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.
The banking industry necessitates implementing an early warning system to effectively identify the factors that impact bank managers and enable them to make informed decisions, thereby mitigating ...systemic risk. Identifying factors that influence banks in times of stability and crisis is crucial, as it ultimately contributes to developing an improved early warning system. This study undertakes a comparative analysis of the stability of Indonesian Islamic and conventional banking across distinct economic regimes-crisis and stability. We analyze monthly banking data from December 2007 to November 2022 using the Markov Switching Dynamic Regression technique. The study focuses on conducting a comparative analysis between Islamic banks, represented by Islamic Commercial Bank (ICB) and Islamic Rural Bank (IRB), and conventional banks, represented by the Conventional Commercial Bank (CCB) and Conventional Rural Bank (CRB). The findings reveal that both Islamic and conventional banks exhibit a higher probability of being in a stable regime than a crisis regime. Notably, Islamic banks demonstrate a greater propensity to remain in a stable regime than their conventional counterparts. However, in a crisis regime, the likelihood of recovery for Sharia-compliant institutions is lower than for conventional banks. Furthermore, our analysis indicates that larger banks exhibit higher stability than their smaller counterparts regarding assets and size. This study pioneers a comprehensive comparison of the Z-score, employed as a proxy for stability, between two distinct classifications of Indonesian banks: Sharia (ICB and IRB) and conventional (CCB and CRB). The result is expected to improve our awareness of the elements that affect the stability of Islamic and conventional banking in Indonesia, leading to a deeper comprehension of their dynamics.
This Article aims to understand how Bitcoin users' and enthusiasts' legal consciousness symbolically penetrates the social field of cryptocurrencies in Brazil by structuring and shaping individual ...decisions to buy, use, and invest in crypto assets. Thirty-nine Bitcoin users and enthusiasts were interviewed. The thirty-nine transcripts were coded and analyzed using grounded theory. In the end, three distinct interpretations were obtained through which the interviewees' legal consciousness is expressed, and affects, as a result, their individual decisions. The interpretations were named: (1) law as a utility tool; (2) law as a security provider; and (3) law as a political tool. From the findings, this Article concludes that, even in social fields where the law is actively contested and rejected, it still represents a structuring component of social relations with relevant behavioral shaping power.
Using a unique dataset of the Euro-area and the U.S. bank lending standards, we find that low (monetary policy) short-term interest rates soften standards for household and corporate loans. This ...softening—especially for mortgages—is amplified by securitization activity, weak supervision for bank capital, and low monetary policy rates for an extended period. Conversely, low long-term interest rates do not soften lending standards. Finally, countries with softer lending standards before the crisis related to negative Taylor rule residuals experienced a worse economic performance afterward. These results help shed light on the origins of the crisis and have important policy implications.
Maintenant que la voie est tracee pour la conception du systeme bancaire ouvert fait au Canada, il faudra trouver reponse a de nombreuses questions de nature juridique afin de s'assurer que ce ...systeme permette aux Canadiens d'exercer un plus grand controle sur leurs donnees bancaires. La question principale porte sur l'attribution de responsabilite s'il y a un pepin, ce qui a deja ete longuement debattu. Dans ¡'elaboration de la solution pour le Canada, des enseignements precieux peuvent etre tires de deux territoires de competence similaires qui ont commence a mettre enplace un systeme bancaire ouvert, soit l'Australie et le Royaume-Uni. Les forces et les lacunes de l'approche en matiere de repartition des responsabilites dans ces pays et leur fondement dans les liens juridiques etablis entre les participants peuvent fournir des orientations. Il est tout aussi interessant de constater l'alignement de ces principes sur les principes equivalents en droit bancaire pour les transferts de fonds. L'auteur du present article en fait la demonstration au moyen d'une comparaison des liens juridiques, et de la repartition des responsabilites, entre participants par rapport au partage de donnees des clients dans les systemes bancaires ouverts australien et britannique et par l'evaluation des resultats en fonction de principes juridiques equivalents par rapport au transfert de fonds de clients en vertu du droit bancaire anglo-australien. En faisant cette comparaison et evaluation, l'auteur du present article constate que le contrat legal du systeme bancaire ouvert australien ainsi que les mecanismes legislatifs de protection contre la responsabilite entre participants etablissent un fondement clair pour l'attribution des responsabilites qui s'aligne sur le droit bancaire anglo-australien, alors que l'absence d'arrangements semblables dans le systeme bancaire ouvert britannique prive les participants de precieuses garanties juridiques quant a la conformite d'autres participants et au partage de la responsabilite en cas de defaut de la part des autres participants. Dans le cadre de sa demarche, l'auteur du present article presente une analyse, des perspectives et des orientations precieuses pour le travail fondamental a venir aux fins de la conception de la structure juridique du systeme bancaire ouvert canadien.
What exactly is ethical finance? Is Islamic finance ethical? Is ethical finance Islamic?
Islamic finance is routinely described as ethical. This reflects the fact that self-described 'ethical' ...finance is a large and growing sector of the market. It has a very positive image with which Islamic financial services seek to associate themselves. Yet the claim that 'Islamic' and 'ethical' are synonymous is rarely seriously examined, and nor is the claim that there exists a consistent and generally understood definition of 'ethical' practice. This book examines a wide range of financial institutions in the UK which fall broadly within the ethical sector, considering the nature of their principles and practices, and how they relate to Islamic models and to Muslim communities.
Key FeaturesThe first systematic comparison of the principles and functioning of Islamic and secular ethical financial servicesIncludes case studies from retail banking, mutual associations such as building societies and credit unions, investment funds, high interest lenders and debt counselling, social enterprise, charities and the wider phenomenon of ethical consumerismProvides a comparison of Christian thought and secular ethical financial services with the Islamic traditionUses the UK as a case study due to its well-developed 'ethical' and Islamic financial services sectors
Robust Risk Quantification via Shock Propagation in Financial Networks
Despite the significance of risk contagion in financial networks, uncertainties arise in interbank network structures because of ...limited information. To address this, proposed is a robust optimization approach to estimate worst-case default probabilities and capital requirements for a specific group of banks (e.g., systemically important financial institutions). By applying this tool, we analyze the impact of different incomplete network information structures and gain regulatory insights into gathering actionable network information.
Given limited network information, we consider robust risk quantification under the Eisenberg–Noe model for financial networks. To be more specific, motivated by the fact that the structure of the interbank network is not completely known in practice, we propose a robust optimization approach to obtain worst-case default probabilities and associated capital requirements for a specific group of banks (e.g., systemically important financial institutions) under network information uncertainty. Using this tool, we analyze the effects of various incomplete network information structures on these worst-case quantities and provide regulatory insights into the collection of actionable network information. All claims are numerically illustrated using data from the European banking system.
Funding:
The work of D. Ahn was supported by the Hong Kong Research Grants Council, University Grants Committee Early Career Scheme Grant 24210420. N. Chen acknowledges funding support from the Hong Kong Research Grants Council, University Grants Committee General Research Fund Grant 14207918 and General Research Fund Grant 14208620. The work by K.-K. Kim was supported by the National Research Foundation of Korea Grant NRF-2019R1A2C1003144.
Supplemental Material:
The e-companion is available at
https://doi.org/10.1287/opre.2020.0722
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