Regulation and Regulators, 1970–92

2020 ◽  
pp. 108-129
Author(s):  
Ranald C. Michie
Keyword(s):  
Financial Markets ◽  
Banking Sector ◽  
Central Banks ◽  
Financial Systems ◽  
Financial Flows ◽  
Financial Activity ◽  
Markets And Institutions ◽  
Divide And Rule ◽  
National Boundaries ◽  
Formal Controls

Before 1970 regulators had relied on the principle of divide and rule as a way of keeping financial systems in order. What this meant in practice was that even in market-based economies authority was exercised behind national boundaries, aided by controls on international financial flows, and by insisting upon a degree of internal compartmentalization not only between banks and markets but also within the banking sector. By the 1970s it was becoming apparent that a growing proportion of financial activity was taking place away from those centres, markets, and institutions over which regulators could exercise some control. The result led governments to abandon formal controls and regulators to search for ways of supervising financial markets. Increasingly the solution was seen to lie with the megabanks as they had the capacity to monitor and police their own behaviour, and were closely supervised by central banks.

Banks, Brokers, Bonds, and Currencies, 1970–92

2020 ◽  
pp. 36-56
Author(s):  
Ranald C. Michie
Keyword(s):  
Financial Markets ◽  
Exchange Rates ◽  
New World ◽  
Second World War ◽  
Financial Systems ◽  
Financial Activity ◽  
Divide And Rule ◽  
National Boundaries ◽  
Financial Transactions ◽  
Second World

After the Second World War governments prioritized banks over markets within both national and international financial systems. The result altered the balance between banks and financial markets firmly in the direction of the former. Banks responded by expanding, reaching a size and scale that allowed them to internalize financial transactions within a single organization. That position then changed from 1970 onwards with an end to the era of control and compartmentalization. The process of change involved the gradual removal of the national boundaries and segregated activities that had protected banks from competition. In this new world financial markets began to prosper. These included markets for stocks and bonds as well as the exponential growth of trading in foreign exchange as the regime of fixed exchange rates collapsed. This era saw the emergence of a new breed of megabanks that spanned the globe and engaged in all manner of financial activity. Serving their needs was a group of interdealer brokers who acted as intermediaries between these banks. The combination of the megabanks and the interdealer brokers undermined the ability of regulators to police both banks and financial markets through a policy of divide and rule.

Regulation and Regulators, 1993–2006

2020 ◽  
pp. 267-297
Author(s):  
Ranald C. Michie
Keyword(s):  
Financial Markets ◽  
Central Banks ◽  
Data Handling ◽  
Financial Systems ◽  
Settlement Systems ◽  
The Face ◽  
Implicit Belief ◽  
National Boundaries ◽  
Financial Transactions

By the 1990s the combination of internal deregulation and globalization led to a spectacular growth in the value of financial transactions both inside countries and across borders. There was a commensurate increase in pressure on payment and settlement systems to cope with the huge volume and variety of transactions. All this was of concern to those who regulated financial systems around the world. The speed and extent of the changes taking place, assisted by the advances made in the technology of communication and data handling, forced regulators to search for new ways of coping with the consequences, as the methods of the past were becoming inadequate. Globalization meant that national boundaries could no longer define the parameters within which financial systems operated, as all became integrated into international flows of short-term money and long-term finance. The complexities arose not only from the process of globalization and technological change but also from the disappearance of the barriers that had long separated different components within national financial systems. Rather than serving separate communities banks and financial markets increasingly competed with each other. In the face of these enormous changes regulators turned to the megabanks as a safe and secure way of monitoring and policing global financial markets. There was an implicit belief that the size and sophistication of these megabanks had made them to big to fail or even require the central banks to play a role as lenders of last resort.

Does Financial Development Lead to Employment and Growth?

2020 ◽  
pp. 1-20
Author(s):  
Murat Gündüz ◽  
Yunus Özyıldırım
Keyword(s):  
Financial Markets ◽  
Financial Development ◽  
Financial Institutions ◽  
Financial Systems ◽  
G7 Countries ◽  
Causality Test ◽  
Fund Flow ◽  
Markets And Institutions ◽  
Causality Relationship ◽  
The Uk

Financial systems, which play a major role in the development of the economy, are primarily helping to fund flow and assist in capital increase. In this study, frequency domain causality test, which was developed by Geweke and Hosoya and developed by Breitung and Candelon, was used to analyze the causality relationship by short, medium, and long periods. This test, which provides periodical examination, was investigated to determine the effect of G7 countries on employment and growth of financial institutions and markets index used to calculate financial development index. Among the G7 countries, the development of financial markets and institutions has been affecting employment in Canada (short-medium), Germany (medium-long), Japan (short-medium-long), and the UK (medium-long); in addition, when the effects of economic growth on financial markets and institutions are investigated, Canada (short-medium), France (medium), Italy (medium-long), America (medium-long), Germany (medium-long), Japan (short-medium-long), and UK (short-medium-long) were determined by analysis.

Banks and Brokers, 2007–20

2020 ◽  
pp. 390-425
Author(s):  
Ranald C. Michie
Keyword(s):  
Global Financial Crisis ◽  
Financial System ◽  
Central Banks ◽  
Financial Systems ◽  
Size Scale ◽  
Monetary Stability ◽  
Time Zones ◽  
Degree Of Control ◽  
National Boundaries ◽  
The Global Financial Crisis

Before the crisis the megabanks had established themselves at the centre of the world’s financial system, transcending national boundaries and time zones as they extended their operations around the globe. These banks also spread themselves over a growing diversity of activities that destroyed the compartmentalized structures of the past.Such was their size, scale, and spread, and the structure of the business they conducted, that these banks were regarded as too-big-to-fail not only by those who worked for them, used them, and traded with them but also by the regulators responsible for supervising financial systems and the central banks tasked with preserving financial and monetary stability. It was this world that appeared to evaporate with the Global Financial Crisis. That turned out not to be the case. Though curbs were placed on the megabanks they turned out to be indispensible in an age of globalization and the only available mechanism through which regulators and central banks could exercise a degree of control over the financial system. What remained after the crisis was a small number of even more powerful US-based megabanks along with an equivalent group of US-based megafunds.

Negative rates hold few positives for stock investors

2016 ◽  
Keyword(s):  
Monetary Policy ◽  
Financial Markets ◽  
Interest Rates ◽  
Business Models ◽  
Banking Sector ◽  
Equity Markets ◽  
Central Banks ◽  
Treasury Bonds ◽  
Content Type ◽  
Negative Interest Rates

Subject Financial markets turmoil and negative interest rates. Significance Global stocks are down 11.7% year-to-date in dollar terms and the yield on benchmark ten-year US Treasury bonds has hit a low of 1.66%. The turmoil in financial markets since the beginning of this year is partly attributable to investors' waning confidence in the effectiveness of central bank policy, and, in particular, that negative interest rate policies are exacerbating weaknesses in the banking sector. This is reducing the scope for a rally in equity markets, which have been overly reliant on the flow of cheap money from central banks. Impacts The strong yen will pose a severe challenge to the Japanese government's reflationary programme. While stock markets will remain sensitive to monetary policy, investors will perceive central banks as sources of volatility. The European financials sell-off stems from concerns about their earnings and business models, as opposed to a full-blown liquidity crisis.

scholarly journals Editorial: COVID-19: The unexpected and disruptive event that will radically shake up and change the world as we know it

2020 ◽  
Vol 10 (4) ◽  
pp. 4-6
Author(s):  
Ivo Pezzuto
Keyword(s):  
Financial Markets ◽  
Business Models ◽  
Investment Decisions ◽  
Central Banks ◽  
Risk Governance ◽  
Portfolio Investment ◽  
Financial Systems ◽  
Factors Affecting ◽  
And Control ◽  
The Impact

The fourth issue of the Risk Governance and Control: Financial Markets & Institutions journal (volume 10, issue 4) explores a number of stimulating subjects related to the future of finance, banking, and financial systems such as the impact of big banks’ digitalization and mergers and acquisitions (M&A) strategies on the sustainability of local banks’ business models and on their relationship with the territory; the factors affecting portfolio investment decisions in the emerging markets, or central banks’ mission to assure stability to the purchasing power of their currencies.

scholarly journals The Financial System in Albania

2015 ◽  
Vol 5 (2) ◽  
pp. 189
Author(s):  
Sanie Doda
Keyword(s):  
Financial Markets ◽  
General Public ◽  
Banking Sector ◽  
Financial System ◽  
Public Trust ◽  
Financial Intermediaries ◽  
Legal Basis ◽  
Financial Systems ◽  
Key Sectors

The Albanian public has gone through a lot of important economical crises and is still very sensitive from factors, even small ones that affect their beliefs in key sectors of the economy. However progress has been made towards the opinion of the general public, in recognition of the financial mediators and financial markets from a good part of the population, since public trust is important to a lot of sectors. Our financial system has gone through a lot of phases, starting from the fall of communism when the country entered a transition phase and the need of a new genuine financial system arose, since there was not any in existence, to continue with the need of development of the banking sector as the most important sector and while creating later a legal basis to help in the progress of this failed system.Developed countries constantly perfection their financial systems. It is astonishing how far they have gone and achieved in their development and in the regulation of some imperfections. Everything seems like it has an answer and the opportunities for investments are huge. Technology has also influenced because it has made everything easier. The role of financial intermediaries is well defined and they are precisely financial intermediaries that help in the regulation of imperfections of the financial markets, and the financial markets are structured in such a way that makes possible the realization of transactions and investments in an instant and very easy way and have a wide sufficient function. 

scholarly journals Financial supervision in EU countries

2007 ◽  
Vol 5 (1) ◽  
pp. 432-439 ◽  
Author(s):  
Enrico Maria Cervellati ◽  
Eleonora Fioriti
Keyword(s):  
Financial Markets ◽  
European Integration ◽  
Financial Supervision ◽  
European Level ◽  
Financial Systems ◽  
Member States ◽  
Supervisory System ◽  
Markets And Institutions ◽  
Legal Frameworks ◽  
The Eu

Today there are about thirty authorities supervising national financial markets and institutions in the EU-15 countries. The member States have chosen different models for supervising their financial systems. We describe the three main theoretical supervisory models proposed in the literature: vertical, horizontal, centralised. In practice, however, it is difficult to find a pure application of these models, while the actual supervisory systems are the result of the different legal frameworks of the member States and of the way in which their financial systems developed. Moreover, although the Lamfalussy Report can be considered an important step towards a more integrated financial supervisory system at the European level, the supervisory arrangements are still very different among member States. This work provides an analysis of the different systems of financial supervision in Europe: showing how the differences that still exist among their systems make it more difficult to achieve a real European integration in financial supervision

scholarly journals Banks: regulation and corporate governance framework

2008 ◽  
Vol 5 (2) ◽  
pp. 449-458 ◽  
Author(s):  
Maria Cristina Ungureanu
Keyword(s):  
Corporate Governance ◽  
Financial Markets ◽  
Banking Sector ◽  
Banking Industry ◽  
The European Union ◽  
Governance System ◽  
Financial Systems ◽  
Governance Framework ◽  
Corporate Governance System ◽  
European Union Countries

The banking sector industry is somewhat unique because it is simultaneously consolidating and diversifying. Banks’ major role in stabilising the financial systems of countries and in spurring their economic growth explains the particularities of their own corporate governance. The specificity of banks, the volatility of financial markets, increased competition and diversification expose banks to risks and challenges. The banking industry is heavily regulated and supervised in every country around the globe. This, in turn, establishes a particular corporate governance system. The paper lays out the specific attributes of banks that influence their regulatory and supervisory environment, which, in turn, creates a unique corporate governance framework for the banking industry. The paper emphasises the benefits and limits of regulations and supervision on banks’ corporate governance and focuses its empirical results on the European Union countries.

European Financial Markets and Institutions

2009 ◽  
Author(s):  
Jakob de Haan ◽  
Sander Oosterloo ◽  
Dirk Schoenmaker
Keyword(s):  
Financial Markets ◽  
Markets And Institutions
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