Within less than two years, a currency crisis that began in Thailand had spread throughout East Asia, Russia, and Brazil, affecting developed economies as well as emerging markets around the world. The scope and virulence of this international financial contagion was completely unexpected. In an attempt to better understand these events, a group of leading economists from international institutions, academic universities, and the private sector gathered at a conference sponsored by the International Monetary Fund, World Bank, and Asian Development Bank. This book presents a selection of the papers given at this conference. This is the most extensive collection to date of research on international financial contagion. It includes survey articles and policy discussions, as well as detailed theoretical models and empirical analyses. Topics range from how to define contagion, to the relative importance of real versus financial linkages, to what policies could reduce contagion in the future. Many of the chapters perform empirical tests attempting to explain why crises spread, either by focusing on a specific transmission channel or an individual country or region. The chapters in this book have made impressive strides toward better understanding the causes and channels of international financial contagion.

Financial crises have occurred throughout history, resulting in the loss of national and international public and personal wealth, creating political uncertainty and shaking the foundations of the national, regional and international economic and social order. This book provides answers to the basic questions of what could have caused some of the more recent regional financial crises, what their key characteristics were, how they could have been prevented, what lessons national governments, central bankers and the International Monetary Fund (IMF) have learned and how such crises could be prevented in the future. The authors include current and former cabinet members of national governments, central bankers, IMF officials, scholars and practicing economists in both national and multilateral organizations, all of whom have either participated in the management of the various types of financial crises they analyze and discuss and/or have made major contributions to their understanding, including recommendations of how they could be avoided in the future.

This book examines the development of the international market for syndicated credits over the past three decades. It brings together practitioners' and academics' views on this form of financing and provides original answers to previously little-explored research questions. What determines banks' participation choices and supply? What influences the pricing of emerging country loans, particularly in times of crises? What are the differences with industrialized country loans and bonds? With its extensive coverage and thought-provoking insights, the book is of particular value for students, practitioners and academics.

Banking privatisation represents one of the major forces which are significantly changing the banking sector in Europe. Studying the process of banking privatisation thus helps to understand the dynamics of the sector. This book analyses - from the perspective of both commercial banking and investment banking - the various processes of banking privatisation in Europe and their effects on the strategies and structures of banks. In its theoretical part, the book considers technical and financial aspects of banking privatisation from Spain, France, Italy, Norway, Germany, and Russia. An indispensable reading for investment bankers, regulators as well as policy-makers responsible for the existence of efficient and stable banking systems.

Bank failures, crises, global banking, megamergers, changes in technology--the effect of these world events is to weaken existing methods of regulating bank safety and soundness, and even to make some methods ineffective. Federal regulators are evaluating new ways to solve them. Dr. Gup and his panel of academics and regulatory professionals explore these problems and the difficulties in implementing solutions. They point out that global banking, megamergers, and changes in technology are drastically altering the way financial services are delivered. They also argue that existing methods of bank regulation, formulated in the United States and elsewhere as early as the 19th century, are not able to cope with these changes. The search now underway for new methods that are global in scope. Inevitably, they will involve cross-border supervision and international cooperation.

Covering a wide range of topics, from the rationale of banking regulation to optimal banking regulation in the new world environments, this book examines the innovative tools needed to cope with these problems. Greater reliance on market discipline; the use of internal controls based on statistical models, such as Value-at-Risk; and subordinated debt are discussed. This timely, probing analysis of one of the hottest topics in bank regulation today, is an important resource for professionals and their academic colleagues in the fields of banking, finance, investment, and world trade.

Paul J.J. Welfens and Holger C. Wolf While the economies of Asia and, more recently, South as well as North America have enjoyed sustained high growth, the growth performance of western Europe and in particular continental Europe has been rather modest. Coupled with sizable improvements in labor productivity and - at best - steady capital productivity, growth proved insufficient to sustain employment levels, much less to replicate the US job creation success. Relative inflation performance has been much better: in the run-up to European Monetary Union inflation rates have dramatically converged towards the lower end of the distribution while risk premia on formerly high inflation economies have fallen. Yet, looking forward, the undoubted success in achieving price stability is mitigated by the lackluster growth -and in particular employment -performance. Indeed, the relative little attention paid to initiatives directed at raising economic growth is startling, not only in the light of the US policy record but also in light of the remarkable rebound of those European economies which have aggressively tackled the structural problems, most prominently the UK and Ireland.

This book examines the reforms of banking in Eastern Europe, which are a key element of the transition to the market in those economies. Particular emphasis is placed on the "bad domestic bank debt" problem. The book also analyzes the development of capital markets in Eastern Europe, and their role in attracting foreign flows, with case-studies on the former Czechoslovakia, Hungary and Poland.;Contributions are from senior policy-makers and academics from Central and Eastern Europe who are involved in the reforms.

Monetary policies and international standards and norms on banking regulations have, once again, come to the forefront of the policy discussion in developed nations due to the recent crisis in the world's financial markets. This discussion is far from new, nor does it apply exclusively to the world's most advanced economies. A stable monetary policy and a sound and well-enforced regulatory regime can help developing nations channel financial resources more efficiently into investments. For open economies it can also act as a buffer, an important stability factor in today's shaky market environment.
This book assesses the challenges facing monetary policies and the independence of central banks. It explores banking systems and examines the impact of monetary policy and banking sector regulations on bank efficiency and economic growth in the Southern and Eastern Mediterranean, at the same time investigating the level of convergence of regulatory practices and efficiency to EU Mediterranean standards.

For centuries, Swiss banks have served the globe's wealthiest individuals, employing a strict culture of anonymity and gaining massive wealth in the process. But when Credit Suisse collapsed, the veil of secrecy came down and the world was suddenly privy to the corruption, scandal and empty hubris that keep our biggest banks alive.

It was a 166-year-old bastion of Swiss banking, amongst the most important and influential financial institutions in the world – but a veneer of high-class service disguised a darker, dirtier reality. From its sterile Zurich headquarters, the bank catered to a clientele that included dictators, drug dealers and former Nazi officers, and helped fleece its own clients out of billions of dollars. This continued for decades, even as Credit Suisse continued to expand, acquiring smaller banks and granting its own executives lucrative bonus contracts.

Meltdown is the story of how the house of cards fell apart. Bloomberg investigative journalist and bestselling author of Pyramid of Lies Duncan Mavin takes readers inside the bank’s hushed marble corridors, detailing its secretive culture and the series of increasingly selfish decisions, made by a handful of men at the top, which ultimately led to disaster.

This is the fascinating history of one of the biggest financial institutions of our times - and a thrilling exposé of the wider financial services sector - which promises to give readers a shocking and brutally honest look into a previously-unknown world of greed, lies and unrelenting human ambition.

The book describes the birth and growth of financial institutions and stock exchanges in Scandinavia and Finland from 1656 to 2010, including their banking crises and the history of banking regulation. It argues that quantitative regulations cannot, in the long run, produce the desired results and bear the seeds of future financial crises.

This text brings together a number of research studies, all of which examine the behaviour of foreign exchange rates. The main focus of the collection is on empirical characterization of high-frequency exchange rate data. The pioneering studies demonstrate and explain, amongst other things, the regular patterns in intra-day foreign exchange rate activity, the effects of macroeconomic news of rates and analyze the profitability of technical trading rules in these markets. The collection should be of use to students, academics and practitioners who are interested in exchange rate dynamics.

To the layman who wishes to understand modern Islamic financial transactions, this book will prove friendly and helpful. It provides the underlying principles of Shariah financial instruments and presented them in actual and practical form. Since 1983, Malaysia has been making significant inroads into the Islamic financials landscape. Today Islamic financial transactions have made their presence felt in almost all financial institutions including banks, unit trusts, insurance, discount houses, fund management, factoring, pawn broking and project financing. And with more than USD200 billion Islamic funds available in global finance today, it is logical that the business of Islamic banking, insurance and fund management is fast expanding and encroaching into non-traditional financing. As the Holy Quran enjoins profit creation via trading and commercial transactions (al-bay') while forbidding profit earned from loans (riba), increasing Islamic consciousness among the Muslims today has opened up new business opportunities in Islamic finance, financial planning and wealth management. The Shariah not only condone interest as riba, but prohibits elements of gambling (maisir) in financial transactions. Ambiguities (gharar) in contractual agreements must be avoided at all cost while companies seeking Islamic capital must not engage with prohibited goods such as alcoholic beverages, pork and pornographic material. But current practices although unintentionally seem to out focus the real Quranic agenda for wealth creation and management. The Quranic alternative to riba is trade and commerce (al-bay'). The essence of trade and commerce is profit creation that implicates risk-taking (ghorm) and value-addition (kasb). Doing so promotes fairness and equitable transactions ('adl) and thus putting ethics and morality (akhlak) into the limelight of corporate business today. This book has attempted to venture into several issues of Islamic finance that incorporates the Quranic conception of trading and commerce (al-bay'). Profit created from financial instruments devoid of risk-taking (ghorm) and value addition (kasb) does not fit into the Quran's outlook of al-bay'. It critically examines current Islamic financial products offered by banks, mutual funds and insurance companies and help guide prospective customers to understand the underlying Shariah principles on which these products are structured. Products ranging from bank deposits/assets and capital market instruments are discussed based on prevailing practical experience in Malaysia as well as other Muslim countries. Divergent Shariah opinions on sale-buyback (bay' al-'inah) and debt trading (bay'al-dayn) are discussed with good intentions to harmonize global Islamic financial transactions. Of most significant is the push for equity financing (musyarakah/mudarabah) in the banking business with proper application of salam and istisna' contract as well. Widespread use of murabahah and al-bai-bithaman ajil (credit sale) contracts in Islamic finance is a worrying trend. This book tries to explore the place of Islamic financial contracts in modern financial markets, whether Islamic financial instruments actually reflect true label. Implication of trading (al-bay') is expected to invite venture capital application in Islamic banking and rationalizes universal banking model for Islamic banks. This book serves to guide banking customers, practitioners and investors over the range of Shariah products available in Malaysia's financial market and help impress how these products can impact their earnings and business.

Building upon a wide range of literatures, this book argues that international regulatory institutions become stronger when oligopolistic institutional arrangements decay and competitive pressures intensify. This is shown to be the case for global finance by the study of two inter-state institutions - the Basle Committee on Banking Supervision and the International Organization of Securities Commissions, and of the international banking and securities industries which they seek to regulate. There is also the development of the concept of "private" regimes.

The Economic and Financial Impacts of the COVID-19 Crisis Around the World: Expect the Unexpected provides an informed, research-based in-depth understanding of the COVID-19 crisis, its impacts on households, nonfinancial firms, banks, and financial market participants, and the effectiveness of the reactions of governments and policymakers in the United States and around the world. It provides reflections and perspectives on the social costs and benefits of various policies undertaken and a toolkit of preventive measures to deal with crises beyond the COVID-19 crisis. Authors Allen N. Berger, Mustafa U. Karakaplan, and Raluca A. Roman apply their expertise to the research and data on the COVID-19 economic crisis as well as draw on their own rich research experience. They take a holistic approach that compares and contrasts this crisis with other economic and financial crises and assesses economic and financial behavior and government policies in the booms before crises and the aftermaths following them, as well as the crises themselves. They do all this with a keen eye on “Expecting the Unexpected” future crises, and policies that might anticipate them and provide better outcomes for society.

At the start of the twenty-first century, the Japanese financial system is undergoing a major transformation. This process is spurred by a sense of crisis. Dominated by large institutions, the Japanese banking system has suffered from serious problems with non-performing loans since the early 1990s, when the Japanese stock market and urban real estate market both crashed. Delays in responding to these twin asset bubbles, by both regulatory authorities and the banks themselves, made matters worse and led to a banking crisis in late 1997 and early 1998. Not anticipating this setback, in late 1996 the Japanese government inaugurated its Big Bang of comprehensive financial deregulation designed to complete the process of creating free, fair, and open financial markets'. Beginning in late 1998 and early 1999 the government finally embarked on a major rehabilitation of the Japanese banking system, including making available some Yen 60 trillion (approximately USD 500 billion) of government funds to recapitalize fifteen major banks, adequately fund the deposit insurance program, and write off the bad loans of nationalized or bankrupted banks. One result of this reform process is that the Ministry of Finance (MOF), which dominated Japanese financial system policy for most of the post-war period, has been stripped of most of its former regulatory powers. The purpose of this book is to describe, analyze, and evaluate the process that is transforming the Japanese financial system. The chapters address various issues relating to the transition of the Japanese financial system from a bank-centered and relationship-based system to a competitive market-based system. Questions taken up include: Why did Japanese banks get into such serious trouble? Why has the MOF lost its immense power? How will the Big Bang's financial deregulation further change the Japanese financial system, including the huge government financial institutions and postal savings system? What are some of the broader implications of this transition? The book is divided into three parts: Part I considers the origins of Japan's banking crisis; Part II focuses on five particularly important areas of major actual and potential changes; Part III addresses the effects of the Big Bang, including its potential systemic externalities. Taken together, this book offers an unusually up-to-date, comprehensive and thorough appraisal and evaluation of the profound changes occurring in Japan's financial system.

This book summarizes Chinese banks' achievements in global markets and examines the differences between Chinese and foreign banks. It also explores the future roadmap of internationalization and the risks involved in the process, in order to provide reference resource for Chinese banks. Based on the CBII (Chinese Bank Internationalization Index), which was first released in 2015, the book introduces the Banks' Internationalization Index ("BII") and expands the BII by examining two groups of data, including the number of overseas branches, overseas assets and revenue. In addition it analyzes representative Chinese banks' internationalization, using 16 of the Global Systemically Important Banks (G-SIBs) as benchmarks.

This book offers a comprehensive guide to the modelling of operational risk using possibility theory. It provides a set of methods for measuring operational risks under a certain degree of vagueness and impreciseness, as encountered in real-life data. It shows how possibility theory and indeterminate uncertainty-encompassing degrees of belief can be applied in analysing the risk function, and describes the parametric g-and-h distribution associated with extreme value theory as an interesting candidate in this regard. The book offers a complete assessment of fuzzy methods for determining both value at risk (VaR) and subjective value at risk (SVaR), together with a stability estimation of VaR and SVaR. Based on the simulation studies and case studies reported on here, the possibilistic quantification of risk performs consistently better than the probabilistic model. Risk is evaluated by integrating two fuzzy techniques: the fuzzy analytic hierarchy process and the fuzzy extension of techniques for order preference by similarity to the ideal solution. Because of its specialized content, it is primarily intended for postgraduates and researchers with a basic knowledge of algebra and calculus, and can be used as reference guide for research-level courses on fuzzy sets, possibility theory and mathematical finance. The book also offers a useful source of information for banking and finance professionals investigating different risk-related aspects.

The Bundesbank is one of the world's most powerful and successful central banks, outstanding for its independence in the conduct of monetary policy and for its success in the achievement of relative price stability virtually throughout the post-war era. This collection of essays by the President of the Bundesbank, by former and present Board members and by Heads of Department within the Bundesbank offer a rare inside insight into its operations. The individual contributions to this volume explain the historical, legal and institutional basis of German internal and external monetary policy and highlight the goals of the German central bank and its role in the economy as a whole. The role of the Deutschmark as one of the leading international transaction, reserve and investment currencies is discussed in detail. Students of monetary management and the banking community throughout the world will benefit greatly from a study of this unique volume.

The financial crisis has exposed severe shortcomings in mainstream monetary economics and modern finance. It is surprising that these shortcomings have not led to a wider debate about the need to overhaul these theories. Instead, mainstream economists have closed ranks to defend existing theories and public authorities have expanded their interference in markets. This book investigates the problems associated with mainstream monetary economics and finance, and proposes alternatives based on the Austrian school of economics. This school emanated from the work of the nineteenth-century Austrian economist Carl Menger and was developed further by Eugen von Boehm-Bawerk, Ludwig von Mises, and Friedrich August von Hayek. In monetary economics, the Austrian school regards the creation of money by banks through credit extension as a key source of economic instability. From this follows the need for a comprehensive reform of our present monetary system. In a new monetary order, money could be issued by both public and private institutions, and there would be no need for fractional reserve banking. Instead of creating money, banks would intermediate it. In finance, the Austrian school rejects the notion of rational expectations and measurable risk. Individuals use their subjective knowledge to gather and evaluate information, and they act in a world of radical uncertainty. Hence, markets are not "efficient" nor can portfolios be built on the basis of known probability distributions of asset prices as described in the modern finance literature. This book explores the need for a new theoretical foundation for asset pricing and investment management that will give practitioners more useful orientation.

Over the last fifty years, increasingly sophisticated risk measurement and management techniques have revolutionized the field of finance. More recently, the globalization of financial markets and policy changes in the regulation of financial institutions have impacted upon how commercial banks manage risk. The widespread implications of these fundamental changes prompted an international conference held in May, 1997, devoted to the topic of risk management and regulation in banking. This book contains the formal papers and the panel discussions that comprise the conference proceedings, and thus collects some of the latest research on managing financial market risk by top scholars, policymakers, and high-ranking banking officials from around the world.

Banking is now an active asset-liability risk management enterprise, attributable in large part to the globalization of commerce. The authors of this descriptive yet practical, applications-oriented book examine the sources and management of traditional and nontraditional banking risks, then the conventional on-balance sheet and the modern off-balance sheet risk management methods. Unlike other more general risk management books, however, they focus closely on the use of financial derivatives--instruments to control the core risks attributable to credit and to fluctuations in interest and foreign exchange rates. The authors cover all this and more, giving experienced and novice practitioners both an easily accessed way to understand and cope with the banking risks they are already familiar with, and the new risks just emerging. The book will also be useful as a supplemental text in college-level courses on money and banking and on the operation of financial markets in general.

The authors begin by explaining how banking has moved from a routine financial process to an active and impersonal process of risk management, from relationship banking to community banking. Even banks that have stayed with traditional lending are now assuming greater risks. The authors then focus on the details of measuring, monitoring, and controlling risks. They define risk and the different philosophical approaches to its management, then continue with a discussion of operational matters, such as risk identification and classification. They discuss the evolution of banking risk management and the banking environment of the 20th Century, with special attention to the differences in methods used during the time of fragmented and highly regulated economies and those used in the highly integrated global economies of the last quarter century. The book describes in useful detail the major financial derivative products: forwards, options, caps, collars, and swaps, and their uses as risk management devices and tools for speculation, both. The book also treats on-balance sheet risk management methods, such as credit options and credit swaps. Interest rate risk is also covered in detail, and so too the management of foreign currency risk.

As financial markets are liberalized, bank management and bank regulators and supervisors are faced with new and complex challenges. In general, bank management is faced with the challenge of managing in a competitive and volatile market environment; bank supervisors have the challenge of establishing the framework that permits risk-taking without endangering the banks' safety and soundness. The book identifies and discusses a set of specific challenges, and suggests approaches that may be used by management and supervisors to surmount them.

The purpose of this book is to examine the significant and increasing problem of state bank non-performing loans (NPLs) in China, which have undermined the stability of the banking system and the efficient operation of markets. The accumulation of NPLs in China has been caused by the dominant role of State banks in China's financial markets, weak internal controls within State banks, policy loans to state owned enterprises, unnecessary administrative controls on banks' lending activities, and inappropriate banking regulation and supervision. The author draws on experiences at national, regional and international level to make recommendations for the development of better workout procedures for existing NPLs. He also examines the role of banking regulation and supervision in preventing accumulation of NPLs and in avoiding the impact of NPLs on the stability of the banking system and the conditions of market discipline.

This book provides new interdisciplinary and comparative answers as to why banking sectors in 'liberal' and 'coordinated' market economies operated under a shared set of rules during the Global Financial Crisis. Exploring the role of complex interactions among interdependent structures, institutions and agents defines this banking behaviour.