scholarly journals Credit risk in emerging markets Peruvian listed company

2017 ◽  
Vol 7 (3) ◽  
pp. 55-64
Author(s):  
Kurt Burneo Farfan ◽  
Gabriela Barriga Ampuero ◽  
Edmundo R. Lizarzaburu ◽  
Julio Cisneros
Keyword(s):  
Credit Risk ◽  
Listed Company ◽  
Credit Scoring ◽  
Cash Flows ◽  
Finance Management ◽  
Enterprise Risk ◽  
Banking Credit ◽  
Future Cash Flows ◽  
Interest Payments ◽  
Debt Obligation

The aim of this paper is to introduce the importance of the banking credit risk, the main elements that conform it and the main alternatives that are offered to access to a loan as well as a description of its measurement and management in the sector. There will be a general explanation of credit risk and the main parties involved in it. As the topic is developed it is going to be analyzed the lending process carried out by the banks as well as the quantitative and qualitative elements taken into account when taking a credit decision (The 5C’s of credit, credit scoring and models for quantification of losses for instance). Another thing to considerate is that Credit risk arises whenever a borrower is expecting to use future cash flows to pay a current debt. Also, the investors have the access for the information of a client and they are compensated for assuming credit risk by way of interest payments from the borrower or issuer of a debt obligation and the credit risk is a useful tool for the finance management. The Enterprise risk management in Peru changed in 2015 because the local regulator is in process to review the norm, including some aspects of corporate governance; these changes are not included in this research.

FINANCIAL DERIVATIVES - INTEREST RATE SWAP

2004 ◽  
Vol 10 (3-4) ◽  
pp. 161-168
Author(s):  
Zoran Ivanović ◽  
Elvis Mujačević
Keyword(s):  
Cash Flows ◽  
Basic Form ◽  
Over The Counter ◽  
Interest Rate Swap ◽  
Market Participants ◽  
Forward Contract ◽  
Financial Derivative ◽  
Future Cash Flows ◽  
Interest Payments ◽  
Rate Swap

Swap as a portfolio of forward contract is a financial derivative traded on the over-the-counter market. In its basic form, swap is based on the exchange of future cash flows between two market participants in accordance with the agreed terms. The cash flows that are exchanged are the interest payments and in some circumstances even the notional amount, and transactions are carried out in a period of two to thirty years. Swaps first appeared in 80's, and have evolved from back-to-back loans.

Does the Mandatory Adoption of IFRS Improve the Association between Accruals and Cash Flows? Evidence from Accounting Estimates

2018 ◽  
Vol 33 (1) ◽  
pp. 39-59
Author(s):  
Jimmy F. Downes ◽  
Tony Kang ◽  
Sohyung Kim ◽  
Cheol Lee
Keyword(s):  
Financial Reporting ◽  
Cash Flows ◽  
Data Availability ◽  
The European Union ◽  
Accounting Quality ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Accounting Estimates ◽  
Accounting Accruals ◽  
Future Cash Flows

SYNOPSIS We investigate the effect of mandatory International Financial Reporting Standards (IFRS) adoption in the European Union on the association between accounting estimates and future cash flows, a key concept of accounting quality within the International Accounting Standard Board conceptual framework. We find that the predictive value of accounting estimates improves after IFRS adoption. This improvement is largely driven by specific types of accounting estimates, such as accounts receivable, depreciation, and amortization expense. We also find that the improvement is concentrated in countries with larger differences between pre-IFRS domestic GAAP and IFRS. Our findings suggest that IFRS allow managers to exercise their judgment to provide information about future cash flows through the more subjective/judgmental portion of accounting accruals. JEL Classifications: M16; M49; O52. Data Availability: The data used in this study are from public sources identified in the study.

Discretionary Risk Disclosures

2003 ◽  
Vol 78 (2) ◽  
pp. 449-469 ◽  
Author(s):  
Bjorn N. Jorgensen ◽  
Michael T. Kirschenheiter
Keyword(s):  
Stock Returns ◽  
Risk Premium ◽  
Voluntary Disclosure ◽  
Cash Flows ◽  
Share Price ◽  
Risk Disclosure ◽  
Share Prices ◽  
Ex Post ◽  
Partial Disclosure ◽  
Future Cash Flows

We model managers' equilibrium strategies for voluntarily disclosing information about their firm's risk. We consider a multifirm setting in which the variance of each firm's future cash flow is uncertain. A manager can disclose, at a cost, this variance before offering the firm for sale in a competitive stock market with risk-averse investors. In our partial disclosure equilibrium, managers voluntarily disclose if their firm has a low variance of future cash flows, but withhold the information if their firm has highly variable future cash flows. We establish how the manager's discretionary risk disclosure affects the firm's share price, expected stock returns, and beta, within the framework of the Capital Asset Pricing Model. We show that whereas one manager's discretionary disclosure of his firm's risk does not affect other firms' share prices, it does affect the other firms' betas. Also, we demonstrate that a disclosing firm has lower risk premium and beta ex post than a nondisclosing firm. Finally, we show that ex ante, the expected risk premium and expected beta of each firm are higher under a mandatory risk disclosure regime than in the partial disclosure equilibrium that arises under a voluntary disclosure regime.

scholarly journals Measuring and Managing Credit Risk for Chinese Microfinance Institutions

2018 ◽  
Vol 10 (7) ◽  
pp. 56
Author(s):  
Jie Li ◽  
Zhenyu Sheng
Keyword(s):  
Credit Risk ◽  
Predictive Power ◽  
Direct Method ◽  
Credit Scoring ◽  
Microfinance Institutions ◽  
Linear Discriminant ◽  
Management Level ◽  
Scoring Model ◽  
Subjective Appraisals ◽  
Credit Scoring Model

Chinese microfinance institutions need to measure and manage credit risk in a quantitative way in order to improve competitiveness. To establish a credit scoring model (CSM) with sound predictive power, they should examine various models carefully, identify variables, assign values to variables and reduce variable dimensions in an appropriate way. Microfinance institutions could employ both CSM and loan officer’s subjective appraisals to improve risk management level gradually. The paper sets up a CSM based on the data of a microfinance company running from October 2009 to June 2014 in Jiangsu province. As for establishing the model, the paper uses Linear Discriminant Analysis (LDA) method, selects 16 initial variables, employs direct method to assign variables and adopts all the variables into the model. Ten samples are constructed by randomly selecting records. Based on the samples, the coefficients are determined and the final none-standardized discriminant function is established. It is found that Bank credit, Education, Old client and Rate variables have the greatest impact on the discriminant effect. Compared with the same international models, this model’s classification effect is fine. The paper displays the key technical points to build a credit scoring model based on a practical application, which provides help and references for Chinese microfinance institutions to measure and manage credit risk quantitatively.

Design of Credit Risk Evaluation System Based on the Fuzzy Neural Network and Expert System

2014 ◽  
Vol 543-547 ◽  
pp. 4523-4527
Author(s):  
Hong Min Zhang
Keyword(s):  
Neural Network ◽  
Risk Factors ◽  
Expert System ◽  
Credit Risk ◽  
Index System ◽  
Evaluation System ◽  
Fuzzy Neural Network ◽  
Enterprise Risk ◽  
Fuzzy Neural ◽  
Set Up

Credit risk is the main risk that Chinese commercial banks are facing. Taking into account three categories of risk factors, namely risk factors of enterprise, risk factors of commercial bank and risk factors of macroscopic economy, an index system was set up. Then, according to the index system and the characteristics of fuzzy neural network and expert system, a credit risk rating system based on fuzzy neural network and expert system was proposed.

scholarly journals Kemampuan Laba dan Arus Kas Operasi dalam Memprediksi Laba dan Arus Kas Masa Depan

2018 ◽  
pp. 80
Author(s):  
Frans AP Dromexs Lumbantoruan ◽  
I Gusti Ngurah Agung Suaryana
Keyword(s):  
Cash Flow ◽  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Flow Property ◽  
Multiple Linear Regression Analysis ◽  
Cash Flows ◽  
Future Earnings ◽  
Analysis Technique ◽  
Operating Cash Flow ◽  
Future Cash Flows

This study aims to determine the ability of earnings and operating cash flows in predicting earnings and future cash flows. This research was conducted on property and real estate companies listed on the Indonesia Stock Exchange. The samples used by 20 companies with 40 observations. The sampling was done by nonprobability samplingmethod with purposive samplingtechnique. The analysis technique used is multiple linear regression analysis. Based on the result of the analysis, earnings influences in predicting future earnings. Likewise, earnings and operating cash flow have an effect in predicting future cash flows. However, operating cash flow is not influential in predicting future earnings. Keywords: profitability, cash flow, property

scholarly journals Do Big 4 auditors improve the ability of goodwill to forecast future cash flows?

2016 ◽  
Vol 13 (3) ◽  
pp. 164-172 ◽  
Author(s):  
Ahmad Al-Hiyari ◽  
Rohaida Abdul Latif ◽  
Noor Afza Amran
Keyword(s):  
Financial Reporting ◽  
Predictive Ability ◽  
Cash Flows ◽  
Reporting Standard ◽  
Accounting Firms ◽  
Big 4 ◽  
Business Combination ◽  
Accounting Rules ◽  
Future Cash Flows ◽  
Professional Judgement

The accounting rules prescribed in Malaysian Financial Reporting Standard (MFRS) 3, Business combination, and (MFRS) 136, Impairment of Assets, give managers considerable reporting discretion in allocating goodwill and estimating its actual value. Agency theory predicts that managers may use the accounting discretion granted by the new rules to pursue their own interests at the expense of shareholders. Hence, auditors are required to exercise professional judgement when investigating hard-to-verify management assumptions and valuations. We exploit this issue by examining whether predictive ability of goodwill improved in the presence of Big 4 auditors. We provide evidence that goodwill has a significant predictive ability for second and third-year ahead cash flows which exists only in the firms audited by the large international reputable accounting firms. This suggests that Big 4 auditors play an important role in ensuring appropriate implementation of the present accounting for goodwill.

Sign in / Sign up

Export Citation Format

Share Document