The typical micro finance clients are self-employed, household-based entrepreneurs & low-income persons that do not have access to formal financial institutions and suffers lack of business skill. Micro entrepreneurs face many hurdles in getting startup financing, and they sometimes lack the skills necessary to manage the financial aspect of their business. They are unable to choose business line and in large number of cases they indulge in particular business by default. As a result, many micro entrepreneurs cannot grow and develop their business beyond a micro enterprise, while even few fail to earn their livelihood. The paper discuss, importance of capacity development as part of professional activity of Micro Finance Institute along with extending micro credit, and argues that for overall growth of client, MFIs and a nation the strategy is sine-qua-non.
{"title":"Capacity Building, Pillar of Micro Finance","authors":"V. Sapovadia","doi":"10.2139/SSRN.975088","DOIUrl":"https://doi.org/10.2139/SSRN.975088","url":null,"abstract":"The typical micro finance clients are self-employed, household-based entrepreneurs & low-income persons that do not have access to formal financial institutions and suffers lack of business skill. Micro entrepreneurs face many hurdles in getting startup financing, and they sometimes lack the skills necessary to manage the financial aspect of their business. They are unable to choose business line and in large number of cases they indulge in particular business by default. As a result, many micro entrepreneurs cannot grow and develop their business beyond a micro enterprise, while even few fail to earn their livelihood. The paper discuss, importance of capacity development as part of professional activity of Micro Finance Institute along with extending micro credit, and argues that for overall growth of client, MFIs and a nation the strategy is sine-qua-non.","PeriodicalId":322489,"journal":{"name":"ERPN: Other Investors (Sub-Topic)","volume":"31 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2007-03-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114983457","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines how costly financial contracting and weak investor protection influence the cross-border operational, financing and investment decisions of firms. We develop a model in which product developers have a comparative advantage in monitoring the deployment of their technology abroad. The paper demonstrates that when firms want to exploit technologies abroad, multinational firm (MNC) activity and foreign direct investment (FDI) flows arise endogenously when monitoring is nonverifiable and financial frictions exist. The mechanism generating MNC activity is not the risk of technological expropriation by local partners but the demands of external funders who require MNC participation to ensure value maximization by local entrepreneurs. The model demonstrates that weak investor protections limit the scale of multinational firm activity, increase the reliance on FDI flows and alter the decision to deploy technology through FDI as opposed to arm's length licensing. Several distinctive predictions for the impact of weak investor protection on MNC activity and FDI flows are tested and confirmed using firm-level data.
{"title":"Multinational Firms, FDI Flows and Imperfect Capital Markets","authors":"Pol Antràs, Mihir A. Desai, C. Foley","doi":"10.2139/ssrn.957338","DOIUrl":"https://doi.org/10.2139/ssrn.957338","url":null,"abstract":"This paper examines how costly financial contracting and weak investor protection influence the cross-border operational, financing and investment decisions of firms. We develop a model in which product developers have a comparative advantage in monitoring the deployment of their technology abroad. The paper demonstrates that when firms want to exploit technologies abroad, multinational firm (MNC) activity and foreign direct investment (FDI) flows arise endogenously when monitoring is nonverifiable and financial frictions exist. The mechanism generating MNC activity is not the risk of technological expropriation by local partners but the demands of external funders who require MNC participation to ensure value maximization by local entrepreneurs. The model demonstrates that weak investor protections limit the scale of multinational firm activity, increase the reliance on FDI flows and alter the decision to deploy technology through FDI as opposed to arm's length licensing. Several distinctive predictions for the impact of weak investor protection on MNC activity and FDI flows are tested and confirmed using firm-level data.","PeriodicalId":322489,"journal":{"name":"ERPN: Other Investors (Sub-Topic)","volume":"6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2007-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133843804","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Private equity funds and hedge funds are both alternative asset classes that are continuously growing in importance. Although they have different focuses, they share some characteristics. First of all, both have or allegedly have a significant impact on the economy as well as the financial system they operate in. Therefore, the question of a potential regulation of both asset classes arises. Due to the lack of sophisticated knowledge about the differences of these asset classes, market players fear that attempts to regulate hedge funds will adversely affect private equity funds. Besides the regulatory issue, there are several other links between these two asset classes that have to be looked at. The relationship between those two asset classes is therefore of general importance. Last months' developments in the hedge fund industry (e.g. rumors about turbulences as well as hedge funds forcing the dismissal of the CEO of Deutsche Borse) have now even led to a broad public debate about private equity and hedge funds. At least in Germany the debate has been partly fueled by the fact that both types of funds are highly funded by institutional investors from abroad. Due to this the debate widened and included criticism on Anglo-Saxon style capitalism as well. In the light of the last German elections, hedge funds and private equity funds have even been compared to locusts, notorious for exhausting whole countries. However, the distinction between hedge funds and private equity funds remains very vague in this discussion, so that deep mistrust is spread among the public opinion against these new, mostly unknown and misunderstood types of investors. For this reason it is important to * discuss the arguments for or against regulation, * look at the major links between the two asset classes, * look at the major differences that exist between the asset classes, and * conceive a set of criteria to clearly distinguish between both types of funds. The purpose of this paper is to comment on possible solutions to the above mentioned tasks. It outlines preliminary thoughts and findings. Further, it comments on the steps that we think should be taken to further enhance perception of private equity funds as opposed to hedge funds from a public as well as a regulatory perspective.
{"title":"Private Equity Funds and Hedge Funds: A Primer","authors":"A. Achleitner, C. Kaserer","doi":"10.2139/ssrn.1109100","DOIUrl":"https://doi.org/10.2139/ssrn.1109100","url":null,"abstract":"Private equity funds and hedge funds are both alternative asset classes that are continuously growing in importance. Although they have different focuses, they share some characteristics. First of all, both have or allegedly have a significant impact on the economy as well as the financial system they operate in. Therefore, the question of a potential regulation of both asset classes arises. Due to the lack of sophisticated knowledge about the differences of these asset classes, market players fear that attempts to regulate hedge funds will adversely affect private equity funds. Besides the regulatory issue, there are several other links between these two asset classes that have to be looked at. The relationship between those two asset classes is therefore of general importance. Last months' developments in the hedge fund industry (e.g. rumors about turbulences as well as hedge funds forcing the dismissal of the CEO of Deutsche Borse) have now even led to a broad public debate about private equity and hedge funds. At least in Germany the debate has been partly fueled by the fact that both types of funds are highly funded by institutional investors from abroad. Due to this the debate widened and included criticism on Anglo-Saxon style capitalism as well. In the light of the last German elections, hedge funds and private equity funds have even been compared to locusts, notorious for exhausting whole countries. However, the distinction between hedge funds and private equity funds remains very vague in this discussion, so that deep mistrust is spread among the public opinion against these new, mostly unknown and misunderstood types of investors. For this reason it is important to * discuss the arguments for or against regulation, * look at the major links between the two asset classes, * look at the major differences that exist between the asset classes, and * conceive a set of criteria to clearly distinguish between both types of funds. The purpose of this paper is to comment on possible solutions to the above mentioned tasks. It outlines preliminary thoughts and findings. Further, it comments on the steps that we think should be taken to further enhance perception of private equity funds as opposed to hedge funds from a public as well as a regulatory perspective.","PeriodicalId":322489,"journal":{"name":"ERPN: Other Investors (Sub-Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2005-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127670334","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In spite of the general unstable political and economical situation that existed in Palestine, the financial sector has witnessed a positive increase in the last ten years. It consisted of four groups: First: The banking system, which includes 22 Arab, foreign, and Palestinian banks with 135 branches (PMA, 2005). Second: Insurance sector, which includes nine insurance corporations. Third: Other financial institutions including moneychangers and microfinance firms. Fourth: The Palestinian stock exchange market dealing only with par- value common shares of 25 Palestinian corporations and one foreign corporation, among six private corporations operate as registered brokers. The size of banks operation in Palestine has grown significantly, as expressed by owner equity and total assets in the last decade. However, in spite of the significant increase in credit advances during the last period, it is still low compared to the value of deposits held by the banks. As for deposits, they have increased to $ 3976 millions in February 2005, which is equivalent to 90% of the Palestinian GDP, and it is more than most of the Arab states. Finally, various recommendations may be drawn regarding financial policy in Palestine. For example, to consider investments in local corporations as a part of the minimum requirements of credit to deposit ratio by the PMA, to encourage banks to invest in both primary and secondary markets in Palestine, to change the present legal entity of the PSE to a non -profit organization owned by insiders known as stakeholders, to issue the proposed law of companies.
{"title":"Palestine Country Profile: The Road Ahead for Palestine: Financial Policies Issues","authors":"N. Ṣabrī, R. Jaber","doi":"10.2139/SSRN.1098035","DOIUrl":"https://doi.org/10.2139/SSRN.1098035","url":null,"abstract":"In spite of the general unstable political and economical situation that existed in Palestine, the financial sector has witnessed a positive increase in the last ten years. It consisted of four groups: First: The banking system, which includes 22 Arab, foreign, and Palestinian banks with 135 branches (PMA, 2005). Second: Insurance sector, which includes nine insurance corporations. Third: Other financial institutions including moneychangers and microfinance firms. Fourth: The Palestinian stock exchange market dealing only with par- value common shares of 25 Palestinian corporations and one foreign corporation, among six private corporations operate as registered brokers. The size of banks operation in Palestine has grown significantly, as expressed by owner equity and total assets in the last decade. However, in spite of the significant increase in credit advances during the last period, it is still low compared to the value of deposits held by the banks. As for deposits, they have increased to $ 3976 millions in February 2005, which is equivalent to 90% of the Palestinian GDP, and it is more than most of the Arab states. Finally, various recommendations may be drawn regarding financial policy in Palestine. For example, to consider investments in local corporations as a part of the minimum requirements of credit to deposit ratio by the PMA, to encourage banks to invest in both primary and secondary markets in Palestine, to change the present legal entity of the PSE to a non -profit organization owned by insiders known as stakeholders, to issue the proposed law of companies.","PeriodicalId":322489,"journal":{"name":"ERPN: Other Investors (Sub-Topic)","volume":"33 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124747372","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper presents new evidence on the origins of investment management companies. Specifically, we examine the characteristics and nature of those "parent" fund companies from which at least one of their key fund manager personnel departed to establish their own independent firms. Covering the period 1980 and 2003, we create a unique hand-collected database of money management firm founders and their "parents." We find that larger, more reputable and more diversified firms with a significant presence in growth-oriented investment objectives are more likely to produce start-ups. Coming from larger companies increases the time it takes for a start-up to attain significant assets under management. Fund managers with experience in more diversified firms and those that are dominated by growth funds experience shorter time to "significant" assets. Locating a start-up geographically closer to a founder's previous employer results in a faster time to market. An analysis of the similarities between parent and start-ups' stock holdings shows that there is almost double the commonality of stocks held, than previously documented for competing mutual funds. The main driver of commonality in stock selection is the number of founders coming from a single parent firm.
{"title":"Fund Managers' Institutional Background and the Birth of Investment Management Companies","authors":"R. Faff, J. Parwada, Joey (Wenling) Yang","doi":"10.2139/ssrn.893481","DOIUrl":"https://doi.org/10.2139/ssrn.893481","url":null,"abstract":"This paper presents new evidence on the origins of investment management companies. Specifically, we examine the characteristics and nature of those \"parent\" fund companies from which at least one of their key fund manager personnel departed to establish their own independent firms. Covering the period 1980 and 2003, we create a unique hand-collected database of money management firm founders and their \"parents.\" We find that larger, more reputable and more diversified firms with a significant presence in growth-oriented investment objectives are more likely to produce start-ups. Coming from larger companies increases the time it takes for a start-up to attain significant assets under management. Fund managers with experience in more diversified firms and those that are dominated by growth funds experience shorter time to \"significant\" assets. Locating a start-up geographically closer to a founder's previous employer results in a faster time to market. An analysis of the similarities between parent and start-ups' stock holdings shows that there is almost double the commonality of stocks held, than previously documented for competing mutual funds. The main driver of commonality in stock selection is the number of founders coming from a single parent firm.","PeriodicalId":322489,"journal":{"name":"ERPN: Other Investors (Sub-Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130123938","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper analyzes market reactions triggered by announcements that hedge funds and private equity investors have purchased large blocks of voting rights. We argue that changes in shareholder wealth are related to the opportunity, possibility, and motivation of being an active blockholder who successfully reduces agency problems. We find positive abnormal returns following an announcement that an active shareholder has acquired at least 5% of a company's voting rights. Proxy variables for agency costs explain the market reaction only for investments of private equity funds. Considering the long-term stock price performance, we observe negative buy-and-hold abnormal returns especially for the hedge fund samples. We argue that this is because of the German corporate governance system, whereby hedge funds must align their interests with advisory board members. Therefore, we believe the distinct negative post-announcement stock performance of hedge fund targets may be a misinterpretation by the capital market of a hedge fund's abilities and motivations. It seems market participants do not believe hedge fund activism creates wealth effects in a manner comparable to private equity engagements.
{"title":"Hedge Funds versus Private Equity Funds as Shareholder Activists - Differences in Value Creation","authors":"M. Mietzner, D. Schweizer","doi":"10.2139/ssrn.1100945","DOIUrl":"https://doi.org/10.2139/ssrn.1100945","url":null,"abstract":"This paper analyzes market reactions triggered by announcements that hedge funds and private equity investors have purchased large blocks of voting rights. We argue that changes in shareholder wealth are related to the opportunity, possibility, and motivation of being an active blockholder who successfully reduces agency problems. We find positive abnormal returns following an announcement that an active shareholder has acquired at least 5% of a company's voting rights. Proxy variables for agency costs explain the market reaction only for investments of private equity funds. Considering the long-term stock price performance, we observe negative buy-and-hold abnormal returns especially for the hedge fund samples. We argue that this is because of the German corporate governance system, whereby hedge funds must align their interests with advisory board members. Therefore, we believe the distinct negative post-announcement stock performance of hedge fund targets may be a misinterpretation by the capital market of a hedge fund's abilities and motivations. It seems market participants do not believe hedge fund activism creates wealth effects in a manner comparable to private equity engagements.","PeriodicalId":322489,"journal":{"name":"ERPN: Other Investors (Sub-Topic)","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125600298","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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