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.

This book contains original readings on Reserves Management for central banks and sovereign wealth funds. It aims to outline best practice in respect of strategic asset allocation, facilitating knowledge-sharing across organizations and encouraging collaboration and dialogue between reserves and asset management specialists in the organizations.

Creating sustainable shareholder value is one of the main strategic objectives for financial institutions. This text provides a detailed analytical assessment of shareholder value creation. The first part provides a framework for analysing shareholder value theory by discussing how shareholder value can be defined, if it can be considered a valid strategic objective for banks, and how it can be measured and created. The second part presents various empirical investigations in to order to measure shareholder value and some of its drivers. The final part analyses the importance of these drivers in creating shareholder value and develops a new measure of bank efficiency.

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.

The papers in this volume were presented at three invited sessions at the annual meetings of the Western Economic Association in San Diego, California on July 8-10, 1999. The comments by delegates were also presented at that time and are included in the volume.

The theme of the sessions was "Bank Problems: A Global Perspective." As has been well documented in previous volumes in this series, serious banking problems have plagued the large majority of countries globally be they industrial, emerging or transition economies. The problems arose because of both market failures and regulatory or government policy failures. The costs of these problems in terms of reduction in real output, misallocations of both real and financial resources, and transfer payments and cross-subsidies, particularly from taxpayers to protected stakeholders in failed banks, have been large and burdensome. Thus, a better understanding of the causes of the problems in both the private and government sectors and their potential solutions is a prerequisite for avoiding, or at least minimizing repetitions in the future. The papers in this volume contribute to this effort and add to our storehouse of knowledge. The emphasis on global in the title is reinforced by including papers by authors from Italy, Spain, and the United Kingdom, as well as the United States.

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.

Financial crises have plagued economies around the globe for centuries, yet no satisfactory policy solution has been found to significantly reduce the likelihood and severity of these devastating events. Macroprudential policy, the intellectual response to
financial crisis, may provide the solution to this recurrent problem. However, what this means in practice is subject to disagreement - with radicals proposing measures to stablise the flow of credit to households and companies, and others suggesting a more conservative approach focused on the banks. Macroprudential Policy is the first book to provide a coherent and comprehensive coverage of the issues of why, when and how policymakers should intervene.
Barwell brings his considerable experience of working in both a cenral bank and the financial sector to bear in examining the practical justification for the new regime, the institutions of macroprudential policy, the instruments at policymakers' disposal, and a discussion of how policymakers will go about discharging their responsibilities. The book also reviews the economic foundations of macroprudential policy. Conventional macroeconomics is based on assumptions that may work for the analysis of price stability and the conduct of monetary policy, but which more or less rules out the possibility of financial crises. This book introduces an alternative macroeconomics where crises can flourish, identifying the market failures which justify interventions to stabilize the system.

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.

Over the last ten years mobile payment systems have revolutionised banking in some countries in Africa. In Kenya the introduction of M-Pesa, a new financial services model, has transformed the banking and financial services industry. Giving the unbanked majority access to the financial services market it has attracted over 18 million subscribers which is remarkable given that fewer than 4 million people in Kenya have bank accounts. This book addresses the legal and regulatory issues arising out of the introduction of M-Pesa in Kenya and its drive towards financial inclusion. It considers the interaction between regulation and technological innovation with a particular focus on the regulatory tools, institutional arrangements and government decisional processes through the examination as a whole of its regulatory capacity. This is done with a view to understanding the regulatory capacity of Kenya in addressing the vulnerabilities presented by technological innovation in the financial industry for consumers after financial inclusion. It also examines the way that mobile payments have been regulated by criticising the piecemeal approach that the Central Bank of Kenya has taken in addressing the legal and regulatory issues presented by mobile payments. The book argues there are significant gaps in the regulatory regime of mobile banking in Kenya.

In this volume the authors provide a survey and an examination of the roots of Swiss banking in order to explain the phenomenal success of Switzerland's banks. Contrary to the conventional wisdom, Swiss banking did not originate with the exiled Hugenot bankers of Geneva. Centuries before Louis XIV, Basle had become a principal banking centre although it was not yet part of the Swiss Confederation. From historical beginnings to contemporary comparative analysis, the book offers an authoritative explanation and analysis of the success of the Swiss banks.

Investing in Corporate Bonds and Credit Risk is a valuable tool for any corporate bond investor. All the most recent developments and strategies in investment in corporate bonds are analyzed included with qualitative and quantitative approaches. A complete and up-to-date investment process is developed through the book, using many examples taken from banking practice. The growing significance of derivative instruments and credit diversification to bond investors is also analyzed in detail. Investment professionals; Corporate finance staff; Portfolio Managers; Senior Managers; Risk Managers; Consultants; Trading and Sales Staff; Quantitative Analysts; Credit Analysts; Regulators MBA courses

The banking sector is undergoing a process of fundamental transformation - mainly due to the challenges of digitalization, insistent customers, regulation and a volatile economic environment. This book provides an in-depth understanding of the underlying logic of 21st century's banking environment and helps to develop a roadmap for the successful transformation of contemporary business models. The authors introduce the 'Zurich model for a customer-centric banking architecture enabling the reader to develop a sustainable business model which copes with the challenges of this information age. They identify customer behavior traps in such an environment; introduce adequate strategic instruments and cornerstones for providing added value through financial services, and provide core factors for conducting a successful transformation process.

Equal treatment in access to credit has long been a fundamental social goal in the United States. However, despite the passage of several laws in the U.S. prohibiting discrimination in the provision of financial services on the basis of race, gender, and marital status, among other factors, questions concerning the existence of racial discrimination in such areas as home mortgage loans and small business credit continue, and confound public policy makers. This book is composed of nine articles and a panel discussion, originally published as a special issue of the Journal of Financial Services Research. These contributions explore the complex issue of discrimination in financial services.

This book, first published in 1985, is a study of the functioning of one sector of American capital markets - non-reserve city national banks - between 1870 and 1900. The unusually wide and deep expansion of the American economy in this period was impelled in part by the growth and development of agriculture, and this study examines the role of one source of loanable funds - banks chartered under the National Banking Acts - in providing American farmers with loans to expand and capitalize.

Whatever happened to the money supply? This book explains how the analysis of monetary and credit aggregates is undertaken at the Bank of England, the European Central Bank and (as an example of a developing country) the Bank of Tanzania. The book also explores how this analysis relates to these central banks' monetary policy strategies and how it feeds into policymaking. An editorial introduction provides the intellectual and historical background - from the contributions of key economists such as Milton Friedman and Jacques Polak, to monetary targeting and inflation targeting - and argues that central banks and policy analysts would be foolish to neglect the insights monetary analysis can offer. The papers compiled in Monetary Analysis at Central Banks demonstrate just how useful and varied those insights are.

It is a popular notion that money and output are separate and autonomous entities. Money and Inflation argues that this idea can neither explain the purchasing power of money nor its variations over time, and a new theory is therefore presented in its place. The book aims to provide the foundations for a new analysis of inflation from a macroeconomic perspective. The role of money is investigated in terms of value, prices, profit, and capital accumulation. The author argues that in order to gain a thorough comprehension of inflation it is necessary to focus on the formation of national income, not on its distribution. Sergio Rossi's new approach proposes a structural reform of modern banking systems, and outlines an original macro-theoretical investigation of measurement problems in price index theory. Despite its elective affinity with the works of Ricardo, Walras and Keynes, the new analysis overturns traditional concepts of money. The discussion elicits a deeper understanding of the conditions underlying today's inflationary pressures and prescribes new solutions to permanently eradicate them. This unique and path-breaking study will be of enormous interest to academics, researchers, and students involved in monetary economics, as well as monetary policy makers, and central bank and international banking officials.

Market volatility and competition have each played a significant role in altering the state of banking over the last twenty years. During the 1980s and 1990s banks have been exposed to new types of risks with far different characteristics and magnitudes than those dealt with in the early days of banking. Erik Banks seeks to explore the qualitative and quantitative aspects of risks attributable to financial instruments in today's markets, which are so much a part of banking business throughout the world. Banks describes the credit risks encountered in dealing with financial instruments and establishes a framework for quantifying the risks and applies framework and concepts on a product-by-product basis.

This book focuses on Fintech regulation in Asian, situating local developments in broader economic, regulatory and technological contexts. Over the last decade, Fintech - broadly defined as the use of new information technologies to help financial institutions and intermediaries compete in the marketplace - has disrupted the financial services sector. Like other 21st century technological developments, Fintech is a global phenomenon that plays out in local economic, political and regulatory contexts, and this dynamic interplay between global trends and local circumstances has created a complex and fast-changing landscape. Diverse stakeholders (most obviously incumbent financial service providers, tech start-ups and regulators) all pursue a competitive edge against a background of profound uncertainty about the future direction and possible effects of multiple emerging technologies. Compounding these difficulties are uncertainties surrounding regulatory responses. Policymakers often struggle to identify appropriate regulatory responses and increasingly turn to policy experimentation. Such issues add to the challenges for the various actors operating in the Fintech space. This situation is particularly fluid in Asia, since many jurisdictions are seeking to establish themselves as a regional hub for new financial services.

Chinese state banks, which were considered technically insolvent in the 1990s, are at present among the largest and most important banks in the world. This book, based on the author's research and also on his extensive experience of working in Chinese banks, explores how Chinese banks' technical efficiency and organisational flexibility have been achieved whilst ownership and control by the Chinese Communist Party have continued. The author reveals a distinctly non-Western approach to corporate governance, but one that has nevertheless worked very well.

The authors present a number of financial market studies that have as their general theme, the econometric testing of the underlying econometric assumptions of a number of financial models. More than 30 years of financial market research has convinced the authors that not enough attention has been paid to whether the estimated model is appropriate or, most importantly, whether the estimation technique is suitable for the problem under study. For many years linear models have been assumed with little or no testing of alternative specification. The result has been models that force linearity assumptions on what clearly are nonlinear processes. Another major assumption of much financial research constrains the coefficients to be stable over time. This critical assumption has been attacked by Lucas (1976) on the grounds that when economic policy changes, the coefficients of macroeconomics models change. If this occurs, any policy forecasts of these models will be flawed. In financial modeling, omitted (possibly non-quantifiable) variables will bias coefficients. While it may be possible to model some financial variables for extended periods, in other periods the underlying models may either exhibit nonlinearity or show changes in linear models. The authors research indicates that tests for changes in linear models, such as recursive residual analysis, or tests for episodic nonlinearity can be used to signal changes in the underlying structure of the market.

The book begins with a brief review of basic linear time series techniques that include autoregressive integrated moving average models (ARIMA), vector autoregressive models (VAR), and models form the ARCH/GARCH class. While the ARIMA and VAR approach models the first moment of a series, models of the ARCH/GARCH class model both the first moment and second moment which is interpreted as conditional or explained volatility of a series. Recent work on nonlinearity detection has questioned the appropriateness of these essentially linear approaches. A number of such tests are shown and applied for the complete series and a subsets of the series. A major finding is that the structure of the series may change over time. Within the time frame of a study, there may be periods of episodic nonlinearity, episodic ARCH and episodic nonstationarity. Measures are developed to measure and relate these events both geographically and with mathematical models. This book will be of interest to applied finance researchers and to market participants.

Marking the 30th anniversary of the formation of Orion Bank in 1970, financial historian Richard Roberts has written a history of Orion and the rise and decline of the consortium banking movement. Consortium banks were formed as joint ventures to enable banks to operate in the booming Euromarkets, with virtually every major international bank participating in a consortium bank during their heyday in the 1970s and 1980s. Orion Bank was one of the leading players in the Euromarkets in those decades: its shareholders were six of the biggest banks in the world from the three major trading blocks: Chase Manhattan, Royal Bank of Canada, NatWest, Westdeutsche Landesbank, Credito Italiano and Mitsubishi Bank. Like other consortiums banks, Orion Bank was prominent in Eurocurrency syndicated lending, but more unusually, it was also a top Eurobond lead manager. The story of Orion exemplifies the tensions inherent in the joint venture approach to business development and the strategic dilemmas facing consortium bank managements and shareholders. Richard Roberts uses primary archival papers and interviews with former Orion executives and other bankers prominent in consortium and investment banking to present an authoritative case study with great topical relevance as today's European banking industry continues to integrate across borders. Take Your Partners is also an invaluable source of reference for anyone with an interest in the Euromarkets and the development of international banking.

The increasing trend towards the securitization of retail and wholesale financial assets is examined with various chapters devoted to the characteristics and significance of the different securitized assets and securitization techniques. Against this backdrop, the author offers an insightful scenario for the future of commercial and investment banking over the next 20 years and provides a new mindset within which senior bankers can make their strategic banking decisions for the 21st century.;This book thus develops and provides evidence for a new theory of financial system development: the "systemic theory". It is a theory of how the financial system develops, not on a singular line of evolution towards greater efficiency as generally accepted, but through the parallel development and co-operation of its various subsystems. This type of development can increase both efficiencies and inefficiencies in the financial system.

Service activities such as banking, insurance, telecommunications, business auditing, distribution, trading, and other services have been at the forefront of the transformation process in East Central Europe and the former Soviet Union. These reforms, though far from complete, are now sufficiently advanced to draw lessons and to identify strategic options for foreign service firms expanding in the region. In this volume, leading analysts and practitioners offer an appraisal of the service markets and the challenges related to foreign entry into the services sector in Central and Eastern Europe during the "second wave" of transformation. What is the emerging pattern of change? What is the outlook for promising business in the area of services? Which entry strategies have proven particularly successful? How do the leading service providers from the West deal with the challenges confronting them in service markets of the region?

This collective volume used case studies, field research and industry studies to consider strategic options for foreign service firms in East Central and Eastern Europe for the late nineties and beyond.

National development banks (NDBs) have transformed from outdated relics of national industrial policy to central pillars of the European Union's economic project. This trend, which accelerated after the Financial Crisis of 2007, has led to a proliferation of NDBs with an expanded size and scope. However, it is surprising that the EU - which has championed market-oriented governance and strict competition policy - has actually advocated for an expansion of NDBs. This book therefore asks, Why has the EU supported an increased role for NDBs, and how can we understand the dynamics between NDBs and European incentives and constraints? To answer these questions, the contributing authors analyze the formation and evolution of a field of development banking within the EU, identifying a new field around an innovative conceptualization of state-backed financing for the purposes of policy implementation. Yet rather than focusing solely on national development banks, the authors instead broaden the focus to the entire ecosystem of the field of development banking, which includes political institutions (both in Brussels and in the member states), financing vehicles (such as the Juncker Plan), regulatory bodies (Directorate-General for Competition, Directorate-General for Economic and Financial Affairs), and commercial actors. Seven in-depth case studies on European NDBs, along with three chapters on European-level actors, detail this field of development banking, and answer the questions of when, where, and how development banking occurs within the EU.