The Structure of the Asian Debt Crisis in Theoretical and Historical Perspective

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Disrupting Finance

This open access Pivot demonstrates how a variety of technologies act as innovation catalysts within the banking and financial services sector. Traditional banks and financial services are under increasing competition from global IT companies such as Google, Apple, Amazon and PayPal whilst facing pressure from investors to reduce costs, increase agility and improve customer retention. Technologies such as blockchain, cloud computing, mobile technologies, big data analytics and social media therefore have perhaps more potential in this industry and area of business than any other. This book defines a fintech ecosystem for the 21st century, providing a state-of-the art review of current literature, suggesting avenues for new research and offering perspectives from business, technology and industry

Sentiment, Expectations and Real Estate Prices —Evidence from China

From the perspective of behavioral finance, this thesis utilizes the real estate data since China's market-oriented reform to investigate the influence of sentimental variables and expectations on real estate prices. As the first topic of the research, Chapter 2 of this thesis takes China’s state level Consumer Expectation Index as proxy variable of consumers’ aggregated sentiment, and adopts the method of time series to empirically research on the relationship between the sentiment and China’s real estate prices. The research result indicates that there is long-term cointegrating relationship between the consumers’ aggregated sentiment and real estate prices, and the influence of the sentiment on real estate prices is stronger than the fundamental indicators in the traditional analytical framework such as M2, GDP, etc. For the purpose of further distinguishing the influence of psychological factors on real estate prices, and investigating data at a more detailed level, Chapter 3 of the thesis adopts panel data model to research the influence of sentiment of the market opinion leaders (entrepreneurs) on house prices of different provinces. The estimation result of the overall panel data indicates that the sentiment of entrepreneurs significantly affects house prices. Then, the country is divided into three areas: eastern, central and western areas, of which the estimation results indicate that the degree of the sentimental influence on house prices is positively correlated with the degree of market maturity. The maturer the market is, the more likely it is to be affected by the psychological factors. The conclusion of endogenous test shows that the sentiment of entrepreneurs is independent of other economic fundamentals and directly affects the prices of housing property. Chapter 4 of the thesis examines the influence of the promotion expectations of Chinese local officials (governors) on house prices from the perspective of public administration. China adopts a unique promotion system of local officials similar to yardstick competition, which has had a broad and profound influence on China's real estate market. This chapter first illustrates the theoretical mechanism that triggers China’s land finance. And on this basis, it carries an empirical study on the influence of promotion expectations of local officials on land prices and then the house prices. The test results indicate that the promotion expectations of China’s local officials have long-term and profound influence on house prices, which help us to better understand the unique mechanism of China's sustained rapid development. The public administrative policies outlined in Chapter 4 have important reference to other developing countries

Architecting system of systems: artificial life analysis of financial market behavior

This research study focuses on developing a framework that can be utilized by system architects to understand the emergent behavior of system architectures. The objective is to design a framework that is modular and flexible in providing different ways of modeling sub-systems of System of Systems. At the same time, the framework should capture the adaptive behavior of the system since evolution is one of the key characteristics of System of Systems. Another objective is to design the framework so that humans can be incorporated into the analysis. The framework should help system architects understand the behavior as well as promoters or inhibitors of change in human systems. Computational intelligence tools have been successfully used in analysis of Complex Adaptive Systems. Since a System of Systems is a collection of Complex Adaptive Systems, a framework utilizing combination of these tools can be developed. Financial markets are selected to demonstrate the various architectures developed from the analysis framework --Introduction, page 3

Chicago Man, K-T Man, and the Future of Behavioral Law and Economics

Most law is aimed at shaping human behavior, encouraging that which is good for society and discouraging that which is bad.\u27 Nonetheless, for most of the history of our legal system, laws were passed, cases were decided, and academics pontificated about the law based on nothing more than common sense assumptions about how people make decisions. A quarter century or more ago, the law and economics movement replaced these common sense assumptions with a well-considered and expressly stated assumption-that man is a rational maximizer of his expected utilities. Based on this premise, law and economics has dominated interdisciplinary thought in the legal academy for the past thirty years. In the past decade it has become clear, however, that people simply do not make decisions as modeled by traditional law and economics. A mountain of experiments performed in psychology and related disciplines, much of it in the heuristics and biases tradition founded by psychologists Daniel Kahneman and Amos Tversky, demonstrate that people tend to deviate systematically from rational norms when they make decisions

Social Security Money's Worth

This paper describes how three money's worth measures the benefit-to-tax ratio, the internal rate of return, and the net present value are calculated and used in analyses of social security reforms, including systems with privately managed individual accounts invested in equities. Declining returns from the U.S. social security system prove to be the inevitable result of having instituted an unfunded (pay-as-you-go) retirement system that delivered $7.9 trillion of net transfers (in 1997 present value dollars) to people born before 1917, and will deliver another$1.8 trillion to people born between 1918 and 1937. But young and future workers cannot necessarily do better by investing their payroll taxes in capital markets. If the old system were closed down, massive unfunded liabilities of $9-10 trillion would still have to be paid unless already accrued benefits were cut. Alternative methods of calculating these accrued benefits yield somewhat different numbers: the straight line calculation is$800 billion less than the constant benefit calculation we propose as the benchmark. Using this benchmark in a world with no uncertainty, we show that privatization without prefunding would not increase returns at all, net of the new taxes needed to pay for unfunded liabilities. These new taxes would amount to 3.6 percent of payroll, or about 29 percent of social security contributions. Prefunding, implemented by reducing accrued benefits or by raising taxes, would eventually increase money's worth for later generations, but at the cost of lower money's worth for today's workers and/or retirees. Computing money's worth when there is uncertainty is much more difficult unless four conditions hold prices into stocks and out of bonds has no effect whatsoever on money's worth when it i adjusted for risk: a dollar of stock is worth no more than a dollar of bonds. diversification can raise welfare for constrained households, but the exact money's worth must depend on specific assumptions about household attitudes toward risk. Calculations lik the Social Security Advisory Council that attribute over $2.85 of net present va$1 shifted from bonds to stocks completely overlook the disutility of risk. By estimate that a 2 percent of payroll equity fund carved out of social security w present value by about 59 cents per dollar of bonds switched into equities When the likely reductions in income and longevity insurance are factored in privatization and diversification is substantially less than popularly perceived

The Inherent Irrationality of Judgment Proofing

In recent articles in the Yale Law Journal and the Stanford Law Review, Professor Lynn M. LoPucki has sparked much academic discussion arguing that recent developments in corporate law have led to an erosion in the system of corporate liability, such that it might one day prove impotent. LoPucki has argued that transactions such as asset securitizations, sale-leasebacks, and corporate structures in which liabilities are placed in asset-poor subsidiaries are driving this change. One early critic to the LoPucki thesis, Professor James J. White, has argued that empirical data show no evidence of increasing use of judgement proofing techniques. In this Article, Professor Steven L. Schwarcz joins this debate, arguing that an economic analysis of these transactions suggests that widespread use of these judgement proofing techniques is unlikely. A key distinction in the analysis, Schwarcz argues, is between arm\u27s length and non-arm\u27s length transactions. Arm\u27s length transactions are unlikely to lead to judgement proofing because corporations will receive value--often cash-- for the assets they sell. It is only by paying out this value in dividends that a corporation begins to judgement-proof itself. The theoretical possibility to take value away from future involuntary creditors through such transactions will rarely be realized because of the costs--taxes, negative publicity, personal and criminal liability--of entering into such agreements. By contrast, in non-arm\u27s length transactions, corporate owners do have the incentive to create judgement-proof structures. However, these structures are not innovative, and they will continue to be well-regulated ex post by existing legal doctrines in bankruptcy, corporate law, tort law, and criminal law. Following this article are a response from Professor Lynn LoPucki, a comment by Professor Charles Mooney, and a breif rejoinder from Professor Schwarcz