Of financial innovations and excesses

Article Abstract:

Within the financial services industry, innovations are either new investment products (such as zero coupon bonds) or new delivery and service systems (such as electronic funds transfer systems). Since 1979, the number of innovations in this industry has increased dramatically, due to deregulation, tax reform and computer technology. An assessment of these innovative products and services indicates that some of them create dislocations of financial resources, which offsets any benefit to the consumer. The benefits of, and causes behind, more than twenty financial innovations are analyzed; among these are included: money market investment accounts, super NOW accounts, zero coupons, IRAs, automatic teller machines, electronic securities trading, electronic funds transfer, interest rate swaps, adjustable rate securities, currency option loans, and high-yield 'junk' bonds.

United States, Banking industry, Analysis, Innovations, Financial services industry, Financial services, Product development, Speeches, lectures and essays, Bank marketing, American Finance Association, transcript, Van Horne, James C.

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The financial and operating performance of newly privatized firms: evidence from developing countries

Article Abstract:

This paper examines the change in the financial and operating performance of 79 companies from 21 developing countries that experienced full or partial privatization during the period from 1980 to 1992. We use accounting performance measures adjusted for market effects in addition to unadjusted accounting performance measures. Both unadjusted and market-adjusted results show significant increases in profitability, operating efficiency, capital investment spending, output, employment level, and dividends. We also find a decline in leverage following privatization but his change is significant only for unadjusted leverage ratios. Our results are generally robust when we partition our data into various subsamples. (Reprinted by permission of the publisher.)

Performance, Finance, Developing countries, Privatization, Privatization (Business)

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The relationship between firm investment and financial status

Article Abstract:

Firm investment decisions are shown to be directly related to financial factors. Investment decisions of firms with high creditworthiness (according to traditional financial ratios) are extremely sensitive to the availability of internal funds; less creditworthy firms are much less sensitive to internal fund availability. This large sample evidence is based on an objective sorting mechanism and supports the results of Kaplan and Zingales (1997), who also find that investment outlays of the least constrained firms are the most sensitive to internal cash flow. (Reprinted by permission of the publisher.)

Management, Investments, Financial management

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