Inter-firm trade finance in times of crisis

The paper discusses the main features that distinguish inter-firm international trade finance from alternative sources of financing. On the one hand, inter-firm trade finance could help overcome informational problems associated with other lending relationships; on the other, it may contribute to propagate shocks due to the interconnection among firms along credit chains. The paper evaluates the potential effects of a financial crisis on the use of trade credit for firms operating in developing countries. It argues that while the advantages of trade credit might remain largely unexploited due to poor legal institutions, the disadvantages might be exacerbated because of these firms’ greater exposure to a default chain. Based on these arguments, a menu of choices is identified for what policymakers can do to boost firms’ access to inter-firm trade finance in times of crisis.Debt Markets,Access to Finance,Bankruptcy and Resolution of Financial Distress,Economic Theory&Research,Emerging Markets

Issues and Options for Restructuring Electricity Supply Industries

The electricity supply industry is highly capital-intensive, whose success depends critically upon the management of its investment. In most developing countries investment is poorly managed, poorly maintained, and often inadequate. Inadequate regulation or political control lead to low prices that undermine the finance of investment and give poor incentives for management and operation. The paper argues that regulation must be carefully designed to provide efficient incentives and adequate guarantees to sustain investment and operations and only then will privatisation improve performance and benefit consumers. The paper discusses the evidence for these claims, the circumstances required for full unbundling and liberalisation to be successful, and those where the Single Buyer Model or continued, ideally reformed, state ownership, may be preferable, at least until conditions improve

On the interactions between capital structure and product markets: A survey of the literature.

Capital structure; Structure; Product; Markets; Market;

On the Interactions between Capital Structure and Product Markets.A Survey of the Literature

This paper surveys capital structure theories based on product characteristics and the structure of input and output markets. In this manner, it extends the work of Harris and Raviv (1991). Simultaneously, we relate capital structure to decisions in the input and output markets, such as production and pricing, investments, and entry and exit. We briefly discuss each of the central papers in these literatures and relate them to the other models. Next, we present the known empirical evidence that either supports or rejects these models. Finally, we offer our conclusions and elaborate on this review article’s implications for future research.

Regulatory Challenges to European Electricity Liberalisation

Regulatory Challenges to European Electricity Liberalisatio

A look at the relationship between industrial dynamics and aggregate fluctuations

The firmly established evidence of right-skewness of the firms’ size distribution is generally modelled recurring to some variant of the Gibrat’s Law of Proportional Effects. In spite of its empirical success, this approach has been harshly criticized on a theoretical ground due to its lack of economic contents and its unpleasant long-run implications. In this chapter we show that a right-skewed firms’ size distribution, with its upper tail scaling down as a power law, arises naturally from a simple choice-theoretic model based on financial market imperfections and a wage setting relationship. Our results rest on a multi-agent generalization of the prey-predator model, firstly introduced into economics by Richard Goodwin forty years ago.Firm size; Prey-predator model; Business Fluctuations

Optimal scope of supply chain network & operations design

The increasingly complex supply chain networks and operations call for the development of decision support systems and optimization techniques that take a holistic view of supply chain issues and provide support for integrated decision-making. The economic impacts of optimized supply chain are significant and that has attracted considerable research attention since the late 1990s. This doctoral thesis focuses on developing manageable and realistic optimization models for solving four contemporary and interrelated supply chain network and operations design problems. Each requires an integrated decision-making approach for advancing supply chain effectiveness and efficiency. The first model formulates the strategic robust downsizing of a global supply chain network, which requires an integrated decision-making on resource allocation and network reconfiguration, given certain financial constraints. The second model also looks at the strategic supply chain downsizing problem but extends the first model to include product portfolio selection as a downsizing decision. The third model concerns the redesign of a warranty distribution network, which requires an integrated decision-making on strategic network redesign and tactical recovery process redesign. The fourth model simultaneously determines the operational-level decisions on job assignment and process sequence in order to improve the total throughput of a production facility unit

Domestic Outsourcing, Rent Seeking, and Increasing Inequality

An increasing share of the economy is organized around financial capitalism, where, in contrast to the past, capital market actors actively assert and manage their claims on wealth creation and distribution. These new actors challenge prior assumptions of managerial capitalism about the goals and governance of firms. The focus on shareholder value is credited with increasing firm efficiency and shareholder returns. This lecture analyzes the changes in organizational behavior and value extraction under financial capitalism