Finance Commons^™

Regulation Of Government Agencies Through Limitation Riders, Neal Devins

Neal E. Devins

Congress often attaches limitation riders to appropriations bills to establish its policy directives. Professor Devins argues that the appropriations process is not the proper vehicle for substantive policymaking. In this article, he analyzes institutional characteristics that prevent the full consideration or articulation of policy in appropriations bills. Professor Devins also considers the extent to which Congress's use of limitation riders inhibits the effectiveness of the other branches of the federal government. Professor Devins concludes that, while Congress's use of limitation riders is sometimes necessary, Congress should be aware of the significant risks associated with policymaking through the appropriations process.

Understanding Kaye Scholer: The Autonomous Citizen, The Managed Subject And The Role Of The Lawyer, Nancy Amoury Combs

Nancy Combs

The Office of Thrift Supervision's (OTS) unprecedented enforcement action against Kaye, Scholer, Fierman, Hays and Handler (Kaye Scholer) prompted howls of protest from the legal community. OTS, it was claimed, was using its excessive power to redefine the role of the lawyer. This Comment confirms that OTS sought to impose duties on Kaye Scholer that conflict with professional ethics rules. The Comment then goes on to suggest that the conflict over professional responsibility in the Kaye Scholer case reflects, more fundamentally, a conflict over the role of the citizen, and the citizen's relationship with the state. Our adversarial system of …

Naked And Covered In Monte Carlo: A Reappraisal Of Option Taxation, Eric D. Chason

Eric D. Chason

The market for equity options and related derivatives is staggering, covering trillions of dollars worth of assets. As a result, the taxation of these instruments is inherently important. Moreover, the importance is made even more acute by the use of options in creating more complex transactions and in avoiding taxes. Consider an equity call option, which entitles, but does not obligate, its holder to buy stock at a set price at a set time in the future. Option theory gives us a way to break the option down into more fundamental units. For example, an equity call option over 10,000 …

Policy Considerations Related To Further Intervention In The Farm Credit System, Neil E. Harl

Neil E. Harl

The Farm Credit System Is a major participant in extending credit to and brokering losses from the agricultural sector during the current adjustment process. This article focuses on the problems faced by the system as a cooperative lender with relatively little diversity in its loan portfolio. Assistance to the system should be accompanied by organizational and structural changes that address the fundamental reasons for its vulnerability. Conditions suggest three basic choices: (1) preservation of the system in recognizable form, (2) decentralization to the district level, or (3) a shift toward a wholesaling function. One realistic alternative would involve a combination …

Currency Wars And The Erosion Of Dollar Hegemony, Lan Cao

Lan Cao

Public Actors In Private Markets: Toward A Developmental Finance State, Robert Hockett, Saule Omarova

Saule T. Omarova

The recent financial crisis brought into sharp relief fundamental questions about the social function and purpose of the financial system, including its relation to the “real” economy. This Article argues that, to answer these questions, we must recapture a distinctively American view of the proper relations among state, financial market, and development. This programmatic vision – captured in what we call a “developmental finance state” – is based on three key propositions: (1) that economic and social development is not an “end-state” but a continuing national policy priority; (2) that the modalities of finance are the most potent means of …

The Equity Beta Of Telcos Operating In Small Island Nations, Bruno E. Viani

Bruno E. Viani

Analysts often use the capital assets pricing model (CAPM) to estimate the cost of equity capital. A key parameter in estimating that cost is the so-called equity beta. Estimates of equity betas for telecommunications firms, or telcos, in small island nations are not readily available, so analysts often rely on estimated equity betas from larger firms in jurisdictions with much larger markets. Doing so may introduce significant errors if the equity risk premium for telcos in large markets differs significantly from those in small markets. In this research note we explore this hypothesis. We find that the equity betas of …

Liquidity, Systemic Risk, And The Bankruptcy Treatment Of Financial Contracts, Riz Mokal

Riz Mokal

Theories And Practices Of Islamic Finance And Exchange Laws: Poverty Of Interest, Ahmed E. Souaiaia

Ahmed E SOUAIAIA

Shareholder Engagement Through Informal Dialogue: A Perspective From Spanish Listed Companies, Javier Agudo

Javier Agudo

The purpose of this research is to further understand the behaviour of listed companies in the informal dialogue with their shareholders. While dialogue in CSR issues and the relations between IR officers and funds had already been studied, additional exploration was needed on dialogue regarding corporate governance and on the role of other company actors and external advisors in it. For this, a qualitative study was undertaken in the Spanish context. A total of eleven semi-structured interviews were conducted with directors of the board, heads of investor relations and secretaries of the board from various listed companies, together with proxy …

What Role Can An International Financial Centre’S Law Play In The Development Of A Sunrise Industry? The Case Of Hong Kong And Solar Powered Investments, Bryane Michael

Bryane Michael (bryane.michael@stcatz.ox.ac.uk)

How can international financial centres like Hong Kong increase assets under management – and thus their size and ranking? Most policymakers and their advisors wrongly answer this question by focusing on financial institutions, and the law that governs them. Instead, policymakers need to start by looking at actual markets. What new tastes and technologies need funding? How can such funding fit into already existing geographies of production, distribution and finance? In this paper, we show how a focus on funding sunrise industries can help increase assets under management for the financial institutions operating in an international financial centre like Hong …

Strategic Default In Joint Liability Groups: Evidence From A Natural Experiment In India, Xavier Gine, Karuna Krishnaswamy, Alejandro Ponce

Alejandro Ponce

Despite the high repayment rates claimed by microcredit programs around the world, some groups of borrowers eventually default and are subsequently disbanded. Exposure to common shocks and strategic default are reasons for the deterioration in group repayment but identification of the precise mechanism is difficult. In this paper we exploit an announcement issued by the Anjuman Committee of a town in southern India banning all Muslims from repaying their microfinance loans. Using administrative data we find that borrowers in Muslim-dominated groups have higher default rates after the announcement compared to the same borrowers with loans in Hindu-dominated groups. We conclude …

Democracy, Law And Global Finance: An Example Of A Research Agenda For A New Practice Of Law And Economics, Tamara Lothian

Tamara Lothian

No abstract provided.

Taking No Prisoners: Captive Insurance As An Alternative To Traditional Or Commercial Insurance, Constance A. Anastopoulo

Constance A. Anastopoulo

No abstract provided.

A Comparison Of Anti-Manipulation Rules In U.S. And Eu Electricity And Natural Gas Markets: A Proposal For A Common Standard, Shaun D. Ledgerwood, Dan Harris

Shaun D. Ledgerwood

In this paper, we describe the development and current status of anti-manipulation rules as they apply to wholesale electricity and natural gas markets in the United States and the European Union, including the institutions that are responsible for overseeing these rules. We then compare and contrast these jurisdictions to discuss similarities, differences, and potential gaps in coverage within and across their internal markets. We note that while the behavior prohibited by the U.S. and EU statutes is remarkably similar, there is in fact no common standard for defining market manipulation. The absence of a common EU/U.S. framework for examining manipulative …

The History And Rationale For A Separate Bank Resolution Process, Thomas Fitzpatrick, Moira Kearney-Marks, James Thomson

James B Thomson

Everyone recognizes the need to have a credible resolution regime in place for fi nancial companies whose failure could harm the entire financial system, but people disagree about which regime is best. The emergence of the parallel banking system has led policymakers to reconsider the dividing line between fi rms that should be resolved in bankruptcy and firms that should be subject to a special resolution regime. A look at the history of insolvency resolution in this country suggests that a blended approach is worth considering. Activities that have potential systemic impact might be best handled administratively, while all other …

Harmonising And Regulating Financial Markets, Mads Andenas

Mads Andenas

This paper discusses problems of harmonisation and regulation of the European Internal Financial Market. The argument is that the current division of powers between the EU and Member States is not achieving sufficient harmonisation to develop an internal market. The obstacles to the Internal Financial Market presented by national regulatory and supervisory regimes remain too high, and the EU minimum standards and mutual recognition regime has failed to lower these barriers sufficiently. There is a need for broader based regulatory and supervisory institutions, undertaking at a European level what cannot effectively be done at a national level, including providing a …

Resolving Large, Complex Financial Firms, Thomas Fitzpatrick, Mark Greenlee, James Thomson

James B Thomson

How to best manage the failure of systemically important fi nancial fi rms was the theme of a recent conference at which the latest research on the issue was presented. Here we summarize that research, the discussions that it sparked, and the areas where considerable work remains.

How Well Does Bankruptcy Work When Large Financial Firms Fail? Some Lessons From Lehman Brothers, Thomas Fitzpatrick, James Thomson

James B Thomson

There is disagreement about whether large and complex financial institutions should be allowed to use U.S. bankruptcy law to reorganize when they get into financial difficulty. We look at the Lehman example for lessons about whether bankruptcy law might be a better alternative to bailouts or to resolution under the Dodd-Frank Act’s orderly liquidation authority. We find that there is no clear evidence that bankruptcy law is insufficient to handle the resolution of large complex financial firms.

U.S. Appellate Court Ruling Deals Fatal Blow To Argentina Brady Bond Debt Swap, Mark J. Calaguas

Mark J Calaguas

No abstract provided.

A Logica De Acumulação Capitalista E O Racionamento Da Oferta De Crédito, Amilton Bispo Dos Reis

Amilton Bispo dos Reis

Este texto deriva da dissertação de mestrado do autor - Crédito para MPES: Análise da Experiência Brasileira Recente - e pretende analisar o atendimento à demanda de crédito das micro e pequenas empresas por parte do sistema bancário, enfatizando as peculiaridades do mercado brasileiro, com o objetivo de identificar em que medida esse caso particular se aproxima ou se afasta do padrão geral apresentado no resto do mundo. Parte-se dos conceitos expostos por Marx sobre o desenvolvimento do sistema de crédito, demonstrando a sua importância fundamental no processo de reprodução do capital. Posteriormente, a partir da constatação de que as …

An End To Too Big To Let Fail? The Dodd–Frank Act’S Orderly Liquidation Authority, Thomas J. Fitzpatrick Iv, James B. Thomson

James Thomson

One of the changes introduced by the sweeping new fi nancial market legislation of the Dodd–Frank Act is the provision of a formal process for liquidating large fi nancial fi rms—something that would have been useful in 2008, when troubles at Lehman Brothers, AIG, and Merrill Lynch threatened to damage the entire U.S. fi nancial system. While it may not be the end of the too-big-to-fail problem, the orderly liquidation authority is an important new tool in the regulatory toolkit. It will enable regulators to safely close and wind up the affairs of those distressed fi nancial fi rms whose …

Diversification Across Time, Ian Ayres, Barry Nalebuff

Ian Ayres

By employing leverage to gain more exposure to stocks when young, individuals can achieve better diversification across time. Using stock data going back to 1871, we show that early leverage combined with reduced equity exposure when older can reduce lifetime portfolio risk. For example, an initially-leveraged portfolio can produce the same mean accumulation as a constant 75% stock allocation with a 21% smaller standard deviation. Since the mean accumulation is the same, the reduction in volatility does not depend on the equity premium. A leveraged lifecycle strategy can also allow investors to come closer to their utility-maximizing allocation. If risk …

Black Tuesday And Graying The Legitimacy Line For Governmental Intervention: When Tomorrow Is Just A Future Yesterday, Donald J. Kochan

Donald J. Kochan

Black Tuesday in October 1929 marked a major crisis in American history. As we face current economic woes, it is appropriate to recall not only the event but also reflect on how it altered the legal landscape and the change it precipitated in the acceptance of governmental intervention into the marketplace. Perceived or real crises can cause us to dance between free markets and regulatory power. Much like the events of 1929, current financial concerns have led to new, unprecedented governmental intervention into the private sector. This Article seeks caution, on the basis of history, arguing that fear and crisis …

Event Studies In Finance: Discussion, Carlo Drago

Carlo Drago

No abstract provided.

Ceo Compensation And Performance In Family Firms By Barontini And Bozzi: Discussion, Carlo Drago

Carlo Drago

No abstract provided.

Determinantes Explícitos E Implícitos De La Deuda Externa Pública Peruana, José Manuel Martin Coronado

José-Manuel Martin Coronado

This research aims to prove that sound economic policies are nothing more that basic conditions for the foreign public debt problem. In fact, by studying the factors of public debt issues in Peru, Latin America and the emerging economies it’s clear that some implicit economic and non-economic factors have to be considered because of the social complexity and variable characteristics in emerging economies. This causes failures in economic policies assumptions, inefficiencies, distorted causality and nonrational behavior. This paper proposes, first, to perform a deep and comparative analysis of the foreign debt determinants in emerging economies, then, to allocate financial resources, …

Applied Monetary Policy And Bank Supervision By The Ecb, Mads Andenas, Lazaros E. Panourgias

Mads Andenas

Monetary policy and banking supervision are closely related and interdependent concepts. Monetary policy and central banking are not defined in such a manner in the Maastricht Treaty that it precludes the European Central Bank from taking on a wider responsibility for financial stability and the handling of banking crises. The article introduced the term 'macro-prudential supervision', explained as 'supervision with a view to safeguarding systemic stability', in a section with the heading 'Default Supervision of Central Banks'.

Misfeasance In Public Office, Governmental Liability And European Influences, Mads Andenas

Mads Andenas

The article deals with the liability of banking regulators in the UK after the BCCI debacle, and provides a wider comparative perspective. It analyses the lack of enforcement culture in the Bank of England, at the systemic failures on the regulatory side that this leads to. The article argues in favour of an extended liability for lack of effective banking supervision, and that banking regulators should be liable where there is a sufficiently breach of the duty to supervise and enforce.

Charities In Tax Reform: Threats To Subsidies Overt And Covert, Evelyn Brody

Evelyn Brody

Fundamental tax reform would do far more damage to charities than the obvious repeal of the deduction for charitable contributions. Over the decades, charities have quietly garnered billions of dollars worth of indirect benefits. For example, the largest tax expenditure - the exclusion from workers' income of employer-provided health insurance - has fattened nonprofit hospitals, and the new tuition tax credits promise to spur tuition inflation. Tax reform presents an opportunity to eliminate tax subsidies and enact any desired direct expenditures for specific public goods and activities. However, converting tax expenditures to direct outlays would likely take the form of …