Fund Management and Systemic Risk - Lessons from the Global Financial Crisis

Fund managers play an important role in increasing efficiency and stability in financial markets. But research also indicates that fund management in certain circumstances may contribute to the buildup of systemic risk and severity of financial crises. The global financial crisis provided a number of new experiences on the contribution of fund managers to systemic risk. In this article, we focus on these lessons from the crisis. We distinguish between three sources of systemic risk in the financial system that may arise from fund management: insufficient credit risk transfer to fund managers; runs on funds that cause sudden reductions in funding to banks and other financial entities; and contagion through business ties between fund managers and their sponsors. Our discussion relates to the current intense debate on the role the so-called shadow banking system played in the global financial crisis. Several regulatory initiatives have been launched or suggested to reduce the systemic risk arising from non-bank financial entities, and we briefly discuss the likely impact of these on the sources of systemic risk outlined in the article

The financing of Italian firms and the credit crunch: findings and exit strategies

The aim of the paper is to analyse how credit crunch has modified the traditional bank-firm relationship with a particular attention to the Italian situation. Our analysis reinforces the finding that in Italy, the credit available to the real economy is insufficient in terms not only of quantity but also of quality. The subsequent step is to identify and discuss possible exit strategies for eliminating the credit crunch and to overcome serious intrinsic shortcomings in terms of alternative instruments, markets and intermediaries. In fact, if on the one hand the crisis has revealed the underdevelopment of the Italian financial market, the insufficient role of institutional investors, the embryonic state of the corporate bond markets and the virtual non-existence of commercial paper markets; on the other hand, it could finally provide the opportunity for the development of these channels. The changing role of banks in the new scenario is also analysed as well as the characteristics firms will require to benefit from it

Globalization, uneven development and the North-South ‘big switch’

An apparent ‘big switch’ in attitudes towards and discourse over economic globalization has occurred since the turn of the Millennium. Economic globalization was formerly widely identified as being orchestrated in the interests of the global North. Sceptics, mostly left - leaning, expressed particular concern for its impacts in the global South. However, a recent backlash against globalization has emerged within the global North from the political right, while support for globalization has been expressed within the global South. This ‘big switch’ defies many theoretical predictions, and can be situated in relation to a shifting geography of global uneven developmen

Bracing for the Typhoon: Climate Change and Sovereign Risk in Southeast Asia

This article investigates and empirically tests the link between climate change and sovereign risk in Southeast Asia. Southeast Asian countries are among those most heavily affected by climate change. The number and intensity of extreme weather events in the region have been increasing markedly, causing severe social and economic damage. Southeast Asian economies are also exposed to gradual effects of global warming as well as transition risks stemming from policies aimed at mitigating climate change. To empirically examine the effect of climate change on the sovereign risk of Southeast Asian countries, we employ indices for vulnerability and resilience to climate change and estimate country-specific OLS models for six countries and a fixed effects panel using monthly data for the period 2002–2018. Both the country-specific and the panel results show that greater climate vulnerability appears to have a sizable positive effect on sovereign bond yields, while greater resilience to climate change has an offsetting effect, albeit to a lesser extent. A higher cost of debt holds back much-needed investment in public infrastructure and climate adaptation, increases the risk of debt sustainability problems, and diminishes the development prospects of Southeast Asian countries

Transnational regulation of temporary agency work compromised partnership between Private Employment Agencies and Global Union Federations

This article critically assesses the potential for the international regulation of temporary agency work (TAW) through building partnership between the Global Union Federations (GUFs) and major Private Employment Agencies (PrEAs). Given the limits of existing national and international regulation of TAW, particularly in developing countries, and the current deadlock in dialogue through the International Labour Organization, the argument of this article is that Transnational Private Labour Regulation (TPLR) offers a unique opportunity to establish a basis for minimum standards for temporary agency workers. This article goes on to propose three potential TPLR frameworks that, although compromised, are transparent, fair and sufficiently elastic to accommodate the distributive and political risks associated with partnership. They also offer important gains, namely increasing the competitive advantage of the PrEAs involved, minimum standards for agency workers and ‘field enlarging’ strategies for the GUFs and their affiliates