Digital Finance and Firm Exit: Mathematical Model and Empirical Evidence from Industrial Firms

From the perspective of financial constraint, this paper constructs a mathematical model to analyze the impact of digital financial development on firm exit probability. The relationship between digital finance and firm exit was tested empirically based on the industrial firm data in 2011–2013. The results show that digital financial development significantly suppresses firm exit probability. Mechanism analysis suggests that digital financial development can ease the information asymmetry of the credit market, facilitate the credit acquisition of firms, and alleviate the constraint on corporate financing, thereby reducing the probability of firm exit. This paper provides the theoretical basis and empirical evidence for controlling firm exit from the angle of digital finance development.

Analysis of exit probability for a trajectory tracking robot in case of a rare event

In this paper, a novel statistical application of large deviation principle (LDP) to the robot trajectory tracking problem is presented. The exit probability of the trajectory from stability zone is evaluated, in the presence of small-amplitude Gaussian and Poisson noise. Afterward, the limit of the partition function for the average tracking error energy is derived by solving a fourth-order system of Euler–Lagrange equations. Stability and computational complexity of the proposed approach is investigated to show the superiority over the Lyapunov method. Finally, the proposed algorithm is validated by Monte Carlo simulations and on the commercially available Omni bundleTM robot.

Environmental Regulations, Competition and Divestment of Foreign Direct Investment: Evidence from China

This paper is concerned with whether the Chinese increasingly stringent environmental regulations (ER) lead to the divestment of foreign direct investment (FDI). Based on industrial firm-level panel data from 2003 to 2010, our results show that the stricter ER do not induce the divestment of FDI but rather reduce the probability of foreign firms’ withdrawal from China. Moreover, in cities with a higher degree of marketization, the ER have greatly reduced the exit probability of foreign firms. The mechanism analysis shows that due to the scale and technological advantages of foreign companies, the ER have stimulated innovation, increased the market share and profits of foreign companies. However, the ER have a greater negative impact on domestic firms’ performance. This research has theoretical and empirical significance for the economic development and environmental protection of developing countries.

Finance and Firm Volatility: Evidence from Small Business Lending in China

The online trading platform Alibaba provides financial technology (FinTech) credit for millions of micro, small, and medium-sized enterprises (MSMEs). Using a novel data set of daily sales and an internal credit score threshold that governs the allocation of credit, we apply a fuzzy regression discontinuity design (RDD) to explore the causal effect of credit access on firm volatility. We find that credit access significantly reduces firm sales volatility and that the effect is stronger for firms with fewer alternative sources of financing. We further look at firm exit probability and find that firms with access to FinTech credit are less likely to go bankrupt or exit the business in the future. Additional channel tests reveal that firms with FinTech credit invest more in advertising and product/sector diversification, particularly during business downturns, which serves as effective mechanisms through which credit access reduces firm volatility. Overall, our findings contribute to a better understanding of the role of FinTech credit in MSMEs. This paper was accepted by Haoxiang Zhu, finance.

First passage upwards for state-dependent-killed spectrally negative Lévy processes

For a spectrally negative Lévy process X, killed according to a rate that is a function ω of its position, we complement the recent findings of [12] by analysing (in greater generality) the exit probability of the one-sided upwards passage problem. When ω is strictly positive, this problem is related to the determination of the Laplace transform of the first passage time upwards for X that has been time-changed by the inverse of the additive functional $$\int_0^ \cdot \omega ({X_u}){\kern 1pt} {\rm{d}}u$$. In particular, our findings thus shed extra light on related results concerning first passage times downwards (resp. upwards) of continuous-state branching processes (resp. spectrally negative positive self-similar Markov processes).

Metode Monte Carlo untuk Menentukan Harga Opsi Barrier dengan Suku Bunga Takkonstan

Asumsi suku bunga konstan pada penentuan harga opsi barrier tidak sesuai dengan kondisi sebenarnya dalam dunia keuangan, karena suku bunga berfluktuasi terhadap waktu. Modifikasi metode Monte Carlo adalah metode yang dibuat untuk menghitung harga opsi barrier dengan suku bunga tak konstan. Ide dasar dari metode ini adalah menggunakan model Cox-Ingersoll-Ross sebagai model suku bunga dan menggunakan bilangan acak berdistribusi seragam dan sebuah exit probability untuk menampilkan estimasi Monte Carlo dari waktu pertama kali harga saham menyentuh levelbarrier.

METODE MONTE CARLO UNTUK MENENTUKAN HARGA OPSI BARRIER DENGAN SUKU BUNGA TAKKONSTAN

Asumsi suku bunga konstan pada penentuan harga opsi barrier tidak sesuai<br />dengan kondisi sebenarnya dalam dunia keuangan, karena suku bunga<br />berfluktuasi terhadap waktu. Modifikasi metode Monte Carlo adalah metode<br />yang dibuat untuk menghitung harga opsi barrier dengan suku bunga<br />takkonstan. Ide dasar dari metode ini adalah menggunakan model Cox-<br />Ingersoll-Ross sebagai model suku bunga dan menggunakan bilangan acak<br />berdistribusi seragam dan sebuah exit probability untuk menampilkan<br />estimasi Monte Carlo dari waktu pertama kali harga saham menyentuh level<br />barrier.