A cooperative game model with bankruptcy theory for Water Allocation: A case study in China Tarim River Basin

China Tarim River Basin is located in an arid area, whose rapid socioeconomic development intensifies the current water resources shortage. To allocate water resources reasonably, this paper introduces the bankruptcy theory into the cooperative game model to contract a linear function describing the degree of satisfaction of each region's declared water demand. Bankruptcy theory solves the problem of insufficient information about players in the cooperative game. From the perspective of the cooperative game's stability, the bankruptcy allocation stability index (BASI) is used to evaluate and compare water resource allocation results in the Tarim River Basin in 2025 and 2030 under different scenarios. Moreover, this paper uses the improved TOPSIS model to build the harmony index of water-economy-environment (HWEE) to evaluate the harmony of water resources, economy and environment in each region. The results show that the model is more suitable for the actual water allocation game and has a good application value than the classical bankruptcy theory. Moreover, the stability index and HWEE proposed in this paper also have better applicability, and the allocation scheme with the same game weight in each region is more stable.

Insurance and Chain Bankruptcy Theory

Purpose: This paper aims to explain the effects of the bankruptcy of one firm in other interrelated companies which are in connection with the bankrupted firm, and shows how the insurance breaks the chain of serial bankruptcy. Design: By economic analysis of insurance, the “chain bankruptcy” theory is put forward as a new theory. Findings: Through a mathematical-behavioral model, we will show how insurance breaks the chain bankruptcy in the economy. Research limitations: We have developed the case with simple modeling based on specific assumptions. In the next step, it would be extended to a more complicated and real set of assumptions. Practical implications: We show how insurance products can break serial bankruptcy in the economy. Social implications: It is shown that how insurance stabilizes the economy and make the business cycle oscillation range narrow. Originality/value: This approach is entirely different and new. Article Type: Research paper

Capital Structure Theories in Finance Research: A Historical Review

Capital structure in one of the most converse and vital issues in the finance literature. This theoretical review of capital structure provides a synthesis of the theory utilised in capital structure literature. This theoretical review explains two categories of theories that examine the optimum capital structure of a firm. Functional market theories, which propose firms conduct share transaction without being used transaction costs and ii) costly transaction theories. The first group consists of the original capital structure theories of Modigliani and Miller (1958, 1963), Miller (1977), and De Angelo and Masulis (1980). The second range of theories captures the various effects of costly capital market transactions: Pecking Order Theory" accredited to Donaldson (1961); the debt capacity theories that depend on bankruptcy to limit a firm's use of debt financing (Robicheck and Myers, 1966) the agency models developed by Jensen and Meckling (1976), Myers (1977), Smith and Warner (1979); and signalling model by Ross (1977). Recent capital structure literature explored into an analytical structure building up the major contributions starting with the development of agency and bankruptcy theory. These theories are connected with the outcome from financing choices to real debt-equity decisions. Finally, we finish our review with established studies that explore the significances of leverage- equity relationship, as well as its determinants.