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The purpose of this paper is to examine the difference of credit enhancement of variously secured bonds issued by local government financing platform bond (LGFPB).

The approaches to secure the bonds usually include mortgage, collateral, guarantee, etc.

Using a sample of LGFPBs issued during the 2007-2013 period, the authors find that all of the approaches to secure the bonds would increase the bond rating and that compounded approaches have a higher credit enhancement effect than single approaches. Among these approaches, the requirement of collateral has the strongest enhancement effect. Moreover, the authors find that the guarantee provided by a state-owned bank or enterprise increases the bond rating more than the guarantee provided by other local government financing platforms.

The findings in this study suggest that the credit enhancement would be deeply affected by the approach used to secure the bond.

These results can help the local government make better decisions when issuing bond.

This study empirically analyzes the different credit enhancement approaches for securing LGPFBs for the first time and contributes to the literature regarding credit ratings of local government bonds.

This study aims to investigate how high-speed railway (HSR) development affects urban construction investment (UCI) bond yield spreads based on China’s background.

This study constructs a quasi-natural experiment and adopts regression analyses to empirically examine the relation between HSR development and UCI bond yield spreads. The empirical analysis is based on a Chinese sample of 15,109 bond offering observations from 2008 to 2019.

The results show that HSR development reduces UCI bond yield spreads. Mechanistic analysis shows that HSR development increases land prices and the level of urbanization, which in turn lowers the UCI bond yield spreads. In addition, the impact of HSR development on UCI bond yield spreads is more significant at higher marketization levels and lower degrees of dependence on land finance cities where UCI corporations are located.

The results imply that transportation infrastructure improvement, such as HSR development, helps to enhance the credit of local governments and the solvency of UCI corporations and ultimately reduces the financing cost of UCI bonds.

This paper provides theoretical support and empirical evidence for the impact of transportation infrastructure construction on the implicit debt risks of local governments in China, which enriches the research on the “HSR economy” from a micro perspective and expands the research on the influencing factors of local governments’ debt risk.

This paper aims to investigate how stockholders and bondholders react to the information disclosed on the financial markets during crisis periods. This paper considers the 2011 European Banking Authority’s stress test as it disclosed detailed information about banks.

It was conducted during the European sovereign debt crisis, and this paper uses an event study methodology. This paper analyzes the average cumulative abnormal returns for different subsamples of banks. This paper compares the reactions of stockholders and bondholders to the stress test by considering pre-results announcements (signal generating process) to the publication of the results on the disclosure date, using quantitative data for each individual bank that participated in the stress test (the signal provided to the financial market).

This paper finds that stockholders’ reaction is more sensitive to idiosyncratic components of the disclosed information, whereas bondholders are more influenced by systematic risk. A deeper investigation shows that subordinated bondholders tend to behave quite similarly to stockholders. This specific reaction of stockholders during financial distress may make them more likely than bondholders to impose market discipline during troubled periods.

This paper brings several new insights to the behavior of stock and bond holders during times of financial distress and makes recommendations to regulators that may serve to refine communication to markets to reduce the shock of negative news.

Some controversial cases of bail-in in the emerging countries have raised the question about whether for those countries to have in place a regulation for the bail-in is appropriate or not. To assess appropriateness, this paper investigates bail-in credibility among investors, as crucial condition for the credibility’s smooth implementation, by measuring the yield spread between bailinable and non-bailinable bonds.

The authors compare the yield spread of banks located in emerging countries that have in place a framework for the bail-in to the comparable yield spread measured for banks located in emerging countries without such framework. The comparison permits to detect whether there is a significant difference between the two spreads, which would suggest that bail-in regulation has been deemed credible by market participants where enforced, or not, which in this case would signal a problem of credibility.

The authors' results point out a significantly higher yield spread for banks located in emerging countries that have adopted a framework for the bail-in of creditors. Bail-in regulation has, therefore, being deemed credible in the adopting emerging countries, thus ensuring a crucial condition for bail-in regulation's smooth application. The authors also point out bank size and country's gross domestic product (GDP) growth as crucial moderators of bail-in expectations of market participants that can guide the implementation of bail-in rules in emerging countries.

This paper contributes to the literature on the credibility of bail-in with a new perspective from the emerging countries.

This study examines the financing methods used by corporations to acquire real estate for their operations. It also examines the opinion of managers about the factors that they consider in choosing financing methods. The data were provided by a survey questionnaire that was sent to members of the International Association of Corporate Real Estate Executives. It was found that companies rely on internal financing (operating cash flows) and external financing such as long‐term leasing, joint ventures, property mortgages and sale/leaseback arrangements. The top‐ranked methods of finance include operating cash flows, property mortgages, leasing and sales/leasebacks. Use of real estate investment trusts, collateralised mortgage obligations and mortgage‐backed securities were the lowest‐ranked forms of financing. Managers tend to look at tax advantages of debt and availability of cash flows in deciding which financing methods to use, rather than theoretical corporate finance factors such as bankruptcy cost. There were significant differences in opinion by industry and by company size regarding the use of cash flows and the impact of debt financing on common stock prices.

Asset‐backed securitization (ABS) is an interesting financial innovation whereby debt instruments backed by cash flows generated from income‐producing assets are issued for investment purposes in the capital markets. This study examines the characteristics of ABS transactions in Singapore and evaluates whether proper governance mechanisms have been developed to protect ABS investors. We examined the unique features of the Visor case, such as rental guarantee, large block ownerships of junior bonds, credit enhancement, embedded options, managerial relationships between the SPV and servicers, and critically evaluated the effects of these characteristics on the governance of ABS. Rules on separation of banks' participation in ABS and the accountant's requirement of “clean sale” that affect the ABS structure were also discussed. We also develop a simple information asymmetric model to evaluate the pecking order choice of two different financing methods: collateralized loans and ABS.

The purpose of this paper is to present a review of selected applications of contingent claims analysis in corporate finance. Contingent claims analysis is an approach to valuing payoffs which are contingent on other uncertain payoffs. The essential logic of the different applications reviewed is that we can value these derivative payoffs by replicating them with assets, whose prices are known. This simple logic is capable of providing one with insights into the pricing of new types of financial assets (e.g. optional bonds) as well as providing new insights into the valuation of strategic corporate investments.

The purpose of this paper is to explore the application of a profit and loss sharing approach to tax increment financing (TIF) districts in the USA.

A survey based on this approach was distributed to representatives of community redevelopment authorities (CRAs) in the State of Florida to ascertain practitioner feedback.

Although a majority of the respondents did not feel it was possible for political, economic and legal reasons, some did feel that it was a practical, reasonable and sustainable approach to financing projects for economic development. Some responses were correlated, with others indicating that certain beliefs framed their answers to the questions.

The surveys were only distributed to CRAs in the State of Florida. Future research will need to include other CRAs in other states to make the findings more generalizable. In addition, the results are merely descriptive and are not an assessment of a successful application.

The need for more development in blighted areas of many cities across the USA will put emphasis on innovative approaches in financing this. The growth of Islamic finance in the USA and the regulatory framework for it might open a doorway for its application in this area.

This is the first attempt to apply an Islamic financing methodology to local economic development in the USA, with practitioner feedback.