Information Asymmetry and Foreign Currency Borrowing by Small Firms

We model the choice of loan currency in a framework which features a trade-off between lower cost of debt and the risk of firm-level distress costs. Under perfect information foreign currency funds come at a lower interest rate, all foreign currency earners as well as those local currency earners with high revenues and/or low distress costs choose foreign currency loans. When the banks have imperfect information on the currency and level of firm revenues, even more local earners switch to foreign currency loans, as they do not bear the full cost of the corresponding credit risk.foreign currency borrowing;competition;banking sector;market structure

Who Needs Credit and Who Gets Credit in Eastern Europe?

Based on survey data covering 8,387 firms in 20 countries we compare credit demand and credit supply for firms in Eastern Europe to those for firms in selected Western European countries.Credit Constraints;Banking sector;Transition economies

Currency Denomination of Bank Loans:Evidence from Small Firms in Transition Countries

We examine the firm-level and country-level determinants of the currency denomination of small business loans. We introduce an information asymmetry between banks and firms in a model that also features the trade-off between the cost of debt and firm-level distress costs. Banks in our model don’t know the currency in which firms have contracted their sales. When foreign currency funds come at a lower interest rate, all foreign currency earners and those local currency earners with low distress costs choose foreign currency loans. With imperfect information in the model concerning the currency in which the firms receive their earnings, even more local earners switch to foreign currency loans as they do not bear the full cost of the corresponding credit risk. We test these implications of our model by using a 2005 survey with responses from 9,655 firms in 26 transition countries that contains reports on 3,105 recent bank loans. We find that firms with foreign currency earnings and lower distress costs borrow more in foreign currency, while opaque firms do not. Interest rate advantages on foreign currency funds do explain differences in loan dollarization across countries, but not within countries over time. The presence of foreign banks and reforms related to corporate governance also contribute to differences in foreign currency borrowing across countries. However, stronger foreign bank presence or corporate governance do not lead more local currency earners to choose foreign currency loans. Our results suggest that while the cost and risk of debt do affect the propensity of small firms to take unhedged foreign currency loans, firm opaqueness does not. Hence, we cannot confirm that information asymmetries are a key driving force of the recently observed increase in loan dollarization in Eastern European transition countries.

Influence of the preliminary annealing conditions on step motion at the homoepitaxy on the Si(100) surface

In this paper, the motion of steps SA and SB on the Si(100) surface in the process of Si Molecular beam epitaxy (MBE) is explored. The study was carried out by means of the reflection intensity dependence behavior analysis of reflection high-energy electron diffraction (RHEED) corresponding to the (2×1) and (1×2) reconstructions. Superstructural rearrangement from a two-domain to a single-domain surface is associated with the bilayer step formation, which occurs due to the different motion rates of the steps SA and SB. Based on the research conducted, the conditions under which the step doubling occurs were determined. A behavior analysis of the diffraction reflection intensity dependences showed that an increasing of preliminary annealing time and temperature facilitates to the faster convergence of the steps SA and SB, but to the slower recovery of the initial surface. The presented experimental results indicate that step movement rate difference depends on the step A edge kink density

Factors affecting acceptance of 3D printing in construction

The use of 3D printing technology offers several advantages over the traditional methods. However, additional challenges and risks are faced due to the introduction of this new technology in construction projects. A literature review was performed to identify the benefits of 3D printing. Five key benefits were identified: faster construction, cost reduction, more geometric freedom, sustainability and safety benefits

The U.S.-Russia Joint Threat Assessment of Nuclear Terrorism

Nuclear terrorism is a real and urgent threat. Given the potentially catastrophic consequences, even a small probability of terrorists getting and detonating a nuclear bomb is enough to justify urgent action to reduce the risk. Al-Qaeda and North Caucasus terrorist groups have both made statements indicating that they seek nuclear weapons and have attempted to acquire them; these groups are presented together as a case study to assess nuclear terrorism as a present and future threat. (The only other terrorist group known to have systematically sought to get nuclear weapons was the Japanese cult group Aum Shinrikyo.) This study makes the case that it is plausible that a technically sophisticated group could make, deliver, and detonate a crude nuclear bomb if it could obtain sufficient fissile material. The study offers recommendations for actions to reduce this danger

Information Asymmetry and Foreign Currency Borrowing by Small Firms

We model the choice of loan currency in a framework which features a trade-off between lower cost of debt and the risk of firm-level distress costs. Under perfect information foreign currency funds come at a lower interest rate, all foreign currency earners as well as those local currency earners with high revenues and/or low distress costs choose foreign currency loans. When the banks have imperfect information on the currency and level of firm revenues, even more local earners switch to foreign currency loans, as they do not bear the full cost of the corresponding credit risk

Information Asymmetry and Foreign Currency Borrowing by Small Firms

We model the choice of loan currency in a framework which features a trade-off between lower cost of debt and the risk of firm-level distress costs. Under perfect information foreign currency funds come at a lower interest rate, all foreign currency earners as well as those local currency earners with high revenues and/or low distress costs choose foreign currency loans. When the banks have imperfect information on the currency and level of firm revenues, even more local earners switch to foreign currency loans, as they do not bear the full cost of the corresponding credit risk