Finance and Financial Management Commons^™

Policy Frameworks And Citizens’ Use Of Fintech Solutions: The Pros And Cons In Egypt, Salma Al-Mohamady

Theses and Dissertations

This thesis provides a comprehensive analysis of the significant influence of financial technology (FinTech) on the banking industry, consumer finance, and economic growth. It specifically concentrates on the swiftly changing FinTech environment in Egypt. The study investigates the impact of incorporating advanced technologies on worldwide financial practices, which has significantly transformed traditional banking models and facilitated the emergence of inventive financial services. The transition is clearly apparent in Egypt, where the expansion of FinTech has been driven by advances in regulations, adaptation to technology, and a population that is becoming more comfortable with digital solutions.

Using a combination of quantitative …

Green Transition And Financial Stability: The Role Of Green Monetary And Macroprudential Policies And Vouchers, Ying Tung Chan, Maria Teresa Punzi, Hong Zhao

Sim Kee Boon Institute for Financial Economics

This paper analyzes a mix of alternative policies in supporting the green transition and the phase-out of fossil fuels, without compromising financial stability. An environmental dynamic stochastic general equilibrium (E-DSGE) model with two sectors (green and brown) and endogenous default is developed to assess potential climate-induced financial stability threats that can be mainly generated through physical and transition risks mechanism. Those risks are evaluated through a compound capital depreciation shock and a carbon tax shock. The paper offers several findings. First of all, a too stringent carbon tax would increase the medium-term default rate in both sectors, harming financial stability …

Navigating Geopolitical Crises For Energy Security: Evaluating Optimal Subsidy Policies Via A Markov Switching Dsge Model, Ying Tung Chan, Maria Teresa Punzi, Hong Zhao

Sim Kee Boon Institute for Financial Economics

This paper aims to provide insights on the design of optimal subsidy policies to enhance energy security amidst energy disruptions triggered by geopolitical conflicts. We introduce a novel Markov switching dynamic stochastic general equilibrium (MS-DSGE) model to address the limitations of existing integrated assessment models in environmental evaluation. These models often fail to adequately consider the environmental and economic impacts of geopolitical conflicts and do not prioritize energy security sufficiently in policymaking. Our application of the MS-DSGE model to the Russia–Ukraine conflict reveals significant decreases in output, social welfare, and energy consumption during disruptions. The mere anticipation of an energy …

Reducing Food Scarcity: The Benefits Of Urban Farming, S.A. Claudell, Emilio Mejia

Journal of Nonprofit Innovation

Urban farming can enhance the lives of communities and help reduce food scarcity. This paper presents a conceptual prototype of an efficient urban farming community that can be scaled for a single apartment building or an entire community across all global geoeconomics regions, including densely populated cities and rural, developing towns and communities. When deployed in coordination with smart crop choices, local farm support, and efficient transportation then the result isn’t just sustainability, but also increasing fresh produce accessibility, optimizing nutritional value, eliminating the use of ‘forever chemicals’, reducing transportation costs, and fostering global environmental benefits.

Imagine Doris, who is …

Policy Research On Allocation Of Science And Technology Funds For State Key Laboratory After Reorganization, Bo Zhang, Xue Wang, Congli Sun

Bulletin of Chinese Academy of Sciences (Chinese Version)

The state key laboratory is an important component of the national strategic scientific and technological strength. The CPC Central Committee made a major decision to reorganize the state key laboratory system, proposed to increase investment in the reorganized state key laboratory, and to reform support policies. Aiming to achieve sci-tech self-reliance and self-strengthening at higher levels, studying the funds allocation of state key laboratory in the new era has important practical and far-reaching significance. In the previous practice, China’s allocation of funds for state key laboratory has 4 problems, such as weak correlation between fund allocation and the mission orientation …

Liquidity Constraints, Consumption, And Debt Repayment: Evidence From Macroprudential Policy In Turkey, Sumit Agarwal, Muris Hadzic, Changcheng Song, Yildirim Yildiray

Research Collection Lee Kong Chian School Of Business

Using account-level credit card data from a large Turkish bank, we study the impact of a unique credit card policy that increases minimum payment on consumption and debt repayment. We show that the policy reduces credit card spending and debt, boosts existing debt repayment, and reduces credit card delinquency. The credit card debt of affected consumers falls on average by 50% two years into the policy’s implementation. An increase in minimum payment has a stronger effect than does a decrease of a similar magnitude. We build a benchmark life cycle model with soft liquidity constraint to explain the reduction in …

Bearer Negotiable Instruments: Addressing A Financial Intelligence Gap And Identifying Criminogenic Weaknesses, Hollis B. Kegg

Dissertations, Theses, and Capstone Projects

Bearer Negotiable Instruments (BNI) are a long-standing category of financial instruments used to transfer large amounts of money in ways that may not be subject to regulation, reporting, tracking, review, or oversight. There is limited information available on BNIs, and no evidence that any studies have been undertaken on BNIs alone, much less reported. Increasingly, BNIs are being used for illegal purposes including money laundering. This study gathers information about their characteristics, nature, purpose, legal status, and numbers. It also focuses on the crime risks associated with BNIs, the crime opportunities they facilitate, and the criminal weaknesses in the financial …

Improving Financial Resiliency To Provide Accessible Community Services During Emergency Conditions Through Strategic Planning, Maria Elisa Colmenares

Walden Dissertations and Doctoral Studies

The study site organization lacked financial resilience to ensure the provision of social services to populations reliant on these services, including before, during, and after emergency conditions. The purpose of this mixed-methods case study was to provide strategic planning recommendations to increase financial resilience and describe the unique partnership between the client agency and the nonprofit arm. The study addressed strategies to increase the financial resilience needed to sustain the organization’s core mission, and strategies the agency can use to provide community services before, during, and after emergencies such as COVID-19, hurricanes, or severe storms. A strengths, weaknesses, opportunities, and …

Accounting Reporting Complexity, Audit Engagement Partner Mandatory Rotation, And Audit Quality, Clement Chen, Zhenfeng Liu, Wenye Tang, Ling Tuo

Accounting Faculty Publications

This paper investigates the influence of a firm's accounting reporting complexity (ARC) on financial statement audit quality. We predict and find that there is a non‐linear relationship between a firm's ARC and audit quality. Specifically, a more complex accounting environment—measured by ARC—leads to higher quality audits, but this effect diminishes when ARC continues to increase. Further analyses reveal that the effect is more salient among client firms that do not purchase non‐audit services (NAS). We also examine whether ARC affects audit quality in the circumstance of mandatory audit partner rotation. Empirical results show a moderating effect of ARC on the …

How Do Sustainability Stakeholders Seize Climate Risk Premia In The Private Cleantech Sector, Lingyu Li, Xianrong Zheng

Information Technology & Decision Sciences Faculty Publications

This paper explores the strategies and practices of capturing climate risk premia for venture capital (VC) fund managers and entrepreneurs in the private cleantech sector. It also examines the impact of the feed-in tariffs (FITs) policy on the management of cleantech investments. It is shown that a longer investment period, less investment capital in cleantech investment management strategies, and optimistic climate risk management practices will help investors to better capture climate risk premia. In fact, the FITs policy will give rise to VC fund managers and entrepreneurs having a positive view regarding the prospects of the cleantech sector, motivating them …

Lessons Learned: Kevin Stiroh, Mercedes Cardona

Journal of Financial Crises

Kevin Stiroh was head of the Financial Sector Analysis Supervision Group at the Federal Reserve Bank of New York (FRBNY) during the Global Financial Crisis of 2007–2009 (GFC). At the FRBNY, Stiroh was a leader in the design of the “stress test” for the banking system, the Supervisory Capital Assessment Program (SCAP). In the aftermath of the GFC, members of the FRBNY, including Stiroh, drafted a report on systemic risk and bank supervision, laying out lessons learned from the crisis and their recommendations. In February 2021, Stiroh transitioned from the FRBNY to a leadership position with the Federal Reserve Board …

Lessons Learned: Gaurav Vasisht, Sandra Ward

Journal of Financial Crises

Gaurav Vasisht served as assistant counsel, banking and financial services, to the governor of New York during the Global Financial Crisis of 2007–2009 (GFC). In his role, Vasisht set the governor’s agenda for banking and financial policy and oversaw the regulatory and legislative priorities of the state banking and insurance departments. Vasisht played a pivotal role in developing and drafting consumer protection legislation, particularly as it related to housing foreclosures at the time of the crisis. This Lessons Learned is based on an interview with Vasisht that occurred on September 27, 2019.

Lessons Learned: Veerathai Santiprabhob, Maryann Haggerty

Journal of Financial Crises

Veerathai Santiprabhob was the governor of the Bank of Thailand from 2015 to 2020, a period that included the onset of the COVID-19 pandemic. Earlier in his career, he was an economist at the International Monetary Fund. At the time of the 1997–1998 Asian Financial Crisis, he returned to his home country to take a position at the Ministry of Finance. There, he was involved with the government response to that financial crisis. From 2000 to 2015, he held private-sector finance jobs before going to lead the Bank of Thailand. This Lessons Learned is based on an interview with Santiprabhob …

Lessons Learned: Erik Sirri, Mercedes Cardona

Journal of Financial Crises

Erik Sirri served as director of the Division of Trading and Markets at the US Securities and Exchange Commission (SEC) from 2006 to 2009. In his post, he was responsible for matters relating to the regulation of stock and option exchanges, national securities associations, brokers-dealers, clearing agencies, transfer agents, and credit rating agencies. Before joining the SEC in 1996, he was an assistant professor of finance at the Harvard Business School from 1989 to 1995. Sirri served as the SEC’s chief economist until 1999, before returning to academia. He is currently a professor of finance at Babson College. His research …

Lessons Learned: Claudia Sahm, Mercedes Cardona

Journal of Financial Crises

Claudia Sahm was a principal economist in the Division of Research and Statistics of the Board of Governors of the Federal Reserve System from 2007 to 2017 and section chief for the Consumer & Community Development section in the Division of Consumer and Community Affairs from 2017 to 2019. Her work focused on macro forecasting; she also researched household behavior and responses to fiscal stimulus. While at the Fed, she proposed the Sahm Rule, a gauge to call the start of a recession, based on an average of the unemployment rate. The rule is part of Sahm’s work on the …

Lessons Learned: Deborah Perelmuter, Mercedes Cardona

Journal of Financial Crises

Deborah Perelmuter has spent more than three decades with the Federal Reserve System. In 2008, as senior vice president at the Federal Reserve Bank of New York (FRBNY) and co-head of Capital Markets Analysis and Trading (CMAT) within the Markets Group, she was tasked with setting up the operational details of the Term Securities Lending Facility (TSLF). The TSLF auctioned Treasury securities to primary dealers in exchange for less liquid collateral to provide liquidity to those firms during the Global Financial Crisis of 2007–2009. Perelmuter became senior financial stability adviser within the office of the director in the FRBNY’s Research …

Lessons Learned: Hiroshi Nakaso, Maryann Haggerty

Journal of Financial Crises

Hiroshi Nakaso joined the Bank of Japan (BOJ) in 1978, rising to deputy governor in 2013. He was instrumental in addressing Japan’s domestic crisis of 1997 and its response to the Global Financial Crisis (GFC). He retired from the bank in 2018 and has since served as chairman of the Daiwa Institute of Research in Tokyo. This Lessons Learned summary is based on a November 2021 interview with Nakaso

Lessons Learned: Patrick Honohan, Maryann Haggerty

Journal of Financial Crises

Patrick Honohan, an economist, was governor of the Central Bank of Ireland and a member of the Governing Council of the European Central Bank (ECB) from September 2009 until November 2015. Early in his tenure, he led a team that investigated the causes of the Irish banking crisis that broke out in 2008 during the Global Financial Crisis. Resolving the problems of bank failure and over-indebtedness that emerged in that crisis dominated his term of office. In late 2010, Ireland had to request financial assistance from the “troika” of the International Monetary Fund (IMF), the European Commission, and the European …

Lessons Learned: Mike Leahy, Yasemin Sim Esmen

Journal of Financial Crises

Mike Leahy was associate director at the Federal Reserve Board’s Division of International Finance between 2008 and 2010. He was instrumental in establishing swap lines with foreign central banks and reviewed and reported on excess reserve balances and required interest payments to depository institutions. This Lessons Learned is based on a phone interview with Leahy on October 22, 2020.

Lessons Learned: Andrew Gray, Mercedes Cardona

Journal of Financial Crises

Andrew Gray joined the FDIC in 2007, after having been majority director of communications for the US Senate Committee on Banking, Housing, and Urban Affairs and press secretary for US Senator Richard C. Shelby (R–AL). Gray’s initial project was a campaign to mark the 75th anniversary of the creation of the Federal Deposit Insurance Corporation (FDIC); his role evolved into running crisis communications as the FDIC stepped in during several bank failures triggered by the Global Financial Crisis (GFC) and conducted 489 bank resolutions during 2008–2013. After the crisis, the FDIC also assumed new responsibilities over the winding down of …

Venezuela: Reserve Requirements, Gfc, Corey N. Runkel

Journal of Financial Crises

Leading up to the Global Financial Crisis (GFC), the Banco Central de Venezuela (BCV) sought to tamp down inflation by raising its interest rate target and by raising the marginal reserve requirement for banks, which it had introduced in 2006. By late 2008, the GFC began to hit Venezuelan banks and the country’s public oil producer (PDVSA). Widespread deposit withdrawals squeezed banks and pushed the interbank lending rate to 28%. The BCV responded in December 2008 by lowering the marginal reserve requirement, applicable to deposits above 90 billion bolívars (USD 4.2 million), from 30% to 27% of deposits. It held …

Thailand: Reserve Requirements, Afc, Ezekiel Vergara, Corey N. Runkel

Journal of Financial Crises

Following years of growth, the Thai economy began showing confidence-busting signs in 1996, including a liquidity crunch. In May 1997, the Bank of Thailand (BOT) announced that it would expand the list of short-term assets that banks and finance companies could use to satisfy the BOT’s liquidity reserve requirement, including obligations of the Financial Institution Development Fund (FIDF), which provided liquidity support to illiquid financial institutions. In the summer of 1997, the BOT suspended the operations of 58 finance companies and floated the Thai baht (THB), unleashing the Asian Financial Crisis (AFC). Tight liquidity conditions continued and, in September 1997, …

Russia: Reserve Requirements, Gfc, Benjamin Hoffner

Journal of Financial Crises

In August 2008, Russian banks and financial markets experienced significant capital outflows after Russia invaded neighboring Georgia. The collapse of Lehman Brothers on September 15 led to further outflows and a 25% drop in Russia’s main stock index. On September 17, regulators halted stock-market trading. Later that day, the Central Bank of the Russian Federation (CBR) announced cuts to the three required reserve ratios (RRRs) it imposed on commercial banks—based on their ruble liabilities to foreign banks, ruble liabilities to individuals, and other liabilities—by 400 basis points, effective September 18, in an effort to promote banking sector liquidity. The CBR …

Russia: Reserve Requirements, 1998, Benjamin Hoffner

Journal of Financial Crises

During the 1998 ruble crisis, the Central Bank of the Russian Federation (CBR) relied on reserve requirements (RR) to bring stability to the ruble’s exchange rate corridor and, over time, to inject liquidity into the frozen domestic banking system. First, in February 1998, the CBR unified the RR ratio on ruble and foreign currency liabilities to facilitate ruble financing. Second, after the devaluation of the ruble in August, the CBR lowered the RR ratio to provide liquidity to the banking system. Third, the CBR revised the computation of the RR ratio to provide relief to banks in an effort to …

Peru: Reserve Requirements, Gfc, Sean Fulmer, Bailey Decker

Journal of Financial Crises

Peru experienced the Global Financial Crisis of 2007–2009 (GFC) in two distinct phases. First, starting in the summer of 2007, record capital inflows to the Peru banking sector contributed to an overheating economy. The Banco Central de Reserva del Perú (BCRP) responded in September 2007 by removing reserve requirements on long-term external credit to promote long-term, rather than short-term, capital inflows. In February 2008, for similar reasons, it began to raise the ordinary minimum reserve requirement on bank liabilities and implemented new marginal reserve requirements on increases in those liabilities. Second, when the collapse of the US investment bank Lehman …

Malaysia: Reserve Requirements, Afc, Bailey Decker

Journal of Financial Crises

Bank Negara Malaysia (BNM) unpegged the ringgit in July 1997, days after Thailand floated the baht. Ringgit depreciation and adverse investor sentiment worsened, contributing to a domestic liquidity shortage and capital flight. Malaysia experienced market instability in the early months of 1998, particularly pressure on its exchange rate, foreign currency reserves, and interest rates. At the same time, disruptions in the domestic money market and loan intermediation process caused an increase in lending rates, which resulted in debt servicing problems and weakened financial stability. To facilitate lending and productive economic activity, BNM twice lowered the statutory reserve requirement (SRR) at …

India: Reserve Requirements, Gfc, Sharon Nunn, Carey K. Mott

Journal of Financial Crises

As international funding sources dried up during the Global Financial Crisis of 2007–2009 (GFC), businesses in India sought funds from domestic financial institutions, straining banks and lifting short-term lending rates. The liquidity pressure, coupled with sharp asset price corrections and rupee depreciation, restricted credit expansion in India. The Reserve Bank of India (RBI) responded with a suite of liquidity measures, including cuts to its two reserve requirement ratios, the cash reserve ratio (CRR) and the statutory liquidity ratio (SLR). The RBI cut the CRR over the course of four months from October 2008 to January 2009, lowering the ratio from …

Jamaica: Reserve Requirements, Gfc, Corey N. Runkel

Journal of Financial Crises

In October 2008, the Global Financial Crisis (GFC) and liquidity shortages rocked American and European markets, causing investors to exit liquid Jamaican-dollar assets. The Bank of Jamaica (BOJ) feared a “disorderly depreciation” in the Jamaican-dollar (JMD) exchange rate to the US dollar (BOJ 2009, 44). In response, the BOJ raised required reserve ratios for cash and other liquid assets, the first increases since 2002. The BOJ raised reserve ratios three times—in December 2008, January 2009, and February 2009—because the central bank could not change its requirements by more than 200 basis points per month. The BOJ raised the requirement for …

Czech Republic: Reserve Requirements, 1997, Benjamin Hoffner

Journal of Financial Crises

In the first quarter of 1997, fiscal and current account deficits in the Czech Republic put pressure on the koruna’s pegged exchange rate as capital flowed out of the domestic economy. Although the Czech National Bank (CNB) committed to tight monetary policy to protect the peg, on April 11, the CNB announced a lowering of the minimum reserve requirement (RR) ratio from 11.5% to 9.5%, effective May 8. The RR ratio (RRR) reduction (RRR) reflected a compromise with the government, which had petitioned the central bank to ease monetary policy. To improve the balance of payments, the government also implemented …

Colombia: Reserve Requirements, Gfc, Natalie Leonard, Bailey Decker

Journal of Financial Crises

On May 6, 2007, the Bank of the Republic (BR), the central bank of Colombia, introduced countercyclical marginal reserve requirements (RRs) on increases in banks’ deposit accounts to constrain leverage and credit risk in the financial system. A month later, the BR also raised the ordinary RR on outstanding deposit balances. The BR kept those requirements in place for more than a year. In June 2008, when the effects of the Global Financial Crisis (GFC) began to temper economic and credit growth, the BR eliminated marginal RRs. Also in June 2008, however, the BR raised the ordinary RR on outstanding …