Farmers and farmers’ associations in developing countries and their use of modern financial instruments

This paper starts with an overview of the current literature on the cost of price risk exposure to developing country farmers. It then discusses market-based price risk management instruments (such as futures and options) that can be used by farmers, as well as various mechanisms through which farmers' associations can facilitate farmers' access to price risk management tools as well as lower-cost financing (using warehouse receipt finance, repos and other structured financings). The experiences with use of such modern financial tools by farmers in several developing countries (Brazil, Colombia, Guatemala, India, Malaysia, Mexico, Philippines, Uganda) are described. The report concludes with a discussion of the practicalities of farmers' associations starting to use such financial instruments, including the potential of new technologies such as smart cards.farmers structured finance warehouse receipts price risk management

Assessing Key performance indicators in Blockchain-Based Supply Chain Financing: Case Study of Chain Stores

In recent years, due to the growth and development of financing tools and methods, financial institutions are always looking for new, efficient, and low-cost methods. In carrying out their daily production operations, companies are faced with different and diverse financial input and output flows from purchasing orders and inventory to receiving the price of sold goods, which are not the same in terms of time. Therefore, they will inevitably look for the financing of these processes, which is referred to as working capital financing. However, in the conditions of recession and lack of bank loans and considering the problems caused by the unilateral management of this issue, there is a need for innovative financial tools such as supply chain financing (SCF). In recent years, with the introduction and evolution of blockchain technology, this opportunity has also arisen in financial fields to make the most of this new technology. Considering the growth of this technology and the importance of supply chain financing, in this research, it was first tried to fully investigate the dimensions and key components of blockchain-based supply chain financing. chain stores were considered as a case study and the importance of supply chain financing was analyzed in them and the SCF framework was presented in these applied enterprises. In addition, the most important key performance indicators in a blockchain-based supply chain financing system are identified and evaluated with an emphasis on chain store processes. To evaluate the data, a non-linear hierarchical analysis method was used. The results show that transferring and reducing risks in different types is one of the most important performance indicators of the blockchain-based supply chain financing system

Commodities and Linkages: Meeting the Policy Challenge

The results of detailed empirical enquiry into the nature and determinants of the breadth and depth of linkages in and out of the commodities sector in eight SSA countries (Angola, Botswana, Gabon, Ghana, Nigeria, South Africa Tanzania, and Zambia) and six sectors (copper, diamonds, gold, oil and gas, mining services and timber) has shown extensive scope for industrial development (MMCP DP 13, 2011). A primary conclusion of this research was that policy in both the private and public realm was a prime factor holding back the development of linkages. Addressing this problem requires the closing of three sets of misalignments between policy and practice – within the corporate sector, within the public sector, and between the public sector and other stakeholders involved in linkage development. In addition, specific policies need to be developed, monitored and implemented in relation to the three contextual drivers of linkages from the commodity sector – skills and capabilities, infrastructure and policies towards ownership

Contract risks and credit spread determinants in the international project bond market

International bond markets have become an increasingly important source of long-term capital for infrastructure projects in emerging market economies over the past decade. The Ras Laffan Liquified Natural Gas (Ras Gas) project represents a milestone in this respect: its $1.2 billion bond offering, completed in December 1996, has been the largest for any international project. The Ras Gas project has the right to extract, process, and sell liquefied natural gas (LNG) from a field off the shore of Qatar. The principal off-taker is the Korea Gas Corporation (Kogas), which resells most of the LNG to the Korea Electric Power Corporation (Kepco) for electricity generation. In this clinical study the authors analyze the determinants of credit spreads for the Ras Gas project in terms of its contractual structure, with a view to better understanding the role of contract design in facilitating access to the global project bond market. Market risk perceptions have long been recognized to be a function of firm-specific variables, particularly asset value as embodied in contracts. The authors therefore study the impact of three interlocking contracts on the credit spreads of the project's actively traded global bonds: the 25-year output sales and purchase agreement with Kogas-Kepco, the international bond covenant, and an output price-contingent debt service guarantee by Mobil to debt holders. Using a sample of daily data from January 1997 to March 2000, the authors find that the quality of the off-taker's credit-and, more important, the market's assessment of the off-taker's economic prospects-drive project bond credit spreads and pricing. In addition, seemingly unrelated events in emerging debt markets spill over to project bond markets and affect risk perceptions and prices in this segment. Judicious use of an output price-contingent debt service guarantee by shareholders can significantly reduce project risks, and markets reward issuers through tighter credit spreads. Bondholders and shareholders share residual risks over time, despite covenants meant to preempt risk shifting. This type of risk shifting originates from incomplete contracts and the nonrecourse nature of project finance. It does not necessarily result from a deliberate attempt by management to increase shareholder value at the expense of debt holders by pursuing high-risk, low-value activities, although project managers and shareholders could still exploit their informational advantages by leaving output supply contracts incomplete in ways beneficial to their private interests. The results hold important lessons for global project finance. Projects incorporating certain design features can reap significant financial gains through lower borrowing costs and longer debt maturities: Judicious guarantees by parents that enjoy a particular hedging advantage enhance a project's appeal, as reflected in favorable pricing. Pledging receivables rather than physical assets as collateral and administering investor cash flows through an off-shore account offers additional security to debt holders. Projects should use their liability structure to create an implicit option on future private debt financing that matches the real option of a project expansion. The finding that bondholders bear residual risks means that shareholders can reduce their risks arising from bilateral monopolies and buy insurance against unforeseen and unforeseeable events.Payment Systems&Infrastructure,Economic Theory&Research,Banks&Banking Reform,Financial Intermediation,Environmental Economics&Policies,Banks&Banking Reform,Financial Intermediation,Economic Theory&Research,Environmental Economics&Policies,Housing Finance

The Failure of Private Ordering and the Financial Crisis of 2008

This Article analyzes the Financial Crisis of 2008 in the context of failures by market participants to engage in private ordering thus leading to opportunistic behavior at the expense of market stability. The Financial Crisis of 2008 offers a decidedly negative verdict on a decades-long project to deregulate financial markets and rely on private ordering mechanisms, including securitization and default swaps, to mitigate opportunistic behavior and improve market efficiency. Although the regulatory approach of the past two decades, which relied in great measure on private parties fending for themselves, helped to generate a number of innovations and positive developments in finance, it ultimately failed to bring about more resilient financial markets. The market for mortgage securitizations found itself subject to adverse selection biases leading to a lemons market for asset-backed securities. At the same time, developments in derivative markets made it possible for central actors there to engage in more risk (moral hazard) than was optimal. Ultimately, parties that should have engaged in private ordering did not. As a consequence, we are left struggling for a new regulatory path forward that recognizes that market participants are human agents subject to the frailties of cognitive limitations, euphoria and perhaps even the occasional self-delusion. What is required is a close examination of the institutional and micro incentives (including incentives of agents) in order to strike a balance between market-based regulation and a more interventionist approach to regulating markets. A more pragmatic approach to market regulation recognizes that the earlier hands-off approach to regulation resulted in over-reliance on weak heuristics and little by way of robust private ordering. A new more pragmatic vision of market regulation will likely stop short of legislating against bubbles, but could, and should, result in less systemic risk and a more sustainable growth trajectory going forward

Applying Market Shaping Approaches to Increase Access to Assistive Technology: Summary of the Wheelchair Product Narrative

To accelerate access to assistive technology (AT), we need to leverage the capabilities and resources of the public, private, and non-profit sectors to harness innovation and break down barriers to access. Market shaping interventions can play a role in enhancing market efficiencies, coordinating and incentivizing the number of stakeholders involved in demand and supply-side activities. Across health sectors, market shaping has demonstrated its potential to enhance national governments’ or donors’ value-for-money, diversify the supply base, and increase reliability – ultimately increasing product and service delivery access for end users. These market shaping successes in other health areas have led practitioners to hypothesize that market shaping could also be applied to assistive technology markets. ATscale, the Global Partnership for AT, aims to mobilise global stakeholders to shape markets in line with a unified strategy. To inform this strategy, it is critical to identify specific interventions required to shape markets and overcome barriers. The first product undergoing analysis by ATscale is wheelchairs. The market for appropriate wheelchairs in low-and middle income countries (LMICs) is highly fragmented and characterized by limited government interest, investment, and a low willingness-to-pay. Moreover, the market is dominated by cheaper, low quality wheelchairs which fail to meet the needs of end-users. Non-profit organizations have attempted to fill the need for context-appropriate wheelchairs, but market uptake is limited. These initial findings led ATscale to believe that market shaping could support increased access to appropriate wheelchairs. This paper outlines what market shaping is, and how it can be applied to assistive technology at large -- using the aforementioned wheelchair product narrative as an illustrative case study and presents the proposed market shaping strategy for wheelchairs. ATscale will develop a framework to evaluate short-term interventions identified to achieve a healthy market and increase access. This paper provides an opportunity to obtain feedback from interested stakeholders on the market shaping strategy for wheelchairs, as well as the product narrative process to be undertaken for other priority AT