Showing papers on "Liquidity risk published in 1980"

A Cash Conversion Cycle Approach to Liquidity Analysis

Abstract: Although working capital management receives less attention in the literature than longer-term investment and financing decisions, it occupies the major portion of a financial manager's time and attention [9, p. 173]. In part, this simply reflects the repetitive nature of investment commitments with relatively short life expectancy and rapid transformation from one investment form to another [6, pp. 1-2]. The time devoted to working capital management, however, also reflects the crucial liquidity or repayment capability implications of a firm's short-term investment and financing policies. Inattention to the liquidity management process may cause severe difficulties and losses due to adverse short-run developments even for the firm with favorable long-run prospects. Incorrect evaluation of the liquidity implications of a firm's working capital needs may, in turn, subject creditors and investors to an unanticipated risk of default. Financial managers and their external financial analyst counterparts recognize, at least intuitively, that all working capital investments do not enjoy the same life expectancy, nor are they transformed into usable liquidity flows at the same speed. It is not clear, however, that they recognize explicitly the crucial role f these differences in evaluating a firm's liquidity position. A cash conversion cycle approach to working capital management illustrates the potential danger of an intuitive approach to liquidity analysis.

Concepts of Business and Financial Risk

Abstract: limiting the business risk to which farmers are exposed. Some approaches to business risk modification involve insurance, government programs, weather modification, and innovations of individual farmers: technological, to limit the probability of disease and insect damage; and market, to limit the probability of adversity through price fluctuations. It is recognized that the introduction or modification of risk in the production process affects the pattern of resource allocation and in turn the level of production (Dillon, pp. 102-48, Just, Wiens, and Wolgin). We suggest that there is also a financial response to business risk modification. The differentiation is important in that business risk and financial risk may well be trade-offs in the risk behavior of farmers. Thus, a decline in business risk would lead to the acceptance of greater financial risk, reducing the effects of the diminished business risk on total risk.

Reforming Cameroon's Government Credit Program: Effects on Liquidity Management by Small Farm Borrowers

Abstract: Higher interest rates and credit limits as well as modified lending practices have been proposed to improve the performance of credit programs for small farmers in developing countries. Models based on Cameroon field data are used to generate results from such reform proposals. The results suggest that small farmer benefits could be increased by increasing credit limits and flexibility in the use of loan proceeds, while reducing default rates and expanding program outreach.

International liquidity issues

Abstract: The relationship between international reserves and national economic policies is not as strong as that between money supplies and private economic behavior; therefore, policies focusing primarily on international reserve aggregates cannot efficiently control the operation of the world economy.