Top PDF THE FINANCIAL CRISIS AND THE EMERGING MARKETS

THE FINANCIAL CRISIS AND THE EMERGING MARKETS

THE FINANCIAL CRISIS AND THE EMERGING MARKETS

Excluding the option to remain with the status of economy "tired", emerging markets have seen in the situation of not being able to afford to refuse cases, justified or not, repayment of loans , to raise and to descend at will and fiscal barriers to nationalize foreign or foreign-owned businesses. In this way, these emerging markets have had to react rational only way they could do that is to join the global market. Many of these emerging countries have suffered painful failures in this phase to adapt to the new rules of the game. But as many have begun to reform their economies, privatize state-owned large companies or to turn to the International Monetary Fund to restructure debt service. In this way, it was a situation where almost every country on the globe has a market-oriented economy, which is involved in the competition for capital. If we make an overview of these emerging markets, we notice that represent 70% of the area and 85% of the world population, their consumer market is by far the largest, while their gross domestic product represents only 20% of global GDP. There are a number of issues that characterize emerging market issues that single them out as a consistent investment product, well delimited from the other groups.
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The global financial crisis and after: a new capitalism?

The global financial crisis and after: a new capitalism?

have no correspondence to reality, but are useful to justify neoliberalism “scientifically”. The method allows them to use mathematics recklessly, and such use supports their claim that their models are scientific. Although they are dealing with a substantive science, which has a clear object to analyze, they evaluate the scientific character of an economic theory not by reference to its relation to reality, or to its capacity to explain economic systems, but to its mathematical consistency, that is, to the criterion of the methodological sciences (Bresser-Pereira 2009). They do not understand why Keynesians as well as classical and old institutionalist economists use mathematics sparingly because their models are deduced from the observation of how economic systems do work and from the identification of regularities and tendencies. The hypothetical- deductive neoclassical models are mathematical castles in the air that have no practical use, except to justify self-regulated and efficient markets, or, in other words, to play the role of a meta-ideology. These models tend to be radically unrealistic as they assume, for instance, that insolvencies cannot occur, or that money does not need to be considered, or that financial intermediaries play no role in the model, or that price of a financial asset reflects all available information that is relevant to its value, etc., etc.. Writing on the state of economics after the crisis, The Economist (2009a: 69) remarked that “economists can become seduced by their models, fooling themselves that what the model leaves out does not matter”. While neoclassical financial theory led to enormous financial mistakes, neoclassical macroeconomics is just useless. The realization of this fact – of the uselessness of neoclassical macroeconomic models – led Gregory Mankiw (2007) to write, after two years as President of the Council of Economic Advisers of the American Presidency, that, to his surprise, nobody used in Washington the ideas that he and his colleagues taught in graduate courses; what policymakers used was “a kind of engineering” – a sum of practical observations and rules inspired by John Maynard Keynes… I consider this paper the formal confession of the failure of neoclassical macroeconomics. Paul Krugman (2009: 68) went straight to the point: “most macroeconomics of the past 30 years was spectacularly useless at best, and positively harmful at worst.”
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The global financial crisis and after: a new capitalism?

The global financial crisis and after: a new capitalism?

Global capitalism will change faster after this crisis, and will change for the better. Social learning is arduous but it happens. Geoff Mulgan remarked that “the lesson of capitalism itself is that nothing is permanent—‘all that is solid melts into air’ as Marx put it. Within capitalism there are as many forces that undermine it as there are forces that carry it forward”. So will we have a new capitalism? To a certain extent, yes. It will still be global capitalism, but no longer neoliberal or financialized. Mulgan is optimistic on this matter: “Just as monarchy moved from centre stage to become more peripheral, so capitalism will no longer dominate society and culture as much as it does today. Capitalism may, in short, become a servant rather than a master, and the slump will accelerate this change.” I share this view, because history shows that since the eighteenth century progress, economic, social, political and environmental development, has indeed been happening. This global crisis has demonstrated once more that progress or development is not a linear process. Democracy does not always prevail over capitalism but is able to regulate it. Sometimes history falls back. Neoliberal and financialized capitalism was such a moment. The blind and powerful forces behind unfettered capitalism controlled the world for some time. But since the capitalist revolution and the systematic increase in the economic surplus that it yielded, gradual change toward a better world, from capitalism to democratic socialism, is taking place. Not because the working class embodies the future and universal values, or because elites are becoming increasingly enlightened. History has been proved both hypotheses false. Instead, what happens is a dialectical process between the people and the elites, between civil society and the ruling classes, in which the relative power of the people and of civil society continually increases. Economic development and information technology provide access to education and culture for an increasing number of people. . Democracy has proved not to be revolutionary, but it systematically empowers people. We are far from participatory
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THE FINANCIAL CRISIS IMPACT ON ETHICAL FINANCIAL INSTITUTIONS

THE FINANCIAL CRISIS IMPACT ON ETHICAL FINANCIAL INSTITUTIONS

The financial statements of the most representative ethical banks reveal that their financial intermediation activity gathers customers aware of the importance of social responsibility and solidarity. In Europe, the ranking of ethical banks term the amount of funds with ethical destination places on first place Great Britain, followed by Netherlands, Sweden, Switzerland and France. Therefore, some countries have an unexploited potential for the social value added. However, the money placed in the ethical financial products is not sufficient to influence the financial market and investors’ behavior. The critical mass has not been reached yet, the share of capital placed in socially responsible investments being only of 0.43% in Europe.
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PENSION FUNDS AND THE FINANCIAL CRISIS IN THE CEE COUNTRIES

PENSION FUNDS AND THE FINANCIAL CRISIS IN THE CEE COUNTRIES

In this paper, the authors analyze the influence of the international financial crisis on the current architecture of the CEE pension systems and their further reforms. As a consequence of the financial crisis, the very fragile pension reform has been subject of debate in the new member states of European Union, given their deep recession and registered fiscal deficits. In many of the CEE countries, which have adopted/developed later the second pillar, the financial crisis has raised questions in what concerns the benefit of moving to a mixed pension system, in comparison with the former one, which relied exclusively on public pay-as-you-go schemes. The current literature analyses the situation in each of the CEE countries, but does not make an overall analysis of the situation of the CEE countries, member of the European Union. The authors show the short-term negative effects of the financial crisis on the pension reform in these countries, but also the longer run effects, on the continuing deteriorating finances of these pension systems, in the context of the aging of population and unsustainable pension schemes. Alongside reviewing and commenting the national authorities’ responses to the financial crisis, we are proposing also some measures meant to enhance the further pension system reform and to improve the performance of the private pension funds. Pensions have a long-time horizon and it would be very wrong to produce a reversal of the past reforms since the main problems of adequacy and sustainability remain vivid (demographic challenge and population aging). It is also true though that, while shifting from an exclusively public pay-as-you-go system towards a mixed pension system, especially in times of financial crisis, authorities must pay increased attention to the management and supervision of the DC pension plans, to the risk management standards and regulations of the private pension funds, alongside other measures meant to enhance further pension system reform.
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Sociology of Law and the Challenge of the Current Financial Crisis

Sociology of Law and the Challenge of the Current Financial Crisis

we have, most visibly in southern Europe, tensions between social categories, part of them more directly hit by the austerity measures currently being implemented, other experiencing the potentialities of new markets opened thanks to the privatizations carried out as a means to solve the current crisis. So there is an intensification of social conflicts. At the same time, we also experience the formation of new actors or collective beings. This is obviously the case of the new social movements such as the “indignados”, or “occupy wall street”. One could speak about a growing concern for the world wide economic stability and development 4 , which could be interpreted as steps in a process of the formation of an effective world society. In other words, the analysis of the current crisis challenges us to revisit our notions of social conflict. Sociology always had it difficult to deal with this topic (among others Coser 1956: 23; Dahrendorf [1958] 1968). Sociology of law, on the other hand, never could ignore it, having as its central object the devices created for the institutionalized treatment of social conflicts. Time for our discipline to take full advantage of its research experience in this field.
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Contagion Channels of the Subprime Financial Crisis to the NYSE Euronext European Markets using Copulas

Contagion Channels of the Subprime Financial Crisis to the NYSE Euronext European Markets using Copulas

(2002), the tes crises w es, thus maki onnections be anch focuses udy concerns kets in crisis mental or re ial channel, ittle evidenc nsus among t annel works t to contribute s to the finan tence of con ose a new se ncial crisis an hen and Hua tations reach (2008) use a nd develope f the second

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When markets fall down: are emerging markets all the same?

When markets fall down: are emerging markets all the same?

Academics have tried to model these times series with disruptions in trends, among other with the regime-switching models (RSM) introduced by Hamilton (1989). The idea to characterize the state of a stock market in terms of regimes is especially relevant in emerging markets because in these markets financial crises tend to occur more often and to last longer than in developed markets, which strongly impacts the wealth of investors (see for instance Kole et al. (2006) for the implications of systemic crises on asset allocation decisions). In a general framework, Ang and Bekaert (2002a, 2004) show that regime- switching dynamics should be incorporated in asset allocation strategies. Although it is common to treat emerging markets as a single homogeneous financial asset class, there is substantial differences between these markets in many aspects, such as the regulations regarding international capital mobil- ity, political regimes, and exchange rates regimes. In this paper we question whether all emerging stock markets have similar regime-switching dynam- ics. Whereas dealing unobserved heterogeneity has proved to be important in many research areas, 2 in finance research heterogeneity has been mostly as-
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The internationalization of Portuguese hospitality for emerging markets

The internationalization of Portuguese hospitality for emerging markets

Estas questões integram o modelo designado por dimensões da internacionalização, identificado por autores como Welch e Luostarinen (1988), Chetty (1999) ou Carneiro e Dib (2007). Este modelo em termos gerais também serve de orientação a parte deste trabalho. Todavia, deu-se preferência à obtenção de informação de caráter mais qualitativo junto dos profissionais no terreno (diretores das unidades hoteleiras), o que permitiu também acres- centar uma caracterização de tipo operacional (na lógica da abordagem de Rutherford e Fallon (2007) em Hotel Management and Operations e uma análise de posicionamento seto- rial usando a estrutura do modelo das cinco forças de Porter (1989) como referido em “The impact of industry force factors on resource competitive strategies on hotel performance” de Takitiyaman, Qu, e Zhang (2010). Acresce uma análise numérica para tipificar o ritmo do pro- cesso de internacionalização. Pensa-se, pois, ter conseguido uma análise mais abrangente cuja metodologia se apresenta no ponto seguinte.
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Financial crisis 2.0: controlling the narrative and controlling the outcome.

Financial crisis 2.0: controlling the narrative and controlling the outcome.

iro, tentando recompor a sua imagem danificada (Story, 2009). Depois do momento de fragilidade, os bancos e demais instituições vistos pelo mercado financeiro internacional como “muito grandes para poderem falir” voltam à mal reputada política de pagar bônus elevados para seus financistas (Dash, 2009a; Sorkin, 2009). E, para fechar o ciclo, aca- bam atraindo capitais privados para devolver antecipadamente os em- préstimos governamentais cujas condições de outorga lhes tolhiam os movimentos (Dash, 2009b). Em seguida, a dura manobra no espaço po- lítico que parece consagrar a dominação. Diante do perigo da nova re- gulamentação, o setor financeiro mobiliza os seus apoios legislativos, manieta os esforços da presidência norte-americana e assim deixa cla- ro “Who’s the Boss” (Sorkin, 2009; Kopecki, 2009). Mas, no quadro eco- nômico e social em que as cicatrizes da crise, em especial o desemprego e as falências pessoais, ainda não estão fechadas, a reação governa- mental recupera o fôlego. Concretamente, ela consegue fazer passar uma nova legislação financeira, menos abrangente do que os críticos das finanças esperavam, mas de escopo suficiente para os membros do governo afirmarem sua intenção de controlar as finanças e algumas das consequências do socorro aos bancos para o resto da população. No cerne da tentativa se trata de criar novas agências de controle e au- mentar o escopo das possibilidades de controle governamental sobre a imensa diversidade de serviços e agentes financeiros que intermedei- am empréstimos que vão dos créditos aos estudantes universitários às especificações nem sempre bem esclarecidas das cláusulas de outorga dos cartões de crédito (Cooper, 2010). O resultado efetivo dessas medi- das, que talvez incidam mais sobre os pontos nos quais o clamor popu- lar é direto, que não são necessariamente aqueles cuja magnitude pode produzir mudanças importantes na ordem das preferências sociais, só poderá ser apreciado se e quando tais organizações estiverem funcio- nando de maneira autônoma, de maneira a esclarecer o alcance do jogo de lobbying que inevitavelmente age no sentido de diminuir ou redire- cionar as atividades governamentais na área financeira (Litchblau, 2010). Mas esse resultado, se unívoco, só será conhecido mais tarde. E, mais provavelmente, as novas agências serão palcos de contenciosos permanentes em torno dos graus de autonomia da esfera financeira da sociedade.
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The Romanian Municipal Bond Market and the International Financial Crisis

The Romanian Municipal Bond Market and the International Financial Crisis

attraction: investor familiarity and confidence, ability to trade securities, freedom to invest, acceptable investment return, strong credit quality, information regarding risks, assistance in interpreting information; b) on the supply side of municipal bonds - issuer attraction: tolerable borrowing costs; long-term debt amortization, assistance to small borrowers, facilitating formal oversight. Additionally, municipality bonds performed better including in the case of redeeming, and for a long period of time money were regarded as the surest placement on the financial market. They represented a form of attracting population’s savings and more prudent investors with a default rate for all money bonds of only 0.04% in the period 1970-2000 as against the default rate on corporate bonds (bonds issued by corporations) of 0.09% 2 . Moreover, recovery
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THE CURRENCY CRISIS TRIGGER OF THE ROMANIAN FINANCIAL CRISIS OF 2008

THE CURRENCY CRISIS TRIGGER OF THE ROMANIAN FINANCIAL CRISIS OF 2008

This paper analyses the ways the financial crisis started to manifest into the Romanian Financial System, through the exchange rate channel. The focus of this Paper is on how the Romanian decision makers contributed in triggering the financial crisis (that would have been triggered anyway). The paper will determine the trigger (the first obvious event) for the Romanian Financial Crisis (the debut) and it will prove that the consequences of this trigger could have been anticipated - it is in line with similar triggers for the debut in other currency crises. Therefore, one of the main conclusions of this paper is that while a global crisis starts to manifest the local economy should limit the exuberance of the decision makers in order to smooth the effects of the crisis.
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Fair value accounting and the financial market crisis. To what extent is fair valuation responsible for the financial crisis?

Fair value accounting and the financial market crisis. To what extent is fair valuation responsible for the financial crisis?

Each participating country agreed to keep its exchange rates fixed against the U.S. dollar and the United States itself tied the value of the dollar in terms of gold. All currencies were allowed to move within a band of +/- 1% from central parity or “par value”. 27 Each member held its international reserves in gold or U.S. dollar and had at any time the right to sell dollar for gold to the Federal Reserve at the fixed exchange rate. The U.S. dollar was fixed to gold at $ 35 an ounce (Sanford & Weiss, 2004, p. 1). The system was thus a gold exchange standard. Besides gold, the dollar was the principal reserve currency, with an entirely new exchange rate system of adjustable pegs. Each country had the obligation to adopt a monetary policy that maintained the exchange rate. The IMF was created as a multilateral body charged with buffering international reserve positions of their participants. All members of the IMF formed a centralized pool of financial resources (gold and national currencies) in order to protect economies from rapid changes in their international reserve position. Under a classical gold standard, gold (reserve) flow into and out of countries could mean wide swings in domestic money supply with attended domestic adjustment problems (inflation or deflation) (Hammes & Wills, 2003, p. 4). If a country struggled towards temporary imbalances of pay- ments, the IMF had the ability to act as stabilization fund to cover temporary deficits while monetary and fiscal policy adjustment occurred. The IMF supported the respective country to bridge temporary imbalances of payment. Changes in exchange rate to U.S. dollar (and therefore to gold) could only be carried out with the IMF´s agreement. Such devaluations and revaluations should be an exception to correct a “fundamental disequilibrium” 28 in the balance of payments (Krugman & Obstfeld, 2009, p. 514-516). This system of fixed rates ended in 1973 when the United States removed itself from the gold standard and the major currencies began to float against each other.
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The Relationship between Sentiment and Risk in Financial Markets

The Relationship between Sentiment and Risk in Financial Markets

Based on this content, we can observe that there is an intuitive relationship between market sentiment and risk in financial markets. Indeed, some studies offer arguments for the existence of such an association. We can mention here the works of Charoenrook (2005), Yazdipour (2011), Yazdipour and Neace (2013), Andersen and Nowak (2013), and Fong (2013), where the optimism and pessimism of investors seems to be directly reflected by the behavior of decision making related to risk. An optimistic investor accepts riskier situations than a pessimistic one. However, all these studies are mainly focused on subjective aspects of market risk, such as risk aversion. In contrast to this, the current tendency in market risk management is the development of objective approaches. One fundamental aspect of proper risk management is its measurement. (For a detailed analysis of ways to measure risk, see Righi & Ceretta, 2014). Overestimating risk can lead to a reduction in gains, while underestimating it can result in catastrophic outcomes. Thus, it is crucial to have the best understanding possible of what kind of information affects the measurement of market risk beyond the usual information regarding prices and returns. The first thing to look at would be some market variables related to liquidity, as in Dias (2013). Nonetheless, as we have noted, we must consider behavioral issues, especially market sentiment. Therefore, there is a gap to be filled regarding the relationship between measures of market sentiment and risk.
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Foreign investment in Brazil and the international financial markets

Foreign investment in Brazil and the international financial markets

There is hence a favorable scenario for developing economies - including Brazil - and the extent to which the recent Asian crisis might have so far affected such posit[r]

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Foreign investment in Brazil and the international financial markets

Foreign investment in Brazil and the international financial markets

perspectives for the coming years with regard to access to international capital markets are determined by at least three elements: the actual effects of the rece[r]

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Extreme observations and diversification in Latin American emerging equity markets

Extreme observations and diversification in Latin American emerging equity markets

We tind that the Latin American emerging markets have signiticantly fatter tails than industrial markets.. especially, the lower tail of the distrihution.[r]

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Banks’ capital, regulation and the financial crisis

Banks’ capital, regulation and the financial crisis

We discuss the results of the capital structure model in four sections. First, we examine the determinants of banks’ excess equity capital for the full sample and analyze whether the pure regulatory view of capital holds for banks’ capital structure. If capital regulation is not the primary determinant of capital structure, we then compare the predictions of the corporate finance literature with those of the buffer view of capital. Second, we examine potential differences in the results of the capital structure model according to the region to where the bank belongs (Europe versus United States) and to the type of bank considered, namely comparing categories of banks based on size, growth opportunities and leverage. Next, we analyze the effect of the international financial crisis on the results of the regression model. Finally, we further investigate the effect of the regulatory environment on banks’ capital by introducing into the original model of excess equity capital several regulatory variables that may vary across countries and time.
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Social Capital and the Financial Crisis: The Case of Iceland

Social Capital and the Financial Crisis: The Case of Iceland

In conducting an analysis that used data generated over a 26 year period, we can distinguish between a social change that occurred immediately after the crisis and longer-term processes. For example, our analyses indicate that there has been a gradual increase in the levels of social capital, measured as social ties with friends and family members alike, since the onset of the financial crisis (see Figures 2 and 3). Examination of the former shows that there is a probable financial-crisis effect, with a significant difference between pre- and post- crisis results, though not between the pre-crisis waves. With respect to the latter, there has been a steady increase over time. This means that this change in the importance of family ties is less likely to be due to the financial crisis and more likely to be part of a long-term phenomenon in Icelandic society. It is, however, outside the reference framework of our financial crisis research to fully examine/understand what this underlying historical dynamic might be.
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Emerging markets and currency exposure

Emerging markets and currency exposure

This research wants to be embedded in the currency exposure framework. More specifically, will conduct a firm-level analysis in an emerging market, Mozambique. Unlike the vast majority of the papers, it will examine a most recent time frame, which goes from 2009 to 2017. However, the aim is to showcase the impact of currency exposures to Mozambican firms according to the nature of their ownership, size, and sector, considering all the features of the Mozambican business environment. Bearing in mind that Mozambique businesses do not apply sophisticated financial practices, especially in terms of risk management, whose function is not clear to those managing that specific area. In fact, the use of hedging against currency risk is unusual, given also the absence of a developed derivative market.
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