WWW.ABSTRACT.DISLIB.INFO
FREE ELECTRONIC LIBRARY - Abstracts, online materials
 
<< HOME
CONTACTS



Pages:     | 1 | 2 || 4 |

«ASSET-BASED FINANCE WHITE PAPER #1 CONTENTS Acronyms Introduction Executive Summary A. Asset-Based Finance A1. Background A2. Instruments and Applications A2a. Accounts Receivables Finance A2b. ...»

-- [ Page 3 ] --

It is also important to clarify the application and rates of value-added tax or sales tax to factoring, leasing, and commissions and interest on advances. It is common practice in developed countries to exempt financial services such as factoring and leasing from a value-added tax. Customs and excise taxes should be adapted to leasing when imported equipment must be returned to its country of origin. Other obstacles to the development of asset-based finance are transactions taxes and stamp duty taxes on factoring, accounts collection, leasing, and lease-back.

Accounting rules must also be clarified for the benefit of proper tax and the reporting of factoring and leasing financial statements. The accounting treatment of provisions and losses should be clearly understood and applied, particularly for factors who purchase receivables and make contingent commitments involving degrees of risk. International Accounting Standard (IAS) 17 applies to leasing: The IFC Leasing Manual illustrates the impact of several approaches to accounting and taxation of leasing, and proposes best practices (Fletcher, Freeman, Sultanov, and Umarov, 2005, pp. 30-54) consistent with those stated here.

Standards for securitization are IAS 39 for accounting purposes and the December 2005 U.S. Securities and Exchange Commission ―Asset Backed Rule,‖ the first codification of a comprehensive set of securitization rules.3 Best practices are set forth in IFC’s ―Securitization in Russia-Ways to Expand Markets and Reduce Borrowing Costs‖ (IFC, 2005).

International factoring will benefit from an industry-formulated framework governing SMEs, their customers, and the export and import factors. Factors Chain International is the most prominent factors network. To join the network, export and import factors sign an interfactor agreement whereby they become governed by the General Rules for International Factoring, which details standard operating procedures, the rules for secure e-mail communications, and the arbitration rules of a voluntary dispute resolution process. A country does not have to incorporate any of these in a regulatory framework.

International conventions also define international leasing and factoring, and relationships between parties, but the compatibility of Factors Chain International practices with International Institute for the Unification of Private Law convention of 1988 renders it unnecessary for a country to ratify. For factoring, the more recent United Nations Commission on International Trade Law convention on contracts for the international sale of goods has even fewer signatories.

see http://www.sec.gov/rules/final/33-8518.htm 10 ASSET-BASED FINANCE: WHITE PAPER # 1 For public warehouses, local standards may exist or be set forth in rules of a commodity or futures exchange. A source of generally accepted auditing standards comes from the Public Company Accounting Oversight Board in its interim auditing standard, AU Section 900, ―Public Warehouses—Controls and Auditing Procedure for Goods Held.‖4

B7. Shariah compliance

If a financial institution wants to offer Islamic finance products, it must appoint a Shariah board or a Shariah counselor to ensure products are Shariah-compliant. It must also segregate funds derived from Islamic finance activities from non-Islamic activities.

There are institutions that help governments and supervisory agencies understand Islamic finance, and issue standards and best practices (e.g., accounting standards). Prominent ones include the International Monetary Fund, the Islamic Financial Services Board, the Accounting and Auditing Organization for Islamic Financial Institutions, and the Islamic Development Bank.

C. Experiences with Asset-Based Finance

It is the government’s role to create awareness of the benefits of access to financial services. Furthermore, these benefits deserve consideration in the design of development assistance programs to all types of financial products (Nenova, Niang, and Ahmed, 2009, p. iv). Intense marketing efforts and outreach programs to targeted borrowers foster the success of introducing such asset-based products (USAID, 2009a, p. 33).

–  –  –

The World Bank concludes the general experience of transition and developing countries with WHR is limited but provides important lessons on the impact of government intervention and conflicting signals.5 The FAO and EBRD report (2002) comments on the positive experiences in Bulgaria and Hungary with WHR and with the observational tour which was conducted in these countries. FAO and EBRD propose a replication in Lithuania in order to improve the see http://www.pcaob.com/Standards/Interim_Standards See http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTARD/0,,contentMDK:20440946~pagePK:210058 ~piPK:210062~theSitePK:336682,00.html ASSET-BASED FINANCE: WHITE PAPER # 1 11 existing WHR system; the text of the proposed draft amendments is provided (p. 34). The FAO recently released a publication describing and assessing the use of WHRs and other asset-based finance products in agriculture in the Eastern European and Central Asian regions; it offers insights into how WHRs improve productivity in agriculture, making a distinction between asset-based finance and traditional credit, which has had mixed results in these regions.

A WHR system offers potential but may not be the best means to increase SME finance and program designers should exercise caution. (USAID, 2009a, p. 12) C2. Purchase Order Finance in Bolivia The ―Purchase Order Finance in Bolivia: Innovations in Financing Value Chains‖ case study, discussed in FS Series #4: Enabling Small- and Medium-Sized Enterprise Access to Finance, details the methodology and experience of Chemonics and Crimson Capital in implementing the USAID-funded Rural Competitiveness Activity (ARCo) in Bolivia (pp. 21-24). ARCo developed POF to address barriers and increase access to financial services for small-scale producers. POF considers all the actors in the value chain, leveraging existing relationships among them to guarantee loans without physical collateral requirements. Several important lessons emerged from the ARCo model with respect to reducing risk and building trust and sustainable incentives in the coffee





industry:

Creating an A/R mechanism reduces risks for financial institutions.

Targeted subsidies lower costs of entering the market and encourage long-term sustainable interventions by financial institutions.

Increased information-sharing, collaboration, and understanding of each party’s constraints improves trust among buyers, sellers, and financial intermediaries.

Training the financial institution’s staff in marketing skills plays an important role in project success, because POFs are driven by supply.

It is important to design an exit strategy to avoid creating dependency.

Furthermore, the USAID Macedonia Business Resource Center project provided financial resources to create the market-driven SME Commercial Finance Fund, which developed and marketed POF, and closely monitored SME production. This resulted in increased finance, SME growth, exports, and job creation. The fund was replicated in Kosovo in 2008 (USAID, 2009a, pp. 31-33).

C3. Factoring

According to Klapper (2005), factoring, frequently done in developed countries on a ―non-recourse‖ basis, has not proven profitable in emerging markets because factors assume large credit risks where credit information is unavailable and fraud is a serious drawback (bogus receivables, non-existing customers). This is compounded by a weak legal environment and the absence of electronic business registries and credit bureaus. In emerging markets, factor could buy receivables ―with recourse‖ (p.7) to the SME if its 12 ASSET-BASED FINANCE: WHITE PAPER # 1 buyer does not pay, provided the SME has the capital reserves to pay (p. 9). Klapper proposes ―reverse factoring‖ as a more viable and effective solution, because it allows factoring ―without recourse‖ and provides low risk finance to high-risk SMEs since the default risk is that of the high-quality customer (p.9). However, she recognizes that legal, tax, and accounting challenges of conventional factoring do remain. The author concludes at length on the Mexican experience of Nafin/DBP programs where ―chains‖ of small SME suppliers and large buyers were created, and the use of electronic channels cut costs and provided greater SME services. Its success is proposed as model for other developing countries (Klapper, 2005, p.25).

A detailed analysis is provided in FS Series #5: Value Chain Finance. (USAID, 2009b, pp. 18-23).

C4. Leasing Fletcher, Sultanov, and Umarov (2005) share experiences on developing equipment financial leasing, address policy issues and appropriate courses of action, and discuss how to maximize leasing’s contribution to development. Developing leasing adds a new product; deepens the financial sector; provides access for SMEs without a significant asset base; makes SMEs more economically active; improves their access to incomeproducing assets; and promotes domestic production, economic growth, and job creation in economies with weak business environments (p.6). They identify key stakeholders and their objectives in developing leasing (p.9), set forth guidelines for the legal framework (p.13) and approaches to tax and accounting treatment and their impact (pp.30-54). One recommendation is not to directly subsidize leasing companies (p.29).

FS Series #4: Enabling Small- and Medium-Sized Enterprise Access to Finance details how the successful introduction of leasing in Armenia, with ACBA Leasing Company (through the USAID Agribusiness SME Market Development program) has had a demonstration effect on other financial institutions and why it is a replicable model (USAID, 2009a, pp. 27-31).

C5. DCA Guarantees This section presents a brief overview of select applications of the guarantee to four types of asset-based finance.

WHRs. To encourage lending to the agricultural sector in Zambia by using warehouse receipts as collateral, USAID provided 50 percent credit guarantees to local commercial banks for lending against WHRs. USAID also supported warehouse management, certification, and grades and standards testing to ensure warehouses were properly managed and collateralized commodities securely stored. Wealth shifted to smaller farmers and traders because local banks entered new rural markets. Prices stabilized because grain was stored instead of being sold at harvest time.

ASSET-BASED FINANCE: WHITE PAPER # 1 13 Leasing. USAID/Sri Lanka structured a lease portfolio guarantee with Lanka Orix Leasing Company, mobilizing enough financing for 150 equipment financial leases, including tractors and transportation vehicles. The innovative use of DCA enabled leasing to those not able to afford standard down payment requirements.

Asset-backed securities. To support mortgage lending development and the secondary mortgage market in Kazakhstan, USAID provided a 50 percent principal guarantee on a U.S. dollar-indexed mortgage-backed bond issued by Lariba Bank. This was designed to demonstrate that banks can finance mortgages and sell off their portfolios.

For a detailed analysis of how DCA assisted the development of access to SME finance

in Kenya with K-Rep Bank, Kenya Commercial Bank, and Fina Bank, see FS Series #4:

Enabling Small- and Medium-Sized Enterprise Access to Finance (USAID, 2009a, pp.

24-27).

14 ASSET-BASED FINANCE: WHITE PAPER # 1

ANNEX A. BIBLIOGRAPHY

Bakker, M., Klapper, L., and Udell, G. (2004). Financing small and medium-size enterprises with factoring: Global growth in factoring – and its potential in Eastern Europe. World Bank. Retrieved from http://wwwwds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2004/07/22/000112742 _20040722174142/Rendered/PDF/wps3342.pdf Dayal, J., Drozda, S., and Wishon, T. (2008). Assessment of Obstacles to SME Finance in Russia. Financial Services Volunteer Corps. Retrieved from http://www.fsvc.org/vertical/Sites/ %7B86C49EB7-0DF3-4B6A-96DEFA73BFC2F%7D/uploads/% 7B6519C9C4-7C5D-4109-97E3ED61BCDAA551%7D.PDF Deelen, L., Dupleich, M., Othieno, L., Wakelin, O., and Berold, R. (Ed). (2003). Leasing for Small and Micro Enterprises. A guide for designing and managing leasing schemes in developing countries. International Labour Organization. Retrieved from http://www.ilo.org/public/libdoc/ilo/2003/103B09_139_engl.pdf Deloitte. ―Summary of IAS 39.‖ Retrieved from http://www.iasplus.com/standard/ias39.htm Emerging Markets Group, Ltd. (2007). Building a Warehouse Receipts Program That Works for All Stakeholders – Notes from the Field No.1. US Agency for International Development.

European Bank for Reconstruction and Development. (2004). Special Study-Warehouse Receipts Programme/Agricultural Commodity Financing Programme.

Retrieved from http://www.ruralfinance.org/servlet/BinaryDownloaderServlet/57498_Special_stu dy.pdf?filename=1217524320587_warehouse_receipts.pdf&refID=57498 European Securitization Forum. (2002). Securitization: A Framework for European Securitization. Retrieved from http://www.sifma.org/regulatory/pdf/euroean-securitisation-WP.pdf FAO Investment Centre/EBRD Cooperation Programme. (2002). Lithuania : Financing of warehouse receipts/Legal review.Report Series – N. 1-October 2002.

Retrieved from ftp://ftp.fao.org/docrep/fao/008/af094e/af094e00.pdf Fleisig, H., Safavian, M., and de la Peña, N. (2006). Reforming Collateral Laws to Expand Access to Finance. International Finance Corporation. Retrieved from http://www.ifc.org/ifcext/sme.nsf/AttachmentsByTitle/BEE+Collateral+Access+t o+Finance/$FILE/Reforming_Collateral.pdf 16 ASSET-BASED FINANCE: WHITE PAPER # 1 Fletcher, M., Sultanov, M., and Umarov, U. (2005). Leasing in Development – Guideline for Emerging Market Economies. International Finance Corporation. Retrieved from http://www.ifc.org/ifcext/sme.nsf/AttachmentsByTitle/Leasing_in_Dev_Nov05.p df/$FILE/Leasing_in_Dev_Nov05.pdf Gibson, T. Shareholder Loan Funds for SMEs in Developing Markets Technical Brief No. 8. US Agency for International Development.



Pages:     | 1 | 2 || 4 |


Similar works:

«ijcrb.webs.com MARCH 2013 VOL 4, NO 11 INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS Linear Programming & Optimizing the Resources Maryam Solhi Lord Samira Mohebbi Bazardeh Sharareh Khoshnood Nastaran Mahmoodi Fatemeh Qowsi Rasht-Abadi Marjan-ol-Sadat Ojaghzadeh Mohammadi MA Students in Commercial Management (International Marketing), Islamic Azad University, Rasht, Iran Abstract Nowadays, managers are evaluated by their decision-making. Linear programming is one of the...»

«Joseph Carbery What were the internal and external pressures for Gorbachev’s economic reforms? When Mikhail Gorbachev became Soviet Premier in March 1985, it became clear that he faced an almost indescribable task in dealing with the Soviet Union’s problems. He had recognised the need for urgent and radical reforms particularly in the area of the ever increasingly stagnant economy. Gorbachev’s convictions of economic reform expressed through his Perestroika policy was further strengthened...»

«SC120927-5.2 University of Windsor Student Committee 5.2: Student Awards and Financial Aid Item for: Information The undergraduate awards program at the University of Windsor is administered by the Office of Student Awards and Financial Aid.Awards may be financed by: 1) an annual donation of at least $1000 (minimum of a three year commitment) as a rule, these awards become active within the same academic year that the terms of reference are approved; 2) presentation of a capital sum of at least...»

«Velsen voor de Wind Kompas voor de toekomst van ondernemend Velsen Rabobank Velsen en Omstreken Inhoudsopgave VOORWOORD INLEIDING CONCLUSIES EN AANBEVELINGEN 1. DE ECONOMIE EN BEVOLKING VAN DE GEMEENTE VELSEN 2. HAVEN EN INDUSTRIE 3. TOERISME EN RECREATIE 4. DETAILHANDEL BRONVERMELDINGEN BIJLAGE: GEÏNTERVIEWDEN EN AANWEZIGEN RONDE TAFEL BIJEENKOMSTEN. 58 COLOFON Voorwoord Het Centrumplan IJmuiden, de realisatie van de derde haven en de aanpak van Oud-IJmuiden zijn slechts enkele voorbeelden...»

«Master in Business Administration (MBA) Meet the Class of 2014 Working together for better global management Master in Business Administration (MBA) The MsM internationally accredited MBA program is tailor-made for managers and entrepreneurs with at least three years of post-graduate work experience, and who wish to excel at managing in a multi-cultural, global context and give their careers a unique boost. Our MBA program combines the latest management thinking with practice and applied...»

«1 Growing Public? Explaining the Changing Economic Role of the State in Asia over the 20th Century Anne Booth SOAS, University of London Abstract This paper surveys some of the recent literature on the role of the state in economic history, paying particular attention to the concepts of the contractual, predatory, regulatory and developmental states and their application to the study of economic development. The paper then relates that literature to the Asian experience over the 20th century....»

«City & Town December 17th, 2015 In this Issue:  Baker-Polito Administration Files Comprehensive Municipal Modernization Bill  By the Numbers  Municipal Finance Law Bureau Muni Modernization Highlights  Bureau of Local Assessment Muni Modernization Highlights  Bureau of Accounts Muni Modernization Highlights  Technical Assistance Bureau Muni Modernization Highlights  OSD Provides New Guide to Posting Building Construction Contracts... Local Officials Directory Municipal...»

«E-COMMERCE TRENDS AND IMPACTS ACROSS EUROPE No. 220 March 2015 E-CommErCE TrEnds and ImpaCTs aCross EuropE Martin Falk and Eva Hagsten No. 220 March 2015 Acknowledgement: Initially, this study served as a background report to the UNCTAD Information Economy Report 2015 entitled “Unlocking the Potential of E-Commerce for Developing Countries”. The authors are grateful to two anonymous referees for helpful comments on an earlier draft. UNCTAD/OSG/DP/2015/2 ii The opinions expressed in this...»

«Returns to Specialization: Evidence from the Outpatient Surgery Market Elizabeth L. Munnich* Department of Economics University of Louisville Stephen T. Parente Carlson School of Management University of Minnesota June 2016 ABSTRACT Technological changes in medicine have created new opportunities to provide surgical care in lower cost, specialized facilities. This paper examines patient outcomes in ambulatory surgery centers (ASCs), which were developed as a low-cost alternative to outpatient...»

«Stuart Karl Landon Curriculum Vitae CONTACT INFORMATION Address: Department of Economics Dean’s Office, Faculty of Arts 6th Floor Humanities Centre 8-14 Tory Building University of Alberta University of Alberta Edmonton, Alberta, Canada Edmonton, Alberta, Canada T6G 2H4 T6G 2E5 Phone: (780) 492-7632 (780) 248-1115, e-mail: slandon@ualberta.ca WEB-PAGES http://uofa.ualberta.ca/arts/about/people-collection/s-landon www.artsrn.ualberta.ca/econweb/landon/landon.htm CITIZENSHIP Canadian DEGREES...»

«NIPA Corporate Profits and Reported Earnings: A Comparison and Measurement Issues Charles Ian Mead, Brent R. Moulton, and Kenneth Petrick* January 2004 Abstract B The users of the national income and product accounts (NIPAs) often compare the growth rates of NIPA profit measures with those of other publically available measures of reported earnings, such as Standard & Poor=s 500 earnings. Differences between the NIPA profit measures and the other reported earnings measures reflect differences...»

«EMPLOYEE-BASED BRAND EQUITY: WHY FIRMS WITH STRONG BRANDS PAY THEIR EXECUTIVES LESS Nader T. Tavassoli, Alina Sorescu, and Rajesh Chandy* *Nader T. Tavassoli is Professor of Marketing, London Business School (ntavassoli@london.edu). Alina Sorescu is Rebecca U. ’74 and William S. Nichols III ’74 Associate Professor of Marketing, Mays Business School, Texas A&M University (asorescu@tamu.edu). Rajesh Chandy is Professor of Marketing, Tony and Maureen Wheeler Chair in Entrepreneurship, and...»





 
<<  HOME   |    CONTACTS
2017 www.abstract.dislib.info - Abstracts, online materials

Materials of this site are available for review, all rights belong to their respective owners.
If you do not agree with the fact that your material is placed on this site, please, email us, we will within 1-2 business days delete him.