Accessing International Capital: Pakistan’s Experience, Prospects, and Policy Implications

In the 1990s accessing international capital markets has become a major source of external financing for many developing countries. The paper reviews Pakistan’s experience in tapping the global financial markets. We conduct a cross-sectional econometric analysis of the factors influencing the access to international equity and debt capital. Results indicate that the factors as suggested in the earlier literature do appear to be influential in determining the access to international capital. The study finds that the role of credit rating in attracting debt flows and of the local capital markets in attracting equity flows is prominent. The rate of economic growth is a major determinant of the access to foreign debt and equity funds. It also appears that the country rating which is based on a comprehensive set of variables indicating the financial health of the country subsumes the other proxies of economic stability and debt management. This study underscores the importance of institutional factors. Areas where improvement is possible to facilitate access to the international capital markets are identified as (1) political and legal environment, including improvements in the quality of the system of civil laws and its enforcement (2) private sector development through sustaining economic liberalisation and privatisation programmes (3) improvement in macro-economic management through a prudent internal and external debt management (4) development of capital markets through, improvements in market operations, enforcement of market regulations, strengthening of financial institutions and effective dissemination of market information.

Weak radiative hyperon decays, Hara's theorem and the diquark

Weak radiative hyperon decays are discussed in the diquark-level approach. It is pointed out that in the general diquark formalism one may reproduce the experimentally suggested pattern of asymmetries, while maintaining Hara's theorem in the SU(3) limit. At present, however, no detailed quark-based model of parity-violating diquark-photon coupling exists that would have the necessary properties.Comment: 10 pages, LaTe

Nonfactorization in Hadronic Two-body Cabibbo-favored decays of D^0 and D^+

With the inclusion of nonfactorized amplitudes in a scheme with $N_c=3$, we have studied Cabibbo-favored decays of $D^0$ and $D^+$ into two-body hadronic states involving two isospins in the final state. We have shown that it is possible to understand the measured branching ratios and determined the sizes and signs of nonfactorized amplitudes required.Comment: 15 pages, Late

Two-body Cabibbo-suppressed Decays of Charmed Baryons into Vector Mesons and into Photons

The heavy quark effective theory and the factorization approximation are used to treat the Cabibbo-suppressed decays of charmed baryons to vector mesons, $\Lambda_C\rightarrow p{\rho^0}, p\omega$, $\Xi_C^{+,0}\rightarrow\Sigma^{+,0}\phi, \Sigma^{+,0}{\rho^0}, \Sigma^{+,0}\omega$ and $\Xi_C^{0}\rightarrow\Lambda\phi, \Lambda\rho, \Lambda\omega$. The input from two recent experimental results on $\Lambda_C$ decays allows the estimation of the branching ratios for these modes, which turn out to be between $10^{-4}$ and $10^{-3}$. The long distance contribution of these transitions via vector meson dominance to the radiative weak processes $\Lambda_C\rightarrow p\gamma$, $\Xi_C\rightarrow\Sigma\gamma$ and $\Xi_C^0\rightarrow\Lambda\gamma$ leads to quite small branching ratios, $10^{-6}-10^{-9}$; the larger value holds if a sum rule between the coupling constants of the vector mesons is broken.Comment: 11 pages, latex, no figure

Risk Management in the Financial Services Sector—Applicability and Performance of VaR Models in Pakistan

Financial services sector has become a major driver of economic growth in the developing countries through innovation in response to the forces of globalisation and technology. Sound risk management practices by financial institution are critical to the stability of the institutions and to the sustainability of economic growth. Therefore, measurement of market risk is important to all market participants for devising risk management strategies. Value-at-Risk (VaR) is the most widely used measure of market risk, which is defined as the maximum possible loss to the value of financial assets with a given probability over a certain time horizon. However, the task of implementing the VaR approach still remains a challenge as the empirical return distributions are found to be fat tailed and skewed in contrast to the normal distribution as assumed in the theoretical models. An extensive literature in finance (e.g., Nassim Taleb’s The Black Swan) underscores the importance of rare events in asset pricing and portfolio choice. These rare events may materialise in the shape of a large positive or negative investment returns, a stock market crash, major defaults, or the collapse of risky asset prices

Analysis of Two-Body Decays of Charmed Baryons Using the Quark-Diagram Scheme

We give a general formulation of the quark-diagram scheme for the nonleptonic weak decays of baryons. We apply it to all the decays of the antitriplet and sextet charmed baryons and express their decay amplitudes in terms of the quark-diagram amplitudes. We have also given parametrizations for the effects of final-state interactions. For SU(3) violation effects, we only parametrize those in the horizontal $W$-loop quark diagrams whose contributions are solely due to SU(3)-violation effects. In the absence of all these effects, there are many relations among various decay modes. Some of the relations are valid even in the presence of final-state interactions when each decay amplitude in the relation contains only a single phase shift. All these relations provide useful frameworks to compare with future experiments and to find out the effects of final-state interactions and SU(3) symmetry violations.Comment: 28 pages, 20 Tables in landscape form, 4 figures. Main changes are: (i) some errors in the Tables and in the relations between the quark-diagram amplitudes of this paper and those of Ref.[10] are corrected, (ii) improvements are made in the presentation so that comparisons with previous works and what have been done to include SU(3) breaking and final-state interactions are more clearly stated; to appear in the Physical Review

Mitigating Vulnerability to Oil Price Risk— Applicability of Risk Models to Pakistan’s Energy Problem

The paper examines the prospects of reducing the price risk of Pakistan’s oil imports through hedging in the oil futures market. The paper evaluates the ex-ante cross hedge strategies over the 1990–2013 period using 1–4 months futures NYMEX in order to see how to reduce price risk? Our results indicate that in all cases except one, ex-ante hedging would have been effective in reducing price risk. We provide quantitative estimates of the return/risk tradeoffs from hedging Pakistan’s oil imports, and find that futures hedging offers the country significant risk-reduction potential. Keywords: Risk-return Trade-off, Hedging, Oil Prices JEL Classification: G100, G13

Macro-economic Policies and Energy Security—Implications for a Chronic Energy Deficit Country

The paper assesses the energy sector’s foreign exchange requirements for meeting energy consumption and for capital expenditures, and identifies its implications for the country’s macroeconomic policy and management. We develop a conceptual model for projecting the energy sector’s long-term requirements for foreign exchange. The model indicates that the country’s chronic dependence on oil imports is likely to expose the economy to high and volatile oil prices. A fundamental issue for Pakistan is how the energy projects requiring large inflows of foreign capital and technology will be financed. The main implication of our analysis is that there will be continuing pressure on the country’s foreign exchange resources. The demand for foreign exchange by the year 2024-25 is projected to be US$20-21 billion without the FDI in new power generation. However, when we include the requirements of foreign exchange for capital expenditure, the total FX requirements are in the range of US$ 23- 24 billion. An implication of the country’s chronic energy deficiency is that the macroeconomic policies, particularly the foreign exchange rate policy, need to be redefined to reflect the projected demands on hard currencies and their expected scarcity value. It is likely that Pakistan will remain dependent on foreign imports to meet its energy requirements for a long time and will need to generate commensurate foreign exchange resources to ensure longterm energy security. JEL classification: E66, F37, Q43 Keywords: Macroeconomic Policy, Exchange Rate Policy, Energy Securit