How Integrated is Latvian Society? An Audit of Achievements, Failures and Challenges

The concept of emerging markets came to surface in early 1980 and constituted of only eight countries from the two continents of South America and Asia. The globalization of financial markets has since raised the importance of emerging capital markets. We take a quantitative approach to investigate the performance of emerging markets compared to developed markets. The aim of the study is to conclude if emerging markets offers investment value and if logic in portfolio theory can be used to improve the chance of creating a relatively better performing investment. Included markets in our study are Brazil, Russia, India, China, Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa. S&P 500 is our benchmark for developed market performance. Sample period is 2002-01-01 to 2011-12-31 and monthly return data, creating 120 data points on each index.   The weighting schemes used for the portfolios are min variance optimization, geographical location and high and low correlation. All investments are scored on performances in correlation to S&P 500, inflation adjusted growth, currency effect, Sharpe ratio, skewness and kurtosis. Rankings are done on the separate categories, on the individual overall ranking on only countries and one overall ranking on all investments. A brief overview of the overall ranking for all investments suggest that medium performing investments are overrepresented (12/20) and the low and high is underrepresented (3/20 and 5/20). Of note is that the min variance portfolio outperforms its components, the geographical portfolios have a wide range and the high correlated portfolio outperforms the low. The country to portfolio ratio over each grade suggests only a small skew of the results. There is no low scoring portfolio but the other two ratios are close to 50/50, suggesting that on average the portfolios create diversification benefits. Furthermore normality of returns seem to be violated and then the concept of volatility as a risk measure is significantly impaired also currency risk can be of high importance, currency effects ranged from -48% to 28.7%. Assuming non-normality seems more accurate than assuming normality; therefore we need to improve on volatility as a tool to measure risk. So one direction for further research we see a need is in the concept of volatility. The initial reason for this research came from small investors’ seemingly intuitive knowledge that emerging markets are a suitable investment option. We have concluded that they in fact are, therefore we suggest that a qualitative study is conducted to investigate this seemingly natural intuition

Camels rating system for banking industry in pakistan : does CAMELS system provide similar rating as PACRA system in assessing the performance of banks in Pakistan?

Financial sector of an economy plays an important role in its economic development and prosperity of the country. Banking industry serves as the backbone of the financial sector that accumulates saving from surplus economic units in the form of deposits and provides it to deficit economic units in the form of advances. Banking industry provides support to economy and industries in specific in the time of recessions and economic crisis. But when banks are at the heart of economic recession or banks are the cause of financial crisis like the recent past financial crisis 2007-09, it makes the situation worst for economic recovery. So it is of great importance to keenly observe the performance of the banks and their compliance with the regulatory requirements.   Performance of the banks is measured at two levels, one is at the management and regulatory level of the banks and another is at external rating agencies. Purpose of regulatory and supervisory rating systems is to measure the bank performance at internal level and its compliance with regulatory requirements to keep the bank on right track. These ratings are highly confidential and are only available to the bank management.  External credit rating agencies examine and evaluate the banks and issue ratings for the general public and investors in particulars. It is of great importance that both these ratings present the same results about the condition of the banks to provide clear information to investors and management. In past several banks suffer from bankruptcy that was the failure of both internal rating systems and credit rating agencies.   CAMELS is the supervisory and regulatory rating system implemented by State Bank of Pakistan. It takes into account six important components of a bank when it evaluates performance of the bank. These components are Capital, Assets, Management, Earning, Liquidity and Sensitivity to market risk. Ratings is assigned to theses components on the scale of 1 to 5 and that is a base for composite rating that also ranged from 1 to 5. PACRA rating agency is the dominant credit rating agency of Pakistan that performs ratings for most banks and industries in the country. In our research we examine the similarities in the results generated by CAMELS rating system and PACRA rating agency. For that purpose we sample seventeen commercial banks of Pakistan Banking industry.   We observed that results generated by sample banks do not show any similarities with each other. This might be an indication of the banks that went on to bankruptcy in past three to four years or a future threat to financial sector of Pakistan.