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Firms’ Financing Constraints: Do Perceptions Match the Actual Situation?
Get PDFThis paper draws on the SAFE survey on access to finance for a sample of 11,886 firms in the Euro Area which are matched with their nearest neighbour in a balance sheet dataset with 2.3 million firms. We investigate the role of firm characteristics with respect to firms’ perceived financing constraints and actual financing constraints in the period 2009-2011. Low-profit firms are more likely to face actual financing constraints. Low working capital and high leverage ratios explain actual financing constraints to a lesser extent. Further, firms are more likely to perceive access to finance problematic when they have more debt with short-term maturity. Finally, firm age, but not size, is important in explaining both the perceived and the actual financial constraints
Spillover in Euro Area Sovereign Bond Markets
Get PDFThis paper applies the Diebold and Yilmaz (2009, 2012) spillover methodology to euro area sovereign bond markets. Our analysis identifies different phases of interaction in those markets in recent years. We find a substantial increase in spillover between euro area sovereign bond markets coinciding with the bailout of Bear Stearns in March 2008. The phase of the euro area crisis from the first Greece bailout in May 2010 until the end of 2011 saw a reversal of the longstanding pattern whereby events in core euro area member state sovereign bond markets exercised a positive net influence on the periphery. In particular, the first Greece bailout coincided with significant positive net spillover from peripheral member states to the core countries. More recently, improved market conditions have seen the pre-2008 pattern re-established with the core having a stronger net impact on peripheral euro area sovereign bond markets. The analysis points to Greece having become relatively detached from other bond markets since its second bailout in March 2012. The spillover index and its components can be updated on an ongoing basis as new data become available and can provide useful information to policymakers and analysts alike.NB: Corrigendum http://www.esr.ie/article/downloadSuppFile/340/12
Deciphering Ireland’s Macroeconomic Imbalance Indicators: Statistical Considerations
Get PDFThe recent financial crisis has highlighted the importance of the early detection and correction of macroeconomic vulnerabilities. This has led the European Commission to develop the Macroeconomic Imbalance Procedure (MIP). Under the MIP, the potential vulnerabilities of EU countries are assessed using standard indicators relating to internal and external macroeconomic imbalances. These indicators, however, assume cross-country data are comparable, despite economic and financial structures being very heterogeneous. This is not the case. This paper finds that for countries with substantial international investment, such as Ireland, five of the eleven indicators are materially distorted by financial and non-financial multinational activities. This paper disaggregates these five affected indicators into multinational and indigenous Irish components, insofar as the existing data allows. It finds that for Ireland the MIP indicators underestimate some external imbalances, significantly overestimate private sector credit imbalances and underestimate the deleveraging of the financial sector. Adjusting the indicators to allow for country-specific factors can help diagnose the underlying imbalance, while reducing instances of the MIP highlighting false positives
Discretionary Medical Cards: Ethical Considerations
Get PDFThe General Medical Service (GMS) scheme governs access to medical cards in Ireland. A medical card entitles the holder to free health services, including free GP care, inpatient and outpatient hospital services, and prescription medications. Eligibility for medical card cover is based on income, while those whose income is above the maximum threshold for eligibility may be granted a Discretionary card. This is on the basis that to fail to offer these cards would result in ‘exceptional personal and financial burdens arising from medical or social circumstances’ being placed on the applicant. In practice, this scheme covers many people with chronic, life-limiting illnesses. A recent governmental review of the Discretionary medical card scheme led to the cancellation and subsequent re-approval of 15,000 cards, and was met with much controversy both in the Dáil and in the media. Ultimately the ensuing debate centred on the issue of resource allocation, and arguments were made for and against the current means-based system of card allocation versus a disease-based model where factors other than income are taken into account in order to determine an applicant’s eligibility for cover. This article examines some of the arguments both in favour and against these approaches, and questions whether the proposed changes to the scheme, as recommended by the Report of the Expert Panel on Medical Need for Medical Card Eligibility, meet the HSE’s own stated policy targets of equity, fairness, proportionality, openness and accountability, solidarity, and sustainability
A Formal Investigation of Inequalities in Health Behaviours After Age 50 on the Island of Ireland
Get PDFTo examine income-related inequality in smoking, low physical activity and frequent alcohol consumption we calculate concentration indices using data on older adults from the Republic of Ireland and Northern Ireland. Smoking and low physical activity are more concentrated among those with lower incomes in both regions, while frequent alcohol consumption is more concentrated among those with higher incomes. Although results for the two jurisdictions are quite similar, low levels of physical exercise appears to be more highly concentrated amongst lower income groups in the North. In conclusion, inequalities in health behaviours exist among older people on the Island of Ireland
Policy and Economic Change in the Agri-Food Sector in Ireland
Get PDFIn the agri-food sector, recent policy reforms such as the milk quota abolition and CAP reform as well as robust export growth have increased the sector’s visibility in public debate. In this paper we assess the economic characteristics of the sector and consider prospects for expansion. We also assess challenges to expansion, including land access, elderly age profile, the uptake of technologies, the financial strength of this sector, increasing price volatility and environmental constraints. The paper also highlights income challenges in terms of low viability rates that affect particularly the drystock sectors and the severe impact that the economic downturn has had on off-farm income. Also as the sector is highly influenced by policy, both in terms of regulation and in terms of impact of agricultural subsidies on total income levels, we consider the impact of recent CAP reforms
Outsourcing Foreign Services and the Internet: Evidence from Firm Level Data
Get PDFWe analyse the link between internet use and foreign sourcing of services and materials inputs. In our empirical analysis using firm level data for Ireland we find, among firms that a priori all purchase inputs abroad, that those who commenced outsourcing from suppliers over the internet (“Adopters”) experience significantly higher growth rates of services offshoring. This result shows in a variety of econometric methods (OLS, Propensity Scoring (Kernel, Nearest Neighbour and Caliper Matching)). Adopting the internet for outsourcing induced an increase in the share of foreign services by 3.2-4.0 per cent
Non-Bank Financing in Ireland: A Comparative Perspective
Get PDFThis research paper provides a statistical overview of which firms use non-bank financing in Ireland as well as a comparison vis-à-vis other Eurozone countries. We include a wide range of both non-bank debt finance (issued debt, trade credit, loans from friends/family/business partners, mezzanine debt and peer-to-peer lending/crowdfunding) as well as equity finance (venture capital, business angel and equity from friends and family and business partners). We attempt to answer the following research questions: (a) what firm characteristics are correlated with applications for, and usage of, specific types of bank finance? (b) What groups of firms or industries are more likely to apply for and use different types of non-bank finance? (c) Do Irish SMEs differ from other European enterprises and, if so, in what way? This overview should help provide evidence with which to understand the policy options available to diversify the financing options of Irish enterprises beyond their current reliance on bank lending
The Relative Age Effect and Under-21 Irish Association Football: A Natural Experiment and Policy Recommendations
Get PDFA relative age effect refers to the presence of a bias towards relatively older children assembled collectively within a selection year. We consider this in association football (soccer) for Republic of Ireland under twenty-one international footballers over two intervals: from November 1981 to November 1994 and from September 2007 to May 2013. As the registration date for organised soccer in Ireland changed between both periods, these intervals provide scope for a natural experiment to test for a shifting relative age effect. The study confirms the existence of a relative age effect, with a selection bias toward players born in the earlier months of the registration year for both intervals