The Response of Firms' Leverage to Uncertainty: Evidence from UK Public versus Non-Public Firms

This paper empirically investigates the effects of uncertainty on firms' leverage. The analysis is carried out for a large panel of public and non-public UK manufacturing rms over 1999-2008. The empirical results provide evidence that firms use less short-term debt as they go through periods of high uncertainty. The leverage of non-public firms is more sensitive to idiosyncratic uncertainty in comparison to their public counterparts, yet macroeconomic uncertainty a ects both types of firms similarly. We finally end our investigation showing that the total impact of either type of uncertainty on firms' leverage is related to the amount of the cash buffer each firm carries

Firm productivity, exchange rate movements, sources of finance and export orientation

We investigate the level and volatility effects of exchange rates on the productivity growth of manufacturing firms with heterogenous access to debt, and domestic and foreign equity markets in Turkey. We find that while exchange rate volatility affects productivity growth negatively, having access to foreign or domestic equity, or debt markets does not alleviate these effects. Furthermore, foreign owned or publicly traded companies do not appear to perform significantly better than the rest. We detect, however, that firm productivity is positively related to having access to external credit. Additionally, we find that while export (inward) oriented firms are affected less (more) by exchange rate appreciations, they are more (less) sensitive to exchange rate volatility

Do Institutions, Inequality and Religious Beliefs Affect Cadaveric versus Live-Kidney Harvesting

Using an unbalanced annual dataset from 63 countries over 1998-2002, we show that improvements in equality and rule of law in developing countries encourage cadaveric kidney transplants. Religion also plays an important role in that relationship

Does Real Exchange Rate Volatility Affect Sectoral Trade Flows?

This paper investigates empirically the effect of real exchange rate volatility on sectoral bilateral trade flows between the US and her top thirteen trading countries. Our investigation also considers those effects on trade flows which may arise through changes in income volatility and the interaction between income and exchange rate volatilities. We provide evidence that exchange rate volatility mainly affects sectoral trade flows of developing but not that of developed countries. We also find that the effect of the interaction term on trade flows is opposite that of exchange rate volatility yet there is little impact arising from income volatility

Determinants of Financial vs. Non Financial Stock Returns: Evidence from Istanbul Stock Exchange

We estimate a four-factor model for a sample of financial and nonfinancial firms traded on the Istanbul Stock Exchange (ISE). The factors relate to market return, interest, inflation and exchange rates. By investigating the effects of these factors simultaneously for different exchange rate regimes, we show that market return, interest, inflation, and exchange rates play a separate role in financial and nonfinancial firms´ stock returns. We also show that all factors are priced during the period of free float. These results are important for determining financial institutions' cost of capital and for identifying the risks that should be hedged

The impact of inflation uncertainty on economic growth: a MRS-IV approach

We empirically investigate inflation uncertainty effects on output growth for the US by implementing a Markov regime switching model as we account for endogeneity problems. We show that inflation uncertainty -obtained from a Markov regime switching GARCH model - has a negative and regime dependent impact on output growth. Moreover, we find that the smooth probability of high growth regime falls long before the recent financial crisis was imminent. This might be driven by a regime dependent causality, an issue which has been left unexplored

Real effects of inflation uncertainty in the US

We empirically investigate the effects of inflation uncertainty on output growth for the US using both monthly and quarterly data over 1985-2009. Employing a Markov regime switching approach to model output dynamics, we show that inflation uncertainty obtained from a Markov regime switching GARCH model exerts a negative and regime dependant impact on output growth. In particular, we show that the negative impact of inflation uncertainty on output growth is almost 4.5 times higher during the low growth regime than that during the high growth regime. We verify the robustness of our findings using quarterly data

Inventories and sales uncertainty

We investigate the empirical linkages between sales uncertainty and firms´ inventory investment behavior while controlling for firms´ financial strength. Using large panels of manufacturing firms from several European countries we find that higher sales uncertainty leads to larger stocks of inventories. We also identify an indirect effect of sales uncertainty on inventory accumulation through the financial strength of firms. Our results provide evidence that financial strength mitigates the adverse effects of uncertainty

Trade Flows, Exchange Rate Uncertainty and Financial Depth: Evidence from 28 Emerging Countries

We investigate the effects of real exchange rate uncertainty and financial depth on manufactures exports from 28 emerging economies to the North and South over 1978-2005. We estimate a dynamic panel model using system GMM approach and show that for the majority of countries in our sample exchange rate uncertainty affects both South-South and South-North trade negatively. Furthermore, for several cases we discover that this effect is unidirectional, that is South-South or South-North. In addition, we find that while financial depth plays a trade-enhancing role, exchange rate shocks can negate this effect. We also show that trade among developing economies is likely to enhance export growth

Inventories and sales uncertainty

We investigate the empirical linkages between sales uncertainty and firms´ inventory investment behavior while controlling for firms´ financial strength. Using large panels of manufacturing firms from several European countries we find that higher sales uncertainty leads to larger stocks of inventories. We also identify an indirect effect of sales uncertainty on inventory accumulation through the financial strength of firms. Our results provide evidence that financial strength mitigates the adverse effects of uncertainty