scholarly journals Effects of institutional quality and the development of the banking system on corporate debt

2018 ◽  
Vol 23 (44) ◽  
pp. 113-124
Author(s):  
Alvaro Edmundo Tresierra ◽  
Sergio David Reyes
Keyword(s):  
Latin America ◽  
Banking System ◽  
Institutional Quality ◽  
Debt Maturity ◽  
Content Type ◽  
National Institutions ◽  
New Findings ◽  
Banking Development

Purpose This study aims to determine if the quality of national institutions and banking development condition the maturity of debt depending on the horizon of short or long term. Design/methodology/approach Analysis is performed on a sample of 116 nonfinancial companies from Peru and Brazil. The measures of quality of national institutions and banking development were obtained from World Bank data and included factorial analysis for dynamic considerations. Findings The findings, through the treatment of pointed indicators, the factor analysis and the subsequent estimation of a dynamic econometric model, called GMM-SYS, show that institutional quality fosters the maturity of long-term debt and banking development boots short-term financial relations. Research limitations/implications Evaluating different measures of the quality of national institutions and banking development is necessary to demonstrate the robustness of the results beyond the sample evaluated in Latin America. Practical implications The research allows to understand the interaction between national institutions and system banking through debt maturity, and this is useful for establishing common target between both groups. Social implications It is important for corporate finance to understand the mechanisms of the interaction between national institutions and system banking, because this affects internal decisions of firms regarding financial implications. Originality/value The treatment of measures of national institutions and banking development include dynamic considerations, and the application of this study in Latin America provides new findings regarding these kind of indexes and their interaction with firms´ features such as debt maturity.

Customer satisfaction and loyalty in the United Arab Emirates banking industry

2015 ◽  
Vol 33 (3) ◽  
pp. 351-375 ◽  
Author(s):  
Hameedah Sayani
Keyword(s):  
United Arab Emirates ◽  
Banking Sector ◽  
Banking System ◽  
Related Factors ◽  
Content Type ◽  
Managerial Implications ◽  
Conventional Banks ◽  
Customer Satisfaction And Loyalty

Purpose – The purpose of this paper is to identify the determinants of consumer loyalty in Islamic and conventional banks in the United Arab Emirates (UAE). The study has relevance and importance in a country with a dual banking system. Since the products and services offered by the banks are largely homogenous, customer loyalty is mostly associated with the quality of certain tangible and intangible dimensions of service. It is important for the banks to understand the factors that lead to higher satisfaction and subsequent loyalty among consumers in the context of the UAE. Design/methodology/approach – More than 300 respondents were surveyed to understand the factors that lead to continuing a relationship with Islamic and conventional banks. The data were analyzed using ANOVA and stepwise regression. Findings – The findings of the study indicate that Islamic banks’ customers are satisfied with the Shariah Advisory Board, convenience-related factors such as number of branches, and efficiency-related factors like handling issues on the phone. However, an inverse relationship is found between advice by the personnel and length of association with the bank. On the other hand, the importance of reputation and efficient handling of issues on the phone is highlighted with respect to conventional banks. Research limitations/implications – The study focusses only on consumers that bank either with Islamic or conventional banks and excludes those who deal with both Islamic and conventional banks simultaneously. Practical implications – The research has several managerial implications, as the findings of the study not only highlight the factors that banking consumers value the most in the UAE banking sector, but also provide insight into the factors which need immediate attention. These decisions have strategic and resource-related implications for banks. This knowledge will allow banks to align services with their long-term objectives and invest into resources and capabilities that will provide them competitive advantage. Originality/value – The study allows identification of factors that are valued the most by banking consumers in a culturally and religiously diverse country with a dual banking system.

Institutional quality and agglomeration of fast food multinationals in Latin American cities

2017 ◽  
Vol 15 (3) ◽  
pp. 251-267
Author(s):  
Fernando Robles
Keyword(s):  
Latin America ◽  
Latin American ◽  
Fast Food ◽  
Institutional Quality ◽  
Location Decision ◽  
Content Type ◽  
Food Networks ◽  
American Cities ◽  
The City

Purpose The purpose of this paper is to explore the location decision of multinationals across major cities in Latin America. Based on agglomeration economics and institutional theory, the paper explores whether institutional quality of a city can temper the attraction of agglomeration factors. Design/method/approach The paper analyzes the geographic dispersion of three global fast-food franchise networks in 45 Latin American cities. The explanatory variables are horizontal aggregation of other multinationals and the institutional quality of a city. The direct and indirect impacts of horizontal agglomeration are explored through negative binomial regression with controls for city population and economic power [gross domestic product (GDP)]. Findings The key finding is that location choice of fast-food networks is driven principally by market conditions and to a lesser extent by horizontal agglomeration. The institutional quality of a city has a positive influence on the agglomeration of fast-food networks. A city with strong institutional quality makes this relation stronger. Research limitations Other multinational and national fast-food franchises are not included in the paper. Future studies should include a greater number of global and local fast-food franchisers. Practical implications The positive reinforcements of agglomeration and strong institution are important for the investment location decision of fast-food multinationals. The institutional quality of the city should be an important consideration in the location decision as it expands regionally and within a country. Smaller cities may not offer the agglomeration advantages of the large metropolitan areas, but their good institutional quality may reduce the business costs for multinationals. Social implications Large cities in Latin America tend to reap the benefits of agglomeration. As a result, smaller secondary cities struggle to be relevant in generating economic activity and attracting private investments. One strategy to achieve relevance is to build strong and transparent institutions and a solid business environment. Originality/value The inclusion of institutional quality at the city level as moderation of the agglomeration factors influencing the location decision of a multinational is original. This paper contributes to our understanding of the importance of regional cities in attracting the investment of multinational firms.

Shareholder risk-taking incentives in the presence of contingent capital

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mahmoud Fatouh ◽  
Ayowande A. McCunn
Keyword(s):  
Risk Taking ◽  
Banking System ◽  
Capital Requirements ◽  
Content Type ◽  
Basic Model ◽  
Conversion Rates ◽  
A Minor ◽  
The Impact ◽  
Practical Implications

Purpose This paper aims to present a model of shareholders’ willingness to exert effort to reduce the likelihood of bank distress and the implications of the presence of contingent convertible (CoCo) bonds in the liabilities structure of a bank. Design/methodology/approach This study presents a basic model about the moral hazard surrounding shareholders willingness to exert effort that increases the likelihood of a bank’s success. This study uses a one-shot game and so do not capture the effects of repeated interactions. Findings Consistent with the existing literature, this study shows that the direction of the wealth transfer at the conversion of CoCo bonds determines their impact on shareholder risk-taking incentives. This study also finds that “anytime” CoCos (CoCo bonds trigger-able anytime at the discretion of managers) have a minor advantage over regular CoCo bonds, and that quality of capital requirements can reduce the risk-taking incentives of shareholders. Practical implications This study argues that shareholders can also use manager-specific CoCo bonds to reduce the riskiness of the bank activities. The issuance of such bonds can increase the resilience of individual banks and the whole banking system. Regulators can use restrictions on conversion rates and/or requirements on the quality of capital to address the impact of CoCo bonds issuance on risk-taking incentives. Originality/value To model the risk-taking incentives, authors generally modify the asset processes to introduce components that reflect asymmetric information between CoCo holders and shareholders and/or managers. This paper follows a simpler method similar to that of Holmström and Tirole (1998).

Labor lawsuits and debt maturity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Omer Unsal
Keyword(s):  
Chief Executive ◽  
Debt Maturity ◽  
Employee Relations ◽  
Short Term ◽  
Content Type ◽  
Negative Effect ◽  
Debt Market ◽  
Legal Fees

Purpose This paper aims to investigate how firms’ relationships with employees define their debt maturity. The authors empirically test the role of employee litigations in influencing firms’ choice of short-term versus long-term debt. The authors study employee relations by analyzing the importance of the workplace environment on capital structure. Design/methodology/approach The author’s test hypotheses using a sample of US publicly traded firms between 2000 and 2017, including 3,056 unique firms with 4,256 unique chief executive officer, adopting the fixed effect panel model. Findings The authors document that employee litigations have a significant negative effect on the use of short-term debt and a significant positive affect on long-term debt. Employee litigations, along with legal fees, outcomes and charging parties, matter the most in explaining debt maturity. In addition, frequently sued firms abandon the short-term debt market and use less shareholders’ equity to finance their operations while relying more on the longer debt market. Originality/value To the best of the authors’ knowledge, this is the first study to examine the role of employee mistreatment in debt maturity choice. The study extends the lawsuit and finance literature by examining unique, hand-collected data sets of employee lawsuits, allegations, violations, settlements, charging parties, case outcomes and case durations.

Can foreign aid motivate institutional reform? An evaluation of the HIPC Initiative

2017 ◽  
Vol 6 (2) ◽  
pp. 242-258 ◽  
Author(s):  
Minh Tam Schlosky ◽  
Andrew Young
Keyword(s):  
Foreign Aid ◽  
Developing Economies ◽  
Poor Country ◽  
Civil Liberties ◽  
Institutional Reform ◽  
Institutional Quality ◽  
Entrepreneurial Activity ◽  
Content Type ◽  
Hipc Initiative

Purpose A number of political economy concerns are associated with the provision of foreign aid to developing economies. These concerns suggest that foreign aid is likely to have harmful effects on a recipient’s institutional quality, and that attempts to give aid conditional on policy and institutional reforms are unlikely to succeed. Established in 1996, the Heavily Indebted Poor Country (HIPC) Initiative is a comprehensive, structured attempt to provide multilateral foreign aid conditional on reforms in recipient countries. The purpose of this paper is to evaluate its effectiveness at affecting institutional reform in participating countries. Design/methodology/approach The authors document how participating countries fared in terms of the quality of their policies and institutions. The authors employ the Fraser Institute’s Economic Freedom of the World index as a measure of economic institutions, and the Freedom House political rights (PR) and civil liberties indices as measures of PR and protections. Based on these measures, the authors report unconditional statistics (e.g. average changes) and also regressions of changes in the measures on HIPC Initiative aid allocations and other controls. Findings The authors find that most participating countries experienced either meager increases or outright decreases in institutional quality. The regression results provide no evidence that the Initiative affects meaningful reforms. Originality/value The potential for foreign aid to have deleterious effects on the institutional quality of recipient countries has been of increasing concern to students of economic development. Such effects can have important implications for entrepreneurial activity in these countries. The HIPC Initiative is specifically designed to acknowledge and, indeed, overcome these concerns, leading to actual increases in institutional quality of recipient countries. To the authors’ knowledge, this work is the first to assess whether the promise of the HIPC Initiative is being fulfilled.

Local institutions in Peru and the presence and number of fast-food outlets

2017 ◽  
Vol 15 (3) ◽  
pp. 338-376
Author(s):  
Esteban Colla-De-Robertis ◽  
Sandro Navarro Castañeda
Keyword(s):  
Principal Component Analysis ◽  
Urban Development ◽  
Fast Food ◽  
Institutional Quality ◽  
Principal Component ◽  
Local Institutions ◽  
Urban District ◽  
Content Type ◽  
Food Outlets

Purpose The paper aims to study the role of local institutions in the establishment of fast-food outlets in urban districts of Peru. In most urban districts, there are no fast-food outlets. The authors, therefore, study the effect of institutional quality on the presence or absence of these outlets and the number of outlets if these are present. Design/methodology/approach The theoretical framework in which this paper is based on is the theory of agglomeration, which establishes that firms benefit from being close to each other. In particular, the paper builds on a model of market entry and competition in geographically independent local markets. An explicit expression was found for the equilibrium number of outlets (including zero) as a function of exogenous determinants of the demand for fast-food in each market, available infrastructure and institutional quality of the district’s government. Principal component analysis was used to construct measures of institutional quality based on administrative and organizational characteristics of district’s municipalities. These measures were incorporated as explanatory variables in a zero-inflated Poisson model, which is appropriate to handle count data and to accommodate excess zeros and which also allows the specification of different models for the zero part and the positive part. Findings Institutional quality mainly affects the presence of fast-food outlets in a district. The quality of urban development management and use of information systems are relevant. An institutional variable particularly relevant in explaining the number of outlets is the presence of an investment programming office in the municipality. The authors confirm the general hypothesis of the paper: institutions have a role in explaining both the presence and number of fast-food outlets in a district. Overall, the results of this paper suggest that institutional quality of a municipal district is related to better infrastructure, which lowers the costs of establishing outlets. Research limitations/implications Limitations in the availability of data at the regional and urban district level did not allow the authors to analyze other factors that affect entry decisions in the fast-food industry in Peru, such as controls to prevent corruption, legal uncertainty or crime. Another limitation was the lack of data on entry costs for each franchisee in each urban district. This forced the authors to use public infrastructure characteristics of the district as (imperfect) proxies of the entry costs. Practical implications The instruments of urban development management and information systems can be effective at attracting investment to a district. These tools operate partly through an indirect effect, namely, the improvement of district infrastructure, which is necessary to reduce the costs of establishing companies. There is also synergy between national government’s programs to attract investment and the good institutional quality in local governments. On the contrary, poor local institutions can be an obstacle to the successful implementation of those national programs. Social implications Foreign direct investment has a positive impact on the economic development of a country through knowledge spillovers. Therefore, any administrative reform to make local government practices more efficient can have an indirect impact on development. Originality/value Principal component analysis is a statistical tool that can be important in building good measures of institutional quality by allowing the combination of different observable characteristics into one component that can be interpreted as an operational restriction. The count model allows the use of the primary, easily observable, dependent variable, namely, the number of outlets. Finally, the two-part model makes it possible to discern the effect of institutional quality on the presence or absence of outlets and the number of outlets if these are present.

scholarly journals Opportunities and challenges of using socially intelligent agents: increasing interaction and school participation for children suffering from a long-term illness

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Eva Mårell-Olsson ◽  
Thomas Mejtoft ◽  
Sofia Tovedal ◽  
Ulrik Söderström
Keyword(s):  
Intelligent Agents ◽  
Design Methodology ◽  
Holistic Approach ◽  
Negative Effects ◽  
Content Type ◽  
Medical Needs ◽  
Societal Benefits ◽  
School Participation

PurposeChildren suffering from cancer or cardiovascular disease, who need extended periods of treatment in hospitals, are subjected to multiple hardships apart from the physical implications, for example, experienced isolation and disrupted social and academic development. This has negative effects long after the child's recovery from the illness. The purpose of this paper is to examine the non-medical needs of children suffering from a long-term illness, as well as research the field of artificial intelligence (AI) – more specifically, the use of socially intelligent agents (SIAs) – in order to study how technology can enhance children's interaction, participation and quality of life.Design/methodology/approachInterviews were performed with experts in three fields: housing manager for hospitalized children, a professor in computing science and researcher in AI, and an engineer and developer at a tech company.FindingsIt is important for children to be able to take control of the narrative by using an SIA to support the documentation of their period of illness, for example. This could serve as a way of processing emotions, documenting educational development or keeping a reference for later in life. The findings also show that the societal benefits of AI include automating mundane tasks and recognizing patterns.Originality/valueThe originality of this study concerns the holistic approach of increasing the knowledge and understanding of these children's specific needs and challenges, particularly regarding their participation and interaction with teachers and friends at school, using an SIA.

Study on the quality improvement on black land in Northeast China under the environment of sustainable agricultural development

Kybernetes ◽  
2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yun Teng ◽  
Boyuan Pang ◽  
Xiangyu Guo
Keyword(s):  
Soil Quality ◽  
Environmental Quality ◽  
Northeast China ◽  
Agricultural Development ◽  
Ecological Quality ◽  
Content Type ◽  
Management Quality ◽  
Black Land

PurposeThe authors are committed to providing the Chinese government with a foundation for making decisions that will protect black land and ensure long-term agricultural development.Design/methodology/approachUsing the grounded theory approach, this study investigates the influencing factors affecting the quality of black land in Northeast China and proposes a hypothetical model for the mechanism of the influencing factors on the quality of black land in Northeast China.FindingsThe factors influencing the quality of black land include not only soil quality, ecological quality and environmental quality, but also economic quality and management quality, and can be classified into five categories. There are complex influence relationships between various factors and black land quality, with soil quality, ecological quality, environmental quality and management quality having a positive influence on economic quality. Soil quality, ecological quality and environmental quality are all improved as a result of good management. Black land quality is influenced positively by environmental quality, economic quality and management quality.Research limitations/implicationsThe quality of black land is a major concern in terms of food production and long-term agricultural development. The black land in Northeast China was chosen as the subject of this study, and the research findings have some limitations. The next step will be to expand from studying the black land in Northeast China to the black land worldwide.Originality/valueIn Northeast China, the quality of the five dimensions of black land must be improved in a coordinated and consistent manner.

The impact of cash flow volatility on firm leverage and debt maturity structure: evidence from China

2018 ◽  
Vol 8 (1) ◽  
pp. 69-91 ◽  
Author(s):  
Zulfiqar Ali Memon ◽  
Yan Chen ◽  
Muhammad Zubair Tauni ◽  
Hashmat Ali
Keyword(s):  
Standard Deviation ◽  
Cash Flow ◽  
Cash Flows ◽  
Debt Maturity ◽  
Percent Reduction ◽  
Content Type ◽  
Debt Maturity Structure ◽  
Maturity Structure ◽  
Cash Flow Volatility

Purpose The purpose of this paper is to investigate the influence of cash flow volatility on firm’s leverage levels. It also analyzes how cash flow volatility influences the debt maturity structure for the Chinese listed firms. Design/methodology/approach The authors construct the measure for cash flow variability as five-year rolling standard deviation of the cash flow from operations. The authors use generalized linear model approach to determine the effect of volatility on leverage. In addition, the authors design a categorical debt maturity variable and assign categories depending upon firm’s usage of debt at various maturity levels. The authors apply Ordered Probit regression to analyze how volatility affects firm’s debt maturity structure. The authors lag volatility and other independent variables in the estimation models so as to eliminate any possible endogeneity problems. Finally, the authors execute various techniques for verifying the robustness of the main findings. Findings The authors provide evidence that higher volatility of cash flows results in lower leverage levels, while the sub-sampling analysis reveals that there is no such inverse association in the case of Chinese state-owned enterprises. The authors also provide novel findings that irrespective of the ownership structure, firms facing high volatility choose debt of relatively shorter maturities and vice versa. Overall, a rise of one standard deviation in volatility causes 8.89 percent reduction in long-term market leverage ratio and 26.62 percent reduction in the likelihood of issuing debentures or long-term notes. Research limitations/implications This study advocates that cash flow volatility is an essential factor for determining both the debt levels and firm’s term-to-maturity structure. The findings of this study can be helpful for the financial managers in maintaining optimal leverage and debt maturity structure, for lenders in reducing their risk of non-performing loans and for investors in their decision-making process. Originality/value Existing empirical literature regarding the influence of variability of cash flows on leverage and debt maturity structure is inconclusive. Moreover, prior research studies mainly focus only on the developed countries. No previous comprehensive study exists so far for Chinese firms in this regard. This paper endeavors to fulfill this research gap by furnishing novel findings in the context of atypical and distinctive institutional setup of Chinese firms.

Peer support in community settings: getting back to our roots

2017 ◽  
Vol 21 (3) ◽  
pp. 184-190 ◽  
Author(s):  
David Crepaz-Keay
Keyword(s):  
Mental Health ◽  
Peer Support ◽  
Community Settings ◽  
Community Based ◽  
Community Benefit ◽  
Content Type ◽  
Mental Health Foundation ◽  
The Impact

Purpose The purpose of this paper is to look at peer support in the context of broader communities. Design/methodology/approach It builds on the author’s experience working with the Mental Health Foundation of developing delivering and evaluating several self-management and peer support initiatives in a variety of settings with a range of different peer groups. It will consider what constitutes a peer and a community, and explore the notion of community solutions for community problems. Findings Peer support in community settings has the capacity to address social isolation, build skills and self-esteem and give individuals a better quality of life – it can also add value to whole communities and reframe the way entire groups are considered within them. It has the ability to be both more accessible and less stigmatising and thus reach more people. This also offers community based peer support as a contributor to preventing the deterioration of mental health and potentially reducing the impact of mental ill-health. Social implications The author needs to think more in terms of whole community and get better at improving how the author measures and articulates this community benefit. This will allow us to make better decisions about how best to apply resources for long term whole community gain. Peer support and peer leadership needs to be at the heart of this process. Originality/value This paper places a familiar approach in a different setting placing peer support firmly outside services and within comunities.

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