The modern paradigm of borrowing as a lesson learned during the global financial crisis
DOI:
https://doi.org/10.7251/ACE1318239KKeywords:
debt, banks in the Republic of Srpska, 5CAbstract
According to data published by the Statistical Office of the Republic of Srpska, Gross Domestic Product (GDP) of the Republic of Srpska recorded a negative growth rate of 0.9% in the third quarter of the year 2012. compared to the same period of the year 2011. This continued a decline in GDP, which is recorded in two quarters of the 2012. On the other hand, a report by the Statistical Office said that the greatest GDP growth occurred in financial intermediation by 7.6%, which is explained by increased public sector demand for money in order to finance the current budget deficit. Consequently, in practice, we often hear same question in context of the borrowing dilemma - where are the limits of borrowing? Simplified approach in seeking answers to the previous question suggests that the borrowing capacity depends on the estimated value of the collateral of credit arrangement. However, the answer to this question should be sought thorough the analysis of the borrowers cash ?ows (in?ows and out?ows), and on the basis of such results we have to do serious examination of the abilities of borrowers capacity to repay their loans from cash ?ows in the future period of time.
References
Donaldson, G. Corporate Debt Capacity. Boston, MA: Division of Research, Graduate School of Business Administration, 1961.
Kester, G. W.Why Borrowers Become Proft Rich and Cash Poor. Te Journal of Commercial Bank Lending, Vol. 74, No. 2, 1992, str. 45-53.
Kester, G.W., Bixler, T.W. Why 90-Day Working Capital Loans Are Not Repaid on Time. Te Journal of Commercial Bank Lending, Vol. 72, No. 12, 1990, str. 10-18.
Kester, G. W., Scott, A. H., Kipling, M. P. How Much Debt Can a Borrower Afford? Te RMA Journal, Vol. 87, No. 3, 2004, str. 46-51.
Kester, W., Радивојац, Г. Политика структуре капитала и финансијске одлуке компанија са Бањалучке берзе. Финанцинг 1/2012, Бања Лука, стр. 9-12.
Lojpur, A., Lakicevic, M. Optimisation of Capital in the Period of Crisis, Proceedings of the 13th Congress AAARS: Finance, Accountancy and Audit in the Global Crisis, 2000.
Modigliani, F., Miller, M.H. (1958). Te Cost of Capital, Corporation Finance, and the Theory of Investment, American Economic Review, Vol. 48, No. 3,1958, str. 261–297.
Myers, S.C. The Capital Structure Puzzle, Journal of Finance, Vol. 39, No. 3, 1984, str. 575–592.
Myers, S.C., Majluf, N.S. Corporate Financing and Investment Decisions when Firms have Information that Investors Do Not Have, Journal of Financial Economics, Vol. 13, No. 2, 1984, str. 187–221.
