Search results for: financial regulatory structure

Authors: Muhammad Tahir, Mushtaq Muhammad

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Capital structure is one of the key decisions taken by the financial managers. This study aims to investigate the factors influencing capital structure decision in Oil and Gas industry of Pakistan using secondary data from published annual reports of listed Oil and Gas Companies of Pakistan. This study covers the time-period from 2008-2014. Capital structure can be affected by profitability, firm size, growth opportunities, dividend payout, liquidity, business risk, and ownership structure. Panel data technique with Ordinary least square (OLS) regression model has been used to find the impact of set of explanatory variables on the capital structure using the Stata. OLS regression results suggest that dividend payout, firm size and government ownership have the most significant impact on financial leverage. Dividend payout and government ownership are found to have significant negative association with financial leverage however firm size indicated positive relationship with financial leverage. Other variables having significant link with financial leverage includes growth opportunities, liquidity and business risk. Results reveal significant positive association between growth opportunities and financial leverage whereas liquidity and business risk are negatively correlated with financial leverage. Profitability and managerial ownership exhibited insignificant relationship with financial leverage. This study contributes to existing Managerial Finance literature with certain managerial implications. Academically, this research study describes the factors affecting capital structure decision of Oil and Gas Companies in Pakistan and adds latest empirical evidence to existing financial literature in Pakistan. Researchers have studies capital structure in Pakistan in general and industry at specific, nevertheless still there is limited literature on this issue. This study will be an attempt to fill this gap in the academic literature. This study has practical implication on both firm level and individual investor/ lenders level. Results of this study can be useful for investors/ lenders in making investment and lending decisions. Further, results of this study can be useful for financial managers to frame optimal capital structure keeping in consideration the factors that can affect capital structure decision as revealed by this study. These results will help financial managers to decide whether to issue stock or issue debt for future investment projects.

Keywords: capital structure, multicollinearity, ordinary least square (OLS), panel data

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Authors: Erika Takidah, Salina Kassim

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Digital transformation has accelerated in the new millennium. It is reshaping the financial services industry from a traditional system to financial technology. Moreover, the number of financial inclusion rates in Indonesia is less than 60%. An innovative model needed to elucidate this national problem. On the other hand, the Islamic financial service industry and financial technology grow fast as a new aspire in economic development. An Islamic bank, takaful, Islamic microfinance, Islamic financial technology and Islamic social finance institution could collaborate to intensify the financial inclusion number in Indonesia. The primary motive of this paper is to examine the strategy of collaboration-based Islamic financial services to enhance financial inclusion in Indonesia, particularly facing the digital era. The fundamental findings for the main problems are the foundations and key ecosystems aspect involved in the development of collaboration-based Islamic financial services. By using the Interpretive Structural Model (ISM) approach, the core problems faced in the development of the models have lacked policy instruments guarding the collaboration-based Islamic financial services with fintech work process and availability of human resources for fintech. The core strategies or foundations that are needed in the framework of collaboration-based Islamic financial services are the ability to manage and analyze data in the big data era. For the aspects of the Ecosystem or actors involved in the development of this model, the important actor is government or regulator, educational institutions, and also existing industries (Islamic financial services). The outcome of the study designates that strategy collaboration of Islamic financial services institution supported by robust technology, a legal and regulatory commitment of the regulators and policymakers of the Islamic financial institutions, extensive public awareness of financial inclusion in Indonesia. The study limited itself to realize financial inclusion, particularly in Islamic finance development in Indonesia. The study will have an inference for the concerned professional bodies, regulators, policymakers, stakeholders, and practitioners of Islamic financial service institutions.

Keywords: collaboration, financial inclusion, Islamic financial services, Islamic fintech

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Authors: Mrigakshi Das

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The private sector investments and quantum of money required in this sector critically hinges on the financial risk and returns the sector offers to providers of capital. Therefore, it becomes important to understand financial performance of hospitals. Financial Analysis is useful for decision makers in a variety of settings. Consider the small proprietary hospitals, say, Physicians Clinic. The managers of such clinic need the information that financial statements provide. Attention to Financial Statements of healthcare Organizations can provide answers to questions like: How are they doing? What is their rate of profit? What is their solvency and liquidity position? What are their sources and application of funds? What is their Operational Efficiency? The researcher has studied Financial Statements of 5 Private Healthcare Organizations in Guwahati City.

Keywords: not-for-profit organizations, financial analysis, ratio analysis, profitability analysis, liquidity analysis, operational efficiency, capital structure analysis

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Authors: Vasiliki A. Tzora, Nikolaos D. Philippas

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The paper measures the financial literacy of youth in Greece derived from the examined aspects of financial knowledge, behaviours, and attitudes that high school students performed. The findings reveal that less than half of participant high school students have an acceptable level of financial literacy. Also, students who are in the top of their class cohort exhibit higher levels of financial literacy. We also find that the father’s education level has a significant effect on financial literacy. Students who keep records of their income and expenses are likely to show better levels of financial literacy than students who do not. Students’ perception/estimation of their parents’ income changes is also related to their levels of financial literacy. We conclude that financial education initiatives should be embedded in schools in order to embrace the young generation.

Keywords: financial literacy, financial knowledge, financial behaviour, financial attitude, financial wellbeing, 15-year-old students

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Authors: Jill Round

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In the economic system, the financial sector plays a crucial role as an intermediary between market participants, other financial institutions, and customers. Financial institutions such as banks have to make decisions to satisfy the demands of all the participants by keeping abreast of regulatory change. In recent years, progress has been made regarding frameworks, development of rules, standards, and processes to manage risks in the banking sector. The increasing focus of regulators and policymakers placed on risk management, corporate governance, and the organization’s culture is of special interest as it requires a well-resourced risk controlling function, compliance function, and internal audit function. In the past years, the relevance of these functions that make up the so-called Three Lines of Defense has moved from the backroom to the boardroom. The approach of the model can vary based on the various organizational characteristics. Due to the intense regulatory requirements, organizations operating in the financial sector have more mature models. In less regulated industries there is more cloudiness about what tasks are allocated where. All parties strive to achieve their objectives through the effective management of risks and serve the identical stakeholders. Today, the Three Lines of Defense model is used throughout the world. The research looks at trends and emerging issues in the professions of the Three Lines of Defense within the banking sector. The answers are believed to helping to explain the increasing regulatory requirements for the banking sector. While the number of supervisory practices increases the risk management requirements intensify and demand more regulatory compliance at the same time. The Structural Equation Modeling (SEM) is applied by making use of conducted surveys in the research field. It aims to describe (i) the theoretical model regarding the applicable linearity relationships, (ii) the causal relationship between multiple predictors (exogenous) and multiple dependent variables (endogenous), (iii) taking into consideration the unobservable variables and (iv) the measurement errors. The surveys conducted on the research field suggest that the observable variables are caused by various latent variables. The SEM consists of the 1) measurement model and the 2) structural model. There is a detectable correlation regarding the cause-effect relationship among the performed supervisory practices and the increasing scope of regulation. Supervisory practices reinforce the regulatory density. In the past, controls were placed after supervisory practices were conducted or incidents occurred. In further research, it is of interest to examine, whether risk management is proactive, reactive to incidents and supervisory practices or can be both at the same time.

Keywords: risk management, structural equation model, supervisory practice, three lines of defense

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Authors: Fady Tawakol

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BitCoin is a decentralized cryptocurrency that can be used without the need of traditional central banks to accomplish any e-commerce trade. The use of such currency could facilitate new economic interactions and linkages. However, without effective and efficient regulations, cryptocurrency transactions are mostly used by criminals to commit crimes such as money laundering, theft, and blackmailing. And because law is one step behind technological developments, this paper discusses the importance of regulations and supervision for the BitCoin-system, to provide unified regulatory solutions for our digital future in the Middle East. It will provide a detailed analysis of the legal nature of BitCoin along with, its regulation with respect to criminal and civil law.

Keywords: BitCoin, financial protection, crypto currency, money laundering

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Authors: Krish Batra

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The advent of open banking has revolutionized the financial services industry by fostering innovation, enhancing customer experience, and promoting competition. However, this paradigm shift towards more open and interconnected banking ecosystems has introduced complex cybersecurity challenges. This research paper delves into the multifaceted cybersecurity landscape of open banking, highlighting the vulnerabilities and threats inherent in sharing financial data across a network of banks and third-party providers. Through a detailed analysis of recent data breaches, phishing attacks, and other cyber incidents, the paper assesses the current state of cybersecurity within the open banking framework. It examines the effectiveness of existing security measures, such as encryption, API security protocols, and authentication mechanisms, in protecting sensitive financial information. Furthermore, the paper explores the regulatory response to these challenges, including the implementation of standards such as PSD2 in Europe and similar initiatives globally. By identifying gaps in current cybersecurity practices, the research aims to propose a set of robust, forward-looking strategies that can enhance the security and resilience of open banking systems. This includes recommendations for banks, third-party providers, regulators, and consumers on how to mitigate risks and ensure a secure open banking environment. The ultimate goal is to provide stakeholders with a comprehensive understanding of the cybersecurity implications of open banking and to outline actionable steps for safeguarding the financial ecosystem in an increasingly interconnected world.

Keywords: open banking, financial services industry, cybersecurity challenges, data breaches, phishing attacks, encryption, API security protocols, authentication mechanisms, regulatory response, PSD2, cybersecurity practices

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Authors: Evagelia Makri, Maria Tsourela, Dimitris Paschaloudis, Dafni M. Nerantzaki

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One of the biggest financial and social problems, which at the same time constitute one of the greater challenges that Greek society faces today, is the illegal avoidance of tax payments. Tax evasion may negate financial data and community budgets, as well as breed financial chaos. This research seeks to reflect Greek reality concerning tax measures. Also, there will be an effort to record the factors surrounding tax evasion. Greek tax system’s data will be rendered in financial terms. Questionnaires will be handed out to tax payers, and interviews will be conducted to taxmen. The quantitative analysis of the questionnaire answers will define the tax payers’ opinion towards the existence of tax evasion. The qualitative analysis of the interviews will reveal the main reason that boosts tax evasion. At the end, there will be some realistic proposals about how to better collect taxes, through the creation of a strong regulatory mechanism.

Keywords: tax evasion, tax collection measures, insurance recovery measures, Greek tax system

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Authors: Luan Vardari, Dena Arapi-Vardari

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Financial stability is a critical component of economic growth and development, and it has been recognized as a key policy objective in many countries around the world. In the Western Balkans, financial stability has been a key issue in recent years, with a number of challenges facing the region, including high levels of public debt, weak banking systems, and economic volatility. Corporate finance, which refers to the financial management practices of firms, is an important factor that can impact financial stability. This paper aims to investigate corporate finance's impact on financial stability in Western Balkan countries. This study will use a mixed-methods approach to investigate the impact of corporate finance on financial stability in the Western Balkans. The study will begin with a comprehensive review of the existing literature on corporate finance and financial stability, focusing on the Western Balkan region. This will be followed by an empirical analysis of regional corporate finance practices using data from various industries and firms. The analysis will explore the relationship between corporate finance practices and financial stability, taking into account factors such as regulatory frameworks, economic conditions, and firm size. The results of the study are expected to provide insights into the impact of corporate finance on financial stability in the Western Balkans. Specifically, the study will identify the key corporate finance practices that contribute to financial stability in the region, as well as the challenges and obstacles that firms face in implementing effective corporate finance strategies. The study will also provide recommendations for policymakers and firms looking to enhance financial stability and resilience in the region.

Keywords: financial regulation, debt management, investment decisions, dividend policies, economic volatility, banking systems, public debt, prudent financial management, firm size, policy recommendations

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Authors: O. Colot, M. Croquet, L. Cultrera, Y. Fandja Collince

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The objective of our research is to evaluate the impact of the allowance for corporate equity (ACE) on the financial structure of Belgian SME in order to highlight the potential existence of a fiscal leverage. To limit the biases linked to the rationing of the capital further to the financial crisis, we compare first the dynamic evolution of the financial structure of the Belgian firms over the period 2006-2015 by focusing on three sub-periods: 2006-2008, 2009-2012 and 2013-2015. We give then an international size to this comparison by including SMEs from countries adjoining Belgium (France, Germany, Netherlands and the United Kingdom) and within which there is no ACE. This comparison allows better understanding the fiscal advantage linked to the ACE of firms evolving in a relatively unstable economic environment further to the financial crisis of 2008. This research is relevant given the economic and political context in which Belgium operates and the very uncertain future of the Belgian ACE. The originality of this research is twofold: the long study period and the consideration of the effects of the financial and economic crisis on the financing structure of Belgian SMEs. The results of this research, even though they confirm the existence of a positive fiscal leverage for the tax deduction for venture capital on the financing structure of Belgian SMEs, do not allow the extent of this leverage to be clearly quantified. The comparative evolution of financing structures over the period 2006-2015 of Belgian, French, German, Dutch and English SMEs shows a strong similarity in the overall evolution of their financing.

Keywords: allowance for corporate equity, Belgium, financial structure, small and medium sized firms

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Authors: Sulila Anar

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Institutions of any kind are regulated by laws which could be formal or informal, visible or invisible that influences the very structure of the institutions itself. Here in this paper the attempt will be to see how institutions of higher education are regulated by the regulatory institutions by taking the case of India, the third largest education system in the world. The attempt is to try to see how regulation of higher education creates a space for contestation among regulatory institutions based on secondary resources and how this affects the governance of university to achieve the goals and visions.

Keywords: higher education, regulation, autonomy, space

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Authors: Barbora Chmelíková

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Financial literacy is a widely discussed topic on the national and international level by governments, organizations and academia. For this reason this study analyses financial knowledge, financial behavior and financial attitudes of students of finance. The aim of the paper is to determine whether the financial literacy of university students studying finance differs from the level of financial literacy in selected OECD countries. The research was conducted at Masaryk University in the Czech Republic. The empirical study comprises questions related to several aspects of financial literacy, as well as socio-demographic data enabling more thorough analysis. The results indicate that improvement in financial literacy of university students is still required, even though their major is finance related.

Keywords: financial literacy, financial behavior, personal finance management, university students

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Authors: Matthias Nnadi

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Using samples of 250 large listed firms by market capitalization in China and Hong Kong, we conducted empirical test to determine the impact of regulatory environment on reporting quality following IFRS convergence using three financial reporting measures; earning management, timely loss recognition and value relevance. Our results indicate that accounting data are more value relevant for Hong Kong listed firms than the Chinese A-share firms. The empirical results for timely loss recognition further reveal that there is a larger coefficient estimate on bad news earnings, which suggests that Chines A-share firms are more likely to report losses in a timely manner. The results support the evidence that substantial convergence of IFRS can improve financial reporting quality in a regulated environment such as China. This further supports the expectation that IFRS are relevant to China and has positive effect on its accounting practice and quality.

Keywords: reporting, quality, earning, loss, relevance, financial, China, Hong Kong

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Authors: Barbora Chmelikova

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Current financial markets offer a wide range of financial products to the consumers. However, access to the financial products is not always provided or guaranteed, particularly in less developed countries. For this reason, financial inclusion is an important component in the modern society. This paper investigates financial inclusion and what financial products are held by university students majoring in finance fields. The OECD methodology was used to examine the awareness and use of financial products. The study was conducted via online questionnaire at Masaryk University in the Czech Republic among finance students. The results show that the students use current and savings accounts more than any other financial products.

Keywords: financial inclusion, financial products, personal finance, university students

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Authors: Peter Oyelere, Fernando Zanella

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Corporate governance is one of the most discussed and researched issues in recent times in countries around the world, with different countries developing and adopting different governance structures, models and mechanisms. While the Codes of corporate governance have been weaved into the regulatory fabrics of most countries, it is equally critically important that their mechanisms, procedures and practices be transparent, and be transparently communicated to all stakeholders. The Internet can be a very useful and cost-effective tool for the timely and voluntary communication of corporate governance matters to stakeholders. The current paper details the results of an investigation on the extent of which companies listed in the UAE are using the Internet for communicating corporate governance issues, matters and procedures. We surveyed the websites of companies listed on the two UAE Stock Exchanges – the Abu Dhabi Stock Exchange (ADX) and the Dubai Financial Market (DFM) – to find out their level and nature of usage of the Internet for corporate governance disclosures. Regulatory and policy implications of the results of our investigation, as well as other areas for further studies, are also presented in the paper.

Keywords: corporate governance, internet financial reporting, regulation, transparency, United Arab Emirates

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Authors: Mustapha Achibane, Imane Allam

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Since the nineties, all Moroccan banking institutions have to respect an arsenal of prudential ratios. The respect of these prudential measures aims to ensure the financial system stability. In order to do so, regulatory authorities tried to reduce the financial and operational risks incurred by the banking entities. Meanwhile, regulatory authorities demanded a balance sheet management work from banks. They also asked them to establish a management control system to manage operational risk, as well as an effort in terms of incurred risk-based commitments. Therefore, the prudential approach has a macroeconomic nature and it is presented as a determinant of the operational, microeconomic approach. This operational approach takes the form of a strategy that each banking entity must develop to manage the different banking risks. This study seeks to analyze the problem of risk management between the prudential and the operational approaches. It was processed through a literature review followed by an analysis of the Moroccan banking sector’s performance. At first, we will reconcile the inductive logic and then, the analytical one. The first approach consists of analyzing the phenomenon from a normative and conceptual perspective, while the second one will consist of considering the Moroccan banking system and analyzing the behavior of Moroccan banking entities in terms of risk management and performance. The results identified a favorable growth in terms of performance, despite the huge provisioning effort made to meet the international standards and the harmonization of the regulations.

Keywords: banking performance, financial intermediation, operational approach, prudential standards, risk management

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Authors: Sarah Marie

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In today's dynamic financial landscape, cryptocurrencies represent a paradigm shift characterized by innovation and intense debate. This study probes into their transformative potential and the challenges they present, offering a balanced perspective that recognizes both their promise and pitfalls. Emulating the engaging style of a TED Talk, this research goes beyond academic analysis, serving as a critical bridge to reconcile the perspectives of cryptocurrency skeptics and enthusiasts, fostering a well-informed dialogue. The study employs a mixed-method approach, analyzing current trends, regulatory landscapes, and public perceptions in the cryptocurrency domain. It distinguishes genuine innovators in this field from ostentatious opportunists, echoing the sentiment that real innovation should be separated from mere showmanship. If one is unfamiliar with who is being referenced, they can likely spot them leaning against their Lamborghinis outside "Crypto" conventions, looking greasy. Major findings reveal a complex scenario dominated by regulatory uncertainties, market volatility, and security issues, emphasizing the need for a coherent regulatory framework that balances innovation with risk management and sustainable practices. The study underscores the importance of transparency and consumer protection in fostering responsible growth within the cryptocurrency ecosystem. In conclusion, the research advocates for education, innovation, and ethical governance in the realm of cryptocurrencies. It calls for collaborative efforts to navigate the intricacies of this evolving landscape and to realize its full potential in a responsible, inclusive, and forward-thinking manner.

Keywords: financial landscape, innovation, public perception, transparency

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Authors: Daud Abdia, Aqsa Shamim, Farhan Tabassum

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In order to achieve specific goals, basketball players have to use different skills to enhance their motivation, one such skill is deliberate practice. The aim of this study was to explore the relationship between deliberate practice of dribbling and self-regulatory behavior of male basketball players. For this purpose, a sample of 108 basketball players using stratified sampling was taken from public and private sector universities. Sample was divided into two groups that are experimental (n=54) and control group (n=54) using comparative experimental design. Experimental group was involved in the training of deliberate practice of dribbling for 5 weeks. Amounts of weekly practice activity and Self-Regulation of Learning Self-Report Scale (SRL-SRS) were used for self-regulatory behavior to collect data after the deliberate practice. The reliability of amounts of weekly practice activity was found to be 0.852, whereas SRL-SRS was found to be 0.890. The results of the study indicated a strong positive correlation between deliberate practice of dribbling and self-regulatory behavior (r=0.755, n=54, p=.000). Whereas, paired sample t-test; t(53)=1.37, p < 0.005 shows statistically significant improvement in the self-regulatory behavior after the training program of deliberate practice from 3.02 ± 0.64m to 3.21 ± 0.75m (p < 0.005). It was concluded that in order to enhance the self-regulatory behavior of basketball players we should work on the deliberate practice of the players.

Keywords: self-regulatory behavior, deliberate practice, dribbling, basketball

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Authors: Saeed Rabea Baatwah, Zalailah Salleh, Norsiah Ahmad

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This study examines whether audit committee chair with financial expertise enhances the audit committee role in financial reporting quality in emerging market. We investigate this influence by employing the direct effect and moderating effect of audit committee chair with financial expertise on financial reporting timeliness. By using Omani data and the panel data method for two proxies for financial reporting timeliness, we find that audit committee chair with financial expertise enhances the timeliness of financial reporting through making the disclosure of annual reports timely. Further, we report evidence showing that both accounting and non-accounting financial expertise on the audit committee have a positive and significant influence on the timeliness of financial reporting. We also document that the association between financial expertise and the timeliness of financial reporting is more pronounced when the chair of the audit committee has financial expertise. This study is among the first to comprehensively prove that audit committee chair with financial expertise contributes to the quality of financial reporting in emerging market.

Keywords: audit committee, chair with financial expertise, timeliness of financial reporting, Oman

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Authors: Prasansha Kumari

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Financial Literacy is the possession of knowledge and understanding of financial matters. Financial Literacy often entails the knowledge of properly making decisions pertaining to certain personal financial areas like real estate, insurance investing, and savings. This paper intends to identify and analyze the financial knowledge among university undergraduates by using 200 undergraduates in four faculties of University of Kelaniya, Sri Lanka. Collected data will be analyzed by descriptive research method using SPSS package. Expected outcomes are considerable percentage of undergraduates have basic knowledge on financial matters while it has a law percentage for advanced financial literacy among undergraduates. Students from faculty of Commerce and Management and Science have good understanding about financial matters than undergraduates in other two faculties

Keywords: advanced finance, undergraduates, financial literacy, savings

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Authors: Sandra Rigot, Samira Demaria, Frederic Lemaire

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The starting point of this research is the contemporary capitalist paradox: there is a real scarcity of long term investment despite the boom of potential long term investors. This gap represents a major challenge: there are important needs for long term financing in developed and emerging countries in strategic sectors such as energy, transport infrastructure, information and communication networks. Moreover, the recent financial and sovereign debt crises, which have respectively reduced the ability of financial banking intermediaries and governments to provide long term financing, questions the identity of the actors able to provide long term financing, their methods of financing and the most appropriate forms of intermediation. The issue of long term financing is deemed to be very important by the EU Commission, as it issued a 2013 Green Paper (GP) on long-term financing of the EU economy. Among other topics, the paper discusses the impact of the recent regulatory reforms on long-term investment, both in terms of accounting (in particular fair value) and prudential standards for banks. For banks, prudential and accounting standards are also crucial. Fair value is indeed well adapted to the trading book in a short term view, but this method hardly suits for a medium and long term portfolio. Banks’ ability to finance the economy and long term projects depends on their ability to distribute credit and the way credit is valued (fair value or amortised cost) leads to different banking strategies. Furthermore, in the banking industry, accounting standards are directly connected to the prudential standards, as the regulatory requirements of Basel III use accounting figures with prudential filter to define the needs for capital and to compute regulatory ratios. The objective of these regulatory requirements is to prevent insolvency and financial instability. In the same time, they can represent regulatory constraints to long term investing. The balance between financial stability and the need to stimulate long term financing is a key question raised by the EU GP. Does fair value accounting contributes to short-termism in the investment behaviour? Should prudential rules be “appropriately calibrated” and “progressively implemented” not to prevent banks from providing long-term financing? These issues raised by the EU GP lead us to question to what extent the main regulatory requirements incite or constrain banks to finance long term projects. To that purpose, we study the 292 responses received by the EU Commission during the public consultation. We analyze these contributions focusing on particular questions related to fair value accounting and prudential norms. We conduct a two stage content analysis of the responses. First, we proceed to a qualitative coding to identify arguments of respondents and subsequently we run a quantitative coding in order to conduct statistical analyses. This paper provides a better understanding of the position that a large panel of European stakeholders have on these issues. Moreover, it adds to the debate on fair value accounting and its effects on prudential requirements for banks. This analysis allows us to identify some short term bias in banking regulation.

Keywords: basel 3, fair value, securitization, long term investment, banks, insurers

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Authors: Rahmoune Abdelhaq

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Systemic risk is a key concern for central banks charged with safeguarding overall financial stability. In this work, we investigate how systemic risk is affected by the structure of the financial system. We construct banking systems that are composed of a number of banks that are connected by interbank linkages. We then vary the key parameters that define the structure of the financial system — including its level of capitalization, the degree to which banks are connected, the size of interbank exposures and the degree of concentration of the system — and analyses the influence of these parameters on the likelihood of contagious (knock-on) defaults. First, we find that the better-capitalized banks are, the more resilient is the banking system against contagious defaults and this effect is non-linear. Second, the effect of the degree of connectivity is non-monotonic, that is, initially a small increase in connectivity increases the contagion effect; but after a certain threshold value, connectivity improves the ability of a banking system to absorb shocks. Third, the size of interbank liabilities tends to increase the risk of knock-on default, even if banks hold capital against such exposures. Fourth, more concentrated banking systems are shown to be prone to larger systemic risk, all else equal. In an extension to the main analysis, we study how liquidity effects interact with banking structure to produce a greater chance of systemic breakdown. We finally consider how the risk of contagion might depend on the degree of asymmetry (tier) inherent in the structure of the banking system. A number of our results have important implications for public policy, which this paper also draws out. This paper also discusses why bank risk management is needed to get the optimal one.

Keywords: financial stability, contagion, liquidity risk, optimal risk

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Authors: G. C. Surya Bahadur, Ranjana Kothari

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The paper attempts to analyze linkages between corporate governance and firm performance in India. The study employs a panel data of 50 Nifty companies from 2008 to 2012. Using LSDV panel data model and 2SLS model the study reveals that that good corporate governance practices adopted by companies is positively related with financial performance. Board independence, number of board committees and executive compensation are found to have positive relationship while ownership by promoters and financial leverage have negative relationship with performance. There is existence of bi-directional relationship between corporate governance and financial performance. Companies with sound financial performance are more likely to conform to corporate governance norms and standards and implement sound corporate governance system. The findings indicate that companies can enhance business performance and sustainability by embracing sound corporate governance practices.

Keywords: board structure, corporate governance, executive compensation, ownership structure

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Authors: Chinelle van der Westhuizen

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The introduction of cryptocurrencies as an alternative payment system have placed governments in a challenging position in relation to the regulatory status of cryptocurrencies and the money laundering activities associated with it. In April 2018, the Australian government amended its Anti-Money Laundering laws to regulate digital currency exchanges in an attempt to regulate money laundering activities and the introduction of ‘know-your-customer’ policies within the digital currency sector. Part one of this paper explores the use of cryptocurrencies for money laundering purposes and its significance to money launderers. Part two studies the efficacy of the current Australian Anti-Money Laundering laws and whether more can be done on a regulatory level. This paper will, therefore, highlight recent court decisions and legislation in terms of money laundering activities within these alternative payment systems in Australia and the United Kingdom. Part three of the paper will further analyze recent case studies by the Australian Transaction Reports and Analysis Centre and the Office for Professional Body Anti-Money Laundering Supervision in the United Kingdom as the regulatory bodies for money laundering activities. The case studies and research will explore the legal disputes and future regulation concerning the use of cryptocurrencies and money laundering on a national as well as international level. This paper intends to highlight that although cryptocurrency is viewed as an innovative global phenomenon and an alternative method of payment, there are a number of legal issues associated with its use that indicate the need for regulatory reform. It is recommended in this paper that the Financial Action Task Force, International Monetary Fund as well as concerned governments have ongoing discussions on these regulatory issues and how to address it appropriately, whether through legislation or universal guidelines. Therefore, the conclusion of this paper will emphasize the benefits of a regulatory regime for money laundering activities within the cryptocurrency space and that the lack of such a regime may be detrimental to countries.

Keywords: cryptocurrency, know-your-customer policy, money laundering, regulation

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Authors: Laura de Zwaan, Tracey West

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There is a sustained observable gender gap in financial literacy, with females consistently having lower levels than males. This research explores the knowledge and experiences of high school students in Australia aged 14 to 18 in order to understand how this gap can be improved. Using a predominantly qualitative approach, we find evidence to support impacts on financial literacy from financial socialization and socio-economic environment. We also find evidence that current teaching and assessment approaches to financial literacy may disadvantage female students. We conclude by offering recommendations to improve the way financial literacy education is delivered within the curriculum.

Keywords: financial literacy, financial socialization, gender, maths

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Authors: Seyed Sajjad Habibi

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The aim of this study is to investigate the impact of global financial crises and corporate financial crisis on tax evasion of companies listed on the Tehran Stock Exchange. For this purpose, panel data in the periods of financial crisis period (2007 to 2012) and without a financial crisis (2004, 2005, 2006, 2013, 2014, and 2015) was analyzed using multivariate linear regression. The results indicate a significant relationship between the corporate financial crisis (bankruptcy risk) and tax evasion in the global financial crisis period. The results also showed a significant relationship between the corporate bankruptcy risk and tax evasion in the period with no global financial crisis. A significant difference was found between the bankruptcy risk and tax evasion in the period of the global financial crisis and that with no financial crisis so that tax evasion increased in the financial crisis period.

Keywords: global financial crisis, corporate financial crisis, bankruptcy risk, tax evasion risk, emerging markets

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Authors: Zouari Ezzeddine, Ghraieb Ikram

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From the results of the academic literature which evokes the limitations of previous studies, this article shows the reasons for multidimensionality Prediction of financial bubbles. A new framework for modeling study predicting financial bubbles by linking a set of variable presented on several dimensions dictating its multidimensional character. It takes into account the preferences of financial actors. A multicriteria anticipation of the appearance of bubbles in international financial markets helps to fight against a possible crisis.

Keywords: classical measures, predictions, financial bubbles, multidimensional, artificial neural networks

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Authors: Rodrigo Zepeda

Abstract:

Transaction cost analysis (TCA) is a way of analyzing the relative performance of different intermediaries and different trading strategies for trades undertaken in financial instruments. It is a way for an investor to determine the overall quality of execution of a particular trade, and there are many different approaches to undertaking TCA. Under the updated Markets in Financial Instruments Directive (2014/65/EU) (MiFID II), investment firms are required when executing orders, to take all sufficient steps to obtain the best possible result for their clients. This requirement for 'Best Execution' must take into account price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of the order. The new regulatory compliance framework under MiFID II will now also apply across a very broad range of financial instruments. This article will provide a comprehensive technical analysis of how TCA and Best Execution will significantly change under MiFID II. It will also explain why harmonization of post-trade reporting requirements under MiFID II could potentially support the development of peer group analysis, which in turn could provide a new and highly advanced framework for TCA that could more effectively support Best Execution requirements under MiFID II. The study is significant because there are no studies that have dealt with TCA and Best Execution under MiFID II in the literature.

Keywords: transaction cost analysis, execution quality, best execution, MiFID II, financial instruments

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Authors: Kamlesh Shashikant Dave

Abstract:

The global financial crisis is rooted in the sub-prime crisis in U.S.A. During the boom years, mortgage brokers attracted by the big commission, encouraged buyers with poor credit to accept housing mortgages with little or no down payment and without credit check. A combination of low interest rates and large inflow of foreign funds during the booming years helped the banks to create easy credit conditions for many years. Banks lent money on the assumptions that housing price would continue to rise. Also the real estate bubble encouraged the demand for houses as financial assets .Banks and financial institutions later repackaged these debts with other high risk debts and sold them to worldwide investors creating financial instruments called collateral debt obligations (CDOs). With the rise in interest rate, mortgage payments rose and defaults among the subprime category of borrowers increased accordingly. Through the securitization of mortgage payments, a recession developed in the housing sector and consequently it was transmitted to the entire US economy and rest of the world. The financial credit crisis has moved the US and the global economy into recession. Indian economy has also affected by the spill over effects of the global financial crisis. Great saving habit among people, strong fundamentals, strong conservative and regulatory regime have saved Indian economy from going out of gear, though significant parts of the economy have slowed down. Industrial activity, particularly in the manufacturing and infrastructure sectors decelerated. The service sector too, slow in construction, transport, trade, communication, hotels and restaurants sub sectors. The financial crisis has some adverse impact on the IT sector. Exports had declined in absolute terms in October. Higher inputs costs and dampened demand have dented corporate margins while the uncertainty surrounding the crisis has affected business confidence. To summarize, reckless subprime lending, loose monetary policy of US, expansion of financial derivatives beyond acceptable norms and greed of Wall Street has led to this exceptional global financial and economic crisis. Thus, the global credit crisis of 2008 highlights the need to redesign both the global and domestic financial regulatory systems not only to properly address systematic risk but also to support its proper functioning (i.e financial stability).Such design requires: 1) Well managed financial institutions with effective corporate governance and risk management system 2) Disclosure requirements sufficient to support market discipline. 3)Proper mechanisms for resolving problem institution and 4) Mechanisms to protect financial services consumers in the event of financial institutions failure.

Keywords: FIIs, BSE, sensex, global impact

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Authors: Eunsup Daniel Shim, Jooh Lee

Abstract:

The US financial crisis of 2008 and subsequent Global Financial Crisis were considered by many economists the worst financial crisis since the Great Depression of the 1930s. As a results, Dodd-Frank Act has passed and aims '(1) to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end "too big to fail", (2) to protect the American taxpayer by ending bailouts, (3) to protect consumers from abusive financial services practices, and for other purposes.' The enactment of Dodd-Frank Act, in part, intended to significantly influence accountability on executive compensation especially for the financial institutions. This paper empirically investigates the changes in Financial CEOs’ compensation since the Financial Crisis of 2008. Our findings show that in the post- Financial Crisis period financial leverage is significant factor influencing the CEOs’ total compensation. In addition market based performance such as stock price and market-to-book ratio shows significant positive relationship with CEO compensation. This change can be interpreted an attempt to reduce opportunistic behavior of top executives after the financial crisis and the enactment of the Dodd-Frank Act.

Keywords: financial CEO compensation, firm performance, financial crisis of 2008, dodd-frank act

Procedia PDF Downloads 490