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Empirical Examination of Quantitative Easing in Monetary Policy and Earning Management of Financial Markets and Institutions

Empirical Examination of Quantitative Easing in Monetary Policy and Earning Management of Financial Markets and Institutions

Overall sample comprises 11 year panel data over 1999 to 2010 period for 7,343 banks in 107 countries. Panel A of table 02 summarizes the distribution of banks in the sample: by bank specialization and accounting standard, and by prudential regulatory regimes. BankScope Database reports five major types of accounting standards used in the banking industry: U.S. GAAP, Local GAAP (that are country specific GAAP), Regulatory Standard (that are different from country GAAP and set up the regulatory authority), IAS (International Accounting Standards), and IFRS (International Financial Reporting Standards). Current accounting literature categorizes these four accounting standards into two major types; local GAAPs and regulatory standards are classified as Rule-based, and IAS and IFRS are identified as principles-based standards. Prudential regulations are broadly categorized into two types: pro-cyclic regimes that require managers to set aside loan loss provisions based on historical defaults rates; and dynamic regimes that use a forward looking probability matrix to incorporate the impact of possible future business cycles. Panel B and Panel C report accounting practices across the countries using Dynamic prudential framework and pro-cyclic prudential framework respectively.

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Emerging issues in financial institutions and markets

Emerging issues in financial institutions and markets

On December 11 th -12 th 2012, the 3 rd Conference for Emerging Scholars in Banking and Finance took place at Cass Business School, City University, London. The conference was jointly organised by the Centre for Banking Research at Cass Business School and The British Accounting and Finance Association’s Financial Markets and Institutions Special Interest Group. The aim of the conference was to bring together emerging scholars working on contemporary issues in financial institutions and markets. The general theme of the conference was designed to allow for a wide range of submissions covering the diverse nature of academic enquiry in banking and finance. The conference also hosted a keynote speech entitled The Role of Corporate Governance in Bank Failures during the Recent Financial Crisis, delivered by Allen Berger (Moore School of Business, South Carolina).

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A ‘twin peaks’ vision for Europe  Bruegel Policy Contribution Issue n˚30 | November 2017

A ‘twin peaks’ vision for Europe Bruegel Policy Contribution Issue n˚30 | November 2017

Nevertheless, the industry and the supervisory authorities are keen to preserve the current sectoral structure and unwilling to adopt a twin peaks model (European Commission, 2017b). From a political economy point of view, this position is understandable. Financial institutions and their supervisors are keen to preserve the status quo, including any cosy relationships between the main players. In particular, the insurance sector is afraid that a merged banking/ insurance prudential authority would be dominated by banking regulatory approaches. By contrast, some stakeholders, mainly from academia, are critical of the sectoral supervision model on the basis that it is outdated and ignores the reality of the retail financial markets in Europe (Huang and Schoenmaker, 2015; European Commission, 2017b). Finally, consumer and public-interest advocacy organisations also support a twin peak model of supervision that would separate market conduct from prudential supervision for reasons mentioned above (eg Lenz, 2017).

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Designing a Marketing Pattern in Order to Increase the Profitability in Insurance Industry

Designing a Marketing Pattern in Order to Increase the Profitability in Insurance Industry

The insurance is a useful tool for the risk management in order to provide the peace and tranquility for people in society. The insurance companies and in total, the industry of insurance in each country, is amongst the most important active financial institutions in financial markets especially in an enterprise market that can play a very fundamental and determinant role in the motivation and dynamism of the financial markets and in providing the investment funds in economical acts in addition to providing the security of the economical acts which in this paper, a designation for an industrial marketing pattern is used in order to increase the profitability in insurance industry. The purpose of this investigation is to identify the effecting factors on increasing the profitability in industry of insurance. The statistical society of employees in an insurance company is including 400 people who had been chosen stochastically and in the next step, 131 samples is chosen using Kokran calculation method and the data analysis is done using SPSS software. Findings indicate that the marketing strategies are positively and meaningfully related to profitability in insurance industry and transformational leadership, organizing resources, and intensity of competition, have very moderating effects on this relation.

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Estimating Growth in Investment of Micro and Small Scale Enterprises in Nigeria

Estimating Growth in Investment of Micro and Small Scale Enterprises in Nigeria

Despite the rural banking policy of the financial regulatory authorities, that is, Central Bank of Nigeria (CBN) and Ministry of Finance in Nigeria, markets and institutions providing credits to micro and small entrepreneurs are extremely limited. The thinness of formal financial markets in the rural communities as well as absence of more complicated interlinked contracts for credit and insurance has been confirmed in several studies by scholars such as Collier (1983) and Aryeetey (1996). Egbuogu (2003) identifies that “in spite of the various government support programmes at developing and facilitating the growth of SMEs, the potentials of the SMEs have not been fully exploited”.Studies confirm that the informal finance sector has considerable experience and knowledge about dealing with small business borrowers and that their performance in relation to financing small business has been positive especially in Asia and Latin America, though there are significant limitations to what it can lend to growing micro businesses. This present study seeks to identify the micro and small investment activities financed by the informal credit markets and also determining the types of financing provided.

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Emerging Market Trends: Owing to liberalization and deregulation reforms in the financial services sector, the previous boundaries between different types of financial institutions are being blurred (Freedman and Goodlet, 1998; Ekerete, 2005; Joseph, 1997). According to Joseph (1997), liberalisation facilitated by technological innovation has led to increased competition in the financial services sector spawning new financial instruments, new financial institutions and the blurring of barriers between different classes of financial institutions. Highlighting the distinguishing features between financial institutions, Ekerete (2005) argued that all financial institutions offer complementary rather than competing products but however the distinctions are more theoretical rather than practical and there seems to be a narrowing down or removal of the line of demarcation between them. Estelami (2012) adds that the financial landscape is becoming highly competitive making the marketing of financial services a highly unique discipline. Deregulatory measures have allowed financial service providers to cross product market boundaries which had partitioned the market for decades. This has contributed to the increased industry concentration, consolidation and mergers between and among financial service providers and market power is being concentrated in many financial service categories hence the need for focused and well calculated marketing strategies to ensure long term success and optimisation of marketing capabilities (Estelami, 2012).

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Priorities for the Juncker Commission: Policy recommendations and advice from the research team at CEPS. CEPS Special Report No. 92, 22 October 2014

Priorities for the Juncker Commission: Policy recommendations and advice from the research team at CEPS. CEPS Special Report No. 92, 22 October 2014

Strategies should be developed for regional convergence and ultimately joint or at least compatible support systems. This will help to re-generate a meaningful wholesale price. A second key challenge will be to solve the remuneration problem of investors without protecting overcapacity, in the event that the revised Emissions Trading System prove not to be sufficiently effective. This will be important to guarantee a more efficient allocation of capital and re-establish a meaningful wholesale price signal. One that allows innovative and market-compatible solutions, such as demand-response to evolve. A third key challenge will be to ensure that member states actually assume their responsibilities when it comes to increasing interconnection infrastructure. This will reverse the questionable development in some markets where new supply is being added, although neighbouring markets are faced with overcapacity. Furthermore, this will smoothen out the variability of renewables, reduce the need for back-up capacity and therefore improve the cost-effectiveness of renewables. This should become the first and foremost priority of the European Commission.

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Proportionality needed in the subsidiarity debate in the EU – Appraisal of the British and Dutch initiatives  CEPS Essay No  11, 8 April 2014

Proportionality needed in the subsidiarity debate in the EU – Appraisal of the British and Dutch initiatives. CEPS Essay No. 11, 8 April 2014

One can approve of a campaign for better EU regulation and for cutting out unnecessary micro-regulation, but it would require impressive commitment by all member states and the EU institutions to follow the best features of the British and Dutch leads for this to have a real effect in the fight against populist euroscepticism. That battle will have to be won primarily with bigger weapons, namely some combination of better macroeconomic results, bigger foreign policy achievements and the emergence of a European level political leadership factor to which the people can relate. There has to be due proportionality in the diagnosis of the responsibility of inadequate subsidiarity for the EU’s ills.

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Many worlds of the ‘low-skilled’, but only one generic policy. CEPS Policy Brief No. 312, 10 January 2014

Many worlds of the ‘low-skilled’, but only one generic policy. CEPS Policy Brief No. 312, 10 January 2014

Since not only the size, but also the structure and other characteristics of low-skilled unemployment differ in Bratislava and Copenhagen, we advise policy-makers in both the EU and national institutions to take not only a differentiated view, but also a holistic and more sophisticated view of this phenomenon. For example, if in one country high-skilled unemployment is due to the strong presence of migrants, while at the same time its employers attach great value to formal diplomas, rather than promoting lifelong leaning in general, measures and learning opportunities to facilitate diploma recognition would be more effective. Or, if being low-skilled is the result of technological change and the workforce is aged and poorly educated, then it would be worthwhile to offer additional learning opportunities to displaced workers. We therefore urge policy-makers to obtain a clear understanding of national (and possibly even local) specificities and also to promote lifelong learning and keeping up with new technologies to shield workers from the risk of detachment from the labour market and skills obsolescence.

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Cameron’s ‘renegotiations’ (or Russian roulette) with the EU: An interim assessment  CEPS Working Document No  413/September 2015

Cameron’s ‘renegotiations’ (or Russian roulette) with the EU: An interim assessment. CEPS Working Document No. 413/September 2015

Cameron’s four areas for ‘reform’. As a result Cameron’s demands are a mixed bag of items, which he presents under much broader labels. After his meeting in Madrid with the Spanish prime minister on 4 September, he told the press that he had “already set out the four areas where we want reform: on competitiveness, sovereignty, social security and economic governance”. It is notable and commendable that his key word here is “reform”, rather than “renegotiation”. This is an important distinction. Reform is something that the UK may do cooperatively together with all the other member states and the EU institutions; renegotiation is about obtaining special conditions for the UK, which as pointed out above, are already very substantial. What is, or might be behind these labels for reform?

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Banks, Development Financial Institutions and Credit Markets in India: A Simple Model of Financial Intermediation

Banks, Development Financial Institutions and Credit Markets in India: A Simple Model of Financial Intermediation

Banks too, under the new prudential regulations have begun to access the debt and stock markets to shore up their capital levels. Again, banks have been making a foray into investment financing while financial institutions have been entering the domain of short-term financing, with the result that the competition for supply of funds has also intensified. As a consequence of the erosion of the hitherto conventional divide between banks and financial institutions, the raison de tour of DFIs has increasingly been called into question. Elsewhere in the world, the demise of the Glass-Steagall Act of 1933 in the US, which hitherto segregated commercial and investment banking and with amendments in the Securities and Exchange Act in Japan that prevented banking and insurance activities under one umbrella, the tremors of universal banking are being increasingly felt in India in recent years 3 .

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The Visegrad group and Germany: towards a new paradigm. CEPS Commentary, 28 November 2013

The Visegrad group and Germany: towards a new paradigm. CEPS Commentary, 28 November 2013

This is a role that the Visegrad bloc – whose collective voting weight equals Germany and France combined – should aspire to. Compared to France, they could offer greater support for Germany’s economic vision, including more intrusive policing of national fiscal prudence. In return, they should demand German support for inclusiveness of EU policies and commensurate empowerment of Community institutions. Such a grand bargain, or a variant thereof, could lay the groundwork for stronger German-Visegrad cooperation on Europe, and eventually a broader pro-integration German-led coalition that might include neighbours such as Austria, the Baltic states, Slovenia, Croatia, Romania and Bulgaria. In institutional terms, the Visegrad Four-Plus offers a promising vehicle for structured dialogue with Germany. In November 2012 and March 2013, Warsaw hosted V4-Weimar Triangle summits with Angela Merkel and François Hollande. Similarly, establishing a regularised V4-Germany platform at the ministerial level would be a step forward. So would Germany’s backing for a V4 candidate for one of the top EU posts after May 2014.

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Agreement needed on liquidity provision to restore confidence in the eurozone. CEPS Policy Brief No. 258, November 2011

Agreement needed on liquidity provision to restore confidence in the eurozone. CEPS Policy Brief No. 258, November 2011

A confidence crisis spreading contagion even to the ‘sound’ part of a monetary union can be stopped by abundant supply of liquidity by the central bank or by a common fund performing the same service, with policy conditionality, with resources lent by the central bank or raised in capital markets. In all likelihood, both are needed in some appropriate combination. Failure by the euro summit to agree on a strong and effective rescue fund has stiffened the ECB, which fears that losses on its holdings of distressed sovereigns may one day force it to turn to national governments for capital, and thus lose independence.

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What kind of governance for the eurozone? CEPS Policy Brief No. 214/September 2010

What kind of governance for the eurozone? CEPS Policy Brief No. 214/September 2010

Another objection is that it is the responsibility of the financial supervisors to deal with excessive risk-taking by banks. When banks extend too much credit and thereby increase the risk of their balance sheets, national supervisors should intervene. This is undoubtedly so. At the same time it does not absolve the Eurosystem from its responsibility to maintain financial stability. When a credit-fuelled boom emerges in some member states, it is also the responsibility of the Eurosystem to act. The Eurosystem also has the most powerful toolkit for controlling the macroeconomic consequences of booms and busts.

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A closer look at Dexia: The case of the misleading capital ratios. CEPS Commentary, 19 October 2011

A closer look at Dexia: The case of the misleading capital ratios. CEPS Commentary, 19 October 2011

for the bank. The long-term loans to the public sector were to a large extent financed by short-term funds. As a result of the outbreak of the crisis and the uncertainty in the capital markets, this tiny margin business was no longer viable. Dexia became highly dependent on central bank funds and government guaranteed debt. This reliance on short-term liquidity was reduced in recent years, but was still substantial by year-end 2010. 11 Attracting short-

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How should support for climate-friendly technologies be designed? CEPS Policy Brief No. 254, 21 September 2011

How should support for climate-friendly technologies be designed? CEPS Policy Brief No. 254, 21 September 2011

Not all barriers to adoption of emerging technologies are market failures. Cost, reliability and quality issues, and risk are all legitimate aspects that the market should be allowed to weigh in. As a result, the main tools for encouraging climate- friendly technologies should be those that encourage the market to make good choices more generally: pricing carbon emissions and other environmental damages, removing distorting subsidies and barriers to competition and supporting RD&D broadly. Broad-based policies include RD&D tax credits, funding universities and research institutions, and other public support for research through competitive grant processes.

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TRENDS AND DETERMINANTS OF FDI
FLOWS IN DEVELOPED AND DEVELOPING
NATIONS 1990-94 TO 2011

TRENDS AND DETERMINANTS OF FDI FLOWS IN DEVELOPED AND DEVELOPING NATIONS 1990-94 TO 2011

In the 1970s FDI made up only 12 per cent of all financial flows to developing countries. Between 1981 and 1982 there was a sharp fall in private lending as international banks lost confidence in borrowing countries financial stability following the debt crisis of 1982. The growing integration of markets and financial institutions increased economic liberalization and motivates rapid innovation in technologies the large number of developing countries to change their foreign investment policy, during 1990.Most significantly, developing countries has been the declining progress of foreign direct investment during the year 1990-94 to 2001.The share of developing countries grows to a peak of 39.9 and 35.6 per cent in 2005 and 2009 respectively. There are multiple factors determining host country attractiveness in the eyes of large foreign direct Institutional investors, notably pension funds and sovereign wealth funds. Research conducted by the World Pensions Council (WPC) suggests that perceived legal/political stability over time and medium-term economic growth dynamics constitute the two main determinants.

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Spillovers from the Arab revolts: is Armenia next in line? CEPS Policy Brief No  236, 15 March 2011

Spillovers from the Arab revolts: is Armenia next in line? CEPS Policy Brief No. 236, 15 March 2011

demonstrations aiming to achieve regime change. On the one hand, ANC leaders demand extraordinary presidential and parliamentary elections. On the other hand, they do not deny the possibility of regime change through a so- called ‘social explosion’. The ANC currently spares no efforts to draw parallels between the situation in the Arab world and Armenia. Censorship, corruption and kleptocracy are cited repeatedly. For its part the ruling elite dismisses the seriousness of these comparisons, citing cultural, religious and geopolitical differences. Yet, in doing so, the authorities misrepresent the reasons for the Arab revolt, which have to do with political, social and economical conditions, rather than with religious, cultural or geopolitical circumstances. Moreover, the governmental officials refer to Armenia’s substantial macroeconomic growth up until the global financial crisis stage, and blame the economic slowdown and increase in prices on the global recession. However, the ruling regime neglects the complaint that the fruits of the growth have not been fairly distributed. The ruling political elite and oligarchs were the main beneficiaries, and the average citizen did not profit much from the economic growth. Furthermore, governmental officials also claim to be making efforts to combat corruption. Yet, they are silent about the fact that no charges have been brought against any high level official to date.

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AIG and the Fed: Prologue to future financial regulation?

AIG and the Fed: Prologue to future financial regulation?

Assets and income at AIG are shrinking rapidly. Premiums fell 22 percent from the fourth quarter of 2007 to the last quarter of 2008, and assets fell $140 billion in the just the last quarter of 2008 to $860 billion. Fed and Treasury holdings of AIG claims have risen to over $150 billion, or more than 16 percent of AIG total assets and more than 80 percent of equity in AIG. Continuing losses will fall disproportionately on the Fed and Treasury, raising the question of whether either institution has a threshold beyond which their losses on AIG become unsustainable. Bankruptcy is a more likely process if such large losses continue. The $6 billion loss on the Fed’s AIG-related SIVs, is larger than losses on the toxic securities acquired by the Fed’s first SIV, which houses securities acquired from the Bear Stearns failure. Together these losses have absorbed about 30 percent of the Fed’s annual payments to the Treasury from its profits. This sum is growing and does not include losses on the extensive private credit facilities that have been created over the past two years. Should these losses continue to cumulate, financial sector pressures and congressional pressures will mount to limit or end such new ventures by the Fed. Fed credit can more safely and prudentially grow by purchases of U.S. government debt, with the marketplace determining where the new Fed credit extensions are ultimately allocated, instead of the Fed attempting to assess the solvency and liquidity of particular financial firms and sectors and directly lending to them. 7

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Patterns and Trends in Sovereign Wealth Fund Investments: A Post-Crisis Descriptive Analysis

Patterns and Trends in Sovereign Wealth Fund Investments: A Post-Crisis Descriptive Analysis

Third, most SWFs have economic development and macroeconomic stability of their origin countries as part of their mandates and maximizing returns and minimizing risks as their objective. In this sense and as argued by Klein & Zur (2009), Ferreira & Matos (20007), and Brav et al. (2008), SWFs behave in many similar ways to other internationally active investment funds. In other words, the primary objective of these funds is to maximize financial return and minimize risks and losses, while also often taking on the additional objective of the long-term development and stability of their countries. “An important element in determining SWF’s effectiveness is its operational independence in making investment decisions…that are consistent with their policy objectives and that cover their asset choices as well as their risk-management practices” (Lipsky, 2010: xi). However, deviations from these mandates are commonplace for various reasons. One such main reason is the influence of political machinery. “The quasi-public nature of these funds means that they are exposed to political influences, often with more short-term goals” (Bernstein, Lerner, & Schoar, 2013: 220) which sets SWFs apart from other investment funds. This also complicates the picture for SWFs, from being simply driven by return-maximizing motives to them also being influenced by political agendas. Bernstein, Lerner, & Schoar (2013) show that “sovereign wealth funds with greater involvement of political leaders in fund management are associated with investment strategies that seem to favor short-term economic policy goals in their respective countries at the expense of longer-term maximization of returns…The opposite patterns hold for funds that rely on external managers [and less involvement of political leaders]” (Bernstein, Lerner, & Schoar, 2013: 220).

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