We apply theories of capital market failure to analyze optimal financing of risky higher education. In the market solution, students can only finance their education through debt. There is underinvestment in human capital, because some students with socially profitable investments in human capital will not invest in education due to adverse selection problems in debt markets and because insuran...

Following the Gauss-Markov theorem the generalized lest-squares estimator is the best linear unbiased estimator but following the kriging theory its use is limited. This paper shows the kriging constraint on the classic generalized least-squares estimator.

conomic growth and the consequent welfare improvement of nations and individuals are driven mainly by technological change, as manifested by the however, by antiquated accounting rules and insufficient disclosure by corporations. Despite the obvious benefits of R&D, which generally stretch over extended periods of time, this investment is immediately expensed (written off) in corporate financia...

The financial crisis of 2008 has heightened the need for more effective and transparent tools in the modelling of capital markets. In this paper we propose to use strategic port-graph rewriting (a particular kind of graph transformation system, where port-graph rewriting rules are controlled by user-defined strategies) as a visual modelling tool to analyse credit derivative markets. We illustra...

This paper examines the PPP hypothesis analysing the behaviour of the real exchange rates vis-à-vis the US dollar for four major currencies (namely, the Canadian dollar, the euro, the Japanese yen and the British pound). An innovative approach based on fractional integration in a multivariate context is applied to annual data from 1970 to 2011. Long memory is found to characterise the Canadian ...

An introduction to numerical statistics.

Recent advances in dynamic factor modelling allow for automated construction of diffusion indices based on large numbers of explanatory variables. We use the methodology proposed by Stock and Watson (1998) to test if such diffusion indices can be used for asset market applications where predictability is expected to be small or nonexistent. Results show that for portfolios formed using the larg...

Local Asian and international capital markets have been branded as culprits in the recent Asian financial crisis. Unfortunately, much of our understanding of the crisis stems from macro level analysis. We provide a micro level approach to understanding the Asian financial crisis that focuses on understanding the development of capital markets throughout the region as well as deciphering the per...

S mall businesses form the foundation of most rural and urban economies. To grow and prosper, these enterprises need access to equity capital as well as the debt capital provided by traditional banking institutions. While debt markets function well in most rural places, rural equity markets tend to be unorganized or nonexistent (RUPRI Rural Finance Task Force). The impetus for the Rural Policy ...

The paper is a practical application of the random walk model on stock price behaviour. The academic literature has moved beyond this random walk approach and the recent focus is now much more on how to improve the forecasts. Since the performance of the random walk model has been contextual, it is desirable that the model is tested in different contexts. Our model shows good results in the Ind...