practical operation strategies for pumped hydroelectric energy storage phes utilising electricity price arbitrage abstract in this paper three practical operation strategies 24optimal 24prognostic and 24hsitrocial are compared to the optimum profit feasible for a phes facility with a 360 mw pump 300 mw turbine and a 2 gwh storage utilising price arbitrage on 13 electricity spot markets the results indicate that almost all 97 of the profits can be obtained by a phes facility when it is optimised using the 24optimal strategy developed which optimises the energy storage based on the day ahead electricity prices however to maximise profits with the 24optimal strategy the day ahead electricity prices must be the actual prices which the phes facility is charged or the phes operator must have very accurate price predictions otherwise the predicted profit could be significantly reduced and even become a loss finally using the 24optimal strategy the phes profit can surpass the annual investment repayments required however over the 5 year period investigated 2005 2009 the annual profit from the phes facility varied by more than 50 on five out of six electricity markets considered considering the 40 year lifetime of phes even with low investment costs a low interest rate and a suitable electricity market phes is a risky investment without a more predictable profit

labor force participation interest rate shocks and unemployment dynamics in emerging economies abstract emerging economies emes have highly volatile unemployment and real wages standard models with interest rate shocks can generate higher unemployment volatility but still fall quantitatively short of matching the empirical volatility of unemployment a small open economy search model with endogenous participation and self employment a feature of emes generates 90 percent of the volatility of unemployment in the data highly volatile wages and quantitatively consistent cyclical aggregate dynamics amid productivity and interest rate shocks of plausible magnitudes endogenous participation amplifies shocks and plays a critical role in overcoming a key limitation of standard search models for emes

does bank competition reduce cost of credit cross country evidence from europe abstract despite the extensive debate on the effects of bank competition on economic welfare and growth only a handful of single country studies deal with the impact of bank competition on the cost of credit we contribute to the literature by investigating the impact of bank competition on the cost of credit in a cross country setting using a panel of firms from 20 european countries covering the period 2001 2011 we consider a broad set of measures of bank competition including two structural measures herfindahl hirschman index and cr5 and two non structural indicators lerner index and h statistic we find that bank competition increases the cost of credit and observe that the positive influence of bank competition is stronger for smaller companies our findings accord with the information hypothesis whereby a lack of competition incentivizes banks to invest in soft information and conversely increased competition raises the cost of credit this positive impact of bank competition is however influenced by the institutional and economic framework as well as by the crisis

perceived credit constraints in the european union the promotion and support of small and medium sized enterprises smes is an essential component of policies designed to help improve europe s economic performance a crucial issue is whether smes face difficulty obtaining bank loans using pre crisis survey data from 2005 and 2006 for nearly 3 500 smes firms with fewer than 250 employees in the european union eu we investigate the determinants of perceived bank loan accessibility at the firm level and at the country level based on hierarchical multi level binomial logit regressions our findings show that the youngest and smallest smes have the worst perception of access to bank loans the smes in nations with concentrated banking sectors are more positive about loan accessibility in addition a high fraction of foreign owned banks is associated with improved perception of loan accessibility in the eu 15 but not in the eu 10

the contribution of nonhomothetic preferences to trade abstract this paper estimates the economic significance of preference nonhomotheticity in international trade tastes are assumed to be identical but budget shares depend on per capita income a linear expenditure system is estimated for 34 countries over 11 commodity aggregates a counterfactual exercise is conducted to estimate the volume of trade caused by deviations from homotheticity the results indicate that nonhomothetic preferences may account for as much as one quarter of interindustry trade flows

transmission congestion relief using privately owned large scale energy storage systems in a competitive electricity market the trend of integrating more nondispatchable renewable sources into the electric grid and phasing out dispatchable fossil fueled power plants in the near future reduces the operational flexibility increases the chance of transmission congestion and endangers the stability of electric system utilities are investigating the application of large scale energy storage systems esss to address some of these imminent challenges to their power systems in this paper the application of privately owned large scale esss for the purpose of congestion relief in transmission systems as an ancillary service is investigated it is demonstrated that in conventional optimal dispatch algorithms for an ess the storage system cannot effectively contribute to congestion relief since the dispatch algorithm has not prepared the ess in advance hence a new real time optimal dispatch rtod algorithm is proposed that aims to generate revenue primarily by exploiting electricity price arbitrage opportunities in the day ahead electricity market while optimally preparing the ess to maximize its contribution to congestion relief as an ancillary service a compressed air ess is sized and employed for evaluations of the proposed rtod algorithm the efficacy and feasibility of the proposed algorithm are validated using real world price data from ontario s wholesale electricity market an analysis is presented regarding the appropriate amount of financial compensation for the ess owner due to this contribution to congestion relief in the studied electricity market

financial development and financing constraints international evidence from the structural investment model this article provides evidence that financial development impacts growth by reducing financing constraints that would otherwise distort efficient allocation of investment the financing constraints are inferred from the investment euler equation by assuming that the firm s stochastic discount factor is a function of the firm s financial position specifically the stock of liquid assets the magnitude of the changes in the cost of capital is twice as large in a country with a low level of financial development as in a country with an average level of financial development the size effect business cycles and legal environment effects are also considered copyright 2003 oxford university press

the operational economics of compressed air energy storage systems under uncertainty abstract a compressed air energy storage system is a means of storing energy which can then be used when the demand for energy increases in this system air is compressed in a cavern when power prices are low and this air is used to run a natural gas fired turbine to generate power when prices go up with the aim of profiting from the price difference this type of system can independently compress air generate electricity or do both however the prices of electricity and natural gas fluctuate which directly impacts the amount of revenue that can be made and this requires the calculating of estimates to optimize operation strategies and maximize profit for these reasons this is a crucial energy storage technology that requires economic analyses to justify investment decisions in power markets in this paper a mixed integer programming method is developed to schedule the operation of the system for forward market prices that are estimated using a markov based probabilistic model then an algorithm that includes two separate modules in a simulation is employed to optimize the annual operation of the system the paper presents a case study for turkey as well as economic analyses based on probabilistic forward prices and the profits obtained from the optimization module

stock markets banks and growth panel evidence this paper investigates the impact of stock markets and banks on economic growth using a panel data set for the period 1976 98 and applying recent gmm techniques developed for dynamic panels on balance we find that stock markets and banks positively influence economic growth and these findings are not due to potential biases induced by simultaneity omitted variables or unobserved country specific effects

financial intermediation capital composition and income stagnation the case of europe abstract we look into the role of financial intermediation in inducing the european financial crisis of 2008 by exploring the effects of overall lending and the allocation of credit to specific categories of borrowers namely households vs firms we find that for the eu26 during the period 1995 2008 excessive household leverage through mortgage lending exerted a crowding out effect on availability of credit to support innovation and productive investment the crowding out effect ultimately translated into a gdp growth that was decoupled from real household income in this article we explain that shifting credit towards mortgages and away from corporate projects is consistent with rational behaviour based on historical trends aimed at minimizing short term risk for each individual bank nevertheless as a whole the sum of individual risk reducing attitudes generated a long term systemic risk

competition and operating volatilities around the world numerous papers have shown that developing economies are more volatile we show that despite greater aggregate and industry stability performance and size of individual firms in developed countries are more volatile in developing countries market imperfections insulate incumbent firms from competition consistent with this firms in developing countries have higher profit higher market concentration and less capital raising cross country differences in operating risk and competition intensity are greater in industries that are dependent on external finance where we expect higher impacts of capital market imperfections we show the inverse relation between aggregate and firm level volatilities has important implications for international studies of cash holding

extra credit bank finance and firm export status in germany this paper estimates the exporter premium in bank lending we examine credit relationships in germany covering all loans of more than 1 5 million euro over the period from 2005 to 2010 having controlled for a wide range of other firm and bank characteristics our results indicate that exporting firms take out loans around 15 percent larger than those of nonexporters

a formalization of the biological model of trade in similar products abstract the present paper uses a variant of the characteristics framework to develop a world demand structure based on broadly defined international taste differences moreover firms face short run adjustments costs when changing product specifications this constellation of assumptions traces very closely the biological model of trade in similar products the usual problem of the pattern of trade indeterminacy that emerges in models of intra industry trade is resolved even in the case with zero transport costs finally the paper analyzes the efects of taste induced intra industry trade on prices and product specifications

stochastic joint optimization of wind generation and pumped storage units in an electricity market one of the main characteristics of wind power is the inherent variability and unpredictability of the generation source even in the short term to cope with this drawback hydro pumped storage units have been proposed in the literature as a good complement to wind generation due to their ability to manage positive and negative energy imbalances over time this paper investigates the combined optimization of a wind farm and a pumped storage facility from the point of view of a generation company in a market environment the optimization model is formulated as a two stage stochastic programming problem with two random parameters market prices and wind generation the optimal bids for the day ahead spot market are the ldquohere and nowrdquo decisions while the optimal operation of the facilities are the recourse variables a joint configuration is modeled and compared with an uncoordinated operation a realistic example case is presented where the developed models are tested with satisfactory results

child labor the role of financial development and income variability across countries abstract in this article we examine the link between child labor and financial development using cross country data we show that child labor and financial development display a significant negative relationship which is particularly strong in the sample of low income countries and is robust for a wide range of specifications and estimators including fixed effects and instrumental variables we identify a plausible channel through which financial development affects child labor as we find that income variability has a sizable positive impact on child labor in countries where financial markets are underdeveloped although this is not the case when financial markets are developed our results suggest that policies aimed at widening access to credit could be effective in reducing the extent of child labor

psychometrics as a tool to improve credit information this paper studies the use of psychometric tests designed by the entrepreneurial finance lab efl as a tool to screen out high credit risk and potentially increase access to credit for small business owners in peru we compare repayment behavior patterns across entrepreneurs who were offered a loan based on the traditional credit scoring method versus the efl tool we find that the psychometric test can lower the risk of the loan portfolio when used as a secondary screening mechanism for already banked entrepreneurs that is those with a credit history the efl tool can also allow lenders to offer credit to some unbanked entrepreneurs that is those without a credit history who were rejected based on their traditional credit scores without increasing the risk of the portfolio

a competitive model of the informal sector abstract in developing nations formal workers tend to be more experienced more educated and earn more than informal workers these facts are often interpreted as evidence that low skill workers face barriers to entry into the formal sector yet there is little empirical evidence that such barriers are important this paper describes a model where in equilibrium the characteristics of formal and informal workers differ systematically even though labor markets are perfectly competitive the informal sector emphasizes low skill work as in the data because informal managers have access to less outside financing and choose to substitute low skill labor for physical capital

sme credit constraints in asia s rising economic star fresh empirical evidence from vietnam this study provides a fresh look at the sme sector s economic backbone vis a vis credit constraint dichotomy in vietnam asia s rising economic star the study uses data from the survey of manufactu

the impact of the business environment on young firm financing this paper uses a dataset of more than 70 000 firms in over 100 countries to systematically study the use of different financing sources for new and young firms in comparison to mature firms the authors find that in all countries younger firms rely less on bank financing and more on informal financing however they also find that younger firms use more bank finance in countries with stronger rule of law and better credit information and that the reliance of young firms on informal finance decreases with the availability of credit information overall the results suggest that improvements to the legal environment and availability of credit information are disproportionately beneficial for promoting access to formal finance by young firms

can informal firms hurt registered smes access to credit using firm level survey responses from 2009 to 2012 we examine whether competitors from the informal sector affect the credit constraints of registered smes in 86 countries worldwide we also investigate the role played by the quality of institutional environment in exacerbating or in alleviating such effect a weak quality of institutional environment strengthens inter linkages between the formal and the informal sectors increases the costs and decreases the benefits assumed by formal firms and reduces the costs attributed to informality moreover it also results in a large informal economy which influences perceptions about the substitutability between formal and informal goods and law evasion our findings indicate that registered smes facing competition from informal firms are more likely to be credit constrained than other formal smes that are not confronted with such competition this result is consistent with the parasite view and the entrepreneurial perspective of informality which assert that informal firms are capable of competing against registered smes and hurting the latter s profits further we find that such adverse impact manifests only in countries with weak rule of law and high degree of corruption and bureaucracy our results also show that registered micro and small firms are more likely to be affected by the presence of informal firm competitors than medium sized firms this is because the benefits of formality that include access to credit from financial institutions increase with firm size on the whole our findings suggest that governments must enhance their role in increasing access to credit to smaller firms and in providing incentives for informal firms to be integrated in the formal economy moreover in order to achieve inclusive growth our results highlight the importance of improving the business environment which affects all entrepreneurs

the historical slave trade and firm access to finance in africa access to finance helps explain the link between the historical african slave trade and current gross domestic product we first present mistrust weakened institutions and ethnic fractionalization as plausible historical channels linking the slave trade to modern finance and development we then show i the slave trade is consistently linked to reduced access to the formal and trade credit needed by modern firms ii this shortage particularly reduces capital investment in smaller firms not in business groups and iii the slave trade cannot explain most other business obstacles suggesting that long term societal shocks are exceptionally important for finance received december 16 2014 editorial decision june 29 2017 by editor philip strahan

trade credit and credit rationing asymmetric information between banks and firms can preclude financing of valuable projects trade credit alleviates this problem by incorporating in the lending relation the private information held by suppliers about their customers incentive compatibility conditions prevent collusion between two of the agents e g the buyer and the seller against the third e g the bank consistent with the empirical findings of petersen and rajan 1995 firms without relationships with banks resort more to trade credit and sellers with greater ability to generate cash lows provide more trade credit finally small firms react to monetary contractions by using trade credit consistent with the empirical results of nilsen 1994 article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

firm credit in the euro area a tale of three crises using survey data from 2009 to 2011 we analyse the effects of the recent euro area economic financial and private debt crisis on the supply of and demand for bank finance for small and medium enterprises smes at the country level we identify three distinct aspects of the recent crisis in the euro area affecting firm credit through different channels controlling for country fixed effects the impact of a weak real economy on firm credit operates both by reducing firms demand for bank financing and by lenders increasing loan rejections and tightening terms and conditions on credit allocated on the other hand financial conditions have no significant effect on demand but they do affect credit supply as we find that financial tensions worsen the chances of obtaining credit and its terms and conditions we interpret this as evidence of a bank balance sheet channel negatively impacting credit provision we find that private sector indebtedness has important effects on smes credit access and its terms

remittances entrepreneurship and employment dynamics over the business cycle abstract we incorporate remittances and micro entrepreneurship self employment into a small open economy business cycle model with capital and labor market frictions countercyclical remittances moderate the decline of households consumption during recessions these remittances also are used to finance the start up costs of microenterprises that bolster households income during economic downturns we show that the positive income effect from countercyclical remittances also leads to a decrease in salaried labor supply which generates offsetting upward pressure on wages during recessions and adversely affects the recovery of the economy consistent with the microeconomic evidence the behavior of remittances decisively affects labor force participation and the composition of employment between non salaried and salaried employment over the business cycle the model delivers labor market and aggregate cyclical dynamics that are consistent with the mexican data including a highly volatile and countercyclical unemployment rate

long term debt maturity and financing constraints of smes during the global financial crisis we use the recent financial crisis to investigate financing constraints of private small and medium sized enterprises smes in belgium we hypothesize that smes with a large proportion of long term debt maturing at the start of the crisis had difficulties to renew their loans due to the negative credit supply shock and hence could invest less we find a substantial variation in the maturity structure of long term debt firms which at the start of the crisis had a larger part of their long term debt maturing within the next year experienced a significantly larger drop in investments in 2009 this effect is driven by firms which are ex ante more likely to be financially constrained consistent with a causal effect of a credit supply shock to corporate investments we find no effect in placebo periods without a negative credit supply shock

loan guarantee schemes in the uk the natural experiment of the enterprise finance guarantee and the 5 year rule loan guarantee schemes have existed since 1953 in the us and are widely used throughout the world to provide financial support to smaller firms by guaranteeing loans from commercial banks the uk government has been an active supporter of loan guarantees since 1981 and has a long track record of modifying its scheme to reflect changing market conditions and the financing needs of its sme sector arguably the two most significant changes occurred in 2008 when the 5 year rule on eligibility was removed and in 2009 when the long standing small firms loan guarantee scheme was replaced by the enterprise finance guarantee scheme we treat the removal of the 5 year rule as a natural policy experiment and empirically question whether on economic grounds this was a sensible policy our findings suggest that the 5 year rule was a better policy choice with regard to employment but had no impact on sales growth

commercial policy and imperfect discrimination by a foreign monopolist this paper examines the effects of commercial policy and the qualit y of imports that are supplied by a multiproduct foreign monopolist th e author finds that a specific quota on some imported products leads to upgrading of the quality of imports and enhances national welfare a specific tariff which does not lead to a decrease in the varieties of imported products does not affect the quality of imports and result s in enhanced national welfare in contrast an ad valorem tariff leads to lower qualities of imported goods and lowers consumer surplus a general quota is undesirable since it results in a lower quality of imports and lower national warfare copyright 1988 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

application of public domain market information to forecast ontario s wholesale electricity prices this paper evaluates the usefulness of publicly available electricity market information in forecasting the hourly ontario energy price hoep in order to do so relevant data from ontario and its neighboring electricity markets namely new york new england and pjm electricity markets are investigated and a final set of explanatory variable candidates that are available before real time are selected multivariate transfer function and dynamic regression models are employed to relate hoep behavior to the selected explanatory variable candidates univariate arima models are also developed for the hoep the hoep models are developed on the basis of two forecasting horizons i e 3 h and 24 h and forecasting performance of the multivariate models is compared with that of the univariate models the outcomes show that the market information publicly available before real time can be used to improve hoep forecast accuracy to some extent however unusually high or low prices remain unpredictable and hence the available data cannot lead to significantly more accurate forecasts nevertheless the generated forecasts in this paper are significantly more accurate than currently available hoep forecasts to analyze the relatively low accuracy of the hoep forecasts comparisons are made with respect to arima models developed for locational marginal prices lmps of ontario s three neighboring markets and price volatility analyses are presented

financial and legal constraints to growth does firm size matter using a unique firm level survey database covering 54 countries we investigate the effect of financial legal and corruption problems on firms growth rates whether these factors constrain growth depends on firm size it is consistently the smallest firms that are most constrained financial and institutional development weakens the constraining effects of financial legal and corruption obstacles and it is again the small firms that benefit the most there is only a weak relation between firms perception of the quality of the courts in their country and firm growth we also provide evidence that the corruption of bank officials constrains firm growth

law finance and firm growth we investigate how differences in legal and financial systems affect firms use of external financing to fund growth we show that in countries whose legal systems score high on an efficiency index a greater proportion of firms use long term external financing an active though not necessarily large stock market and a large banking sector are also associated with externally financed firm growth the increased reliance on external financing occurs in part because established firms in countries with well functioning institutions have lower profit rates government subsidies to industry do not increase the proportion of firms relying on external financing the corporate finance literature suggests that market imperfections caused by conflicts of interest and informational asymmetries between corporate insiders and investors constrain firms in their ability to fund investment projects the magnitude of these imperfections depends in part on the effectiveness of the legal and financial systems because these systems differ across countries the literature implies that there should exist systematic cross country differences in firms ability to obtain external capital to finance investment in this paper we examine whether the underdevelopment of legal and financial systems does prevent firms in some countries from investing in potentially profitable growth opportunities in particular we focus on the use of long term debt or external equity to fund growth see our earlier work demirgut kunt and maksimovic 1996a which compares firms financial structures in developed and developing countries and finds the greatest difference to be in the provision of long term credit we estimate a financial planning model to obtain the maximum growth rate that each firm in our thirty country sample could attain without access to long term financing we then compare these predicted growth rates to growth rates realized by firms in countries with differing degrees of development in their legal and financial systems our approach enables us to identify specific characteristics of the legal and financial systems that are associated with long term financing of firm growth thus we provide a micro level test of the hypoth

financial development and corporate growth in the eu single market the establishment of the eu 15 single market in 1993 brought about a high degree of similarity in firms growth opportunities across countries while substantial diversity existed in the development of national financial markets we compare within industry growth rates of similar single market firms facing financial systems of different depth and institutional quality as of 1993 moving from the least to the most developed financial market within the eu 15 boosts firms annual value added growth by about three percentage points our results also suggest that the growth gap due to initially underdeveloped financial systems was closed by 2003

partial credit guarantees and firm performance evidence from colombia this paper studies the effect of government backed partial credit guarantees on firms performance in colombia these guarantees are automatically granted by the national guarantee fund ngf to firms without enough collateral to lift their credit constraints we put together a panel of firms covering the period 1997 2007 that allows us to control for observed and unobserved firm characteristics potentially affecting both the selection of firms into the program and firms performance we find that firms that gain access to credit backed by the ngf were able to grow in terms of both output and employment however we do not find any effect on productivity wages or investment

estimating the value of electricity storage in pjm arbitrage and some welfare effects significant increases in prices and price volatility of natural gas and electricity have raised interest in the potential economic opportunities for electricity storage in this paper we analyze the arbitrage value of a price taking storage device in pjm during the six year period from 2002 to 2007 to understand the impact of fuel prices transmission constraints efficiency storage capacity and fuel mix the impact of load shifting for larger amounts of storage where reductions in arbitrage are offset by shifts in consumer and producer surplus as well as increases in social welfare from a variety of sources is also considered

when arm s length is too far relationship banking over the credit cycle we conduct face to face interviews with bank ceos to classify 397 banks across 21 countries as either relationship or transaction lenders we then use the geographic coordinates of these banks branches and of 14 100 businesses to analyze how the lending techniques of banks in the vicinity of firms are related to credit constraints at two contrasting points of the credit cycle we find that while relationship lending is not associated with credit constraints during a credit boom it alleviates such constraints during a downturn this positive role of relationship lending is stronger for small and opaque firms and in regions with a more severe economic downturn moreover our evidence suggests thatrelationship lending mitigates the impact of a downturn on firm growth and does not constitute evergreening of loans

a more complete conceptual framework for sme finance abstract we propose a more complete conceptual framework for analysis of sme credit availability issues in this framework lending technologies are the key conduit through which government policies and national financial structures affect credit availability we emphasize a causal chain from policy to financial structures which affect the feasibility and profitability of different lending technologies these technologies in turn have important effects on sme credit availability financial structures include the presence of different financial institution types and the conditions under which they operate lending technologies include several transactions technologies plus relationship lending we argue that the framework implicit in most of the literature is oversimplified neglects key elements of the chain and often yields misleading conclusions a common oversimplification is the treatment of transactions technologies as a homogeneous group unsuitable for serving informationally opaque smes and a frequent misleading conclusion is that large institutions are disadvantaged in lending to opaque smes

a new database on the structure and development of the financial sector this article introduces a new database of indicators of financial structure and financial development across countries and over time the database is unique in that it combines a wide variety of indicators that measure the size activity and efficiency of financial intermediaries and markets it improves on previous efforts by presenting data on the public share of commercial banks introducing indicators of the size and activity of nonbank financial institutions and constructing measures of the size of bond and primary equity markets this article introduces a new database the first to provide comprehensive measures of the development structure and performance of the financial sector this database is the first to define and construct indicators of the size and activity of nonbank financial intermediaries such as insurance companies pension funds and non deposit money banks it is also the first to include indicators of the size of primary equity markets and primary and secondary bond markets in constructing the database authors carefully deflate measures and match stock and flow variables

access to credit by firms in sub saharan africa how relevant is gender the literature on the determinants of firms financing constraints has paid little attention to gender as a determinant of access to finance using data for 34 342 firms from 90 developing countries the paper analyzes the determinants of firms financing constraints and assesses whether female owned firms are more financially constrained than male owned businesses the results show that female owned firms in sub saharan africa are more likely to be financially constrained than male owned firms but there is no gender gap in other developing regions the gender gap in sub saharan africa is robust to variations in specifications and econometric estimation procedures

online adaptive real time optimal dispatch of privately owned energy storage systems using public domain electricity market prices this paper aims to evaluate and improve the usefulness of publicly available electricity market prices for real time optimal dispatching rtod of a privately owned energy storage system ess in a competitive electricity market the rtod algorithm seeks to maximize the revenue by exploiting arbitrage opportunities available due to the inter temporal variation of electricity prices in the day ahead market the pre dispatch prices issued by the ontario independent electricity system operator and the corresponding ex post hourly ontario energy prices are employed as the forecast and the actual prices a compressed air ess is sized and employed for evaluations due to its lower capital expenditure and its ability to be positively influenced by the availability of waste heat first the conventional rtod algorithm is developed by formulating a mixed integer linear programming problem it is demonstrated that the forecast inaccuracy of publicly available market prices significantly reduces the ess revenue then a new adaptive algorithm is proposed and evaluated which adapts the objective function of the optimization problem online based on historical market prices available before real time the outcomes reveal that the proposed adaptive rtod can significantly increase the ess revenue compared to the conventional algorithm as well as the back casting method proposed in prior studies

bank competition and access to finance international evidence using a unique database for 74 countries and for firms of small medium and large size we assess the effect of banking market structure on the access of firms to bank finance we find that bank concentration increases obstacles to obtaining finance but only in countries with low levels of economic and institutional development a larger share of foreign owned banks and an efficient credit registry dampen the effect of concentration on financing obstacles while the effect is exacerbated by more restrictions on banks activities more government interference in the banking sector and a larger share of government owned banks

financing patterns around the world are small firms different using a firm level survey database covering 48 countries we investigate how financial and institutional development affects financing of large and small firms our database is not limited to large firms but includes small and medium size firms and data on a broad spectrum of financing sources including leasing supplier development and informal finance small firms and firms in countries with poor institutions use less external finance especially bank finance protection of property rights increases external financing of small firms significantly more than of large firms mainly due to its effect on bank finance small firms do not use disproportionately more leasing or trade finance compared with larger firms so these financing sources do not compensate for lower access to bank financing of small firms we also find that larger firms more easily expand external financing when they are constrained than small firms finally we find suggestive evidence that the pecking order holds across countries

employment and firm heterogeneity capital allocation and countercyclical labor market policies abstract developing and emerging economies have large employment shares in micro and small firms which are characterized by limited access to formal financing and high reliance on input credit these economies implemented a host of countercyclical labor market policies amid the global financial crisis gfc but labor market data limitations prevent detailed empirical assessments of the effectiveness of these policies we develop a business cycle model with frictional labor markets consistent with the employment and firm structure of these economies and assess the aggregate impact of key countercyclical labor market policies implemented amid the gfc improving job intermediation for large firms is particularly effective in aiding recoveries policies targeting smaller firms yield limited aggregate benefits differences in labor productivity and sectoral contribution to employment and output across firm categories are key in explaining the response to policy

government intervention and firm investment evidence from international micro data abstract building on the important study by beck et al 2005 we examine how government intervention in firms decision making is related to their investment and sales growth using the unique world bank dataset wbes covering 6500 firms in 70 countries we find strong evidence that the extent of government intervention in firms investment employment sales pricing dividend and merger and acquisition decisions is negatively related to their investment and sales growth with the effect being more profound in foreign owned firms and less significant in state owned firms the empirical results are robust to a series of robustness tests and instrumental variable regressions

information production dilution costs and optimal security design abstract we investigate the problem of a firm wishing to finance a project by issuing securities under asymmetric information we find that when outside investors can produce noisy information on the firm s quality the degree of information asymmetry resulting in equilibrium is endogenous and depends on the information sensitivity of the security issued thus in contrast to the prediction of the pecking order theory see e g myers and majluf j financial econom 13 1984 187 a security with low sensitivity to private information such as debt does not always dominate one with high information sensitivity such as equity a firm s preference for equity rather than debt depends on the costs of information production the precision of the information production technology and the extent of the information asymmetry we also study the optimal security design problem and find that depending on the cost and precision of the information production technology risky debt or a composite security with a convex payoff emerges as optimal securities

economic impact of electricity market price forecasting errors a demand side analysis several techniques have been proposed in the literature to forecast electricity market prices and improve forecast accuracy however no studies have been reported examining the economic impact of price forecast inaccuracies on forecast users therefore in this paper the application of electricity market price forecasts to short term operation scheduling of two typical and inherently different industrial loads is examined and the associated economic impact is analyzed using electricity market price forecasts as the expected next day electricity prices optimal operating schedules and the associated costs are determined for each load these costs are compared with those of a perfect price forecast scenario in which actual prices are used to determine the operating schedules numerical results and discussions are provided based on price forecasts with different error characteristics

optimal planning to include storage devices in power systems it is difficult to forecast renewable energy resources due to their variability high uncertainty of the resources increases the concern about the reliable operation of the electric power system storage devices have been considered a candidate to control variable energy resources and most studies on storage devices are performed in the economic dispatch therefore electric power adequacy may be an issue in this paper a new approach in the optimal power flow framework is proposed for deploying storage devices and the feasibility and economic impact analyses are discussed

financial structure corporate savings and current account imbalances abstract we explore the effects of a country s financial structure on its corporate savings and current account a financial system that relies relatively more on banks and less on the capital market presents more difficulties for small and medium sized enterprises to access external finance these firms find it necessary to accumulate more savings on their own as a result countries that have a less developed capital market are more likely to run current account surpluses or smaller current account deficits using panel data of 66 countries for the period 1990 2007 we find consistent and robust evidence in favor of this hypothesis further explorations based on firm level data reveal that firms especially smaller firms in economies with relatively underdeveloped capital markets do save significantly more than their counterparts in countries with relatively more developed capital markets

cloud energy storage for grid scale applications in the uk abstract in this paper the uk s electricity market and battery technologies were researched to determine the economics of aggregating domestic batteries for grid scale services a feasibility study was conducted under three scenarios in order to estimate the value of advanced lead acid ala and lithium ion li batteries for domestic households in the uk a profit optimization model was built using historical market data and technical parameters of the batteries an aggregated system of 5000 batteries was simulated and used to compare and stack value streams of seven different grid scale services in the uk including energy arbitrage reserve and frequency regulation services the results showed that using a battery system for domestic services is currently not economically viable however grid scale provision of dynamic frequency response and fast reserve services yield sufficient annual revenue to compensate for these losses the annual profit margin per household obtained was 532 692 for ala and li batteries respectively allowing a shared margin of 230 300 after accounting for household costs the promotion of an aggregated storage system is hindered by current regulatory barriers in the uk such as a double payment structure for storage operators lack of subsidy and lack of separate definition for storage devices

access to finance in sub saharan africa is there a gender gap we show the existence of an unconditional gender gap in sub saharan africa however when key observable characteristics of the enterprises or individuals are taken into account the gender gap disappears in the case of enterprises we explain our finding with differences in key characteristics and a potential selection bias in the case of individuals the lower use of formal financial services by women can be explained by gender gaps in other dimensions related to the use of financial services such as their lower level of income and education and by their household and employment status

financial development unemployment volatility and sectoral dynamics abstract we document a negative and significant relationship between domestic financial development and unemployment volatility in developing and emerging economies demes and the absence of such relationship in advanced economies aes a business cycle labor search model with firm heterogeneity collateral constraints and interfirm input credit capital can quantitatively rationalize these facts greater financial development is associated with lower usage of input credit capital greater bank credit and greater capital accumulation all of which make firms more resilient in the presence of financial shocks firms increased shock resiliency stabilizes employment decisions ultimately leading to smoother unemployment fluctuations then by establishing explicit linkages between firms interfirm input credit acts as an important mechanism that fosters lower volatility across firms under greater financial development as such increases in financial development have a smaller impact in stabilizing unemployment in economies with higher average bank credit gdp ratios and less input credit usage which is the case of aes compared to economies with lower average bank credit gdp ratios and more input credit usage which is the case of demes

r d and credit rationing in smes we study the effects of credit rationing on research and development r d investment using survey and accounting data on a large representative sample of manufacturing small and medium sized enterprises smes our econometric model accounts for the endogeneity of our credit rationing indicator and employs an innovative theory based identification strategy we find that credit rationing has a significantly negative effect on both the probability to set up r d activities and on the level of r d spending conditioned on the r d decision but the overall estimated reduction in r d spending is largely to be associated with the first effect jel g21 d82 032 c35 i introduction long run economic growth and welfare resides on the production of new knowledge and its implementation into new or improved products or processes for this reason identification evaluation and correction of the detrimental effects of potential underinvestment in research and development r d activities have a prominent place in the policy agendas of all industrialized countries this is particularly the case in europe where since the start of the recent economic crisis the policy debate has been focused on the role of capital market imperfections as they increase the cost of r d when firms do not have sufficient internal funds to finance it the credit crunch that is the lack of availability or reduction in supply of credit to businesses from traditional financial institutions is said to reduce firms investment in innovative activities and growth prospects however despite its theoretical appeal and in contrast with the proven sensitivity of fixed capital investment to financing constraints evidence on the susceptibility of r d investment to financial frictions and in particular to credit rationing is still mixed and inconclusive three explanations have been put forward for the lack of robust evidence first it is claimed that the variety in the results reflects the contrast between theoretical explanations based on asymmetric information arguments suggesting a sensitivity of r d to financing constraints potentially higher than that of ordinary investment and the characteristics of r d as a long term investment with high adjustment costs suggesting rather the opposite 1 second existing evidence is based almost exclusively on the sensitivity of firm level r d spending to the availability of internal finance typically measured through cash flow which is however known to be problematic in its ability to proxy for financing constraints kaplan and zingales 1997 2000 third recent contributions have stressed the difficulty in identifying the role of financing constraint using standard investment models when firms have access to multiple channels for raising external financial resources and managing buffer stocks of liquidity brown martinsson and petersen 2011 in this study we use firm level data on r d investment and credit constraints to measure the detrimental effect of credit rationing on r d investment dealing with all the above specified issues first we claim that the ambiguity originated by information problems versus the nature of r d as a long term investment might be resolved if we distinguish between the probability of r d investment the r d participation decision and the size of r d investment once the decision to invest has been taken the amount of r d spending decision we therefore study the effect of credit rationing on the decision to do r d and on the amount of r d investment our hypothesis is that credit rationing displays a stronger effect on the first decision compared with the latter while this expectation might seem obvious to our knowledge econometric analyses on the topic have not yet addressed or proven the differential impact of credit rationing on the participation and amount decisions respectively

the commitment problem of secured lending the paper presents a new theory of trade credit in which firms buy inputs on credit from suppliers to restore the benefits of secured bank financing impaired by contract incompleteness in a setting where investment is endogenous and unobservable to financiers we show that a bank secured credit contract is time inconsistent upon being granted credit the entrepreneur has an incentive to alter the original input combination jeopardizing the bank s revenues anticipating the entrepreneur s opportunism the bank offers an unsecured credit contract reducing the surplus from the venture one way for the entrepreneur to commit to the contract terms is to purchase inputs on credit from the supplier the supplier observes the input investment and acts as a guarantor that inputs will be purchased as contracted thus facilitating access to secured bank financing the commitment role of trade credit still holds in a multi period extension that investigates the impact of bank relationship lending on secured debt and trade credit our model provides novel testable predictions on optimal financial contracts in both one period and repeated lending relationships

collectivism and corruption in commercial loan production how to break the curse recent research suggests that collectivism breeds corruption in bank lending this finding together with the stickiness of culture poses a direct challenge to economic growth in collectivist societies in this paper we address this grim outlook by examining the types of firms that are susceptible to the detrimental effect of collectivism on lending integrity and the formal institutions that can help alleviate such effect we find that the adverse effect of collectivism on bank corruption is more severe in small and medium sized firms privately owned firms and non exporting firms while it is considerably weaker in countries with more effective private monitoring a higher lower fraction of foreign owned government owned banks a more competitive banking sector better information sharing and stronger legal and political institutions our findings are robust to using alternative measures of collectivism and alternative dependent variables these results highlight how firm level characteristics and formal institutions interact with collectivism in affecting firms access to bank credit

bilateral trade flows the linder hypothesis and exchange risk bilateral trade flows are used to examine the linder hypothesis and the effect of exchange rate variability in a gra vity type trade model derived from an underlying demand and supply mo del a behavioral model is used to justify examining these issues joi ntly the model performs well empirically using a sample of seventeen countries for the period 1974 82 the authors find overwhelming supp ort for the linder hypothesis and this version of the gravity model moreover they find strong support for the hypothesis that increased exchange rate variability affects bilateral trade flows copyright 1987 by mit press

inter firm trade finance in times of crisis the paper discusses the main features that distinguish inter firm international trade finance from alternative sources of financing on the one hand inter firm trade finance could help overcome informational problems associated with other lending relationships on the other it may contribute to propagate shocks due to the interconnection among firms along credit chains the paper evaluates the potential effects of a financial crisis on the use of trade credit for firms operating in developing countries it argues that while the advantages of trade credit might remain largely unexploited due to poor legal institutions the disadvantages might be exacerbated because of these firms greater exposure to a default chain based on these arguments a menu of choices is identified for what policymakers can do to boost firms access to inter firm trade finance in times of crisis

aggregate demand shifts income distribution and the linder hypothesis the intraindustry trade literature emphasizes nonhomothetic preferences and incomes as important determinants of aggregate demand and trade patterns the authors provide evidence for such preferences particularly that the structure of income driven demand shifts is related to indices of linder type product characteristics and that income distribution is a significant factor in determining aggregate expenditures these results imply that as general income levels rise the relative volume of trade in manufactured consumer goods should rise and the total volume of trade should rise independent of changes in the intercountry difference between income levels copyright 1996 by mit press

finance and the sources of growth the authors evaluate whether the level of development in the banking sector exerts a causal impact on economic growth and its sources total factor productivity growth physical capital accumulation and private saving they use 1 a pure cross country instrumental variable estimator to extract the exogenous component of banking development and 2 a new panel technique that controls for country specific effects and endogeneity they find that banks do exert a large causal impact on total factor productivity growth which feeds through to overall gdp gross domestic product growth the long run links between banking development and both capital growth and private savings are more tenuous

world product and income international comparisons of real gross product the volume reports on the third phase of the united nations international comparison project icp the main results provide comparisons of real gross domestic product gdp per capita for thirty four countries in 1975 quantity and price comparisons are given also for personal consumption capital formation and public consumption and further subdivisions of final expenditures on gdp are estimated

a comparative analysis of the value of pure and hybrid electricity storage significant natural gas and electricity price variation and volatility especially during the past few years raise questions about understanding the value drivers behind electricity storage the impact of these drivers for pure storage such as pumped hydroelectric storage and compressed air energy storage caes are different and in this paper we explore these differences in operation and net revenue over a variety of timescales we also consider the arbitrage value that is attainable in practice and explain why simple forecasting techniques based on historical data will generally be less successful for caes the breakeven cost of storage and how this can depend on regulatory treatment of storage and market structure is also considered

economics of electric energy storage for energy arbitrage and regulation in new york unlike markets for storable commodities electricity markets depend on the real time balance of supply and demand although much of the present day grid operates effectively without storage cost effective ways of storing electrical energy can help make the grid more efficient and reliable we investigate the economics of two emerging electric energy storage ees technologies sodium sulfur batteries and flywheel energy storage systems in new york state s electricity market the analysis indicates that there is a strong economic case for ees installations in the new york city region for applications such as energy arbitrage and that significant opportunities exist throughout new york state for regulation services benefits from deferral of system upgrades may be important in the decision to deploy ees market barriers currently make it difficult for energy limited ees such as flywheels to receive revenue for voltage regulation charging efficiency is more important to the economics of ees in a competitive electricity market than has generally been recognized