The Effect of Credit Insurance on Liquidity Constraints and Default Rates: Evidence From a Governmental Intervention

Understanding the extent to which interventions in financial markets can reduce liquidity constraints is of crucial importance to researchers and policymakers. Even though there is consensus that limited access to financing can reduce the number of profitable projects undertaken by entrepreneurs, there is little research on how well governmental interventions address this problem. In this paper we use Partial Credit Guarantee Schemes in Chile to study how such a government intervention in the financial system can affect the access that entrepreneurs have to the formal financial system. We also explore how these schemes affect the default rates on the guaranteed loans. We find that partial credit guarantee schemes increase the number of loans and the aggregate amount lent to small and medium size businesses. In addition, we find that credit guarantees increase the debt capacity of individual entrepreneurs, holding assets fixed. We also find that Credit Guarantees increase default rates, but the evidence suggests that this result is explained mainly by misalignment of bank incentives rather than moral hazard in the context of client practices.

The Effect of the Number of Lending Banks on the Liquidity Constraints of Firms: Evidence From a Quasi-Experiment

We empirically explore whether firms have a target for the number of banks from which they borrow, and whether having multiple bank relationships has an impact on firms’ liquidity situation. A bank merger in Chile provides a quasi-experiment as it constitutes an exogenous reduction in the number of lenders for firms that were previously borrowing from both merging banks. We find that a significant percentage of firms whose number of bank relationships was reduced by the merger regain their original number of lenders. In particular, firms whose number of bank lending relationships was reduced from two to one as a result of the merger have a 23% higher probability of adding a new bank lending relationship in the five years following the merger than similar firms unaffected by the merger. Overall, we find that a reduction in firms’ number of bank lenders resulting from the merger reduced firms’ access to credit. In particular, a reduction from two to one bank lending relationships generated, on average, a 14.4% decrease in loan size for the affected companies compared to firms unaffected by the merger.

Do Relationships Matter? Evidence from Loan Officer Turnover

We show that the cost of employee turnover in firms that rely on decentralized knowledge and personal relationships depends on the firms' planning horizons and the departing employees' incentives to transfer information. Using exogenous shocks to the relationship between borrowers and loan officers, we document that borrowers whose loan officers are on leave are less likely to receive new loans from the bank, are more likely to apply for credit from other banks, and are more likely to miss payments or go into default. These costs are smaller when turnover is expected, as in the case of maternity leave, or when loan officers have incentives to transfer information, as in the case of voluntary resignations

Keeping it simple: financial literacy and rules of thumb

Micro-entrepreneurs often lack the financial literacy required to make important financial decisions. We conducted a randomized evaluation with a bank in the Dominican Republic to compare the impact of two distinct programs: standard accounting training versus a simplified, rule-of-thumb training that taught basic financial heuristics. The rule-of-thumb training significantly improved firms' financial practices, objective reporting quality, and revenues. For micro-entrepreneurs with lower skills or poor initial financial practices, the impact of the rule-of-thumb training was significantly larger than that of the standard accounting training, suggesting that simplifying training programs might improve their effectiveness for less sophisticated individuals

Essays in corporate finance

Thesis (Ph. D.)--Massachusetts Institute of Technology, Sloan School of Management, 2009.Cataloged from PDF version of thesis.Includes bibliographical references (p. 105-106).This thesis consists of three essays covering topics in empirical corporate finance with an emphasis on banking relationships and its effect on liquidity constraints and business growth. In particular, it investigates the effect of monetary capital and human capital constraints and the role of banking relationships to relax both constraints. The first essay studies how the number of bank relationships affects the liquidity constraints of businesses. The second essay investigates how accounting training can affect the liquidity constraints of entrepreneurs finally the third essay studies the effect of credit insurance as a mechanisms to reduce liquidity constraints. Further details of each essay are included below: In Chapter 1, I empirically explore whether firms have a target for the number of banks from which they borrow, and whether having multiple bank relationships has an impact on firms' liquidity situation. A bank merger in Chile provides a quasi-experiment as it constitutes an exogenous reduction in the number of lenders for firms that were previously borrowing from both merging banks. I find that a significant percentage of firms whose number of bank relationships was reduced by the merger regain their original number of lenders. In particular, firms whose number of bank lending relationships was reduced from 2 to 1 as a result of the merger have a 23% higher probability of adding a new bank lending relationship in the 5 years following the merger compared to similar firms unaffected by the merger.(cont.) Overall, I find that a reduction in firms' number of bank lenders resulting from the merger reduced firms' access to credit. In particular, a reduction from two to one bank lending relationship on average generated a 14.4% decrease in loan size for the affected companies compared to firms unaffected by the merger. In Chapter 2 (joint work with Antoinette Schoar and Greg Fischer) We conduct a randomized impact evaluation of a training program for micro-entrepreneurs in the Dominican Republic that allows us to identify the effects of cash management and accounting techniques on business practices and business performance. To a randomly-selected fraction of the entrepreneurs enrolled in the training program we also provided on-site accounting and cash management advice. We find that micro entrepreneurs are reluctant to incorporate complex and time-consuming accounting practices into their businesses, however, simpler cash flow management practices were widely adopted by trained entrepreneurs. People who were taught basic cash flow management techniques increased their sales up to 80%. The increase in sales during bad performance periods was substantially more significant than the average increase in sales. This suggests that the most important mechanism through which training improved performance was by reducing the effect of drawbacks in the businesses. Complex accounting techniques only increased sales when combined with on-site advice, most likely because these practices where not consistently implemented when on-site advice was not provided.(cont.) In Chapter 3 (joint work with Kevin Cowan and Alvaro Yafies), we use Partial Credit Guarantee Schemes in Chile to study how such a government intervention in the financial system can affect the access that entrepreneurs have to the formal financial system. We also explore how these schemes affect the default rates on the guaranteed loans. We find that partial credit guarantee schemes increase the number of loans and the aggregate amount lent to small and medium size businesses. In addition, we find that credit guarantees increase the debt capacity of individual entrepreneurs, holding assets fixed. We also find that Credit Guarantees increase default rates, but the evidence suggests that this result is explained mainly by misalignment of bank incentives rather than moral hazard in the context of client practices.by Alejandro Herman Drexler.Ph.D

The Effect Of The Number Of Lending Banks On The Liquidity Constraints Of Firms: Evidence From A Quasi-Experiment

En este trabajo exploramos si las firmas tienen un objetivo para el número de bancos con los cuales deciden endeudarse, y si la presencia múltiples acreedores afecta su liquidez. La fusión de los bancos Santander y Santiago constituye un shock externo al número de acreedores para las firmas que mantenían deuda con ambas instituciones al momento de la fusión. En este estudio encontramos que una fracción significativa de las firmas que sufrieron una reducción en el número de acreedores por efecto de la fusión, vuelve al número original de bancos con los que trabajaba antes de la fusión. En particular, la probabilidad de agregar un nuevo acreedor en los cinco años que siguen a la fusión es 23% mayor para las firmas cuyo número de bancos disminuye de dos a uno como resultado de la fusión, comparada con la probabilidad de agregar un nuevo acreedor para firmas similares cuyo número de bancos no fue afectado por la fusión. Adicionalmente, encontramos que una reducción en el número de bancos a consecuencia de dicha fusión reduce el acceso al crédito para las firmas afectadas. En particular, pasar de dos relaciones bancarias a una genera, en promedio, una reducción de 14.4% en el monto total prestado a estas empresas comparado con el monto prestado a empresas similares que no fueron afectadas por la fusión

Anopheles stephensi p38 MAPK signaling regulates innate immunity and bioenergetics during Plasmodium falciparum infection.

BackgroundFruit flies and mammals protect themselves against infection by mounting immune and metabolic responses that must be balanced against the metabolic needs of the pathogens. In this context, p38 mitogen-activated protein kinase (MAPK)-dependent signaling is critical to regulating both innate immunity and metabolism during infection. Accordingly, we asked to what extent the Asian malaria mosquito Anopheles stephensi utilizes p38 MAPK signaling during infection with the human malaria parasite Plasmodium falciparum.MethodsA. stephensi p38 MAPK (AsP38 MAPK) was identified and patterns of signaling in vitro and in vivo (midgut) were analyzed using phospho-specific antibodies and small molecule inhibitors. Functional effects of AsP38 MAPK inhibition were assessed using P. falciparum infection, quantitative real-time PCR, assays for reactive oxygen species and survivorship under oxidative stress, proteomics, and biochemical analyses.ResultsThe genome of A. stephensi encodes a single p38 MAPK that is activated in the midgut in response to parasite infection. Inhibition of AsP38 MAPK signaling significantly reduced P. falciparum sporogonic development. This phenotype was associated with AsP38 MAPK regulation of mitochondrial physiology and stress responses in the midgut epithelium, a tissue critical for parasite development. Specifically, inhibition of AsP38 MAPK resulted in reduction in mosquito protein synthesis machinery, a shift in glucose metabolism, reduced mitochondrial metabolism, enhanced production of mitochondrial reactive oxygen species, induction of an array of anti-parasite effector genes, and decreased resistance to oxidative stress-mediated damage. Hence, P. falciparum-induced activation of AsP38 MAPK in the midgut facilitates parasite infection through a combination of reduced anti-parasite immune defenses and enhanced host protein synthesis and bioenergetics to minimize the impact of infection on the host and to maximize parasite survival, and ultimately, transmission.ConclusionsThese observations suggest that, as in mammals, innate immunity and mitochondrial responses are integrated in mosquitoes and that AsP38 MAPK-dependent signaling facilitates mosquito survival during parasite infection, a fact that may attest to the relatively longer evolutionary relationship of these parasites with their invertebrate compared to their vertebrate hosts. On a practical level, improved understanding of the balances and trade-offs between resistance and metabolism could be leveraged to generate fit, resistant mosquitoes for malaria control

Diagnóstico y propuesta de mejora de la utilización de los recursos disponibles

Informe de investigación--Universidad de Costa Rica, Vicerrectoría de Acción Social, Trabajo Comunal Universitario. 2004. Para mayor información puede escribir a [email protected] realizado en la Fundación Hogar de Ancianos en Piedades de Santa Ana. Se analizó el ambiente en el hogar y la calidad de vida de los adultos mayores que habitan allí. Al respecto, se identificó la carencia de un programa de actividades para las personas de tercera edad, que aporte a su salud física y mental. Entonces, se estableció un plan que pudiera ajustarse a la realidad económica del hogar.Universidad de Costa RicaUCR::Vicerrectoría de Acción Social::Trabajo Comunal Universitario (TCU

Toward optical coherence tomography on a chip: in vivo three-dimensional human retinal imaging using photonic integrated circuit-based arrayed waveguide gratings

In this work, we present a significant step toward in vivo ophthalmic optical coherence tomography and angiography on a photonic integrated chip. The diffraction gratings used in spectral-domain optical coherence tomography can be replaced by photonic integrated circuits comprising an arrayed waveguide grating. Two arrayed waveguide grating designs with 256 channels were tested, which enabled the first chip-based optical coherence tomography and angiography in vivo three-dimensional human retinal measurements. Design 1 supports a bandwidth of 22 nm, with which a sensitivity of up to 91 dB (830 µW) and an axial resolution of 10.7 µm was measured. Design 2 supports a bandwidth of 48 nm, with which a sensitivity of 90 dB (480 µW) and an axial resolution of 6.5 µm was measured. The silicon nitride-based integrated optical waveguides were fabricated with a fully CMOS-compatible process, which allows their monolithic co-integration on top of an optoelectronic silicon chip. As a benchmark for chip-based optical coherence tomography, tomograms generated by a commercially available clinical spectral-domain optical coherence tomography system were compared to those acquired with on-chip gratings. The similarities in the tomograms demonstrate the significant clinical potential for further integration of optical coherence tomography on a chip system