Net Funding Research Articles

Simulating employment and fiscal effects of public investment in high-quality universal childcare in the UK

This paper simulates the likely fiscal and employment effects of a vast public annual investment programme of free universal high-quality early childhood education and care (ECEC) services in the UK. It examines the extent to which it would pay for itself fiscally for different scenarios of pay increases. Investing in high-quality universal ECEC benefits all children by improving their life chances, especially for those living in lower income families. It also generates larger employment effects than other more typical investment policies such as construction projects and fosters gender equality in employment: not only it provides many high-quality jobs for women, it also allows many mothers to improve their lifetime earnings prospects by freeing up their childcare constraints. This in turn has beneficial fiscal revenue effects for the government. Estimations of annual public expenditure for a system of highly qualified and well-paid childcare staff with low child-to-staff ratios are performed, with universal coverage for all pre-school children aged 6 months to 4.5 years. Labour demand and matching supply effects are also simulated using input–output methods, for different take-up rates of the programme. A microsimulation tool is used to calculate increases in household income and tax liabilities and decreases in social security benefits spending. This results in a net annual funding requirement of between 28 and 39% of the gross investment. Two funding methods are then explored: raising taxation in a progressive way and recouping the cost over time from persistent mothers’ increased earnings. The former would entail a net additional contribution by the richest 20% of households of at most 0.4% of their income; the latter would require 21 to 31 years to offset the programme on average, which is within a typical working life-course following a first child’s birth, of 35 years.

Finding opportunity in COVID-19: A narrative study of women artisan microentrepreneurs

ABSTRACT As the COVID-19 pandemic and its impact on the United States and global economies unfolded, the sewing industry was one of many that faced widespread uncertainty. A narrative research study examined how artisan microentrepreneurs in the sewing space experienced entrepreneurial opportunity alertness as they navigated the early months of the pandemic. Findings indicate that participation in multistage artisan entrepreneur communities provided the greatest benefits for members with no perceptible disadvantages. Entrepreneurs with diverse coping strategies were more resilient to challenges. The COVID-19 pandemic accelerated consumer adoption of digital technology in the United States, which facilitated growth for microbusinesses that have digital fluency or are ready to adopt new technologies. Policy recommendations are to restore net neutrality and implement federal funding for nonemployer firms impacted by disaster so artisan microbusinesses can thrive in the digital space.

Proper fund size: a perspective from both investors and fund managers

This paper proposes the notion of the proper size interval for funds and the market redemption return in fund markets. We establish a model to determine the proper size interval that accounts for the interests of both investors and fund managers as well as market constraints. We then propose a method to analyze fund managers’ abilities and fund sizes compared to the market averages. Using data on Chinese equity and hybrid funds for the sample period from 2009 to 2019, we find that there is a negative log-linear relationship between fund net excess return and fund size. Our model shows that both equity and hybrid funds experience the transition from being over-sized to properly- and under-sized. Under-sized and over-sized funds account for about 60% and 30% of the total sample, respectively, while less than 10% of funds have a proper size. Compared with over- or under-sized funds, funds with a proper size can generate higher returns and higher capital inflow. Our empirical results confirm that funds with higher managerial ability indeed outperform those funds with lower managerial ability, regardless of the category of fund size. Overall, our model provides a new method for fund investors, managers, and regulators to classify and evaluate funds.

The Portfolio Composition Effect

Does the evaluation of a portfolio of stocks depend on its composition of winner and loser stocks? To test this, we define a simple, counting-based measure of performance - the number of winner relative to the number of loser stocks in a portfolio - and examine how this composition measure affects individuals' willingness to invest in a portfolio. We derive testable predictions for the proposed composition measure from a framework which combines category-based thinking with mental accounting. Consistent with our predictions, we find across all experiments that individuals allocate larger investments to portfolios with more winner than loser stocks relative to alternative portfolios with more loser than winner stocks, although both portfolios (1) have realized identical overall portfolio returns and (2) show identical expected risk-return characteristics. Building on our experimental findings, we analyze fund flows of exchange-traded funds on leading equity market indices. We identify that the proposed portfolio composition measure is positively related to future net fund flows.

Modeling and analysis of the effect of COVID-19 on the stock price: V and L-shape recovery

The emergence of the COVID-19 pandemic, a new and novel risk factor, leads to the stock price crash due to the investors’ rapid and synchronous sell-off. However, within a short period, the quality sectors start recovering from the bottom. A stock price model has been developed to capture the price dynamics during shock and recovery phases of such crisis. The main variable and parameter of the model are the net fund flow (Ψt) due to institutional investors, and financial antifragility (ϕ) of a company, respectively. We assume that during the crash, the stock price fall is independent of the ϕ. We study the effects of shock length (TS) and ϕ on the stock price during the crisis period using the Ψt obtained from both the synthetic fund flow data and real fund flow data. We observed that the possibility of recovery of stock with ϕ>0, termed as quality stock, decreases with an increase in TS beyond a specific period. A quality stock with higher ϕ shows V-shape recovery and outperform others. The TS and recovery period of quality stock are almost equal in the Indian market. Financially stressed stocks, i.e., the stocks with ϕ<0, show L-shape recovery during the pandemic. The stock data and model analysis show that the investors, in the uncertainty like COVID-19, invest in the quality stocks to restructure their portfolio to reduce the risk. The study may help the investors to make the right investment decision during a crisis.

Mutual fund asset allocation during COVID-19

The paper examines the investment decisions of equity mutual funds during various stages of the COVID-19 pandemic with monthly portfolio holdings. We find that funds have favored firms with lower risk, higher financial flexibility, and larger asset size during the early months of the pandemic. This preference for relatively less risky firms, which later reverses, suggests a reallocation towards safer assets given the higher uncertainty at the beginning of the crisis. We also find that funds preferred growth firms over value firms as value firms with greater invested capital are likely to be less resilient to the crisis-induced shock. Institutional investors have also favored group-affiliated firms throughout the crisis, reflective of their ability to negotiate through the protracted economic shock. Furthermore, our fund-level analysis reveals that the investment approach of funds strongly varied by the extent of the net fund flows. The paper brings out key firm- and fund-level characteristics that impact the asset allocation of institutional investors during extreme market uncertainty.

ANALISIS KENAIKAN SISA LEBIH PERHITUNGAN ANGGARAN PEMERINTAH KABUPATEN REMBANG TA 2011-2015 DITINJAU DARI PERENCANAAN DAN PELAKSANAAN ANGGARAN

The amount of the budget surplus (SILPA) of the Government of Rembang District increased in the fiscal year (FY) of 2011-2015. In the FY 2015, the SILPA reached even as much as 26,78% of the local revenue and expenditure budget (APBD). The increase was hihgly contradictory to the budgeting process, considering that in the budgeting process, considering that in the budgeting process, the District Government implemented a deficit-based budgeting system with the SILPA budget at nil. This study was to determine the causes of the increase in the SILPA of the Government of Rembang District in the FY of 2011-2015. This was qualitative research with a case study approach. It involved participants from three elements whose jobs are connected to the local government financial management, namely the budget managers, budget users, and Budget Agency of the Regional House of Representative (DPRD). The results of this study indicate that the increase in the SILPA of the Government of Rembang District occurs when the budget is in surplus, and the net financing is te positive. The budget estimated to the accommodate the use of the SiLPA of the previous year as mandate by the regulation of the Minister of Home Affairs Number 13 of 2006 where in principle, some of the programs and/or activities have no longer implemented. Second, agency problem causes both the application of the minimal approach pattern in the process of determining the income estimation and the aplication of the maximal approach pattern in the process of determining the expenditure allocation result in the budgetary slack. Third, the legal cases ensnaring some officials of the Government of Rembang District have made the employees not sufficiently perform in the absorbing the budget.

Introduction to a Special Issue of the Financial Planning Review on financial technology

Introduction to a <i>Special Issue</i> of the <i>Financial Planning Review</i> on financial technology

After the Affordable Care Act: the Effects of the Health Safety Net and the Medicaid Expansion on Latinxs' Use of Behavioral Healthcare in the US.

This study investigated the association between the implementation of the Affordable Care Act (ACA) and Latinxs' use of behavioral health services in the US. Organizational responses from the 2010, 2014, and 2016 National Mental Health Service Survey were used to examine the number and proportion of outpatient Latinx admissions over time, as well as the role of Medicaid expansion and health safety net funding on Latinxs' admissions. Findings showed that there was an increase in Latinx admissions post-ACA (2014). However, 2years post-implementation (2016), Latinx admissions were at levels lower than prior to the healthcare reform. Despite this overall decrease, behavioral health safety net organizations, particularly those located in states that adopted the expansion of Medicaid, served more Latinxs than behavioral health service organizations outside the safety net. Policy and practice implications to strengthen behavioral safety net organizations that serve Latinxs are discussed.

Abnormal Returns, Corporate Financial Policies and the Dynamics of Leverage: Empirical Evidence from Non-Financial Sector of Pakistan

The aim of this study is to evaluate impact of corporate financial policies and the dynamics of leverage on financial performance of non-financial sector in Pakistan. In this study we used the data from Fertilizer, Chemical and Cement sector for the period 2008-2017. Abnormal return has been taken as dependent variable and Change in cash to lagged market values, Change in EBIT to lagged market values, Change in dividend to lagged market value, Net Financing to lagged market value, Lagged cash values to lagged market values, Lagged cash values to lagged market values crossed by change in cash to lagged market value, Change in total assets net of cash to lagged market values, Change in interest to lagged market values, Operating leverage, Financial leverage, Total leverage, Leverage ratio, Leverage ratio to change in cash crossed by lagged market values and WACC are taken as explanatory variables. OLS, Fixed effect and Random effect models has been used to express the impact of these variables on return. Hence it is concluded that leverage dynamics are significant contributors in designing the corporate financial policies. Corporate financial policies have significant impact on the financial performance of the non-financial sector of Pakistan.

Stock returns and mutual fund flows in the korean financial markets: a system approach

ABSTRACT This paper investigates dynamic and causal relations between stock returns and mutual fund flows in Korea using a system method that utilizes information from the stock, bond, and money markets. For this purpose, we employ the Dynamic Seemingly Unrelated Regression, the Seemingly Unrelated Regression Error Correction Model, and two causality tests in a system method to account for cross-equation correlations among markets that have a close relationship with one another. Furthermore, we use the information in the variance-covariance matrix of residual to improve the efficiency of the statistical estimates. The empirical evidence from the system method indicates that fund flows do not respond to eliminate deviations from long-run equilibrium, and stock prices cause net fund flows in the Korean market, implying that investors move their money to the securities that yield higher returns to rebalance their investment portfolios in the short-run. Thus, our findings do not support the popular notion of mutual fund flows as the driving force behind rallies in the Korean financial markets.

Stock Returns and Mutual Fund Flows in the Korean Financial Market: A System Approach

This paper investigates dynamic and causal relations between stock returns and mutual fund flows in Korea using a system method which utilizes information from the stock, bond, and money markets. For this purpose, we employ DSUR proposed by Mark, Ogaki, and Sul (2005), SURECM, and two causality tests by Granger (1969) and Sims (1972) in a system method to account for cross equation correlations among markets which have a close relationship with one another. Furthermore, we make use of information in the variance-covariance matrix of residual to improve the efficiency of the statistical estimates. The empirical evidence from the system method indicates that fund flows do not respond to eliminate the deviation from long-run equilibrium, and stock prices cause net fund flows in the Korean market, implying that investors move their money to the securities that yield higher returns to rebalance their investment portfolios in the short-run. Thus, our findings do not support the popular notion that considers mutual fund flows as a driving force behind rallies in Korean financial markets.

The Portfolio Composition Effect

Does the evaluation of a portfolio of stocks depend on its composition of winner and loser stocks? To test this, we define a simple, counting-based measure of performance - the number of winner relative to the number of loser stocks in a portfolio - and examine how this composition measure affects individuals' willingness to invest in a portfolio. We derive testable predictions for the proposed composition measure from a framework which combines category-based thinking with mental accounting. Consistent with our predictions, we find across all experiments that individuals allocate larger investments to portfolios with more winner than loser stocks relative to alternative portfolios with more loser than winner stocks, although both portfolios (1) have realized identical overall portfolio returns and (2) show identical expected risk-return characteristics. Building on our experimental findings, we analyze fund flows of exchange-traded funds on leading equity market indices. We identify that the proposed portfolio composition measure is positively related to future net fund flows.

The Role of the Local Information Demand for Cross-Listed Securities: Evidence From European Cross-Listed ETFs

We investigate how the local information demand explains the market outcomes in cross-listed European Exchange Traded Funds (ETFs). Our results show that the local information demand predicts the future trading volume and, to a lesser extent, the future net fund flows. The effects of the information demand are much stronger when the institutional ownership of the traded ETF is low. Our evidence implies that retail investors, unlike institutional investors, trade and process information regarding securities locally regardless of the domicile of the underlying investment. Our findings hence lend support to the perceived role of familiarity bias, although its prominence and impact vary between countries.

Linguistic Cues of CEOs’ Future Focus in Earnings Conference Calls: The Impact on Corporate Policies

Building on the Upper Echelons Theory we investigate the impact of CEO future sightedness on corporate policies and firm performance. We capture CEOs future orientation through an unobtrusive, validated tool of linguistic analysis of textual characteristics expressed by CEOs during 2008-2012 earnings conference calls for the top 1.000 NYSE companies. We then provide three levels of results. Firstly, we show that - all other factors equal - the presence of a future-oriented CEOs impacts on Corporate Financial Policies, both in terms of book leverage and cash holdings. Secondly, we analyse the differences in capital structure as result of CEOs’ active financing decision. In line with the Pecking Order Theory (and conditional to the presence of net financing deficit) highly future focused CEOs negatively affect the attraction of external resources via debt and equity issuance and prefer internal sources of financing in terms of retained earnings. Finally, we integrate our sample with acquisition announcements and estimate a series of linear probability models to assess whether CEO future focus has a material impact on firm acquisitiveness. Future focused CEOs in our sample are, indeed, less likely to attempt an acquisition in a given year, more likely to pay for the acquisition with acquirer stocks, and less likely to conclude a cross-sector acquisition.

Effect of Net Cash Flows on Investors' Decisions on Companies Listed in Amman Stock Exchange during the Period of 2001–2017: A Case Study on Industry and Service Sectors

This study aims to estimate the impact of net cash flows on investors' decisions on industrial and service companies listed in the Amman Stock Exchange during the period of 2001–2017. The study is based on data from the accumulated annual reports of the previously mentioned industrial and service companies. The study tests autocorrelation by using the Breusch–Godfrey serial correlation Lagrange multiplier test, and the analysis shows no autocorrelation between the variables of the study. Moreover, the study tests the stability of the variance by using the autoregressive conditional heteroskedasticity test, and the results show the absence of a variation problem among the study variables and models. Thus, they do not suffer from measurement problems. Hypotheses testing through the measurement analysis of the industrial sector show a negative impact of net investment cash flow on investors' decisions. However, net financing cash flow has a positive effect on investors' decisions, while net operation cash flow has no statistically significant effect on investors' decisions. The analysis of the service sector reveals a statistically significant negative effect of net operation cash flow on investors' decisions, whereas net financing cash flow has no effect on investors' decisions. The study concludes with a set of recommendations, the most important of which is the need for companies to pay attention to net investment cash flows to buy companies with fixed assets and to use traditional financing alternatives such as murabaha, musharaka, and Islamic sukuk hedging instruments.

Institutional investors and loan dynamics: Evidence from loan renegotiations

We examine the probability of exit for different types of investors in the syndicated loan market, as well as how the entry and exit of different types of investors is associated with changes in loan characteristics. Nonbanks, particularly CLOs, closed-end funds, and mutual funds, are more likely than bank lenders to exit the syndicate rather than to participate in the renegotiated loan. For mutual funds, greater net fund outflows imply a greater likelihood of exit, and this finding is consistent with nonbank lending creating greater systemic risk (Stein 2013). For most nonbanks, the likelihood of an exit increases if the financial condition of the borrower improves and the potential for higher spreads wanes. Controlling for borrower risk, the addition of most nonbank institutions, in contrast to banks, is accompanied by an increase in loan spreads, but no significant increase in the number or tightness of covenants.

Islamic Banking Financing Effect on Growth

The study is an attempt to explore the transmission channel through which development in Islamic banking could lead to economic growth. In order to determinethis transmission mechanism, the estimation based Vector Error Correction model (VECM) is used. This study has tested Murabaha, Ijarah and Diminishing Musharaka as proposed Islamic financial products because of their majority share in Islamic financing. This study has tested two co-integrated systems in the VECM model. The first system tests the effect of an increase in financing in Islamic banking products on the net financing of Islamic banks and the second system tests the effect of net financing of Islamic banks on economic growth. The results indicate that the financing done by Islamic banking products positively affects economic growth in Pakistan. Also, the net financing of Islamic banks is significantly based on financing in Ijarah and Murabaha. Hence, this study highlights the growth potential of Islamic banking which is gaining shares in the overall banking system of Pakistan.

Who benefits in a crisis? Evidence from hedge fund stock and option holdings

We use a unique data set of hedge fund long equity and equity option positions to investigate a significant lockup-related premium earned during the tech bubble (1999–2001) and financial crisis (2007–2009). Net fund flows are significantly greater among lockup funds during crisis and noncrisis periods. Managers of hedge funds with locked-up capital trade opportunistically against flow-motivated trades of non-lockup managers, consistent with a hypothesis of rent extraction in providing crisis era liquidity. The success of this opportunistic trading is concentrated during periods of high borrowing costs, in less liquid stock markets, and is enhanced by hedging in the equity option market.

Fish alternative start-ups net funding

Fish alternative start-ups net funding