Australian Finance Company Profitability: Tests of the Hedging and S.C.P. Models

R. W. McShane and I. G. Sharpe
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R. W. McShane: Department of Economics, University of Newcastle.
I. G. Sharpe: Department of Finance, University of New South Wales.

Australian Journal of Management, 1987, vol. 12, issue 1, 69-90

Abstract: The paper tests the hedging and structure-conduct-perfor Mance (S.C.P.) models in the context of Australian finance company profit margins. Econometric results from pooled time-series/cross-section data were consistent with the S.C.P. model and inconsistent with the hedging model. Finance company profits are positively related to market power and the degree of risk aversion, and negatively related to the level of interest rates and provisions made for bad and doubtful debts.

Keywords: PROFITABILITY; FINANCE COMPANIES; HEDGING (search for similar items in EconPapers)
Date: 1987
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:12:y:1987:i:1:p:69-90

DOI: 10.1177/031289628701200106

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