Jinminpi (the "People's Money") is the currency now circulated in communistic China. It is usually abbreviated as JMP$. Only the People's Bank of China issues the notes. They are inconvertible paper money, and neither gold nor foreign exchange has been provided as reserves. Chinese communists generally follow Soviet communists. There is no exception in accounting. The cash control system in Communistic China is practically an extension of that in the Soviet Union. Simply speaking, there are three parts in the Soviet Ruble Control System: cash control; credit control; and transfer control. The democratic cash control differs from the Soviet cash control, not only in the operation but also in the object. The chief purpose of the democratic cash control is to insulate the abnormal fluctuation of cash circulated in foreign countries in order to stabilize the external value of the currency in foreign exchange market. By the cash control system; the central bank effectively controls the receipts and disbursements of all organizations. Since the cash in hand and cash settlements are limited, the volume and speed of money in circulation can be reduced and controlled by the central bank. Prices can, therefore, be stabilized.

We investigate the structure of preferences and uncertainty that guarantees that prices are fully revealing even though asset markets are incomplete and there are more sources of uncertainty than assets in the economy. A sufficient condition for fully revealing prices is that investors have preferences of the (possibly state-dependent) linear-risk-tolerance class. Finally, we discuss how our result allows one to extend certain existing literature on demand aggregation, welfare analysis, and the pricing of contingent claims to the case in which markets are incomplete and investors have asymmetric private information.

The paper examines the microeconomic (partial equilibrium) behavior of joint ventures established between transnational corporations and domestic partners in less developed countries. It focuses on issues relating to resource allocation and profit distribution under various institutional scenarios. The analysis places special emphasis on the role of bargaining power, transfer pricing, stock ownership, and profit shares of the parties, and the responsiveness of joint ventures to national development goals. Some of the results apply to wholly owned subsidiaries of transnational corporations, local firms, and licensing arrangements, which emerge as special cases.

This paper provides a theory of debt and hedging based on human capital. We distinguish human capital from physical capital in two ways: (1) human capital is inalienable and can exercise a one-sided option to leave the firm and (2) human capital is not perfectly replaceable. We show that a firm may reach the first best solution while issuing debt or equity to outsiders provided that either the insiders receive a senior claim or that the firm hedges. We then show that given asymmetric information concerning costs the only viable solution has the firm issuing debt to outsiders and hedging.

This paper provides a review of developments in the area of risk management at both the firm level and the macro-economy. We review rationales regarding why firms choose to manage risk, as well as new developments in measuring and managing risk in a dynamic setting. We also consider current risk sharing arrangements in light of the theory regarding optimal risk sharing. The paper concludes with some suggestions for additional research that emphasizes the importance of incorporating market incompleteness in an equilibrium setting. We also discuss the role of incompleteness at the macro-level and speculate on how derivatives markets may influence macro-economic stabilization policy.

The authors investigate the structure of preferences and uncertainty that guarantees that prices are fully revealing even though asset markets are incomplete and there are more sources of uncertainty than assets in the economy. A sufficient condition for fully revealing prices is that investors have preferences of the (possibly state-dependent) linear-risk-tolerance class. Finally, the authors discuss how their result allows one to extend certain existing literature on demand aggregation, welfare analysis, and the pricing of contingent claims to the case in which markets are incomplete and investors have asymmetric private information. Copyright 1995 by American Economic Association.

This paper considers the maturity intermediation and intertemporal lending decisions of risk-averse financial intermediaries. In particular, the maturity mismatch problem and the fixed-versus-variable-rate lending decision are modeled when the major source of risk involves uncertain future interest rates. The results imply that the strategy of matching the maturity of assets and liabilities is not generally optimal or even minimum risk. This is due primarily to the “built-in” hedge that the intermediary has as a result of rolling over short-term loans while continuing to finance long-term loans. Intertemporal dependencies between loan demand and costs (or both) also have an effect on the optimal degree of maturity mismatching and provide one rationale for making loans at rates below current marginal cost.

ABSTRACT This paper considers the maturity intermediation and intertemporal lending decisions of risk‐averse financial intermediaries. In particular, the maturity mismatch problem and the fixed‐versus‐variable‐rate lending decision are modeled when the major source of risk involves uncertain future interest rates. The results imply that the strategy of matching the maturity of assets and liabilities is not generally optimal or even minimum risk. This is due primarily to the “built‐in” hedge that the intermediary has as a result of rolling over short‐term loans while continuing to finance long‐term loans. Intertemporal dependencies between loan demand and costs (or both) also have an effect on the optimal degree of maturity mismatching and provide one rationale for making loans at rates below current marginal cost.