The recent financial crisis proved that pre-existing arrangements for the governance of global markets were flawed. With reform underway in the USA, the EU and elsewhere, Emilios Avgouleas explores ...some of the questions associated with building an effective governance system and analyses the evolution of existing structures. By critiquing the soft law structures dominating international financial regulation and examining the roles of financial innovation and the neo-liberal policies in the expansion of global financial markets, he offers a new epistemological reading of the causes of the global financial crisis. Requisite reforms leave serious gaps in cross-border supervision, in the resolution of global financial institutions and in the monitoring of risk originating in the shadow banking sector. To close these gaps and safeguard the stability of the international financial system, an evolutionary governance system is proposed that will also enhance the welfare role of global financial markets.
The Basel Committee on Banking Supervision (BIS) has recently sanctioned expected shortfall (ES) as the market risk measure to be used for banking regulatory purposes, replacing the well-known value ...at risk (VaR). This change is motivated by the appealing theoretical properties of ES as a measure of risk and the poor properties of VaR. In particular, VaR fails to control for “tail risk.” In this transition, the major challenge faced by financial institutions is the unavailability of simple tools for evaluation of ES forecasts (i.e., backtesting ES). The main purpose of this paper is to propose such tools. Specifically, we propose backtests for ES based on cumulative violations, which are the natural analogue of the commonly used backtests for VaR. We establish the asymptotic properties of the tests, and investigate their finite sample performance through some Monte Carlo simulations. An empirical application to three major stock indexes shows that VaR is generally unresponsive to extreme events such as those experienced during the recent financial crisis, whereas ES provides a more accurate description of the risk involved.
This paper was accepted by Neng Wang, finance
.
O objetivo da pesquisa foi verificar a presença de estratégias empreendedoras e/ou de inovação nas dez maiores instituições financeiras brasileiras, em termos de ativos totais, de acordo com o Banco ...Central. Para tanto, criou-se um modelo de cinco critérios, baseados na literatura, que subsidiou a análise de conteúdo realizada por meio dos relatórios administrativos e notas explicativas das instituições selecionadas. Identificou-se que as organizações têm procurado, de maneira unânime, incorporar a tecnologia aos seus processos, produtos e/ou serviços. O compromisso com a transformação digital é um fator transversal aos critérios elencados, uma vez que denota a atuação em oportunidades empreendedoras, sustenta os frameworks empreendedor e inovador, também viabilizando novas ideias, processos, produtos e/ou serviços e a criação de valor a todos os stakeholders. Este artigo contribui ao campo devido à escassez de estudos teórico-empíricos com este tema, além da proposição de critérios para avaliação da presença dessas estratégias, pavimentando caminhos para a pesquisa empírica e argumentações conceituais. Também por sua utilização nesta mesma pesquisa, articulando as abordagens de modo a lançar luz sobre as práticas das maiores instituições financeiras brasileiras.
We analyze the reliability of voluntary disclosures of financial information, focusing on widely-employed publicly-available hedge fund databases. Tracking changes to statements of historical ...performance recorded between 2007 and 2011, we find that historical returns are routinely revised. These revisions are not merely random or corrections of earlier mistakes; they are partly forecastable by fund characteristics. Funds that revise their performance histories significantly and predictably underperform those that have never revised, suggesting that unreliable disclosures constitute a valuable source of information for investors. These results speak to current debates about mandatory disclosures by financial institutions to market regulators.
SUMMARY
Pablo Zbinden?>We consider the drivers and implications of the growth of ‘BigTech’ in finance – i.e. the financial services offerings of technology companies with established presence in the ...market for digital services. BigTech firms often start with payments. Thereafter, some expand into the provision of credit, insurance and money management products, either directly or in cooperation with financial institution partners. Focusing on credit, we show that BigTech firms lend more in countries with less competitive banking sectors and less stringent bank regulation. Analysing the case of Argentina, we find support for the hypothesis that BigTech lenders, by acquiring a vast amount of non-traditional information, have an advantage in credit assessment relative to a traditional credit bureau. They also serve unbanked borrowers, and may have an advantage in contract enforcement. It is too early to judge the extent of BigTech’s eventual advance into the provision of financial services. However, the early evidence allows us to pose pertinent questions that bear on their impact on financial stability and overall economic welfare.
Monetary policy affects the real economy in part through its effects on financial institutions. High-frequency event studies show that the introduction of unconventional monetary policy in the winter ...of 2008–09 had a strong, beneficial impact on banks and, especially, on life insturance companies. I interpret the positive effects on life insurers as evidence that expansionary policy helped to recapitalize the sector by raising the value of legacy assets. Expansionary policy had small positive or neutral effects on banks and life insurers during the period 2010–13. The interaction of low nominal interest rates and administrative costs forced money market funds to waive fees, producing a possible incentive to reach for yield to reduce waivers. I show that money market funds with higher costs did reach for higher returns in 2009–11, but not thereafter. Some private defined-benefit pension funds increased their risk taking beginning in 2009, but again such behavior largely dissipated by 2012. In sum, unconventional monetary policy helped to stabilize some sectors and provoked modest additional risk taking in others. I do not find evidence that riskiness of the financial institutions studied fomented a trade-off between expansionary policy and financial stability at the end of 2013.
Purpose
Islamic finance is an alternative approach of financial intermediation based on risk-sharing and asset-backed operations, which evolved substantially in recent years in academic research ...raising the need for quantitative studies to address the intellectual development and scientific performance of this field. This study aims to provide quantitative statistics and comprehensive review of the key influential and intellectual structure of Islamic finance literature.
Design/methodology/approach
The authors apply the trending and cutting-edge quali-quantitative approach of bibliometric citation analysis. This study reviews 1,940 English studies and review papers published in scientific journals indexed by the Scopus database from 1983 to 2019. RStudio, VOSviewer and Excel’s software are used to analyze the collected data and apply the bibliometric tests.
Findings
The results identify the leading academic authors, journals, institutions and countries with relation to Islamic finance. The authors also propose six main research themes in this field, which are as follows: Islamic finance – fundamentals, growth and legitimacy; customer’s attitude and perception toward Islamic finance; accounting and social reporting of Islamic finance; performance and risk management of Islamic finance; Islamic financial markets; and efficiency of Islamic financial institutions. Lastly, the authors identify research gaps in the existing Islamic finance literature and present 24 future research directions.
Research limitations/implications
The data in this study is confined only to the Scopus database of English papers and reviews. It also considers papers directly related to the field of Islamic finance.
Originality/value
To the best of the authors’ knowledge, this paper is one of the first to address the literature of Islamic finance from a bibliometric aspect. The results of this study along with future research questions will help researchers and practitioners to further explore and stand on firm quantitative bases regarding the scientific development of Islamic finance.
This paper investigates the influence of corporate governance on financial firms' performance during the 2007–2008 financial crisis. Using a unique dataset of 296 financial firms from 30 countries ...that were at the center of the crisis, we find that firms with more independent boards and higher institutional ownership experienced worse stock returns during the crisis period. Further exploration suggests that this is because (1) firms with higher institutional ownership took more risk prior to the crisis, which resulted in larger shareholder losses during the crisis period, and (2) firms with more independent boards raised more equity capital during the crisis, which led to a wealth transfer from existing shareholders to debtholders. Overall, our findings add to the literature by examining the corporate governance determinants of financial firms' performance during the 2007–2008 crisis.
► Firms with higher institutional ownership performed worse during the crisis. ► Institutional ownership was associated with greater risk-taking before the crisis. ► Firms with more independent boards performed worse during the crisis. ► Board independence was associated with more equity raisings during the crisis. ► Equity capital raisings helped firms survive the crisis.
This paper investigates the impact of macroprudential policy announcements on financial stability in Europe. Our three financial (in)stability proxies are systemic risk measures that cover all types ...of financial institutions and consider various financial market segments. We find that the announcements of macroprudential policy actions only contain banking systemic risk with the latter computed based on market data. However, when measuring systemic risk by including both market and balance sheet data, we observe an increase in the systemic risk of all financial institutions, banks and non-banks. This last result is confirmed when considering non-diversifiable risk across financial market segments.
This paper provides a modern overview of capital markets, financial institutions, and corporate finance in China. In our discussions, we highlight and describe what is unique to China. We also ...describe how papers in the Special Issue advance our understanding of financial markets, institutions, and corporate finance in China and in general.
PDF
