Risk-Taking, Agency Problem, and Small Business Loan Guarantee: An Application of Option Pricing Theory

We examine the relationship between the small business loan guarantee and the agency problem of small firms. We then recommend financial instruments or financial contracts that can minimize of eliminate the moral hazard problem

Monitoring fever treatment behaviour and equitable access to effective medicines in the context of initiatives to improve ACT access: baseline results and implications for programming in six African countries

BACKGROUND: Access to artemisinin-based combination therapy (ACT) remains limited in high malaria-burden countries, and there are concerns that the poorest people are particularly disadvantaged. This paper presents new evidence on household treatment-seeking behaviour in six African countries. These data provide a baseline for monitoring interventions to increase ACT coverage, such as the Affordable Medicines Facility for malaria (AMFm). METHODS: Nationally representative household surveys were conducted in Benin, the Democratic Republic of Congo (DRC), Madagascar, Nigeria, Uganda and Zambia between 2008 and 2010. Caregivers responded to questions about management of recent fevers in children under five. Treatment indicators were tabulated across countries, and differences in case management provided by the public versus private sector were examined using chi-square tests. Logistic regression was used to test for association between socioeconomic status and 1) malaria blood testing, and 2) ACT treatment. RESULTS: Fever treatment with an ACT is low in Benin (10%), the DRC (5%), Madagascar (3%) and Nigeria (5%), but higher in Uganda (21%) and Zambia (21%). The wealthiest children are significantly more likely to receive ACT compared to the poorest children in Benin (OR = 2.68, 95% CI = 1.12-6.42); the DRC (OR = 2.18, 95% CI = 1.12-4.24); Madagascar (OR = 5.37, 95% CI = 1.58-18.24); and Nigeria (OR = 6.59, 95% CI = 2.73-15.89). Most caregivers seek treatment outside of the home, and private sector outlets are commonly the sole external source of treatment (except in Zambia). However, children treated in the public sector are significantly more likely to receive ACT treatment than those treated in the private sector (except in Madagascar). Nonetheless, levels of testing and ACT treatment in the public sector are low. Few caregivers name the national first-line drug as most effective for treating malaria in Madagascar (2%), the DRC (2%), Nigeria (4%) and Benin (10%). Awareness is higher in Zambia (49%) and Uganda (33%). CONCLUSIONS: Levels of effective fever treatment are low and inequitable in many contexts. The private sector is frequently accessed however case management practices are relatively poor in comparison with the public sector. Supporting interventions to inform caregiver demand for ACT and to improve provider behaviour in both the public and private sectors are needed to achieve maximum gains in the context of improved access to effective treatment

The Sub-Gaussian Distribution of Currency Futures: Stable Peretian or Nonstationary?

This study conducts an empirical test to examine wh ether the observed non-normal distribution of currency futures price changes isgenerated by the relationship between maturity and variability. In general, the author finds that the relationship between maturity and vari-ability is not suff icient to explain the observed non- normality. Although some amount of non-statio narity is present in the scale and in the characteristic exponent, the non-norma l stable Paretian distribution adequately describes futures price changes for mo st currencies and most contracts during the period covered in thisstudy Copyright 1987 by MIT Press.

The Behavior of Foreign Exchange Rates – Comment†

The distributors of foreign exchange rates are important for model building and empirical analysis. For example, many studies have examined foreign exchange market efficiency and currency portfolio management under the assumption that foreign exchange rates are normally distributed. The statistical tests in these studies, and thus their conclusions, may not be reliable if the foreign exchange rates follow non-normal distributions. Realizing the importance of the distribution of exchange rates, Professors Calderón-Rossell and Ben-Horim (1982) (hereafter C-B) have conducted a study analyzing these distributions. Based on the skewness of the distribution, C-B have classified foreign currencies into three groups. In the first group, the skewness statistic was not significantly different from zero for all currencies and subperiods. In the second group, the distribution of changes in the foreign exchange rates was close to symmetric except for at least one subperiod. In the third group, the skewness statistic suggests strongly that all the distributions were asymmetric. Their results reveal that:© 1986 JIBS. Journal of International Business Studies (1986) 17, 165–175

Variability and inflation: Evidence from developed and developing countries

Variations of a reduced-form equation for inflation determination are specified with ARCH processes for 34 countries. Results of testing for and estimation of the ARCH specifications show significant results in nearly half, but in five of those, tests suggest the presence of an AR(4) process which may invalidate the test for ARCH. Use of predicted conditional standard deviations of inflation, rather than the unconditional measure used previously, shows no evidence of a correlation of variability and inflation.