Default Option, Risk-Aversion and Household Borrowing Behaviour

Assuming a risk-neutral bank and assuming household utility to be exponential, we show how under information symmetry the covariance of income and loan repayments may explain higher household borrowings than in the case without default option. Under ex post information asymmetry and positive control costs, the result is less clear-cut. We also make evident that in a situation in which a household without default option would neither borrow nor save, the existence of a default option makes household borrowing behaviour unpredictable.Consumption, exponential utility, certainty equivalent, households, default option, borrowing, risk, risk aversion, risk management

The Store-of-Value-Function of Money as a Component of Household Risk Management

We analyse how money as a store of value affects the decisions of a representative household under diversifiable and non-diversifiable risks. given that the central bank successfully stabilizes the rate of inflation at a low level. Assuming exponential utility allows us to derive an explicit relationship between optimal money holdings, the household's desire to tilt, smooth and stabilize consumption as well as minimize portfolio risk. In this context we also show how the correlation between stochastic labour income and stock returns impact the store-of-value function of money. Finally we prove that the store-of-value benefits of money holdings continue to hold even if we take riskless alternatives into account.Money demand, consumption, CRRA, CARA, exponential utility, households, risk, risk management

Problems of Evaluating Small Firms’ Quality as a Reason for Unfavourable Loan Conditions

The article substantiates the hypothesis that the profitability of small firms is above all determined by qualitative variables. In this respect a low standardization of goods and even more importantly, the high significance of governance structures play a crucial role rendering the quality of the firm’s human capital, the flexibility of its machinery but also externalities of business networks, an appropriate integration of the family into business affairs as examples of qualitative information which also bear a high degree of privacy. Whereas the literature suggests relational contracts as a way how qualitative and private information can be credibly conveyed to the lender, it is shown that even in the German housebank-dominated financial system borrower- lender relationships of the kind recommended by the literature are hardly to be found. Rather, German banks, too, respond to information gaps with unfavourable loan conditions. As an alternative specialized information intermediation is briefly discussed.Small firms financing, rationing, information

Adjustment in EMU: Is Convergence Assured?

Using a modified version of the model presented by Belke and Gros (2007), we analyze the stability of adjustment in a currency union. Using econometric estimates for parameter values we check the stability conditions for the 11 original EMU countries and Greece. We found significant instability in the model for a large number of countries. We then simulate the adjustment process for some empirically observed parameter values and find that even for countries with relatively smooth adjustment, the adjustment to a price shock in EMU might take several decades. Keywords: EMU, convergence, stability.EMU, convergence, stability, inflation

Ruthenium versus platinum: interactions of anticancer metallodrugs with duplex oligonucleotides characterised by electrospray ionisation mass spectrometry

The binding of the ruthenium-based anticancer drug candidates KP1019, NAMI-A and RAPTA-T towards different double-stranded oligonucleotides was probed by electrospray ionisation mass spectrometry and compared with that of the widely used platinum-based chemotherapeutics cisplatin, carboplatin and oxaliplatin. It was found that the extent of adduct formation decreased in the following order: cisplatin>oxaliplatin>NAMI-A>RAPTA-T>carboplatin>KP1019. In addition to the characterisation of the adducts formed with the DNA models, the binding sites of the metallodrugs on the oligonucleotides were elucidated employing top-down tandem mass spectrometry and were found to be similar for all the metallodrugs studied, irrespective of the sequence of the oligonucleotide. A strong preference for guanine residues was establishe