Legal Documents as Means of Financial Abstraction: How Bankers’ Lawyers Constructed Swaps and Changed Finance

2021 ◽  
pp. 1-27
Author(s):  
Pascale Cornut St-Pierre
Keyword(s):  
Financial Markets ◽  
Financial Instruments ◽  
Legal Documents ◽  
Contextual Elements

Abstract Finance rests on a process of abstraction, based on various material devices that have been studied by economic sociologists in recent years. The fact that many of those devices are legal in nature has not attracted much attention, even though financial instruments are typically embodied in legal documents. This paper argues that interactions involving legal documents shape both financial markets and their regulation, by specifying the contextual elements that will be deemed relevant in interpreting financial commitments. It takes as a case study the emergence of swaps since the 1980s. Through their work in standardizing, commenting, and litigating swaps contracts, bankers’ lawyers were able to recast obligations between banks and their clients in more abstract terms, discarding all references to specific business projects. Such abstraction simultaneously allowed the spectacular development of swaps markets, their positioning on the fringes of regulations, and the strengthening of bankers’ prerogatives against their clients.

Real-Estate Derivatives

2017 ◽  
Author(s):  
Radu S. Tunaru
Keyword(s):  
Real Estate ◽  
Financial Markets ◽  
Investment Banks ◽  
Financial Instruments ◽  
Stress Tests ◽  
Real World Data ◽  
No Arbitrage ◽  
New Frontier ◽  
Property Price ◽  
Comparative Description

This book brings together the latest concepts and models in real-estate derivatives, the new frontier in financial markets. The importance of real-estate derivatives in managing property price risk that has destabilized economies frequently in the last hundred years has been brought into the limelight by Robert Shiller over the last three decades. In spite of his masterful campaign for the introduction of real-estate derivatives, these financial instruments are still in a state of infancy. This book aims to provide a state-of-the-art overview of real-estate derivatives at this moment in time, covering the description of these financial products, their applications, and the most important models proposed in the literature in this area. In order to facilitate a better understanding of the situations when these products can be successfully used, ancillary topics such as real-estate indices, mortgages, securitization, and equity release mortgages are also discussed. The book is designed to pay attention to the econometric aspects of realestate index prices, time series, and also to financial engineering no-arbitrage principles governing pricing of derivatives. The emphasis is on understanding the financial instruments through their mechanics and comparative description. The examples are based on real-world data from exchanges or frommajor investment banks or financial houses in London. The numerical analysis is easily replicable with Excel and Matlab. This is the most advanced published book in this area, combining practical relevance with intellectual rigour. Real-estate derivatives will become important for managing macro risks in order to pass stress tests imposed by regulators.

Banking on Failure

2020 ◽  
Author(s):  
Richard S Collier
Keyword(s):  
Financial Markets ◽  
Financial Institutions ◽  
Current Position ◽  
Tax System ◽  
Number Of Factors ◽  
Tax Systems

This book seeks to explain why and how banks ‘game the system’. More specifically, its objective is to account for why banks are so often involved in cases of misconduct and why those cases often involve the exploitation of tax systems. To do this, a case study is presented in Part I of the book. This case study concerns a highly complex transaction (often referred to as ‘cum-ex’) designed to exploit a flaw at the intersection of the tax system and the financial markets settlements system. It was entered into by a very large number of banks and other financial institutions. A number of factors make the cum-ex transaction remarkable, including the sheer scale of the financial amounts involved, the large number of banks and financial institutions involved, the comprehensive failure of the controls infrastructure in this highly regulated sector, and the fact that authorities across Europe have found it so difficult to deal with the transaction. Part II of the book draws out the wider significance of cum-ex and what it tells us about modern banks and their interactions with tax systems. The account demonstrates why the exploitation of tax systems by banks is practically inevitable due to a variety of systemic features of the financial markets and of tax systems themselves. A number of possible responses to the current position are suggested in the final chapter.

Undoing the Legal Capacities of a Military Object: A Case Study on the (In)Visibility of Civilians

2017 ◽  
Vol 42 (02) ◽  
pp. 377-397 ◽  
Author(s):  
Martina Kolanoski
Keyword(s):  
Armed Conflicts ◽  
Membership Categorization Analysis ◽  
Sequential Approach ◽  
Object A ◽  
Legal Documents ◽  
Membership Categorization ◽  
Field Notes ◽  
Civil Proceeding ◽  
The Military

International law dictates that actors in armed conflicts must distinguish between combatants and civilians. But how do legal actors assess the legality of a military operation after the fact? I analyze a civil proceeding for compensation by victims of a German-led airstrike in Afghanistan. The court treated military video as key evidence. I show how lawyers, judges, and expert witnesses categorized those involved by asking what a “military viewer” would make of the pictures. During the hearing, they avoided the categories of combatants/civilians; the military object resisted legal coding. I examine the decision in its procedural context, using ethnographic field notes and legal documents. I combine two ethnomethodological analytics: a trans-sequential approach and membership categorization analysis. I show the value of this combination for the sociological analysis of legal practice. I also propose that legal practitioners should use this approach to assess military viewing as a concerted, situated activity.

scholarly journals The Architecture of Financial Networks and Models of Financial Instruments According to the “Just Transition Mechanism” at the European Level

2020 ◽  
Vol 13 (10) ◽  
pp. 235
Author(s):  
Otilia Manta ◽  
Kostas Gouliamos ◽  
Jie Kong ◽  
Zhou Li ◽  
Nguyen Minh Ha ◽  
...  
Keyword(s):  
Financial Markets ◽  
Financial Market ◽  
Research Priorities ◽  
Financial Instruments ◽  
Global Level ◽  
European Level ◽  
Support Tool ◽  
Eu Directive ◽  
Transition Mechanism ◽  
European Investment

At the global level and in particular the European level, challenges related to climate change and the transition to green transactions have created an imperative where identifying or developing innovative financial instruments, appropriate for these priorities, have become our research priorities and objectives. Starting from the analysis of the European Investment Plan for green transactions, as well as the EU Directive 2018/410 of the European Parliament and of the Council, in conjunction with ongoing efforts to identify innovative financing tools, research is presented based on hypotheses using concepts and models of green financing. The paper aims to analyze the main concepts and phenomena that could be considered generative factors for current financial market trends, as well as the inventory of facts and acts that provide a picture of the financial market. Based on these investigations, this paper suggest how we can best analyze the economic environment, processes, and resources in terms of their predictions regarding the sustainability of financial markets in the context of current challenges. Moreover, our paper aims to highlight in our empirical research the above-mentioned aspects, including the analysis of the emergence of new financial instruments at the global level with a direct impact on financial sustainability at the European level, including reflecting certain particularities of financial markets Romania. This research will be both a scientific contribution to the specialized literature and a possible support tool for the practical activities of entrepreneurs in their economic endeavor of developing sustainable businesses.

scholarly journals Analysing the Sway of Cash Instruments in the Indian Financial Market Context

2021 ◽  
Vol 10 (06) ◽  
pp. 01-04
Author(s):  
Bhumi Mehta
Keyword(s):  
Financial Market ◽  
Financial Instruments ◽  
Financial Instrument ◽  
Legal Documents ◽  
Financial Innovations ◽  
Monetary Value ◽  
Financial Products ◽  
Derivative Instruments ◽  
Different Types ◽  
Bill Of Exchange

There are basically four types of financial instruments viz. a bank deposit, a bill of exchange, a bond, and equity. As a result of a steady stream of financial innovations in today’s time, the market landscape is far less sparse-and far more complex to evaluate. Financial instruments are termed as the financial products which are tradable as packages of capital, each having their own unique characteristics and structure. The wide collection of financial instruments in today's marketplace allows for the efficient flow of capital amongst the world's investors. Financial instruments are legal documents that embody monetary value. There are a number of different types of documents that are properly identified as a financial instrument. There are different types of financial instrument, like cash instruments or derivative instruments.

scholarly journals TESTING THE EFFICIENCY MARKET HYPOTHESIS: AN EXAMPLE OD BOSNIA AND HERZEGOVINA

2019 ◽  
Vol 17 (1) ◽  
Author(s):  
Tijana Šoja ◽  
Zumreta Galijašević ◽  
Emina Ćeman
Keyword(s):  
Financial Markets ◽  
Bosnia And Herzegovina ◽  
Financial Market ◽  
Capital Market ◽  
Strong Influence ◽  
Weak Form ◽  
Financial Instruments ◽  
Price Movement ◽  
Run Test ◽  
Available Information

Governments of many countries, companies and business organizations last decades increasingly pay attention and recognize the importance of the capital market for economic growth and development. One of the factors that has strong influence on the capital market, as a platform for long-term borrowing and obtaining funds, is the price movement of financial instruments traded on capital market. The price movement of financial instruments is linked to the efficiency of the market, and is under strong influence of all available information about companies, which quickly reflect on the prices of financial instruments.Fama (1965) was one of the first economist who used term „efficient financial market“. He conducteda research on the financial market and pointed out that in an efficient market, on average, competition would cause that all effects of the latest market information will be included through the value of shares traded. The hypothesis of an efficient financial market suggests that the price of the shares, financial instruments, reflects all available information, so investor cannot realize extra profits if he has some certain insider information or on the basis of publicly available historical data and information. Many investors are trying to find those securities that are underestimated, and for which is expected to growth in the future. In a case of efficient financial market, it is quite impossible to find underestimated securities because information quickly incorporated into the price of securities. Ttesting of the efficiency of financial market is largely present in the developed markets, while somewhat weaker tests have been carried out on the examples of transitional financial markets. In published researches it is most often confirmed that transition countries have or have had poorly performing financial markets, especially in the initial stages of their development (Bahmani-Oskooee et al, 2016; Kvedaras and Basdevant, 2002).In this research we are testing the efficient market hypothesis for the financial market in Bosnia and Herzegovina. We tested hypothesis that the financial market is weakly efficient. For this test we are using stock index data from the Sarajevo and Banja Luka Stock Exchange, SASX10, BIRS and BATX index. The analysis includes daily, weekly and monthly index movements from 2006 to August 2018, for SASX 10 and BIRS indices, while BATX data is available from 2009 until August 2018. In the first step we calculate returns for all periods (deily, weekly and montly) between indicies and in another step we tested autocorrelation between their returns.Efficient market hypothesis has been tested through three statistical tests: autocorrelation test, run test and variance test. The results obtained by applying different tests do not give a single answer to the question whether financial market in Bosnia and Herzegovina perform at a low level of efficiency. Auto-correlation tests reject the hypothesis of weak form market efficiency,while the run test and the test of variance ratios confirm the weak form of market efficiency. Such findings suggest that it is not possible, with sufficient precision, to predict trends in the financial market in Bosnia and Herzegovina.

A review of innovative bond instruments for sustainable development in Asia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nisha Prakash ◽  
Madhvi Sethi
Keyword(s):  
Sustainable Development ◽  
Private Sector ◽  
Financial Markets ◽  
Financial Instruments ◽  
Content Type ◽  
Global Institutions ◽  
Country Level ◽  
2030 Agenda ◽  
Asian Economies ◽  
Sustainable Finance

Purpose Advancing the economies in Asia toward meeting sustainable development goals (SDGs) needs an unprecedented investment in people, processes and the planet. The participation of the private sector is necessary to bridge the financing gap to attain this objective. Engaging the private sector can contribute significantly to attaining the 2030 agenda for SD. However, the financial markets in Asian economies are yet to realize this potential. In this context, this paper aims to discuss the state of finance for SD in Asia and identifies innovative financial instruments for attracting private investments for SDs in these economies. Design/methodology/approach This study relies on published articles, reports and policy documents on financing mechanisms for SD. The literature review covered journal data sources, reports from global institutions such as the UN, World Bank, International Monetary Fund and think-tanks operating in the field of climate change policies. Though the topic was specific to financial market instruments, a broader search was conducted to understand the different sources of sustainable finance available, particularly in Asia. Findings The investments that are required for meeting the SDGs remain underfunded. Though interest in sustainability is growing in the Asian economies, the financial markets are yet to transition to tap the growing interest in sustainable investing among global investors. This paper concludes that to raise capital from private investors the Asian economies should ensure information availability, reduce distortions and unblock regulatory obstacles. It would also need designing policies and introducing blended financing instruments combining private and public funds. Research limitations/implications Though the study has grouped Asian economies, the financing strategy for SDGs should be developed at the country-level considering the domestic financial markets, local developmental stage, fiscal capacity and nationally determined contributions. Further research can focus on developing country-specific strategies for using innovative financial instruments. Originality/value Mobilizing funds for implementing the 2030 Agenda for SD is a major challenge for Asian economies. The paper is addressed to national policymakers in Asian economies for developing strategies to raise capital for SD through private participation. It provides opportunities for revisiting national approaches to sustainable finance in these economies.

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