Chih-Yung Lin

Motorcycle emissions and fuel consumption in urban and rural driving conditions

This work reports sampling of motorcycle on-road driving cycles in actual urban and rural environments and the development of representative driving cycles using the principle of least total variance in individual regions. Based on the representative driving cycles in individual regions, emission factors for carbon monoxide (CO), hydrocarbons (HC), nitrogen oxides (NO(x)=NO+NO(2)) and carbon dioxide (CO(2)), as well as fuel consumption, were determined using a chassis dynamometer. The measurement results show that the representative driving cycles are almost identical in the three largest cities in Taiwan, but they differ significantly from the rural driving cycle. Irrespective of driving conditions, emission factors differ insignificantly between the urban and rural regions at a 95% confidence level. However, the fuel consumption in urban centers is approximately 30% higher than in the rural regions, with driving conditions in the former usually poor compared to the latter. Two-stroke motorcycles generally have considerably higher HC emissions and quite lower NO(x) emissions than those of four-stroke motorcycles. Comparisons with other studies suggest that factors such as road characteristics, traffic volume, vehicle type, driving conditions and driver behavior may affect motorcycle emission levels in real traffic situations.

The Government's Role in Government-Owned Banks

In this study, we reinvestigate the question of whether government banks are inferior to private banks. We use cross country data from 1993 to 2007 to trace the different types of government banks. These types comprise banks that acquire distressed banks, normal banks, or no banks at all. Contrary to common belief, the evidence shows that unless government banks are required to purchase a distressed bank because of political factors (the government’s role), their performances are at par with that of private banks. This fact particularly holds true in countries with poor records on political rights and governance.

Can political and business connections alleviate financial constraints

This article examines the relationship between political and business connections (PBCs) and firms’ financial constraints. We proxy a firm’s PBCs by whether or not the firm’s CEO should hold a directorship in major trade organizations. Using an endogenous switching regression model, we find that firms with a connected CEO are less likely to be classified as financially constrained firms. Our results can provide a possible explanation why firms allow their CEOs to hold directorships in trade associations.

Bank Loan Supply in the Financial Crisis: Evidence from the Role of Political Connection

Abstract We investigate the changes in bank loan supply during the 2007–2008 financial crisis, with particular focus on the influence of political connections. We demonstrate that although political connections can help firms obtain lower loan rates during the precrisis period, such benefits disappear in the postcrisis period. Moreover, the loan acceptance ratio for politically connected firms is enhanced in the postcrisis period, especially for the politically connected firms with high risks. Evidence reveals that the focus of the benefits for politically connected firms is more likely to shift from the loan rate to the loan acceptance ratio during the postcrisis period.

Applying recurrent event analysis to understand the causes of changes in firm credit ratings

This study applies recurrent event analysis to examine the determinants of changes in firm credit ratings. This study uses two extended Cox proportional hazard models to examine upgrade and downgrade data separately. Explanatory variables are taken from financial ratios in Z-score (Altman, 1968) and AR-score (Altman and Rijken, 2004) models. The empirical results first suggest that sales to asset ratio and market equity to book debt ratio are the key explanatory variables for the sample comprising credit rating upgrade firms examined using Z-scores specification. Next, the sample of credit rating upgrade firms examined using AR-score variables reveals that the first rating of young firms is generally underestimated. Additionally, analysis of sample comprising credit downgrade firms examined using Z-score specification identifies working capital to asset ratio and market equity to book debt ratio as the key explicative variables. Furthermore, analysis of sample of credit downgrade firms examined using AR-score model reveals that larger firms are not easily downgraded, and old firms are more likely to be downgraded because of their ratings typically having initially been overestimated. Finally, high q firms with high retained earnings may suffer from underinvestment problem. Consequently, credit agencies may be reluctant to upgrade such firms.

Equity Short Selling and the Bank Loan Market

We use a differences-in-difference setup, the SEC’s Regulation SHO Pilot program, to study how equity short selling affects the decisions of financial intermediation and the cost of private debt for firms. Our results show that bank loan spreads decline significantly for treated firms compared to control firms during the Pilot program period. The results are driven mainly by firms with high information asymmetry, high short-selling threat, and high loan-level and firm-level credit risks. Overall, our findings indicate that short selling helps reduce information asymmetry and agency problems between firms and banks, thereby resulting in loan spread reductions.

CEO Overconfidence and the Cost of Private Debt: Evidences from Bank Loan Contracting

This paper studies whether banks charge higher or lower interest rates on loans to firms with overconfident CEOs. It establishes a theoretical model to show the relationship between the loan rate and overconfidence of the borrowing firm’s CEO. It also conducts empirical analyses to test the predictions of the model. As predicted in the model, with a hedge against the downside risk of the loan payments, banks favor firms with overconfident CEOs such that these firms enjoy lower loan rates and higher loan approval rates, especially when firms have rich firm-specific growth opportunities or during prosperous periods. Furthermore, there is evidence showing that firms with overconfident CEOs bring more future business opportunities to banks than other firms. Hence, this paper implies that banks may prefer high-risk borrowers if the future benefits from doing businesses with these borrowers are sufficiently high.

Labour unions and global bank loan market

ABSTRACT This article attempts to collect a data set of labour unions in global 500 biggest banks and investigate whether labour unions of banks influence the designing of bank loan contracts. We use global syndicate loan market to examine this issue. For simplicity, banks with and without labour unions are referred to as ‘unionized banks’ and ‘nonunionized banks’, respectively. We find that unionized banks tend to loosen their lending standard in the bank loan contract: unionized banks are more likely to charge lower loan spread and favourable nonprice terms compared with nonunionized banks. Hence, our results support that unionized banks tend to lend more loans to reduce the negative effect of labour unions.

Overconfident Banks and Firm Innovations

We study whether bank CEO optimism (optimistic bank) plays a role in technological progress. We find that optimistic banks lend more to smaller/riskier firms and charge higher loan spreads to compensate for the higher risk exposures. More interestingly, these optimistic banks prefer lending to risky firms that engage in more corporate innovation. Our results show that, compared with other borrowers, these risky borrowers spend more on R&D after obtaining loans from optimistic banks. We also find that these firms yield higher innovation output and achieve greater market valuation. Overall, our findings suggest bank CEO optimism helps to facilitate corporate innovation.

Do short sellers exploit the persistent risk culture of banks? Evidence from two banking crises

We find that change of short interests predict banks’ stock returns during the two recent banking crises. More interestingly, before the 2007-2009 crisis, short interests increase more for the banks that suffered more in the LTCM crisis. We also find that change in short interests predict banks’ loan quality and default risk during crises. The results are stronger for banks with higher risk-taking behavior. Overall, our findings indicate that short sellers are informed about the risk exposure of banks for the two financial crises and target those with a culture for risky business models.