Cash flows and credit cycles

Figueroa, Nicolás; Leukhina, Oksana

doi:10.1016/j.jbankfin.2017.10.013

Cited by 9 publications

(5 citation statements)

References 26 publications

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“…These papers draw focus on stationary equilibria, whereas we are analyzing dynamic simulation and the mapping to business cycles. Figueroa and Leukhina (2018) present a model in which adverse selection can drive movements in productivity; however, as with the other studies mentioned above, this is caused by compositional effects in which the 'bad' types are less productive entrepreneurs. Reichlin and Siconolfi (1998) analyze a similar adverse selection problem in a stationary overlapping-generations model, finding it can generate persistent endogenous cycles.…”

Section: Introductionmentioning

confidence: 88%

Lending standards, productivity, and credit crunches

Swarbrick

2021

Macroecon. Dynam.

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We propose a macroeconomic model in which adverse selection in investment amplifies macroeconomic fluctuations, in line with the prominent role played by the credit crunch during the financial crisis. Endogenous lending standards emerge due to an informational asymmetry between borrowers and lenders about the riskiness of borrowers. By using loan approval probability as a screening device, banks ration credit following increases in lending risk, generating large endogenous movements in TFP, explaining why productivity often falls during crises. Furthermore, the mechanism implies that financial instability is heightened when interest rates are low.

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Section: Introductionmentioning

confidence: 88%

Lending standards, productivity, and credit crunches

Swarbrick

2021

Macroecon. Dynam.

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“…10 Financial instability has also been studied in the closed economy context, including the work of Azariadis and Smith (1998), Aghion et al (1999), Reichlin and Siconolfi (2004), Myerson (2012), Matsuyama et al (2016) and Figueroa and Leukhina (2018). The mechanisms described in these papers are clearly significant in the present context because they demonstrate how entrepreneurs might prefer to invest less when rich than when poor, and their mechanisms generate cycles even without financial integration.…”

Section: Introductionmentioning

confidence: 90%

Volatile capital flows and financial integration: The role of moral hazard

Kikuchi

Stachurski

Vachadze

2018

Journal of Economic Theory

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We study a model in which income and capital flows between countries are jointly determined in a world economy with integrated financial markets. In a setting that combines risky entrepreneurial activity with moral hazard, we find that a shift from autarky to financial integration leads to boom-bust cycles in capital flows, output and consumption. Moral hazard causes cycles because financial intermediaries incentivize effort by insisting entrepreneurs take an equity share in their own projects. The size of this stake rises with wealth, discouraging entrepreneurship and inhibiting capital formation. The reverse is true when wealth falls, generating cycles.

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“…The state of liquidity in a firm is complemented by a firm's ability to meet its cash obligations and is also augmented by the statement of cash flows. According to Figueroa & Leukhina, a firm can have a billion in revenues and millions in profit but the accounting for all of these is based on the accrual method hence the state of liquidity can in thousands where too many of the sales were made on credit [15]. In this section, the most applicable ratio to check is the current ratio for years 2020 and 2021 financial statements.…”

Section: Liquidity Positionmentioning

confidence: 99%

Is Logitech a Good Investment after the Pandemic?

Xu¹

2022

Advances in Economics, Business and Management Research

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Investing is a critical decision for a large part of the population across the globe since it's a probabilistic question with a multiplicity of choices. At any given point and time, an investor is faced with the problem of numeracy of information about the investment, and he/she often succumbs to failure or succeeds with sheer luck for not knowing what matters before making an investment decision. In the wake of COVID-19, many businesses were affected due to the lockdowns and other restrictive measures that led to either lowered sales or the total closure of some establishments for a significant amount of time. However, although every crisis cripples many, there is always an opportunity for the strong to survive and others to come up as the best companies to invest in. In this paper, an analysis of the investment fitness of Logitech is performed, serving as an advisory tool for investors post COVID-19.

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Cash flows and credit cycles

Cited by 9 publications

References 26 publications

Lending standards, productivity, and credit crunches

Lending standards, productivity, and credit crunches

Volatile capital flows and financial integration: The role of moral hazard

Is Logitech a Good Investment after the Pandemic?

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