Demand For Capital Research Articles

Measuring Free Cash Flows to Equity for Financial Institutions: An Application to Qatar Islamic and Conventional Banks

This paper explores how accounting disclosures can be combined with regulatory disclosures to refine existing concepts of free cash flows to equity (FCFE) for financial institutions. The resulting measure is designed to promote market discipline by helping investors distinguish among capital demands driven by new growth opportunities, organic capital generation and shifting risk weightings. We apply this measure to the publicly listed conventional and Islamic banks in Qatar. The results support the conclusions that FCFE is relevant for predicting growth and the demand for capital for both Islamic and conventional banks.

Globalisation, Eden and the Myth of Original Markets

The proposal by Adam Smith that the market is a primal human reality has arguably been the most influential of the myths offered as a substitute for the authoritative story of Eden by the Enlightenment’s founding fathers. This essay examines how rival primal stories shape agents’ moral stances by directing attention, framing conceptual priorities and in situating stated and unstated analytical presuppositions in contemporary economic discourses. Contemporary scholars have recently emphasised that the root metaphor of Smith’s economic theory is original barter. Tracing this scholarship, I will show how this picture of the human economic agent grounds the central tenets of the emerging global economic order. This vision will, however, then be shown to contrast with both the biblical vision of human economic activity (Genesis 2), medieval and reformation theological appropriations of this vision, and the political and economic institutions that pre-modern Christendom developed to express their belief in a human responsibility to serve the divine sustenance of the human race. I will conclude by suggesting why the transition from Christendom to modern global capitalism demands a deeper than usual theological analysis of phenomena we usually refer to under the heading of globalisation, calling for reformulations of basic Christian and non-Christian presumptions about economic practice and ethics.

The Green Economy Paradox: A Critical Inquiry into Sustainability Indexes

The idea of “green economy,” which was placed on the global agenda by the Rio 20 conference, claims to serve as a bridge between the demands of global capitalism and the vision of sustainability. In the corporate social responsibility literature, writers such as Michael Porter and Mark Kramer have made a similar claim, arguing that there is a positive correlation between corporate social performance and corporate financial performance. I argue that the claim underlying the green economy thesis, whereby the goals of (classical) economic growth and sustainable development can be achieved concurrently, is highly problematic. First, the claim disregards the extent to which the web of ideas and institutional structures that underpin the global capitalist system constrains the capacity of agents to commit themselves to sustainable policies. Second, it understates the difficult tradeoffs involved in implementing green growth policies. This critique ties in with the debate over the capacity of corporate social responsibility instruments to promote sustainable development. I examine this general critique in the context the two leading global sustainability indexes: the FTSE4Good Index Series and the Dow Jones Sustainability Indexes (DJSI). Sustainability indexes epitomize the green economy thesis because they claim to positively affect the sustainability profile of firms despite the fact that (or precisely because) they are situated at the heart of modern capitalism: the stock exchange. I demonstrate how the paradox at the heart of the green economy thesis manifests in sustainable indexes. In particular, I highlight the tension between the indexes’ dual role as financial products (tracking the firms’ share values) and as CSR instruments. I also show that both indexes suffer from a deep democratic deficit, which is inconsistent with their public function. I conclude with policy recommendations that could bring the indexes closer to a more meaningful understanding of the concept of green economy.

Groundwater and Economic Dynamics, Shadow Rents and Shadow Prices: The Punjab

This study investigates the effect of electricity subsidies on economic and groundwater dynamics. The analysis follows from a dynamic, multisector and general equilibrium model in which both aquifer hydrology dynamics in the Punjab region of India and capital accumulation across India are endogenous. The model predicts Punjabi aquifer depletion which has distinct regional impacts and slight spillovers on the rest of the Indian economy. From the Punjab perspective, electricity subsidies encourage higher levels of groundwater extraction than one would observe in the absence of the subsidy. In turn, the higher levels of groundwater extraction increase agriculture's ability to compete for labor and other farm inputs. Even with the subsidy, however, as the economy transitions to the long run equilibrium, groundwater tables fall and more electricity is needed to supply the same amount of water used in the previous period. These forces slowly diminish agriculture's ability to compete for resources and the sector eventually loses resources to the rest of the economy and in turn, agricultural income falls over time. These dynamics are accentuated when the subsidy is removed, leading to a more rapid decline in Punjabi agricultural income. Our empirical findings suggest eliminating the 'electricity for irrigation' subsidy leads to double gains: An environmental gain and an economic gain. The environmental gain is a slower rate of aquifer depletion over time relative to a subsidy world. Removing the subsidy discourages production of high water-intensive crops, thus slowing the rate of groundwater extraction. Although removing the subsidy increases agricultural production costs, it makes electricity less expensive for competing sectors, namely manufacturing, which in turn leads, over time, to increased electricity, capital and labor demand from manufacturing. This reallocation of resources to more productive sectors in the economy leads to an increase in Punjabi gross state domestic product, as compared to the case where electricity is subsidized. The empirical results suggest removing Punjabi electricity subsidies entails trade-offs between agricultural and manufacturing income and has implications for long term water use. Empirical results also suggest that correctly calculating the "stock" value of a natural resource requires macroeconomic data and hence, may be impossible to conduct in a partial equilibrium setting.

How ICT investment influences energy demand in South Korea and Japan

This empirical study examines substitute/complementary relationships in the demands for ICT capital, non-ICT capital, energy, materials, and labor in the industrial sectors in Japan and South Korea during 1973–2006 and 1980–2009, respectively. In doing so, a dynamic factor demand model is applied to link intertemporal production decisions by explicitly recognizing that the level of certain factors of production (referred to as quasi-fixed factors: ICT and non-ICT capital) cannot be changed without incurring so-called adjustment costs, defined in terms of forgone output from current production. Special emphasis is on the effects of ICT investment on energy use through the substitute/complementary relationships. This study quantifies how ICT capital investment in South Korea and Japan affects industrial energy demand. We find that ICT and non-ICT capital investment serve as substitutes for the inputs of labor and energy use. The results also demonstrate significant cost differences across industries in both countries.

A sustentabilidade ecológica do consumo em Minas Gerais: uma aplicação do método da pegada ecológica

Resumo: Embora sejam intensas as preocupações com o desenvolvimento sustentável, escassas são as tentativas de se mensurá-lo entre as unidades subnacionais no Brasil. Com o intuito de contribuir para o preenchimento dessa lacuna, este trabalho tem como objetivo principal analisar a sustentabilidade ecológica do consumo da população do Estado de Minas Gerais no ano de 2008 por meio do cálculo de sua pegada ecológica. A análise se baseia nas contribuições mais recentes para tal metodologia, buscando comparar o impacto local e a disponibilidade global de recursos. Concluiu-se que, apesar de estar dentro da própria capacidade de suporte do Estado, em termos per capita, a demanda absoluta por capital natural gera uma pressão excessiva quando comparada à disponibilidade mundial de capital natural, uma vez que, caso a população de todo o mundo mantivesse o mesmo padrão de consumo dos mineiros, seriam necessários 2,64 planetas Terra para sustentá-la.

A Study of Investor Sentiments and Stock Market Behavior

This paper highlights the presence of investors’ sentiments in the stock market with empirical evidences. Further it lays down the importance of stock market investment with the proper understanding of the sentiments.In this new millennium, with high speed technology which provides easy accessibility and financial products like credit derivatives and commodity market, capital market becomes an inseparable part of life for each and every individual. From the street hawkers who sell popcorn, ice cream, tea, vegetables, etc. to the business tycoons who manufactures consumer and producer based products and services; it would not be wrong if this market is regarded as a center of attraction for everyone. Whether a person is dealing in capital market or not, day-to-day changes and movements in the stock market will keep influencing the prices of all categories of products and services and thus all people get inevitably affected and related to the stock market, directly or indirectly. Thus it can be seen that there is a presence of awareness among common people but in the twenty-first century, time demands as well as dynamic nature of money and capital market demands for the awareness in its true sense about the stock market among common people.

Multinational versus National Firms on Capital Adjustment Costs: A Structural Approach

Abstract This paper provides an alternative perspective on the firm-level empirical analysis of the relation between foreign ownership and capital demand adjustment in host countries. The author estimates a dynamic structural model of investment on a sample of 4672 Belgian firms for the period 2003-2010, permitting him to distinguish the ‘ownership status’ of firms. He considers a dynamic discrete choice model of a general specification of adjustment costs including convex and non-convex components. The author uses the method of simulated moments in order to estimate the structural parameters. His results indicate that multinationals’ affiliates face lower capital adjustment costs than national firms.

Chronicle of a Dispossession Foretold

The production of a tourist space on the Bahía de Banderas, on Mexico’s Pacific coast, has required converting the land, the river, and the bay into private property, dispossessing the citizenry of its access to them and interfering with the right of free transit. The production of this unequal and exclusive space demonstrates the absence of democracy in spatial production and the defenselessness of the citizenry in the face of the neoliberal project. La producción del espacio turístico de Bahía de Banderas, en la costa del Pacífico mexicano, require convertir en propiedad privada el suelo, el río y las playas, lo cual implicó despojar a la ciudadanía de su acceso al río, al mar y al derecho del libre tránsito. Tal producción de un espacio desigual y de exclusión social evidencia el alto déficit de democracia en la producción espacial, así como la indefensión de la ciudadanía que conlleva el neoliberalismo.

Book review: Joseph E Uscinski The people’s news: Media, politics, and the demands of capitalism

Book review: Joseph E Uscinski <i>The people’s news: Media, politics, and the demands of capitalism</i>

Stock Price Related Financial Fragility and Growth Patterns

The total output of an economy usually follows cyclical movements which are accompanied by similar movements in stock prices. The common explanation relies on the demand side. It points out that stock market wealth drives consumption which triggers production afterwards. This paper focuses on influences via the supply side of the economy. The aim of the paper is to explore channels where stock price patterns influence the amount of credit taken by firms. We examine trend and volatility cycles on the stock market. There are three channels addressed: the stock market valuation as piece of information for the assessment of a firm’s creditworthiness, the influence on restructuring prospects in times of financial distress and the stock market related remuneration of the top management affecting capital demand. We ask to which extent a channel may contribute to the stock price - output relation when there is mutual feedback. A model `a la Delli Gatti et al. (2005) drives the results. Firms take credit to finance their production which determines their financial fragility. If their stochastic revenue is too low, they are bankrupt and leave the economy. The capital loss hurts the bank’s equity base and future credit supply is diminished. This causes business cycles. Results show that if the bank assesses creditworthiness according to the stock price then idiosyncratic stock price fluctuations have only a slight effect as they disturb selection and hinder growth. If stock market optimism matters for bankruptcy ruling the level of stock owners’ influence does not matter. If optimism is wide spread among stock investors however, investment behaviour is also correlated through the stock prices and this results in huge real economy cycles without any long-term growth. If volatility is considered in the decision of managers they act more prudently and this fosters growth.

International effects of China's rise and transition: Neoclassical and Keynesian perspectives

Opinion over the global implications of China's rise is divided between critics and proponents. Critics see it as having developed at the expense of both investment and employment in the US, Europe and Japan. Proponents emphasise improvements in the terms of trade and reductions to the cost of financing that stem from China's supply of light manufactures, its demand for Western capital and luxury goods and its high saving. The criticism implies Keynesian assumptions while proponents take a neoclassical perspective. In this paper, both are embodied in a global macro-model that emphasises bilateral linkages via trade and investment, with monetary spill-overs represented by globally integrated bond markets. Net gains are suggested for the US and Europe from China's successful export-oriented growth, though there are partially offsetting Keynesian effects. China's recent slower, more consumption focussed, growth appears also to be beneficial in those regions and in Japan notwithstanding terms of trade losses.

Are Educational Reforms Necessarily Growth-Enhancing? Weak Institutions as the Cause of Policy Failures

We study a developing economy in which the representative firm’s production function exhibits complementarities between human capital and the available level of technology. The firm invests in the acquisition of new technology, while employees decide how much human capital to acquire. The speed of human capital accumulation positively affects the growth rate of the economy, and as a result a reform that improves the educational system can lead to faster growth. Importantly though, if property rights are weakly enforced, firms have limited incentives to invest in the acquisition of new technologies. This might constrain the demand for human capital, making an educational reform potentially unsuccessful. If property rights are weakly protected, an educational reform results in the choice of a higher level of education only if individuals can transfer their human capital to a different economy, where the demand for their skills is higher. We thus conclude that only if an improvement in the school system is combined with better property rights enforcement will an educational reform unambiguously lead to faster growth.

(Failing to) create eco-innovation networks: The Nordic Climate Cluster

The Nordic Climate Cluster (NOCC) was an innovation network composed of large Norwegian and Swedish companies from different industries with common interests in climate-friendly eco-innovations. The network was initiated in 2008, but was disbanded just two years later. This study treats the NOCC as a special case (an eco-innovation network) and examines factors that influenced its failure. The study shows that the network failed for a variety of reasons, including a lack of stability, a lack of social capital and inadequate market demands for eco-innovations. The study concludes with implications for policy-makers who are keen to promote eco-innovation via networking.

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Human capital demand in Brazil: The effects of adjustment cost, economic growth, exports and imports

Abstract The objective of this paper is to learn about the effects of the adjustment costs, economic growth, imports and exports on human capital labor demand. The dynamic model proposed by Sargent (1978) was adjusted to consider three types of human capital: (a) one with fundamental education (1–8 years of schooling); (b) one with secondary education level (9–11 years of education); (c) and one with tertiary education level (12 years or more of schooling). Using state level panel data, the dynamic econometrics estimates showed the following results: (i) the labor market adjustment costs are very higher; (ii) the adjustment cost for the human capital with intermediary education level is the highest one compared to the others; (iii) the states’ economic growth favor those with superior education; (iv) the imports seems to favor the demand for those with intermediate education levels; (v) the degree of openness does show some weak effect on the demand for human capitals with intermediate education. In sum, the growing demand for human capital with some superior education seems to be more associated to its lower adjustment cost and economic growth; the non-significance of real wage elasticity and high adjustment cost seems to indicate that the human capital with intermediate knowledge is in short supply; hence, economic education policy that increases supply of such human capital are in need.

'A Triple-Braided Cord': Empirical Analysis of Three Theories of Nonprofit Sector Density

The three primary strands of nonprofit formation and density are well-documented, though often as rivalrous as the nonprofit-government relationships often encased in such theories. Building on previous studies which utilize similar data to test isolated hypotheses, this paper utilizes a combination of new “digitized” data and established records of social trust and community characteristics to mount a simultaneous test of the three top theories: government failure, interdependence, and social capital. We find that all sources of funding exert substantial impact on a nonprofit’s choice of location, in addition to local levels of social capital and heterogeneous demand. Therefore, we find evidence that both demand (client-as-agent) and supply (nonprofit-as-agent) forces are at work in the nonprofit market. Though this suggests simultaneity, such a model would both acknowledge a complex system more closely resembling that of a modern marketplace for quasi-public goods and would support the existence of a triple-braided cord of established threads of thought that explains the resilience of the nonprofit sector to various causes of density.

From inter-Asia studies toward tricontinental studies

This paper proposes new conceptual frameworks for “inter-Asia studies” in order to be more appropriate for addressing and redressing the demands of global patriarchal capitalism as well as overcoming the “regime of separation” of Asian studies from African and/or Latin American studies. To do that, first, I will problematize the male-East Asia-metropolis centeredness of “inter-Asia.” Then, I will try to locate “inter-Asia studies” into the field of “tricontinental studies” invented by the decolonial and deimperial spirit of connection between the colonized continents of Asia, Africa and Latin America. In the third section, I will propose a “feminist inter-referencing reading” that involves shuttling back and forth between the postcolonial sub-regions of Asia, Africa and/or Latin America horizontally from the location and perspective of gendered subalterns rather than upward-mobile metropolitan feminists. The feminist standpoint that reading takes is combined with the conceptual frameworks of labor, ecology and ethnicity. It is also held that such a feminist inter-referencing reading needs the imaginative and interpretative metaphor of the “planet” to overcome the Westernized notion of the “nation” and “globe” as well as the concept of “universality shared by all humans” not monopolized by Westerners. Lastly, this paper will illustrate the new kind of “tricontinental studies” by providing an example of “feminist inter-referencing reading” which connects and compares the sub-regions of South Korea, Vietnam and Liberia.

The people's news: media, politics, and the demands of capitalism

Acknowledgments 1. Introduction: Whose News? 2. Informational Demands for News: Agenda Setting and Audience Influence 3. Demands for Gratification: Competing in the National News Economy 4. Perpetual Feedback: Monitoring the New Media Environment 5. Where Can We Go? Consuming Responsibly Notes References Index About the Author

Book Review: The People’s News: Media, Politics, and the Demands of Capitalism, by Joseph E. Uscinski

The People's News: Media, Politics, and Demands of CapitalismJoseph Uscinski, an assistant professor of political science at University of Miami, has taken a giant step forward with his examination of what he refers to as the people's news. Although his subtitle makes reference to demands of capitalism, his focus within text is on what economists refer to as consumer demands. This conflict between constructions is something to which we will return after I take due note of great many things that Uscinski makes perfectly clear.This is a book about information and democracy, and Uscinski suggests we have reason to be concerned about character and quality of information being supplied by nation's news media. Among many shortcomings that are identified within introduction, we are reminded of many ways that negativity can degrade quality of citizen engagement in democratic process. Framed as a externality rather than a journalistic goal, we are told that overly pronounced negative news can us to avoid activities that might otherwise lead to enlightened citizenship.The nature of these media effects are explored more fully in second chapter, where Uscinski explores many of claims and challenges that have been made with regard to agenda-setting hypothesis. While making it clear that controlled experiments provide considerable support for claims that media coverage can set audience agenda, Uscinski describes an innovative approach for assessing extent to which audiences can also be said to set media agenda. After presenting five arguments for why a study of television network news provides a fair test of audience influence, Uscinski describes his use of abstracts from Vanderbilt News Archives from 1968 to 2010 to identify extent of news coverage of various issues over this forty-two-year period. Among many interesting things he notes about this coverage is extent to which networks agree with themselves, as well as New York Times, about which issues are worthy of our attention. He makes use of Gallup's Most Important Problem as a measure of public's interest in these issues.The challenge, of course, is to determine direction of influence, or dare we say the direction of statistical causation between news issue coverage and public opinion. For this, Uscinski relies upon Granger analysis to assess this directionality at different time lags. Not surprisingly, there is no simple answer to question being set here. While audience opinion is said to drive media coverage with regard to seven issues, media drive opinion in four, and there is no significant relationship for ten remaining issue areas. Uscinski this evidence of audience influence over news media to introduce another perspective on media effects into discussion.Uscinski provides a political scientist's slant on some of insights derived from communications scholars' periodic engagement with media uses and gratifications. Audiences are said to derive important gratifications from exposure to media content that is consistent with their ideology and political partisanship. Because these are believed to be relatively stable attributes of an individual's identity, it is likely that neither is much changed by exposure to news media content. It is here that change in nature of media environment becomes particularly relevant. …