Hedge Funds as a Weapon of State?: Financial and Monetary Power in an Era of Liberalized Finance

The purpose of this paper is to determine whether states retain the capacity to engage in financial and monetary forms of diplomacy within the present context of liberalized international capital markets. In doing so, it argues that what has been ignored in much of the current international relations literature is the historically unique characteristics of certain non-state financial actors and the opportunities which they may afford for the use of state power. Specifically, by demonstrating the increasing authority which is being exercised by hedge funds and how this authority is serving to re-centralize investment decisionmaking, this paper argues that these funds may provide a renewed site through which states might exercise financial and monetary forms of power

The Limits of Carbon Disclosure: Theorizing the Business Case for Investor Environmentalism

This article examines the potential effectiveness of socially responsible investment (SRI) and investor environmentalism through carbon disclosure in terms of their key goal of creating real financial incentives, through share price performance, for firms to pursue climate change mitigation. It does so by theoretically assessing the two main assumptions which underpin investor environmentalism as promoted by SRI funds and NGOs such as the Carbon Disclosure Project: those concerning the power of institutional investors, and the "“business case"” for climate change mitigation. In doing so, it argues that the potential of using institutional investors to create real financial incentives for climate change mitigation, in the form of share price performance, has been considerably overestimated and that there is not even a strong theoretical case for why carbon disclosure should work in this regard. This is argued based on the structural constraints faced by most institutional investors, as well as the fundamentally incorrect assumption about climate change, that it is a form of market failure, which theoretically underpins these initiatives. (c)© 2011 by the Massachusetts Institute of Technology.

THE TROUBLE WITH HEDGE FUNDS

This article examines the impact of hedge funds on the workings of international financial markets and their implications for public policy. In contrast to the neoclassical view of hedge funds, which views them as being'too-small-to-matter, this article argues that the activities of hedge funds are significant for policymakers because of their ability to become extensively overleveraged and to act as market leaders. I consider the role played by hedge funds in financial crises, market volatility, market manipulation and systemic risk. The article concludes with a critical review of recent proposals for dealing with the public policy issues raised by hedge funds. Copyright 2002 by The Policy Studies Organization.

Empowerment of Whom and for What? Financial Literacy Education and the New Regulation of Consumer Financial Services

Financial regulators in many states recently have obtained statuory mandates to enhance consumer financial literacy. This paper investicages the development of policy pursuant to such mandates in the UK and Canada to identify how national regulators in both countries represent financial market place. It finds that regulators in both countries represent financial education as empowerment and responsible consumer behaviour. The paper rekates the tension between empowerment and responsibilization aspects of literacy enhancement to policy goals of expectations of protection. It raises questions about regulators' use of consumer education to responsiblize consumption of financial products and calls for further research on the international growth of financial literacy education as a regulatory project