The regulatory response to financial innovation

The credit crisis triggered profound changes in financial markets and institutions. Sine it started, regulators have sought to address the systemic failure that led to it. They have named, shamed and fined the guilty parties (see table). That said, regulators have yet to fundamentally question their own failure to keep pace with financial innovation. They should not forget that it was the creation and promotion of new financial instruments, technologies and business models that sowed the seeds of the crisis. Unless we become more pro-active in regulating them, we are set to repeat the mistakes of the past in novel new ways

Investment benchmarks : their ontological and epistemological roots

This paper investigates the ontology and epistemological justification behind investment benchmarks through the lens of a logical positivist paradigm. This is relevant because the field of finance is often critiqued by moral philosophers and has to justify itself as having a philosophical basis. It is introduced with a Greek δείκνυμι thought experiment on the social good of such benchmarks. This is done to draw the reader into a mindset that questions their epistemological underpinning. It asks what the nature of benchmarks is and answers this within the context of the broad academic finance tradition that is dominated by positivists, empiricists and a few critical realists

The impact of academic research in finance (impact ratio)

Academic institutions are under increasing pressure to show that their research output has impact. As this concept is easier to quantify in science based disciplines, this paper reviews how one interprets what impact is in finance. It suggests how best to incorporate it into academic research through the use of a simple to understand Impact Ratio. It provides an overview of the leading academic publications and their role in this process. It asks how impact within finance is understood, appreciated, and subject to critique. It concludes that academics should demonstrate how they can facilitate the development of capital markets through evidence based policy and enhancing capital market efficiency

Central bank digital currencies - Lessons from China

This paper critically reviews the lessons learnt from the testing of China’s digital currency, the e-CNY. Using a theory-based case study, it looks at the e-CNY testing through the lens of the academic literature on Central Bank Digital Currencies (CBDCs). The con-trolled field experiments by the Peoples Bank of China tested the technology, consumer usage and transaction robustness of the e-CNY. The results of this testing are collated, and the paper compares the transactions per second with other digital money offerings. It also investigates the results in the context of privacy and monetary policy. It is observed that several lessons can be learnt. These are that (1) CBDC testing needs to be phased and in-corporate techniques, approaches, tools, and frameworks; (2) retail CBDCs compete with private forms of digital money for share of wallet; (3) the hybrid co-development model allows for a robust CBDC offering; and (4) privacy concerns and digital literacy impact user uptake. It is concluded that there is a role for retail CBDCs and that those central banks that are exploring the possibility should develop a testing regime

Crypto-assets : Regulating the "dark side" of financial blockchain

The use of financial blockchain and decentralised ledgers system has many benefits. These include immutability, efficiency and security. Digital financial information can be securely stored on a network of computational devices, with changes to those records being reflected simultaneously across that network, but there is also a dark side. Public blockchains, although visible, are typically anonymous and this presents its own challenges. The source and destination of digital asset transfer can be misleading and masked, sometimes resulting in money laundering. Tax can be evaded and the proceeds of trade transactions difficult to audit. There are other concerns that need to be addressed as the increasing scale and sophistication of blockchain transactions grows. The digital wallet trail becomes more opaque with size. These dark traits will need to be properly regulated if the technology is to be used for societal good

The use of predictive analytics in finance

Statistical and computational methods are being increasingly integrated into Decision Support Systems to aid management and help with strategic decisions. Researchers need to fully understand the use of such techniques in order to make predictions when using financial data. This paper therefore presents a method based literature review focused on the predictive analytics domain. The study comprehensively covers classification, regression, clustering, association and time series models. It expands existing explanatory statistical modelling into the realm of computational modelling. The methods explored enable the prediction of the future through the analysis of financial time series and cross-sectional data that is collected, stored and processed in Information Systems. The output of such models allow financial managers and risk oversight professionals to achieve better outcomes. This review brings the various predictive analytic methods in finance together under one domain

Sustainable Finance : AI Applications in Satellite Imagery and Data

This paper explores the applications of financial technology on the supervision of sustainable finance. It does this within the context of state level goals and how these can be monitored and enforced using AI applications, supported by satellite imagery and data. Its contribution is in showing how financial technology can aid and support sustainable goals. It finds that institutional investment monitoring variables are not aligned with the variables in either the literature or those that are mandated by legislation. It recommends a greater use of satellite imagery and data in the enforcement of Environmental, Social and Governance goals

How to foster co-operation between the Scottish and Irish Asset Management industries : Scottish and Irish finance initiative

This paper set outs the case for bilateral co-operation in the asset management industry between Scotland and Ireland. We identify the strengths and weaknesses in the respective countries industries and suggest how industry, government, and technology can be leveraged to capitalize on synergies between the two geographies. In particular, we present the conclusion that it is easier to change the direction of future development than re-invent the past. In this respect, we drill down into Fintech and Robo-advisory as areas of interest for both policy makers and companies alike. Our analysis shows the economic impact from such co-operation will be net positive for both jobs and assets under management

A Curriculum for the Body of Knowledge in Open Finance

This paper addresses an identified skills gap in graduates who are entering the Open Finance workplace. The latter is a new sub sector of finance centered on the use of third-party permissioned data. We address the concern that such graduates lack commercial awareness and relevant financial work experience. We build on the Curricular Domains Model. This expresses the curriculum as knowledge, action and self-domain. We first identify the needs of employers through an embedded researcher approach in collaboration with the Smart Data Foundry. We then apply an Integrated Curriculum Design Framework (ICDF) to the findings in order to develop a transdisciplinary curriculum that can be applied to a master’s degree program. Our contribution is in facilitating a systemic combination of the finance and computing disciplines to create a new one that addresses this field. We believe our proposed educational offering can assist with the challenges that are presented by the adoption of Open Finance