278 research outputs found
Global Financial Regulatory Reforms: Implications for Developing Asia
The objective of global regulatory reform is to build a resilient global financial system that
can withstand shocks and dampen, rather than amplify, their effects on the real economy.
Lessons drawn from the recent crisis have led to specific reform proposals with concrete
implementation plans at the international level. Yet, these proposals have raised
concerns of relevance to Asia’s developing economies and hence require further
attention at the regional level. We argue that global financial reform should allow for the
enormous development challenges faced by developing countries—while ensuring that
domestic financial regulatory systems keep abreast of global standards. This implies
global reforms should be complemented and augmented by national and regional
reforms, taking into account the very different characteristics of emerging economies’
financial systems from advanced economies. Key areas of development focus should be
(i) balancing regulation and innovation, (ii) establishing national and cross-border crisis
management and resolution mechanisms, (iii) preparing a comprehensive framework
and contingency plan for financial institution failure, including consumer protection
measures such as deposit insurance, (iv) supporting growth and development with
particular attention to the region’s financial needs for infrastructure and for SMEs, and
(v) reforming the international and regional financial architecture.published_or_final_versio
The need for consolidating international financial regulatory architecture
The existing international financial regulatory architecture is multifarious. Prevalent regulatory forums are numerous, with over-lapping spheres of activity, where all such forums share a lack of consolidated authority. Bodies like the Basel Committee on Banking Supervision (BCBS), Group of 20, Financial Stability Forum, and OECD are all working to reform the international financial architecture. This multiplicity of opinions and disagreement on a minimum set of common standards due to existence of multiple forums with an absence of any concentration of authority is the subject of this paper. There is an argument by various scholars that this can be achieved through the appointment of a Global Supervisor, or a World Regulatory Authority. This paper is an attempt to explore this thesis, and this study goes beyond exploring the structure of various financial law organizations to suggest that there is a need to consolidate the existing structures not only by reducing the number of platforms available but by consolidating the authority into one efficient body.postprintThe 13th International Conference on Finance and Banking: Lessons Learned from the Financial Crisis, Ostrava, Czech Republic, 12-13 October 2011. In Conference Proceedings of The 13th International Conference on Finance and Banking, 2011, p. 24-3
Responding to the Global Financial and Economic Crisis: Meeting the Challenges in Asia
The global financial and economic crisis marks an important turning point for finance and
the Asian growth model. Regional consensus is now supporting economic rebalancing
away from the dominant focus on exports to developed markets and towards more a
more balanced economic structure supported by domestic and regional financial
development. In relation to finance, the crisis highlights the necessity of addressing a
range of issues across the region. First, Asian approaches to financial liberalization,
prudential regulation, and financial innovation are likely to be closely considered around
the world. At the same time, while the region has not been at the center of the global
crisis—in contrast to the Asian financial crisis of 1997/98—it nonetheless provides an
important opportunity to strengthen domestic and regional financial regulation. Second,
beyond the post-crisis issues, and the prevention of systemic risk in particular, finance
must continue to play a central role in supporting economic development and poverty
reduction across the region. While the global crisis has highlighted once again the risks
of finance, a central objective across Asia must be financial sector development to
support economic growth and development. Third, in addition to domestic reform, the
crisis provides an opportunity to enhance the international financial architecture, not only
to improve its efficacy, but also to enhance the role of empowered Asian economies in
global fora and institutions. At the same time, weaknesses in the international financial
architecture suggest the need for Asian regional alternatives to address liquidity,
liberalization, regulation, and exchange rate volatility.published_or_final_versio
A road to financial stability
This article provides a road map to financial stability. The roadmap is created by analyzing successive
episodes of financial crisis at various points in time and the regulatory-cum-supervisory responses
devised to reduce the chance of future threats to systemic stability. This article provides a glimpse of
historical events that led to the establishment of Basel Committee and then critically evaluates
committee’s efforts to make financial markets more certain and secure. This article also highlights the
efforts of supervisory authorities in creating an effective regulatory framework through the Basel Capital
accords. A critique of the Basel accords is sketched showing how Basel I and Basel II did not help
contain successive episodes of financial crisis. This paper also draws upon Basel III regulations currently
under deliberation and highlights vulnerable areas that may continue to threaten systemic stability even
after the implementation of Basel III
Trade finance in East Asia - potential responses to the shortfall
The crisis of 2008 saw many European banks reduce their provision of trade finance in East Asia. Notwithstanding the actions of the G20 and other bodies to redress this, a substantial shortfall in trade finance facilities in the region remains. This article explores the development of this shortfall, and analyses potential responses to it.
These responses range from some much-needed further revisions to the Basle III rules, to deepening of cross-border cooperation, creating a ring-fenced liquidity pool for trade finance, encouraging co-financing among the various providers of trade finance both private and public, and establishing a regional trade finance database. In addition, the article ponders the likelihood of China’s banks beginning to take a substantial role in providing trade finance to the region. Trade finance offers China’s banks a low risk means of expanding into international business, and offers China a way to provide the sort of important service to its region that regional leaders typically seek to provide.postprin
Overstating Moral Hazard: Lessons from Two Decades of Banking Crises
Over the past two decades a variety of banking system rescue approaches have been used, including in the 1997 Asian financial crisis, the 2008 global financial crisis, and the 2010 European debt crisis. By analysing the resolution of these crises as well as the approach to addressing bad loans in the People’s Republic of China, this paper provides a new perspective on the common belief that bailouts are invariably harmful to public funds or excessively conducive to moral hazard. Depending on the form of bailout, bank restructuring, and fiscal backstop, resolutions can be an effective means to restore a banking system. This paper argues that in a systemic financial crisis, a combination of balance sheet restructuring and the use of asset management companies to deal with non-performing loans is often the best choice. However, a fully-fledged resolution that triggers the bail-in procedure remains the best approach for non-systemically important financial institution failures which take place outside of systemic crises, namely when the failure is idiosyncratic.postprin
Post-Crisis Financial Integration in East Asia
organized by HKSAR Central Policy Unit / Centre of Asian Studies, University of Hong KongFinancial integration is less pronounced in East Asia than among states in Europe and North
America, or compared to economic integration within the region. Cross-border trade flows,
direct investment and investment in capital goods have long been greater and faster growing than
other investment flows, while regional institutional and legal structures are scarce and frequently
insubstantive. This dichotomy persists despite suggestions since the early 1990s that Asian
financial integration would accelerate, most especially following the East Asian financial crisis
of 1997-98, including the growth of regional representative organizations and in national
enthusiasm for the World Trade Organization. In particular, it defies post-crisis expectations that
greater financial integration might prevent or lessen the impact of future financial shocks. This
article suggests explanations in legal, governance and institutional frameworks for the paradox
of modest financial integration accompanying robust economic growth and trade integration.
First, cultural norms militate against regional innovation in financial markets and systems.
Second, other economic institutions have tended to resist market-orientated regional reform.
Above all, states failed to collaborate effectively in solutions to regional contagion during and
following the 1997-98 financial crisis. Without improving financial integration, Asia will
maintain a reliance on risk averse portfolio selection and excessive international reserve
accumulation, all to the detriment of its financial markets.published_or_final_versio
Trade Finance in East Asia: Potential Responses to the Shortfall
The crisis of 2008 saw many European banks reduce their provision of trade finance in East Asia. Notwithstanding the actions of the Group of Twenty and other bodies to redress this, a substantial shortfall in trade finance facilities in the region remains. This article explores the development of this shortfall and analyses potential responses to it. These responses range from some much needed further revisions to the Basel III rules, to the deepening of cross-border cooperation, creating a ring-fenced liquidity pool for trade finance, encouraging co-financing among the various providers of trade finance both private and public and establishing a regional trade finance database. In addition, the article ponders the likelihood of China’s banks beginning to take a substantial role in providing trade finance to the region. Trade finance offers China’s banks a low risk means of expanding into international business and offers China a way to provide the sort of important service to its region that regional leaders typically seek to provide.postprin
The Evolution of FinTech: A New Post-Crisis Paradigm?
'Financial technology' or 'FinTech' refers to technology enabled financial solutions. FinTech is often seen today as the new marriage of financial services and information technology. However, the interlinkage of finance and technology has a long history and has evolved over three distinct eras. FinTech 1.0, from 1866 to 1987, was the first period of financial globalization supported by technological infrastructure such as transatlantic transmission cables. This was followed by FinTech 2.0, from 1987 to 2008, during which financial services firms increasingly digitized their processes. Since 2008 a new era of FinTech has emerged in both the developed and developing world. This era is defined not by the financial products or services delivered but by who delivers them. This latest evolution of FinTech, led by start-ups, poses challenges for regulators and market participants alike, particularly in balancing the potential benefits of innovation with the possible risks of new approaches.preprin
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