Sufficient and affordable access to different sources of finance is crucial to enable SMEs and entrepreneurs to contribute to inclusive growth. The 9th edition of the Scoreboard on Financing SMEs and ...Entrepreneurs provides data from 48 countries around the world on SME lending, alternative finance instruments and financing conditions, as well as information on policy initiatives to improve SME access to finance. Lending conditions remained broadly favourable in the run-up to the COVID-19 outbreak, despite some early signals of tightening. Nevertheless, SME bank credit increased only at a modest pace in many countries and declined in some others in 2018. At the same time, the take-up by SMEs of other sources of finance, including leasing and factoring, equity crowdfunding and venture capital investments expanded significantly, suggesting that SMEs are increasingly turning to a combination of instruments. The thematic chapter provides an overview of the evolution of SME financing policies over the last decade, from the immediate post-crisis period and the early recovery years, to the most recent policy trends.
Indonesia has made impressive progress in reducing income inequality and improving living standards since the Asian Financial Crisis but the decline in poverty has slowed in recent years while ...inequality has risen and a large part of the population remains vulnerable. The Government of Indonesia has recognised the potential of social protection to address these challenges and to underpin a long-term development strategy based on more inclusive economic growth. As a consequence, social assistance programmes have grown significantly in recent years while social insurance has undergone major reforms. The Government is gradually realising its vision of a system of social protection, based on comprehensive and coherent coverage for all age groups.The Social Protection System Review of Indonesia charts the evolution of social protection. It explores the current context for social protection and how this is likely to evolve in the future, analyses the extent to which existing programmes are aligned to those needs and how effective these programmes are at reducing poverty. It also examines the financing of social protection. Finally, it proposes policies to enhance the social protection system across a number of dimensions, including programmes, institutions, financing and information architecture.
This paper has two objectives. First, we show how debt financing distorts a retailer’s inventory decision when the retailer orders multiple items that differ in cost, revenue, or demand parameters. ...Taking advantage of limited liability, a debt-financed retailer favors items with a low salvage value, those with a high profit margin, and those that represent a large proportion of the total inventory investment. Second, we argue that this distortion is mitigated when the financing is provided by the supplier who can observe the actual order quantities before determining the credit terms. Borrowing goods rather than borrowing cash limits the retailer’s ability to deviate from the first-best inventory decision. On the flip side, few suppliers can access capital at the same low cost as banks. We study a combination of bank and supplier financing that allows the retailer to get the best of both worlds.
This paper was accepted by Serguei Netessine, operations management
.
Sustainable finance is a rich field of research. Yet, existing reviews remain limited due to the piecemeal insights offered through a sub-set rather than the entire corpus of sustainable finance. To ...address this gap, this study aims to conduct a large-scale review that would provide a state-of-the-art overview of the performance and intellectual structure of sustainable finance. To do so, this study engages in a review of sustainable finance research using big data analytics through machine learning of scholarly research. In doing so, this study unpacks the most influential articles and top contributing journals, authors, institutions, and countries, as well as the methodological choices and research contexts for sustainable finance research. In addition, this study reveals insights into seven major themes of sustainable finance research, namely socially responsible investing, climate financing, green financing, impact investing, carbon financing, energy financing, and governance of sustainable financing and investing. To drive the field forward, this study proposes several suggestions for future sustainable finance research, which include developing and diffusing innovative sustainable financing instruments, magnifying and managing the profitability and returns of sustainable financing, making sustainable finance more sustainable, devising and unifying policies and frameworks for sustainable finance, tackling greenwashing of corporate sustainability reporting in sustainable finance, shining behavioral finance on sustainable finance, and leveraging the power of new-age technologies such as artificial intelligence, blockchain, internet of things, and machine learning for sustainable finance.
We show that measurable managerial characteristics have significant explanatory power for corporate financing decisions. First, managers who believe that their firm is undervalued view external ...financing as overpriced, especially equity financing. Such overconfident managers use less external finance and, conditional on accessing external capital, issue less equity than their peers. Second, CEOs who grew up during the Great Depression are averse to debt and lean excessively on internal finance. Third, CEOs with military experience pursue more aggressive policies, including heightened leverage. Complementary measures of CEO traits based on press portrayals confirm the results.
This research delves into sustainability within the road freight transport sector, focusing on how financing policies interact with the capital structures of haulage companies. Employing an ...agent-based model inspired by Sweden’s freight sector, we simulate strategies for fleet replacement while considering financial health and balance sheets. Hauliers are portrayed as agents with financial attributes sourced from real-world financial statements. Their financing decisions are informed by pecking order theory. Through a series of scenario tests, we simulate the impacts of policy interventions on hauliers’ transition trajectories. Our findings highlight the challenges associated with integrating electric trucks, attributed to limited financing avenues. Both internal and equity financing are found to be inadequate, while debt financing raises concerns about credit risks. These findings remain robust even when incentives like subsidies and reduced interest rates on loans are introduced. The study underscores the intricate interplay between financial factors and sustainable heavy-duty road transport.
Do financing constraints matter for R&D? Brown, James R.; Martinsson, Gustav; Petersen, Bruce C.
European economic review,
11/2012, Volume:
56, Issue:
8
Journal Article
Peer reviewed
Open access
Information problems and lack of collateral value should make R&D more susceptible to financing frictions than other investments, yet existing evidence on whether financing constraints limit R&D is ...decidedly mixed, particularly in the studies of non-U.S. firms. We study a large sample of European firms and also find little evidence of binding finance constraints when we estimate standard investment-cash flow regressions. However, we find strong evidence that the availability of finance matters for R&D once we directly control for: (i) firm efforts to smooth R&D with cash reserves and (ii) firm use of external equity finance. Our study provides a framework for evaluating financing constraints when firms rely extensively on external finance and endogenously manage buffer stocks of liquidity to keep investment smooth, and our findings show that controlling for this smoothing behavior is critical for uncovering the full effect of financing constraints. Our findings also indicate a major role for external equity in financing R&D, highlighting a causal channel through which stock market development and liberalization can promote economic growth by increasing firm-level innovative activity.
► Nature of R&D makes it particularly susceptible to financing difficulties. ► Little prior evidence that financing constraints limit R&D in Europe. ► R&D smoothing and use of external finance can bias inference in standard tests. ► We find strong financial effects after controlling for smoothing and stock issues. ► Results indicate that stock markets are important for R&D in Europe.
Who is financing corporate green innovation? Xiang, Xiaojian; Liu, Chuanjiang; Yang, Mian
International review of economics & finance,
March 2022, 2022-03-00, Volume:
78
Journal Article
Peer reviewed
Green innovation is a major engine of economic growth in the new era. However, due to its high risk, long cycle and double externalities, green innovation often requires long-lasting financial ...support during its development. In the process of green innovation, do Chinese public listed companies show clear preferences in financing sources? What role does the "invisible hand" of the government play in the green-innovation-related financing activities of public listed companies? Drawing upon the data of green patent application and citation of A-share listed companies in Shanghai and Shenzhen between 2007 and 2014, this paper employed the Poisson model for panel data to perform an empirical study to confirm the aforementioned questions. The research indicates that public listed companies can acquire the funds needed for green innovation both through internal financing and external financing. The effect of the three external financing channels, namely government subsidies, equity financing and debt financing on green innovation are gradually weakened and this result is consistent with a variety of robustness checks. Meanwhile, government subsidy can encourage public listed companies to enhance their level of green innovation through debt financing and equity financing.
In this paper we consider a two-level supply chain with a single retailer and a manufacturer, where both the firms are facing financial constraints and can not produce/order their optimal quantity. ...Our work shows that a lender who finances the manufacturer has a motivation to finance the retailer as well. Motivated by this, we investigate lender's problem of financing both the firms by making a joint decision on the loan amount and comparing it with the case when lender makes independent decision on loan amount for both the firms. Our numerical study indicates that if one of the firms in the supply chain has sufficiently low cash, joint decision (we refer to it as supply chain financing) may be better not only for the lender but for the retailer and manufacturer as well.
The upsurge of shadow banking is typically driven by rising financing demand from certain real sectors. In China, the 4 trillion yuan stimulus package in 2009 was behind the rapid growth of shadow ...banking after 2012, expediting the development of Chinese corporate bond markets in the poststimulus period. Chinese local governments financed the stimulus through bank loans in 2009 and then resorted to nonbank debt financing after 2012 when faced with rollover pressure from bank debt coming due. Cross-sectionally, using a political-economy-based instrument, we show that provinces with greater bank loan growth in 2009 experienced more municipal corporate bond issuance during 2012–2015, together with more shadow banking activities including trustloans and wealth management products. China’s poststimulus experience exhibits similarities to financial market development during the US National Banking Era.
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