Abstract: This paper elaborates risk shifting in debt financing system as the ultimate cause of the global financial crisis. In contrast, risk sharing in equity financing like sukuk helps the economic system to be better sustained. Nevertheless, some types of sukuk are haunted by the issue of imitation with bonds. The critics on the imitation issue not only have raised doubt on the ability of sukuk to diminish risk shifting behavior but also the ability of this Islamic financial instrument to ensure better future financial stability. Through that, this paper provides discussion on the possibility of sukuk to induce risk shifting and how equity financing may help sukuk to be free from risk shifting. This paper is important in the sense that sukuk receives a significant demand from investors throughout the world. For this instrument to be supportive in the future economic stability, the issue of imitation needs to be identified and addressed. Furthermore, critics cannot be focused on debts and its ability to gauge the financial flux but also to sukuk due to their structures similarity.
Abstract: According to the theory of capital structure, this paper uses principal component analysis and linear regression analysis to study the relationship between the debt characteristics of the private listed companies in Jiangsu Province and their business performance. The results show that the average debt ratio of the 29 private listed companies selected from the sample is lower. And it is found that for the sample whose debt ratio is lower than 80%, its debt ratio is negatively related to corporate performance, while for the sample whose debt ratio is beyond 80%, the relationship of debt financing and enterprise performance shows the different trends. The conclusions reflect the drawbacks may exist that the debt ratio is relatively low and having not take full advantage of debt governance effect of the private listed companies in Jiangsu Province.
Abstract: The term private equity usually refers to any type of
equity investment in an asset in which the equity is not freely
tradable on a public stock market. Some researchers believe that
private equity contributed to the extent of the crisis and increased
the pace of its spread over the world. We do not agree with this.
On the other hand, we argue that during the economic recession
private equity might become an important source of funds for firms
with special needs (e.g. for firms seeking buyout financing, venture
capital, expansion capital or distress debt financing). However,
over-regulation of private equity in both the European Union and
the US can slow down this specific funding channel to the
economy and deepen credit crunch during global crises.