growth paths and survival chances an application of gambler s ruin theory this paper links new firm survival with growth with a focus on the patterns in firms growth paths we theorise a gambler s ruin framework by arguing that new firm performance is best modelled as a random walk process but that survival is nonrandom and depends primarily on the stock of accumulated resources a firm s resources are either there when the business begins or are generated by successful periods wins the empirical section tracks over six years the sales and survival non survival of 6247 uk start ups which all began trading in the same quarter of 2004 we do not find strong evidence in favour of a taxonomy of growth paths because we observe that every possible growth path seems to occur with roughly equal probability however we observe that growth paths influence subsequent survival controlling for lagged size we observe that longer lags of growth and even start up size have significant effects on survival

back to basics the comanor wilson mes index revisited the present article attempts to investigate the validity of the comanor wilson minimum efficient size mes measure the basic assumption is that firms that have exhausted scale economies are in non increasing returns to scale the same firms are also assumed to have a size greater than mes estimated on sales total turnover employment or fixed assets data envelopment analysis dea is used on a sample of firms in three greek manufacturing industries to classify firms in operation according to increasing or non increasing returns to scale on the basis of the results of the dea input oriented model the mes measure correctly predicts over 85 of the cases a probit model is applied to those cases that are not identically predicted by mes concerning returns to scale results indicate that technical efficiency size and age are the factors that compel mes to yield the same prediction as the dea approach

determinants of capital structure in irish smes this paper presents an empirical examination of determinants of the capital structure of a sample of 299 irish small and medium sized enterprises smes results suggest that age size level of intangible activity ownership structure and the provision of collateral are important determinants of the capital structure in smes a generalisation of zellner s journal of the american statistical association57 348 368 1962 seemingly unrelated regression sur approach is used to examine industry effects and to test the stability of parameter estimates across sectors we find that the influence of age size ownership structure and provision of collateral is similar across industry sectors indicating the universal effect of information asymmetries firms overcome the lack of adequate collateralisable firm assets in two ways by providing personal assets as collateral for business debt and by employing additional external equity to finance research and development projects

does entry size matter the impact of the life cycle and technology on firm survival a wave of empirical studies has recently emerged showing that smaller scale entry is confronted with a lower likelihood of survival than their larger counterparts the purpose of this paper is to examine whether the relationship between size of a firm when entering an industry and the likelihood of survival holds under different technological conditions and across the different stages of the industry life cycle the empirical evidence suggests that the relationship between firm size and the likelihood of survival is shaped by technology and the stage of the industry life cycle while the likelihood of survival confronting small entrants is generally less than that confronting their larger counterparts the relationship does not hold for mature stages of the product life cycle or in technologically intensive products in mature industries that are still technologically intensive entry may be less about radical innovation and possibly more about filling strategic niches thus negating the impact of entry size on the likelihood of survival

regulatory environments and the location decision evidence from the early foreign market entries of new technology based firms new technology based firms ntbfs embarking on a strategy of rapid internationalisation choose foreign market entries that minimise transaction costs and the related risks of failure means to reduce the young firms vulnerability to the appropriation of intellectual capital are particularly important influences on early foreign market choices we explore the effect of the institutional dimension specifically the national regulatory environment on the location choices and the speed of internationalisation by british and german ntbfs we provide evidence that entrepreneurial young firms choose to enter country markets offering better regulatory protection for their intellectual property this decision is moderated by a home regulatory regime bias in contrast we observe that the speed of internationalisation is influenced less by the foreign regulatory regime and more by industry and firm characteristics we also observe that managerial experience influences the location choices of ntbfs facing regulatory hazards

understanding international trade policies an emerging synthesis the international trade problems of the 1980s stimulated an expansion of scholarship on trade policies by economists and political scientists at least four distinct theoretical perspectives weave their way through recent literature that concentrates on the united states emphasizing market conditions policy beliefs and values national political institutions and global structures respectively new studies in each of these traditions advance beyond the work of their predecessors but none of the perspectives has yet proved adequate as a single unifying vehicle nevertheless we can also see clear movement toward a synthesis with single works blending insights from several traditions thus the books under review do not all fall neatly into the familiar exclusive categories of economics or political science the emerging synthesis needs strengthening in several ways including the development of conditioning hypotheses that will reduce remaining apparent confusions

effects of the 1970 bank holding company act evidence from capital markets this study measures the effects of the 1970 amendment to the bank holding company bhc act on the profitability and risk of bhcs using capital market data differences in abnormal returns and risk among three portfolios of bank shares which differ in their regulatory status are examined in various periods preceding and following the enactment no significant differences in performance and no change in the relative risk of any pair of portfolios were observed thus the null hypothesis that the nonbank expansion provisions of the 1970 amendment had no effect on bhcs risk and profitability cannot be rejected the growth of bank holding companies and their expansion into nonbank activities following the 1970 amendment to the bank holding company bhc act of 1956 produced striking structural changes in the banking industry the nonbank expansion provisions of the statute triggered a continuing debate about the costs and benefits of these provisions black miller and posner 2 consider the amendment to be an important innovation that can increase the efficiency and hence the profitability of financial intermediaries other writers however suggest that nonbank activities of bank holding companies may increase the risk of bank failure thereby increasing the regulatory involvement silverberg 14 orgler and wolkowitz 13 and mayne 10 2 this study analyzes the effects of the 1970 amendment to the bank holding company act on the profitability and riskiness of bank holding companies capital market data are used to measure risk and return fama 6

an analysis of bank risk and deposit rate ceilings abstract the effect of deposit rate regulation on bank solvency is an important and unresolved issue that has received only limited attention in this paper capital market data is used to assess changes in both systematic and non systematic risk of a portfolio of bank stocks at the time of deposit rate deregulation the evidence indicates that neither measure of capital market risk is significantly affected leading to the conclusion that bank solvency risk will not be increased by the deregulation of interest rates on deposits

gender differences in firm performance evidence from new ventures in the united states abstract prior studies examining the performance of female and male owned firms have generally reported that female owned firms underperform male owned firms however it is conceivable that the performance measures used by previous studies and or their inability to control for key demographic differences may have contributed to this finding for example few studies use size adjusted performance measures and yet we know that female owned firms tend to be smaller than their male counterparts similarly risk is typically not considered even though evidence suggests that women tend to be more risk averse than men we use a longitudinal five year database of more than 4000 new ventures that began operations in the u s in 2004 to determine whether potential differences in the performances of female and male owned firms disappear when appropriate performance measures are used and important demographic differences are controlled for in the models the performance measures we examine include 4 year closure rates return on assets roa and a risk adjusted measure sharpe ratio univariate test results confirm our expectation based on both liberal and social feminist theory that there is no difference in the performance of female and male owned new ventures provided performance is appropriately measured further these results are supported by our multivariate analyses which control for demographic differences such as industry experience and hours worked our findings should be of interest to researchers financiers advisors and policy makers perhaps more importantly our findings should also ensure that women who are contemplating starting a new venture are not discouraged from doing so by a false belief that new ventures initiated by women are less likely to succeed than those initiated by men

corporate taxes and the demand for labor and capital in developing countries this article provides evidence about the impact of corporate taxation on both labor and capital demand by private companies in a developing economy using firm level data from chile our results show that higher corporate tax rates reduce not only the demand for capital but also the demand for labor due to complementarities between both inputs an interesting element of the results presented in this article is the asymmetry between the effects of taxation according to company size the impact on labor demand is significantly higher in large corporations than in small enterprises while the demand for capital is more responsive to corporate tax changes in small firms we can explain these results based on differences in credit constraints according to firm size

one bank holding company formation and the 1970 bank holding company act amendment an empirical examination allowing for industry group effects abstract the current study attempts to resolve the apparent empirical inconsistencies concerning the combined effect of the passage of the bank holding company act amendment of 1970 and the formation of one bank holding companies obhcs found by billingsley and lamy 1984 on one hand and martin and keown 1981 aharony and swary 1981 and eisenbeis harris and lakonishok 1984 on the other hand in the present study we demonstrate that the findings of billingsley and lamy of a major impact on obhcs resulting from the 1970 amendment reflect an industry specific factor induced into their findings by calendar date clustering of the obhc formation dates when a banking industry group effect is allowed the results of billingsley and lamy simply disappear thus the results of this paper suggest that the latter group of authors was correct in suggesting that neither obhc formation nor the 1970 amendments have prompted a change in the risk return characteristics of the affected banks

measuring the effects of regulation with stock price data this article examines the usefulness of stock returns in measuring the effects of regulation when the dates on which market expectations change are not known and standard sources e g the wall street journal are used to choose announcement dates twenty major changes in regulatory constraint since 1887 are considered tests using either monthly or daily data are found to have surprisingly little ability to detect the effects of regulation the evidence shows that formal regulatory announcements are generally anticipated in cases where it is unclear when expectations change

price dispersion price flexibility and repeated purchasing this paper presents a search model in which consumers repeatedly purchase a commodity the repetition of purchases leads to the formation of implicit contracts with sellers which generate a kink in the demand curve facing each seller these kinks can generate equilibrium price dispersion under conditions where single purchase search models predict no price dispersion despite the kinks prices are at least partially flexible in that some and possibly all sellers change their prices in response to changes in production costs or demand dispersion de prix flexibilite des prix et achats repetes ce memoire presente un modele de recherche dans lequel les consommateurs font des achats repete s d un bien la repetition de l achat entraine la formation de contrats implicites avec les vendeurs ceci cree un pli dans la cedule de demande a laquelle chaque vendeur fait face ces plis peuvent engendrer une dispersion des prix d equilibre alors que le meme modele ne predirait aucune dispersion de prix en l absence d achats repet s malgre les plis les prix sont au moins partiellement flexibles puisque certains vendeurs tous peut re peuvent changer leurs prix en reponse a des changements dans les cofuts de production ou dans la demande

the role of interest rate taxes in credit markets with divisible projects and asymmetric information this paper assumes that entrepreneurs have divisible projects with random payoffs however managerial skill is unobservable to outsiders projects are assumed to be financed through debt a pooling equilibrium is shown to exist in which good and bad entrepreneurs sell debt at the same price if both types of entrepreneur have a positive probability of bankruptcy project scale will be too large this provides a prima facie case for raising interest rates and hence the cost of capital through taxation if in equilibrium only the poor entrepreneurs go bankrupt there is an outlying possibility that interest rates are too low and a subsidy is called for

effect of credit guarantee policy on survival and performance of smes in republic of korea this study evaluates the effect of credit guarantee on smes at the firm level to estimate the effect of credit guarantee we analyze relations between credit guarantee the survival of guaranteed firms and their productive performance the result indicates that credit guarantee frequency enabled guaranteed firms to achieve good performances in general on the contrary the effect of guarantee amounts is ambiguous in that there is difference between the contemporary effect and the lagged effect therefore we conclude that credit guarantee satisfied partially its goal to alleviate smes difficulty in acquiring finance and to stabilize employment

the direct employment effects of new businesses in germany revisited an empirical investigation for 1976 2004 based on an improved and extended database the establishment history panel we extend the analysis of fritsch and weyh small business economics 27 2 245 260 2006 by investigating the development of employment in german start up cohorts for the period 1976 to 2004 we confirm the typical pattern found in start up cohorts an initial increasing number of employees that is soon followed by a decreasing number we also provide some of the first evidence for the liability of aging phenomena in germany older firms face a relatively high risk of exit we find that most entries with relatively large initial employment grow substantially in the first two decades however these businesses suffer from a considerable employment decline after 25 years

outside enterpreneurial capital this article investigates factors that affect rejection rates in applications for outside finance among different types of investors banks venture capital funds leasing firms factoring firms trade customers and suppliers partners and working shareholders private individuals and other sources taking into account the non randomness in a firm s decision to seek outside finance the data support the traditional pecking order theory further the data indicate that firms seeking capital are typically able to secure their requisite financing from at least one of the different available sources however external finance is often not available in the form that a firm would like this article engages with four interrelated empirical questions first what are the characteristics of privately held entrepreneurial firms that seek external outside finance and what drives the request for capital from the different potential sources of external finance banks venture capitalists private individuals leasing factoring suppliers customers partners working shareholders among other sources second what are the factors that lead to rejection or acceptance of requests for external finance given this non randomness in the types of firms that seek external finance in the spirit of heckman 1976 1979 third as various forms of financing are far from being perfect substitutes are there differences in the ability of firms to obtain capital from the different available sources fourth can firms obtain all of their desired capital from the different available sources even if it is not in the form they would like it is widely recognised that the decision to seek external finance and the type of financing sought is related to information asymmetries faced by investors regarding the entrepreneurial firm s quality see for example jensen and meckling 1976 1 where

the higher cost of follow up loans this paper uses unique data and looks at the interest margin for follow up finance vis a vis first round finance applying data for asset values we examine the substitution between collateral and interest margins consistent with the theories of bester 1985 besanko and thakor 1987 and the empirical evidence of cressy 1996b we find that a trade off between collateral and interest margins exists our main result indicates that follow up finance is more expensive for loans but not for overdrafts we suggest that a relatively fixed asset base land and buildings as seen in higher security to loan values raises the price and risk of successive financial increments this explains the higher relative cost of follow up finance to borrowers

an intertemporal model of industrial exit a finite horizon model of industrial exit is developed after an initial lag most exits are by young firms the duration of the lag is positively related to sunk entry costs but not due to the fallacy of sunk costs the conception of entry differs from previous research as a result not all entrants are identical and firm size affects the rate of learning on average larger new firms last longer entrepreneurs in declining firms act more lazily as the firm declines a number of empirical observations about declining firms are organized by the model

market expectations of the effects of the tax reform act of 1986 on banking organizations abstract this study investigates market expectations regarding the effect of the tax reform act of 1986 on the banking industry the evidence shows that overall the tax reform did not adversely affect the stocks of banking institutions the findings suggest that overall banking organizations were expected to largely mitigate any negative effects of the tax reform on their cash flow by rebalancing and or repricing their portfolios of assets and liabilities the most significant provision of the new act was the limitation on foreign tax credits interestingly the markets did not expect any adverse valuation effects from the recapture of loan loss reserves or the elimination of the interest deductibility for carrying tax exempt securities

dilemmas of export diversification in a developing economy mexican oil in the 1980s abstract small states usually find it very costly to implement strategies with the objective of reducing their dependence on great economic powers this essay seeks to explain the accomplishments and failures of mexico s efforts to diversify its foreign economic relations beyond the united states though mexican exports to the industrialized world have surged in the 1980s their excessive concentration on oil has skewed mexico s trade profile and stunted the growth of non oil industries moreover while exports of non oil products have expanded fourfold over the last decade they remain concentrated as well within the us market if protectionism in the latter continues to grow the slow but steady new orientation of mexican business toward foreign markets will prove more effective than the government s political security considerations of recent years in leading them to diversify mexico s profile of foreign economic relations beyond the united states

the market valuation effects of the financial institutions reform recovery and enforcement act of 1989 abstract this paper evaluates the stock market effects of events leading to the passage of the financial institutions reforms recovery and enforcement act of 1989 the evidence suggests that the signing of the act by president bush produced positive abnormal returns for both banks and s ls and that the addition of tougher capital standards produced positive returns for s ls in addition the act increased the risk of both banks and s ls

do firms get the financing they want measuring credit rationing experienced by small businesses in the u s this paper measures the extent to which small businesses in the united states in the late 1980s were able to access the external credit finance they desired we argue that a comprehensive definition of credit rationing must account for both a creditworthy firms that apply for and are denied financing and b creditworthy firms that decide not to apply for desired external financing given expectations about how long it may take to obtain financing and the evolution of investment opportunities

the effects of tax reform on real estate some empirical results this paper uses data on publicly traded real estate firms to examine the effects of two major tax reforms specifically we analyze the effects of the 1976 and 1986 tax reform acts tras on the risks and returns of real estate investment trusts reits and other real estate firms using intervention analysis since reits have been a dominant force in the real estate equity markets and since they are treated differently for tax purposes than corporations investing in real estate we examine the two groups of firms separately while there exists much popular press literature which discusses the impact of tax reform on real estate little empirical work has directly examined the market s response to these changes 2 most previous work undertaken to examine the potential impact of tax changes has used simulation modeling to estimate the effects on real estate firms values e g fisher and lentz 1986 hendershott follain and ling 1986 a review of the simulation literature is presented in follain and brueckner 1986 turning away from the simulation technique nourse 1987 uses appraisal data to empirically estimate how the 1976 and 1981 tax laws affect capitalization rates i e net income divided by value for real estate in contrast with the existing literature we use market data to evaluate the empirical effects of the 1976 and 1986 law changes the empirical results provide insights into the interaction between tax laws and the market for real estate assets in the next section of the paper we discuss the historical background of the 1976

social networking websites who survives abstractthis article studies the relationship between the characteristics of social networking sites snss and their probability of survival the data sample includes 224 snss launched throughout the world from 1995 to 2015 and that can be described by focus strategy business financing methods and interactions with external companies such as partnerships mergers and acquisitions three factors are systematically associated with closure hazard rates first compared with snss that address a specialized audience generalist snss have a three times higher probability of closing second being the target of a merger or acquisition more than doubles the probability of closure third new entrants have higher probability to survive if compared with snss with experience in the industry

technological regimes and firm survival evidence across sectors and over time in addition to the usual variables representing firm and industry specific features that impact the firm s survival this paper uses three r d related variables to reflect two schumpeterian technological regimes creative destruction the entrepreneurial regime and creative accumulation the routinized regime after controlling for age size entry barriers capital intensity the profit margin the concentration ratio the profit cost ratio and entry rates the empirical results confirm the theoretical relationship between technological regimes and the survival rate of new firms new firms are more likely to survive under the entrepreneurial regime moreover this effect is larger within the younger cohorts of firms than within the older ones

internet start ups access to the bank loan market evidence from italy the analysis of the bank sector s ability to efficiently fuel the birth of new italian business ventures in internet related services is studied in particular through the specification and the estimate of a series of econometric models this paper aims at investigating which characteristics of a large sample of internet start ups and their relative founders facilitate access to the loan market more precisely the role played by founders human capital as a possible significant signal used by banks to evaluate investment projects is addressed estimation results suggest that highly qualified human resources possessed by internet founders do not represent an important driver for gaining access to bank credit and they do not affect the amount of the incurred debt

the value of human and social capital investments for the business performance of startups we investigate the manifold posed question to what extent does investment in human and social capital besides the effect of talent enhance entrepreneurial performance we distinguish between three different performance measures survival profits and generated employment on the basis of the empirical analysis of a rich dutch longitudinal data set of firm founders we conclude that specific investments indeed affect the three performance measures substantially and significantly specific attention is paid to the unobserved talent bias moreover the effect of the emergence of so called knowledge industries is explored

regional reciprocal interstate banking the supreme court and the resolution of uncertainty abstract in 1985 the supreme court affirmed the ability of the states to enter into regional reciprocal compacts in northeast bancorp inc et al v board of governors of the federal reserve system the current study tests the hypotheses that the court s decision exerted a material influence on the wealth of shareholders in bank holding companies bhcs operating within regional banking compacts and that shareholder reactions were affected by the size of their bhc as a proxy for the likelihood that a bhc would be an acquiror vs a target in the new legislative climate the analysis uses a sample of 52 bhcs that were members of regional interstate banking compacts and a control sample of 107 bhcs based in states that had not passed such enabling legislation as of the event date both portfolios of bhcs exhibited a statistically significant average positive reaction to the supreme court decision further there is evidence that the average bhc in each group reacted significantly differently to that event the reactions of bhcs in regional compacts were associated negatively with their relative size within their respective regional compact but related positively to their absolute size interestingly the reactions of bhcs in the control sample were also negatively associated with their relative size within their home office s state but also positively related to their absolute size all in all shareholders viewed the interstate banking opportunities brought by the supreme court decision to be consistent with their interests

new firm survival new results using a hazard function a limitation of audretsch s 1991 study of new firm survival was the level of aggregation to industries this precluded linking establishment specific characteristics such as organizational structure and size to post entry performance the purpose of this paper is to relate the post entry performance of individual establishments not only to their technological and market structure environments but also to establishment specific characteristics we do this by estimating a hazard duration function for more than 12 000 individual establishments in u s manufacturing started in 1976 by tracking their subsequent performance over a ten year period we conclude that establishment specific characteristics which audretsch was not able to capture in his earlier study play an important role in shaping the exposure to risk confronting new establishments copyright 1995 by mit press

why do most firms die young a model is developed to explain why most firms die in the first few years of trading a risk averse entrepreneur with initial capital endowment faces a brownian motion in net worth over time to balance return profits growth and risk variance of profits she adopts a portfolio strategy choosing market positioning to achieve an optimal combination of risk and return at each instant given her financial and human capital endowments and attitude towards risk failure occurs when the firm s value falls below the opportunity cost of staying in business the resulting distribution of failure is inverse gaussian implying for specific parameter values a positively skewed failure curve of the type observed in practice in addition the model presents a novel measure of management human capital mhc which implies that high mhc entrepreneurs will have higher absolute and marginal profits growth than low mhc entrepreneurs at given levels of risk

an examination of the factors associated with bank switching in the u k small firm sector previous research has consistently shown that a large number of firms are sufficiently dissatisfied with their bank relationship to have considered switching to an alternative bank in practice however the number of firms which actually switch banks is relatively low this paper examines empirical evidence from a postal survey of small firms in order to investigate this paradox binomial and multinomial logistic regression is used to identify the characteristics which discriminate between a group of firms considering switching banks and two other groups namely those which had switched banks in the previous three years and those which had not switched banks and were not considering doing so the paper tests the hypothesis that some small firms may be informationally captured in that they are tied into their current bank relationship due to difficulties in conveying accurate information about their performance the results provide some evidence in support of the hypothesis in that rapidly changing information particularly changing technology was a characteristic associated with firms which were considering switching but had not switched however there was no significant evidence to support the hypothesis that superior performing firms are more likely to be informationally captured growth and perceived business success were both associated with firms which switched banks there was strong evidence that the main drivers of the decision to switch or consider switching banks were difficulties obtaining finance and dissatisfaction with the service provided the results also showed that firms which were considering switching banks tended to use more alternative non banking sources of finance it is concluded that some firms will resolve difficulties obtaining finance by switching banks whereas others will use alternative sources of finance depending on the balance between the benefits of switching such as increased finance and switching costs including information provision

a simple model of price dispersion abstract this article considers a simple stock flow matching model with fully informed market participants unlike the standard matching literature prices are assumed to be set ex ante when sellers pre commit themselves to sell their products at an advertised price the unique equilibrium is characterized by price dispersion due to the idiosyncratic match payoffs in a marketplace with full information this provides new insights into the price dispersion literature which instead commonly assumes that buyers are not perfectly informed and engage in a costly search

trajectories of small business financial structure a dynamic theory of the small firm is expounded assuming entrepreneurs maximise business value over a finite time horizon predicted trajectories for key financial variables are seen to depend on whether debt or equity are cheaper the predicted trajectories are compared with actual trajectories using empirical evidence from three years of detailed primary source data on one hundred and fifty new business startups in scotland evidence largely confirms predictions of the model for the cheap equity case for this case as capital and sales rise steadily debt is retired rapidly except when interest rates on long term debt are low this finding is supported by explicit empirical trajectories of key financial variables

determinants of south asian entrepreneurial growth in britain a multivariate analysis this paper aims to contribute to our understanding of the factors influencing south asian entrepreneurial growth in britain it develops a multivariate model along the lines of small business economics but includes cultural and social variables the theoretical model specified assumes that cultural factors have an augmenting effect on socio economic factors a distinction is also drawn between initial entrepreneurial characteristics and later expansion strategies used the empirical model based on the general to specific approach can explain almost 60 per cent of entrepreneurial growth the results suggest that moving away from a style of management based on immigrant culture has a positive impact on growth this requires greater delegation of responsibilities to non family employees at the same time strengthening links with the country of origin has a positive impact on growth while the commitment to work hard at start up is essential human capital factors like the entrepreneur s educational attainment and employee training appear to be more crucial than financial resources in contributing to growth

when is gibrat s law a law the purpose of this article is to investigate if the industry context matters for whether gibrat s law is rejected or not using a dataset that consists of all limited firms in five digit nace industries in sweden during 1998 2004 the results reject gibrat s law on an aggregate level since small firms grow faster than large firms however gibrat s law is confirmed about as often as it is rejected when industry specific regressions are estimated it is also found that the industry context e g minimum efficient scale market concentration rate and number of young firms in the industry matters for whether gibrat s law is rejected or not

evaluation of credit guarantee policy using propensity score matching in this article we evaluate the effect of the credit guarantee policy by comparing a large sample of guaranteed firms and matched non guaranteed firms from 2000 to 2003 the sample firms are compared with respect to growth rates of different performance indicators including productivity sales employment investment r d wage level and the survival of firms in the post crisis period in order to avoid the selectivity problem propensity score matching methodologies are adopted results suggest that credit guarantees influenced significantly firms ability to maintain their size and increase their survival rate but not to increase their r d and investment and hence their growth in productivity moreover due to the adverse selection problem firms with lower productivity were receiving guarantees

entrepreneurial women and men two different species the ability of the self employed to create additional job opportunities is a fundamental concern given the huge increases in public resources targeted at new venture creation in the u k and other countries since 1979 this study initially concentrates on identifying differences in the personal and demographic characteristics of women and men in four potential labour market states namely unemployment waged employment single self employment and job creating self employment it then goes on to consider labour market transitions over a four year period between 1991 and 1995 the key findings are firstly that women entrepreneurs are better educated than their male counterparts and secondly that flows into self employment were considerably higher for men than women furthermore proportionately three times as many male self employed in 1991 had gone on to become job creating self employed by 1995

politics in command foreign trade as national security policy many of the current theoretical debates in international relations focus on the connection between economics and security policies most traditional north american textbooks have considered the two policy areas as separate domains some scholars view the major economic trends and events of the 1970s as intertwined whereas others argue that state interests properly should prevail when the two sets of values conflict the traditional liberal mercantilist and neo marxist literatures shed some light on the nexus between politics and economics in foreign policy but they offer very general statements that reflect only the conditions of the major powers two case studies of japan and finland in the postwar period suggest that generalizations must be applied cautiously that some states are compelled to follow mercantilist policies to protect their political independence and autonomy and that policies of welfare maximization often have to be subordinated to security concerns the cases also reveal that the connection between economic and security concerns changes over time a dynamic model of foreign policy will thus have to be sensitive both to the peculiar circumstances of a variety of states and to the sources of foreign policy change

goodwill intertemporal price dependence and the repurchase decision stigler s i96i pioneering article on the economics of information directed economists attention to market situations where the classical assumption of perfect knowledge could not be supported his theory pictured a world in which prices were not known to the consumer a priori information being scarce was also costly but information had clear economic value to those wishing to possess it focus of the new theory thus came to be on an individual optimising over benefits expected price reductions and costs time spent canvassing to the activity of information gathering or search whilst this new direction taken by consumer theory has been towards greater descriptive realism the attendant drawbacks have been several technical complexities of formulation have commonly resulted in highly simplified models with utility linear in prices and purchase restricted to a single unit of the good even when time has been explicitly taken into account an invariable assumption has been the independence of prices from one period to the next 2 after twenty years stigler still remains alone in the literature as having made an attempt to integrate the idea of intertemporally correlated prices with the important economic concept of goodwill the present paper is an attempt to remedy within the context of a single model the above mentioned deficiencies the main emphasis of the paper as the title suggests is on the role of goodwill and intertemporal price dependence in the repurchase decision the decision whether or not to buy again at the same store or to look around the framework proposed is a dynamic one in which the consumer has in each period to a finite horizon an ex post and ex ante utility maximisation problem the ex post problem concerns her consumption decision in any period once prices are known the ex ante problem her decision as to how much

valuation effects of the international banking act on foreign banks operating in the united states note this study empirically evaluates the daily stock price behavior of thirty one major foreign banks operating in the united states at the time of the passage of the international banking act of 1978 statistically insignificant abnormal returns are observed during the months of debate over this legislation however negative and statistically significant abnormal returns are found after the bill was signed by president carter the empirical results of this analysis taken together with those of previous research suggest that the international banking act was perceived at the time as having reduced the regulatory inequities between u s banks and foreign banks operating in the united states copyright 1991 by ohio state university press

the effects of the international banking act on domestic bank profitability and risk the passage of the international banking act of 1978 was the first major step towards imposing consistent and uniform federal regulations on the growing number of foreign banks entering the united states prior to this date foreign banks had been subject to a patchwork of state laws of varying degrees of stringency covering their entry expansion and portfolio behavior see white 1982 and walker 1983 the net result of this patchwork of state regulation was that by 1978 foreign banks had developed certain competitive advantages over domestic banks these advantages emanated from the fact that foreign bank branches and agencies i were not required to meet federal reserve determined reserve requirements on liabilities such as large cds and ii they were not subject to federal laws governing interstate banking the 1927 mcfadden act and activity diversification the 1933 glass steagall act and the 1956 bank holding company act including its 1970 amendments however foreign banks were also subject to certain disadvantages compared to domestic banks in particular they were inhibited from entering into retail banking markets by being ineligible for fdic insurance and being denied access to fed services such as check collection and the discount window to eliminate these discrepancies in relative regulation the international banking act iba was introduced in the house of representatives in february 1978 re

the latent demand for bank debt characterizing discouraged borrowers concerns that small firms encounter credit constraints are well entrenched in the literature despite widespread empirical evidence that a relatively small proportion of small firms have their loan applications rejected however many firms may be discouraged from applying for fear of rejection these businesses are the focus of this paper based on responses to a large scale postal survey of uk small and medium sized enterprises smes we find that twice as many businesses were discouraged from applying for a bank loan than had their loan request denied more particularly we observe a number of distinguishing characteristics of discouraged borrowers relative to applicants these include strategy sector prior entrepreneurial experience and banking relationships the implications of our findings for policy and future research are briefly discussed

risk adverse selection and capital market failure this paper investigates the implications of adverse selection for capital market equilibrium when borrowers are risk averse k j arrow and r c lind 1970 argue that when capital markets fail to spread risk properly interest rates are too high the market adds a risk premium that the social planner would not this paper shows that when projects differ in quality in a pooling equilibrium the private market sets interest rates too low even accounting for the risk premium hence there is overinvestment the result is shown to be robust to the introduction of moral hazard copyright 1990 by royal economic society

the relationship between u k banks and their small business customers much emphasis is placed upon the benefits to both parties of a good relationship between banks and their small business customers having explained the significance of smes in the u k economy the papers goes on to consider briefly some of the arguments which underpin the rationale for these relationships the roles of information and communication are discussed and the poor co ordination between banks smes and their accountants is highlighted evidence from over 6 000 small businesses in response to the forum of private business survey in 1994 is then presented this demonstrates the strong positive association between more participative relationships and more positive perceptions of their banks by firms finally it is suggested that a virtuous circle of information and communication could be established if the parties cooperate in a systematic process of risk assessment

are business startups debt rationed using a large random sample of u k start ups and a rich data set the paper demonstrates that human capital is the true determinant of survival and that the correlation between financial capital and survival is spurious provision of finance is demand driven with banks supplying funds elastically and business requests governing take up firms self select for funds on the basis of the human capital endowments of the proprietors with better businesses more likely to borrow a reason why others have seemingly identified start up debt gaps may be the failure to test a sufficiently rich empirical model copyright 1996 by royal economic society

bank loan terms and conditions for eurozone smes the evolution of bank loan price and non price terms and conditions t cs for the 2009 2011 period are investigated using firm level survey data for a sample of eurozone small and medium sized enterprises the raw firm responses which are of a discrete nature denoting tightening or easing of the t cs or no change at all are modeled by a bivariate ordered probit model according to the results obtained there are sizeable differences between countries with the protagonists of the sovereign debt crisis greece ireland portugal spain exhibiting predicted probabilities of tightening that are considerably above the eurozone average in addition price t cs exhibit a substantial tightening over time finally firms net interest expenses and profitability emerge as important determinants in explaining the cross sectional variation in bank loan t cs that they face

the impact of the 1980 depository institutions deregulation and monetary control act on market value and risk evidence from the capital markets the depository institutions deregulation and monetary control act of 1980 brought about major changes in the banking industry this study employs capital market data to examine the act s impact on the relative competitive positions of distinct classes of firms within the industry the evidence supports the hypothesis that federal reserve system banks profited from the regulatory change at the expense of nonmember banks and savings and loans copyright 1988 by ohio state university press

microfinance subsidies and local externalities we analyse equilibrium borrowers effort and the cost of microcredit loans in the presence of moral hazard project correlation and subsidies under group lending conditions our results show that under the assumption of endogenous effort project correlation has significant effects on borrowers effort only when it is determined by asymmetric positive or negative shocks these findings indicate that the well known negative effect of within group symmetric project correlation on group lending with joint liability disappears once endogenous effort is taken into account we also analyse the effects of subsidised lending and asymmetric correlation on the relative convenience in terms of borrowers effort of the alternative 1 between group lending and individual lending with notional collateral and 2 among three different market structures of the microfinance industry

racial and gender discrimination in the micro firms credit market evidence from trinidad and tobago this paper examines the market for loans from banks to micro and small enterprises in trinidad and tobago it tests for the presence of racial and gender discrimination it takes the reported refusal to grant loans to groups when all other indicators of credit worthiness are taken into account as evidence of discrimination the paper distinguishes between application and denial rates it finds that once all other indicators of credit worthiness are taken into account neither application nor denial rates differ significantly by gender reported denial rates are however higher for africans compared with other ethnic groups implying the possible presence of discrimination

credit rationing or entrepreneurial risk aversion an alternative explanation for the evans and jovanovic finding abstract evans and jovanovic ej evans d jovanovic b 1989 an estimated model of entrepreneurial choice under liquidity constraints journal of political economy 97 4 808 827 claimed that in a credit market with collateral based lending credit rationing occurs if more collateral increases startups adjusting the model to incorporate uncertainty and decreasing absolute risk aversion this relationship can be explained as a risk averter s response to the lowered riskiness of self over wage employment

the financial conditions for swedish smes survey and research agenda this paper shows that in two important sectors of swedish industry in the early 1990s the existence of finance demand internally generated constraints in addition to the familiar finance supply externally generated constraints on businesses are a significant empirical phenomenon firms are aware that relinquishing some control would improve performance however the returns in growth profits and survival are not sufficient to offset the utility of control loss owners of younger firms especially in business services regard very favourably the added expertise of new preferably angel equity holders with one in three such firms having actively sought new owners equity finance is therefore to be regarded as a package from the viewpoint of the smaller firm with transfer of management skills from venture capitalist to firm sweetening the bitter pill of control loss

some evidence on the empirical significance of credit rationing this paper examines the credit rationing debate using detailed contract information on over one million commercial bank loans from 1977 to 1988 while commercial loan rates are sticky consistent with rationing this stickiness varies with loan contract terms in ways that are not predicted by equilibrium credit rationing theory in addition the proportion of new loans issued under commitment does not increase significantly when credit markets are tight despite the fact that borrowers without commitments can be rationed whereas commitment borrowers are contractually insulated from rationing overall the data suggest that equilibrium rationing is not a significant macroeconomic phenomenon

consumer search with uncertain product quality this paper presents a unified model of consumer search when both prices and qualities are uncertain it is assumed that price can be observed prior to purchase but that quality can be observed only after purchase and experience this two stage decision problem is of particular interest since in practice there is usually some connection between quality and price of the many interesting implications of this dependence explored in this paper is the result that the usual reservation price rule may no longer be optimal indeed the optimal stopping set may take one of several alternative and more realistic forms

small business failure and external risk factors unlike much of the previous literature which has generally focused on internal risk factors this study seeks to explore the impact of macro economic factors on small business mortality the results suggest that economic factors appear to be associated with between 30 and 50 of small business failures depending on the definition of failure used as expected failure rates were positively associated with interest rates where failure was defined as bankruptcy and the rate of unemployment where failure was defined as discontinuance of ownership however somewhat unexpectedly failure rates were found to be positively associated with lagged employment rates where failure was defined as to prevent further losses and with current and lagged retail sales where failure was defined as either failed to make a go of it discontinuance of ownership or discontinuance of business this indicates that a strengthening economy may provide the trigger for an increase in voluntary business exits as individual proprietors seek to maximize the returns available to them on both their financial and human capital

the effects of didmca on bank stockholders returns and risk abstract in this paper we examine the effects of the 1980 didmca on bank stockholders returns and risk while at the time of the announcement both commercial banks and thrifts appeared to benefit measured by abnormal returns over a longer period of time surrounding the announcement week it is evident that thrift stockholders were the primary beneficiaries of the acts passage when the effects of didmca on risk was analysed it was found that after the act s passage the total return risk of both money center and regional banks increased while that for thrifts decreased however some of the beneficial effects of the act appear to have been mitigated by an increase in the absolute size of unexpected interest rate risk in the post enactment period