scholarly journals Legislative Capacity and Credit Risk

2021 ◽  
Author(s):  
David Fortunato ◽  
Ian R Turner
Keyword(s):  
Credit Risk ◽  
Negative Relationship ◽  
Institutional Capacity ◽  
Policy Outcomes ◽  
Economic Implications ◽  
General Obligation Bonds ◽  
General Obligation ◽  
Economic Landscape ◽  
Credit Worthiness ◽  
Political Economic

Legislatures differ in their institutional capacity to draft and enact policy. While strong legislatures can increase the congruence of policy outcomes to the electorate's preferences, they can also inject uncertainty into markets with their ability to alter the political economic landscape. We argue that this uncertainty will manifest in a state's ability to borrow and hypothesize a negative relationship between legislative capacity and credit-worthiness. Using ratings of general obligation bonds issued by the American states over nearly two decades and data on the institutional capacity of state legislative assemblies, we find support for the claim that having a legislature that is better equipped to affect policy change increases credit risk evaluations. The results we present broaden our understanding of the importance of legislative institutions, the determinants of credit risk, and the economic implications of democratic responsiveness.

scholarly journals Does Corruption Lead to Lower Subnational Credit Ratings? Fiscal Dependence, Market Reputation, and the Cost of Debt

2021 ◽  
pp. 1-19
Author(s):  
Maciej Sychowiec ◽  
Monika Bauhr ◽  
Nicholas Charron
Keyword(s):  
Credit Ratings ◽  
National Level ◽  
Negative Relationship ◽  
Cost Of Debt ◽  
Economic Implications ◽  
Sovereign Credit Ratings ◽  
Heterogeneous Effects ◽  
Federal Revenue ◽  
Negative Effect ◽  
Using Data

Abstract While studies show a consistent negative relationship between the level of corruption and range indicators of national-level economic performance, including sovereign credit ratings, we know less about the relationship between corruption and subnational credit ratings. This study suggests that federal transfers allow states with higher levels of corruption to retain good credit ratings, despite the negative economic implications of corruption more broadly, which also allows them to continue to borrow at low costs. Using data on corruption conviction in US states and credit ratings between 2001 and 2015, we show that corruption does not directly reduce credit ratings on average. We find, however, heterogeneous effects, in that there is a negative effect of corruption on credit ratings only in states that have a comparatively low level of fiscal dependence on federal transfers. This suggest that while less dependent states are punished by international assessors when seen as more corrupt, corruption does not affect the ratings of states with higher levels of fiscal dependence on federal revenue.

scholarly journals Narrating technonatures: discourses of biotechnology in a neoliberal era

2018 ◽  
Vol 25 (1) ◽  
pp. 186
Author(s):  
Myles Carroll
Keyword(s):  
Social Justice ◽  
Social Relations ◽  
Power Relations ◽  
Status Quo ◽  
The Political ◽  
Effective Strategy ◽  
Economic Implications ◽  
Political Implications ◽  
The Status ◽  
Political Economic

This article considers the role played by discourses of nature in structuring the cultural politics of anti-GMO activism. It argues that such discourses have been successful rhetorical tools for activists because they mobilize widely resonant nature-culture dualisms that separate the natural and human worlds. However, these discourses hold dubious political implications. In valorizing the natural as a source of essential truth, natural purity discourses fail to challenge how naturalizations have been used to legitimize sexist, racist and colonial systems of injustice and oppression. Rather, they revitalize the discursive purchase of appeals to nature as a justification for the status quo, indirectly reinforcing existing power relations. Moreover, these discourses fail to challenge the critical though contingent reality of GMOs' location within the wider framework of neoliberal social relations. Fortunately, appeals to natural purity have not been the only effective strategy for opposing GMOs. Activist campaigns that directly target the political economic implications of GMOs within the context of neoliberalism have also had successes without resorting to appeals to the purity of nature. The successes of these campaigns suggest that while nature-culture dualisms remain politically effective normative groundings, concerns over equity, farmers' rights, and democracy retain potential as ideological terrains in the struggle for social justice.

Understanding the effects of banking profitability in Pakistan

2021 ◽  
pp. 2150003
Author(s):  
Tanzeela Yaqoob ◽  
Zara Omer ◽  
Samreen Fatima
Keyword(s):  
Panel Data ◽  
Credit Risk ◽  
Random Effect ◽  
Negative Relationship ◽  
Credit Risk Management ◽  
Return On Assets ◽  
Public And Private ◽  
Public And Private Sector ◽  
Time Invariant ◽  
Yearly Data

The purpose of this study is to investigate the bank specific determinants related to the performance of public and private sector banks in Pakistan. Using strongly balanced panel yearly data from 2010 to 2017, Pooled OLS, fixed effect, Random effect and Random Effect Mundlak Transformation (REMT) have been utilized to provide the empirical evidences in credit risk management in Pakistan. The identification of suitable explanatory variable that explains the banking profitability wisely is made possible by using the panel data techniques. In this study, impact of bank specific variables are: Return On Assets, Capital Ratio, Credit Risk, Credit deposit ratio, Liquidity Ratio, Interest expended to interest earned, bank size and ownership on the profitability of banks in Pakistan has been assessed using four different panel data techniques. Out of the four estimation strategies Random Effect with Mundlak (1978) transformation raises the overall variation of the baseline model to 63% that is explained by banking profitability. Ignoring the time-invariant characteristics in the model, credit deposit ratio and interest expanded to interest earned possess negative relationship with return on assets of banks. Size of the bank is positive and significant when with-in and between banks information is augmented in Radom effect method of estimation. However the size of banks may not affect the banking profitability by allowing correlation between unobservable heterogeneity using Random Effect with Mundlak (1978) transformation.

The inter-relationships among liquidity creation, bank capital and credit risk: evidence from emerging Asia–Pacific economies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Tu D.Q. Le ◽  
Xuan T.T. Pham
Keyword(s):  
Credit Risk ◽  
Emerging Economies ◽  
Financial Stability ◽  
Generalized Method Of Moments ◽  
Negative Relationship ◽  
Capital Requirements ◽  
Asia Pacific ◽  
Bank Capital ◽  
Content Type ◽  
Small Banks

PurposeThis study investigates the inter-relationships among liquidity creation, bank capital and credit risk in selected emerging economies between 2012 and 2016.Design/methodology/approachA three-step procedure as proposed by Berger and Bouwman (2009) is used to measure liquidity creation. Thereafter, a simultaneous equations model with the generalized method of moments (GMM) estimator is used to examine the links between liquidity creation, bank capital and credit risk.FindingsThe findings indicate that bank capital and credit risk affect each other positively after controlling for liquidity creation. Also, the findings show a negative impact of credit risk on liquidity creation while our findings do not find any evidence to confirm the reverse relationship between them. Furthermore, the findings demonstrate a two-way negative relationship between liquidity creation and bank capital in these emerging economies. Finally, the results indicate a positive relationship between capital and credit risk, especially in the case of small banks in the sample.Practical implicationsThe findings suggest that the trade-off between the benefits of financial stability induced by tightening capital requirements and those of improved liquidity creation has crucial implications for policymakers and bank regulators in making the banking system more resilient. A positive impact of capital on credit risk emphasizes that the authorities in selected emerging economies should put more attention on small banks to ensure their exposures under target control.Originality/valueThis is the first study that examines the dynamic interrelationships among liquidity creation, bank capital and credit risk in the Asia–Pacific region.

Credit Risk Assessment and Data Mining

2011 ◽  
pp. 800-805 ◽  
Author(s):  
André Carlos Ponce de Leon Ferreira de Carvalho ◽  
João Manuel Portela Gama ◽  
Teresa Bernarda Ludermir
Keyword(s):  
Data Mining ◽  
Credit Risk ◽  
Financial Management ◽  
Computational Tools ◽  
Useful Knowledge ◽  
Efficient Data ◽  
Structured Problems ◽  
Computer Based ◽  
Credit Risk Analysis ◽  
Political Economic

The widespread use of databases and the fast increase of the volume of data they store are creating a problem and a new opportunity for credit companies. These companies are realizing the necessity of making an efficient use of the information stored in their databases, extracting useful knowledge to support their decision-making process. Nowadays, knowledge is the most valuable asset a company or nation may have. Several companies are investing large sums of money in the development of new computational tools able to extract meaningful knowledge from large volumes of data collected over many years. Among such companies, companies working with credit risk analysis have invested heavily in sophisticated computational tools to perform efficient data mining in their databases. The behavior of the financial market is affected by a large number of political, economic, and psychological factors, which are correlated and interact among themselves in a complex way. The majority of these relations seems to be probabilistic and non-linear. Thus, these relations are hard to express through deterministic rules. Simon (1960) classifies the financial management decisions in a continuous interval, whose limits are non-structure and highly structured. The highly structured decisions are those where the processes necessary for the achievement of a good solution are known beforehand and several computational tools to support the decisions are available. For non-structured decisions, only the managers’ intuition and experience are used. Specialists may support these managers, but the final decisions involve a substantial amount of subjective elements. Highly non-structured problems are not easily adapted to the computer-based conventional analysis methods or decision support systems (Hawley, Johnson, & Raina, 1996).

scholarly journals Municipal Bond Ratings: Are They Worthwhile for Rural Governments?

1982 ◽  
Vol 11 (1) ◽  
pp. 67-73
Author(s):  
Patrick J. Sullivan
Keyword(s):  
Credit Ratings ◽  
Municipal Bond ◽  
Bond Ratings ◽  
General Obligation Bonds ◽  
General Obligation

Rural governments in the Northeast purchased credit ratinqs for a high percentage of their general obligation bonds sold in 1977. This paper examines the effect credit ratings had on the interest cost of GO bonds sold by nonmetro governments in the Northeast. The results suggest that the decision to purchase a rating may be a costly error under certain circumstances.

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