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Economic Capital (economic + capital)
Selected AbstractsEconomic Capital and Financial Risk Management for Financial Services Firms and Conglomerates by B. Porteous and P. TapadarJOURNAL OF THE ROYAL STATISTICAL SOCIETY: SERIES A (STATISTICS IN SOCIETY), Issue 2 2007N. H. Bingham No abstract is available for this article. [source] Pricing Loans Using Default ProbabilitiesECONOMIC NOTES, Issue 2 2003Stuart M. Turnbull This paper examines the pricing of loans using the term structure of the probability of default over the life of the loan. We describe two methodologies for pricing loans. The first methodology uses the term structure of credit spreads to price a loan, after adjusting for the difference in recovery rates between bonds and loans. In loan origination, it is common practice to estimate the probability of default for a loan over a specified time horizon and the loss given default. The second methodology shows how to incorporate this information into the arbitrage free pricing of a loan. We also show how to derive an estimate of the credit spread due to liquidity risk. For both methodologies, we show how to calculate a break,even credit spread, taking into account the fee structure of a loan and the costs associated with the term structure of marginal economic capital. The break,even spread is the minimum spread for the loan to be EVA neutral in a multi,period setting. (J.E.L.: G12, G33). [source] The Impact of Virtual Embeddedness on New Venture Survival: Overcoming the Liabilities of Newness1ENTREPRENEURSHIP THEORY AND PRACTICE, Issue 2 2007Eric A. Morse In this article, we examine the impact of virtual embeddedness,the establishment of interorganizational connections through the use of electronic technologies,on the likelihood of new venture survival. We explore the effects of recent technological and social changes on traditional conceptions of the liabilities of newness. We argue that virtual embeddedness positively affects new venture survival by decreasing the liabilities of newness associated with a new venture's need to create and manage new roles and systems, lack of extant trust relationships, lack of social capital, and lack of economic capital. This argument has important implications for both the study and management of contemporary new ventures. [source] Capital Allocation and Risk Performance Measurement In a Financial InstitutionFINANCIAL MARKETS, INSTITUTIONS & INSTRUMENTS, Issue 5 2000Stuart M. Turnbull This paper provides an analytical and practical framework, consistent with maximizing the wealth of existing shareholders, to address the following questions: What are the costs associated with economic capital? What is the tradeoff between the probability of default and the costs of economic capital? How do we take into account the time profile of economic capital when assessing the performance of a business? What is the appropriate measure of profitability, keeping the probability of default constant? It is shown that the capital budgeting decision depends not only on the covariance of the return of a project with the market portfolio, but also on the covariance with the bank's existing assets. This dependency arises from the simple fact that the economic capital is not additive. [source] Money with a Mean Streak?INTERNATIONAL STUDIES QUARTERLY, Issue 2 2001Foreign Economic Penetration, Government Respect for Human Rights in Developing Countries This study examines the relationship between foreign economic capital and the level of government respect for two types of human rights in developing countries. Two opposing schools of thought offer explanations as to what this relationship might be like. According to the liberal neoclassical school, the acceptance of liberal economic doctrine will provide positive political benefits to developing countries. The "dependency" school, on the other hand, argues that because ties between core and periphery elites give governments in developing nations an incentive to repress, human rights conditions will worsen as foreign economic penetration increases. The results of previous empirical queries into this matter have been mixed. In contrast to most studies, we focus on a broader measure of foreign economic capital, including foreign direct investment, portfolio investment, debt, and official development assistance. Using ordered logit analysis on a cross-national sample of forty-three developing countries from 1981 to 1995, we discover systematic evidence of an association between foreign economic penetration and government respect for two types of human rights, physical integrity rights and political rights and civil liberties. Of particular interest is the finding that both foreign direct investment and portfolio investment are reliably associated with increased government respect for human rights. [source] Economic and financial aspects of mine closureNATURAL RESOURCES FORUM, Issue 4 2001James R. Kahn Abstract Today, mine reclamation is a key component to a successful mine plan. Most of the industrialized nations have recognized the need to make mining activities relatively environmentally friendly, if they want to continue to benefit from the economic gains from mineral resource development. Countries such as the United States, Canada, Australia and South Africa are leaders in the field and have implemented relatively sophisticated legislation to ensure environmentally correct mine closure. These countries rely on a combination of strict control strategies and economic penalties to ensure compliance. Yet, from the firm's perspective, reclamation activities are counterproductive as they cut into profits. In order to attract economic development and earn much needed economic capital, most of the rest of the world, particularly the developing countries, lack effective mine closure legislation. The traditional command and control type of legislation that is sometimes used is either vague and therefore avoided, or not enforced appropriately, resulting in an undesirable level of environmental degradation. With the use of case studies from Brazil, this article shows that direct controls are effective in some instances and not in others. It proposes that economic and financial tools may be more effective than the traditional direct controls in getting firms to comply with environmental standards, particularly in developing countries where environmental compliance is more difficult to achieve. It explains the use of performance bonding as one type of economic incentive that has proven to be an effective environmental policy in mine planning and closure. The authors additionally push beyond the typical style of performance bonds to introduce a flexible bonding and insurance system that allows governments to maintain strict environmental standards but limits firms financial exposure during the mining process. Such a system learns from the successes of the industrialized countries that use performance bonding and is sensitive to the needs of developing nations to attract investment yet maintain environmental integrity. [source] Competing interests: Toronto's Chinese immigrant associations and the politics of multiculturalismPOPULATION, SPACE AND PLACE (PREVIOUSLY:-INT JOURNAL OF POPULATION GEOGRAPHY), Issue 2 2007J. Salaff Abstract Social service agencies and advocacy groups have played an integral role in mediating between the Asian ethnic populations. In the Canadian institutional setting, associations become a means of political expression. Canada incorporates new immigrants into its national institutions. However, these neo-liberal institutions and policies have not redressed major problems arising in the settlement process. Under Canada's discourse of enlightened multiculturalism, social service agencies are funded to help to integrate diverse peoples. The policy of multiculturalism meshes well with the liberal ideology underlying loose coupling, encouraging people to retain their cultural identities while settling and participating in national processes. These policies are designed to be sensitive to clients' cultural backgrounds; however, there are unforeseen consequences. In this system, different groups are granted different amounts of social, cultural and economic capital along with differential access to this capital, which affects their position and potential for action in other arenas. In particular, we find that the social service approach treats new Chinese immigrants as similar, thereby fostering competition between subgroups over leadership, funds and representation. Our data come from interviews with key figures in the Chinese-Canadian community and associations, and reviews of press and other media. Copyright © 2006 John Wiley & Sons, Ltd. [source] How green is the valley?THE CANADIAN GEOGRAPHER/LE GEOGRAPHE CANADIEN, Issue 3 2005Foreign direct investment in two Norwegian industrial towns Since the early 1900s, foreign direct investments (FDIs) have greatly affected Norwegian society, especially peripheral communities. This article analyses how transnational corporations (TNCs) use territory down to the local level, and how this complex relationship between firms and spaces is shaped by attributes related to the TNC and the characteristics of the local economy. An extensive literature discusses different types of effects and spillovers, such as vertical supply linkages and spin-offs, but theoretical explanations of outcomes are more difficult. The literature links positive as well as negative outcomes to local conditions and to the investment motives of the entity making the FDI, but says little about how these vary with types of business, communities and national economies, and how these interactions generate different outcomes. We conclude that FDIs have different abilities to transform an area. We argue that FDI can trigger path-dependent dependency when it is dominated by economic capital and path-dependent development when it consists of a balance of economic capital, social networks and knowledge. This variation in the effects of FDI is illustrated by an empirical analysis of two industrial towns in Western Norway, one with natural resources and the other with intangible technology resources. Depuis le début des années 1900, les investissements directs à l'étranger (IDE) ont grandement marqué la société norvégienne, notamment dans les communautés périphériques. Cet article présente une analyse de la façon dont les entreprises transnationales (ETN) exploitent le territoire y compris le niveau local. Il tente aussi d'expliquer comment la relation complexe entre les entreprises et les espaces dépend des attributs propres aux ETN et des caractéristiques de l'économie locale. Un courant important de la littérature étudie les nombreuses incidences et répercussions des ETN, comme les relations d'offre verticale et les effets indirects. Cependant, les discussions qui s'ensuivent présentent généralement peu d'explications d'ordre théorique concernant les résultats. La littérature associe les résultats positifs ou négatifs directement aux conditions locales et aux motivations qui poussent une entreprise à placer ses capitaux dans un IDE. Elle aborde à peine la question sur comment les résultats peuvent varier selon les types d'entreprises, de communautés et d'économies nationales, et comment ces interactions produisent des résultats différents. En conclusion, nous rappelons que les IDE disposent de plusieurs possibilités de transformer un milieu. Un investissement peut produire une dépendance au sentier qui accentue la soumission quand le capital économique domine, et une dépendance au sentier qui accentue le développement quand il offre un équilibre entre le capital économique, les réseaux sociaux et le savoir. Une analyse empirique permet de relever cette variation qui caractérise les incidences des IDE. Elle porte sur deux villes moyennes industrielles situées dans la partie occidentale de la Norvège. La première est riche en ressources naturelles tandis que l'autre est dotée de ressources technologiques intangibles. [source] | |||||||||||||