This paper tests the response of bond yield spreads and equity prices to credit rating changes in the Australian financial market. Unlike some earlier studies for foreign markets, we find evidence that both yield spreads and equity prices move in the ‘expected’ direction following rating...

This paper presents some theory and evidence on the implications of sudden currency depreciations for output and inflation. It identifies some of the characteristics shared by countries which have suffered falling output in the aftermath of a currency crisis, and it presents a small model which...

This paper reviews corporate finance literature which explains some of the long-term causes of the Japanese banking sector’s poor performance in the early 1990s. It concentrates on the ideas that an adverse selection problem developed in the bank lending market during the 1980s, and that banks...

The sharemarket crash of October 1987 has raised the question of the effect of a change in share prices on real consumption expenditure. This paper examines this issue by examining the role of permanent income or wealth in explaining the behaviour of aggregate consumption expenditure in...

This paper reviews some evidence on the cost of equity capital in Australia and overseas. Two conventional approaches yield conflicting results. A third approach, based on the International Asset Pricing Model, starts from the premise that Australian equities are part of a world market, and...