Source Of Debt Research Articles

Financing hydroelectric power plants: a review and evaluation of financing channels

PurposeThis study aims to identify project funding shortcomings in the existing literature and evaluate the financing channels accordingly.Design/methodology/approachThis paper uses a structured literature review – a content analysis method. Then, the comparative analysis applied to data gathered from the content analysis.FindingsTo define the main research topics and establish a focus on hydroelectric power plant (HEPP) financing, a comprehensive structured literature review was conducted. According to the results of this study, there are three main categories of HEPP financing studies in the literature, namely, financing channels and products, factors that complicate financing and financing- risk relationship of HEPP projects. According to these findings, which criteria most affecting HEPP financing and which financing channel is the most suitable are determined.Research limitations/implicationsAmong all financing channels, only direct debt sources are selected.Practical implicationsThis study is structured as a simple lender selection guide for HEPP investments. Selection criteria are applicable for both lenders and investors. For lenders, those criteria are expected to improve loan performance and optimize financial product selection. For investors, those criteria are expected to help choosing suitable products and improve revenues.Social implicationsThis study will contribute the researchers those intended to work on the topic.Originality/valueThis study will contribute to limited literature on HEPP financing. Project finance literature is limited and narrow even there is no study that investigates hydropower project finance sourcing. In this manner, this study can be considered as a pioneer.

Credit Card Debt and the Provision of Financial Support to Kin in the US

Credit card debt stands at over $1 trillion in the US and grows continuously. Scholars have argued that high (and growing) levels of credit card debt are attributable in part to rising economic vulnerabilities, combined with a thinning public safety net, credit cards being increasingly employed to make ends meet in this context. This paper extends this line of work by stressing that individuals and households do not rely on their credit cards only to mitigate their own financial hardships, but also those experienced by their non-coresidential kin members. More specifically, building on the notion that kin networks can constitute a source of negative social capital, we argue that individuals often accumulate credit card debt as they attempt to provide monetary assistance to their relatives in need. We also show that this effect is particularly strong in lower-income groups and in African American communities, in which need levels are especially high. Based on random and fixed effects analyses of data from the Panel Study of Income Dynamics, these insights extend scholarship on both kin networks of support and the sources of credit card debt.

Subprime May Not Have Caused the 2000s Housing Crisis: Evidence from Cleveland, Ohio

During the 2000s housing bust, Cleveland’s Slavic Village was dubbed “ground zero of the foreclosure crisis” by the national media. Despite this, during the preceding housing boom Cleveland had stable house price growth and relatively low mortgage debt growth, a stark contrast to circumstances in areas such as California that had exceptionally high house price and mortgage debt growth. What explains the relatively minor housing boom and perceived sharp downturn in Cleveland? In this Commentary I show that while subprime debt was a prominent source of debt in Cleveland and especially in its Slavic Village neighborhood during the 2000s, it is difficult to peg subprime debt as playing a causal role in the subsequent foreclosure crisis.

The Cost of Debt for REITs: The Mortgage Puzzle

Established, low-leverage equity REITs with access to the public debt market rely on both non-recourse mortgages and full recourse bonds/notes as sources of long-term debt. Interest rates on secured, non-recourse debt (mortgages) include a costly strategic default option premium and do not benefit from a firm’s overall financial capacity. We find that use of non-recourse, mortgage debt is more likely for longer-term, smaller borrowings, and during recessionary periods, consistent with REITs valuing financial flexibility in their capital structure. The higher rates for property-level debt suggest a benefit to REITs versus single asset investors in terms of cost of capital. Since REITs also access debt at the corporate level, the spread between long-term non-recourse debt and long-term recourse debt implies a benefit to the REIT structure.

The role of macroeconomic factors in the capital structure of European firms: How influential is bank debt?

Based on a partial target adjustment model and the trade-off theory, this paper investigates whether the influence of macroeconomic variables of monetary policy on corporate leverage is shaped by the nature of borrowing, and more specifically by the presence of bank debt. Given the importance of banking institutions as transmitters of monetary policy, we argue that this source of debt might play a critical role in capital structure behaviour. In addition, as banking relationships are more informative and flexible, bank debt is likely to soften the effects of the economic cycle. Using a sample of European countries from 2004 to 2015, our evidence reveals that bank debt modifies the impact which macroeconomic variables of monetary policy have on a firm’s leverage. By comparing crisis and non-crisis periods, our results also show a more stable influence of said variables over the business cycle on bank debt than on non-bank debt.

Creditors' governance, information asymmetry and debt diversification: evidence from India

PurposeThe governing role of bank-appointed directors (BADs) on the boards of non-financial firms has a potential to reduce information asymmetry between the firm and non-bank lenders. This should increase the confidence of other creditors in firm activities, thus performing the certification role. Therefore, the purpose of this paper is to empirically examine the certification role of BADs.Design/methodology/approachThe authors test their hypotheses by using a panel of Indian non-financial firms. Our approach involves examining whether there is a significant difference in the number of different debt sources, the dispersion of debt among different debt sources, and leverage for BAD and Non_BAD Firms. The authors use univariate analysis and multivariate regression models to test the difference.FindingsThe authors find that firms with BADs on their board have (1) access to a higher number of different debt sources, (2) debt distributed evenly among different sources and (3) a higher debt ratio. Overall, our study provides supporting evidence for the certification role that BADs play on the boards of non-financial firms.Originality/valueThe authors contribute to the literature in two aspects. First, to the best of our knowledge, this is the only study that examines the effect of the governing role of banks on the lending decisions of non-bank lenders. Second, our study is associated with the growing body of the governance literature in the emerging markets context by examining the interaction of financial policies and governance in an institutional framework, which is very different from that of the developed world.

Ensuring Equitable Access to School Meals

Ensuring Equitable Access to School Meals

FINANCIAL RESOURCES OF SMALL BUSINESSES: INTERNAL AND EXTERNAL FACTORS INFLUENCING THE SOURCES OF THEIR FORMATION

The development of small business is of great importance for the stable development of the economy of any country. Economically developed small business is the basis of the economy of a developed state, so many research papers are devoted to the study of small business problems. Small businesses, because of their size, are more flexible in responding to all changes in the economy and have a greater potential for development. Recently, according to statistics, there has been a decrease in investment activity in small businesses. In other words, small business has become less invested in fixed assets. The observed crisis phenomena in the economy exacerbate the problem of investment financing and confirm the relevance of research on this topic. According to the heads of small businesses, the main reason for weak investment is the lack of financial resources. There is a wide variety of sources of financial resources. Sources of financial resources of small businesses have their own characteristics. However, small businesses are limited in their choice of sources of financial resources, because not all existing sources of financial resources are available and can be actually used by small businesses. There are a lot of number of factors that determine the final version of the structure of sources of financial resources of a small business. The article highlights the main external and internal factors that determine the structure of the sources of financial resources of small business. Internal factors characterize specificity of the enterprise (the legal form of the business, the sectoral specifics of small business, the stage of the life cycle of a small business and the economic characteristics of the businesses), external – the specifics of the external economic environment and industry, condition of the labor market and unemployment rate, financial and credit policy, investment sphere. The author of the article comes to the conclusion that the stage of the life cycle is one of the most important factors that determine the structure of sources of financial resources of small enterprises, since at different stages of the life cycle, the structure of financial sources of an enterprise differs. Among external factors, the author puts the economic conditions in which a small business operates in the first place. In a stable economic situation, a small business will have access to a wide range of sources of financial resources. In an economic downturn, the availability of debt sources is sharply reduced, due to high risks of non-return of funds, in addition, there is a low investment activity of business. The article describes the influence of each factor.

Does geopolitical uncertainty affect corporate financing? Evidence from MIDAS regression

This paper investigates the effect of geopolitical uncertainty on (market) leverage ratio, debt maturity, and choice of debt source. Using a new monthly index of geopolitical uncertainty and annual data for corporate financing variables, we find that under geopolitical uncertainty firms tend to reduce debt and increase market leverage. We argue that this increase is driven by asymmetrical reductions in the numerator (total debt) and the denominator (total debt and equity) of the leverage ratio. Under geopolitical uncertainty, firms tend to shorten their debt maturity structure and—especially those firms with lower credit quality—to substitute bank debt for public debt.

How do software architects perceive technical debt in Colombian industry? An analysis of technical debt causes

Technical debt is a metaphor used to describe technical decisions that can give the company a benefit in the short term but possibly hurting the overall quality of the software in the long term. Architectural decisions are considered one of the most common sources of technical debt, therefore, it becomes relevant to understand what causes lead to technical debt from the point of view of software architects. To accomplish this task, we used a survey research method to collect and analyze a corpus of 28 software architects from Colombia, as a part of the InsighTD project. Results showed that inappropriate planning is the most cited technical debt cause by software architects. However, results differ when comparison against engineers and manager are performed. Innacurate time estimate and producing more without quality were the most selected causes of technical debt according to engineers and managers. To improve this comparison, the rank-biased overlapping technique was used. As more elements were compared, more similar were these lists of causes among all three roles.

Patterns and Correlates of New Drug Initiation among Female Exotic Dancers: The Contribution of Occupational and Structural Risks

Introduction: Exotic dance clubs (EDCs) can play pivotal roles in the production of drug-related risks for female exotic dancers (FED). We aimed to characterize the structural and occupational factors associated with new drug initiation post-EDC entry among new FED (N = 117) in Baltimore, Maryland. Materials and Methods: Logistic regression models tested the associations of new drug uptake, measured as initiating any illicit drug (including non-prescribed and diverted prescription narcotics) not used prior to EDC employment, with structural (e.g. debt sources, housing instability) and occupational (e.g. sex work, dancing as sole income source) vulnerabilities. Results: Most FED were younger than 24 years-old (60%), identified as Black/African American (61%), and did not complete high school (56%). Twenty-nine (25%) reported using any new drug post-EDC entry, with cocaine (34%) cited most frequently among newly initiated substances. In multivariable analysis, drug initiation was significantly associated with cumulative debt sources (Adjusted Odds Ratio [AOR] = 1.82, 95% Confidence Interval [CI]: 1.19–2.77), dancing as only income source (AOR = 4.21, CI: 1.29–13.71), and sex work (AOR = 9.26, CI: 2.74–31.32). Conclusions: Our findings implicate co-occurring structural and occupational factors in FED’s initiation of illicit drugs proceeding EDC employment. Results demonstrate the coping role of drug use for FED in stressful working environments and the multiple vulnerabilities associated with illicit drug uptake. The study reinforces a need for harm reduction interventions (i.e. debt relief, employment connections, increased hourly pay) that consider the contribution of overlapping financial insecurities to the production of occupational risks motivating drug uptake.

Does debt diversification impact firm value? Evidence from India

Corporate debt diversification (firms simultaneously utilizing multiple distinct debt sources) is a global phenomenon. However, how such financing affects firm value has not yet been examined. Using Indian firms, we investigate debt diversification’s impact on monitoring effectiveness, agency costs, and financial constraints – which can all affect market value. Results reveal a negative impact of debt diversification on firm value, particularly among group-affiliated firms. This negative impact is attributed to free riding among lenders: evidence suggests that increased agency costs resulting from inferior monitoring contributes to worse firm accounting performance. Further, debt diversification does not appear to reduce financial constraints.

Paying for Law School: Law Student Loan Indebtedness and Career Choices

Student loan debt has reached crisis levels, topping $1.64 trillion dollars this year and surpassing credit card debt to become the second largest source of debt held by Americans. When discussing student loan debt, it is easy to fixate on the aggregate impact of the burdens this debt places on taxpayers, the economy, and borrowers alike, such as the depressive effects that student loan debt has on marriage, homeownership, and entrepreneurship. Yet, a discussion of which graduates are saddled with the largest student loans and how their debt obligations impacts their career choices is often absent from conversations about student debt and has been understudied to date. This Article contributes to the discourse about student loan debt and its potentially negative externalities by investigating responses from an original survey administered at four law schools, revealing novel findings about law students’ expected debt loads, career choices, and intentions to participate in the Public Service Loan Forgiveness program. In Part I of this Article, the student loan crisis is more closely examined with particular emphasis on its salience for law school graduates. In addition, the first part of this Article provides credible descriptive evidence that rates and amounts of borrowing to attend law school impact law students differentially on the basis of their endowed characteristics, such as race and parental education. Next, Part II explores the Public Service Loan Forgiveness program, describing the program’s creation and implementation, in addition to evaluating its efficacy and the direct and indirect costs of its administration. Part III discusses two pervasive issues within the legal academy with significant social implications — the access-to-justice gap and the public-interest drift — against the backdrop of the student loan crisis and the possible answers that the Public Service Loan Forgiveness program could provide in addressing these issues. Part IV describes the data collected from the original survey, the methods used to analyze these data, and reports and discusses the results. The findings reported in Part IV offer insight into how a law student’s endowed and acquired traits influence their career intentions and provide evidence of the causal relationship between loan debt and career choice and intentions to enroll in the Public Service Loan Forgiveness program. Finally, this Article concludes by suggesting that the Public Service Loan Forgiveness program presents the best available option to address problems stemming from the access-to-justice gap and the public-interest drift, while also offsetting the negative effects of structural stratification in legal education.

A Europe of Creditors and Debtors: Three Orders of Debt Relations in European Integration

AbstractThis article proposes a debt‐based narrative able to explain both structural and substantive changes in European integration. The narrative results from a study of the dynamics of three different sources of external debt —cross‐border trade, sovereign debt and direct debt relations between member states– in the context of the successive stages of macroeconomic integration. The outcome is the identification of three cumulative orders of debt relations that can reveal the main features of the concrete constellation of power corresponding to each of those stages. Hence, cross‐border trade was decisive during the decades of monetary cooperation. Once the European Monetary Union was agreed in Maastricht, sovereign debt, as perceived by market actors, played the key role. Finally, since the sovereign debt crisis direct debt relations between member states are essential. The EU institutional system has accordingly adapted to these different constellations and nowadays guarantees the full repayment of debts to fellow member states.

DISENTANGLING THE ASSOCIATION BETWEEN GOVERNMENT DEBT AND ECONOMIC GROWTH: A GRANGER CAUSALITY APPROACH FROM INDONESIA

This paper aims to examine the possible Granger-causality relationship between public debt and economic growth in Indonesia between 1998 and 2018. To accomplish this aim, a time series regression approach as well as diagnostic tests such as the Augment Dickey–Fuller test and Johansen cointegration test (which provides evidence of a long-term relationship between external debt and economic growth) were conducted. A VECM Granger causality approach was chosen to investigate the causal link between government and economic growth. The VECM estimation provides new evidence that, over the long term, domestic debt has significantly and positively affected economic growth; at the same time, external debt has significantly and negatively affected economic growth. Meanwhile, Granger-causality analysis shows that economic growth has a unidirectional causal relationship with external public debt, but does not have such a relationship with domestic public debt. For this study, a series of 20 data points per variable were analyzed, covering 1998 through 2018. This sample size is rather small, and as such its findings are not perfect. The use of a much larger data set would enhance any similar studies in the future. Nonetheless, this study illuminates the role of government debt in the economy by highlighting the importance of domestic markets as sources of public debt to promote economic growth in Indonesia, and recommends that the government do so.

The Impact of Financial Leverage on the Performance of Commercial Banks: Evidence from Selected Commercial Banks in Ethiopia

The financing decision function of corporate finance deals with determining the best financing mix or capital structure of the firm in order to maximize the value of firm or wealth of owners. In Ethiopia, Commercial Banks use a combination of debt and equity source of finance in their capital structure. Each source of finance has its own cost of capital in the capital structure and hence effect on value of corporation. The ratio used to measure the proportion of debt to equity is considered as Financial Leverage. The main objective of this study is to investigate the effect of financial leverage on the financial performance of Ethiopian Commercial Banks for the period of 10 years (2008-2017) for the 5 selected commercial banks. As a measure of financial leverage for the independent variables three variables such as Debt ratio (DR), Debt Equity ratio (DER) and Interest coverage ratio (ICR) (times interest earned ratio) were used. As a measure of financial performance, the dependent variable two ratios such as return on asset (ROA) and return on equity (ROE) were used. The ex-post facto and longitudinal research design were used. The secondary data were collected from the audited financial reports (profit and loss statement and statement of financial position) of selected commercial banks operated in Ethiopian financial system. Descriptive statistics and Fixed Effect model were used. The result of the study showed that, Debt Ratio (DR) has a negative insignificant effect on Banks’ performance measured by Return on Assets (ROA) and Return on Equity (ROE) while Debt Equity Ratio (DER) And Interest Coverage Ratio (ICR) have significant positive Effect on Banks’ performance measured by Return on Assets (ROA) and Return on Equity (ROE).

Introduction of Bond Market: Would It Be a Possible Solution for Bangladesh?

This study aims at investigating the prospects of a bond market in Bangladesh. Most of the developed and developing economies have an active and successful bond market. But Bangladesh despite being one of the fastest-growing economies, does not have an active bond market. Hence, this study was designed to investigate the impact of a bond market on the economic growth of Asian countries and what are the prospects and challenges in Bangladesh. To investigate the benefits of a bond market in Bangladesh, this study examined the relationship between bond market return and economic growth of 4 Asian economies which included, India, Indonesia, Hong Kong, and Japan. The average annual yield of 10-year bonds was used as the independent variable and the annual GDP growth rate of these countries was used as the dependent variable in the econometric model. Data for the last 20 years from 2000 to 2019 were used for all the variables. The Unit Root Test showed that 3 variables were stationary at first difference and the other five variables were stationary at level. The Johansen Co-integration test identified the long-run association among the variables indicating the long-run relationship between bond market return and economic growth. Granger Causality revealed a bi-directional relationship for India; unidirectional relationship for Indonesia (Bond→GDP growth) and Japan (GDP Growth→Bond); and no unidirectional or bidirectional relationship among the bond market return and economic growth of Hong Kong. The various new projects, the overextension of the banking sector, and perhaps the overall good condition of the economy has created the perfect situation to develop a bond market in Bangladesh. As there are conditions that provide advantages in bond market creation, there are also various challenges that the government must overcome. Some of the most important challenges to clear up are the underdeveloped tax system, the illiquid or absent secondary market, the alternative source of debt, and the overall lack of investors. Considering the various developed bond markets these policy implications could seriously aid the development process.

Effects of Leverage Ratio on Corporate Research and Development Expenditure of Small and Medium Enterprises

With the data of listed companies on SME board in 2014-2017, fixed effect model is utilized for testing the effect of leverage ratio on corporate research and development expenditure of small and medium enterprises from the perspectives of debt maturity, debt source, and innovation heterogeneity. The empirical result reveals significantly negative effects of leverage level on corporate R&D expenditure of domestic SMEs, and such effects become more obvious in enterprises engaging in exploratory innovation. From the perspectives of debt maturity and source, extremely high short-term debt level and excessive dependence on commercial credit as corporate financing channels are the factors in high leverage level restraining corporate R&D expenditure of domestic SMEs.

Political uncertainty and the choice of debt sources

This paper studies the effect of political uncertainty on the choice of debt sources. We find a positive relationship between political uncertainty stemming from elections and the proportion of bank loans over total debts, especially when elections are closely contested. Furthermore, this relationship is stronger in opaque firms and more financially constrained firms as well as firms from countries with weaker shareholder rights, labor protection, creditor rights and national governance.

Bank financing and credit ratings

ABSTRACT By looking at a sample of firms rated by S&P, we study the extent to which the mix between bank financing and other sources of debt affects corporate credit ratings. We find that S&P penalizes firms of high credit quality that use relatively more bank debt compared to market debt. Instead, debt composition does not seem to matter when rating risky firms. We conclude that managers of firms of high credit quality should have relatively low (high) recourse of bank financing (public debt) from a credit ratings perspective.