Funding Rules Research Articles

Solving Issues of Default Under Syndicated Loan Transactions: A Detailed Legal Analysis

This paper seeks to dissect the fundamental principles of syndicated loan agreements, analyse various legal problems and complications dwelling more on compliances clauses and lender’s default. Clauses are always of immense significance as far as loan transfers and agreements are concerned. They play huge parts, not only in every loan agreement, but also in other areas of international finance, for example in the issuance of various debt securities such as Eurobonds and medium term notes controlled by the rules of international finance. Although negative pledge and clauses are widely used, their applications are not without difficulties. In past years, there have been some controversies about which undertakings by the borrower are prohibited, the scope of the prohibition and what kind of remedies are available to the lender in case of a default or breach, and this will be the threshold of this essay, bordering largely on lender’s default and the mode of creating a preventive mechanism to discourage such default. Thus, questions and further controversies arise on rights and remedies available to the borrower, where a lender default, or breaches the syndicated loan agreement will also be discussed.In most cases, there is a tendency to draft agreements in such a way that the borrower is put in a fix, and bind so hard by the tenets of the agreements, all because he is the borrower. Therefore, it can be rightly argued that the ingenuity of debtors when it comes to raising secured finance in adverse financial conditions might have affected the ways which the agreements are drafted and how clauses are inserted. Thus, a rigid and complex negative pledge clause is often the preferred alternative as to a clause which eventually turns out to be inadequate when it comes to protecting the interests of the lender, but what are the rights of a borrower when a lender defaults, in what circumstances can a lender default or breach the express term of the agreement this will be looked at later but before then it important to consider the historical overview of syndicated loan agreements globally.

Has the Golden Rule of Public Finance Made a Difference in the UK?

This paper uses the SVAR methodology to investigate the effects of public investment on growth, and more specifically, the effects of the introduction of a golden rule of public finance. We extend the existing literature by estimating a model of the British economy that takes into account long run factors such as public debt accumulation. We find that in such a long run framework, public investment has a significant and permanently positive effect on GDP growth; this result runs counter to the most recent literature on the topic that was limited to a short run specification. We further find, by comparing different subsamples, that the introduction of the golden rule in 1997 strengthened the positive effect of public investment.

Comparing Compositional Effects in Two Education Systems: The Case of the Belgian Communities

ABSTRACTThe Belgian educational field includes separate educational systems reflecting the division of the country into linguistic communities. Even if the French-speaking and the Dutch-speaking communities keep sharing important similarities in terms of funding rules and structures, they present a huge gap between their respective pupils’ achievement. The Belgian educational systems are then characterized by high levels of segregation; this paper aims to model the potential differential effect of school composition on pupils’ achievement. Multilevel models are consequently tested on the Programme for International Student Assessment 2009 data (7184 respondents in 236 schools). Our results suggest that the position of pupils in the educational system still has a deep influence in a system that functions as a quasi-market and where grade repetition and tracking are widely used. Our analysis also confirms that academic and socio-economic compositions have an extra negative effect on pupils’ achievement.

Club governance and the making of global financial rules

ABSTRACTWho writes the rules of global finance? This article explains how the transnational financial policy community can influence the content of financial governance by organizing itself via a club model. This agent-centered explanation advances the concept of a club to highlight the mechanisms through which actors operate, the expertise and skills valued by this community and the way in which principles for what constitutes appropriate financial governance are derived. Evidence is provided by an investigation of the Group of Thirty, part-think tank, part-advocacy group, a hybrid organization whose members are active in both the official and private sectors. Club characteristics can be seen in the group's high profile and prestigious membership, which self-presents a strong sense of honor. The article highlights the club as a location for those traditionally understood as financial elites. It emphasizes the collective attributes of the club, such as reputational consistency of membership, but also the importance of a track record of policy work for the enduring relevance of club arrangements in agenda-setting, consensus building and establishing mechanisms for private influence in financial governance. The study draws on 80+ interviews with key stakeholders from the community, including group members, conducted between 1998 and 2010.

Acute heart failure clinical pathways, hospital funding and accreditation standards

Background. The aim of this study was to analyze the formalization of hospital pathways for patients with acute heart failure (AHF) and to describe standards of accreditation and funding of the providers. Methods. This study was carried out in 10 Italian Regions, through the analysis of regional determination and grey literature. Results. Pathway standardization is mainly present for patients with chronic heart failure; only the Piedmont and Emilia Romagna Regions provide a formal standardization for patients with AHF. Among the analyzed Regions, there were no differences in the start of the management process for AHF, including hospital admission. Conversely, several differences were observed among Regions in the organization of Short Way Observation (both in terms of duration and supply), the possibility of alternative modality of admission (e.g. "home hospitalization") and the funding rules of emergency departments. Conclusions. These above stressed differences are likely to have a significant impact on the optimal management of patients with AHF.

Money in the 2014 Congressional Elections: Institutionalizing a Broken Regulatory System

AbstractThe campaign finance system has fragmented campaign activity in response to rules that are unworkable in a strong party system. The 2014 congressional elections illustrate how party coalitions have adapted to practices that enable them to raise and spend money outside this formal regulatory framework. For several election cycles, partisan interest groups have used outside campaign organizations to circumvent rules that constrain candidate and party committees. The 2014 elections illustrate how party leaders in Congress and these candidates have now embraced the outside campaign strategy to wrest some control from other elements of the party. Recent changes to campaign finance rules may shift additional money toward traditional committees, but outside groups like Super PACs are now established features of US political campaigns.

Practical Applications of Is the 60–40 Stock–Bond Pension Fund Rule Wise?

While pension funds have long tracked the 60–40 stock–bond rule as a low-risk investment strategy, it significantly underperforms US presidential-party-based election strategies. This <b><i>Practical Applications</i></b> report delves into an alternative suggestion revealed in <b><i>Is the 60–40 Stock–Bond Pension Fund Rule Wise?,</i></b> which was published in the Winter 2013 issue of <b><i>The Journal of Portfolio Management</i></b>. Pension funds would do better managing asset class exposure according to political parties and election cycles, maintains author <b>William Ziemba</b>, Alumni Professor of Financial Modeling and Stochastic Optimization (Emeritus) at the <b>University of British Columbia</b>, Vancouver, and President of <b>William T. Ziemba Investment Management</b>. His article builds on earlier research that used asset class return data from 1928 to 1997 by incorporating new data for the latter part of Clinton’s second term, the Bush years and half of Obama’s first term, from 1998 to 2010.

Implications of Full and Partial Retirement for Replacement Rates in a Defined Benefit System

Flexible retirement arrangements in which workers can retire abruptly or gradually at the age of their choice with higher retirement income as a reward for working more or longer fit well with the changes in life course patterns in the past decades and may help to keep pension systems sustainable in times of population ageing. We analyse the flexibility of an existing pension arrangement in the Netherlands, characterised by a subsistence-level pay-as-you-go state pension combined with a supplementary occupational pension. We use the actual rules of a large occupational pension fund, the state pension and the tax system to calculate net replacement rates at ages 60 to 70 in full and partial retirement scenarios. We find that partial retirement results in a smoother income path and encourages employees to defer their pension claims beyond age 65. Moreover, while occupational pensions give close to actuarially fair rewards for continued full-time or part-time work, the state pension does not. This makes postponing retirement less attractive for low-income groups in particular.

Golden Rules of Financing Related to the Life Cycle of Czech Automotive Firms

Golden Rules of Financing Related to the Life Cycle of Czech Automotive Firms

Constitutionalizing Property-Owning Democracy

Constitutionalizing Property-Owning Democracy

Enacting the rules of global finance: sovereign wealth funds and the promotion of corporate governance reform

In the wake of the financial crises of the last two decades, the promotion of corporate governance reform has emerged as a priority concern of the international financial community. This paper draws attention to the role played by Sovereign Wealth Funds (SWFs) in this process. It shows that SWFs’ enactment of a common set of shareholder-oriented corporate governance reforms has not solely been driven from the ‘outside in’—i.e. conforming to prevailing global financial norms and pressures. Indeed, various SWFs are in fact attempting to change financial best practice from the ‘inside out’ by promoting a transformative shareholder-value model of corporate governance throughout the companies they hold in their investment portfolios. To better elucidate the dynamics of this process, this paper looks at the experience of two SWFs in Asia and Europe. More specifically, it will explore the corporate governance agendas of Norway’s Government Pension Fund-Global and Malaysia’s Khazanah Nasional Berhad.

An Evolutionary Economic Explanation of the SEC's Delay in Issuing Crowd Funding Rules

Why Would The SEC Delay Doing What Congress Told Them To Do About Implementing Crowd Funding?Most of the traditional economic equilibrium theory would have a hard time explaining why the SEC has not moved forward with rules for crowd funding, under Title II and III of the JOBS Act of 2012.To summarize this delay, the Congress passed the JOBS Act in April of 2012, and gave the SEC 9 months to come up with rules on certain provisions of the law, so that small firms could benefit by raising capital with the new method of crowd funding.Traditional economic theory would attempt to explain this delay by describing quantity and price adjustments, in very small increments, that would lead the economy to a point of equilibrium. Constitutional economic theory would extend traditional theory by suggesting that the agents who control the SEC may have their own internal goals that they are trying to maximize. James Buchanan called this behavior of both elected and appointed officials “rent seeking,” and his explanation is a big improvement over traditional theory in explaining the behavior of the SEC.

Tail risk in pension funds: an analysis using ARCH models and bilinear processes

Pension funding rules and practice contain implicit smoothing and counter-cyclical mechanisms. We set up a stylized model to investigate whether this may give rise to tail risk, in the form of large but rare losses, when pension liabilities are imperfectly but optimally hedged by pension fund assets. We find that pension losses follow a nonlinear dynamic process, and we derive a complete description of the stochastic properties of this process using Markov chain and bilinear stochastic process theory. The resulting pension dynamics resembles that of a modified ARCH model, which suggests that bursts in volatility may occur, and tail risk may be present. Simulations confirm that pension losses exhibit skewness, leptokurtosis and heavy tails, specially when cash flow smoothing is pronounced. Regulators and investors should be aware of the total amount of smoothing in pension funds as this may contribute to extreme losses, which may adversely affect the security of employee benefits as well as the valuation of firms with corporate pension plans.

Released potential: A qualitative study of the Mental Health Nurse Incentive Program in Australia

The Mental Health Nurse Incentive Program (MHNIP) is a Commonwealth Government funded scheme that supports people living with a mental illness. Despite its significance, the program has received little attention from researchers nor critical discussion within the published work. This paper first critically examines the MHNIP from the contexts of identities, autonomy, and capabilities of mental health nurses (MHN) and then reports on findings from a qualitative study that explored the experiences of staff working in the MHNIP. Key findings from this qualitative study include four main themes indicating that both the program and the nurses working within it are addressing the unmet needs of people living with a mental illness. They achieve these ends by adopting holistic and consumer-centred approaches and by providing a wide range of therapeutic interventions. As well, the MHN in this study valued the freedom and autonomy of their practice outside public health services and the respect received from colleagues working in other disciplines. Findings suggest that MHN within the study were experienced as having autonomous identities and roles that may be in contrast to the restrictive understandings of MHN capability within the program's funding rules.

Is the 60–40 Stock–Bond Pension Fund Rule Wise?

Pension funds typically suggest the 60–40 stock–bond rule to lower risk, as bonds tend to rise during stock market declines. However, U.S. investment returns have depended on the presidential party in power, and returns in the last two years of all administrations exceed those in the first two years. The strategies using small-cap stocks with Democrats and intermediate bonds or large-cap stocks with Republicans yields final wealth of about six times the large–cap index, 50% more than small caps and more than twenty times the 60–40 mix since 1942.

Entitlement Reform: From Tangled Web to Safety Net

So far, most options for protecting the viability of Social Security have tinkered with financing and eligibility rules that do nothing about design flaws that led to our current fiscal crisis – regressive transfers, unfunded liabilities, and inefficient funding of retirement benefits. Under the current system, payroll taxes rob the first dollars of earnings from the working poor and from others who would prefer real savings to a promise of future benefits from the government, while retirees who do not need public support fight for their earned benefits. My proposal, Social Security Basic Income, replaces a rigid formula for forced savings and intergenerational transfers with a pay-as-you-go welfare program funded from general revenue that provides basic income to poor people, regardless of age. Comparative static analysis of the impact of this system on individuals finds that a generous safety net will not significantly increase total federal expenditures or individual tax burdens.

The Perspective of a Small Member State to the Democratic Deficiency of the ESM

The adoption and ratification process of the Treaty establishing the European Stability Mechanism (ESM Treaty) has produced deep debates about this process and the European Union; about the (lack of a) link between the two; about democratic processes which allegedly have been short-circuited in the rush to a political/financial mechanism; about the rule of law and the rule of finance and expediency.Three decades ago, Estonia was part of a different constellation. Now, a part of the EU for the better part of the last decade, the debate about small versus large, about rules for all and procedures for some raise issues which touch not only Estonia; they are ones which can cross the borders into other economic associations and unions, such as the CIS or the Eurasian Economic Community (EAEC or EurAsEC).The authors of this article seek to address some issues regarding the democratic legitimacy of the ESM Treaty. Several of the legislative choices made in the ESM Treaty have passed without sufficient public debate or transparency. A thesis is presented here that some solutions adopted by the ESM Treaty have a dubious value in the context of EU law as well as in the progress of democratization of the EU. The article pinpoints a shift in the voting powers to the detriment of smaller Member States. Above all, the legal foundations of judicial review by the Court of Justice of the EU (CJEU) are questioned. The article reaches a generalized conclusion that deviation from the current decision processes and standards of democracy can be justifiable only if such a change is supported by the general public.

Optimal Economic Policy and Oil Prices Shocks in Russia

The goal of the paper is to explain and analyze whether the Central Bank of Russia should include commodity prices into the lists of variables they try to respond. We augmented New Keynesian DSGE small open economy model of Dib (2008) with the oil stabilization fund and new Taylor-type monetary policy rule and estimated the model using Bayesian econometrics. The results show that Central Bank’s mild response to the oil price changes may be desired in terms of minimizing fluctuations of inflation and output only in the case when stabilization fund would be absent, while this response is redundant when“excess” oil revenues can be saved in the fund.

The changing rules for academy funding

Academies are currently dealing with complex and changing funding rules. Vincent King looks at how some schools have been coping.

The European Fiscal Compact: A Counterfactual Assessment

Faced with the global financial crisis and an increasingly worrisome sovereign-debt crisis, the Eurozone countries are rethinking their fiscal governance. This paper discusses the different reforms and subsequent fiscal rules which have emerged since 2011. It assesses the impact of fiscal rules on the output gap and inflation rate of three representative countries of the Eurozone. By means of a counterfactual, the rules based upon their macroeconomic outcomes are ranked. The new debt reduction rule would certainly lead to lower debt levels, hence to larger fiscal margins for maneuver in the future but, in steep contrast with the golden rule of public finance, it would be very costly to implement as the requirement to enforce a substantial consolidation in the short run would be considerably higher than that of a golden rule and would worsen the output gap and inflation rate. The cap on the cyclically adjusted deficit also leads to unfavorable outcomes whereas the Maastricht status quo, limiting overall public deficit, would be a “second best” behind the golden rule of public finance.