Factoring: A n Effective Financing Option to SMEs in China

Size: px
Start display at page:

Download "Factoring: A n Effective Financing Option to SMEs in China"

Transcription

1 Factoring: A n Effective Financing Option to SMEs in China FENG Yue Economics and Management Department, Nanjing Institute of Technology, P.R.China, Abstract: Factoring is a growing option of external financing for small and medium-size enterprises (SMEs) in China since its entry into WTO in The reason why there is considerable potential for factoring in China underlies three aspects: large funding gaps and serious difficulties in getting financial supports by SMEs, dramatic trade growth, and tremendous increase of factoring business itself in China as well as around the world. Data analysis also shows there is a good chance for factoring s further growth in China. Therefore, some recommendations are put forward to advance factoring in Chinese market in this paper, such as strengthening credit information infrastructure, enhancing legal and judicial system and training professional personnel. Keywords: Factoring, Financing, Small and Medium-size Enterprises 1 Introduction As accounted for 99% of total enterprises, small and medium size enterprises (SMEs) play an important role in increasing production, providing service, and creating jobs and so on. However,SMEs is facing many problems and market challenges in their efforts to develop and grow, and the funding gaps are vital for the firm s survival and growth. Because of such disadvantages of SMEs as asymmetric information and insufficient collateral which probably resulting in adverse selection and moral hazard, banks and other finance institutions cannot provide adequate credit supports to SMEs (Lin Yifu and Sun Xifang 2005; Xu Xianmei 2008). According to statistics, among the total credit balance RMB Yuan billion, only RMB Yuan billion is for township enterprises and RMB Yuan billion is for private enterprises, which account for only 2.72% and 1.34% respectively (Jiang Fuxin and Zhou Chunping 2008). Under the recession conditions of world economy due to the Subprime Mortgage Crisis in American, traditional credit at most commercial banks is being tightened significantly, and it is more and more difficult for SMEs to obtain financing. The existence of these problems normally directs many SMEs to seek different alternatives of finance for their operations, and factoring is exactly the right alternative, a flexible and low cost financing vehicle for SMEs. Factoring, an external financing source for corporations and SMEs, is growing around the world, and a lot of financial literatures focus on this issue in recent years. Comparison to conventional financing technology, factoring with its unique advantages may be particularly useful in countries with weak judicial enforcement and imperfect records of upholding seniority claims, and this has been well supported by Leora Klapper (2006) and Marie H.R. Bakker, et al (2004) with discussion of some factoring cases in emerging economies and Eastern Europe. A certain kind of factoring, that is reverse factoring is also discussed by some researchers, and the case of the Nafin reverse factoring program in Mexico is illustrated as a successful example by Leora Klapper. The choice of factoring as a financing source is not only based on firm s demographic characteristics, but also on some additional factors, such as the availability of credit to firms, the collateral requirements by banks and its value, the value of the firm s debt, and also whether the business is experiencing financing difficulties (Khaled Soufani 2005). There is only a little literature focusing on factoring in China, but China is a rising star in factoring among developing and transition countries. The purpose of this paper is to give a small contribution to factoring field in China. In the next section, we present a theoretical analysis on the reasons why there is considerable potential factoring market in China. And subsequently we make a time-series data analysis and a comparison of factoring turnovers among China and some developed countries, and we find there exists large room to develop factoring in China in the third section. And then we put forward some 318

2 recommendations on how to effectively advance factoring business in China, such as strengthening credit information infrastructure, enhancing law system and training professional personnel in the fourth section. In the last section, we provide conclusions and some suggestions for future research. 2 Potential Factoring Market for SMEs in China 2.1 On the aspect of SMEs: large demand and huge difficulty in financing SMEs face significant funding gaps and thus have a large demand for external financing due to its poor capability of making accumulations and profits. But the imperfection of Chinese security market makes it very difficult for SMEs with small scale and low credit score to obtain capital support by issuing stocks and bonds, and also the imperfection of Chinese security market makes bank loan to be the primary funding source for SMEs. Taking SMEs in Shanghai as an example, the ratio of bank loans to their all external financing is even higher than 70%. Nevertheless, even heavily depending on bank loan comparison to large size enterprises, SMEs can get less bank loan at more strict terms, because commercial banks usually put more constraint on SMEs. According to a fresh statistics, the fraction of bank loan to SMEs to overall bank loan is only 8%, which is obviously unbalanced with SMEs contribution of 1/3 GDP, 2/3 industry increased value, 38% export and 1/4 fiscal revenue. As for export firms which factoring mainly serving for, funding demand is largely increasing under the situation that their trade partners, mainly EU, American and Japanese enterprises, are in a downward economic condition. On the one hand, the importers in EU, American and Japanese ask for a deferred payment terms which causes a further lack of working capital for Chinese exporters, thus the exporters are dragged into a worse finance situation and they have to rely more on bank financing. On the other hand, banks put more strict conditions on lending contracts with SMEs in order to limit their risks of defaults because some Chinese SMEs have already gone bankrupt as the result of being affected by this financial crisis, thus, there occurs a vicious circle being difficult to obtain bank loan, then going bankrupt, then getting more difficult to obtain loan. In a word, financial crisis makes it more and more difficult for SMEs to looking for external funding opportunity. 2.2 On the aspect of export growth: factoring is especially suitable for international trade A factoring case is called international factoring when it involves four parties of clients: exporter, importer, exporter factor and importer factor. In recent years, international factoring developed rapidly and benefited a lot of foreign trade companies, especially small and medium size trade companies, with the advantages to be derived from an international factoring arrangement: working capital, credit risk protection and collection service for the exporter, while the importer benefits from buying on open account terms without the need to open letters of credit or to accept other payment conditions with a similar restrictive character. Due to the benefits of factoring to exporters and importers, it is more popular that the exporters and importers are outsourcing their credit and collection functions to international factors. Since China s entry into WTO in 2001, the export and import volume continuously increased four times at a more than 20% annual rate. The volume of export and import reached US Dollars 2, 562 billion, ranking the third in the world (only next to the U.S.A. and Germany), and the amount of export increased to US Dollars 1, 429 billion and only US Dollars 36.5 billion less than the top Germany in Although affected by financial crisis, both export and import turnover decreased in the first half of 2009, the increasing tendency of foreign trade in China is absolutely not changed. So, there is big room for factoring, especially international factoring in China. 2.3 On the aspect of factoring itself: developing popularly around the world In 2008 world total factoring turnover stands at Euro 1,325,111 million with an increasing of 190% compared to that in 1998, also in 2008 world total international factoring volume to be seen with the biggest growth of 20% compared to that in The Asian countries continued to gain in market share, 319

3 both in domestic factoring and in international factoring with each 35% growth rate. Meanwhile FCI itself grew to a membership of 245 members, located in 65 countries. Most of those members in developed countries have existed for many years and have abundant experience to let them the leaders in their respective markets. In most developing and transition countries, factoring is normally initially introduced and at its beginning stage, but factors in these countries can gain in Know-how by working closely with factors in developed countries. 3 Current Situation of Factoring in China At present there are 16 FCI members in china following the first FCI membership got by Bank of China in 1993, but factoring didn t attract much attention until the Ericsson case happened in March 2002, and from then on factoring industry experienced a rapid expansion from a very low base. In 2008, factoring volume reached Euro 55,000 million, which is more than 26 times compared to that in But compared with some biggest factoring business countries, such as the U.S.A., the U.K. and Japan, China is only a small factoring country. Table 1 shows the vertical and horizontal comparison and indicates large room for factoring industry development in China. Table 1 Factoring Turnover in China and Some Countries China U.S.A. U.K. Japan World (1)1(2)2 1 (1) (2) (1) (2) (1) (2) Total , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,016, , , , , ,134, , , , , ,301, , , , , ,325,111 Percent Change % 42.74% % % % Annul Growth % 3.62% 8.36% 10.57% 11.25% Source: Factors Chain International and calculation. Note: (1) represents factoring turnover (million euro) (2) represents percentage to world total (%) As an important branch of factoring, international factoring is normally the introductory and principal type of factoring in most developing and transition countries, Table 2 shows that China has become the biggest generator of international factoring business, with superior continued growth potential compared to other countries in the world. Table 2 Domestic and International Factoring Turnover in China and Some Countries Domestic International Percent Domestic International Volume1 Volume International Volume Volume Percent International (2008) (2003) (2003) (2003) (2008) (2008) China % 30,000 25, % U.S.A % 90,000 10, % 1.56% ,000 13, % Japan % 105,000 1, % 320

4 Total World % 1,148, , % Source: Factors Chain International and calculation. Note: 1Volume (million euro) Although there is a decrease in factoring business in the first half of 2009 in China, the potential for the longer term is confident. With the recovery of world economy and world trade in the second half of 2009, many SMEs, who are still facing the difficult time of limited access to working capital and limited availability of credit insurance for debtor risks, will be eager to use factoring as the first choice of financing. 4 Recommendations to Advance Factoring in China 4.1 Credit information infrastructures should be strengthened Factors provide working capital to sellers through purchasing the sellers accounts receivable at a discount. Whether the factors can successfully collect the accounts receivable depends on the creditworthiness of the buyers. The information about a firm s payment performance is vital to factors because the firm s record of paying its past obligations may be the best indicator of its ability to pay its future ones. A survey found that credit risk is negatively correlated with measures of formal information sharing (Jappelli and Pagano 2001). At present, there exists a big lack of financial system s information infrastructure in China. The missing is not only the financial information records, but also, even more, the awareness of credit records. To strengthen the credit information infrastructures by setting up both public credit registries and private credit bureaus should be a solution. 4.2 Legal and judicial environment should be enhanced A country s legal and judicial environment may play a critical role in driving factoring business. It involves many law rules to conduct a factoring, such as contract law, bankruptcy law, guaranty law, and private international law, etc. The lack of an effective legal and judicial system and relative supervisory measures may be the main obstacle to factoring in developing countries. In fact, there are countries with a strong rule of law that have significant amounts of factoring, examples include the United Kingdom, the United States of American, Japan, Austria, Denmark and Netherlands. The law system is getting more and more complete and healthy after the introduction of market mechanism to China, but there is still a big gap to meet the market need, especially to meet the requirement of factoring business. So, it is essential to enhance the legal and judicial environment in China. 4.3 Professional personnel should be trained Because factoring is usually a bundle of services: financing, the credit risk assumption service, and the collection service, employees who work in this area might be needed with a high level of comprehensive knowledge in the line of factoring. However, there exists a large shortage of financial talents due to the short history and small scale of factoring in China. Professional personnel should be trained in various ways. Learning from fellow traders in factoring developed countries by both inviting experts in and sending financial personnel abroad can be viewed as a useful method. For example, the case of the Nafin reverse factoring program in Mexico is regarded as a successful case and it is worth to be popularized in developing countries, so to learn from this mode in Mexico might be one of the feasible learning affairs. And another available way is to introduce talents in factoring special area directly from Wall Street and other factoring developed countries, particularly that a lot of employees lost their jobs in banks and other financial institutions during this financial crisis might be a good chance for attracting senior talents. 321

5 5 Conclusion On demand side, SMEs are popularly facing financing difficulties. While SMEs playing a more and more important role in economic growth and social stability, and also with their big growth in foreign trade, the funding gaps become the main hindrances for SMEs survival in the drastic competition. On supply side, factoring is a popular and growing source of external financing for business firms, particularly for SMEs because of its flexible and welcoming virtues in serving clients needs around the world. Therefore, there is considerable room for factoring in China. By means of strengthening credit information infrastructure, enhancing legal and judicial environment, and training professional personnel, factoring would become a kind of really effective financing technology for SMEs. Data limitations prevent a complete analysis to reveal what are important determinants for SMEs to their decision on financing by factoring, therefore, empirical tests should be one of the further research works. References [1]. LIN Yifu, SUN Xifang. Information, Informal Finance and SME Financing. Economic Research Journal, 2005 (7):35~44(in Chinese) [2]. XU Xianmei. Discussion on Small and Medium-sized Enterprises Financing. Journal of Nanjing University of Finance and Economics, 2008 (1):39~41,64(in Chinese) [3]. JIANG Fuxin, ZHOU Chunping. Transaction costs, Informal Finance and SME Financing. Forum of World Economics & Politics, 2009 (2):22~26(in Chinese) [4]. Leora Klapper. The role of factoring for financing small and medium enterprises. Journal of Banking & Finance, 2006,30(11): 3111~3130 [5]. Bakker, M., L. Klapper, G.F. Udell. Financing Small and Medium-Size Enterprises with Factoring: Global Growth in Factoring--and Its Potential in Eastern Europe. Working Paper No World Bank, Washington D.C. [6]. Khaled Soufani. On the Determinants of Factoring as a Financing Choice: Evidence from the UK. Journal of Economics and Business, 2002, 54(2): 239~252 [7]. Jappelli, T., M. Pagano. Information Sharing, Lending and Defaults: Cross-Country Evidence. Journal of Banking and Finance, 2001, 26: [8]. LU Fangfang, DUAN Yuanping. Research on China s Factoring Development under Sub-prime Mortgage Crisis. International Economics and Trade Research, 2009, 25 (7):50~54(in Chinese) [9]. ZHANG Tianqiao. On the Application of International Factoring in Small and Medium-sized import and Export Enterprises. Reformation and Strategy, 2008,24 (6):103~106(in Chinese) [10]. Tadeo A. Satta. Exploring the value of factoring as a finance option for small enterprises in emerging economies. Entrepreneurship and Innovation, 2006, 7(4):243~

保 理 在 中 国 情 境 下 的 融 资 作 用

保 理 在 中 国 情 境 下 的 融 资 作 用 所 属 领 域 : 资 产 证 券 化 Category: Asset securitization 发 表 语 言 : 英 文 In English 保 理 在 中 国 情 境 下 的 融 资 作 用 The financing role of factoring in China context Shuzhen Chen 1 School of Management, University of

More information

Contemporary Logistics. Two-factor Export Factoring: Optimal Option for Export-oriented SMEs Financing

Contemporary Logistics. Two-factor Export Factoring: Optimal Option for Export-oriented SMEs Financing Contemporary Logistics 06 (2012) 1838-739X Contents lists available at SEI Contemporary Logistics Journal homepage: www.seiofbluemountain.com Two-factor Export Factoring: Optimal Option for Export-oriented

More information

Boosting SMEs with Better and Innovative Financing Services

Boosting SMEs with Better and Innovative Financing Services ISSN 1816-6075 (Print), 1818-0523 (Online) Journal of System and Management Sciences Vol. 4 (2014) No. 2 Boosting SMEs with Better and Innovative Financing Services Wei Liu 1 1 Department of Integrated

More information

EFFECTS OF BANK MERGERS AND ACQUISITIONS ON SMALL BUSINESS LENDING

EFFECTS OF BANK MERGERS AND ACQUISITIONS ON SMALL BUSINESS LENDING EFFECTS OF BANK MERGERS AND ACQUISITIONS ON SMALL BUSINESS LENDING Allen N. Berger Board of Governors of the Federal Reserve System Wharton Financial Institutions Center RIETI Policy Symposium Japan s

More information

The Factoring Industry Worldwide & The Role of International Factoring

The Factoring Industry Worldwide & The Role of International Factoring The Factoring Industry Worldwide & The Role of International Factoring Erik Timmermans Secretary General IFG 1 Factoring Basics The Factoring Company provides flexible finance against the assignment of

More information

Trade Note September 15, 2006

Trade Note September 15, 2006 Public Disclosure Authorized 38239 Trade Note September 15, 2006 EXPORT FINANCING FOR SMEs: THE ROLE OF FACTORING Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized

More information

Outsourcing Accounts Receivable to Increase Cash Flow

Outsourcing Accounts Receivable to Increase Cash Flow Outsourcing Accounts Receivable to Increase Cash Flow Outsourcing Accounts Receivable to Increase Cash Flow In the current economic environment, small and medium-size businesses are facing unprecedented

More information

Factoring financing alternative for SMEs

Factoring financing alternative for SMEs Factoring financing alternative for SMEs Laura Giurca Vasilescu Faculty of Economy and Business Administration University of Craiova, Romania laura_giurca_vasilescu@yahoo.com Abstract Financing is necessary

More information

IFC Secured Transactions Advisory Project in China

IFC Secured Transactions Advisory Project in China IFC Secured Transactions Advisory Project in China 1 Background In 2004, the People s Bank of China (PBOC) recognized wide spread financing difficulties among small and medium enterprises (SMEs) and requested

More information

Credit Scoring of SME Using Credit Information Database. Satoshi Kuwahara CRD Association, Japan July, 2015

Credit Scoring of SME Using Credit Information Database. Satoshi Kuwahara CRD Association, Japan July, 2015 Credit Scoring of SME Using Credit Information Database Satoshi Kuwahara CRD Association, Japan July, 2015 1. What is CRD? 2. Background of CRD Establishment 3. Credit Bureau & Credit Database 4. Concrete

More information

Receivables Finance in Emerging Markets

Receivables Finance in Emerging Markets Receivables Finance in Emerging Markets How financial innovation can enhance social and economic development Executive Summary Andy Davis and Peter Chen June 2014 In the White Paper, the authors examine

More information

Specifics of national debt management and its consequences for the Ukrainian economy

Specifics of national debt management and its consequences for the Ukrainian economy Anatoliy Yepifanov (Ukraine), Vyacheslav Plastun (Ukraine) Specifics of national debt management and its consequences for the Ukrainian economy Abstract This article is about the specifics of the national

More information

Further Developments of Hong Kong s Offshore RMB Market: Opportunities and Challenges

Further Developments of Hong Kong s Offshore RMB Market: Opportunities and Challenges Further Developments of Hong Kong s Offshore RMB Market: Opportunities and Challenges Zhang Ying, Senior Economist In recent years, as the internationalization of the RMB has been steadily carrying out,

More information

The Determinants of Global Factoring By Leora Klapper

The Determinants of Global Factoring By Leora Klapper The Determinants of Global Factoring By Leora Klapper Factoring services can be traced historically to Roman times. Closer to our own era, factors arose in England as early as the thirteenth century, as

More information

Research on the Deposit Insurance Pricing Under the Marketing RMB Interest Rate

Research on the Deposit Insurance Pricing Under the Marketing RMB Interest Rate Research on the Deposit Insurance Pricing Under the Marketing RMB Interest Rate Lingyan Sun 1, Tianning Shi 1, Panlu Shi 1 1 School of Science, Nanjing University of Science and Technology, Nanjing, China.

More information

A Primer on Exchange Rates and Exporting WASHINGTON STATE UNIVERSITY EXTENSION EM041E

A Primer on Exchange Rates and Exporting WASHINGTON STATE UNIVERSITY EXTENSION EM041E A Primer on Exchange Rates and Exporting WASHINGTON STATE UNIVERSITY EXTENSION EM041E A Primer on Exchange Rates and Exporting By Andrew J. Cassey and Pavan Dhanireddy Abstract Opportunities to begin exporting

More information

After Bankruptcy: What You Need to Know

After Bankruptcy: What You Need to Know After Bankruptcy: What You Need to Know The Path to Creditworthiness Bankruptcy offers some resolution to your financial worries. However, it also carries negative consequences and major responsibilities

More information

Analysis on Financing Difficulties of Small and Medium-sized Enterprises in China and Corresponding Countermeasures

Analysis on Financing Difficulties of Small and Medium-sized Enterprises in China and Corresponding Countermeasures International Journal of Humanities and Social Science Vol. 3 No. 15; August 2013 Analysis on Financing Difficulties of Small and Medium-sized Enterprises in China and Corresponding Countermeasures Ping

More information

ECONOMIC FACTORING ROLE AND ITS ADVANTAGES COMPARED WITH DEBT COLLECTORS AND BANK CREDIT TO SMEs IN ALBANIA

ECONOMIC FACTORING ROLE AND ITS ADVANTAGES COMPARED WITH DEBT COLLECTORS AND BANK CREDIT TO SMEs IN ALBANIA ECONOMIC FACTORING ROLE AND ITS ADVANTAGES COMPARED WITH DEBT COLLECTORS AND BANK CREDIT TO SMEs IN ALBANIA Shpresa Çela 1 Dr. Faculty of Economics, University of Tirana sh_cela@hotmail.com +355 68 20

More information

Sustainable financing solutions at times of crisis How to finance your business through factoring? Bucharest, October the 6-th, 2009

Sustainable financing solutions at times of crisis How to finance your business through factoring? Bucharest, October the 6-th, 2009 Sustainable financing solutions at times of crisis How to finance your business through factoring? Bucharest, October the 6-th, 2009 Dan Stoica, RomFactor 1 Agenda What is happening with companies in the

More information

Loan Capital Formation Strategy of Companies I.D. Anikina*

Loan Capital Formation Strategy of Companies I.D. Anikina* Abstract Loan Capital Formation Strategy of Companies I.D. Anikina* Defines of principles, goals, objectives, stages and factors of loan capital companies. Analyzed the main methods of forming loan capital

More information

Receivables Finance & Protection

Receivables Finance & Protection Receivable management in China Receivables Finance & Protection General Management / Jens Hoter / 23.09.2009 / Page 1 of 14 Index General Environment in China Present Market Protection Business Receivables

More information

Annual Economic Report 2015/16 German council of economic experts. Discussion. Lucrezia Reichlin, London Business School

Annual Economic Report 2015/16 German council of economic experts. Discussion. Lucrezia Reichlin, London Business School Annual Economic Report 2015/16 German council of economic experts Discussion Lucrezia Reichlin, London Business School Bruegel Brussels, December 4 th 2015 Four parts I. Euro area economic recovery and

More information

Study on the financing methods of China's listed companies

Study on the financing methods of China's listed companies 2011 3rd International Conference on Information and Financial Engineering IPEDR vol.12 (2011) (2011) IACSIT Press, Singapore Study on the financing methods of China's listed companies Xiya Luo 1 School

More information

International Factoring. Milan, 2014

International Factoring. Milan, 2014 International Factoring Milan, 2014 Agenda UBI FACTOR What is Factoring International Factoring Differences between Factoring and Banking Mutual Benefits 2 A Leader in the Italian and European Factoring

More information

Small and Medium-Sized Enterprise Human Resources Management Outsourcing Feasibility Study in China

Small and Medium-Sized Enterprise Human Resources Management Outsourcing Feasibility Study in China International Journal of Business and Social Science Vol. 5, No. 7; June 2014 Small and Medium-Sized Enterprise Human Resources Management Outsourcing Feasibility Study in China Hepeng School of Management

More information

Credit Guarantees for Small Business Lending

Credit Guarantees for Small Business Lending Credit Guarantees for Small Business Lending -Experiences of a small business credit guarantee company Contents Importance of SMEs in the Chinese economy SMEs current access to finance Current status of

More information

Forecasting Chinese Economy for the Years 2013-2014

Forecasting Chinese Economy for the Years 2013-2014 Forecasting Chinese Economy for the Years 2013-2014 Xuesong Li Professor of Economics Deputy Director of Institute of Quantitative & Technical Economics Chinese Academy of Social Sciences Email: xsli@cass.org.cn

More information

INTERNATIONAL FACTORING A VIABLE FINANCING SOLUTION FOR FIRMS

INTERNATIONAL FACTORING A VIABLE FINANCING SOLUTION FOR FIRMS Finances - Accounting INTERNATIONAL FACTORING A VIABLE FINANCING SOLUTION FOR FIRMS Assoc. Prof. Ph.D Giurc Vasilescu Laura University of Craiova Faculty of Economy and Business Administration, Craiova,

More information

Small and Medium-sized Enterprises (SME) Forum

Small and Medium-sized Enterprises (SME) Forum Introduction to the Forum The was established in 2005 and acts as a platform for European SMEs to share experiences and provide practical information to support their business success in China. The Forum

More information

SMEs Access to Financial Services: Bankers Eye. Evelyn Mweta Richard, Neema Geoffrey Mori

SMEs Access to Financial Services: Bankers Eye. Evelyn Mweta Richard, Neema Geoffrey Mori Chinese Business Review, ISSN 1537-1506 February 2012, Vol. 11, No. 2, 217-223 D DAVID PUBLISHING SMEs Access to Financial Services: Bankers Eye Evelyn Mweta Richard, Neema Geoffrey Mori University of

More information

Study on the Solution to the Financing of Enterprises in Supply Chain Finance

Study on the Solution to the Financing of Enterprises in Supply Chain Finance Study on the Solution to the Financing of Enterprises in Supply Chain Finance Huang Ruiyu & Wang Yuxi School of Management Shanghai University of Engineering Science Shanghai China Abstract Facing the

More information

2.5 Monetary policy: Interest rates

2.5 Monetary policy: Interest rates 2.5 Monetary policy: Interest rates Learning Outcomes Describe the role of central banks as regulators of commercial banks and bankers to governments. Explain that central banks are usually made responsible

More information

University of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi

University of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi University of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi CH 25 Exch Rate & BofP 1) Foreign currency is A) the market for foreign exchange.

More information

THE RETURN OF CAPITAL EXPENDITURE OR CAPEX CYCLE IN MALAYSIA

THE RETURN OF CAPITAL EXPENDITURE OR CAPEX CYCLE IN MALAYSIA PUBLIC BANK BERHAD ECONOMICS DIVISION MENARA PUBLIC BANK 146 JALAN AMPANG 50450 KUALA LUMPUR TEL : 03 2176 6000/666 FAX : 03 2163 9929 Public Bank Economic Review is published bi monthly by Economics Division,

More information

PUBLIC DEBT SIZE, COST AND LONG-TERM SUSTAINABILITY: PORTUGAL VS. EURO AREA PEERS

PUBLIC DEBT SIZE, COST AND LONG-TERM SUSTAINABILITY: PORTUGAL VS. EURO AREA PEERS PUBLIC DEBT SIZE, COST AND LONG-TERM SUSTAINABILITY: PORTUGAL VS. EURO AREA PEERS 1. Introduction This note discusses the strength of government finances in, and its relative position with respect to other

More information

The Market Profile of Taiwan Non-Life Insurance Industry in the year of 2008

The Market Profile of Taiwan Non-Life Insurance Industry in the year of 2008 The Market Profile of Taiwan Non-Life Insurance Industry in the year of 2008 Economic Profile in 2008 I. Economic situation (1) International economy In 2008, affected by extended USA credit crisis, the

More information

Euro Zone s Economic Outlook and What it Means for the United States

Euro Zone s Economic Outlook and What it Means for the United States WELCOME TO THE WEBINAR WEBINAR LINK: HTTP://FRBATL.ADOBECONNECT.COM/ECONOMY/ DIAL-IN NUMBER (MUST USE FOR AUDIO): 855-377-2663 ACCESS CODE: 71032685 Euro Zone s Economic Outlook and What it Means for the

More information

The role of factoring for financing small and medium enterprises

The role of factoring for financing small and medium enterprises Journal of Banking & Finance 30 (2006) 3111 3130 www.elsevier.com/locate/jbf The role of factoring for financing small and medium enterprises Leora Klapper * The World Bank, 1818 H Street NW, Washington,

More information

The Role of Factoring for Financing Small and Medium Enterprises

The Role of Factoring for Financing Small and Medium Enterprises The Role of Factoring for Financing Small and Medium Enterprises Leora Klapper The World Bank Abstract: Factoring is explicitly linked to the value of a supplier s accounts receivable and receivables are

More information

Credit Risk Management: Trends and Opportunities

Credit Risk Management: Trends and Opportunities Risk & Compliance the way we see it Credit Risk Management: Trends and Opportunities The Current State of Credit Risk Management 1 Overview The crisis exposed the shortcomings of existing risk management

More information

THE POTENTIAL MACROECONOMIC EFFECT OF DEBT CEILING BRINKMANSHIP

THE POTENTIAL MACROECONOMIC EFFECT OF DEBT CEILING BRINKMANSHIP OCTOBER 2013 THE POTENTIAL MACROECONOMIC EFFECT OF DEBT CEILING BRINKMANSHIP Introduction The United States has never defaulted on its obligations, and the U. S. dollar and Treasury securities are at the

More information

2013 global economic outlook: Are promising growth trends sustainable? Timothy Hopper, Ph.D., Chief Economist, TIAA-CREF January 24, 2013

2013 global economic outlook: Are promising growth trends sustainable? Timothy Hopper, Ph.D., Chief Economist, TIAA-CREF January 24, 2013 2013 global economic outlook: Are promising growth trends sustainable? Timothy Hopper, Ph.D., Chief Economist, TIAA-CREF January 24, 2013 U.S. stock market performance in 2012 * +12.59% total return +6.35%

More information

Investing in the United States Tazeem Pasha

Investing in the United States Tazeem Pasha Investing in the United States Tazeem Pasha Embassy of Spain and ICEX Seminar on Financing Opportunities forspanish Companies and Projects in the United States By Tazeem Pasha Monday, 19 March 2012 Washington,

More information

Bank of America Merrill Lynch Banking & Insurance CEO Conference Bob Diamond

Bank of America Merrill Lynch Banking & Insurance CEO Conference Bob Diamond 4 October 2011 Bank of America Merrill Lynch Banking & Insurance CEO Conference Bob Diamond Thank you and good morning. It s a pleasure to be here and I d like to thank our hosts for the opportunity to

More information

Small-Medium Enterprises in Hong Kong: Recent Developments and Policy Issues. Y. C Richard Wong The University of Hong Kong

Small-Medium Enterprises in Hong Kong: Recent Developments and Policy Issues. Y. C Richard Wong The University of Hong Kong 8/7/13 Small-Medium Enterprises in Hong Kong: Recent Developments and Policy Issues Y. C Richard Wong The University of Hong Kong We review the recent developments of small and medium enterprises (SMEs)

More information

Risk Management. Risk Charts. Credit Risk

Risk Management. Risk Charts. Credit Risk Risk Management Risk Management Sumitomo Bank sees tremendous business opportunities developing in concert with the current liberalization and internationalization of financial markets, advancement of

More information

Credit risk management of commercial bank

Credit risk management of commercial bank Available online www.jocpr.com Journal of Chemical and Pharmaceutical Research, 2014, 6(5):1784-1788 Research Article ISSN : 0975-7384 CODEN(USA) : JCPRC5 Credit risk management of commercial bank Qian

More information

The World of (International)Factoring

The World of (International)Factoring The World of (International)Factoring Facts & Figures Different Products The Two-Factor System The Role of IFG Erik Timmermans Secretary General IFG 1 Evolution of World Factoring Turnover 1980 : +/- 50

More information

Outsourcing Human Resources Management for SMEs

Outsourcing Human Resources Management for SMEs Outsourcing Human Resources Management for SMEs Xiong huchen Feng qin College of Business and Administration Zhejiang University of Technology, P. R. China, 310014 Abstract Human resource management outsourcing

More information

Public consultation on Building a Capital Markets Union COM/2015/63 green paper

Public consultation on Building a Capital Markets Union COM/2015/63 green paper Public consultation on Building a Capital Markets Union COM/2015/63 green paper Jelena Soskic European Policy Advisor jso@danskerhverv.dk phone: +32 486 03 04 53 The Danish Chamber of Commerce welcomes

More information

Factoring in the 21st Century

Factoring in the 21st Century Factoring in the 21st Century The economic relevance of factoring and trade finance in Europe May 2013 1. What is factoring? 2. Who are factoring clients? 3. European factoring market and future trends

More information

The U.S. Housing Crisis and the Risk of Recession. 1. Recent Developments in the U.S. Housing Market Falling Housing Prices

The U.S. Housing Crisis and the Risk of Recession. 1. Recent Developments in the U.S. Housing Market Falling Housing Prices Economic Spotlight ALBERTA FINANCE Budget and Fiscal Planning March 4, 2008 The U.S. Housing Crisis and the Risk of Recession Summary The worsening U.S. housing slump is spreading to the broader economy

More information

China Railways Development, Financing and Challenges

China Railways Development, Financing and Challenges China Railways Development, Financing and Challenges Zhang, Jianping Depart. of Development & Planning Ministry of Railway, P. R. China March 31, 2006 Transport Forum, World Bank 1. Current Situation of

More information

EUF STATISTICS. 31 December 2013

EUF STATISTICS. 31 December 2013 . ESTIMATES OF EU TURNOVER VOLUMES. Turnover volumes by product, allocation and notification (Estimates of EU s, Millions of ) Estimate of the EU % on Turnover Significance of the sample on total turnover

More information

Introduction of P/C Insurance Market in China

Introduction of P/C Insurance Market in China Introduction of P/C Insurance Market in China Context Economic Environment in China P/C Insurance Market in China Development Status Market Potential P/C Insurance Regulation in China Overview Solvency

More information

Investment and Investment Finance in Croatia, how can the EIB contribute? Dario Scannapieco and Debora Revoltella European Investment Bank

Investment and Investment Finance in Croatia, how can the EIB contribute? Dario Scannapieco and Debora Revoltella European Investment Bank Investment and Investment Finance in Croatia, how can the EIB contribute? Dario Scannapieco and Debora Revoltella European Investment Bank 24 March 2014 Outline EU and Croatia key challenges The Investment

More information

Two trillion and counting

Two trillion and counting Two trillion and counting Assessing the credit gap for micro, small, and medium-size enterprises in the developing world OCTOBER 2010 Peer Stein International Finance Corporation Tony Goland McKinsey &

More information

EC 341 Monetary and Banking Institutions, Boston University Summer 2, 2012 Homework 3 Due date: Tuesday, July 31, 6:00 PM.

EC 341 Monetary and Banking Institutions, Boston University Summer 2, 2012 Homework 3 Due date: Tuesday, July 31, 6:00 PM. EC 341 Monetary and Banking Institutions, Boston University Summer 2, 2012 Homework 3 Due date: Tuesday, July 31, 6:00 PM. Problem 1 Questions 1, 4, 6, 8, 12, 13, 16, 18, 22, and 23 from Chapter 8. Solutions:

More information

Financial Support System and Strategy of SMEs in the Incubation Based on Business Life Cycle

Financial Support System and Strategy of SMEs in the Incubation Based on Business Life Cycle Financial Support System and Strategy of SMEs in the Incubation Based on Business Life Cycle Yanjuan Cui School of Finance, Dongbei University of Finance and Economics School of Management, Dalian Polytechnic

More information

BAD DEBT SETTLEMENT - CRITICAL ISSUES IN BANK RESTRUCTURING IN VIETNAM I. Analytical framework overview 1. Theoretical consideration 1.1.

BAD DEBT SETTLEMENT - CRITICAL ISSUES IN BANK RESTRUCTURING IN VIETNAM I. Analytical framework overview 1. Theoretical consideration 1.1. BAD DEBT SETTLEMENT - CRITICAL ISSUES IN BANK RESTRUCTURING IN VIETNAM I. Analytical framework overview 1. Theoretical consideration 1.1. Concept A bad debt or non-performing loan (NPL) can be understood

More information

THE CONCEPTUAL FRAMEWORK OF FACTORING ON SMALL AND MEDIUM ENTERPRISES

THE CONCEPTUAL FRAMEWORK OF FACTORING ON SMALL AND MEDIUM ENTERPRISES THE CONCEPTUAL FRAMEWORK OF FACTORING ON SMALL AND MEDIUM ENTERPRISES Minaxi Rani Assistant Professor (Extn.), Department of Commerce, Govt. College for women P.G. College, Hisar, Haryana, (India) ABSTRACT

More information

2012: Deeper into crisis or the long road to recovery?

2012: Deeper into crisis or the long road to recovery? 2012: Deeper into crisis or the long road to recovery? Bart Van Craeynest Hoofdeconoom Petercam Bart.vancraeynest@petercam.be 1 2012: crises looking for answers Global slowdown No 2008-0909 rerun Crises

More information

MS&AD Insurance Group Holdings 2 nd Information Meeting of FY 2015 (Held on November 25, 2015) Q&A Session Summery

MS&AD Insurance Group Holdings 2 nd Information Meeting of FY 2015 (Held on November 25, 2015) Q&A Session Summery MS&AD Insurance Group Holdings 2 nd Information Meeting of FY 2015 (Held on November 25, 2015) Q&A Session Summery Below is a summery of Q&A session from the Information Meeting held on November 25, 2015

More information

Lecture 2. Output, interest rates and exchange rates: the Mundell Fleming model.

Lecture 2. Output, interest rates and exchange rates: the Mundell Fleming model. Lecture 2. Output, interest rates and exchange rates: the Mundell Fleming model. Carlos Llano (P) & Nuria Gallego (TA) References: these slides have been developed based on the ones provided by Beatriz

More information

18 ECB FACTORS AFFECTING LENDING TO THE PRIVATE SECTOR AND THE SHORT-TERM OUTLOOK FOR MONEY AND LOAN DYNAMICS

18 ECB FACTORS AFFECTING LENDING TO THE PRIVATE SECTOR AND THE SHORT-TERM OUTLOOK FOR MONEY AND LOAN DYNAMICS Box 2 FACTORS AFFECTING LENDING TO THE PRIVATE SECTOR AND THE SHORT-TERM OUTLOOK FOR MONEY AND LOAN DYNAMICS The intensification of the financial crisis in the fourth quarter of 211 had a considerable

More information

FLEXIBLE EXCHANGE RATES

FLEXIBLE EXCHANGE RATES FLEXIBLE EXCHANGE RATES Along with globalization has come a high degree of interdependence. Central to this is a flexible exchange rate system, where exchange rates are determined each business day by

More information

Factoring is emerging as a short-term financial solution for business The role of FCI

Factoring is emerging as a short-term financial solution for business The role of FCI Factoring is emerging as a short-term financial solution for business The role of FCI Daniela Bonzanini Chairman of Factor Chain International Torino, 10 June 2015 1 Factoring Spreading its Wings! GLOBAL

More information

Importance of SMEs and the Role of Public Support in Promoting SME Development

Importance of SMEs and the Role of Public Support in Promoting SME Development Creating A Conducive Legal & Regulatory Framework for Small and Medium Enterprise Development in Russia A Policy Dialogue Workshop, St. Petersburg, Russia September 14-16, 2003 Importance of SMEs and the

More information

The EMU and the debt crisis

The EMU and the debt crisis The EMU and the debt crisis MONETARY POLICY REPORT FEBRUARY 212 43 The debt crisis in Europe is not only of concern to the individual debt-ridden countries; it has also developed into a crisis for the

More information

2015 Country RepTrak The World s Most Reputable Countries

2015 Country RepTrak The World s Most Reputable Countries 2015 Country RepTrak The World s Most Reputable Countries July 2015 The World s View on Countries: An Online Study of the Reputation of 55 Countries RepTrak is a registered trademark of Reputation Institute.

More information

Final Assessment 1 of Spain's eligibility for an EFSF/ESM loan to recapitalize certain financial institutions

Final Assessment 1 of Spain's eligibility for an EFSF/ESM loan to recapitalize certain financial institutions Final Assessment 1 of Spain's eligibility for an EFSF/ESM loan to recapitalize certain financial institutions Background On 25 June 2012, the Spanish Government applied for external financial assistance

More information

IV. Special feature: Foreign currency deposits of firms and individuals with banks in China

IV. Special feature: Foreign currency deposits of firms and individuals with banks in China Robert N McCauley (+852) 2878 71 RMcCauley@bis.org.hk YK Mo (+852) 2878 71 IV. Special feature: deposits of firms and individuals with banks in China In principle, an economy with capital controls can

More information

Chapter 5. Saving and Investment in the Open Economy. 2008 Pearson Addison-Wesley. All rights reserved

Chapter 5. Saving and Investment in the Open Economy. 2008 Pearson Addison-Wesley. All rights reserved Chapter 5 Saving and Investment in the Open Economy Chapter Outline Balance of Payments Accounting Goods Market Equilibrium in an Open Economy Saving and Investment in a Small Open Economy Saving and Investment

More information

Comparative Analysis of Shanghai and Hong Kong s Financial Service Trade Competitiveness

Comparative Analysis of Shanghai and Hong Kong s Financial Service Trade Competitiveness Comparative Analysis of Shanghai and Hong Kong s Financial Service Trade Competitiveness Ying Li Longfei Liu Lijun Liang Management School Shanghai University of Engineering and Science China Abstract

More information

RESERVE BANK OF AUSTRALIA

RESERVE BANK OF AUSTRALIA RESERVE BANK OF AUSTRALIA AUSTRALIA S FOREIGN TRADE AND INVESTMENT RELATIONSHIPS Ric Battellino Deputy Governor Remarks to 3 rd Annual Australian Parliamentary Conference, Perth 6 November 2009 AUSTRALIA

More information

CHAPTER 2 LITERATURE REVIEWS. The Theory and Principles of Crisis Management

CHAPTER 2 LITERATURE REVIEWS. The Theory and Principles of Crisis Management CHAPTER 2 LITERATURE REVIEWS The main objective of this study is to investigate the practice of strategic management during economy crisis in an Asian Manufacturer Company ( Company X ) in Rayong Province,

More information

Focus on China Market and Pursue Sustainable Value Growth

Focus on China Market and Pursue Sustainable Value Growth Focus on China Market and Pursue Sustainable Value Growth (Beginning) Distinguished guests, ladies and gentlemen: Good morning. I 'm Wu Zongmin, from China Pacific Property Insurance Company Limited (CPIC

More information

Statement by Dean Baker, Co-Director of the Center for Economic and Policy Research (www.cepr.net)

Statement by Dean Baker, Co-Director of the Center for Economic and Policy Research (www.cepr.net) Statement by Dean Baker, Co-Director of the Center for Economic and Policy Research (www.cepr.net) Before the U.S.-China Economic and Security Review Commission, hearing on China and the Future of Globalization.

More information

Offshore Service Outsourcing: A SWOT Analysis of SMEs in Jiangsu Province

Offshore Service Outsourcing: A SWOT Analysis of SMEs in Jiangsu Province Offshore Service Outsourcing: A SWOT Analysis of SMEs in Jiangsu Province FENG Yue, HAN Yu Economics and Management Department, Nanjing Institute of Technology, P.R.China, 211167 fengyue@njit.edu.cn Abstract:

More information

The default rate leapt up because:

The default rate leapt up because: The financial crisis What led up to the crisis? Short-term interest rates were very low, starting as a policy by the federal reserve, and stayed low in 2000-2005 partly due to policy, partly to expanding

More information

The Relationship Between Debt Financing and Market Value of Company: Empirical Study of Listed Real Estate Company of China

The Relationship Between Debt Financing and Market Value of Company: Empirical Study of Listed Real Estate Company of China Proceedings of the 7th International Conference on Innovation & Management 2043 The Relationship Between Debt Financing and Market Value of Company: Empirical Study of Listed Real Estate Company of China

More information

The U.S. Financial Crisis:

The U.S. Financial Crisis: JA Worldwide The U.S. Financial Crisis: Global Repercussions Introduction For many years, we have all heard talk of globalization. But what does it really mean? In the simplest of terms it refers to an

More information

Recent U.S. Economic Growth In Charts MAY 2012

Recent U.S. Economic Growth In Charts MAY 2012 Recent U.S. Economic Growth In Charts MAY 212 GROWTH SINCE 29 The Growth Story Since 29 Despite the worst financial crisis since the Great Depression and a series of shocks in its aftermath, the economy

More information

Gao Peiyong* * Gao Peiyong, Professor, Renmin University, Beijing, China. E-mail: gaopy@263.net.

Gao Peiyong* * Gao Peiyong, Professor, Renmin University, Beijing, China. E-mail: gaopy@263.net. The Scale of Public Debt in China Gao Peiyong* In measuring the present scale of China s public debt, cess has public debt in China experienced? Thirdly, facing the current situation of public debt in

More information

Restoring Financing and Growth To Europe s SMEs. Jeffrey Anderson Senior Director for European Affairs (formerly)

Restoring Financing and Growth To Europe s SMEs. Jeffrey Anderson Senior Director for European Affairs (formerly) Restoring Financing and Growth To Europe s SMEs Jeffrey Anderson Senior Director for European Affairs (formerly) 1. Introduction & Report Focus 2. SMEs in Europe 3. Main Findings 4. Four sets of Impediments

More information

Mario Draghi: Europe and the euro a family affair

Mario Draghi: Europe and the euro a family affair Mario Draghi: Europe and the euro a family affair Keynote speech by Mr Mario Draghi, President of the European Central Bank, at the conference Europe and the euro a family affair, organised by the Bundesverband

More information

Credit Risk Assessment of POS-Loans in the Big Data Era

Credit Risk Assessment of POS-Loans in the Big Data Era Credit Risk Assessment of POS-Loans in the Big Data Era Yiyang Bian 1,2, Shaokun Fan 1, Ryan Liying Ye 1, J. Leon Zhao 1 1 Department of Information Systems, City University of Hong Kong 2 School of Management,

More information

Long Term Business Financing Strategy For A Pakistan Business. Byco Petroleum Pakistan Limited

Long Term Business Financing Strategy For A Pakistan Business. Byco Petroleum Pakistan Limited Long Term Business Financing Strategy For A Pakistan Business Byco Petroleum Pakistan Limited Contents Why We Need Financing Strategy 3 How Financing Strategies are driven? 4 Financing Prerequisite for

More information

X. INTERNATIONAL ECONOMIC DEVELOPMENT 1/

X. INTERNATIONAL ECONOMIC DEVELOPMENT 1/ 1/ X. INTERNATIONAL ECONOMIC DEVELOPMENT 1/ 10.1 Overview of World Economy Latest indicators are increasingly suggesting that the significant contraction in economic activity has come to an end, notably

More information

Financial Analysis of Real Estate Enterprises: A Case Study of Vanke

Financial Analysis of Real Estate Enterprises: A Case Study of Vanke International Business and Management Vol. 9, No. 1, 2014, pp. 74-78 DOI:10.3968/5469 ISSN 1923-841X [Print] ISSN 1923-8428 [Online] www.cscanada.net www.cscanada.org Financial Analysis of Real Estate

More information

Development Proposals in China s Bond Market Based on Major Capital Markets Overseas and Inter-bank Market Experience Liu Xiaoti

Development Proposals in China s Bond Market Based on Major Capital Markets Overseas and Inter-bank Market Experience Liu Xiaoti International Conference on Education, Management and Computing Technology (ICEMCT 2015) Development Proposals in China s Bond Market Based on Major Capital Markets Overseas and Inter-bank Market Experience

More information

Global Crisis Testing Financial Strength of Banks and Life Insurance Firms

Global Crisis Testing Financial Strength of Banks and Life Insurance Firms November 2009 Global Crisis Testing Financial Strength of Banks and Life Insurance Firms Fukao Mitsuhiro President, Japan Center for Economic Research Conditions may warrant further support, with focus

More information

November 2, 2011 (For your information) Mazda Motor Corporation FISCAL YEAR ENDING MARCH 2012 FIRST HALF FINANCIAL RESULTS (Speech Outline)

November 2, 2011 (For your information) Mazda Motor Corporation FISCAL YEAR ENDING MARCH 2012 FIRST HALF FINANCIAL RESULTS (Speech Outline) November 2, 2011 (For your information) Mazda Motor Corporation FISCAL YEAR ENDING MARCH 2012 FIRST HALF FINANCIAL RESULTS (Speech Outline) Representative Director, Chairman of the Board, President and

More information

P R E S S R E L E A S E

P R E S S R E L E A S E Hong Kong, May 22, 2013 Survey reveals corporate overdue payment in Asia Pacific region deteriorated in 2012 - Companies are less optimistic about recovery of global economy in 2013 A survey of corporate

More information

Thierry Tressel Lead Economist, Research Group, World Bank 2015 High Level Caribbean Forum, Sept. 3-4 2015, St. Kitts

Thierry Tressel Lead Economist, Research Group, World Bank 2015 High Level Caribbean Forum, Sept. 3-4 2015, St. Kitts Thierry Tressel Lead Economist, Research Group, World Bank 215 High Level Caribbean Forum, Sept. 3-4 215, St. Kitts Policy issue Focus on SMEs: they are the biggest contributors to employment across countries,

More information

Reasons for Congress to Keep the LIFO Inventory Method

Reasons for Congress to Keep the LIFO Inventory Method Reasons for Congress to Keep the LIFO Inventory Method The last-in, first-out (LIFO) inventory method has been an important provision of the U.S. tax code for the past 70 years however the Obama administration

More information

Small and Medium Enterprises Access to Finance in China

Small and Medium Enterprises Access to Finance in China Chapter 11 Small and Medium Enterprises Access to Finance in China Sun Xuegong Institute of Economic Research, National Development and Reform Commission (NDRC), China Liu Xueyan Institute of Economic

More information

Annual Report 2007 COMMERCIAL FINANCE WWW.INGCOMFIN.PL

Annual Report 2007 COMMERCIAL FINANCE WWW.INGCOMFIN.PL 2007 Annual Report 2007 COMMERCIAL FINANCE WWW.INGCOMFIN.PL It is with pleasure that I present to you the Annual Report of 2007 which describes the activity of ING Commercial Finance Polska S.A. Last year

More information