The statistics in Table 1 are taken from the article ‘Interbank Liquidity Crunch and the Firm Credit Crunch: Evidence from the 2007−2009 Crisis’
In Table 1 above,
‘No. of banking relationships’ is the number of different banks that lend to a firm as of 2007:Q2.
‘Change in credit’ is change in the (log) level of all the loans for each firm-bank pair between 2009:Q2 and 2007:Q2, where the initial interbank shock was August 2007.
‘Interbank borrowing’ is the ratio of total interbank borrowing in 2007:Q2 for a bank;
‘Foreign interbank borrowing’ is the part obtained abroad; and
‘Domestic interbank borrowing’ is the part obtained from other banks in Portugal.
‘Bank size’ is the log of total assets of the bank.
‘Bank liquid assets’ is the ratio of cash to total assets of the bank.
‘Bank return on assets’ is the profits of the bank divided by its total assets.
‘Bank non-performing loans (NPL)’ is the fraction of loans that are in default as a fraction of total assets of the bank.
‘Bank capital’ is the total bank capital as a fraction of the bank’s total assets.
‘Firm size’ is the log of total assets of the firm.
‘Firm age’ is the age of the firm measured using the date of the firm’s incorporation (ln(1+age)).
‘Firm employees’ is the log of number of employees of a firm.
Discuss the statistics presented in Table 1. What do the statistics suggest for the purpose of this study?
Do the statistics allow you to identify, as the authors claim, that changes in the interbank borrowing ratio relate to the ability of financial institutions to substitute funds from alternative sources? Explain your answer.
The statistics in Table 1 are taken from the article ‘Interbank Liquidity Crunch and the Firm...
We study the credit supply effects of the unexpected freeze of
the European interbank market, using exhaustive Portuguese
loan-level data. We find that banks that rely more on interbank
borrowing before the crisis decrease their credit supply more
during the crisis. The credit supply reduction is stronger for
firms that are smaller, with weaker banking relationships. Small
firms cannot compensate the credit crunch with other sources of
debt. Furthermore, the impact of illiquidity on the credit crunch
is stronger for...
Read the attached article. Do you feel one style of banking
control is more stable than the other? Why? Does one banking method
minimize market volatility and risk better or is it just packaged
differently? Do you feel the US (Western) Banking system can better
control the patterns of behavior going forward that have caused
economic damage in the past? Should the Fed continue its stimulus
policy, reduce it or abandon it entirely (Google some recent
articles to research this)? (Please...
18-1. (Related to Checkpoint 18.1 on page 573) (Measuring firm liquidity) The following table contains current asset and current liability balances for Deere and Company (DE): 2008 2007 2006 1,687,500 ($ thousands) Current assets Cash and cash equivalents Short-term investments Net receivables Inventory Total current assets 2,211,400 0 3,944,200 3,041,800 9,197,400 2,278,600 1,623,300 3,680,900 2,337,300 9,920,100 3,508,100 1,957,300 7,152,900 Current liabilities Accounts payable Short-term/current long-term debt Other current liabilities Total current liabilities 6,562,800 8,520,500 4,666,300 8,121,200 3,186,100 9.969,400 2,766,000 15,921,500...
Using the financial ratios provided in Table 4.1 and the financial statement infor- mation presented below for Costco Wholesale Corporation, calculate the follow ing ratios for Costco for both 2013 and 2014: a. Gross profit margin b. Operating profit margin c. Net profit margin d. Times-interest-earned (or coverage) ratio e. Return on stockholders' equity 1. 1 f. Return on assets g. Debt-to-equity ratio h. Days of inventory . Inventory turnover ratio j. Average collection period Based on these ratios, did...
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Please read the facts of the case and prepare answers for the
following questions :
1 – What is the relevance of the $2,000 monthly payment
to Dave Verden on the analysis of Jones’ financing needs?
2 – What metrics could you use to compare the historical financial
results for Jones with the projected financial results under the
four defined scenarios?
3 – Other than financing needs, what other issues should Jones
address as he considers the different growth
scenarios?...
Please help me answer theses practice questions
QUESTION 2 Which of the following can a country implement to protect local industries (e.g. bicycles) according to the video on the deceptive promise of free trade? Border walls local training programs to strengthen local industries protectionist policies such as tarrifs creating a high minimum wage locally governments can't do anything QUESTION 3 Which of the following European countries has a trade surpluse with the US as well as most other European countries...
CASE 1-5 Financial Statement Ratio Computation Refer to Campbell Soup Company's financial Campbell Soup statements in Appendix A. Required: Compute the following ratios for Year 11. Liquidity ratios: Asset utilization ratios:* a. Current ratio n. Cash turnover b. Acid-test ratio 0. Accounts receivable turnover c. Days to sell inventory p. Inventory turnover d. Collection period 4. Working capital turnover Capital structure and solvency ratios: 1. Fixed assets turnover e. Total debt to total equity s. Total assets turnover f. Long-term...