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Industry Papers on Financial services



The Universal Credit Rating Group:  Measuring Debt Ethically The Universal Credit Rating Group: Measuring Debt Ethically
Daniel Cash, World Economics, December 2016
The Universal Credit Rating Group (UCRG) is a collection of rating agencies that are aiming to redress what they see as an imbalance in the provision of credit ratings across the global economy. This article describes the UCRG and discuss as its chances of succeeding in ... More


The Creation of the Asian Infrastructure and Investment Bank: America’s Loss and China’s Gain The Creation of the Asian Infrastructure and Investment Bank: America’s Loss and China’s Gain
Stuart P.M. Mackintosh, World Economics, September 2016
The Global Financial Crisis (GFC) pulled institutions together diplomatically and economically. It clarified options and failures of the past and hastened coordinated reforms. But the GFC also starkly illuminated another geopolitical dynamic: Deals struck in extremis mu ... More


International Liquidity Management Since the Financial Crisis International Liquidity Management Since the Financial Crisis
Richhild Moessner & William A. Allen , World Economics, December 2015
This article discusses how international liquidity management has been affected by the recent crisis. It notes that since the Bretton Woods system collapsed in 1971 it was expected that the demand for international reserves would diminish, since countries were no longer ... More


Data on Singapore’s Sovereign Wealth Fund is Flawed Data on Singapore’s Sovereign Wealth Fund is Flawed
Christopher Balding, World Economics, September 2015
This paper undertakes a critique of the quality of Singapore’s public economic data in the context of the claim that one of the island’s sovereign wealth funds, Temasek Holdings, reports that it has earned since inception in 1974 an average annualized rate of return of ... More


The Endless Business of Reforming the IMF The Endless Business of Reforming the IMF: A review of Joseph P. Joyce’s The IMF and global financial crises: Phoenix rising? and some further thoughts
Biagio Bossone, World Economics, December 2014
In this article I review Joseph P. Joyce’s thought-provoking book The IMF and global financial crises: Phoenix rising?” (Cambridge University Press, 2012). The book is a comprehensive yet concise appraisal of the IMF’s history of successes and failures in preventing cri ... More


New Data on Global Differences in Family Offices New Data on Global Differences in Family Offices
Robert Eigenheer, World Economics, March 2014
A family office is not a specifically-defined institution per se. Rather, the family office is a broad concept to cover all financial needs of one or more wealthy families. While in the United States the first family offices were established in the nineteenth century, i ... More


Singapore’s Temasek Holdings Singapore’s Temasek Holdings: Investment and risk management strategies since the 2008-2009 global financial crisis
Friedrich Wu, Ng Kuan Khai & Gerald Giam, World Economics, March 2014
This paper examines shifts in Temasek Holding’s (Singapore’s sovereign wealth fund) investment and risk management strategies since the 2008–09 global financial crisis (GFC), as well as the risks it has faced in recent years. Our findings reveal that the shift in Temase ... More


Light at the End of the Tunnel Light at the End of the Tunnel: The Eurozone’s sovereign debt problem
Elliot Y. Neaman & Shalendra D. Sharma, World Economics, June 2013
In October 2012, the Norwegian Nobel Committee honoured the EU with the 2012 peace prize for creating a peaceful and stable Europe after the destructive wars and economic crises of the twentieth century. However, it would have been more appropriate to bestow the prize o ... More


The International Liquidity Crisis of 2008–2009 The International Liquidity Crisis of 2008–2009
William A. Allen & Dr Richhild Moessner, World Economics, June 2011
The ‘credit crunch’ that began in August 2007 turned into a crisis when Lehman Brothers failed in September 2008. That event caused large international capital flows, including heavy repatriation of dollars to the United States. Central banks, led by the Federal Reserve ... More


Understanding the Greek Crisis Understanding the Greek Crisis: Unlocking the puzzle of Greek banks’ deteriorating performance
Michael Mitsopoulos & Theodore Pelagidis, World Economics, March 2011
This paper focuses on the distortions that the Greek public debt has imposed on the Greek banking system, and suggests how these can be unwound. The low level of competitiveness of the Greek economy, which is well below the competitiveness of the developed countries, po ... More


José De Gregorio on Howard Davies and David Green: Banking on the Future. The Fall and Rise of Central Banking José De Gregorio on Howard Davies and David Green: Banking on the Future. The Fall and Rise of Central Banking

World Economics, December 2010
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Savings for the Poor Savings for the Poor: Banking on mobile phones
Ignacio Mas, World Economics, December 2010
This paper reviews the relevance of formal financial services – in particular, savings – to poor people, the economic factors that have hindered the mass-scale delivery of such services in developing countries, and the technology-based opportunities that exist today to ... More


Paying the High Price of Active Management Paying the High Price of Active Management: A new look at mutual fund fees
Ross M. Miller, World Economics, September 2010
Financial economists have long known that actively managed mutual funds underperform comparable index funds and that investment management fees are a major contributor to this underperformance. This article shows that the impact of mutual fund fees is even greater when ... More


George Soros’ Reflexivity and the Global Financial Crisis George Soros’ Reflexivity and the Global Financial Crisis
Thomas D. Willett
World Economics, June 2010
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Narrow Banking Narrow Banking
John Kay, World Economics, March 2010
The credit crunch of 2007–8 was the direct and indirect result of losses incurred by major financial services companies in speculative trading in wholesale financial markets. The largest source of systemic risk was within individual financial institutions themselves. Th ... More


The IMF, the Credit Crunch and Iceland The IMF, the Credit Crunch and Iceland: A new fiscal saga?
Sheetal K. Chand, World Economics, September 2009
Iceland was badly hit by a fundamental mismatch between the assets and international liabilities of her banking system, with severe consequences for the welfare of the population. The country now has an International Monetary Fund programme. The paper asks three questio ... More


The Secret of Canadian Banking: Common Sense? The Secret of Canadian Banking: Common Sense?
Laurence Booth, World Economics, September 2009
This article looks at the basic reasons why the Canadian banking system was recently judged by the World Economic Forum to be the soundest in the world. It does so by first examining the basic functions of a financial system and what Canadian banks are allowed to do as ... More


Alistair Milne on Robert J. Shiller,The Subprime Solution: How Today’s Global Financial Crisis Happened and What to Do About It Alistair Milne on Robert J. Shiller,The Subprime Solution: How Today’s Global Financial Crisis Happened and What to Do About It

World Economics, June 2009
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Understanding Crime, Political Uncertainty and Stock Market Returns Understanding Crime, Political Uncertainty and Stock Market Returns: A case study of the Colombian stock market
Juan Carlos Franco Laverde, Maria Estela Varua & Arlene Garces-Ozanne, World Economics, June 2009
Colombia’s economy has experienced positive growth over the past few years despite the incidence of serious armed conflict in the region. However, the Colombia of today still faces a significant degree of sociopolitical instability as a result of organised crime associa ... More


The World Financial Crisis The World Financial Crisis: New economy, globalisation and old-fashioned philosophy
F. Gerard Adams, World Economics, March 2009
The world financial crisis of 2008 is a consequence of new financial technologies, new accounting methods and new international linkages. These developments have come at a time when governments have returned to an old-fashioned free market philosophy. This paper links t ... More


Sweden’s Bank Nationalisations Sweden’s Bank Nationalisations: Are there lessons for today?
Fredrik Erixon, World Economics, March 2009
Many banks are on the verge of bankruptcy and have received support from the government to stay afloat. Measures taken have not sufficed, and an increasing number of economists and commentators are calling for the nationalisation of banks in the United Kingdom and Unite ... More


Singapore’s Sovereign Wealth Funds Singapore’s Sovereign Wealth Funds: The political risk of overseas investments
Friedrich Wu, World Economics, September 2008
This paper examines Singapore’s two sovereign wealth funds (SWFs)-the Government Investment Corporation of Singapore (GIC) and Temasek Holdings (Temasek)—and the political risks which they are exposed to in their overseas investments. Wu argues that Temasek has hitherto ... More


The Sovereign Wealth Funds of Singapore The Sovereign Wealth Funds of Singapore
Anthony Elson, World Economics, September 2008
This paper examines the origin, evolution and recent operations of Singapore’s two sovereign wealth funds, Temasek Holdings (TSK) and the Government Investment Corporation (GIC). Singapore is a unique case in that it has two of the oldest and largest sovereign wealth fu ... More


Credit Crisis 101 Credit Crisis 101: (or what happened to “free and clear”?)
Edward Gottesman, World Economics, September 2008
Subprime mortgage loans were the catalyst, not the cause, of the crisis. Policy errors in both the public and private sectors stretch back nearly 40 years. Inflation, monetary policy and lax regulation all played a role in allowing individual greed and irrational risk-t ... More


Risk-Pricing and the Sub-Prime Crisis Risk-Pricing and the Sub-Prime Crisis
Andrew G. Haldane, World Economics, September 2008
As the sub-prime crisis celebrates its first birthday, what lessons have been learnt? The crisis was rooted in a misperception problem among end-investors, facilitated by financial engineers selling “tail risk” products. Contrary to the precrisis rhetoric, this tail ris ... More


Trends and Challenges in Islamic Finance Trends and Challenges in Islamic Finance
Heiko Hesse, Andreas (Andy) Jobst & Juan Solé, World Economics, June 2008
The paper first discusses the current trends in Islamic finance, which has become mainstream with currently more than US$800 billion of assets worldwide and a buoyant market for sukuk bonds. However, this exorbitant growth raises many challenges, particularly in the are ... More


Islamic Economics and Finance Islamic Economics and Finance
Rodney Wilson, World Economics, March 2008
This article provides an introduction to key concepts and methods involved in an Islamic approach to business, investment, risk taking and insurance. The prohibition of riba (interest or usury) profoundly influences the way business transactions and investments a ... More


The Future of Financial Regulation The Future of Financial Regulation
Howard Davies, World Economics, March 2008
In light of the recent turmoil in global financial markets and criticisms of the performance of the regulatory system, Sir Howard Davies-who prior to his current appointment as Director of the London School of Economics was Chairman of the Financial Services Authority, ... More


Sovereign Wealth Funds Sovereign Wealth Funds: What they are and what’s happening
Stephen Jen, World Economics, December 2007
Sovereign Wealth Funds (SWFs), much in the news of late, are a new and growing class of funds that are already large in size, and will likely grow very rapidly in the coming years. How they will operate, both in terms of their portfolio allocation and the way in which t ... More


Does the World Need a Universal Financial Institution? Does the World Need a Universal Financial Institution?
James Boughton, World Economics, June 2005
All financial institutions specialize, in dimensions that may include categories of assets and liabilities, types of services offered, customer demographics, and geographic coverage. The International Monetary Fund is the only international financial institution that is ... More


European Financial Market Integration European Financial Market Integration: Distant dream or nascent reality?
Patrice Muller, World Economics, September 2004
European Monetary Union and a vigorous legislative agenda have profoundly changed the environment in which the European financial services industry operates. These developments should have contributed to a deepening of financial market integration in the European Uni ... More


A Single European Market in Asset Management A Single European Market in Asset Management: Vision and reality
Friedrich Heinemann, World Economics, March 2004
In spite of progress with integration, the European single market is still far from perfect. In particular, financial services markets are still heavily segmented along national borders—even in the era of the Internet and the Euro. In order to understand the reasons ... More


Blueprint for Public Company Reform Blueprint for Public Company Reform
Edward Gottesman, World Economics, December 2003
The crisis of confidence in corporate governance and the opacity of public company reporting are growing concerns. These flaws in the market system have been highlighted by the stock market bubble and pose a threat to orderly capital flows. Reform is needed, but legi ... More


China’s Capital Market China’s Capital Market: Better than a casino
Stephen Green, World Economics, December 2003
Throughout the 1990s, China’s stock market was developed as a tool of industrial policy. It was used to supply capital to state-owned enterprises (SOEs) that remained controlled by the state and whose performance usually declined after listing. Secondary market tradi ... More


Why The Five Economic Tests? Why The Five Economic Tests?: The decision about British membership of a single European currency in historical context
Ed Balls, World Economics, March 2003
Chief Economic Adviser to the Treasury, Ed Balls, sets out the government’s approach to making the decision about British membership of a single European currency in an historical context. The basis for deciding whether there is a clear and unambiguous economic case ... More


The Puzzle of the Harmonious Stock Prices The Puzzle of the Harmonious Stock Prices
Randall Morck & Bernard Yeung, World Economics, September 2002
A peculiar pattern is evident across the stock markets of different countries. In emerging markets, such as Peru and China, all the stocks in the country tend to rise and fall together in the course of ordinary trading. But in developed countries, such as Denmark and C ... More


Some Facts about Hedge Funds Some Facts about Hedge Funds
Harry M. Kat , World Economics, June 2002
Hedge funds promise investors the best of both worlds: superior performance and high diversification potential combined into one. This article discusses a number of recent findings that show that the case for hedge funds is less straightforward than often portrayed. A ... More


Stock Markets and Central Bankers Stock Markets and Central Bankers: The economic consequences of Alan Greenspan
Stephen Wright, World Economics, March 2002
There is a near-consensus that central bankers should focus their attention on the control of inflation, and should accordingly not pay attention to movements in stock markets. This view is reinforced by the continuing influence of the Efficient Markets Hypothesis (EMH) ... More


Cohabiting with Goliath Cohabiting with Goliath: How small equity exchanges will survive in the future
Avinash Persaud, World Economics, December 2001
The surviving legacy of the Long Term Capital debacle of October 1998 is an increased preference for liquidity among international investors. This process has a self-fulfilling element with liquidity following investors out of the less liquid markets and into the mor ... More


Bad Market Days Bad Market Days: Lessons from the stock market crashes of 1929 & 1987
Harold Bierman, World Economics, September 2001
There are a large number of misconceptions regarding the great stock market crash of 1929 and the crash of 1987. Both crashes occurred when the general level of business was good and getting better. In 1929 there were very few hints that the great depression was two ye ... More


The Rebirth of the Corporate Bond Market The Rebirth of the Corporate Bond Market
Bill Robinson, John Raven & Christopher Chua , World Economics, June 2001
There has been a major switch from equity to debt finance in recent years, associated with a fall in the long-term rate of interest. The paper explores the macro-economic causes of the sea change in interest rates (lower budget deficits, independent central banks, lo ... More


E-money: Will it Take Off? E-money: Will it Take Off?
Peter Spencer, World Economics, March 2001
The growth of the Internet and e-commerce raises some interesting questions for those interested in the monetary system. Is a new Internet-based digital transactions medium likely to evolve and what would the consequences of this be for taxation, monetary and financia ... More


Can Bettors Win? Can Bettors Win?: A perspective on the economics of betting
Leighton Vaughan Williams, World Economics, March 2001
In this paper, a survey is undertaken of studies that examines the extent to which systematic patterns of behaviour in betting markets can generate above-average or even abnormal returns, the latter being most conveniently defined for these purposes as a profit. The p ... More


Sending the Herd off the Cliff Edge Sending the Herd off the Cliff Edge: The disturbing interaction between herding and market-sensitive risk management practices
Avinash Persaud, World Economics, December 2000
In the international financial arena, policy makers chant three things: market-sensitive risk-management, transparency and prudential standards. The message is we do not need a new world order, just to improve the workings of the existing one. While many believe this is ... More