An asset-pricing perspective on inflation reveals that it depends on current and expected monetary and fiscal policies. There are three ways to carry $1 today into the future: money, bonds, and real assets. That dollar’s purchasing power varies inversely with the price level. Expected money growth, tax rates, and government spending directly impinge on these expected rates of return of these as...

We study the financing patterns of large and indivisible projects – arguably the main focus of capital structure theory – by developing a filter that identifies investment spikes in a large population of firms. Consistent with the pecking-order theory we find that projects are predominantly financed with debt, particularly in large and profitable firms. However, we reject the hypothesis that in...

This paper analyzes the impact of pollution and abatement policy within a stochastic endogenous growth model. The agents have environmental preferences, but they neglect their individual contribution to aggregate abatement. Therefore, environmental care is done by the government and financed via income taxation and government bonds. Equilibrium growth depends on environmental preferences, perce...

We calculate abnormal stock returns for Japanese non-financial companies around major events associated with the banking crisis (1995–2000), and find that not all companies were equally sensitive to the malaise of the banking sector: the most affected were small, leveraged, low-tech companies with low credit ratings and low market to book ratios. This is consistent with ‘‘credit crunch’’ theori...

This study aims to analyze the legal reconstruction of bad credit settlements from perspective consumer protection. The problem described above is that debtor unable fulfill his obligation repay debt as a customer in agreement, which results problems. research method used this empirical juridical law research. on implementation granted by are not all fault alone, but there also external causes ...

one of the economic problems in the developing countries is the debt problem. external debt occurs in the developing countries due to the elimination of the restrictions on the savings gap, the foreign exchange gap, and the fiscal gap in order to form the capital to accelerate the economic growth (karakoy et al., 2012, p. 491). in contrast, borrowing and rising the external debt could be little...

A windfall of natural resource revenue (or foreign aid) faces government with choices of how to manage public debt, investment, and the distribution of funds for consumption, particularly if the windfall is both anticipated and temporary. We show that the permanent income hypothesis prescription of an ever-lasting increase in consumption financed by borrowing ahead of the windfall and then accu...

Using a unique dataset combining panel data of reported financial information for a sample of small and medium enterprises in India with data from a survey of the same firms regarding the role of relationships in supply of inter-firm credit, the present study examines the availability and importance of relationship-based informal credit for small firms given their total credit needs. We find th...

The amount of capital necessary to support a portfolio of debt securities depends on the probability distribution of the portfolio loss. Consider a portfolio of loans, each of which is subject to default resulting in a loss to the lender. Suppose the portfolio is financed partly by equity capital and partly by borrowed funds. The credit quality of the lender's notes will depend on the probabili...