Finance and Financial Management Commons^™

Lessons Learned: Guillermo Ortiz Martínez, Mercedes Cardona

Journal of Financial Crises

Guillermo Ortiz Martínez served as undersecretary of finance and public credit in Mexico’s federal government from 1988 to 1994. He became secretary in December 1994 in the administration of Ernesto Zedillo and served until December 1997. As undersecretary, he was president of the bank privatization committee and the chief negotiator for Mexico during the North American Free Trade Agreement (NAFTA) negotiations in 1991 to 1993. He was governor of the Bank of Mexico from January 1998 to December 2009 and is currently partner and member of the board of BTG Pactual, a Brazilian investment bank. This Lesson Learned summary is …

Lessons Learned: Paul Boothe, Mary Anne Chute Lynch

Journal of Financial Crises

Paul Boothe served as Canada’s senior associate deputy minister of industry during the Global Financial Crisis (GFC) of 2007–2009. Boothe led the Canadian federal government’s negotiation team during the restructuring talks with Chrysler and General Motors (GM). He also negotiated with the Canadian Auto Workers (CAW), a union that included Tier 1 auto parts suppliers for all the major auto manufacturers worldwide. Canada aligned with the United States government to rescue the auto manufacturers and provided 20% of the funding to rescue the corporations and suppliers. From 2004 to 2005, Boothe served as the associate deputy minister of finance and …

Lessons Learned: Daniela Klingebiel, Yasemin Sim Esmen

Journal of Financial Crises

Daniela Klingebiel was principal portfolio manager with the World Bank’s Pension and Endowment Department, Hedge Funds, during the Global Financial Crisis. Throughout her career, she has written many papers on financial crises, comparing various governments’ attempts to manage them and dissecting what has worked and why. This Lessons Learned summary is based on an interview with Klingebiel held on February 4 and March 3, 2021.

Lessons Learned: Bo Lundgren, Maryann Haggerty

Journal of Financial Crises

Bo Lundgren was Sweden’s cabinet minister for fiscal and financial affairs from 1991 to 1994, making him a key leader in managing the nation’s severe financial crisis during those years. Lundgren had a decades-long political career as a member of the Swedish Parliament from 1975 to 2004, was leader of the Moderate Party (1999–2003), and vice president of the European People’s Party in the European Union. He also served from 2004 to 2013 as director general of the Swedish National Debt Office, the country’s central financial agency. Drawing on his experiences in the Swedish crisis, Lundgren has shared his views …

Lessons For The Discount Window From The March 2023 Bank Failures, Susan Mclaughlin

Journal of Financial Crises

The speed of the bank runs that occurred in the United States in March 2023 took most by surprise. The ensuing policy debate about reform has focused very little on the role of the Federal Reserve’s discount window and how it could be made more fit for purpose in mitigating risks to financial stability emanating from the banking system. Making the discount window a more effective financial stability tool will require actions both to reduce the stigma associated with borrowing and improve the operational agility and readiness of the Fed as lender and banks as borrowers. A number of frictions …

India: Yes Bank Restructuring, 2020, Salil Gupta

Journal of Financial Crises

Yes Bank was suffering from liquidity outflows in the second half of 2019 owing to a combination of deposit withdrawals, invocation of pledged shares, losses from extraordinary credit provisions, and overexposure to stressed sectors like power and infrastructure. In December 2019, Yes Bank reported a Common Equity Tier 1 capital ratio at 0.6%, far below the Reserve Bank of India (RBI) mandated levels, and a quarterly loss of 185 billion Indian rupees (INR; USD 2.5 billion). In early March 2020, the RBI and the Ministry of Finance announced a restructuring plan for India’s fourth-largest private bank, Yes Bank, to prevent …

Fhlb Dividends: Low-Hanging Fruit For Reconfiguring Fhlb Lending, Steven Kelly, Susan Mclaughlin, Andrew Metrick

Journal of Financial Crises

In the United States, the lender-of-last-resort tool is the Federal Reserve’s discount window. Despite countervailing policy efforts, substantial market stigma remains associated with borrowing from the discount window. It is in this context that market participants have come to view the Federal Home Loan Banks (FHLBs) as an alternative to the Fed’s discount window for backstop liquidity needs—despite the FHLBs’ relatively constrained abilities to play this role. Notably, however, the FHLBs don’t just benefit from discount window stigma; the FHLBs reinforce discount window stigma with their subsidized pricing. The FHLBs are government-sponsored enterprises—and as such can fund themselves at government …

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 …

The Role Of Macroprudential Policies Under Carbon Pricing, Maria Teresa Punzi

Sim Kee Boon Institute for Financial Economics

This paper analyses the effectiveness of macroprudential policy on macro-financial fluctuations when the government enforces carbon pricing to reduce carbon emissions and achieve the net-zero target. A carbon tax policy alone can reduce carbon emissions by 2030, but at the cost of a deep and prolonged recession, with consequential financial instability due to a higher probability of default on entrepreneurs in the brown sector. This result suggests that carbon pricing should be coupled with complementary policies, such as macroprudential policy. In particular, differentiated LTV ratios and differentiated capital requirements that penalize the brown sector in favour of the green sector …

Strengthen And Optimize Professional Talent Team Building To Enhance Effectiveness Of Large-Scale Research Infrastructures, Xiyi Yang, Lingling Zhang, Xielin Liu, Xiaoyu Zhou

Bulletin of Chinese Academy of Sciences (Chinese Version)

The construction and operation of large-scale research infrastructures involves not only basic scientific research issues, but also complex engineering and management issues. Therefore, strengthening and optimizing professional talent team-building is a key factor in comprehensively improving the effectiveness of large-scale research infrastructures. However, current management system of these infrastructures pays insufficient attention to professional engineering and technical talents and management talents in terms of financial support, talent evaluation, and incentive system construction, which has seriously reduced the stability and work enthusiasm of these talents, which in turn directly restricts the scientific and social benefits of the infrastructures. By investigating several …

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 …

Forecasting Crude Oil Price Using Multiple Factors, Hind Aldabagh, Xianrong Zheng, Mohammad Najand, Ravi Mukkamala

Computer Science Faculty Publications

In this paper, we predict crude oil price using various factors that may influence its price. The factors considered are physical market, financial, and trading market factors, including seven key factors and the dollar index. Firstly, we select the main factors that may greatly influence the prices. Then, we develop a hybrid model based on a convolutional neural network (CNN) and long short-term memory (LSTM) network to predict the prices. Lastly, we compare the CNN–LSTM model with other models, namely gradient boosting (GB), decision trees (DTs), random forests (RFs), neural networks (NNs), CNN, LSTM, and bidirectional LSTM (Bi–LSTM). The empirical …

Community Cultural Wealth And Its Impact On Pandemic Relief Funding For Small Businesses, Brett Smith

West Chester University Doctoral Projects

This dissertation investigates the impact of social, navigational, familial, aspirational, and resistant capital on the ability of small business owners in Pennsylvania to access relief funding during the COVID-19 pandemic, primarily the period from March 2020 to December 2020. Utilizing Dr. Tara Yosso’s Community Cultural Wealth framework, the study explores systemic barriers within relief initiatives and how they affect marginalized communities.

To meet business owners where they were, and to utilize technologies born as a result of the pandemic, this study utilized Asynchronous Video Interviews (AVI) and online surveys, to capture the lived experiences of these small business owners. Not …

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 …

E-Dsge Model With Endogenous Capital Utilization Rate, Ying Tung Chan, Maria Teresa Punzi

Sim Kee Boon Institute for Financial Economics

Environmental policy research has increased due to stricter policies aligned with climate goals. However, to achieve the goal of net-zero emissions, the adoption of even stronger policies and increased carbon taxes is necessary, with transition risk becoming a major concern for companies. Even though governments worldwide have been employing a range of methods such as carbon tax, cap-and-trade, and intensity targets to mitigate the impact of climate change, a pivotal debate around determining the optimal policy that reduces emissions without harming the economy continues. Our paper delves into the environmental policy assessment emphasizing the role of endogenous capital utilization rates, …

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 …

Rethinking The "Phillips Curve" In Nigeria: Assessing The Unemployment-Inflation Nexus In A Non-Linear Framework, Oba Efayema Obukohwo, Hilda Enoh Olele

Bullion

The need to boost economic growth through policies that will simultaneously enhance employment and price stability cannot be overemphasized for a developing economy like Nigeria. This study thus seeks to ascertain the nexus between unemployment and inflation in Nigeria utilizing unemployment, and other control variables between 1980 and 2020 within a nonlinear framework, the study invalidated the inverse relationship. The study thus proposed that government should formulate and implement policies that will stimulate growth through an unemployment-inflation decelerating trajectory.

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 …

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 …

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 …

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: 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: 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: 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