Economics of payment cards: a status report

This article surveys the recent theoretical literature on payment cards (focusing on debit and credit cards) and studies this research's possible implications for the current public policy debate over payment card networks and the pricing of their services for both consumers and merchants.Payment systems ; Credit cards

THE EUROPEAN COMMISSION IN THE CAP DECISION MAKING: A CASE STUDY ON THE SUGAR REFORM

This paper represents the first step of a wider research project on the relation between the EU institutional settings and the policy outcome. We specifically tackle the CAP definition process and the role of the Commission inside consultation procedure, proposing a case study on the sugar CMO reform of 2006. Using and adapting the theoretical framework proposed by Putnam (1988) we first check the suitability of sugar for such analysis than we reconstruct the various phases of the sugar CMO definition process evaluating qualitatively, the main issue in discussion, MSs position in relation also to the final outcome and the role played by the Commission in this context. The analysis is carried out as a documental study in which we collected and evaluate the documents produced by different bodies during the reform process together with interviews with commission internals in order to validate our hypothesis. The objective is to point out winners and losers of the reform process, highlighting the circumstances in which the Commission could have acted in order to compensate losers. Moreover, understand how such compensations could have helped the Commission in safeguarding the guidelines for the reform it supports.CAP Reform, Sugar reform, Institutional settings, Consultation procedure, CMO, Agricultural and Food Policy, Political Economy, Q10, Q18.,

Non-Cooperative Rational Interactive Proofs

Interactive-proof games model the scenario where an honest party interacts with powerful but strategic provers, to elicit from them the correct answer to a computational question. Interactive proofs are increasingly used as a framework to design protocols for computation outsourcing. Existing interactive-proof games largely fall into two categories: either as games of cooperation such as multi-prover interactive proofs and cooperative rational proofs, where the provers work together as a team; or as games of conflict such as refereed games, where the provers directly compete with each other in a zero-sum game. Neither of these extremes truly capture the strategic nature of service providers in outsourcing applications. How to design and analyze non-cooperative interactive proofs is an important open problem. In this paper, we introduce a mechanism-design approach to define a multi-prover interactive-proof model in which the provers are rational and non-cooperative - they act to maximize their expected utility given others\u27 strategies. We define a strong notion of backwards induction as our solution concept to analyze the resulting extensive-form game with imperfect information. We fully characterize the complexity of our proof system under different utility gap guarantees. (At a high level, a utility gap of u means that the protocol is robust against provers that may not care about a utility loss of 1/u.) We show, for example, that the power of non-cooperative rational interactive proofs with a polynomial utility gap is exactly equal to the complexity class P^{NEXP}

Regulating islamic financial institutions : The nature of the regulated

More than 200 Islamic financial institutions (IFIs) operate in 48 countries. Their combined assets exceed $200 billion, with an annual growth rate between 12 percent and 15 percent. The regulatory regime governing IFIs varies significantly across countries. A number of international organizations have been established with the mandate to set standards that would strengthen and harmonize prudential regulations as they apply to IFIs. The authors contribute to the discussion on the nature of prudential standards to be developed. They clarify the risks that IFIs are exposed to and the type of regulations that are needed to systematically manage them. They consider that the industry is still in a development process whose eventual outcome is the convergence of the practice of Islamic financial intermediation with its conceptual foundations. The authors contrast the risks and regulations needed in the case of Islamic financial intermediation operating according to core principles and current practice. They outline implications for approaches to capital adequacy, licensing requirements, and reliance on market discipline. They then propose an organization of the industry that wouldallow it to develop in compliance with its principles and prudent risk management, and facilitate its regulation.Labor Policies,Payment Systems&Infrastructure,International Terrorism&Counterterrorism,Financial Intermediation,Banks&Banking Reform,Financial Intermediation,Banks&Banking Reform,Environmental Economics&Policies,Economic Theory&Research,Banking Law

Comprehensive Monitor-Oriented Compensation Programming

Compensation programming is typically used in the programming of web service compositions whose correct implementation is crucial due to their handling of security-critical activities such as financial transactions. While traditional exception handling depends on the state of the system at the moment of failure, compensation programming is significantly more challenging and dynamic because it is dependent on the runtime execution flow - with the history of behaviour of the system at the moment of failure affecting how to apply compensation. To address this dynamic element, we propose the use of runtime monitors to facilitate compensation programming, with monitors enabling the modeller to be able to implicitly reason in terms of the runtime control flow, thus separating the concerns of system building and compensation modelling. Our approach is instantiated into an architecture and shown to be applicable to a case study.Comment: In Proceedings FESCA 2014, arXiv:1404.043

Do CDS spreads reflect default risks? Evidence from UK bank bailouts

CDS spreads are generally considered to reflect the credit risks of their reference entities. However, CDS spreads of the major UK banks remained relatively stable in response to the recent credit crisis. We suggest that this can be explained by changes in loss given default (LGD). To obtain the result we first derive the probabilities of default from stock option prices and then determine the LGD consistent with actual CDS spreads. Our results reveal a significant decrease in the LGD of bailed out banks over the observed period in contrast to banks which were not bailed out and non-financial companies