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Deposit insurance and banking reform in Russia

The objective of this paper is not to review the pros and cons of deposit insurance systems, but to focus, rather narrowly, on the recent adoption of a deposit insurance system (DIS) in Russia, the rationale offered, and the potential impact it might have on the stability and development of the Russian banking system. An attempt is made to draw some lessons from the implementation experience in Russia. The paper starts with a brief description of the Russian DIS, followed by an overview of the banking system's structure and some observations on the sequencing followed for adopting the DIS and the political economy of its adoption. It concludes with a discussion of areas requiring attention.Banks&Banking Reform,Financial Intermediation,Financial Crisis Management&Restructuring,Corporate Law,Insurance&Risk Mitigation

Moral hazard and lack of commitment in dynamic economies

We revisit the role of limited commitment in a dynamic risk-sharing setting with private information. We show that a Markov-perfect equilibrium, in which agent and insurer cannot commit beyond the current period, and an infinitely-long contract to which only the insurer can commit, implement identical consumption, effort and welfare outcomes. Unlike contracts with full commitment by the insurer, Markov-perfect contracts feature non-trivial and determinate asset dynamics. Numerically, we show that Markov-perfect contracts provide sizable insurance, especially at low asset levels, and are able to explain a significant part of wealth inequality beyond what can be explained by self-insurance. The welfare gains from resolving the commitment friction are larger than those from resolving the moral hazard problem at low asset levels, while the opposite holds for high asset levels.Moral hazard ; Risk

Prediction of pressure-induced red shift of f->d(t2g) excitations in Cs2NaYCl6:Ce(3+) and its connection with bond length shortening

Quantum chemical calculations including embedding, scalar relativistic, and dynamic electron correlation effects on Cs2NaYCl6:(CeCl6)3- embedded clusters predict: (i) red shifts of the 4f->5d(t2g) transition with pressure and (ii) bond length shortening upon 4f->5d(t2g) excitation. Both effects are found to be connected which suggests that new high pressure spectroscopic experiments could reveal the sign of the bond length change.Comment: 6 pages text; 1 table; 3 figures; to be published in J.Chem.Phy

Credit Enhancement through Financial Engineering: Freeport-McMoRan's Gold-Denominated Depository Shares

In 1993 and early 1994, Freeport McMoRan Copper and Gold (FCX), a mining company, issued two series of gold-denominated depositary shares to raise 430 million dollars expanding their mining capacity in Indonesia. We price the depositary shares using a term structure model for the forward rates implied by gold futures and we show that FCX successfully enhanced the credit quality of the issue. This credit enhancement is achieved because the effect of linking the payoff of the depositary shares to gold reduces default risk and is similar to conventional risk management. However, the bundling of financing and risk management allows the firm to target hedging benefits only to the newly issued securities. The design of the security also overcomes the asset substitution problem. The depositary shares issued by FCX illustrate how firms can enhance credit quality through financial engineering without changing the existing priority ordering of their capital structure.Risk management, Gold-linked, Hybrid Securities

The Structure of AdS Black Holes and Chern Simons Theory in 2+1 Dimensions

We study anti-de Sitter black holes in 2+1 dimensions in terms of Chern Simons gauge theory of anti-de Sitter group coupled to a source. Taking the source to be an anti-de Sitter state specified by its Casimir invariants, we show how all the relevant features of the black hole are accounted for. The requirement that the source be a unitary representation leads to a discrete tower of states which provide a microscopic model for the black hole.Comment: 17 pages, LaTex. The presentation in Section 5 was improved; other minor improvements. Final form of the manuscrip

Learning the Roots of Visual Domain Shift

In this paper we focus on the spatial nature of visual domain shift, attempting to learn where domain adaptation originates in each given image of the source and target set. We borrow concepts and techniques from the CNN visualization literature, and learn domainnes maps able to localize the degree of domain specificity in images. We derive from these maps features related to different domainnes levels, and we show that by considering them as a preprocessing step for a domain adaptation algorithm, the final classification performance is strongly improved. Combined with the whole image representation, these features provide state of the art results on the Office dataset.Comment: Extended Abstrac