1,179 research outputs found
Whither Capitalism? Financial externalities and crisis
As with global warming, so with financial crises â externalities have a lot to answer for. We
look at three of them. First the financial accelerator due to âfire salesâ of collateral assets -- a
form of pecuniary externality that leads to liquidity being undervalued. Second the ârisk-
shiftingâ behaviour of highly-levered financial institutions who keep the upside of risky
investment while passing the downside to others thanks to limited liability. Finally, the
network externality where the structure of the financial industry helps propagate shocks
around the system unless this is checked by some form of circuit breaker, or âring-fenceâ.
The contrast between crisis-induced Great Recession and its aftermath of slow growth in the
West and the rapid - and (so far) sustained - growth in the East suggests that successful
economic progress may depend on how well these externalities are managed
Study of statistical correlations in intraday and daily financial return time series
The aim of this article is to briefly review and make new studies of
correlations and co-movements of stocks, so as to understand the
"seasonalities" and market evolution. Using the intraday data of the CAC40, we
begin by reasserting the findings of Allez and Bouchaud [New J. Phys. 13,
025010 (2011)]: the average correlation between stocks increases throughout the
day. We then use multidimensional scaling (MDS) in generating maps and
visualizing the dynamic evolution of the stock market during the day. We do not
find any marked difference in the structure of the market during a day. Another
aim is to use daily data for MDS studies, and visualize or detect specific
sectors in a market and periods of crisis. We suggest that this type of
visualization may be used in identifying potential pairs of stocks for "pairs
trade".Comment: 22 pages, 11 figures, Springer-Verlag format. To appear in the
conference proceedings of Econophys-Kolkata VI: "Econophysics of systemic
risk and network dynamics", Eds. F. Abergel, B.K. Chakrabarti, A. Chakraborti
and A. Ghosh, to be published by Springer-Verlag (Italia), Milan (2012
Credit bureaus between risk-management, creditworthiness assessment and prudential supervision
"This text may be downloaded for personal research purposes only. Any additional reproduction for other purposes, whether in hard copy or electronically, requires the consent of the author. If cited or quoted, reference should be made to the full name of the author, the title, the working paper or other series, the year, and the publisher."This paper discusses the role and operations of consumer Credit Bureaus in the European Union in the context of the economic theories, policies and law within which they work. Across Europe there is no common practice of sharing the credit data of consumers which can be used for several purposes. Mostly, they are used by the lending industry as a practice of creditworthiness assessment or as a risk-management tool to underwrite borrowing decisions or price risk. However, the type, breath, and depth of information differ greatly from country to country. In some Member States, consumer data are part of a broader information centralisation system for the prudential supervision of banks and the financial system as a whole. Despite EU rules on credit to consumers for the creation of the internal market, the underlying consumer data infrastructure remains fragmented at national level, failing to achieve univocal, common, or defined policy objectives under a harmonised legal framework. Likewise, the establishment of the Banking Union and the prudential supervision of the Euro area demand standardisation and convergence of the data used to measure debt levels, arrears, and delinquencies. The many functions and usages of credit data suggest that the policy goals to be achieved should inform the legal and institutional framework of Credit Bureaus, as well as the design and use of the databases. This is also because fundamental rights and consumer protection concerns arise from the sharing of credit data and their expanding use
The price of rapid exit in venture capital-backed IPOs
This paper proposes an explanation for two empirical puzzles surrounding initial public offerings (IPOs). Firstly, it is well documented that IPO underpricing increases during âhot issueâ periods. Secondly, venture capital (VC) backed IPOs are less underpriced than non-venture capital backed IPOs during normal periods of activity, but the reverse is true during hot issue periods: VC backed IPOs are more underpriced than non-VC backed ones. This paper shows that when IPOs are driven by the initial investorâs desire to exit from an existing investment in order to finance a new venture, both the value of the new venture and the value of the existing firm to be sold in the IPO drive the investorâs choice of price and fraction of shares sold in the IPO. When this is the case, the availability of attractive new ventures increases equilibrium underpricing, which is what we observe during hot issue periods. Moreover, I show that underpricing is affected by the severity of the moral hazard problem between an investor and the firmâs manager. In the presence of a moral hazard problem the degree of equilibrium underpricing is more sensitive to changes in the value of the new venture. This can explain why venture capitalists, who often finance firms with more severe moral hazard problems, underprice IPOs less in normal periods, but underprice more strongly during hot issue periods. Further empirical implications relating the fraction of shares sold and the degree of underpricing are presented
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When performativity fails: Implications for Critical Management Studies
This article argues that recent calls in this journal and elsewhere for Critical Management Studies scholars to embrace rather than reject performativity presents an overly optimistic view of (a) the power of language to achieve emancipatory organizational change and (b) the capability of lone Critical Management Studies researchers to resignify management discourses. We introduce the notion of failed performatives to extend this argument and discuss its implications for critical inquiry. If Critical Management Studies seeks to make a practical difference in business and society, and realize its ideals of emancipation, we suggest alternative methods of impact must be explored
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