Fuller test was run to address the stationary issue in the data, and then Ordinary Least Square (OLS) model test was run to check the relationship among the variables. Two models were set in the study. In the first model, the relationship of GDP per capita, money supply, total debt servicing and volume of trade showed a significant relationship with the fiscal deficit, while in the second model the relationship of inflation, fiscal deficit, money supply, government debt and public debt showed a significant relationship with the interest rate. Policy makers are advised to focus on the increase of DGP/Capita and export volume. In order to sustain the rate of inflation, the government may regulate the money supply and public borrowing.

The Default Contagion of Contingent Convertible Bonds in Financial Network

This paper investigates the impact of Contingent Convertible (CoCo) bonds on systemic risk using Eisenberg-Noe’s financial network method, where the network is linked by debt relationship. The default contagion and loss amplification due to network linkage measure the systemic risk, from which we can ascertain the potential impact of CoCo bonds on systemic risk. Results show that CoCo bonds enhance the spillover effect of issuer’s default; in the meanwhile, sufficient CoCo bonds partly offset the impact of default contagion from other institutions. In addition, CoCo bonds enhance the amplification effect of loss due to network linkage, but the amplification effect diminishes after considering the bankruptcy cost. Finally, the numerical test is given to provide some insight into how the issuance of write-down (WD) bonds have influences on commercial banks in China.

On the relationship of money supply, consumer demand, demographics and debt

On the relationship of money supply, consumer demand, demographics and debt

On the relationship of money supply, consumer demand, demographics and debt

We show that consumer-based economies tend to suffer from demand saturation after an initial and prolonged period of growth. Saturation triggers a Minsky super-cycle, characterised by high debt, high income inequality and financial instability. We argue that monetary policies such as negative interest rates and yield curve targeting can be effective in combating recessionary conditions in an unsaturated economy, but yield to problems in a saturated economy as misallocations may generate bubbles. We find that maintaining a growth rate which corresponds to the demand growth rate at which consumers replenish their stock of goods, smooth out the business cycle in an unsaturated economy, while technological development and demographic modification is the only possible way to prevent or combat the saturation of an economy.

Ijarah Contracts in the Russian System of Debt Relationship

Ijarah Contracts in the Russian System of Debt Relationship

Tax avoidance and cost of debt: evidence from a natural experiment in China

AbstractThis study examines the impact of tax avoidance on the cost of debt using a natural experiment in China. Existing literatures identify two channels about how debt holders perceive tax avoidance behaviour. But there is no census on why and when one channel prevails or dominates the other one. Using China's New Regulation on bonds issuance in 2015 as a natural experiment, we find a negative (positive) association exists between tax avoidance and the cost of debt before (after) the New Regulation. We also find that both going public and state ownership have significant impacts on the tax avoidance and cost of debt relationship. Our findings suggest that debt holders’ perception on tax avoidance behaviour varies with external corporate governance regulations.

On the Relationship of Money Supply, Consumer Demand and Debt

This article assesses economic growth in the context of consumer saturation. We show that consumer based economies tend to suffer from demand saturation after an initial and prolonged period of growth. However, structural demand saturation irrevocably triggers a Minsky-type super cycle that is characterized by high debt, high income inequality, stagnation and financial instability. We argue that controlled debt deflation through negative interest rate policies can be effective in combating recessionary conditions and resolving the debt crisis. Moreover we show that monetary policy can help to mitigate the effect of consumer saturation through yield curve targeting. The idea is to ensure that economies do not grow too quickly, but maintain a growth rate which corresponds to the demand growth rate at which consumers replenish their stock of goods in the long run. We argue that such a policy avoids boom and busts and smooths out the business cycle.

THE ANALYSIS OF THE U.S. EXTERNAL DEBT IN TERMS OF FACING THE CHALLENGES OF THE WORLD ECONOMIC DEVELOPMENT

The up-to-date approaches to external debt and its effects on economic processes entrench the standpoint of debt financing being the distinctive feature of the modern inclined-to-liberalization world. Subsequently, unhampered capital flow between economies is the offspring of macroeconomic equilibrium, since the allocation of capital based on barrier-free movement pays the way for factor prices levelling. Given these points, commodity prices develop a propensity for adjustment, financial system acquires sustainability and reliability. This research builds on existing knowledge in the domain of debt and is conducted in pursue of analyzing the U.S. external debt and effects it has on both the U.S. Economy and the global economy. Prior to looking into the external debt itself, the research study reveals the latest world financial and economic tendencies, the distinguishing features of which are low interest rates and smoldering economic growth. The IMF dubbed this economic agenda as “…a low growth, low-rate area” [1]. Along similar lines, the results of the research lend firm support to the view that the U.S. external debt poses little threat to the world economy in the short-run, since the U.S. economic growth outpaces debt servicing costs build-up. However, in case of the emergence of an economic decline, the United States may face challenges of debt servicing in the long-run perspective, hence fail to comply with the sacred principles of debt relationship such as timeliness and solvency

Sovereign Debt Restructuring: A Contract Theory Perspective

The story of sovereign debt restructuring has been one mixed fortunes. While sovereign debt restructuring based on contractual approach has shown remarkable success, certain challenges (particularly holdout disruption) continue to beset it. Market players and other stakeholders in international finance have made some efforts to contain these challenges. However, they do not appear to have been laid to rest. Recent history of sovereign debt restructuring appears to show that these challenges are rooted in a classical theoretical approach to sovereign debt restructuring. But, remedies and proposals to contain them have been sought almost exclusively from positive law (by positive law I refer to the bare body of man-made laws consisting of codes, regulations, and statutes enacted or imposed within a political entity such as a state or nation and stripped of underlying theoretical legal norms). The pith of this paper is to present an alternative way of looking at contractual sovereign debt restructuring – legal (contract) theory. This perspective from contract theory presents an alternative approach to sovereign debt restructuring based on a theoretical enquiry into the contractual relationships that underlie sovereign debt transactions. This enquiry should lead to a formulation of normative principles of sovereign debt in context; and from these principles positive rules of law may be extrapolated to address issues arising from sovereign debt restructuring, based on the product of the enquiry. This is in contrast with the current approach to contractual sovereign debt restructuring where barefaced ex ante positive law of contract (mostly domestic) is applied to sovereign debt restructuring with little or no regard as to whether the legal norms that inform the positive law also underpin the sovereign debt relationship.

Nonlinear association between ownership concentration and leverage: The role of family control

The 2008–2009 global financial crisis and the European debt crisis have raised further questions on leverage decision making. In this regard, this study examines the association between concentration of controlling rights and leverage in the presence of families. This study also assesses the role played by families in moderating the nonlinear reversed U-shaped association between concentration of controlling rights and debt ratio. Publicly listed companies in Taiwan, which is a nation characterized by weak protection for minority shareholders, are studied for the period of 1999 to 2014. The effect of the nonlinear inverted U shape is confirmed, and the weakened effect of the existence of family control is presented. The results remain unchanged in several alternative tests, including addressing the endogeneity issue of ownership–decision studies. Overall, this study highlights the ownership–debt relationship in a nation with weak protection of minority shareholders.

Money, Power, and Monetary Regimes

Money, in this paper, is defined as a power relationship of a specific kind, a stratified social debt relationship, measured in a unit of account determined by some authority. A brief historical examination reveals its evolving nature in the process of social provisioning. Money not only predates markets and real exchange as understood in mainstream economics but also emerges as a social mechanism of distribution, usually by some authority of power (be it an ancient religious authority, a king, a colonial power, a modern nation state, or a monetary union). Money, it can be said, is a “creature of the state” that has played a key role in the transfer of real resources between parties and the distribution of economic surplus.In modern capitalist economies, the currency is also a simple public monopoly. As long as money has existed, someone has tried to tamper with its value. A history of counterfeiting, as well as that of independence from colonial and economic rule, is another way of telling the history of “money as a creature of the state.” This historical understanding of the origins and nature of money illuminates the economic possibilities under different institutional monetary arrangements in the modern world. We consider the so-called modern “sovereign” and “nonsovereign” monetary regimes (including freely floating currencies, currency pegs, currency boards, dollarized nations, and monetary unions) to examine the available policy space in each case for pursuing domestic policy objectives.

The price of an apprentice : contracts and trials in the woollen industry in sixteenth century Italy

The history of work in the modern era has – often unfairly – considered children’s work to be a minor aspect of the household, if not « complementary » to the economic activities unfolding within it. While the traditional garzonato [apprenticeship] represented a formative stage of an adolescent’s life, geared toward learning a trade that would be practiced in adulthood, other work done outside of a trade career was considered – often incorrectly – as « minor » and as a mere response to a family’s economic or structural difficulties. As a result the wages of pueri, that is children between the ages of 7 and 14, were usually considered « supplementary » to the household budget in relation to the wages of more adult workers, and thus stripped of their individual nature. However, research on certain Italian and European cities has enabled a partial revision of these interpretations, offering a broader framework for the causes and significance of children’s work in modern times. Drawing on the proceedings from a number of central and northern Italian civil and business courts (Padua, Florence, Vicenza, Milan), cross-checked with a large body of notarial acts, this paper seeks to show how children’s wages played a role that went beyond just remunerating work or supplementing family income. In fact, wages were primarily a means to ensure the temporal continuity of a relationship of debt and credit between two or more people, allowing the children – and their respective parents and guardians – to enter into relationships with other individuals and build social as well as economic ties that might prove useful in the future. Second, children’s wages were not set according to a ‘standard’, but rather reflected apprentices’ individual characteristics, which were primarily defined by the characteristics of their biological family. Finally, by earning wages these children were able to begin a long process of integration into ancien regime society. On the basis of these and other elements this paper proposes to critically discuss the nature, role and function of children’s wages in modern times.

Does Debt Really Crack the Whip? Evidence from a Panel of Selected OECD Countries

Abstract External debt and GDP relationship has long been a focus of interest. The outcome of time series analyses and a few panel data outcome of previous studies are contradicting. In an attempt of unifying we have tried a panel data model of 17 selected OECD countries. We have estimated pooled regression, fixed effects and random effects models. The result in this first round of estimation was in favor of fixed and ultimately random effects model. However, error terms of all these models turned out to be serially correlated. To overcome this problem several alternative dynamic models have been experimented. Overall result of study shows that for the OECD countries the foreign debt growth relationships is a positive one. Although there are some countries in the world that have a negative relationship, for the case of OECD at least, positive relationships are indicative of good policy administration.

Local Government Debt, a Time-Bomb for China’s Economy?

China's national audit office reported huge debt accumulated at all levels of local governments in recent years. This paper aims to explain the factors contributing to the local government debt in China with empirical study on the economic development data. The relationship of government debt and economic ratios is examined with the auto regressive linear equation constructed between the local government debt, fiscal income, GDP growth rate and CPI. Granger causality test is performed to find the granger cause of local government debt from previous year’s data. From the analysis, the risk of local government debt is evaluated from the global settings. Policy implications and suggestions are presented at the end.

The impact of the ESA 2010 on statistics of the general government sector

The author presents the importance of the new European System of National and Regional Accounts (ESA 2010) for statistics of the general government sector. She pays particular attention to the development of data for the excessive deficit procedure. The article explains the methodological changes made to the studies in this field parallel to the ESA 2010. It discusses, among others, issues related to defining the deficit and debt of the general government, as well as the determination of a new way registering transfer of liabilities of pension schemes. It also presents the impact of new methodological guidelines for the relationship of deficit and debt to GDP in the Member States of the European Union.

Factors of impact on dynamics and quality of accounts receivable of enterprise: theoretical aspect

The article summarizes the views of researchers on the factors that impact accounts receivable of enterprises. Systematization of factors of impact on the dynamics and quality of accounts receivable of enterprises has been scientifically proved. In order to provide the most capable system of accounts receivable management at enterprises, it is proposed to consider the system of factors of impact on its quality at the macro and micro levels that will allow regulate the debt relationship between the company and contractors quicker. Thus, system of factors has been improved, the leading role of which belongs to economic factors, which impact can be quantified. The list and analysis of factors influencing the dynamics and structural changes of accounts receivable are proposed to carry out taking into account the quality of accounts receivable for goods (work, services). The share of overdue debt in the total account receivable of the enterprise is proposed to be the main indicator of quality. Parameters that characterize the main factors of impact on dynamics and quality of accounts receivable of enterprises have been defined. Macro indicators are derived from official statistic sources. The indicators that characterize micro factors can be calculated according to accounting data of enterprises.