This book records the first success stories of a new form of financial intermediation, the hometown investment fund, that has become a national strategy in Japan, partly to meet the need to finance small and medium-sized enterprises (SMEs) after the devastating earthquake and tsunami in March 2011. The hometown investment fund has three main advantages. First, it contributes to financial market stability by lowering information asymmetry. Individual households and firms have direct access to information about the borrowing firms, mainly SMEs, that they lend to. Second, it is a stable source of risk capital. The fund is project driven. Firms and households decide to invest by getting to know the borrowers and their projects. In this way the fund distributes risk but not so that it renders risk intractable, which was the problem with the "originate and distribute" model. Third, it contributes to economic recovery by connecting firms and households with SMEs that are worthy of their support. It also creates employment opportunities, at the SMEs as well as for the pool of retirees from financial institutions who can help assess the projects. Introduction of the hometown investment fund has huge global implications. The world is seeking a method of financial intermediation that minimizes information asymmetry, distributes risk without making it opaque, and contributes to economic recovery. Funds similar to Japan's hometown investment fund can succeed in all three ways. After all, the majority of the world's businesses are SMEs. The first chapter explains the theory behind this method, and the following chapters relate success stories from Japan and other parts of Asia. This book should encourage policymakers, economists, lenders, and borrowers, especially in developing countries, to adopt this new form of financial intermediation, thus contributing to global economic stability.
This chapter is organized as follows. The economic problem on which this book focuses is motivated in Section 1. The two tools used to study this economic problem, which are real options theory and game theory, are discussed in Sections 2 and 3, respectively. Section 4 surveys the contents of this book. In Section 5 some promising extensions of the research presented in this book are listed. 1. TECHNOLOGY INVESTMENT Investment expenditures of companies govern economic growth. Es- pecially investments in new and more efficient technologies are an impor- tant determinant. In particular, in the last two decades an increasing part of the investment expenditures concerns investments in informa- tion and communication technology. Kriebel, 1989 notes that (already) in 1989 roughly 50 percent of new corporate capital expenditures by major United States companies was in information and communication technology. Due to the rapid progress in these technologies, the tech- nology investment decision of the individual firm has become a very complex matter. As an example of the very high pace of technological improvement consider the market for personal computers. IBM intro- duced its Pentium personal computers in the early 1990s at the same price at which it introduced its 80286 personal computers in the 1980s. Therefore it took less than a decade to improve on the order of twenty times in terms of both speed and memory capacities, without increasing the cost (Yorukoglu, 1998).
The Caribbean countries of Jamaica, Barbados and Trinidad-Tobago represent excellent examples of the increasingly important role played by Foreign Direct Investment (FDI) in less developed, micro-economies. The increased dependence of these countries on FDI, however, calls to question the attractiveness of the business environment of the region to the foreign investor. This volume examines both the investment behaviour and corporate strategies operating in these three countries, and assesses the factors which influence the motivations, location choices and market entry mode of multinationals making investment in the Caribbean. The degree to which these are shaped by the timing of the investment decision, the type of FDI - market-seeking, resource-seeking or export-seeking - and the country of origin of the investor is also explored. By drawing on core case studies and the use of quantitative analysis, the author highlights key issues relating to corporate strategy and investment behaviour of Multinational Enterprises in the economies of less industrialised countries, including: - public policy - strategic management - human resource development, institutional reform and infrastructural upgrading.
The last words Noah heard as he turned off the radio were, "The market. The market." Noah wasn't sure if it were the words or the radio guy's repetition that made him think of the children's rhyme, "To market, to market, to buy a fat pig;" "That's it," he said, although the only one there to hear was his dog George. "George, we are going to the market, just like in the children's rhyme. We may not buy a fat pig, but we are going to find out what went wrong." ##### What if all of economics is based on a mistake? What if markets do not exist? What if supply and demand do not exist? What if the only thing that is real is the damage the market idea caused and continues to cause to individuals, businesses, investments, and the economy? By showing all that, and more, this little book overthrows centuries of economic thinking based on the false market idea and replaces it with something better-economic facts anyone can see and understand and use."
Exchange Traded Funds (ETF's) are a relatively new open- ended investment vehicle. Launched in 1993, their appeal as an important and unique financial product has compelled institutional and retail investors to look anew at their almost endless possibilities. This has led to their dramatic expansion. Meziani draws from his academic and corporate expertise to straddle both theory and practice. Using this book, practitioners, academics and students alike will find a thorough explanation of the theoretical ideas underlying ETF's, along with their detailed analysis, communicated in practical and clear terms.
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