T.A. Bhavani and N.R. Bhanumurthy
- Published in print:
- 2012
- Published Online:
- September 2012
- ISBN:
- 9780198076650
- eISBN:
- 9780199081868
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198076650.001.0001
- Subject:
- Economics and Finance, Macro- and Monetary Economics
This study focuses on the state of financial access in post-reform India. It is analysed from the macroeconomic growth perspective keeping in view the importance of rapid growth for the Indian ...
More
This study focuses on the state of financial access in post-reform India. It is analysed from the macroeconomic growth perspective keeping in view the importance of rapid growth for the Indian economy and the fact that majority of production organizations especially in the unorganized segment are yet to have access to the formal financial system. Financial access is considered in terms of actual use of one of the financial services, that is, supply of financial resources for productive investment purpose. The study measures financial access in terms of availability of finances from the formal financial institutions and their adequacy in taking care of productive investment needs. Adequacy of finances is assessed through financial resource gap, that is, proportion of productive investment that is not funded by the formal financial institutions. Availability and adequacy of resources from the formal financial system is analysed at different levels of aggregation: household, sector (agriculture, industry and services), segment (unorganized and organized), and economy. Industry and services sectors are divided into organized and unorganized segments given their differential access to the formal financial system and financial access is computed separately for the two segments. In addition, the study compares India with selected countries (Brazil, China, and United Kingdom) and within India it compares private sector banks with public sector banks. Finally, it provides policy recommendations.Less
This study focuses on the state of financial access in post-reform India. It is analysed from the macroeconomic growth perspective keeping in view the importance of rapid growth for the Indian economy and the fact that majority of production organizations especially in the unorganized segment are yet to have access to the formal financial system. Financial access is considered in terms of actual use of one of the financial services, that is, supply of financial resources for productive investment purpose. The study measures financial access in terms of availability of finances from the formal financial institutions and their adequacy in taking care of productive investment needs. Adequacy of finances is assessed through financial resource gap, that is, proportion of productive investment that is not funded by the formal financial institutions. Availability and adequacy of resources from the formal financial system is analysed at different levels of aggregation: household, sector (agriculture, industry and services), segment (unorganized and organized), and economy. Industry and services sectors are divided into organized and unorganized segments given their differential access to the formal financial system and financial access is computed separately for the two segments. In addition, the study compares India with selected countries (Brazil, China, and United Kingdom) and within India it compares private sector banks with public sector banks. Finally, it provides policy recommendations.
B. Greenwald and J. E. Stiglitz
- Published in print:
- 2004
- Published Online:
- September 2007
- ISBN:
- 9780199269426
- eISBN:
- 9780191710179
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199269426.003.0006
- Subject:
- Business and Management, Organization Studies
This chapter provides a formal model for incorporating finance within the theory of the firm and for a more nuanced reading of the evolution of capitalistic economies. Financial markets emerged as ...
More
This chapter provides a formal model for incorporating finance within the theory of the firm and for a more nuanced reading of the evolution of capitalistic economies. Financial markets emerged as mechanisms for ensuring the fulfilment of promises made for a return in the future in exchange for money today. The ensuing difficulties were met in part by legal changes, such as the development of limited liability and enforceable fraud standards, along with pragmatic advances in such areas of accountability as accountancy and auditing. Nonetheless, tensions remain due largely to information asymmetry problems and enforcement of difficulties. Given differing rates of return across sectors, the firm takes on the role of an important financial institution. An evolutionary process results in which deficiencies in the market give rise to new contract forms and their exploitation by some participants in the market, thus producing still newer arrangements. The evolution of financial instruments necessarily remains intertwined with the evolution of the firm.Less
This chapter provides a formal model for incorporating finance within the theory of the firm and for a more nuanced reading of the evolution of capitalistic economies. Financial markets emerged as mechanisms for ensuring the fulfilment of promises made for a return in the future in exchange for money today. The ensuing difficulties were met in part by legal changes, such as the development of limited liability and enforceable fraud standards, along with pragmatic advances in such areas of accountability as accountancy and auditing. Nonetheless, tensions remain due largely to information asymmetry problems and enforcement of difficulties. Given differing rates of return across sectors, the firm takes on the role of an important financial institution. An evolutionary process results in which deficiencies in the market give rise to new contract forms and their exploitation by some participants in the market, thus producing still newer arrangements. The evolution of financial instruments necessarily remains intertwined with the evolution of the firm.
Ngaire Woods
- Published in print:
- 2003
- Published Online:
- November 2003
- ISBN:
- 9780199261437
- eISBN:
- 9780191599309
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199261431.003.0005
- Subject:
- Political Science, International Relations and Politics
Examines the role of the US in international financial institutions with particular reference to the World Bank and the International Monetary Fund (IMF). Describes the extraordinary influence of the ...
More
Examines the role of the US in international financial institutions with particular reference to the World Bank and the International Monetary Fund (IMF). Describes the extraordinary influence of the US on these institutions as a function of both formal means (e.g., US financial contributions) and informal practices and conventions that have developed over time, with the informal mechanisms of influence often being more important than the formal ones. However, it is also argued that, notwithstanding the weight of US influence, it would be inaccurate to consider the World Bank and the IMF as mere instruments of US power and policy, and that their remaining credibility and legitimacy rest in part on their ability to create some political distance between themselves and their most powerful state patron. US domestic political conditions are also important. Within the country, the division of authority between Executive and Congress sometimes enhances and at other times constrains US influence; the effective exercise of US power also requires interlocutors in host governments who share the technical mind‐set and ideological predispositions of the US and international financial institutions. The different sections of the chapter: analyse the formal and informal structures of power in the World Bank and IMF; look at the US in relation to the financing, lending decisions, staffing and management of these institutions; and discuss formal power structures and informal exercises of influence.Less
Examines the role of the US in international financial institutions with particular reference to the World Bank and the International Monetary Fund (IMF). Describes the extraordinary influence of the US on these institutions as a function of both formal means (e.g., US financial contributions) and informal practices and conventions that have developed over time, with the informal mechanisms of influence often being more important than the formal ones. However, it is also argued that, notwithstanding the weight of US influence, it would be inaccurate to consider the World Bank and the IMF as mere instruments of US power and policy, and that their remaining credibility and legitimacy rest in part on their ability to create some political distance between themselves and their most powerful state patron. US domestic political conditions are also important. Within the country, the division of authority between Executive and Congress sometimes enhances and at other times constrains US influence; the effective exercise of US power also requires interlocutors in host governments who share the technical mind‐set and ideological predispositions of the US and international financial institutions. The different sections of the chapter: analyse the formal and informal structures of power in the World Bank and IMF; look at the US in relation to the financing, lending decisions, staffing and management of these institutions; and discuss formal power structures and informal exercises of influence.
Kern Alexander, Rahul Dhumale, and John Eatwell
- Published in print:
- 2005
- Published Online:
- September 2007
- ISBN:
- 9780195166989
- eISBN:
- 9780199783861
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195166989.003.0004
- Subject:
- Economics and Finance, Financial Economics
This chapter assesses the evolution of international standard setting in financial markets by examining the characteristics of the various international bodies, such as the Basel Committee on Banking ...
More
This chapter assesses the evolution of international standard setting in financial markets by examining the characteristics of the various international bodies, such as the Basel Committee on Banking Supervision and the International Organization of Securities Commissions, that are involved in international standard setting. Topics discussed include international financial institutions, supervisory structures for financial conglomerates, the Financial Action Task Force, and financial crises from the 1990s and onwards.Less
This chapter assesses the evolution of international standard setting in financial markets by examining the characteristics of the various international bodies, such as the Basel Committee on Banking Supervision and the International Organization of Securities Commissions, that are involved in international standard setting. Topics discussed include international financial institutions, supervisory structures for financial conglomerates, the Financial Action Task Force, and financial crises from the 1990s and onwards.
Ngaire Woods
- Published in print:
- 2003
- Published Online:
- November 2003
- ISBN:
- 9780199251209
- eISBN:
- 9780191599293
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199251207.003.0004
- Subject:
- Political Science, International Relations and Politics
Woods's chapter focuses primarily on procedural justice within the international financial institutions. She argues that the procedures adopted by these institutions are central to the debate about ...
More
Woods's chapter focuses primarily on procedural justice within the international financial institutions. She argues that the procedures adopted by these institutions are central to the debate about global economic justice, and thus it is essential to explore how these bodies make decisions and implement them. Her conclusions suggest that, notwithstanding recent and important reforms, the institutions still suffer from weaknesses in representation and accountability. Unless these bodies attend to these deficiencies, the range and scope of their activities should be circumscribed.Less
Woods's chapter focuses primarily on procedural justice within the international financial institutions. She argues that the procedures adopted by these institutions are central to the debate about global economic justice, and thus it is essential to explore how these bodies make decisions and implement them. Her conclusions suggest that, notwithstanding recent and important reforms, the institutions still suffer from weaknesses in representation and accountability. Unless these bodies attend to these deficiencies, the range and scope of their activities should be circumscribed.
Chris Jochnick and Fraser A. Preston (eds)
- Published in print:
- 2006
- Published Online:
- May 2006
- ISBN:
- 9780195168006
- eISBN:
- 9780199783458
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0195168003.001.0001
- Subject:
- Economics and Finance, Development, Growth, and Environmental
Recent world events have created a compelling need for new perspectives and realistic solutions to the problem of sovereign debt. The success of the Jubilee 2000 movement in raising public awareness ...
More
Recent world events have created a compelling need for new perspectives and realistic solutions to the problem of sovereign debt. The success of the Jubilee 2000 movement in raising public awareness of the devastating effects of debt, coupled with the highly publicized Bono/O'Neill tour of Africa, and the spectacular default and economic implosion of Argentina, have helped spur a global debate over debt. A growing chorus of globalization critics, galvanized by the Catholic Church's demand for forgiveness and bolstered by recent defaults, has put debt near the top of the international agenda. Creditor governments and international financial institutions have belatedly recognized the need for more sustainable progress on debt as an inescapable step towards economic recovery in many parts of the world. This book advances the dialogue around these issues by providing an overview of the problems raised by debt and describing new and practical approaches to overcoming them. It brings together the voices of prominent members of the international debt community. It includes pieces from the most relevant constituencies: from creditors (the IMF/World Bank, government lenders, private investors) to critics (debtor representatives, activists, and academics) and analysis from economists, bankers, lawyers, social scientists, and politicians.Less
Recent world events have created a compelling need for new perspectives and realistic solutions to the problem of sovereign debt. The success of the Jubilee 2000 movement in raising public awareness of the devastating effects of debt, coupled with the highly publicized Bono/O'Neill tour of Africa, and the spectacular default and economic implosion of Argentina, have helped spur a global debate over debt. A growing chorus of globalization critics, galvanized by the Catholic Church's demand for forgiveness and bolstered by recent defaults, has put debt near the top of the international agenda. Creditor governments and international financial institutions have belatedly recognized the need for more sustainable progress on debt as an inescapable step towards economic recovery in many parts of the world. This book advances the dialogue around these issues by providing an overview of the problems raised by debt and describing new and practical approaches to overcoming them. It brings together the voices of prominent members of the international debt community. It includes pieces from the most relevant constituencies: from creditors (the IMF/World Bank, government lenders, private investors) to critics (debtor representatives, activists, and academics) and analysis from economists, bankers, lawyers, social scientists, and politicians.
Douglas A. Shackelford, Daniel N. Shaviro, and Joel Slemrod
- Published in print:
- 2012
- Published Online:
- May 2012
- ISBN:
- 9780199698165
- eISBN:
- 9780191738630
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199698165.003.0006
- Subject:
- Economics and Finance, Financial Economics
In the aftermath of the 2008 financial crisis, a variety of taxes on financial institutions have been proposed or enacted. The justifications for these taxes range from punishing those deemed to have ...
More
In the aftermath of the 2008 financial crisis, a variety of taxes on financial institutions have been proposed or enacted. The justifications for these taxes range from punishing those deemed to have caused or unduly profited from the crisis, to addressing the budgetary costs of the crisis, to better aligning banks’ and bank executives’ incentives in the light of the broader social costs and benefits of their actions. Although there is a long-standing literature on corrective, or Pigouvian, taxation, most of it has been applied to environmental externalities, and the externalities that arise from the actions of financial institutions are structurally different. This chapter reviews the justifications for special taxes on financial institutions, and addresses what kinds of taxes are most likely to achieve the various stated objectives, which are often in conflict. It then critically assesses the principal taxes that have been proposed or enacted to date: financial transactions taxes, bonus taxes, and taxes on firms in the financial sector based on size, bank liabilities, or excess profits.Less
In the aftermath of the 2008 financial crisis, a variety of taxes on financial institutions have been proposed or enacted. The justifications for these taxes range from punishing those deemed to have caused or unduly profited from the crisis, to addressing the budgetary costs of the crisis, to better aligning banks’ and bank executives’ incentives in the light of the broader social costs and benefits of their actions. Although there is a long-standing literature on corrective, or Pigouvian, taxation, most of it has been applied to environmental externalities, and the externalities that arise from the actions of financial institutions are structurally different. This chapter reviews the justifications for special taxes on financial institutions, and addresses what kinds of taxes are most likely to achieve the various stated objectives, which are often in conflict. It then critically assesses the principal taxes that have been proposed or enacted to date: financial transactions taxes, bonus taxes, and taxes on firms in the financial sector based on size, bank liabilities, or excess profits.
Kern Alexander, Rahul Dhumale, and John Eatwell
- Published in print:
- 2005
- Published Online:
- September 2007
- ISBN:
- 9780195166989
- eISBN:
- 9780199783861
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195166989.003.0012
- Subject:
- Economics and Finance, Financial Economics
This chapter argues that the adoption of international standards and principles of corporate governance should be accompanied by domestic regulations that prescribe specific rules and procedures for ...
More
This chapter argues that the adoption of international standards and principles of corporate governance should be accompanied by domestic regulations that prescribe specific rules and procedures for the governance of financial institutions that address national differences in political, economic, and legal systems. It begins by briefly considering “governance” within this context, using a principal-agent framework. It then discusses the general principles of corporate governance for financial institutions that the Basel Committee has adopted for all banking institutions operating in the G10 industrialized countries, followed by a discussion of the principles of corporate governance for securities firms as set forth by IOSCO. The overriding theme is the belief that transparency of information is integrally related to accountability in that transparency can provide government supervisors, bank owners, creditors, and other market participants with sufficient information and incentive to assess the management of a bank. The chapter concludes by considering these and other issues related to the governance role of financial institutions in the overall economy.Less
This chapter argues that the adoption of international standards and principles of corporate governance should be accompanied by domestic regulations that prescribe specific rules and procedures for the governance of financial institutions that address national differences in political, economic, and legal systems. It begins by briefly considering “governance” within this context, using a principal-agent framework. It then discusses the general principles of corporate governance for financial institutions that the Basel Committee has adopted for all banking institutions operating in the G10 industrialized countries, followed by a discussion of the principles of corporate governance for securities firms as set forth by IOSCO. The overriding theme is the belief that transparency of information is integrally related to accountability in that transparency can provide government supervisors, bank owners, creditors, and other market participants with sufficient information and incentive to assess the management of a bank. The chapter concludes by considering these and other issues related to the governance role of financial institutions in the overall economy.
Fantu Cheru
- Published in print:
- 2006
- Published Online:
- May 2006
- ISBN:
- 9780195168006
- eISBN:
- 9780199783458
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0195168003.003.0003
- Subject:
- Economics and Finance, Development, Growth, and Environmental
This chapter examines the politics of policy reform in low-income Africa, and specifically the double standard applied by the creditor countries in dealing with the debts of middle-income Latin ...
More
This chapter examines the politics of policy reform in low-income Africa, and specifically the double standard applied by the creditor countries in dealing with the debts of middle-income Latin American and low-income African countries. Whereas the Latin American debt was promptly dealt with by Western creditors because of the risk it posed to the stability of the Western banking system, equal attention was never given to the debt burden of the poorest African countries, whose debts were largely owed to multilateral financial institutions. Finally, the chapter examines the adequacy of the heavily indebted poor countries (HIPC) initiative, which was introduced in 1996 to address the problem of debt owed by low-income countries to the multilateral development banks.Less
This chapter examines the politics of policy reform in low-income Africa, and specifically the double standard applied by the creditor countries in dealing with the debts of middle-income Latin American and low-income African countries. Whereas the Latin American debt was promptly dealt with by Western creditors because of the risk it posed to the stability of the Western banking system, equal attention was never given to the debt burden of the poorest African countries, whose debts were largely owed to multilateral financial institutions. Finally, the chapter examines the adequacy of the heavily indebted poor countries (HIPC) initiative, which was introduced in 1996 to address the problem of debt owed by low-income countries to the multilateral development banks.
Paul Mosley
- Published in print:
- 2012
- Published Online:
- May 2012
- ISBN:
- 9780199692125
- eISBN:
- 9780191739286
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199692125.003.0007
- Subject:
- Economics and Finance, Development, Growth, and Environmental, Macro- and Monetary Economics
Especially in poorer countries and regions, international financial institutions (multilateral, bilateral, and increasingly international NGOs) have been important in financing the implementation of ...
More
Especially in poorer countries and regions, international financial institutions (multilateral, bilateral, and increasingly international NGOs) have been important in financing the implementation of the pro-poor ideas, policies, and structures described in previous chapters. They have attempted to make their aid more effective – and since the 1990s more pro-poor – by attaching policy conditions to their aid, which is achieved through a combination of liberalization, good governance, and commitment to poverty reduction. This idea forms the basis of the Washington institutions’ Poverty Reduction Strategy documents. However, as this chapter shows, what really matters in practice is not adherence to formal conditionality but trust between international financial institutions and recipients; and this is determined more by personal relationships than by technical performance criteria. In spite of this personalization of the aid relationship, this chapter finds that aid does influence policy (for example, the level of the PPE and PPI indices developed in Chapters 5 and 6) and thereby, in the poorer countries, plays a significant part in reducing poverty. Indonesia, Ghana, Uganda, and Bolivia, and outside the study’s sample also Sri Lanka, Bangladesh, and India, would have had totally different poverty trajectories in the absence of support from the international financial institutions.Less
Especially in poorer countries and regions, international financial institutions (multilateral, bilateral, and increasingly international NGOs) have been important in financing the implementation of the pro-poor ideas, policies, and structures described in previous chapters. They have attempted to make their aid more effective – and since the 1990s more pro-poor – by attaching policy conditions to their aid, which is achieved through a combination of liberalization, good governance, and commitment to poverty reduction. This idea forms the basis of the Washington institutions’ Poverty Reduction Strategy documents. However, as this chapter shows, what really matters in practice is not adherence to formal conditionality but trust between international financial institutions and recipients; and this is determined more by personal relationships than by technical performance criteria. In spite of this personalization of the aid relationship, this chapter finds that aid does influence policy (for example, the level of the PPE and PPI indices developed in Chapters 5 and 6) and thereby, in the poorer countries, plays a significant part in reducing poverty. Indonesia, Ghana, Uganda, and Bolivia, and outside the study’s sample also Sri Lanka, Bangladesh, and India, would have had totally different poverty trajectories in the absence of support from the international financial institutions.
T.A. Bhavani and N.R. Bhanumurthy
- Published in print:
- 2012
- Published Online:
- September 2012
- ISBN:
- 9780198076650
- eISBN:
- 9780199081868
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198076650.003.0004
- Subject:
- Economics and Finance, Macro- and Monetary Economics
Chapter 4 analyses the changes in the financial sector development along the dimensions of structure, size, reach, technology, efficiency, soundness of the sector. The structure of the sector has ...
More
Chapter 4 analyses the changes in the financial sector development along the dimensions of structure, size, reach, technology, efficiency, soundness of the sector. The structure of the sector has undergone substantial change in terms of new institutions and instruments, although most of them pertain to the private corporate sector. Reforms enabled the sector to grow along the dimensions of size, reach, and to enhance its productivity through the adoption of technological advancements. All the indicators show that the Indian financial sector, particularly banking sector has come a long way from fully regulated, less competitive, and high cost to more efficient and profitable industry. To make the sector more competitive in the international markets, lot more needs to be done.Less
Chapter 4 analyses the changes in the financial sector development along the dimensions of structure, size, reach, technology, efficiency, soundness of the sector. The structure of the sector has undergone substantial change in terms of new institutions and instruments, although most of them pertain to the private corporate sector. Reforms enabled the sector to grow along the dimensions of size, reach, and to enhance its productivity through the adoption of technological advancements. All the indicators show that the Indian financial sector, particularly banking sector has come a long way from fully regulated, less competitive, and high cost to more efficient and profitable industry. To make the sector more competitive in the international markets, lot more needs to be done.
Tony Van Gestel and Bart Baesens
- Published in print:
- 2008
- Published Online:
- January 2009
- ISBN:
- 9780199545117
- eISBN:
- 9780191720147
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199545117.001.0001
- Subject:
- Mathematics, Applied Mathematics, Mathematical Finance
This book is the first book of a series of three that provides an overview of all aspects, steps, and issues that should be considered when undertaking credit risk management, including the Basel II ...
More
This book is the first book of a series of three that provides an overview of all aspects, steps, and issues that should be considered when undertaking credit risk management, including the Basel II Capital Accord, which all major banks must comply with in 2008. The introduction of the recently suggested Basel II Capital Accord has raised many issues and concerns about how to appropriately manage credit risk. Managing credit risk is one of the next big challenges facing financial institutions. The importance and relevance of efficiently managing credit risk is evident from the huge investments that many financial institutions are making in this area, the booming credit industry in emerging economies (e.g. Brazil, China, India), the many events (courses, seminars, workshops) that are being organised on this topic, and the emergence of new academic journals and magazines in the field (e.g., Journal of Credit Risk,Journal of Risk Model Validation, Journal of Risk Management in Financial Institutions). Financial risk management, an area of increasing importance with the recent Basel II developments, is discussed in terms of practical business impact and the increasing profitability competition, laying the foundation for the other two books in the series.Less
This book is the first book of a series of three that provides an overview of all aspects, steps, and issues that should be considered when undertaking credit risk management, including the Basel II Capital Accord, which all major banks must comply with in 2008. The introduction of the recently suggested Basel II Capital Accord has raised many issues and concerns about how to appropriately manage credit risk. Managing credit risk is one of the next big challenges facing financial institutions. The importance and relevance of efficiently managing credit risk is evident from the huge investments that many financial institutions are making in this area, the booming credit industry in emerging economies (e.g. Brazil, China, India), the many events (courses, seminars, workshops) that are being organised on this topic, and the emergence of new academic journals and magazines in the field (e.g., Journal of Credit Risk,Journal of Risk Model Validation, Journal of Risk Management in Financial Institutions). Financial risk management, an area of increasing importance with the recent Basel II developments, is discussed in terms of practical business impact and the increasing profitability competition, laying the foundation for the other two books in the series.
Geoff Lloyd
- Published in print:
- 2012
- Published Online:
- May 2012
- ISBN:
- 9780199698165
- eISBN:
- 9780191738630
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199698165.003.0008
- Subject:
- Economics and Finance, Financial Economics
Systemic tax biases in favour of corporate debt financing and investment returns in the form of capital gains may have strengthened non-tax incentives to greater leverage, greater risk taking, and a ...
More
Systemic tax biases in favour of corporate debt financing and investment returns in the form of capital gains may have strengthened non-tax incentives to greater leverage, greater risk taking, and a lack of transparency, which were among the root causes of the financial crisis. Such tax biases were in each case exacerbated by increased tax arbitrage activity, tax-driven structured finance, and use of tax havens, facilitated by globalization and financial innovation. While this activity may in part have disappeared as a result of the significant losses incurred by financial institutions, other tax-related asymmetries may come to dominate behaviour in coming years. As part of an overall strategic response to the financial crisis, there is a case for identifying well-targeted reforms that might reduce or remove the incentives to financial instability caused inadvertently by common features of national tax systems. An appendix discusses the tax implications of financial institutions’ losses.Less
Systemic tax biases in favour of corporate debt financing and investment returns in the form of capital gains may have strengthened non-tax incentives to greater leverage, greater risk taking, and a lack of transparency, which were among the root causes of the financial crisis. Such tax biases were in each case exacerbated by increased tax arbitrage activity, tax-driven structured finance, and use of tax havens, facilitated by globalization and financial innovation. While this activity may in part have disappeared as a result of the significant losses incurred by financial institutions, other tax-related asymmetries may come to dominate behaviour in coming years. As part of an overall strategic response to the financial crisis, there is a case for identifying well-targeted reforms that might reduce or remove the incentives to financial instability caused inadvertently by common features of national tax systems. An appendix discusses the tax implications of financial institutions’ losses.
E. Philip Davis
- Published in print:
- 1995
- Published Online:
- November 2003
- ISBN:
- 9780198233312
- eISBN:
- 9780191596124
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198233310.003.0006
- Subject:
- Economics and Finance, Financial Economics
Turning from financial fragility to systemic risk, the next two chapters seek to make an initial assessment of the causes, nature, and consequences of financial instability in contemporary financial ...
More
Turning from financial fragility to systemic risk, the next two chapters seek to make an initial assessment of the causes, nature, and consequences of financial instability in contemporary financial markets by means of an examination of the features of six recent periods of financial disorder, in the light of the various theoretical approaches to financial crisis that have been proposed in the literature. To what extent did financial instability follow directly from financial fragility in the non‐financial sectors, with defaults by companies or households progressively weakening the balance sheets of financial institutions? Or were risks other than credit risk primarily responsible? Were the periods of financial instability ‘unique events’ or can common features be discerned? How well do the predictions of the theoretical paradigms fit the actual data? This chapter provides the theoretical background, while Ch. 6 offers an empirical assessment. We cover the financial fragility, monetarist, uncertainty, credit rationing/disaster myopia, and asymmetric information strands of the theory of financial instability.Less
Turning from financial fragility to systemic risk, the next two chapters seek to make an initial assessment of the causes, nature, and consequences of financial instability in contemporary financial markets by means of an examination of the features of six recent periods of financial disorder, in the light of the various theoretical approaches to financial crisis that have been proposed in the literature. To what extent did financial instability follow directly from financial fragility in the non‐financial sectors, with defaults by companies or households progressively weakening the balance sheets of financial institutions? Or were risks other than credit risk primarily responsible? Were the periods of financial instability ‘unique events’ or can common features be discerned? How well do the predictions of the theoretical paradigms fit the actual data? This chapter provides the theoretical background, while Ch. 6 offers an empirical assessment. We cover the financial fragility, monetarist, uncertainty, credit rationing/disaster myopia, and asymmetric information strands of the theory of financial instability.
Hal S. Scott
- Published in print:
- 2005
- Published Online:
- January 2007
- ISBN:
- 9780195169713
- eISBN:
- 9780199783717
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195169713.003.intro
- Subject:
- Economics and Finance, Financial Economics
This introductory chapter begins with a discussion of the proposed revision of the rules for the regulation of capital adequacy developed by the Basel Committee on Banking Supervision. It then ...
More
This introductory chapter begins with a discussion of the proposed revision of the rules for the regulation of capital adequacy developed by the Basel Committee on Banking Supervision. It then describes the differences among financial institutions and the three ways to ensure adequate capital: market discipline, supervisory review of firm economic models used to determine capital, and command and control regulation. An overview of the chapters included in this volume is presented.Less
This introductory chapter begins with a discussion of the proposed revision of the rules for the regulation of capital adequacy developed by the Basel Committee on Banking Supervision. It then describes the differences among financial institutions and the three ways to ensure adequate capital: market discipline, supervisory review of firm economic models used to determine capital, and command and control regulation. An overview of the chapters included in this volume is presented.
T.A. Bhavani and N.R. Bhanumurthy
- Published in print:
- 2012
- Published Online:
- September 2012
- ISBN:
- 9780198076650
- eISBN:
- 9780199081868
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198076650.003.0001
- Subject:
- Economics and Finance, Macro- and Monetary Economics
Chapter 1 begins with the overview of the financial sector policies—pre- and post-reform India. In the background of policy reforms, it presents the research issues and salient features of the study. ...
More
Chapter 1 begins with the overview of the financial sector policies—pre- and post-reform India. In the background of policy reforms, it presents the research issues and salient features of the study. This chapter states the basic research objectives of the study: assessment of the state of financial development and financial access in the post-reform period in India, and two extensions of these objectives, namely, international comparison of specified aspects of the Indian financial sector and the extent of private sector participation. The chapter notes the special features of the study, including macroeconomic growth approach and assessment of financial access in terms of availability and adequacy of financial resources from the formal financial system for the productive investment purpose at different levels of economy.Less
Chapter 1 begins with the overview of the financial sector policies—pre- and post-reform India. In the background of policy reforms, it presents the research issues and salient features of the study. This chapter states the basic research objectives of the study: assessment of the state of financial development and financial access in the post-reform period in India, and two extensions of these objectives, namely, international comparison of specified aspects of the Indian financial sector and the extent of private sector participation. The chapter notes the special features of the study, including macroeconomic growth approach and assessment of financial access in terms of availability and adequacy of financial resources from the formal financial system for the productive investment purpose at different levels of economy.
Benjamin J. Richardson
- Published in print:
- 2008
- Published Online:
- January 2009
- ISBN:
- 9780195333459
- eISBN:
- 9780199868827
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195333459.003.0001
- Subject:
- Law, Company and Commercial Law
This chapter outlines the general purpose, scope, and structure of the book. It argues that the financial sector must share some of the responsibility to promote environmentally responsible ...
More
This chapter outlines the general purpose, scope, and structure of the book. It argues that the financial sector must share some of the responsibility to promote environmentally responsible development, and examines whether SRI has the ability to steer financial markets towards this goal. The shift from an ethical to a business case has made SRI more respectable, but robbed it of much of its capacity to promote a true alternative to current environmentally harmful investment practices. Improved governance of the SRI market therefore is essential, and this chapter outlines some priority areas for reform. In advancing reform, it is important to be aware of the complexity of the financial sector and its variable responses to environmental issues. There are significant differences in the institutional characteristics of financiers, which influence their capacity and willingness to invest responsibly.Less
This chapter outlines the general purpose, scope, and structure of the book. It argues that the financial sector must share some of the responsibility to promote environmentally responsible development, and examines whether SRI has the ability to steer financial markets towards this goal. The shift from an ethical to a business case has made SRI more respectable, but robbed it of much of its capacity to promote a true alternative to current environmentally harmful investment practices. Improved governance of the SRI market therefore is essential, and this chapter outlines some priority areas for reform. In advancing reform, it is important to be aware of the complexity of the financial sector and its variable responses to environmental issues. There are significant differences in the institutional characteristics of financiers, which influence their capacity and willingness to invest responsibly.
Wilson Brissett
- Published in print:
- 2011
- Published Online:
- May 2012
- ISBN:
- 9780199769063
- eISBN:
- 9780199896851
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199769063.003.0020
- Subject:
- Sociology, Economic Sociology
This chapter takes a look at thrift among low-income populations today, analyzing institutions that support and discourage thrift among the poor. Personal savings itself is institutionally arranged ...
More
This chapter takes a look at thrift among low-income populations today, analyzing institutions that support and discourage thrift among the poor. Personal savings itself is institutionally arranged to be easily available to the prosperous and relatively inaccessible to the low-income worker. The sale of lottery tickets and the high-interest lending of payday loan centers, on the other hand, are available at every corner store and strip mall. In this way, government and mainstream market forces are discouraging the practice of thrift among low-income populations (often, as in the case of credit card companies, in the name of “democratization”) more forcefully than ever before. The rising tide of this “debt culture” has been countered by the growing influence of Community Development Financial Institutions (CDFIs), which offer a range of services from savings accounts to mortgage lending to venture capital investing in low-income areas, and usually enjoy support from government funding and partnership with commercial financial organizations. They have popularized the notion of a “double bottom line” that measures investment success by both financial return and social impact. The overall impact of CDFIs, however, has been too small to counteract substantially the anti-thrift forces among the American poor.Less
This chapter takes a look at thrift among low-income populations today, analyzing institutions that support and discourage thrift among the poor. Personal savings itself is institutionally arranged to be easily available to the prosperous and relatively inaccessible to the low-income worker. The sale of lottery tickets and the high-interest lending of payday loan centers, on the other hand, are available at every corner store and strip mall. In this way, government and mainstream market forces are discouraging the practice of thrift among low-income populations (often, as in the case of credit card companies, in the name of “democratization”) more forcefully than ever before. The rising tide of this “debt culture” has been countered by the growing influence of Community Development Financial Institutions (CDFIs), which offer a range of services from savings accounts to mortgage lending to venture capital investing in low-income areas, and usually enjoy support from government funding and partnership with commercial financial organizations. They have popularized the notion of a “double bottom line” that measures investment success by both financial return and social impact. The overall impact of CDFIs, however, has been too small to counteract substantially the anti-thrift forces among the American poor.
Tommaso Padoa-Schioppa
- Published in print:
- 2004
- Published Online:
- July 2005
- ISBN:
- 9780199270569
- eISBN:
- 9780191602542
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199270562.003.0004
- Subject:
- Economics and Finance, Financial Economics
This essay explores the development of financial regulation along two key dimensions: the preference for financial self-imposed standards over law-based prescriptions, and the preference for ...
More
This essay explores the development of financial regulation along two key dimensions: the preference for financial self-imposed standards over law-based prescriptions, and the preference for regulations based on the internal control mechanisms of financial institutions over traditional simple and easily verifiable rules. It begins by describing the conceptual road map used to examine controls in the financial industry then reviews the evolution of the methods of financial regulation. It discusses how to maintain effective control when financial institutions are given significant self-regulatory powers.Less
This essay explores the development of financial regulation along two key dimensions: the preference for financial self-imposed standards over law-based prescriptions, and the preference for regulations based on the internal control mechanisms of financial institutions over traditional simple and easily verifiable rules. It begins by describing the conceptual road map used to examine controls in the financial industry then reviews the evolution of the methods of financial regulation. It discusses how to maintain effective control when financial institutions are given significant self-regulatory powers.
Mathias Dewatripont, Jean-Charles Rochet, and Jean Tirole
- Published in print:
- 2010
- Published Online:
- October 2017
- ISBN:
- 9780691145235
- eISBN:
- 9781400834648
- Item type:
- book
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691145235.001.0001
- Subject:
- Business and Management, Finance, Accounting, and Banking
The financial crisis that began in 2007 in the United States swept the world, producing substantial bank failures and forcing unprecedented state aid for the crippled global financial system. ...
More
The financial crisis that began in 2007 in the United States swept the world, producing substantial bank failures and forcing unprecedented state aid for the crippled global financial system. Providing an international perspective, this book draws critical lessons from the causes of the crisis and proposes important regulatory reforms, including sound guidelines for the ways in which distressed banks might be dealt with in the future. While some recent policy moves go in the right direction, others, the book argues, are not sufficient to prevent another crisis. The book shows the necessity of an adaptive prudential regulatory system that can better address financial innovation. Stressing the numerous and complex challenges faced by politicians, finance professionals, and regulators, and calling for reinforced international coordination (for example, in the treatment of distressed banks), the book puts forth a number of principles to deal with issues regarding the economic incentives of financial institutions, the impact of economic shocks, and the role of political constraints.Less
The financial crisis that began in 2007 in the United States swept the world, producing substantial bank failures and forcing unprecedented state aid for the crippled global financial system. Providing an international perspective, this book draws critical lessons from the causes of the crisis and proposes important regulatory reforms, including sound guidelines for the ways in which distressed banks might be dealt with in the future. While some recent policy moves go in the right direction, others, the book argues, are not sufficient to prevent another crisis. The book shows the necessity of an adaptive prudential regulatory system that can better address financial innovation. Stressing the numerous and complex challenges faced by politicians, finance professionals, and regulators, and calling for reinforced international coordination (for example, in the treatment of distressed banks), the book puts forth a number of principles to deal with issues regarding the economic incentives of financial institutions, the impact of economic shocks, and the role of political constraints.
