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Trends in the Capital Structure and Risk Assessment of Swedish Real Estate Companies : A Study on the Impact of the 2022-2023 Shift in Interest Rates / Trender i svenska fastighetsbolags kapitalstruktur och riskbedömning : En studie om påverkan av ränteförändringen 2022-2023Landgärds, Karolina, Lövgren, Hanna January 2023 (has links)
This study aims to analyse the changes in the capital structure of Swedish real estate companies over the past five years, with a particular focus on the period 2022-2023, characterised by the policy interest rate increasing from zero to 3.5 percent. The study further explores the potential risks these companies face concerning interest rate exposure and liquidity. The research process involves a comprehensive literature review, quantitative analysis of financial key figures, and qualitative interviews with banks and consultants in the real estate market. The findings suggest that the capital structure of real estate companies is highly influenced by the cost of capital and the companies’ credit ratings. While large companies with the highest credit ratings have coped with increased capital costs in the bond market and continue issuing bonds, remaining investment grade companies have turned to the bank sector as the prices in the bond market have increased. Increased competition in bank financing has made the banks more selective, prioritising existing customers and making it challenging for high-yield and non-existing bank customers to secure debt. The high demand for bank financing further opens up possibilities for alternative financing to increase market shares. As a consequence of escalated risk in the real estate sector, financiers are increasing credit margins and implementing stricter credit terms. A key factor for assessing the risk in today’s market is the capability of the cash flow to cover the rising cost of capital, exposing the low- yielding residential segment. To mitigate liquidity risk, the findings suggest an increased need for equity and expected share issuance and asset sales. However, a stress test conducted based on the Interest coverage ratio suggests that the real estate market is able to handle additional interest rate increases, not facing alarming distress until interest rates increase by an additional 3%. By examining theories such as the Pecking Order and Trade-off Theory, this research contributes to the existing literature, shedding light on the evolving capital structure of Swedish real estate companies and the impact of interest rate fluctuations on financing strategies and risk evaluation. / Denna studie syftar till att analysera trender i svenska fastighetsbolags kapitalstruktur under de senaste fem åren, med fokus på perioden 2022-2023, färgad av höjningar i Riksbankens styrränta från noll till 3.5%. Studien utforskar även potentiella risker för fastighetsbolag avseende ränta och likviditet. Forskningsprocessen inkluderar en omfattande litteraturgenomgång, kvantitativ analys av finansiella nyckeltal och kvalitativa intervjuer med banker och konsulter på fastighetsmarknaden. Resultaten antyder att kapitalstrukturen för fastighetsbolag i hög grad påverkas av kapitalkostnad och företagens kreditbetyg. Medan stora företag med högsta kreditbetyg har kunnat hantera ökade kapitalkostnader på obligationsmarknaden och fortsätter att emittera obligationer, har återstående företag med investment grade rating vänt sig till banksektorn när priserna på obligationsmarknaden har ökat. Ökad konkurrens för bankfinansiering har gjort bankerna mer selektiva, med prioritet för befintliga kunder, vilket har gjort det utmanande för high-yield betygsatta och icke-existerande bankkunder att säkra skulder. Den höga efterfrågan på bankfinansiering öppnar också upp möjligheter för alternativ finansiering att öka i marknadsandel. Som en följd av ökad risk inom fastighetssektorn ökar finansiärer kreditmarginalerna och inför striktare kreditvillkor. En viktig faktor för att bedöma risken på dagens marknad är förmågan hos kassaflödet att täcka den stigande kapitalkostnaden, vilket exponerar det lågavkastande bostadssegmentet. För att minska likviditetsrisken antyder resultaten ett ökat behov av eget kapital och förväntade aktieemissioner och försäljningar av tillgångar. Studien inkluderar ett stresstest genomfört baserat på räntetäckningsgraden, vilket emellertid antyder att fastighetsmarknaden klarar av ytterligare räntehöjningar och uppnår ordentliga finansiella svårigheter först vid en räntehöjning på ytterligare 3 procentenheter från dagens läge. Genom att undersöka teorier som Pecking Order och Trade-off Theory bidrar denna forskning till befintlig litteratur och belyser den utvecklande kapitalstrukturen för svenska fastighetsbolag samt påverkan av räntefluktuationer på finansieringsstrategier och riskbedömning.
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Risk management associated with tariff-linked agreementsMahlatsi, Tsatsi Jonas 01 1900 (has links)
The study focuses on tariff-linked (or commodity-linked) agreements entered into between a power utility and commodity producers. The main purpose of these types of agreements is to link electricity tariff payable by commodity producers to the price of the commodity produced thereby transferring a certain level of commodity price risk to the power utility.
The study looks at risk management practices of a power utility company with a particular reference to tariff-linked agreements. Also, the study critically analyses risk hedging mechanisms put in place by the power utility. The report makes practical recommendations, where applicable, in dealing with these risks.
Risk management continuously evolve to meet the challenges of complex financial world. Despite the latest sophisticated risk management tools available commodity producers still encounter difficulties to hedge the price risk. The challenge for the power utility is the application of new risk management tools to effectively manage price risk. / Business Management / M.Com. (Business Economics)
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Critical success factors for the implementation of an operational risk management system for South African financial services organisationsGibson, Michael David 02 1900 (has links)
Operational risk has become an increasingly important topic within financial institutions of late,
resulting in an increased spend by financial service organisations on operational risk management
solutions. While this move is positive, evidence has shown that information technology
implementations have tended to have low rates of success. Research highlighted that a series of
defined critical success factors could reduce the risk of implementation failure. Investigations into
the literature revealed that no critical success factors had been defined for the implementation of
an operational risk management system.
Through a literature study, a list of 29 critical success factors was identified. To confirm these
factors, a questionnaire was developed. The questionnaire was distributed to an identified target
audience within the South African financial services community. Reponses to the questionnaire
revealed that 27 of the 29 critical success factors were deemed important and critical to the
implementation of an operational risk management system. / Business Management / M. Com. (Business Management)
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Correlations and linkages in credit risk : an investigation of the credit default swap market during the turmoilWu, Weiou January 2013 (has links)
This thesis investigates correlations and linkages in credit risk that widely exist in all sectors of the financial markets. The main body of this thesis is constructed around four empirical chapters. I started with extending two main issues focused by earlier empirical studies on credit derivatives markets: the determinants of CDS spreads and the relationship between CDS spreads and bond yield spreads, with a special focus on the effect of the subprime crisis. By having observed that the linear relationship can not fully explain the variation in CDS spreads, the third empirical chapter investigated the dependence structure between CDS spread changes and market variables using a nonlinear copula method. The last chapter investigated the relationship between the CDS spread and another credit spread - the TED spread, in that a MVGARCH model and twelve copulas are set forth including three time varying copulas. The results of this thesis greatly enhanced our understanding about the effect of the subprime crisis on the credit default swap market, upon which a set of useful practical suggestions are made to policy makers and market participants.
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Risk-taking propensity and culture of entrepreneurship in small and medium enterprises in GautengLetsoalo, Maupi Peter. January 2015 (has links)
M. Tech. Business Administration / The objectives of this study is to measure the risk propensity of entrepreneurs from four nationalities in the Gauteng region, namely Chinese, Zimbabweans, Pakistanis and South Africans. The study tries to find out if entrepreneurship and risk taking is determined by culture. It also looks at how the businesses of these people are performing.
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The Levy-LIBOR model with default riskWalljee, Raabia 03 1900 (has links)
Thesis (MSc)--Stellenbosch University, 2015 / ENGLISH ABSTRACT : In recent years, the use of Lévy processes as a modelling tool has come to be viewed more favourably than the use of the classical Brownian motion setup. The reason for this is that these processes provide more flexibility and also capture more of the ’real world’ dynamics of the model. Hence the use of Lévy processes for financial modelling is a motivating factor behind this research
presentation. As a starting point a framework for the LIBOR market model with dynamics driven by a Lévy process instead of the classical Brownian motion setup is presented. When modelling LIBOR rates the use of a more realistic driving process is important since these rates are the most realistic interest rates used in the market of financial trading on a daily basis. Since the financial crisis there has been an increasing demand and need for efficient modelling and management of risk within the market. This has further led to the motivation of the use of Lévy based models for the modelling of credit risky financial instruments. The motivation stems from the basic properties of stationary and independent increments of Lévy processes. With these properties, the model is able to better account for any unexpected behaviour within the market, usually referred to as "jumps". Taking both of these factors into account, there is much motivation for the construction of a model driven by Lévy processes which is able to model credit risk and credit risky instruments. The model for LIBOR rates driven by these
processes was first introduced by Eberlein and Özkan (2005) and is known as
the Lévy-LIBOR model. In order to account for the credit risk in the market, the Lévy-LIBOR model with default risk was constructed. This was initially done by Kluge (2005) and then formally introduced in the paper by Eberlein
et al. (2006). This thesis aims to present the theoretical construction of the model as done in the above mentioned references. The construction includes the consideration of recovery rates associated to the default event as well as a
pricing formula for some popular credit derivatives. / AFRIKAANSE OPSOMMING : In onlangse jare, is die gebruik van Lévy-prosesse as ’n modellerings instrument
baie meer gunstig gevind as die gebruik van die klassieke Brownse bewegingsproses opstel. Die rede hiervoor is dat hierdie prosesse meer buigsaamheid verskaf en die dinamiek van die model wat die praktyk beskryf, beter hierin
vervat word. Dus is die gebruik van Lévy-prosesse vir finansiële modellering ’n motiverende faktor vir hierdie navorsingsaanbieding. As beginput word ’n raamwerk vir die LIBOR mark model met dinamika, gedryf deur ’n Lévy-proses in plaas van die klassieke Brownse bewegings opstel,
aangebied. Wanneer LIBOR-koerse gemodelleer word is die gebruik van ’n meer realistiese proses belangriker aangesien hierdie koerse die mees realistiese koerse is wat in die finansiële mark op ’n daaglikse basis gebruik word. Sedert die finansiële krisis was daar ’n toenemende aanvraag en behoefte aan doeltreffende modellering en die bestaan van risiko binne die mark. Dit het verder gelei tot die motivering van Lévy-gebaseerde modelle vir die modellering van finansiële instrumente wat in die besonder aan kridietrisiko onderhewig is. Die motivering spruit uit die basiese eienskappe van stasionêre en onafhanklike inkremente van Lévy-prosesse. Met hierdie eienskappe is die model in staat
om enige onverwagte gedrag (bekend as spronge) vas te vang. Deur hierdie faktore in ag te neem, is daar genoeg motivering vir die bou van ’n model gedryf deur Lévy-prosesse wat in staat is om kredietrisiko en instrumente onderhewig hieraan te modelleer. Die model vir LIBOR-koerse
gedryf deur hierdie prosesse was oorspronklik bekendgestel deur Eberlein and Özkan (2005) en staan beken as die Lévy-LIBOR model. Om die kredietrisiko
in die mark te akkommodeer word die Lévy-LIBOR model met "default risk" gekonstrueer. Dit was aanvanklik deur Kluge (2005) gedoen en formeel in die
artikel bekendgestel deur Eberlein et al. (2006). Die doel van hierdie tesis is om die teoretiese konstruksie van die model aan te bied soos gedoen in die bogenoemde verwysings. Die konstruksie sluit ondermeer in die terugkrygingskoers
wat met die wanbetaling geassosieer word, sowel as ’n prysingsformule vir ’n paar bekende krediet afgeleide instrumente.
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Offset Banking in New Zealand: towards sustainable development, with insight from international modelsDenny, Jemma P Simon Stewart January 2011 (has links)
Biodiversity loss is an important issue for New Zealand: for the domestic environment, economy and society, but also for New Zealand as a member of the international community. Biodiversity offset banking is making an important contribution to addressing such issues in a number of countries around the world. Developing the ability to participate and take advantage of possible benefits requires comprehensively understanding both the fundamental principles and varying concepts, and supports the analysis necessary for New Zealand to progress towards offset banking. New Zealand can learn much from observing and investigating overseas models and use them as valuable templates. California and New South Wales provide examples of potential policies and frameworks (both economic and social) to establish and operate successful offset banking systems.
Discussions of offset banking, both in theory and practice, frequently concern the potential failings of the system. These issues can be conceptualised as various forms of risk. Considering offset banking as sustainable development, this thesis addresses such risks to reflect the tripartite biological, financial and social framework of sustainable development. Biologically, risk is in the potential biodiversity outcomes are inadequate, unexpected or undesirable. Scientific uncertainty underlies this, both inherently and from the limits of current scientific disciplines. Through expanding scientific knowledge and experience, measures for reducing or accommodating the risk of uncertainty are emerging. Financial risk represents concerns that individual banks may lack the monetary support to achieve the specific biodiversity conservation required for the site. Also the system of interacting banks, bankers and traders may fail to produce financial outcomes that support effective and efficient biodiversity conservation over the breath of the scheme. Social risk lies in the potential that societies’ individuals conduct themselves in ways that conflict with achieving biodiversity conservation through malfeasance
or negligence. Additionally, there is social risk that an offset banking system fails to respond
appropriately to broader society and human, such as equity and intergenerational justice.
Here, deliberating these risks is primary to appreciating how design elements and emergent properties minimize risks. Given comprehensive understanding, components of a system can be designed and allow informed policy, regulations and rules to offer successful risk mitigation. For this reason policy, rules and regulations observed within California and New South Wales helps to discuss this and establish guidance for New Zealand offset banking design to draw upon. Californian systems are achieving promising conservation and continued growth; New South Wales’ Biobanking scheme is robustly designed and in its early stages. Each contrasts in design and carries varying criticisms. California has been observed as potentially shortcoming biologically, whereas New South Wales Biobanking has been questioned based on the strength and character of its economic underpinnings. In addition to these considerations, New Zealand has significant societal perspectives to incorporate given current popular, socio-democratic conservation modus operandi.
Identifying the three forms of risk present highlights the importance of allocating appropriate
consideration and expertise to the biological, economic and social components of offset banking.
Successful sustainable development, biodiversity conservation and risk mitigation may be achieved through designing mechanisms, regulations and governing policy for offset banking. New Zealand may therefore expand the success and application of current offsetting by taking guidance from examples and analysis presented here.
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Náklady vlastního kapitálu jako měřítko rizik během životního cyklu podniku a trhu / Cost of equity as the measuring instrument of risks during the corporate- and market life cycleKonečný, Zdeněk January 2013 (has links)
This dissertation is focused on relations between corporate life cycle and the structure of entrepreneurial risk, that is measured by cost of equity. Besides the corporate life cycle there is considered also the market life cycle. The research results prove, that there are only little differences in the structure of entrepreneurial risks depending on the corporate life cycle and the market position.
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Reassessing the assessment: exploring the factors that contribute to comprehensive financial risk evaluationCarr, Nicholas January 1900 (has links)
Doctor of Philosophy / Department of Personal Financial Planning / Sonya L. Britt / This dissertation explores the personal financial planning risk-assessment process. Specifically, the study has five main purposes:
1. Explore the associations among independent risk-assessment variables.
2. Explore the concept that prudent financial risk-assessment goes beyond estimating an individual’s risk tolerance.
3. Explore the impact that each risk variable has on an individual’s overall Comprehensive Risk Profile (CRP).
4. Construct a comprehensive method of risk-assessment to estimate an individual’s overall risk profile.
5. Develop a weighted risk profile score and assign it to a target asset allocation model.
Risk-assessment is one of the most instrumental components of the financial planning process. Financial planners and advisors have a fiduciary, as well as a suitability, responsibility to assess the level of risk individuals should bear with respect to their financial plan (Morse, 1998). Because of this, the evaluation of one’s risk profile impacts the success of an individual’s financial plan. If the risk-assessment is accurate, financial goals will have a higher likelihood of being met. To date, little research in the personal financial planning field has attempted to model financial risk-taking behavior in a way that is useful for practitioners, academics, and policy makers. The literature has tended to focus on either models of risk-taking rooted in economic utility theory, or tests of hypotheses related to the association among demographic and socioeconomic factors and risk-taking (Grable & Lytton, 1998). Traditional economic models do not fully account for the role that personal, behavioral, and environmental factors play in influencing individuals’ behavior beyond maximizing their expected utility (Hanna & Chen, 1997). Researchers have yet to develop a risk-profiling system that uses these behavioral or personal factors, to describe an individual’s financial risk-taking framework. Ultimately, the results of this study will lead to a multidimensional, comprehensive, accurate method of risk-assessment for both academic researchers, as well as practitioners. The following will serve as the empirical model for the study.
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The impact of the National. Credit Act (NCA) on risk in the South African banking system10 June 2014 (has links)
M.Phil. (Economics) / There has been increasing focus on banking system stability worldwide, particularly due to the recent financial crisis experienced and the resultant adverse economic effects. In the case of a developing country like South Africa (SA), the stability of the banking system is even more important as it is crucial for the achievement of the country’s development goals. Credit extension is also a core component for facilitating economic and social development in the country. The downside risk attached to credit extension is that once it reaches a point of being excessive it can have a destabilising effect on the banking system and the economy. SA has experienced a rapid increase in credit extension since 2001, which prompted the implementation of the National Credit Act (NCA), with the intention of regulating the credit industry and improving the practices therein. More recently, further concerns have been raised by regulatory authorities around the possibility of an asset bubble in the SA economy as a result of the level of unsecured credit extended in the country. The objective of this study therefore is to investigate the impact of the NCA on risk, both credit and systemic, in the banking system. This is important, as investigating and understanding the impact of credit controls, like the NCA, on risk in the banking system is critical to supporting the SA development agenda. The findings of this study show that the NCA has been successful in reducing credit risk in the banking system, even though this was by default and not through the stated intention of the Act. This was achieved through the introduction of the affordability requirement into the credit assessment process. This study highlights however, that there are still areas of improvement which can be made to the NCA to increase its effectiveness in preventing excessive credit extension.
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