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Corporate interest rate risk management with derivatives in Australia: empirical results

CARNEIRO, Luiz Augusto Ferreira; SHERRIS, Michael
Fonte: Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade, Departamento de Contabilidade e Atuária Publicador: Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade, Departamento de Contabilidade e Atuária
Tipo: Artigo de Revista Científica
Português
Relevância na Pesquisa
36.24%
Financial and insurance theories explain that large widely-held corporations manage corporate risks if doing so is costective to reduce frictional costs such as taxes, agency costs and financial distress costs. A large number of previous empirical studies, most in the U.S., have tested the hypotheses underlying corporate risk management with financial derivative instruments. In order to quantify corporate hedge demand, most previous studies have used the ratio of principal notional amount of derivatives to company size, although they recognize that company size is not an appropriate proxy for financial risk. This paper analyzes the interest-rate-risk hedge demand by Australian companies, measured through the ratio of principal notional amount of interest rate derivatives to interest-rate-riskbearing liabilities. Modern panel data methods are used, with two panel data sets from 1998 to 2003 (1102 and 465 observations, respectively). Detailed information about interest-rate-risk exposures was available after manual data collection from financial annual reports, which was only possible due to specific reporting requirements in Australian accounting standards. Regarding the analysis of the extent of hedge, our measurement of interest-rate-risk exposures generates some significant results di erent from those found in previous studies. For example...

Endogeneidade e mecanismos de transmissão entre a taxa de juros doméstica e o risco soberano: uma revisita aos determinantes do risco-Brasil.; Endogeneity and transmission mechanisms from the domestic interest rate to the Brazil-risk: a revisit to the determinants of the Brazil-risk.

Leichsenring, Daniel Ribeiro
Fonte: Biblioteca Digitais de Teses e Dissertações da USP Publicador: Biblioteca Digitais de Teses e Dissertações da USP
Tipo: Dissertação de Mestrado Formato: application/pdf
Publicado em 09/06/2004 Português
Relevância na Pesquisa
36.23%
Este trabalho faz uma reconstituição histórica da política monetária praticada no Brasil desde a implementação do Plano Real, revisa uma determinada discussão teórica sobre o tema da taxa de juros brasileira e suas possíveis relações perversas com outras variáveis macroeconômicas, e apresenta um modelo para tentar captar esses possíveis efeitos perversos da política monetária, tais como descritos na maior parte dos trabalhos apontados na discussão teórica. No último decênio, a taxa de juros nominal doméstica sempre esteve acima dos 15% ao ano, sendo que em grande parte do período analisado, a taxa de juros real ficou acima deste patamar. Com efeito, essa condução da política monetária trouxe à tona determinados efeitos indesejados, tais como a contaminação do risco-País pela taxa de juros doméstica. Entre os principais resultados obtidos seguindo uma análise com base num modelo VAR em que se avaliam choques nas variáveis por meio de funções impulso-resposta generalizadas (GIR), encontra-se que o risco soberano brasileiro, no período pós-desvalorização cambial, tem como determinantes os fundamentos macroeconômicos, em particular variáveis fiscais, como a dívida líquida do setor público consolidado como proporção do PIB...

Determinantes da taxa de juros nominal e sua relação com a taxa de câmbio no Brasil no período de 1990 a 2006; Determination of nominal interest rate and its relationship with the exchange rate in Brazil during the time period from 1990 to 2006

Harfuch, Leila
Fonte: Biblioteca Digitais de Teses e Dissertações da USP Publicador: Biblioteca Digitais de Teses e Dissertações da USP
Tipo: Tese de Doutorado Formato: application/pdf
Publicado em 19/03/2008 Português
Relevância na Pesquisa
36.26%
Nas duas últimas décadas, o Brasil vem praticando elevadas taxas de juros nominais em relação à taxa de inflação existente. Isso encarece o crédito, aumenta o endividamento e prejudica o crescimento econômico sustentado. Além disso, fatores como a implementação de políticas econômicas de combate à inflação, a aceleração do processo de abertura e internacionalização econômicas criam um mix variáveis que se relacionam com a taxa de juros e deixam explícita a necessidade de se analisar os principais determinantes da taxa de juros nominal no Brasil e sua relação com a taxa de câmbio, objetos de estudos do presente trabalho. O modelo teórico apresentado, expandido para incluir uma equação de Fisher adequada à economia brasileira e o risco de default, foi estimado seguindo os seguintes passos: 1) testes de raiz unitária de Dickey-Pantula, Dickey-Fuller, raiz unitária sazonal e raiz unitária com quebra estrutural foram realizados de modo a saber o grau de integração de cada variável e, assim, como cada uma deve ser considerada nos modelos; 2) regressões para taxa de juros e taxa de câmbio foram, inicialmente, estimadas pelo método de Mínimos Quadrados Ordinários e, caso tenham sido constatados problemas de heteroscedasticidade e autocorrelação dos resíduos...

O regime jurídico do juro em negócio financeiro; Body of law which governs the interest rate in credit

Park, Thais Hae Ok Brandini
Fonte: Biblioteca Digitais de Teses e Dissertações da USP Publicador: Biblioteca Digitais de Teses e Dissertações da USP
Tipo: Dissertação de Mestrado Formato: application/pdf
Publicado em 07/05/2009 Português
Relevância na Pesquisa
36.24%
Este trabalho tem como objetivo analisar o regime jurídico do juro em negócio financeiro e a expressão dos efeitos que se colhem no plano da ordem social. O que se pretende demonstrar é como o direito regula a matéria em face do papel que o juro desempenha no encaminhamento do fluxo monetário, influenciando de maneira decisiva o crédito e, por conseguinte, a atividade produtiva do Estado. Para tanto, dividiu-se o presente estudo num exame do juro sob uma perspectiva micro e macrojurídica. Primeiro, o juro foi apresentado em face da noção de preço, momento em que a análise da especulação como motivação da liquidez revelou que os fluxos monetários em direção aos particulares se ajustam em função da participação do Estado na renda social. Em seguida, foi realizado um estudo detalhado acerca do regime jurídico brasileiro do juro, bem como da limitação dos juros em função dos princípios do equilíbrio econômico-financeiro e da vedação ao enriquecimento sem causa. A última parte do trabalho pretendeu expor a multilateralidade de efeitos decorrente da prática de juros, concluindo-se pela necessidade em se considerar na sua composição sua vertente dinâmica, com exame detalhado da taxa básica de juros e suas peculiaridades. Concluiu-se...

O interesse público nas sociedades de economia mista; The public interest in joint ventures

Bonfim, Natália Bertolo
Fonte: Biblioteca Digitais de Teses e Dissertações da USP Publicador: Biblioteca Digitais de Teses e Dissertações da USP
Tipo: Dissertação de Mestrado Formato: application/pdf
Publicado em 16/04/2012 Português
Relevância na Pesquisa
36.27%
O trabalho trata do interesse público nas sociedades de economia mista enquanto tipo societário que agrega participação estatal e privada em seu capital social, e que se constitui em instrumento do Estado para a implementação de políticas públicas. Analisa os elementos que as caracterizam e os problemas internos e externos que delas decorrem, buscando demonstrar que toda sua estrutura gravita em torno do interesse público que lhes dá causa. Em um segundo momento, percorre os meandros da expressão interesse público, investigando seus aspectos ideológicos e a compreensão do conceito no decorrer da evolução histórico-cultural do pensamento jurídico-político. Assegura que sua essência de conceito jurídico indeterminado não retira a possibilidade de sua melhor aplicação a cada caso concreto, tendo em vista que seu núcleo permanece aberto à realidade. Entende que, com a instituição do Estado Democrático de Direito pela Constituição Federal de 1988, que erigiu a dignidade da pessoa humana como princípio fundamental da ordem econômicasocial, o interesse público passou a constituir uma forma de garantir a satisfação dos interesses privados, pelo que não se pode incorrer no erro de afirmar que o interesse público coloca em risco os direitos fundamentais...

Corporate interest rate risk management with derivatives in Australia: empirical results

Carneiro,Luiz Augusto Ferreira; Sherris,Michael
Fonte: Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade, Departamento de Contabilidade e Atuária Publicador: Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade, Departamento de Contabilidade e Atuária
Tipo: Artigo de Revista Científica Formato: text/html
Publicado em 01/04/2008 Português
Relevância na Pesquisa
36.24%
Financial and insurance theories explain that large widely-held corporations manage corporate risks if doing so is costective to reduce frictional costs such as taxes, agency costs and financial distress costs. A large number of previous empirical studies, most in the U.S., have tested the hypotheses underlying corporate risk management with financial derivative instruments. In order to quantify corporate hedge demand, most previous studies have used the ratio of principal notional amount of derivatives to company size, although they recognize that company size is not an appropriate proxy for financial risk. This paper analyzes the interest-rate-risk hedge demand by Australian companies, measured through the ratio of principal notional amount of interest rate derivatives to interest-rate-riskbearing liabilities. Modern panel data methods are used, with two panel data sets from 1998 to 2003 (1102 and 465 observations, respectively). Detailed information about interest-rate-risk exposures was available after manual data collection from financial annual reports, which was only possible due to specific reporting requirements in Australian accounting standards. Regarding the analysis of the extent of hedge, our measurement of interest-rate-risk exposures generates some significant results di erent from those found in previous studies. For example...

Interest-taking and carry-over effects of incidental rejection emotions

Weinstein, Netta (1981 - ); Ryan, Richard M.
Fonte: University of Rochester. Publicador: University of Rochester.
Tipo: Tese de Doutorado Formato: Number of Pages:xii, 154 leaves
Português
Relevância na Pesquisa
36.23%
Thesis (Ph. D.)--University of Rochester. Dept. of Clinical and Social Sciences in Psychology, 2010.; A study examined the role of interest-taking in regulating emotions and reducing the influence of incidental emotions when making judgments. To this end, 142 students participated in a single laboratory session. Participants were first led to believe that a peer had rejected them. They were then asked to write for seven minutes. The content of the writing depended on assignment to one of three conditions. In a suppression condition, they were asked to suppress their feelings and instead focus their attention to neutral events that had occurred earlier in the day. In a second expression condition participants were asked to express thoughts and feelings, but were given no more instructions on how to do so. A final interest-taking condition asked that participants not only express, but also take an interest or curiosity in their emotional experiences while doing so. Affect (specifically, anger, prosocial affect, and internalization of rejection) was measured immediately after the writing and at the end of the study. Additionally, participants rated audiotaped speeches in which the individual who rejected them, and an unrelated individual...

INTEREST RATE PASS-THROUGH AND CREDIT SPREAD IN NEW KEYNESIAN MODELS. THEORETICAL AND EMPIRICAL RELEVANCE

LIBERATI, DANILO
Fonte: La Sapienza Universidade de Roma Publicador: La Sapienza Universidade de Roma
Tipo: Tese de Doutorado
Português
Relevância na Pesquisa
36.24%
The behavior of banks and the determination of retail interest rates have taken a prominent role after the recent financial crisis: high levels of the cost of credit and quantity rationing are characterizing the actual economic environment. Monetary policy has sought to address the setting of bank rates by continuous operations on the monetary policy rate. Nevertheless, the adjustment of bank rates has not been complete. The aim of this dissertation is to show that the incomplete pass-through of policy rate changes on the loan rate may depend also on market frictions, in particular those existing in the credit market. To this aim, we present three self-contained but highly correlated papers in which we discuss the role of these frictions, and their interplay with those existing in the labor market, on the size of the interest rate pass-through and its relevance in shaping business cycle dynamics. The study of interest rate dynamics also allows us to focus on the cyclical behavior of the credit spread, which is often used as a leading indicator of the economic activity. In order to shed light on these issues, we employ a New Keynesian framework (Walsh, 2003) which offers a convenient setting for monetary policy analysis. What is relevant in this model is the so-called “cost channel” that links the current and the expected future real marginal costs of the productive sector of the economy with inflation and then with the business cycle dynamics. If...

Systemic Risk, Dollarization, and Interest Rates in Emerging Markets

Bacha, Edmar L.; Holland, Márcio; Gonçalves, Fernando M.
Fonte: World Bank Publicador: World Bank
Tipo: Artigo de Revista Científica
Português
Relevância na Pesquisa
36.24%
This study investigates the impact of systemic risks and financial dollarization on real interest rates in emerging economies. Higher systemic risks induce both higher real interest rates and increased dollarization. Using appropriate instruments for the dollarization ratio, the study overcomes the simultaneous equation problem and correctly estimates a negative coefficient for the dollarization ratio in the interest rate equation. It confirms the theoretical prediction that a strategy of "dedollarizing" the economy will raise the equilibrium domestic real interest rate if the strategy fails to address fundamental macroeconomic risks. Even so, it also finds that this effect is small, after controlling for the risks of dilution and default. The results bring to light the systemic-risk reasons for high interest rates in emerging economies—and contribute to evaluating the difficulties of dedollarization policies.

Are Microcredit Interest Rates Excessive?

Rosenberg, Richard; Gonzalez, Adrian; Narain, Sushma
Fonte: World Bank, Washington, DC Publicador: World Bank, Washington, DC
Português
Relevância na Pesquisa
36.25%
Over the past two decades, institutions that make micro loans to low-income borrowers in developing and transition economies have focused increasingly on making their operations financially sustainable by charging interest rates that are high enough to cover all their costs. They argue that doing so will best ensure the permanence and expansion of the services they provide. Sustainable (i.e., profitable) microfinance providers can continue to serve their clients without needing ongoing infusions of subsidies, and can fund exponential growth of services for new clients by tapping commercial sources, including deposits from the public.

How Interest Rates Changed under Financial Liberalization : A Cross-Country Review

Honohan, Patrick
Fonte: World Bank, Washington, DC Publicador: World Bank, Washington, DC
Português
Relevância na Pesquisa
36.26%
Financial liberalization was expected to make interest rates, and asset prices more volatile, with distributional consequences, such as reduced, or relocated rents, and increased competition in financial services. The author examines available data on money market, and bank interest rates for evidence of whether these things happened. He shows that as more and more countries liberalized, the level and dynamic behavior of developing-country interest rates converged to industrial-country norms. In the short term, volatility increased in both real, and nominal money market interest rates. Treasury bill rates, and bank spreads, evidently the most repressed, showed the greatest increase as liberalization progressed - shifting substantial rents from the public sector, and from favored borrowers. Whereas quoted bank spreads in industrial countries contracted somewhat in the late 1990s, spreads in developing countries remained much higher, presumably reflecting both market power, and the higher risks of lending in the developing world. There was no clear-cut change in mean rates of inflation...

Do High Interest Rates Defend Currencies during Speculative Attacks?

Kraay, Aart
Fonte: World Bank, Washington, DC Publicador: World Bank, Washington, DC
Português
Relevância na Pesquisa
36.25%
Drawing on evidence from a large sample of speculative attacks in industrial and developing countries, the author argues that high interest rates do not defend currencies against speculative attacks. In fact, there is a striking lack of any systematic association between interest rates and the outcome of speculative attacks. The lack of clear empirical evidence on the effects of high interest rates during speculative attacks mirrors the theoretical ambiguities on this issue.

Interest Rate Caps around the World : Still Popular, but a Blunt Instrument

Maimbo, Samuel Munzele; Henriquez Gallegos, Claudia Alejandra
Fonte: World Bank Group, Washington, DC Publicador: World Bank Group, Washington, DC
Português
Relevância na Pesquisa
36.33%
Among other common forms of government financial control, caps on interest rates have been declining over the past several decades as most industrialized countries and a rising number of developing countries continue liberalizing their financial policies. However, in several countries the last financial crisis reopened the debate on interest rate controls as a tool for consumer protection. This paper undertakes a stock-taking exercise to determine the number of countries currently capping interest rates on loans. The paper looks at the main characteristics of the regimes countries have used, including the source of rate-setting authority, the methodology, and the criteria for establishing the cap. The paper finds at least 76 countries around the world currently use some form of interest rate caps on loans -- all with varying degrees of effects, including the withdrawal of financial institutions from the poor or from specific segments of the market, an increase in the total cost of the loan through additional fees and commissions...

Public Deliberation and Interest Organisations: a Study of Responses to Lay Citizen Engagement in Public Policy

Hendriks, Carolyn Maree
Fonte: Universidade Nacional da Austrália Publicador: Universidade Nacional da Austrália
Tipo: Thesis (PhD); Doctor of Philosophy (PhD)
Português
Relevância na Pesquisa
36.26%
This thesis empirically examines how lobby groups and activists respond to innovative forms of public participation. The study centres on processes that foster a particular kind of deliberative governance including citizens’ juries, consensus conferences and planning cells. These deliberative designs bring together a panel of randomly selected lay citizens to deliberate on a specific policy issue for a few days, with the aim of providing decision makers with a set of recommendations. While policy makers worldwide are attracted to these novel participatory processes, little consideration has been given to how well they work alongside more adversarial and interest-based politics. This doctoral research project examines this interface by studying what these processes mean to different kinds of policy actors such as corporations, advocacy groups, government agencies, experts and professionals. These entities are collectively referred to in this thesis as ‘interest organisations’ because in some way they are seeking a specific policy outcome from the state – even government-based groups. The empirical research in this thesis is based on comparative case studies of four deliberative design projects in Australia and Germany. The Australian cases include a citizens’ jury on waste management legislation and a consensus conference on gene technology in the food chain. The German case studies include a planning cells project on consumer protection in Bavaria...

Global Transmission of Interest Rates : Monetary Independence and the Currency Regime

Frankel, Jeffrey; Schmukler, Sergio; Serven, Luis
Fonte: World Bank, Washington, DC Publicador: World Bank, Washington, DC
Tipo: Publications & Research :: Policy Research Working Paper; Publications & Research
Português
Relevância na Pesquisa
36.28%
The authors empirically study the sensitivity of local interest rates to international interest rates and how that sensitivity is affected by a country's choice of exchange rate regime. To establish the empirical regularities, they use a reduced-form empirical approach to compute both panel and single-country estimates of interest rate sensitivity for a large sample of developing and industrial economies between 1970 and 1999. When using the full sample, they find that: 1) Interest rates are typically lower in economies with fixed exchange rates than in those with flexible exchange rates. 2) More rigid currency regimes tend to exhibit higher transmission than more flexible regimes. In many cases in the 1990s, however, the authors cannot reject full transmission (a slope coefficient equal to 1), even for several countries with floating regimes. The data suggest an upward time trend in the degree to which domestic interest rates are sensitive to international capital movements and developing economies' increased financial integration with the rest of the world. As a result...

Microcredit Interest Rates and Their Determinants, 2004-2011

Rosenberg, Richard; Gaul, Scott; Ford, William; Tomilova, Olga
Fonte: CGAP, Washington, DC Publicador: CGAP, Washington, DC
Tipo: Publications & Research :: Working Paper; Publications & Research
Português
Relevância na Pesquisa
36.3%
From the beginning of modern microcredit, its most controversial dimension has been the interest rates charged by micro lenders, often referred to as microfinance institutions (MFIs). These rates are higher, often much higher, than normal bank rates, mainly because it inevitably costs more to lend and collect a given amount through thousands of tiny loans than to lend and collect the same amount in a few large loans. Higher administrative costs have to be covered by higher interest rates. Many people worry that poor borrowers are being exploited by excessive interest rates, given that those borrowers have little bargaining power, and that an ever-larger proportion of microcredit is moving into for-profit organizations where higher interest rates could, as the story goes, mean higher returns for the shareholders. Section one looks at the level and trend of micro lenders' interest rates worldwide, and breaks them out among different types of institutions (peer groups). Section two examines the cost of funds that micro lenders borrow to fund their loan portfolio. Section three reports on loan losses...

The Impact of Pedagogical Practice On Student Interest In Elementary Science Classrooms

GROEN, JOVAN F.
Fonte: Quens University Publicador: Quens University
Tipo: Tese de Doutorado Formato: 416509 bytes; application/pdf
Português
Relevância na Pesquisa
36.25%
Using a mixed-method design, the purpose of this research was to understand interest in the elementary science classroom as affected by different teaching methods. Of particular concern was the state of interest in junior level (Grades 4-6) science classrooms. Research conducted on science interest and attitudes toward science has identified significant declines in student interest and engagement across grade levels. To remedy these concerns, it has become imperative that researchers and science educators gain a greater understanding of the growing literature in the field of interest and how this research might improve student engagement, especially at the elementary level. Questionnaires were administered to 178 students from Grades 4-6 measuring their individual interest in science, the frequency at which they were exposed to different teaching methods in science, and the level of interest they held for each instructional approach in science class. In addition, student interviews were conducted with six students from both genders representing each grade to better understand what makes for interesting and effective teaching of science in the eyes of the students. The quantitative and qualitative components yielded largely similar findings. Results indicated that passive learning tasks...

Corporate interest rate risk management with derivatives in Australia: empirical results

Carneiro, Luiz Augusto Ferreira; Sherris, Michael
Fonte: Universidade de São Paulo. Escola de Economia, Administração e Contabilidade Publicador: Universidade de São Paulo. Escola de Economia, Administração e Contabilidade
Tipo: info:eu-repo/semantics/article; info:eu-repo/semantics/publishedVersion; ; ; ; ; ; Formato: application/pdf
Publicado em 01/04/2008 Português
Relevância na Pesquisa
36.24%
Financial and insurance theories explain that large widely-held corporations manage corporate risks if doing so is costective to reduce frictional costs such as taxes, agency costs and financial distress costs. A large number of previous empirical studies, most in the U.S., have tested the hypotheses underlying corporate risk management with financial derivative instruments. In order to quantify corporate hedge demand, most previous studies have used the ratio of principal notional amount of derivatives to company size, although they recognize that company size is not an appropriate proxy for financial risk. This paper analyzes the interest-rate-risk hedge demand by Australian companies, measured through the ratio of principal notional amount of interest rate derivatives to interest-rate-riskbearing liabilities. Modern panel data methods are used, with two panel data sets from 1998 to 2003 (1102 and 465 observations, respectively). Detailed information about interest-rate-risk exposures was available after manual data collection from financial annual reports, which was only possible due to specific reporting requirements in Australian accounting standards. Regarding the analysis of the extent of hedge, our measurement of interest-rate-risk exposures generates some significant results di erent from those found in previous studies. For example...

Os Determinantes das Taxas de Juros Brasileiras para Títulos Públicos Préfixados de Longo Prazo; The Determinants of Brazilian Interest Rates for Government Bonds; The Determinants of Brazilian Interest Rates for Government Bonds

Klotzle, André Cabus; PUC-Rio; Ness Jr., Walter Lee; PUC-Rio; Klotzle, Marcelo Cabus; PUC-Rio
Fonte: Universidade Federal Fluminense - LATEC Publicador: Universidade Federal Fluminense - LATEC
Tipo: info:eu-repo/semantics/article; info:eu-repo/semantics/publishedVersion; Formato: application/pdf
Publicado em 23/03/2012 Português
Relevância na Pesquisa
36.25%
Este trabalho objetiva, por meio de um modelo de paridade coberta de juros ajustada aos riscos-paíse demais riscos, verificar estatisticamente quais são os determinantes externos da taxa de juros domésticabrasileira diária para títulos públicos pré-fixados de longo prazo — no caso, as Notas do Tesouro NacionalSérie F (NTN-Fs), com vencimento em 2017. A variável dependente foi definida como a taxa de retorno efetivadas respectivas NTN-Fs, ao passo que as variáveis independentes foram a taxa livre de risco dos Treasuriesnorte-americanos de 10 anos, o prêmio de risco Brasil e o risco cambial. Tendo em vista que as variáveisindependentes possuem fortes relações de multicolinearidade, optou-se por rodar um modelo VAR e, a partirdo mesmo, extrair os graus de endogeneidade de cada variável. As principais ferramentas do modelo VAR— decomposição de variância e funções impulso-resposta — permitiram tirar importantes conclusões acercados impactos defasados de variações ou choques ocorridos nas variáveis independentes sobre a taxa dejuros das NTN-Fs analisadas. Os resultados comprovaram que a taxa de juros das NTN-Fs é a variável maisendógena do modelo, e mostraram que o risco cambial é a menos endógena. A conclusão mais relevante foiter se observado uma correlação negativa entre a taxa de juros livre de risco dos Treasuries norte-americanosde 10 anos e a dos títulos de longo prazo brasileiros em 2007...

"Public purpose or public interest" and third party transfers

Slade,BV
Fonte: PER: Potchefstroomse Elektroniese Regsblad Publicador: PER: Potchefstroomse Elektroniese Regsblad
Tipo: Artigo de Revista Científica Formato: text/html
Publicado em 01/01/2014 Português
Relevância na Pesquisa
36.24%
In this article the difference between public purpose and public interest in section 25(2) of the 1996 Constitution is considered. It is generally accepted that public purpose is a narrower category than public interest and that the distinction between public purpose and public interest does not make any practical difference. However, in this contribution it is suggested that the difference between public purpose and public interest makes no practical difference only in cases where expropriated property is used by the state for the realisation of a particular purpose. The difference between public purpose and public interest becomes more important when a particular expropriation also involves a third party transfer, since it indicates the level of scrutiny that the courts should apply in determining the lawfulness of the expropriation. When property is expropriated and transferred to a third party for the realisation of a public purpose, such as building and managing electricity plants, the lawfulness of the expropriation is not easily questioned. As such, the application of a rationality test to determine the legitimacy of the expropriation is generally easy to accept. However, this lenient approach cannot be as easily accepted where an expropriation and third party transfer takes place in the public interest. Examples of third party transfers in the public interest include land reform...