Mexico’s Credit Guarantee Programs: Shifting Regional Impacts

Discussion Paper on Credit Guarantee Schemes

Inventory, Risk Shifting, and Trade Credit

T 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...

Credit Default Swaps and Risk-Shifting

Credit default swaps (CDSs) are thought to ease borrowing by protecting lenders against default. This paper develops a model of the demand for CDS when borrowers choose the riskiness of investment and verification is imperfect. The model shows that CDSs may lead to risk-shifting, increasing the probability of default. Our model provides new insights on the role of CDS during the recent financia...

Rely/Guarantee Reasoning for Asynchronous Programs

Asynchronous programming has become ubiquitous in smartphone and web application development, as well as in the development of server-side and system applications. Many of the uses of asynchrony can be modeled by extending programming languages with asynchronous procedure calls—procedures not executed immediately, but stored and selected for execution at a later point by a non-deterministic sch...

Evaluation of Credit Guarantee Policy using Propensity Score Matching

In the aftermath of the Asian financial crisis in Korea, the credit guarantee policy was used as an instrument by the government to support small and medium enterprises (SMEs). However, the effect of the credit guarantee has not been carefully studied and the policy has been criticized for impairing development of innovative private financial sector and for making SMEs highly dependent on gover...