Risk has always been central to finance, and managing risk depends critically on information. As evidenced by recent events, the need has never been greater for skills, systems and methodologies to manage risk information in financial markets. Authored by leading figures in risk management and analysis, this handbook serves as a unique and comprehensive reference for the technical, operational, regulatory and political issues in collecting, measuring and managing financial data. It is targeted towards a wide range of audiences, from financial industry practitioners and regulators responsible for implementing risk management systems, to system integrators and software firms helping to improve such systems. Volume 2 describes a structural and operational framework for managing a financial risk data repository. As experience accumulates on managing modern risk systems, the knowledge base of practical lessons grows. Understanding these issues and leading practices may mean the difference between failed and successful implementations of risk systems.

Financial economics is a fascinating topic where ideas from economics, mathematics and, most recently, psychology are combined to understand financial markets. This book gives a concise introduction into this field and includes for the first time recent results from behavioral finance that help to understand many puzzles in traditional finance. The book is tailor made for master and PhD students and includes tests and exercises that enable the students to keep track of their progress. Parts of the book can also be used on a bachelor level. Researchers will find it particularly useful as a source for recent results in behavioral finance and decision theory.

This book is a collection of 21 original papers on Latin American finance by prominent researchers in and out of the region. This is an attempt to bring them together under the same umbrella so that the commonality and peculiarity of Latin finance can be more easily discerned across different applications as well as compared across countries. While topics are diverse (encompassing corporate finance, banking, equity and bond markets, dollarization, and pension funds), the papers range from country-specific to comparative and international in perspectives.

This volume presents a unified mathematical framework for the transmission channels for damaging shocks that can lead to instability in financial systems. As the title suggests, financial contagion is analogous to the spread of disease, and damaging financial crises may be better understood by bringing to bear ideas from studying other complex systems in our world. After considering how people have viewed financial crises and systemic risk in the past, it delves into the mechanics of the interactions between banking counterparties. It finds a common mathematical structure for types of crises that proceed through cascade mappings that approach a cascade equilibrium. Later chapters follow this theme, starting from the underlying random skeleton graph, developing into the theory of bootstrap percolation, ultimately leading to techniques that can determine the large scale nature of contagious financial cascades.

Philip Ernstberger analyses in his three essays different topics of financial pathologies. Thereby, changes in fundamentals as well as information are considered as the driving force for the behavior of speculators and investors. The first essay deals with currency crises, in which the central bank, through setting the interest rate, steers the economy and defends against speculators. The second essay examines the effects of a rating and possible biases on the coordination of investors and the pricing of debt. In the third essay the author uses forecasts of default probabilities and implied market default probabilities to infer the weighing of information by investors.

Finance is widely seen as an obstacle to a better world. Principles of Sustainable Finance explains how the financial sector can be mobilized to counter this. Using finance as a means to achieve social goals we can divert the planet and its economy from its current path to a world that is sustainable for all. Written for undergraduate, graduate, and executive students of finance, economics, business, and sustainability, this textbook combines theory, empirical data, and policy to explain the sustainability challenges for corporate investment. It shows how finance can steer funding to certain companies and projects without sacrificing return and thus speed up the transition to a sustainable economy. It analyses the Sustainable Development Goals as a strategy for a better world and provides evidence that environmental, social, and governance factors matter, explaining in detail how to incorporate these factors in the corporate and financial sectors. Tailored for students, Principles of Sustainable Finance starts each chapter with an overview and learning objectives to support study. It includes suggestions for further reading, lists and definitions of key concepts, and extensive uses of figures, boxes, and tables to enhance educational goals and clarify concepts. Principles of Sustainable Finance is also supported by an online resource that includes teaching materials and cases.

'A failing orthodoxy calls out for powerful alternatives. Neoclassical economics is that failed orthodoxy; Whalen and his contributors are the critical alternative. In this finely orchestrated edited volume, the contributors take turns wielding a sledgehammer to demolish the weakened edifice of neoclassical theory. Then, each adds a brick to a new theoretical foundation as they work together to expand upon the Post-Keynesian Institutionalist approach, especially the ideas laid down by Hyman Minsky. Their critique is clear and the alternative theory and policies they present are critical for anyone trying to understand the nature and operation of market-based economies.' - Dorene Isenberg, University of Redlands 'A convergence of Post Keynesian and Institutional economics, which have much in common, offers a sound and practical way forward after the Great Recession. By drawing inspiration from Hyman Minsky and tracing similarities in the economics of Veblen, Commons and Keynes, this book pursues such a convergence in an original and thought-provoking manner. The result is a new way of thinking about economics, one based on serious economic theory and rooted firmly in economic reality.' - Philip Arestis, University of Cambridge, UK This timely book rethinks economic theory and policy by addressing the problem of economic instability and the need to secure broadly shared prosperity. It stresses that advancing economics in the wake of the Great Recession requires an evolutionary standpoint, greater attention to uncertainty and expectations, and the integration of finance into macroeconomics. The result is a broader array of policy options - and challenges - than conventional economics presents. Building on the pioneering work of Thorstein Veblen, John R. Commons and John Maynard Keynes, the authors synthesize key insights from Institutional and Post Keynesian economics into Post-Keynesian Institutionalism. Then they use that framework to explore an array of economic problems confronting the United States and the world. Inspired by the work of Hyman Minsky, the authors place financial relations at the center of their analysis of how economies operate and change over time. Students and scholars of macroeconomics and public policy will find this book of interest, as will a wider audience of financial analysts, policy makers and citizens interested in understanding economic booms and downturns.

This book is the outcome of the CIMPA School on Statistical Methods and Applications in Insurance and Finance, held in Marrakech and Kelaat M'gouna (Morocco) in April 2013. It presents two lectures and seven refereed papers from the school, offering the reader important insights into key topics. The first of the lectures, by Frederic Viens, addresses risk management via hedging in discrete and continuous time, while the second, by Boualem Djehiche, reviews statistical estimation methods applied to life and disability insurance. The refereed papers offer diverse perspectives and extensive discussions on subjects including optimal control, financial modeling using stochastic differential equations, pricing and hedging of financial derivatives, and sensitivity analysis. Each chapter of the volume includes a comprehensive bibliography to promote further research.

Ethics and Finance: An Introduction provides a comprehensive and accessible introduction to the ethical issues raised by modern finance. Drawing carefully on ethical theory and with frequent use of case studies, it includes an analysis of the global financial system and its regulation and control, as well as a detailed analysis of the financial crisis. Chapters on specific areas of finance practice cover all the major financial scandals of recent times, from mis-selling to market manipulation and from insider trading to bankers' bonuses, as well as much more positive developments. From micro finance to derivatives trading, the book provides a careful and balanced treatment designed to help finance students and practitioners approach this sensitive topic in a thoughtful and constructive way. No prior knowledge of ethics or finance is required, and the book will be invaluable to students, finance teachers, practitioners and regulators.

This illuminating and thought-provoking book questions whether classical Islamic capitalism, which has served Muslims so well for centuries, can provide a viable alternative world economic system. In the current recession - the worst since 1929 - this is surely a provocative question. But if Islamic capitalism is to emerge as a viable alternative, its nature and systems must be well understood. Murat Cizakca explores key issues within Islamic capitalism and finance, shedding light on whether the Islamic system can indeed be called 'capitalist', the principles on which the system was built, the institutions that were consequently developed, how they function and have evolved, and, perhaps, most importantly, whether they can be modernized to meet today's needs. Against the backdrop of rapid change in the Middle East, this book gives a solid background to the economic systems that will emerge in the world of Islam. An essential guide to the past, present and future of Islamic economy and finance, this compelling book will prove to be of particular interest to academics and researchers of economics, finance, economic and financial history and political science.

A total of eleven papers in this volume represent recent research on important topics in finance. The contributions include analyses of issues relating to asset prices, the behavior of stock returns, and capital-raising activities. Hodges, et al. employ stochastic dominance arguments to show that the efficiency of time diversification depends on the degree of autocorrelation in security returns. In their study of the announcement effects of ninety-three minority equity investments, Chan, et. al. find a neutral stock price response on average for acquiring firms but a significantly positive response for selling firms. Nguyen, et al. provide evidence on the returns structure of U.S. information technology stocks surrounding the bursting of the internet bubble in early 2000. In a study of the informational effects of auditor reputation, Godby and Mahar, Jr. find that implied volatilities for firms audited by Andersen have increased relative to those for firms audited by other Big Five firms. Charaput and Chang find that the usage of installment receipts enhances liquidity in Canadian secondary equity offerings.

The contributions to this volume also examine important issues in international finance and financial institutions. Brailsford, et al. use a VECM technique to examine Purchasing Power Parity and causality between the yen and the dollar. Sarmas studies the impact of Hong Kong's fixed exchange rate system and Singapore's floating exchange rate system on the correlation between the US and the two respective countries' stock markets. Povel develops a theoretical model to explain multiple banking as a commitment device. Baer, et al. develop a model and empirically examine how thecreation of a futures clearinghouse can reduce the need for margin in bilateral and multilateral settings. Roberts and Siddiqi provide an empirical analysis of the link between collateralization and the number of lenders in private debt contracts. Finally, Tripp et al. empirically examine the relative efficiency of single versus multiple common bond credit unions.

Detect fraud faster--no matter how well hidden--with IDEA automation

"Fraud and Fraud Detection" takes an advanced approach to fraud management, providing step-by-step guidance on automating detection and forensics using CaseWare's IDEA software. The book begins by reviewing the major types of fraud, then details the specific computerized tests that can detect them. Readers will learn to use complex data analysis techniques, including automation scripts, allowing easier and more sensitive detection of anomalies that require further review. The companion website provides access to a demo version of IDEA, along with sample scripts that allow readers to immediately test the procedures from the book.

Business systems' electronic databases have grown tremendously with the rise of big data, and will continue to increase at significant rates. Fraudulent transactions are easily hidden in these enormous datasets, but "Fraud and Fraud Detection" helps readers gain the data analytics skills that can bring these anomalies to light. Step-by-step instruction and practical advice provide the specific abilities that will enhance the audit and investigation process. Readers will learn to: Understand the different areas of fraud and their specific detection methodsIdentify anomalies and risk areas using computerized techniquesDevelop a step-by-step plan for detecting fraud through data analyticsUtilize IDEA software to automate detection and identification procedures

The delineation of detection techniques for each type of fraud makes this book a must-have for students and new fraud prevention professionals, and the step-by-step guidance to automation and complex analytics will prove useful for even experienced examiners. With datasets growing exponentially, increasing both the speed and sensitivity of detection helps fraud professionals stay ahead of the game. "Fraud and Fraud Detection" is a guide to more efficient, more effective fraud identification.

Government policies, marketing campaigns of banks, insurance companies, and other financial institutions, and consumers' protective actions all depend on assumptions about consumer financial behavior. Unfortunately, many consumers have no or little knowledge of budgeting, financial products, and financial planning. It is therefore important that organizations and market authorities know why consumers spend, borrow, insure, invest, and save for their retirement - or why they do not. Understanding Consumer Financial Behavior provides a systemic economic and behavioral approach to the way people handle their finances. It discusses the different types of financial behaviors consumers may engage in and explores the psychological explanations for their behavior and choices. This exciting new book is essential reading for scholars of marketing, finance, and management; financial professionals; and consumer policy makers.

Since its establishment in 1965, Business Economics has been an essential resource for those who use economics in the workplace. Its consistent intent has been to distinguish itself from academic journals by focusing on what is useful to practitioners of economics in their everyday work, and it has risen to become the leading forum for debating solutions to critical business problems, analyzing key business and economic issues, and sharing of best-practice models, tools, and hands-on techniques. In celebration of the journal's anniversary, The Best of "Business Economics" brings together forty of the best articles from half a century of publication: those that pushed boundaries, challenged conventional wisdom, and redefined the way practitioners and academics approached their work. Much of the insight afforded in this collection on the uses and limitations of economics are as fresh and useful today as when they were published. Featuring award-winning articles and the world's premier economists, this collection is an essential addition to any economics library.

Changes in the field of central banking over the past two decades have been nothing short of dramatic. They include the importance of central bank autonomy, the desirability of low and stable inflation, and the vital role played by how central banks communicate their views and intentions to the markets and the public more generally. There remains considerable diversity nevertheless in the institutional framework affecting central banks, the manner in which the stance of monetary policy is determined and assessed, and the forces that dictate the conduct of monetary policy more generally. The global financial crisis, which began in the United States in 2007, only serves to highlight further the importance of central bank policies. The aim of this volume is to take stock of where we are in the realm of the practice of central banking and considers some of the implications arising from the ongoing crisis.

Recent large-scale corporate collapses, such as Lehman Brothers, Enron, Worldcom, and Parmalat, highlight the implosion of traditional models of fraud prevention. By focusing on risk factors at the micro level, they have failed to take into account the broader context in which external auditors operate as well as the crucial importance of such factors as corruption, organizational culture, corporate social responsibility, ethical values, governance, ineffective regulation, and a lack of transparency. Corporate Fraud and Corruption engages readers by showing how evidence-based, multi-level micro and macro analysis of fraud risk and protective factors inform effective fraud prevention, in turn minimizing financial catastrophes. Krambia-Kapardis focuses on her own empirical research into the aetiology of fraud to showcase a holistic approach to fraud prevention. This book also features major case studies from the United States, the United Kingdom, and Australia.

Fixed income volatility and equity volatility evolve heterogeneously over time, co-moving disproportionately during periods of global imbalances and each reacting to events of different nature. While the methodology for options-based "model-free" pricing of equity volatility has been known for some time, little is known about analogous methodologies for pricing various fixed income volatilities. This book fills this gap and provides a unified evaluation framework of fixed income volatility while dealing with disparate markets such as interest-rate swaps, government bonds, time-deposits and credit. It develops model-free, forward looking indexes of fixed-income volatility that match different quoting conventions across various markets, and uncovers subtle yet important pitfalls arising from naive superimpositions of the standard equity volatility methodology when pricing various fixed income volatilities.

In The Financial Crisis Reconsidered, Aronoff challenges the conventional view that reckless credit produced the US housing boom and the financial crisis, explaining how the large current account deficit, and its mercantilist origin, was a more fundamental cause. He also demonstrates that the decision to provide relief for bank creditors rather than underwater homeowners was responsible for the prolonged recession that followed the crisis. Aronoff proposes a novel theory to account for the ultimate origins of secular stagnation and economic volatility. He shows how accumulation, which occurs when a person or country earns more than it ever plans to spend, generates both an excess of saving and a deficiency in demand. While savings provide the funds to promote booms, under-consumption ensures that these booms will turn bust and that the economy will fall short of its potential growth rate. Aronoff argues that mercantilists and top income earners engage in accumulation, and that the influence of both types has grown in recent decades. Combining economic theory and historical narrative, this book offers a new perspective of the housing boom and the financial crisis, concluding with innovative policy proposals to reduce accumulation without compromising the benefits of a market economy.

This book presents a new statistical method of constructing a price index of a financial asset where the price distributions are skewed and heavy-tailed and investigates the effectiveness of the method. In order to fully reflect the movements of prices or returns on a financial asset, the index should reflect their distributions. However, they are often heavy-tailed and possibly skewed, and identifying them directly is not easy. This book first develops an index construction method depending on the price distributions, by using nonstationary time series analysis. Firstly, the long-term trend of the distributions of the optimal Box-Cox transformed prices is estimated by fitting a trend model with time-varying observation noises. By applying state space modeling, the estimation is performed and missing observations are automatically interpolated. Finally, the index is defined by taking the inverse Box-Cox transformation of the optimal long-term trend. This book applies the method to various financial data. For example, applying it to the sovereign credit default swap market where the number of observations varies over time due to the immaturity, the spillover effects of the financial crisis are detected by using the power contribution analysis measuring the information flows between indices. The investigations show that applying this method to the markets with insufficient information such as fast-growing or immature markets can be effective.

This book is a comprehensive, yet concise text that brings together all aspects of SME banking theories and empirical studies in one text. The book contains the latest policy debates on money creation and credit rationing and the relative role of demand-side and supply-side factors affecting SME financing. Readers will understand the borrower-specific, lender-specific and business environment drivers of bank finance for SMEs as well as the determinants of loan contract terms, particularly the risk premium and collateral. Readers will also understand how loan officers acquire proprietary information on SMEs and apply various lending techniques, such as financial statement lending, relationship lending and credit scoring to the loan underwriting process. In addition, the book also features recent trends on the rise of alternative finance intermediaries such as online peer-to-peer lenders and the competitive implications for traditional banks providing loans to SMEs. Findings from this work will thus be of particular interest to commercial bankers, bank-dependent small business borrowers as well as policy makers, and researchers in central banks, development banks, development agencies and international financial institutions.

New venture founders and their sponsors seek to create economic value by finding and commercializing new and better ways of doing things. Their common goal, which also defines the purpose of the entrepreneurial process itself, requires a better grasp of the key elements that influence the choices involved in attempting to create economic value under highly uncertain conditions. It also requires a deeper understanding of the consequences of new venture investment as well as the various contextual factors that influence investment decisions and venture outcomes. When confronted with a particular decision making problem faced by entrepreneurs and new venture investors, academic scholars analyze how and why the problem in question is a special case of some theory or model which they know. In seeking to detect generalities and to make abstracted sense of observed realities, academics generally classify the problem in a way that is a natural consequence of the specific discipline- or field-based knowledge they possess (Davidsson, 2002). The explanations that academic researchers provide and the predictions they make are therefore likely to be framed in terms of the types of variables, theoretical perspectives, levels of analysis, and research methodologies with which they are familiar. In seeking to explore the intellectual underpinnings of new venture investment, we have gathered and organized a set of papers that provide scholarly analysis of the choices involved in new venture investment as well as the various contextual factors that influence investment outcomes. To insure a more robust and hopefully interesting scholarly treatment of such problems, we sought to include a variety of interdisciplinary and international perspectives that reflect a broad range of theoretical and empirical approaches.

This edited volume seeks to provide a critical and technical look at international political economic indices (PEIs). It examines measurement issues, relates PEIs to economic theory, and suggests better measures than those currently used.

This book provides unique insights into the politics of finance and the socio-political relations which drive financial policymaking in Hong kong, Singapore, and Shanghai. While the existing literature in the field focuses mainly on economic explanations for financial centre development, this book fills a gap by focusing on the socio-political relations which underpin the financial policy-making process. Drawing on extensive interviews with senior policy-makers and financial sector professionals, the book describes how state-industry relations drive financial policy-making in three major financial hubs. Insights and policy recommendations drawn from these interviews will be particularly useful for policy-makers and financial sector professionals hoping to draw lessons from the successful development of the three leading Asian financial centres. Business and Politics in Asia's Key Financial Centres draws on public policy theoretical frameworks for its analytical basis. The three chapters focusing on the historical development of Hong Kong, Singapore, and Shanghai also provide a consolidated narrative with regard to the development of these three cities as leading financial centres, while also serving as independent case studies. Scholars focusing on policy processes and political factors that underpin financial sector development, as well as instructors and students of public policy, international political economy, and financial sector policy, will find this book useful for their research.