The Capital Markets Union and Firms’ Access to External Market-Based Finance

2018 ◽  
Author(s):  
Paola Bongini ◽  
Annalisa Ferrando ◽  
Emanuele Rossi ◽  
Monica Rossolini
Keyword(s):  
Financial Markets ◽  
Capital Markets ◽  
Capital Market ◽  
Action Plan ◽  
Business Environment ◽  
Current Debate ◽  
Capital Markets Union ◽  
Country Specific ◽  
The Eu

Firms’ access to capital markets among Eurozone countries is a challenging issue for the EU Capital Markets Union (CMU) agenda. We contribute to the current debate on the CMU by identifying the characteristics of firms that can be deemed ‘suitable’ for market-based finance. Using survey-based research, we show which firm-specific attributes and country-specific features foster a firm’s likelihood of accessing non-bank sources of finance. Our results reveal that a few Eurozone countries appear to have achieved high access to capital market financing, but there is substantial unexploited potential among firms fit for market-based finance. Our research also indicates that the macro business environment and conditions—such as GDP growth, the degree of development of domestic financial markets, and the quality of the legal and judicial enforcement system—significantly impact firms’ market suitability. Our results therefore can be linked to a number of goals of the CMU Action Plan.

Ceci n’est pas un Capital Markets Union: Re-establishing EU-led financialization

2020 ◽  
Vol 24 (3-4) ◽  
pp. 248-267
Author(s):  
Nina Haerter
Keyword(s):  
Financial Markets ◽  
Capital Markets ◽  
Market Integration ◽  
Policy Documents ◽  
Policy Initiatives ◽  
Financial Products ◽  
Capital Markets Union ◽  
The Many ◽  
Integration Project ◽  
The Eu

In the 11 years since the outbreak of the financial crisis, the EU has introduced many policy initiatives directed at the financial sector, the most recent one being the Capital Markets Union. The official aim is to integrate Europe’s financial markets, fulfilling decades-old wishes for a Single Market for capital. Some scholars have already voiced concerns about different elements of Capital Markets Union since its inception in 2015, but the extent to which this critique was generalizable remained unclear. Through an analysis of policy documents and interview data inspired by the ‘What’s the Problem Represented to be?’-approach, this paper reveals two common threads among the many Capital Markets Union proposals, which are not explicitly acknowledged: a reduction of prudential rules and various forms of incentivizing financial products with public funds. It is therefore argued that Capital Markets Union is not a market integration project (as its name and official narrative suggest), as much as it is the re-establishment of EU-led financialization, following a long tradition of asymmetrical integration in the Union.

Capital Markets Union, Third Countries, and Equivalence

2018 ◽  
Author(s):  
Niamh Moloney
Keyword(s):  
Financial Market ◽  
Capital Markets ◽  
Capital Market ◽  
Free Trade Agreement ◽  
Trade Agreement ◽  
Regulatory Requirements ◽  
Governance Regime ◽  
Financial Governance ◽  
Capital Markets Union ◽  
The Eu

The EU currently manages access by non-EU/-EEA states to the EU financial market through its ‘third country’ rules, which typically require that the financial governance regime of the state in question is ‘equivalent’ to the EU regime. However, the UK's departure from the EU by 31 March 2019 has raised questions about how UK, as a ‘third country,’ ensures access to the EU financial market, and how a related Free Trade Agreement (FTA) might be configured. This chapter first considers the current regulatory requirements governing third country access to the EU capital market and their implications for the Capital Markets Union. It then examines the evolution of third country/equivalence-related techniques internationally for capital markets and how they might be relevant for the EU. It also speculates as to how the EU's equivalence arrangements for third countries are likely to develop, including in the context of an EU/UK FTA.

scholarly journals Market-Based Finance, Debt and Systemic Risk: A Critique of the EU Capital Markets Union

2018 ◽  
Vol 0 (0) ◽  
Author(s):  
Vincenzo Bavoso
Keyword(s):  
Financial Markets ◽  
Capital Markets ◽  
Firm Level ◽  
Bretton Woods ◽  
The Past ◽  
Regulatory Changes ◽  
Financing Channels ◽  
Capital Markets Union ◽  
Regulatory Measures ◽  
The Eu

Abstract Modern, globalised financial markets are the offspring of a process of liberalisation of capital that started with the collapse of Bretton Woods in the 1970s and culminated with a number of regulatory changes in the 1980s and 1990s. As a consequence of that process, financial markets have grown dramatically and become increasingly integrated at a global level. Importantly, the growth and innovation that occurred over the past decade has taken place in the realm of capital market finance, and in particular in the context of market-based channels that revolved chiefly around securitisation and repo transactions. As a result, new debt transactions and products have been engineered since the 1980s. This article contends that, contrary to conventional belief, the excessive development of market-based channels of finance has been one of the catalysts behind the crises and scandals exploded over the past fifteen years. In particular, the employment of innovative debt transactions was instrumental to the creation of excessive levels of risk-taking and leverage. These had catastrophic consequence, both at firm level and at systemic level. Notwithstanding the regulatory measures that have been enacted over the past fifteen years, the way in which debt transactions in capital markets are designed and entered into remains lightly or indirectly regulated. Moreover, regulators have so far neglected the role that leverage and debt creation have in the economy and the consequence that these phenomena have on the wider social context. On the contrary, recently the EU has promoted the implementation of an old design, namely the Capital Markets Union (CMU). This revolves around market-based forms of financing, which should represent an alternative to the traditionally predominant (in Europe) bank-based financing channels. This article contends that the CMU framework fails to appreciate the dangers associated with capital markets finance and its ensuing debt creation effects. It argues that, despite some regulatory efforts, a suitable architecture for the regulation of market-based channels of finance is still missing.

A Global Perspective on Securitized Debt

2018 ◽  
Author(s):  
Steven L Schwarcz
Keyword(s):  
United States ◽  
Financial Crisis ◽  
Capital Market ◽  
Global Financial Crisis ◽  
The United States ◽  
Global Perspective ◽  
Capital Markets Union ◽  
The Global Financial Crisis ◽  
Asset Backed Securities ◽  
The Eu

Securitisation represents a significant worldwide source of capital market financing. European investors commonly invest in asset-backed securities issued in U.S. securitisation transactions, and vice versa One of the key goals of the European Commission's proposed Capital Markets Union (CMU) is to further facilitate securitisation as a source of capital market financing as a viable alternative to bank-based finance for companies operating in the EU. To that end, this chapter explains securitisation and attempts to put its rise, its decline after the global financial crisis, and its recent CMU-inspired revival into a global perspective. It examines not only securitisation's relationship to the financial crisis but also post-crisis comparative regulatory approaches in the EU and the United States.

The Role of Financial Innovation in EU Market Integration and the Capital Markets Union

2018 ◽  
Author(s):  
Emilios Avgouleas
Keyword(s):  
Capital Markets ◽  
Risk Sharing ◽  
Market Integration ◽  
Financial Innovation ◽  
The European Union ◽  
Recent Developments ◽  
Capital Markets Union ◽  
Critical Overview ◽  
The Eu

This chapter offers a critical overview of the issues that the European Union 27 (EU-27) will face in the context of making proper use of financial innovation to further market integration and risk sharing in the internal financial market, both key objectives of the drive to build a Capital Markets Union. Among these is the paradigm shift signalled by a technological revolution in the realm of finance and payments, which combines advanced data analytics and cloud computing (so-called FinTech). The chapter begins with a critical analysis of financial innovation and FinTech. It then traces the EU market integration efforts and explains the restrictive path of recent developments. It considers FinTech's potential to aid EU market integration and debates the merits of regulation dealing with financial innovation in the context of building a capital markets union in EU-27.

Capital Markets Union after Brexit

2018 ◽  
Author(s):  
Danny Busch ◽  
Emilios Avgouleas ◽  
Guido Ferrarini
Keyword(s):  
Capital Markets ◽  
Action Plan ◽  
Economic Perspective ◽  
Institutional Investment ◽  
Fully Integrated ◽  
Cross Border ◽  
Better Regulation ◽  
Capital Markets Union ◽  
To Come ◽  
General Aspects

In line with the European Commission's wish to create fully integrated European capital markets, its Capital Markets Union (CMU) Action Plan is intended to make it easier for providers and receivers of funds to come into contact with one another within Europe, especially across borders. This book discusses various aspects of CMU from a legal and/or economic perspective. The chapters are grouped in a thematic way, covering the following areas: (i) general aspects, (ii) Brexit, (iii) financing innovation, (iv) raising capital on the capital markets, (v) fostering retail and institutional investment, (vi) leveraging banking capacity to support the wider economy, and (vii) facilitating cross-border investing. This chapter outlines some general aspects of CMU that are not explicitly covered by the other chapters in this book: (1) the CMU objectives, (2) the EBU–CMU relationship, (3) regulatory burden, and (4) Better Regulation and the Call for Evidence.

The Capital Market Authority Effectiveness in the Regulation of Financial Markets perspectives from the financial sector actors

2012 ◽  
Vol 02 (11) ◽  
pp. 15-24
Author(s):  
Charles Kombo Okioga
Keyword(s):  
Financial Markets ◽  
Financial Market ◽  
Capital Markets ◽  
Capital Market ◽  
Financial Regulation ◽  
International Standards ◽  
Market Regulation ◽  
Financial Market Regulation ◽  
Market Participants ◽  
New Business

Capital Market Authority in Kenya is in a development phase in order to be effective in the regulation of the financial markets. The market participants and the regulators are increasingly adopting international standards in order to make the capital markets in sync with those of developed markets. New products are being introduced and new business lines are being established. The Capital Markets Authority (Regulator) is constantly reviewing existing regulations and recommending changes to regulate the market properly. Business lines and activities are being harmonized by market participants to provide a one stop solution in order to meet the financial and securities services needs of the investors. The convergence of business lines and activities of market intermediaries gives rise to the diversity of a firm’s business operations to meet multiplicity of regulations that its activities are subject to. The methodology used in this study was designed to examine the relationship between capital markets Authority effective regulation and the performance of the financial markets. The study used correlation design, the study population consisted of 30 employees in financial institutions regulated by Capital Markets Authority and 80 investors. The study found out that effective financial market regulation has a significant relationship with the financial market performance indicated by (r=0.571, p<0.01) and (r=0.716, p≤0.01, the study recommended a further research on the factors that hinder effective financial regulation by the Capital Markets Authority.

Corporate Governance and Accountability in the Age of Multilevel Governance in Turkey

2019 ◽  
pp. 117-139
Author(s):  
Gülşah Atağan
Keyword(s):  
Corporate Governance ◽  
Financial Markets ◽  
Capital Markets ◽  
Capital Market ◽  
Multilevel Governance ◽  
Governance Environment ◽  
Commercial Code ◽  
Governance Practices ◽  
Turkish Commercial Code ◽  
Legal Infrastructure

Corporate governance and accountability are getting more and more important both for world and Turkish economies thanks to increasing competitiveness conditions among companies. Applications of corporate governance principles can show differences from country to country. In Turkey, The Capital Markets Board issued corporate governance principles in 2003 to improve the corporate governance environment and integrate the Turkish capital market with global financial markets. The board has also adopted these principles in 2005 and made them final. The new Turkish Commercial Code is based on corporate governance principles. The new Turkish Commercial Code constitutes the legal infrastructure for corporate governance practices.

Part II The New EU Prospectus Rules, 9 The Contents of the Prospectus: Non-Financial Information and Materiality

2020 ◽  
Author(s):  
de Serière Victor
Keyword(s):  
Capital Markets ◽  
Investor Protection ◽  
Tort Law ◽  
Financial Information ◽  
Good News ◽  
Level Playing Field ◽  
Playing Field ◽  
Prospectus Liability ◽  
Capital Markets Union ◽  
The Eu

This chapter addresses the non-financial information to be included in a prospectus, alongside an analysis of the fundamental concept of materiality. It examines some issues relating to non-financial information to be included in a prospectus under the new EU prospectus regime. A level playing field in terms of uniform investor protection within the EU accordingly has regrettably not been achieved. This chapter argues that the Prospectus Regulation could have achieved more by requiring Member States to impose certain uniform tort law requirements in their national prospectus liability regimes. Another topic addressed in this chapter relates to the possibility for offerors of securities to obtain liability protection by including exoneration clauses in prospectuses. The Prospectus Regulation does not regulate this topic, but the analysis in this chapter shows that the possibilities appear to be severely limited; practice in any event shows that exoneration is seldom (if ever) stipulated. The chapter concludes that all this appears to be relatively good news in terms of investor protection generally, but the lack of harmonisation stands in the way of a unified EU capital markets union.

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