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Higher margin requirements mean investors must commit more capital to a transaction, reducing their overall funds for investment.
Private investors are understandably reluctant to commit more capital when it is unclear whether a bank holds enough toxic waste to render it insolvent.Another factor weighing on confidence is uncertainty over the direction of policy.
Equally, the mooted €1tn capacity of the enhanced EFSF, four times its remaining €250bn lending capacity, depends on relatively favourable market conditions – and the willingness of overseas investors such as sovereign wealth funds to commit more capital.
The key messages are that investment banks need to take more risks, commit more capital to their business, and start investing in the deals they recommend to their clients.
Couple those facts with the (still) low cost of capital given where interest rates are, and the sustained growth of technology companies across emerging market geographies, and you have a more willing pool of investors that want to commit more capital to emerging technology ecosystems (this is happening in Latin America, too).
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Angels committed more capital in each quarter of 2013 than in the previous year, according to CrunchBase data.
A 10% increase in employee salaries and benefits also contributed to higher operating spending, but may be a signal of better times ahead as the company commits more capital to its workers.
Kennedy is an aggressive investor but only 60% invested, waiting to see if Nasdaq breaks out above 1,521 or breaches support at 1,411 before committing more capital to stocks.
Huge questions hang over the Treasury's plan to remove those loans, and many economists think it must commit more public capital than the already authorised $700 billion in TARP money.
Allocating this money does not necessarily mean awarding it, however, and the strong economy allowed Mr. Giuliani not only to commit more to capital projects, but also to come through on more of his pledges than other mayors had in the past.
Canny investors will put more capital there.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com