Michael Chui and Prasanna Gai
- Published in print:
- 2005
- Published Online:
- July 2005
- ISBN:
- 9780199267750
- eISBN:
- 9780191602504
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199267758.001.0001
- Subject:
- Economics and Finance, Financial Economics
This book offers an analytical perspective on the policy debate on the design and reform of the international financial architecture. It stresses the role played by coordination problems in the ...
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This book offers an analytical perspective on the policy debate on the design and reform of the international financial architecture. It stresses the role played by coordination problems in the origin and management of crises by relating the insights of the new literature on global games to earlier work on currency crises, bank runs, and sovereign debt default. It draws on recent research and policy work to examine the debate on the design of sovereign bankruptcy procedures, the role of the IMF in influencing the actions of creditors and debtors, and the role of private sector involvement in the management of financial crises.Less
This book offers an analytical perspective on the policy debate on the design and reform of the international financial architecture. It stresses the role played by coordination problems in the origin and management of crises by relating the insights of the new literature on global games to earlier work on currency crises, bank runs, and sovereign debt default. It draws on recent research and policy work to examine the debate on the design of sovereign bankruptcy procedures, the role of the IMF in influencing the actions of creditors and debtors, and the role of private sector involvement in the management of financial crises.
Lawrence R. Jacobs and Desmond King
- Published in print:
- 2009
- Published Online:
- July 2012
- ISBN:
- 9780195392135
- eISBN:
- 9780199852543
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195392135.003.0001
- Subject:
- Political Science, American Politics
With the upheaval of the American economic and financial system, a large number of banks and firms are forced to declare bankruptcy while private markets and key industries have collapse as well. ...
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With the upheaval of the American economic and financial system, a large number of banks and firms are forced to declare bankruptcy while private markets and key industries have collapse as well. These reflect not only an unsustainable collection of government administrative practices and capacities but also question the legitimacy of the American state as a representative of democracy as well. In this chapter, the primary strains surrounding the American state are discussed. It also points out the deep-rooted dysfunctionalism in the operation of the American state's administrative institutions. To be able to understand current financial and economic turmoil occurring, the nature of unsustainability is presented in detail. Situated functionalism value in studying state sustainability is also illustrated.Less
With the upheaval of the American economic and financial system, a large number of banks and firms are forced to declare bankruptcy while private markets and key industries have collapse as well. These reflect not only an unsustainable collection of government administrative practices and capacities but also question the legitimacy of the American state as a representative of democracy as well. In this chapter, the primary strains surrounding the American state are discussed. It also points out the deep-rooted dysfunctionalism in the operation of the American state's administrative institutions. To be able to understand current financial and economic turmoil occurring, the nature of unsustainability is presented in detail. Situated functionalism value in studying state sustainability is also illustrated.
Oliver Hart
- Published in print:
- 1995
- Published Online:
- November 2003
- ISBN:
- 9780198288817
- eISBN:
- 9780191596353
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198288816.001.0001
- Subject:
- Economics and Finance, Financial Economics
This book provides a framework for thinking about economic relationships and institutions such as firms. The basic argument is that in a world of incomplete contracts, institutional arrangements are ...
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This book provides a framework for thinking about economic relationships and institutions such as firms. The basic argument is that in a world of incomplete contracts, institutional arrangements are designed to allocate power among agents. The first part of the book is concerned with the boundaries of the firm. It is argued that traditional approaches such as the neoclassical, principal‐agent, and transaction costs theories cannot by themselves explain firm boundaries. The book describes a theory—the incomplete contracting or property rights approach—based on the idea that power and control matter when contracts are incomplete. If the terms of a transaction can always be renegotiated, the incentives of a party to undertake relationship‐specific investments will depend crucially on the ability to control the use of productive assets when renegotiation takes place. Asset ownership becomes an essential source of power. The theory suggests that firm boundaries are chosen to allocate power optimally among the various parties to a transaction. The foundations of incomplete contracting are also discussed.The remainder of the book applies incomplete contracting ideas to understand the financial structure of closely held and public companies. The analysis illustrates how debt acts as an automatic mechanism to constrain the behaviour of managers or owners of both kinds of companies. In closely held companies, debt can force an entrepreneur to pay out funds to investors rather than to himself. In a public company, ownership is dispersed among small shareholders causing a separation between ownership and control. It is argued that debt and equity choices, capital structure decisions, bankruptcy procedures, corporate governance, and takeovers, play a substantial role in limiting the ability of a (self‐interested) manager to make unprofitable but power‐enhancing decisions.Less
This book provides a framework for thinking about economic relationships and institutions such as firms. The basic argument is that in a world of incomplete contracts, institutional arrangements are designed to allocate power among agents. The first part of the book is concerned with the boundaries of the firm. It is argued that traditional approaches such as the neoclassical, principal‐agent, and transaction costs theories cannot by themselves explain firm boundaries. The book describes a theory—the incomplete contracting or property rights approach—based on the idea that power and control matter when contracts are incomplete. If the terms of a transaction can always be renegotiated, the incentives of a party to undertake relationship‐specific investments will depend crucially on the ability to control the use of productive assets when renegotiation takes place. Asset ownership becomes an essential source of power. The theory suggests that firm boundaries are chosen to allocate power optimally among the various parties to a transaction. The foundations of incomplete contracting are also discussed.
The remainder of the book applies incomplete contracting ideas to understand the financial structure of closely held and public companies. The analysis illustrates how debt acts as an automatic mechanism to constrain the behaviour of managers or owners of both kinds of companies. In closely held companies, debt can force an entrepreneur to pay out funds to investors rather than to himself. In a public company, ownership is dispersed among small shareholders causing a separation between ownership and control. It is argued that debt and equity choices, capital structure decisions, bankruptcy procedures, corporate governance, and takeovers, play a substantial role in limiting the ability of a (self‐interested) manager to make unprofitable but power‐enhancing decisions.
Kunibert Raffer
- Published in print:
- 2006
- Published Online:
- May 2006
- ISBN:
- 9780195168006
- eISBN:
- 9780199783458
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0195168003.003.0013
- Subject:
- Economics and Finance, Development, Growth, and Environmental
This chapter argues that that the IMF's sovereign debt restructuring mechanism (SDRM) is misguided in several ways. Most importantly, the SDRM proposal leaves the IMF itself in the position of having ...
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This chapter argues that that the IMF's sovereign debt restructuring mechanism (SDRM) is misguided in several ways. Most importantly, the SDRM proposal leaves the IMF itself in the position of having to make two crucial decisions: whether to endorse a stay of payments to creditors, and what amount of debt is “sustainable”, i.e., how much debt should be written off. This decision-making capacity creates a conflict of interest, as the IMF itself is almost always a creditor to countries experiencing debt crises. As an alternative to the IMF's SDRM, a mechanism modeled on Chapter 9 of the US bankruptcy code is proposed, which applies to municipalities and resolves some of the knotty problems of dealing with public (as compared with private) insolvency. This approach would rely on ad hoc panels formed by the debtor and creditor committees and therefore would not require that the IMF serve as arbitrator.Less
This chapter argues that that the IMF's sovereign debt restructuring mechanism (SDRM) is misguided in several ways. Most importantly, the SDRM proposal leaves the IMF itself in the position of having to make two crucial decisions: whether to endorse a stay of payments to creditors, and what amount of debt is “sustainable”, i.e., how much debt should be written off. This decision-making capacity creates a conflict of interest, as the IMF itself is almost always a creditor to countries experiencing debt crises. As an alternative to the IMF's SDRM, a mechanism modeled on Chapter 9 of the US bankruptcy code is proposed, which applies to municipalities and resolves some of the knotty problems of dealing with public (as compared with private) insolvency. This approach would rely on ad hoc panels formed by the debtor and creditor committees and therefore would not require that the IMF serve as arbitrator.
J. E. Stiglitz
- Published in print:
- 2006
- Published Online:
- May 2006
- ISBN:
- 9780195168006
- eISBN:
- 9780199783458
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0195168003.003.0008
- Subject:
- Economics and Finance, Development, Growth, and Environmental
This chapter looks at the ethical aspects of globalization during the 1990s. It argues that in the way that they have sought to shape globalization, the advanced industrial countries and some of the ...
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This chapter looks at the ethical aspects of globalization during the 1990s. It argues that in the way that they have sought to shape globalization, the advanced industrial countries and some of the multilateral institutions that they control have violated some basic ethical norms. Three central issues in the context of global finance are analyzed: the design of debt contracts between developed and developing countries and other aspects of lending behavior; the consequences of excessive debt; and broader issues associated with the global reserve system. Three types of ethical problems are discussed: (1) where markets (or international institutions) take advantage of their “power” and the weaknesses of the developing country to pursue their own interests at the expense of or risk to those in the developing countries; (2) where international financial institutions provide advice that works to the disadvantage of the developing countries; and (3) where the markets, and especially the international financial institutions, have not done as much as they could for the well-being of the developed countries.Less
This chapter looks at the ethical aspects of globalization during the 1990s. It argues that in the way that they have sought to shape globalization, the advanced industrial countries and some of the multilateral institutions that they control have violated some basic ethical norms. Three central issues in the context of global finance are analyzed: the design of debt contracts between developed and developing countries and other aspects of lending behavior; the consequences of excessive debt; and broader issues associated with the global reserve system. Three types of ethical problems are discussed: (1) where markets (or international institutions) take advantage of their “power” and the weaknesses of the developing country to pursue their own interests at the expense of or risk to those in the developing countries; (2) where international financial institutions provide advice that works to the disadvantage of the developing countries; and (3) where the markets, and especially the international financial institutions, have not done as much as they could for the well-being of the developed countries.
Darrell Duffie
- Published in print:
- 2011
- Published Online:
- September 2011
- ISBN:
- 9780199279234
- eISBN:
- 9780191728419
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199279234.001.0001
- Subject:
- Economics and Finance, Financial Economics
This book addresses the empirical estimation of corporate default risk. The book addresses the measurement of corporate default risk based on the empirical estimation of default intensity processes, ...
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This book addresses the empirical estimation of corporate default risk. The book addresses the measurement of corporate default risk based on the empirical estimation of default intensity processes, and their correlation. The default intensity of a borrower is the mean rate of arrival of default, conditional on the available information. For example, a default intensity of 0.1 means an expected arrival rate of one default per ten years, given all current information. Default intensities change with the arrival of new information about the borrower and its economic environment. The main focus here is on methodologies for estimating default intensities and on some key empirical properties of corporate default risk. The book pays special attention to the correlation of default risk across firms, and unobserved “frailty” factors that increase this correlation.Less
This book addresses the empirical estimation of corporate default risk. The book addresses the measurement of corporate default risk based on the empirical estimation of default intensity processes, and their correlation. The default intensity of a borrower is the mean rate of arrival of default, conditional on the available information. For example, a default intensity of 0.1 means an expected arrival rate of one default per ten years, given all current information. Default intensities change with the arrival of new information about the borrower and its economic environment. The main focus here is on methodologies for estimating default intensities and on some key empirical properties of corporate default risk. The book pays special attention to the correlation of default risk across firms, and unobserved “frailty” factors that increase this correlation.
Gary Herrigel
- Published in print:
- 2010
- Published Online:
- September 2010
- ISBN:
- 9780199557738
- eISBN:
- 9780191720871
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199557738.003.0004
- Subject:
- Business and Management, Political Economy
The chapter compares emergence of minimills in Germany, Japan and the US, along with the recomposition of the Integrated Steel Mill sector. Steel production as an industrial activity in each of the ...
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The chapter compares emergence of minimills in Germany, Japan and the US, along with the recomposition of the Integrated Steel Mill sector. Steel production as an industrial activity in each of the societies, especially in the United States, is radically reconceived, but continues to be successful in each country. Again, in contrast to the claims of Varieties of Capitalism, the American steel industry proves adept at both gradual and radical innovation, as do the German and Japanese industries.Less
The chapter compares emergence of minimills in Germany, Japan and the US, along with the recomposition of the Integrated Steel Mill sector. Steel production as an industrial activity in each of the societies, especially in the United States, is radically reconceived, but continues to be successful in each country. Again, in contrast to the claims of Varieties of Capitalism, the American steel industry proves adept at both gradual and radical innovation, as do the German and Japanese industries.
Darrell Duffie
- Published in print:
- 2011
- Published Online:
- September 2011
- ISBN:
- 9780199279234
- eISBN:
- 9780191728419
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199279234.003.0002
- Subject:
- Economics and Finance, Financial Economics
This chapter provides the mathematical foundations for stochastic intensity, on which most of the methodology is based. The intensity of an event such as default is its conditional mean arrival rate, ...
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This chapter provides the mathematical foundations for stochastic intensity, on which most of the methodology is based. The intensity of an event such as default is its conditional mean arrival rate, measured in events per year, given all information currently available to the observer. The chapter also presents the multi-firm version of the doubly-stochastic hypothesis, under which the sole source of default correlation between two firms is the dependence of their default intensities on common or correlated observable risk factors. The doubly-stochastic property rules out contagion as well as correlation induced by unobservable risk factors. The chapter includes a mathematical device for testing a model of the default intensity processes of a large number of borrowers.Less
This chapter provides the mathematical foundations for stochastic intensity, on which most of the methodology is based. The intensity of an event such as default is its conditional mean arrival rate, measured in events per year, given all information currently available to the observer. The chapter also presents the multi-firm version of the doubly-stochastic hypothesis, under which the sole source of default correlation between two firms is the dependence of their default intensities on common or correlated observable risk factors. The doubly-stochastic property rules out contagion as well as correlation induced by unobservable risk factors. The chapter includes a mathematical device for testing a model of the default intensity processes of a large number of borrowers.
Darrell Duffie
- Published in print:
- 2011
- Published Online:
- September 2011
- ISBN:
- 9780199279234
- eISBN:
- 9780191728419
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199279234.003.0003
- Subject:
- Economics and Finance, Financial Economics
This chapter presents the theory underlying the maximum likelihood estimation of term structures of survival probabilities, for example the dependence of default probability on time horizon. The ...
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This chapter presents the theory underlying the maximum likelihood estimation of term structures of survival probabilities, for example the dependence of default probability on time horizon. The methodology allows the events of concern to be censored by disappearance of corporations from the data, due for instance to merger or acquisition. The idea is to estimate the parameter vector determining the default intensity as well as the parameter vector determining the transition probabilities of the covariate process, and then to use the maximum likelihood estimator of these parameters to estimate the survival probabilities of the corporations, for a range of choices of the survival horizon. The results show that the joint estimation of the parameters is relatively tractable under the doubly-stochastic property.Less
This chapter presents the theory underlying the maximum likelihood estimation of term structures of survival probabilities, for example the dependence of default probability on time horizon. The methodology allows the events of concern to be censored by disappearance of corporations from the data, due for instance to merger or acquisition. The idea is to estimate the parameter vector determining the default intensity as well as the parameter vector determining the transition probabilities of the covariate process, and then to use the maximum likelihood estimator of these parameters to estimate the survival probabilities of the corporations, for a range of choices of the survival horizon. The results show that the joint estimation of the parameters is relatively tractable under the doubly-stochastic property.
Ben S. Branch, Hugh M. Ray, and Robin Russell
- Published in print:
- 2007
- Published Online:
- May 2007
- ISBN:
- 9780195306989
- eISBN:
- 9780199783762
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195306989.001.0001
- Subject:
- Economics and Finance, Financial Economics
This book examines the business liquidation process — the winding up of the affairs of a company that has either decided voluntarily to liquidate or been forced to liquidate by its creditors. The ...
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This book examines the business liquidation process — the winding up of the affairs of a company that has either decided voluntarily to liquidate or been forced to liquidate by its creditors. The contributors to the book have substantial hands-on experience in the reorganization and liquidation of businesses, the sale of business assets, and management of commercial litigation. They share their approach to maximizing and creating value in the deteriorating and chaotic business environment that so often leads to a company going out of business. The legal forums for liquidation — bankruptcy, state receivership, federal receivership, and assignment for the benefit of creditors — are explained. The liquidator's role, powers, duties, oversight, and compensation are outlined and the special rules for bankruptcy trustees are set forth. The chapters also cover the major tasks of liquidation including investigation of the company, termination of employees, disposition of assets, evaluation of litigation, resolution of claim, distributions and ultimately, and the dissolution or “winding down” of the company.Less
This book examines the business liquidation process — the winding up of the affairs of a company that has either decided voluntarily to liquidate or been forced to liquidate by its creditors. The contributors to the book have substantial hands-on experience in the reorganization and liquidation of businesses, the sale of business assets, and management of commercial litigation. They share their approach to maximizing and creating value in the deteriorating and chaotic business environment that so often leads to a company going out of business. The legal forums for liquidation — bankruptcy, state receivership, federal receivership, and assignment for the benefit of creditors — are explained. The liquidator's role, powers, duties, oversight, and compensation are outlined and the special rules for bankruptcy trustees are set forth. The chapters also cover the major tasks of liquidation including investigation of the company, termination of employees, disposition of assets, evaluation of litigation, resolution of claim, distributions and ultimately, and the dissolution or “winding down” of the company.
