Why public transit can be good for business, even in the auto-oriented Sunbelt

Rail transport is expensive for cities to build and maintain, but many cities have gotten around this by building light rail systems in recent decades. In new research, Kevin Credit examines how businesses are affected by new light rail transit systems. He finds that areas within one mile of stations have nearly 30 percent more retail businesses, 40 percent more ..

Alien Registration- Credit, Emilie (Biddeford, York County)

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Credit Crunch! Credit Crunch! Credit Crunch?

Utilizing macro and micro data, this issue verifies the validity of the claim that there has been a credit crunch since the onset of Asian financial crisis. Results do not lend credence to the hypothesis. Instead, the observed slowdown in the credit market is a reflection of the economic downturn.Asian financial crisis, financial market, money and banking, credit program, credit market, credit access

Trade Policy and Transport Costs in Kenya

Recent studies on trade policy for low-income countries have established that high transport costs associated with poor quality infrastructure in countries such as Kenya represent a barrier to trade and an additional source of protection to domestic producers of import competing goods. This study reports results for Kenya on protection rates from tariffs and transport costs. Although Kenya reduced tariffs during the 1990s, protection increased for agriculture, manufactured foods, wood products and clothing. Two sectors experienced declines in protection (raw textiles, fishing and forestry) and chemicals moved from positive to negative protection. Effective protection due to transport costs was equivalent to 50% in the early 1990s but fell to 20% by 2003. As the new EAC Customs Union implies a reduction in tariffs, overall the level of protection will fall on average to below ten per cent.Effective Protection, Transport Costs, Trade, Kenya

Do firms engage in earnings management to improve credit ratings?: Evidence from KRX bond issuers

In this paper, we examine the relationship between credit ratings, credit ratings changes and earnings management. Since the 1997 Asian Financial Crisis, many listed firms collapsed, leading investors to suffer losses. As a result, credit ratings have become a very important indicators of firms’ financial stability for investors, government agencies and debt issuers and other stakeholders. Firms with a similar credit rating are grouped together as firms of similar credit quality (Kisgen 2006) because credit ratings provide an ‘economically meaningful role’ (Boot et al. 2006). Numerous studies find that managers care deeply about their credit ratings (Graham and Harvey 2001; Kisgen 2009; Hovakimian at al. 2009). Firms that borrow equity in the form of bonds may have incentives to increase credit ratings with opportunistic earnings management. A change in a firm’s credit ratings has a direct impact on a firm’s profitability. Firm’s benefit from better terms from suppliers, enjoy better investment opportunities and have lower cost of capital when their credit risk is lower. Firms incur a higher cost of debt and experience additional costs when their credit risk is higher. American studies find that firms use earnings management to influence credit ratings (Ali and Zhang 2008; Jung et al. 2013; Alissa et al 2013). Credit rating agencies have stated they assume financial statements to be reasonable and accurate (Securities and Exchange Commission, 2003; Standard and Poor’s, 2006) and they do not consider themselves to be auditors. They take the information in the financial statements as accurate. Therefore, there is a potential for managers to engage in earnings management to influence credit ratings. In South Korea, there have been numerous experiments with auditor legislation because of financial collapses due to earnings management in the 2000s. Therefore, a decomposition of the relation between opportunistic earnings management and credit ratings is an important consideration for Korean accounting academia. Previous Korean studies have examined whether credit ratings in period t are significantly related to level of earnings management in the same period; however, those studies fail to find the consistent results. It is widely known that credit rating agencies allow one year credit watch period to assess default risk before credit rating decision. Firms with an incentive to increase their credit ratings through earnings management will only realize if earnings management positively influences credit ratings in the following year. Therefore, we focus on establishing a relationship between the levels of earnings management at time t and credit ratings / changes at time t+1. Our study provides a more robust analysis by establishing if both accrual based and real earnings management in period t influences credit ratings and credit rating changes in period t+1. Using a sample of 1,717 Korean KRX firm-years from 2002 to 2013, we find a negative relation between earnings management in period t and credit ratings in period t+1, suggesting that firms with higher credit ratings have lower levels of earnings management. Moreover, we find that firms that experience a credit ratings change in period t+1 are less likely to engage in opportunistic earnings management in period t, suggesting that firms do not have the potential to increase credit ratings. We also find that firms that experience a credit rating increase in period t+1 have a negative association with opportunistic earnings management for accruals measures. Moreover, when we split our sample into firms that experience 1) a credit rating increase, 2) decrease and 3) remaining the same, we find that firms that engage in earnings management are more likely to remain unchanged or experience a credit rating decrease. Thus, taken together, we find no evidence of relationship between opportunistic earnings management and an increase in credit ratings in the South Korean public debt market. Our results may be of interest to regulators, credit rating agencies, market participants and firms that question whether level of earnings management in current year influences credit ratings in the subsequent period

Credit Union Capital, Insolvency, and Mergers Before and After Share Insurance

From their beginnings in 1908, U.S. credit unions have grown into a trillion-dollar industry with more than 100 million members. Despite many similarities, credit unions have always differed fundamentally from banks. One fundamental difference was that share accounts in credit unions, unlike bank deposits, were not debt. Thus, credit unions had options to delay and discount payments to account holders. Those options were one reason why, when thousands of banks failed, no credit unions failed during the Great Depression. Insolvency came to credit unions only after share accounts became federally insured in 1971. Insurance and its associated regulations had larger effects on the structure of the credit union industry than it had on the banking industry. Insurance turned bank deposits from risky debt into riskless debt. Insurance largely turned credit union share accounts from risky equity into riskless debt. Thus, insurance introduced insolvency risk and insolvency to credit unions. Before federal insurance, many credit unions voluntarily liquidated, and of those, only about one-fifth imposed losses on their members. After federal insurance took effect in 1971, voluntary liquidations of solvent credit unions became rare. To reduce insolvency risk and losses to the share insurance fund, regulators enabled and encouraged mergers of both strong and weak credit unions. They also discouraged new credit unions. These regulatory responses moved the credit union industry from high entry and low merger rates to near-zero entry and high merger rates. We further argue that the proximate causes of regulation differed between credit unions and banks. Major bank regulations almost always, and only, happened following banking crises. In contrast, major credit union regulations rarely followed crises, but rather usually followed prosperity in the credit union industry. Insurance is one of the examples we give