The long term impact of microfinance on income, wages and the sectoral distribution of economic activity

This paper analyses the long-term effects of improved small-scale lending, often provided by microfinance institutions set up with the support of development aid. The analysis shows that some common assumptions about microfinance are not true at all: First, it shows that the impact on income will accrue not to the microenterprises themselves, but rather to the consumers of their products. Second, microfinance will have a significant positive effect on the wage levels of employees in the informal sector. Third, microfinance will cause high growth rates in the informal production sector, whereas the trade sector will either contract or at best grow very little

The impact of valuation rules for intangible assets in Japanese and German accounts of listed companies : [Version April 2003]

Intangible assets as goodwill, licenses, research and development or customer relations become in high technology and service orientated economies more and more important. But comparing the book values of listed companies and their market capitalization the financial reports seems to fail the information needs of market participants regarding the estimate of the proper firm value. Moreover, with the introduction of Anglo-American accounting systems in Europe and Asia we can observe even in the accounts of companies sited in the same jurisdiction diverging accounting practices for intangible assets caused by different accounting standards. To assess the relevance of intangible assets in Japanese and German accounts of listed companies we therefore measure certain balance sheet and profit and loss relations according to goodwill and self-developed software. We compare and analyze valuation rules for goodwill and software costs according to German GAAP, Japanese GAAP, US GAAP and IAS to determine the possible impact of diverging rules in the comparability of the accounts. Our results show that the comparability of the accounts is impaired because of different accounting practices. The recognition and valuation of goodwill and self-developed software varies significantly according to the accounting regime applied. However, for the recognition of self-developed software, the effect on the average impact on asset coefficients or profit is not that high. Moreover, an industry bias can only be found for the financial industry. In contrast, for goodwill accounting we found major differences especially between German and Japanese Blue Chips. The introduction of the new goodwill impairment only approach and the prohibition of the pooling method may have a major impact especially for Japanese companies’ accounts

Networks of micro and small enterprise banks : a contribution to financial sector development :[Version January 2004]

The paper is a follow-up to an article published in Technique Financière et Developpement in 2000 (see the appendix to the hardcopy version), which portrayed the first results of a new strategy in the field of development finance implemented in South-East Europe. This strategy consists in creating microfinance banks as greenfield investments, that is, of building up new banks which specialise in providing credit and other financial services to micro and small enterprises, instead of transforming existing credit-granting NGOs into formal banks, which had been the dominant approach in the 1990s. The present paper shows that this strategy has, in the course of the last five years, led to the emergence of a network of microfinance banks operating in several parts of the world. After discussing why financial sector development is a crucial determinant of general social and economic development and contrasting the new strategy to former approaches in the area of development finance, the paper provides information about the shareholder composition and the investment portfolio of what is at present the world's largest and most successful network of microfinance banks. This network is a good example of a well-functioning "private public partnership". The paper then provides performance figures and discusses why the creation of such a network seems to be a particularly promising approach to the creation of financially self-sustaining financial institutions with a clear developmental objective

Networks of micro and small enterprise banks : a contribution to financial sector development : [Version March 2005]

The paper is a follow-up to an article published in Technique Financière et Developpement in 2000 (see the appendix to the hardcopy version), which portrayed the first results of a new strategy in the field of development finance implemented in South-East Europe. This strategy consists in creating microfinance banks as greenfield investments, that is, of building up new banks which specialise in providing credit and other financial services to micro and small enterprises, instead of transforming existing credit-granting NGOs into formal banks, which had been the dominant approach in the 1990s. The present paper shows that this strategy has, in the course of the last five years, led to the emergence of a network of microfinance banks operating in several parts of the world. After discussing why financial sector development is a crucial determinant of general social and economic development and contrasting the new strategy to former approaches in the area of development finance, the paper provides information about the shareholder composition and the investment portfolio of what is at present the world's largest and most successful network of microfinance banks. This network is a good example of a well-functioning "private public partnership". The paper then provides performance figures and discusses why the creation of such a network seems to be a particularly promising approach to the creation of financially self-sustaining financial institutions with a clear developmental objective

Avoiding the rating bounce : why rating agencies are slow to react to new information

Rating agencies state that they take a rating action only when it is unlikely to be reversed shortly afterwards. Based on a formal representation of the rating process, I show that such a policy provides a good explanation for the empirical evidence: Rating changes occur relatively seldom, exhibit serial dependence, and lag changes in the issuers’ default risk. In terms of informational losses, avoiding rating reversals can be more harmful than monitoring credit quality only twice per year

The ignored performance measure

This paper studies a setting in which a risk averse agent must be motivated to work on two tasks: he (1) evaluates a new project and, if adopted, (2) manages it. While a performance measure which is informative of an agent´s action is typically valuable because it can be used to improve the risk sharing of the contract, this is not necessarily the case in this two-task setting. I provide a sufficient condition under which a performance measure that is informative of the second task is worthless for contracting despite the agent being risk averse. This shows that information content is a necessary but not a sufficient condition for a performance measure to be valuable

Project selection, income smoothing, and Bayesian learning

Capital rationing is an empirically well-documented phenomenon. This constraint requires managers to make investment decisions between mutually exclusive investment opportunities. In a multiperiod agency setting, this paper analyses accounting rules that provide managerial incentives for efficient project selection. In order to motivate a shortsighted manager to expend unobservable effort and to make efficient investment decisions, the principal sets up an incentive scheme based on residual income (e.g. EVATM). The paper shows that income smoothing generates a trade-off between agency costs resulting from differences in discount rates and the costs associated with the "congruity" of residual earnings

Entgeltflexibilisierung aus juristischer Sicht : juristische Beiträge des interdisziplinären Symposiums "Flexibilisierung des Arbeitsentgelts aus ökonomischer und juristischer Sicht" am 25. und 26. Januar 2001 in Mannheim

Juristische Beiträge des interdisziplinären Symposiums "Flexibilisierung des Arbeitsentgelts aus ökonomischer und juristischer Sicht" am 25. und 26.Januar 2001 in Mannheim