Global Capital and National Governments, first published in 2003, suggests that international financial integration does not mean the end of social democratic welfare policies. Capital market ...openness allows participants to react swiftly and severely to government policy; but in the developed world, capital market participants consider only a few government policies when making decisions. Governments that conform to capital market pressures in macroeconomic areas remain relatively unconstrained in supply-side and micro-economic policy areas. Therefore, despite financial globalization, cross-national policy divergence among advanced democracies remains likely. Still, in the developing world, the influence of financial markets on government policy autonomy is more pronounced. The risk of default renders market participants willing to consider a range of government policies in investment decisions. This inference, however, must be tempered with awareness that governments retain choice. As evidence for its conclusions, Global Capital and National Governments draws on interviews with fund managers, quantitative analyses, and archival investment banking materials.
This book presents an economic survey of international capital mobility from the late nineteenth century to the present. The authors examine the theory and empirical evidence surrounding the fall and ...rise of integration in the world market. A discussion of institutional developments focuses on capital controls and the pursuit of macroeconomic policy objectives in shifting monetary regimes. The Great Depression emerges as the key turning point in recent history of international capital markets, and offers important insights for contemporary policy debates. Its principal legacy is that the return to a world of global capital is marked by great unevenness in outcomes regarding both risks and rewards of capital market integration. More than in the past, foreign investment flows largely from rich countries to other rich countries. Yet most financial crises afflict developing countries, with costs for everyone.
The squam lake report French, Kenneth R; Baily, Martin N; Campbell, John Y ...
2010., 20100525, 2010, 2010-05-25
eBook
In the fall of 2008, fifteen of the world's leading economists--representing the broadest spectrum of economic opinion--gathered at New Hampshire's Squam Lake. Their goal: the mapping of a long-term ...plan for financial regulation reform.
The Squam Lake Reportdistills the wealth of insights from the ongoing collaboration that began at these meetings and provides a revelatory, unified, and coherent voice for fixing our troubled and damaged financial markets. As an alternative to the patchwork solutions and ideologically charged proposals that have dominated other discussions, the Squam Lake group sets forth a clear nonpartisan plan of action to transform the regulation of financial markets--not just for the current climate--but for generations to come.
Arguing that there has been a conflict between financial institutions and society, these diverse experts present sound and transparent prescriptions to reduce this divide. They look at the critical holes in the existing regulatory framework for handling complex financial institutions, retirement savings, and credit default swaps. They offer ideas for new financial instruments designed to recapitalize banks without burdening taxpayers. To lower the risk that large banks will fail, the authors call for higher capital requirements as well as a systemic regulator who is part of the central bank. They collectively analyze where the financial system has failed, and how these weak points should be overhauled.
Combining an immense depth of academic, private sector, and public policy experience,The Squam Lake Reportcontains urgent recommendations that will positively influence everyone's financial well-being--all who care about the world's economic health need to pay attention.
Prior research suggests that business groups (BGs) in developing economies have emerged as alternatives to poorly developed economic institutions in these countries. In this paper, we argue that this ...does not imply they are always substitutes. Specifically, we consider the case of capital markets, a key economic institution: while the absence of well-developed capital markets may indeed have stimulated the emergence of business groups, we propose that BG affiliation and the scrutiny that maturing capital markets impose on firms that participate actively in them nevertheless can play a complementary role in influencing a firm's performance. We find support for our predictions in a novel longitudinal data set of Indian firms that contain both listed and unlisted BG affiliated as well as unaffiliated firms.
The recent crisis highlighted the importance of globally active banks in linking markets. One channel for this linkage is through how these banks manage liquidity across their entire banking ...organization. We document that funds regularly flow between parent banks and their affiliates in diverse foreign markets. We show that parent banks, when hit by a funding shock, reallocate liquidity in the organization according to a locational pecking order. Affiliate locations that are important for the parent bank revenue streams are relatively protected from liquidity reallocations in the organization, while traditional funding locations are more extensively used to buffer shocks to the parent bank balance sheets.
► Global banks manage liquidity globally. ► Core funding locations are a source of internal capital markets. ► Core investment locations are a destination for internal capital markets.
Originalidade/valor: Crises estabelecem oportunidades para o estudo de fatores determinantes e seus impactos sobre as empresas. Nao existem evidencias empiricas sobre os impactos de crises sobre a ...estrutura de capital de empresas brasileiras levando em consideracao a comparacao entre as crises de 2002, 2008 e 2015, o que motivou o presente trabalho.
Objetivo: O objetivo deste trabalho foi verificar as decisoes de financiamento pelas empresas brasileiras nas crises financeiras de 2002, 2008 e 2015, e identificar os impactos dessas crises, assim ...como a influencia das fontes de financiamento--fontes bancarias, subsidiadas e mercado de capitais--sobre a alavancagem e a maturidade das dividas das empresas nesses periodos. Originalidade/valor: Crises estabelecem oportunidades para o estudo de fatores determinantes e seus impactos sobre as empresas. Nao existem evidencias empiricas sobre os impactos de crises sobre a estrutura de capital de empresas brasileiras levando em consideracao a comparacao entre as crises de 2002, 2008 e 2015, o que motivou o presente trabalho. Design/metodologia/abordagem: Foram feitas analises descritivas e estimadas regressoes por dados em painel. Resultados: Os resultados mostraram relacao estatisticamente positiva entre crises financeiras e alavancagem das empresas, bem como sobre dividas de curto e longo prazos. Com relacao a alavancagem, recursos bancarios, recursos dos mercados de capitais e subsidiados mostraram relacao estatisticamente positiva com o nivel de alavancagem das empresas apenas na crise de 2008. Considerando a maturidade das dividas, a crise de 2002 foi um determinante importante para as decisoes de endividamento de curto prazo das empresas, ante a participacao predominante de recursos bancarios naquele momento. As fontes de financiamento foram importantes na determinacao do endividamento de longo prazo das empresas na crise de 2008. PALAVRAS-CHAVE Estrutura de capital. Crises financeiras. Mercado de credito. Fontes de financiamento. Alavancagem. Purpose: The purpose of this study is to verify the financing decisions by Brazilian companies in the financial crises of 2002, 2008 and 2015, and to identify the impacts of these crises, as well as the influence of the funding sources--banking, subsidized sources and capital markets--on the leverage and maturity of companies' debts in these periods. Originality/value: Crises establish opportunities for the study of determining factors and their impacts on companies. There is no empirical evidence on the impacts of crises on the capital structure of Brazilian companies taking into account the comparison between the crises of 2002, 2008 and 2015, which motivated the present study. Design/methodology/approach: We performed descriptive analyzes and estimated regressions by panel data. Findings: The results showed a statistically positive relationship between financial crises and corporate leverage, as well as short and long-term debt. With regard to leverage, banking resources, resources from capital and subsidized markets showed a statistically positive relationship with the level of leverage of companies only in the 2008 crisis. Considering the maturity of debts, the 2002 crisis was an important determinant for companies' short-term debt decisions, in view of the predominant participation of banking resources at that time. Financing sources were important in determining companies' long-term indebtedness in the 2008 crisis. KEYWORDS Capital structure. Financial crises. Credit market. Funding sources. Leverage.
We examine the capital-market effects of changes in securities regulation in the European Union aimed at reducing market abuse and increasing transparency. To estimate causal effects for the ...population of E.U. firms, we exploit that for plausibly exogenous reasons, such as national legislative procedures, E.U. countries adopted these directives at different times. We find significant increases in market liquidity, but the effects are stronger in countries with stricter implementation and traditionally more stringent securities regulation. The findings suggest that countries with initially weaker regulation do not catch up with stronger countries, and that countries diverge more upon harmonizing regulation.
This paper analyzes waves in international capital flows. We develop a new methodology for identifying episodes of extreme capital flow movements using data that differentiates activity by foreigners ...and domestics. We identify episodes of “surges” and “stops” (sharp increases and decreases, respectively, of gross inflows) and “flight” and “retrenchment” (sharp increases and decreases, respectively, of gross outflows). Our approach yields fundamentally different results than the previous literature that used measures of net flows. Global factors, especially global risk, are significantly associated with extreme capital flow episodes. Contagion, whether through trade, banking, or geography, is also associated with stop and retrenchment episodes. Domestic macroeconomic characteristics are generally less important, and we find little association between capital controls and the probability of having surges or stops driven by foreign capital flows. The results provide insights for different theoretical approaches explaining crises and capital flow volatility.
► We develop a new method to identify episodes of extreme capital flow movements. ► Using gross instead of net flows yields very different results than previous work. ► Global factors, especially global risk, are correlated with all types of episodes. ► Contagion through trade, banking and region are correlated with certain episodes. ► Domestic factors are less important. Capital controls do not reduce capital waves.
This review paper delves into the intricate interplay between capital markets, investor protection, portfolio strategies, and behavioural aspects in investments. The VOSviewer 1.6.19 software is ...utilised to perform a bibliometric analysis and a exhaustive systematic literature review on a sample of 248 papers published in journals in Web of Science databases. Our comprehensive analysis reveals the emergence of key themes, shedding light on the critical role of behavioural finance in shaping investment choices and outcomes. We explore how investor behaviour often deviates from traditional models of market efficiency and how these deviations impact portfolio construction and investment strategies. Our paper contributes to a deeper comprehension of the complexities that drive investment decisions and helps academics, society, investors, and regulators by providing a structured analysis of literature strands. Builds a basis for better regulation and protection of investors in the capital markets, with relevant information for future studies on investor behaviour.
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