Substantial Debt Research Articles

DEBT FINANCING AND PERFORMANCE OF MANUFACTURING COMPANIES IN NIGERIA

Certain companies have accumulated substantial debt that surpasses their net gains, which has a negative impact on their performance and investor trust. Consequently, this can ultimately end in complete collapse and even lead to closures. Based on the above corporate challenges this study examines into the effect of debt financing on performance of manufacturing companies in Nigeria. The study employed the descriptive survey design. The secondary panel data was sourced audited financial statement of selected manufacturing firms in Nigeria from the period of 2019-2022. The panel regression technique was employed to determine the relationship and magnitude of impact between the dependent variables and independent variables. The Hausman test was employed in taking decision from the pooled effect, fixed effect and random effect model. The findings from objective one revealed that short term debt has negative significant effect on return on equity at (β:-0.23: p<0.05) while long-term debt has positive significant effect on return on equity at (β: 0.10: p<0.05). Objective two revealed that long-term debt and debt ratio has negative significant effect on earnings per share at (β:-1.57: p<0.05) and (β:-42.73: p<0.05). The study recommended that manufacturing companies should aim to reduce reliance on short-term debt, as it negatively impacts return on equity (ROE) due to higher interest rates and repayment pressures. Instead, companies should consider increasing long-term debt, which positively affects ROE by providing stable, lower-cost financing over extended periods. A balanced debt structure, with strategic use of long-term financing, can help firms enhance profitability while maintaining financial flexibility and managing risks effectively.

Municipalities at the crossroads: Deciphering the nexus between municipal insolvencies and international investment mandates

AbstractNavigating the convergence of domestic governance and international investment law presents multifaceted challenges in an ever‐globalizing world. The recent bankruptcy of the Birmingham City Council in September 2023, burdened by substantial debt from equal pay claims, serves as a poignant example, illustrating the potential widespread effects of local financial crises on international investment protections and obligations. The discourse explores the complexities arising from municipal insolvencies and the implications of such local fiscal policies on international investment obligations. The lens of international arbitral tribunals sheds light on the dilemmas faced when local realities vie with global responsibilities, especially concerning investor protections and Bilateral Investment Treaties. Decentralized states add another layer of intricacy, balancing regional policies with overarching international commitments. As the landscape of international investment law transforms, both state entities and investors must understand and adapt to the evolving interplay. The synthesis of these two realms is crucial in today's globalized era. Through proactive policy‐making, stakeholder dialogues, and a keen understanding of both local and global dynamics, a harmonious fusion of domestic objectives and international obligations can be achieved.

Household Debt and Housing: Source of Income Inequality in South Korea

ABSTRACT This study uncovers that the rising incidence of household debt, particularly being used for acquiring non-financial assets, correlates with a notable increase in income, predominantly benefitting high-income households. This trend is especially relevant in South Korea, where a significant portion of household debt is driven by the acquisition of non-financial assets such as houses. However, in the context of existing loan regulations, which prioritise macroprudential stability, the capacity to accrue substantial debt for non-financial assets is largely limited to high-income households. Consequently, this pattern aggravates income inequality as the analysis reveals that higher household debt balances are linked to positive income effects which are mostly available only to high-income households.

An extended event study methodology and its application in the HNA group's overseas market contraction

This paper introduces a novel framework for analyzing the performance of cross-border merger and acquisition (M&A) activities in international business. It investigates whether the contraction of overseas market activities can mitigate financial crises, using the case study of a Chinese multinational enterprise (MNE). Traditional event study methodology, commonly used for assessing business performance changes, relies on assumptions of normality and homoscedasticity in data. However, real financial data often exhibits high volatility and non-normal distribution, rendering traditional methods inadequate for estimation. To address this limitation, we propose an enhanced analytical framework integrating the Shapiro–Wilk test, event studies, quantile regression, and nonparametric rank tests. This approach provides more robust estimates, facilitating a more accurate and comprehensive analysis of business performance changes under specific events. Applying this methodology to assess the short-term performance of HNA Group, a cross-border airline in China, during its financial crisis, we find that while overseas market contraction events generate overall positive short-term value for enterprises, the impact varies depending on the assets sold. However, given HNA Group's substantial debt burden, the positive effect is minimal, indicating that overseas market contraction alone is insufficient as a "self-help" strategy in addressing corporate financial crises.

The Long-Term Impact of Student Debt on Career Choices and Social Mobility of Low-Income Students

This paper explores the long-term impact of student debt on the career choices and social mobility of low-income students in the United States. Utilizing a mixed-methods research design, the study combines quantitative data from national surveys and secondary sources with qualitative insights from in-depth interviews. The findings reveal that low-income students graduate with significantly higher levels of student debt compared to their higher-income peers, which constrains their career options and compels them to prioritize financial stability over personal interests. This debt burden also impedes their ability to achieve upward social mobility, as it limits their capacity to save, invest, and make significant life purchases such as buying a home. Moreover, the psychological stress associated with substantial debt further exacerbates these challenges, leading to chronic stress and mental health issues that impede career progression and overall quality of life. The intergenerational effects of student debt are also profound, as financial strain on parents and subsequent economic instability experienced by their children perpetuate cycles of poverty. This study underscores the need for comprehensive policy interventions to alleviate the burden of student debt and promote greater economic equity.

An Empirical Study on Factors Influencing on Dividend Payout in India with Respect to NIFTY 50 Companies

This article examined the factors influencing the dividend payout of Non financing and non-banking companies listed in NIFTY 50 India. Generating profit is one of the key characteristics of the successful firms. So, when these profits are attained firms distribute profits with their shareholders (investor’s) in the form of dividends. So here we are going to see the various factors which are influencing the dividend payout in India’s NIFTY Fifty. This study covers for the tenure of 5 financial years (2018 - 2023). Various theoretical models have been developed by academicians and researchers to empirical examine the impact of factors on dividend payout ratios of different companies, and it is also suggested that managers should use these models while making decision for dividend payments, Grullon et al. (2002).
 So, in this paper we are going to find the various factors influencing the dividend payout, and we are also going to draw the conclusion by using Descriptive Statistics, Correlation, Simple Regression and Panel Data Analysis. Companies with higher ROE tend to exhibit higher dividend payout ratios, underscoring the role of profitability as a strong driver of dividend distribution policies. Conversely, the Debt-to-Equity Ratio (DE Ratio) consistently demonstrates a negative relationship with DP Ratio, implying that companies with higher debt levels relative to equity tend to have lower dividend payout ratios. This emphasizes the impact of financial leverage on dividend decisions, as firms with substantial debt obligations prioritize debt servicing over dividend payments.

Skilled managers and capital financing decisions: navigating Chinese firms through financing constraints and growth opportunities

PurposeExecutive decisions regarding capital financing are an important management aspect, especially during financing constraints and growth opportunities. The current study examines the impact of managerial skills of a company on capital financing decisions. Furthermore, it analyzed this nexus in financing constraints and growth opportunity situations.Design/methodology/approachThe authors use the GMM (generalized method of moments) estimation approach on a dataset of 20,651 firm-year observations of Chinese A-share companies from 2010 to 2019.FindingsThe authors’ findings are compatible with management signaling and reputation enhancement theories, since they show that managerial skill is connected with more substantial debt financing. Managers with high management skills are likely to have more debt financing as they can foresee the economic future of their companies and tactfully convey private information, lowering information inequality and enhancing their reputation. Furthermore, the authors also show that firms with restricted financial resources and growth opportunities make this relationship stronger. Capital structure and managerial skill findings are unaffected by alternative specifications, omitted factors, industry group bias and endogeneity.Originality/valueThis study sheds fresh light on the essential manager personality trait of managing ability and how it influences complicated corporate decision-making, particularly in the tough environment due to financing constraints and competitive growth. The authors argue that high-ability managers are compelled to use debt financing not only to lessen information asymmetry but also to guarantee that the market finds their superior ability. This work contributes significantly to the managerial ability literature and the capital structure literature supporting signaling theory.

Financial Crises and Capital Structure Decisions: Empirical Evidence from Emerging Markets

ABSTRACT This study analyzes emerging market firms’ capital structure decisions. We select the reference as 2007–2008 financial crisis and study the temporal behavior. We investigate if EM firms differ in decisions of issuing debt and equity and if their responses to the global financial crisis are explicable with the existing theories. Our findings suggest that the crisis behavior of EM firms is not fully conformable with the extant theories. Their debt and equity reversals are antithetical, that is in the reverse direction from the last extreme point, driving a pattern to stagger between substantial debt issues followed by equity expansions.

Narrating and accounting the costs of reform in a “Chronicle of the Reform of San Salvador de Oña (1450–1465)”

ABSTRACT The monastery of San Salvador de Oña was reformed by the priors of the monastery of San Benito de Valladolid between 1450 and 1456. The majority of the monks of Oña opposed this reform, which led to their being replaced by monks from Valladolid. In addition, the payment of papal taxes, lawsuits and building projects generated a substantial debt, which was repaid through the sale of the church’s silver ornaments and altarpieces, and as a result the monks who were expelled from Oña accused the reformers of theft. The priors of San Benito and its monks defended their actions in two texts: a document acknowledging the debt and explaining its origin, and a chronicle of the reform undertaken by the priors of San Benito which minimised their responsibility for the monastery’s mismanagement. Thus, the financial accountancy of the reform was combined with a literary commemoration of this undertaking.

:The Afterlife of Enclosure: British Realism, Character, and the Commons

:<i>The Afterlife of Enclosure: British Realism, Character, and the Commons</i>

Postcyberpunk dystopian cityscape and emotion artificial intelligence: A spatio-cognitive analysis of posthuman representation in Blade Runner 2049 (2017)

Within visual culture, postcyberpunk films are best approached as places of Otherness whereby human identity and agency are downplayed and posthumans are magnified in highly technopolic societies marked with scientific determinism. Postcyberpunk treats the posthuman enclave as a heterotopic site, oscillating between utopian and dystopian spaces, potentially and optimistically, creating a space for humanity to be reassessed and renegotiated. Against this backdrop, the current research endeavor proposes a Spatio-Cognitive Model of Posthuman Representation focusing attention on heterotopic ‘spaces’ and ‘bodies’ in hyperconnected environments. While the model owes a substantial debt to Foucault’s writings on heterotopia and the utopian body, in tilting the focus of enquiry, this paper is informed by the tenets of polyrhythmia, hypermimesis, spatial repertoires, semiotic assemblages and cognitive embodiment as insightful interventions. Blade Runner 2049 is taken as a fertile case study grounded in paradoxes and ambiguities around the contradiction between humans and replicants, artificial intelligence and super-large enterprises. The hybridity pertinent to the postcyberpunk film genre and the inner and outer topographies of posthuman representation proved to be insightful investigative vantage points of multimodal inquiry for the socio-political and technocratic implications they underlie. With technology seamlessly integrated into social spaces and posthuman bodies, Blade Runner 2049 is arguably structured as an emotional journey composed of multiple heterotopias (spatial layers, ruptures and bifurcations expressed through socio-political capitalist projections). The article adamantly argues for new philosophical perspectives and praxis in redefinition of the social relationship between human and posthuman.

Catastrophic Expenditure for Health in the Philippines

Catastrophic Expenditure for Health in the Philippines

Environmental protection and sovereign debt restructuring

The consequences of the climate change problem are global. Contributions to solving that problem are therefore properly expected to come from every country to a greater or lesser degree depending on their share of responsibility for environmental pollution and their financial resources. But some countries may have a compelling argument for why they should not be expected to join the planetary effort to fight climate change. These are countries facing the need to restructure their external debt.1 Sovereigns that cannot pay what they are already contractually obligated to pay are unlikely to be in a position to devote financial resources to environmental conservation or other measures to mitigate the effects of climate change. As incongruous as it may sound, however, it is precisely the subset of countries undergoing a debt restructuring that may have an alternative avenue for funding these projects. An example is Belize’s 2021 debt restructuring which resulted in both substantial debt relief and a credible long-term source of conservation funding. In the discussion that follows, and building on insights from the Belize transaction, we describe a restructuring technique that could be used in a wide range of circumstances.2

Who Pays? Measuring Differences in the Process of Repayment of Legal Financial Obligations

This policy brief outlines findings and policy implications from a study of the correlates of legal financial obligation (LFO) debt repayment, an increasingly important area of study for two key reasons. First, the proliferation of LFO assessments can generate substantial debt burdens for justice-involved persons to be repaid during their reentry to the community. Second, local criminal justice agencies increasingly rely on fees as a source of operating revenue, raising questions about collections policy and practice. This study focused on a specific context of LFO debt and repayment among persons sentenced to probation and transferred to a specialized collections unit. Results from statistical analyses using bivariate tests and logistic regression indicated a salience of individual-level and institutional-level factors as correlates with the likelihood of full debt repayment. Specifically, some persons will struggle to repay their LFO balances if amounts assessed are in excess of their means, even in an institutional context adopting an individualized, flexible, and non-punitive approach to collections. Discussed policy implications suggest a need for reform at the point of LFO assessment to avoid imposing obligations that are unreasonable to individuals’ ability to repay.

Determinants of substantial public debt reductions in Central and Eastern European Countries

Government debt development is a timeless issue in economics that has gained even more attention in light of the global financial crisis and the Covid 19 pandemic crisis. The following paper uses several specifications of a logistic probability model to examine the key determinants underlying substantial public debt reductions in Central and Eastern European EU Member States for the period 1996–2020. The results suggest that fiscal adjustments are more likely to be successful in reducing public debt if they are based on expenditure cuts rather than revenue increases. In this context, cuts in social benefits and government employee compensation prove to be particularly effective. In addition, favourable economic growth rates increase the probability of a substantial reduction in government debt.

Mortgage Prepayment and Path-Dependent Effects of Monetary Policy

How much ability does the Fed have to stimulate the economy by cutting interest rates? We argue that the presence of substantial debt in fixed-rate, prepayable mortgages means that the ability to stimulate the economy by cutting interest rates depends not just on their current level but also on their previous path. Using a household model of mortgage prepayment matched to detailed loan-level evidence on the relationship between prepayment and rate incentives, we argue that recent interest rate paths will generate substantial headwinds for future monetary stimuli. (JEL E32, E43, E52, E58, G21, G51)

An Assessment of Flood Shocking Tears Down: A Case Study in Bogura District

This study was conducted on two chars of Bogura district using primary data and aims at understanding of how flood affects the rural poor living in the char lands. The study revealed that floods have long-term negative implications on socio-economic status. According to survey the most affected sector was agriculture (54.03%), followed by property (28.66%) and health (19.71%), diseases as Diarrhea occurred at alarming levels (76.07%) in the study areas. In the study year food availability and roads communications were also highly affected by flood. Floods make people vulnerable; as they take away their livelihoods at the first instance and leave them with little resources to overcome from the situation. Because of floods, rural poor communities face job loss, and two-thirds of their income is reduced, which limits their capabilities of preparedness, response, and recovery to subsequent floods. People cope with the situation by bearing substantial debts and a loss of productive assets. It also examines the impacts of flood on the livelihood of the rural poor and explores their coping strategies and also observers it as a positive ingredient for fertility and soil improvement. However the present study captures both positive and negative.&#x0D; Res. Agric., Livest. Fish.8(1): 65-73, April 2021

Sovereign Debt Restructuring: A Modest Proposal

Many sovereigns, including weaker credits, have taken on substantial debt during the COVID-19 pandemic. This raises the prospect of future defaults and sovereign restructurings, which will be informed by debt-sustainability analysis. But when analyzing notable recent sovereign defaults, we find a pattern of serially correlated errors: the analysis at the time of the restructuring is too optimistic about future sovereign debt dynamics. In light of this, I propose that future sustainability analysis should be based on more pessimistic expectations. In turn, this implies that sovereign creditors should face larger losses in future restructurings.

The impact of public external debt on private investment. Evidence from Zimbabwe under the multi-currency system.

The levels of public debt have grown significantly in both emerging and developed countries even during times of peace. The rising levels of debt pose substantial debt sustainability issues to developing countries including Zimbabwe. A defaulting country usually has limited access to new international credit lines or tends to borrow at a higher cost, due to high perceived country risk premium, making the country a less attractive investment destination. Zimbabwe is currently suffering debt distress and has since the year 2000 struggled to service her external debt from international multilateral financial institutions. Zimbabwe’s external debt continues to pile up due to penalties on defaults. This paper examines the impact of public external debt on private investment in Zimbabwe, using quarterly time-series data for the period 2009 and 2017. The period of study was a period of relative stability when Zimbabwe operated under a multicurrency system. Interest rates, political risk, trade openness and household consumption are control variables of this study. Using the Vector Error Correction Model (VECM), we find that external debt and external debt squared have a negative impact on private investment in the long run. Results suggest that Zimbabwe’s external debt is crowding out private investment. In the short-term, we urge the government of Zimbabwe to apply for debt rescheduling to avoid penalties that have so far contributed to the ballooning of Zimbabwe’s external debt obligations. In the medium term, we urge the government of Zimbabwe to design comprehensive debt and arrears reduction strategies, to reduce Zimbabwe’s external debt to sustainable levels. In the long term, after regaining borrowing rights, we urge the government of Zimbabwe to invest external borrowings in productive ventures, to facilitate debt amortisation. Secondly, we recommend that external debt be invested in education, health and infrastructure, which can potentially stimulate private investment, and thus create a multiplier effect on economic growth. Lastly, we recommend the government to invest foreign loans in sectors where Zimbabwe enjoys a comparative advantage, to ensure reliable export revenue for debt servicing.

Explaining Stagnant Living Standards in a Generalized Asset Growth Context

: Aggregate U.S. assets have grown at an impressive rate over the past four decades, especially in recent years. Despite this, middle class living standards have remained relatively flat over the past four decades, and substantial debt has been required to maintain consumption at customary levels. We assemble the U.S. balance sheet for the past seventy years, showing how mounting debt has contributed to growth in financial assets, relative declines in net worth, and increases in assets in relation to GDP. We also calculate a financialization ratio based on our data, for which the trend line identifies a structural break circa 1980 after which the U.S. economy “financializes.” Our numbers, moreover, support the claim that the debt spiral intensified income inequality. Most remarkably, average national equity returns remained flat or even declined slightly post-1980 despite much greater volatility and debt leverage, contrary to what basic financial theory would dictate.