1,720,987 research outputs found
Analysing, Planning and Valuing Private Firms
No full textThis book aims to provide a framework for the valuation of private corporations. Starting from the analysis of financial statements to understand where value comes from, to the appli-cation of valuation methods, this book tries to provide a list of tools and techniques to solve practical application drawbacks. Regarding the financial statement analysis, despite the consolidated use of financial ratios and scores, sometimes it is difficult to provide a complete picture of the company’s economic, financial, and strategic dynamics. The process of valuing private companies is not different from the process of valuing public companies. The present value is computed by discounting future cash flows with a proper rate that reflects the riskiness of the cash flows. However, when applying valuation techniques to private companies, there are two standard problems to overcome: the financial statements for private firms are likely to go back fewer years and have less detail; there is no market value for either debt or equity. In this book, we try to over-come these two criticalities by proposing some approaches to (1) forecast revenues, margins, and cash flows; (2) estimate the cost of capital for private corporations. Then we also provide a framework on how to use relative valuation techniques (multiple) that despite their simplicity hide some pitfalls in the application
Essays on Bank Risk
Full text linkThis thesis comprises research on banks’ risk. The work is presented in three empirical essays.
The first essay investigates the relationship between bank capital and liquidity and the impact of those connections on the market probability of default. Using quarterly balance sheet data of large European banks over the period 2005-2015 and various configurations of capital and liquidity; we first analyse through a simultaneous equation model the connections between capital and liquidity. The results of the model show a bidirectional positive relationship between capital and funding liquidity risk in line with the “financial fragility” and the “crowding out of deposits” hypotheses developed in theoretical papers. The results also indicate the importance of off-balance sheet exposures and the limitation of risk based capital ratios in explaining the relationship. Given the importance of capital and liquidity for financial stability, in the second part of the paper we explore whether those variables provide incremental information on banks’ risk. To do so, we use a factor model to analyse if leverage and funding liquidity risk are reflected in CDS spreads. We find that capital appears to have a large impact on CDS spread changes, while liquidity risk is priced only when it falls below the regulatory threshold.
The second essay examines the causal effect of bank credit rating changes on bank capital structure decisions. In this paper, we hypothesize that bank managers’ concern for credit ratings due to the discrete cost and benefits associated with different credit levels. Using a unique data set with quarterly detailed information on rating changes and bank’s balance sheets for 76 banks based in EU and US from 2005Q1 to 2015Q4, we find that rating changes matter for bank capital structure decisions. More precisely, we find that a downgrade event triggers reductions in leverage, long-term funding and lending. While upgrades do not cause capital structure adjustments. In doing our empirical exercise, we also exploit the asymmetric impact of rating changes of banks based in countries that experienced the sovereign debt crisis. This asymmetric effect leads to greater: capital adjustments, reductions in long-term funding and lending of banks from those stressed countries.
The third essay examines how bank risks affects the transmission mechanism of unconventional monetary policy measures taken by the Federal Reserve (FED) in response to the financial crisis. Using quarterly balance sheet data and employing a GMM approach, for a sample of 149 US banks over the period 2007 to 2016, I find that bank risk positions are relevant for the transmission mechanism through the bank lending channel during the FED Quantitative easing (QE) programmes. The empirical findings suggest that QE programs helped banks to supply new loans through the reduction of bank risk conditions, as perceived by financial market investors.abstractit
Financial fragmentation and SMEs’ access to finance
Full text linkThis paper focuses on the impact of financial fragmentation on small and medium enterprises (SMEs)’ access to finance. We combine country-level data on financial fragmentation and the ECB’s SAFE (Survey on the Access to Finance of Enterprises) data for 12 European Union (EU) countries over 2009-2016. Our findings indicate that an increase in financial fragmentation not only raises the probability of all firms to be rationed but also to be charged higher loan rates; in addition, it increases the likelihood of borrower discouragement and it impairs firms’ perceptions of the future availability of bank funds. Less creditworthy firms are even more likely to become credit rationed, suggesting a flight to quality effect in lending. However, our study also documents a potential adverse effect of increasing bank market power resulting from greater integration. This suggests that financial integration could impair firms’ financing, if not accompanied by policy initiatives aimed at maintaining an optimal level of competition in the banking sector
Large EU banks' capital and liquidity: Relationship and impact on credit default swap spreads
Full text linkThis paper explores the interrelations between bank capital and liquidity and their impact on the market probability of default. We employ an unbalanced panel of large European banks with listed credit default swap (CDS) contracts during the period 2005-2015, which allow us to consider the impact of the recent financial crisis. Our evidence suggests that bank capital and funding liquidity risk as defined in Basel III have an economically meaningful bidirectional relationship. However, the effect on CDS spread is ambiguous. While capital appears to have a relatively large impact on CDS spread changes, liquidity risk is priced only when it falls below the regulatory threshold
Can Small Firms Innovate Away From Competition?
Full text linkIn this paper we test whether innovation allows entrepreneurs to navigate their way out of highly com-petitive markets into calmer waters where competitive pressures are reduced. In doing so, we establishthree key findings: first, in line with the Schumpeterian creative destruction theory, our results docu-ment a decreasing marginal effect of prior innovation on consecutive perceived competition, an effectthat is stronger for small firms operating in more competitive markets; then, we highlight the differ-ent synergistic effects generated by the complementarity between tangible and intangible innovationactivities in competitive and oligopolistic markets that support the Schumpeterian view; finally, weestablish that such synergies have proven crucial in navigating out of the COVID-19 pandemic
Frontier Topics in Banking: Investigating New Trends and Recent Developments in the Financial Industry
No full textThe aim of this book is twofold: Firstly to focus on the development of new instruments and topics in the financial industry. Secondly to analyze the development of “old” themes applied to different international contexts, such as cross-border banking and the role of government financial resources in China. With these goals in mind, the book explores the investigation of new instruments for the financing of SMEs and new ventures, such as mini bonds and equity crowdfunding. Additionally, it covers the field of corporate governance and corporate social responsibility including financial inclusion, gender roles, disclosure, social media roles and litigation. The book also investigates the choices followed by the Royal Swedish Academy in the selection of Nobel laureates in economics science to analyze their influence on the financial industry. Geared to banking academics, researchers and students, this book uncovers the most prominent issues within the banking industry today
Analisi e valutazione finanziaria d'impresa
No full textIl presente contributo ha il fine di illustrare i principali strumenti per l’analisi e la valutazione finanziaria d’impresa modificando l’ottica, vale a dire indirizzandosi principalmente a imprenditori, direttori finanziari e consulenti di piccole e medie imprese. Prediligendo un taglio applicativo, intende al contempo fornire al lettore un approfondimento concettuale rigoroso ma non prolisso. Più nello specifico, il presente testo si distingue dagli altri contributi simili per i seguenti aspetti: – integra le analisi a valore con quelle riconducibili agli indici e flussi con un taglio semplice e intuitivo; – riporta un modello per la stima dei costi del dissesto, particolarmente adatto per la valutazione delle imprese in crisi; – elabora un nuovo metodo derivato dai più noti modelli discounted cash flow ed EVA, particolarmente adatto per la valorizzazione delle piccole e medie imprese; – elabora una metodologia di valutazione tramite multipli di borsa che considera le specificità reddituali e finanziarie dell’impresa da valutare
Dynamic Discouraged Borrowers
Full text linkThis paper investigates the intertemporal dynamics of borrower discouragement. Using a cross-country panel of firms that were resurveyed across the waves of the Survey on Access to Finance of Enterprises, we find that the probability of transitioning into discouragement changes over the business cycle and across bank financing products: term loans and credit lines. Past credit experiences and firm-level risk indicators are important factors in explaining the probability of being discouraged over time.We also analyse the transitioning out of discouragement, and show that firm-level improvements in credit history and profit outlook drive the transitioning out of the discouragement state
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