scholarly journals Review Paper on Composite Leading Index Creation for Forecasting the Bangladeshi Financial Sector

2020 ◽  
Vol 9 (4) ◽  
pp. 23-32
Author(s):  
Maria Afreen
Keyword(s):  
Financial Market ◽  
Asset Management ◽  
Systemic Risk ◽  
Stress Test ◽  
Financial System ◽  
Financial Sector ◽  
Hazard Model ◽  
Capital Adequacy ◽  
Policy Makers ◽  
The Impact

In perspective of the economic vulnerability faced by banks in financial sector, this study mirrors the methodology used by Shumway (2001) – the dynamic hazard model that is able to forecast systemic risk in financial market arena. Here, the terminology followed is based on the CAMELS framework variables: capital adequacy, asset, management, earnings, liquidity and sensitivity to market risk. The objective of this study is to construct a macroprudential indicator (MPI) for the case of Bangladeshi financial market. The result will then be tested for robustness with macro-stress test. Lagged independent variables will be used in the simple hazard model to allow early prediction of MPI in the year in which the crisis happens. The empirical findings can be used as a guideline for the Bangladesh Government and policy makers in accessing, examining and forecasting the health of the Bangladeshi financial system and formulate suitable financial system policies for control. MPI generates information about systemic risk allowing the detection of potential economic crises functioning as an early warning indicator. Government and policy makers will be able to make early preparation in cushioning any potential crises by means of the MPI. Thus the impact of the crises could be minimized and eventually reduce its impact on the Bangladesh economy. The specific objectives are to assemble a novel MPI that is able to recommend early signals of financial market vulnerability, to identify the MPI turning points and establish a comprehensive reference chronology for Bangladeshi financial market and to evaluate the predictive performance of newly constructed MPI on characterizing Bangladeshi financial sector.

Impact of regulatory announcements on systemic risk in the Indian telecom sector

2018 ◽  
Vol 13 (5) ◽  
pp. 1395-1416 ◽  
Author(s):  
Sushma Priyadarsini Yalla ◽  
Som Sekhar Bhattacharyya ◽  
Karuna Jain
Keyword(s):  
Risk Premium ◽  
Systemic Risk ◽  
Service Providers ◽  
Policy Makers ◽  
Content Type ◽  
Risk Premiums ◽  
Buffering Hypothesis ◽  
Research Findings ◽  
Telecom Sector ◽  
The Impact

Purpose Post 1991, given the advent of liberalization and economic reforms, the Indian telecom sector witnessed a remarkable growth in terms of subscriber base and reduced competitive tariff among the service providers. The purpose of this paper is to estimate the impact of regulatory announcements on systemic risk among the Indian telecom firms. Design/methodology/approach This study employed a two-step methodology to measure the impact of regulatory announcements on systemic risk. In the first step, CAPM along with the Kalman filter was used to estimate the daily β (systemic risk). In the second step, event study methodology was used to assess the impact of regulatory announcements on daily β derived from the first step. Findings The results of this study indicate that regulatory announcements did impact systemic risk among telecom firms. The study also found that regulatory announcements either increased or decreased systemic risk, depending upon the type of regulatory announcements. Further, this study estimated the market-perceived regulatory risk premiums for individual telecom firms. Research limitations/implications The regulatory risk premium was either positive or negative, depending upon the different types of regulatory announcements for the telecom sector firms. Thus, this study contributes to the theory of literature by testing the buffering hypothesis in the context of Indian telecom firms. Practical implications The study findings will be useful for investors and policy-makers to estimate the regulatory risk premium as and when there is an anticipated regulatory announcement in the Indian telecom sector. Originality/value This is one of the first research studies in exploring regulatory risk among the Indian telecom firms. The research findings indicate that regulatory risk does exist in the telecom firms of India.

scholarly journals Financial system and growth and economic development

VUZF Review ◽  
2021 ◽  
Vol 6 (2) ◽  
pp. 160-170
Author(s):  
Małgorzata Hala
Keyword(s):  
Economic Growth ◽  
Economic System ◽  
Financial Institutions ◽  
Financial System ◽  
Financial Sector ◽  
Real Sector ◽  
The Real ◽  
State And Local ◽  
The Impact

The aim of the article is to present the role of the financial system in economic growth and development. The first part presents the traditional understanding of the relationship between the economic system and economic growth. The second part presents the experience of financial crises and their impact on the conversation on the mutual relations between the financial sector and the real sector. The third part shows the role of the state in the financial system. The article describes the arrangement of interrelated financial institutions, financial markets and elements of the financial system infrastructure.  It shows what part of the economic system the financial system is, and whether it enables the provision of services allowing the circulation of purchasing power throughout the economy. The article presents the important role of the financial system, the role related to the transfer of capital from entities with savings to entities that need capital for investments. It shows the financial system as a set of logically related organizational forms, legal acts, financial institutions and other elements enabling entities to establish financial relations in the real sector and the financial sector, and this system forms the basis of activity for entities using money, enabling the conclusion of various economic transactions, in which money performs various functions. The article also presents the concept of a financial crisis as a situation in which there are rapid changes in the financial market, usually associated with insufficient liquidity or insolvency of banks or financial institutions, and as a result, a decrease in production or its deepening. The article also includes issues related to the impact of public authorities (state and local authorities) on the financial system in the economy.

Anti-money laundering – the need for intelligence

2017 ◽  
Vol 24 (3) ◽  
pp. 472-479 ◽  
Author(s):  
Richard John Lowe
Keyword(s):  
Money Laundering ◽  
Organized Crime ◽  
Financial Services ◽  
National Level ◽  
Financial Sector ◽  
International Standards ◽  
Policy Makers ◽  
Content Type ◽  
The Military ◽  
The Impact

Purpose The purpose of this paper is to highlight the need for predictive intelligence to support anti-money laundering programs in the financial sector. Design/methodology/approach The methodology adopted herein consists of a literature review on the use of intelligence in anti-money laundering, the sources of intelligence and information used in the financial sector, supported by experience gained from investigating and prosecuting money laundering cases, and the assistance provided to financial services companies. Findings Banks and other regulated services are required to meet international standards to deny services to criminals and terrorists, identify suspicious activity and report to the authorities. Regulated businesses have large operations which check customers against sources that confirm their identity or against lists of proscribed or suspected offenders at an individual or national level. Their controls tend to look backwards when other organisations that rely on intelligence, such as the military, value predictive, forward-looking intelligence. The penalties that banks and others face for failure in their controls are increasingly severe, as looking backwards and not forwards reduces the extent to which the controls meet their purpose of reducing the impact of organized crime and terrorism. Originality/value This paper serves as a useful guide to alert and educate anti-money laundering professionals, law enforcement and policy makers of the importance of predictive intelligence in countering organized crime and terrorism. It also considers whether lessons in intelligence handling from other areas can inform a debate on how intelligence can be developed to counter money laundering.

scholarly journals Analysis of Financial Sector Reforms and Impacts: Reflections from Pakistan

2011 ◽  
Vol 3 (2) ◽  
pp. 91-102
Author(s):  
Ali Raza ◽  
Muhammad Usman . ◽  
Muhammad Akram .
Keyword(s):  
Economic Growth ◽  
First Generation ◽  
Financial Sector ◽  
Financial Indicators ◽  
Policy Makers ◽  
Future Studies ◽  
Financial Restructuring ◽  
Sector Performance ◽  
The Government ◽  
The Impact

The purpose of this paper is to examine all efforts made by the Government of Pakistan in order to uplift the efficiency of financial sector through financial restructuring institutions such as banks, as well as to recognize the impact of these reforms on various financial indicators. Results of this study suggested that financial sector performance was very much better after the completion of first generation reforms but many new reforms are still required for macroeconomic stability and economic growth of Pakistan. This was the first attempt made by researcher in which detailed discussion was provided about financial sector reforms and it will help out the policy makers while developing policies for future and it will enhance the knowledge of economists and all other beneficiaries as well. Moreover, discussion for further reforms and gap for future studies was also provided.

scholarly journals FINANCIAL MARKET STABILITY – KEY LEVER ECONOMIC DEVELOPMENT OF THE STATE

2021 ◽  
Author(s):  
Inna Aleksieienko ◽  
Svitlana Leliuk ◽  
Olga Poltinina
Keyword(s):  
Gross Domestic Product ◽  
Financial Market ◽  
Banking Sector ◽  
Equity Capital ◽  
The State ◽  
Capital Adequacy ◽  
Domestic Product ◽  
Bank Capital ◽  
International Liquidity ◽  
The Impact

Economic issues of the state's development at the present stage, largely depend on the development of the financial sphere. That is dictated by the reduction of the role of the real sector in the economy of the development of the state. Based on the experience of developed countries, we can state that the functioning of the effective banking system is the lever of development of the country's economy. The modern Ukrainian economy still cannot demonstrate the adequacy of the development of the financial market. The banking sector is most effective in this area. The issue of regulating the adequacy of bank capital is also relevant for the Ukrainian economy. The solution of this issue, to a certain extent, is embedded in the process of Ukraine's implementation of international standards for regulating the activities of banks. In this direction, the NBU has developed a program of measures to update regulatory requirements for banks. The paper argues the feasibility of a bank-centric financial market model for Ukraine. An analysis of the dynamics of the formation of bank capital has been carried out. The indicators of its sufficiency are considered separately. The results of the analysis of the compliance of Ukrainian banks with international liquidity standards are presented. Analysis of banks' capital security, dynamics of its absolute values with the rate of formation of gross domestic product was carried out. The bank's capital adequacy indicators are used as criteria for assessing their stability. The methodology used to assess the relationship between banks' equity and gross domestic product through sensitivity ratio (β). The level of communication between the indicators was determined by the value of the correlation ratio. Separately, an analysis of the impact of banks' equity on the level of gross domestic product for individual periods was carried out. The purpose of this analysis is to find out the peculiarities of banks' activities. As a result, it was proved that there is a connection between the indicator of the level of banks' equity capital and the gross domestic product. Additionally, the article describes the problems that hinder the development of the financial market in Ukraine. Government support for the banking sector is the basis for its development.

Systemic Risk in Financial Services

2011 ◽  
Vol 16 (2) ◽  
pp. 195-300 ◽  
Author(s):  
D. Besar ◽  
P. Booth ◽  
K. K. Chan ◽  
A. K. L. Milne ◽  
J. Pickles
Keyword(s):  
Financial Markets ◽  
Systemic Risk ◽  
Financial Services ◽  
Financial Crises ◽  
Financial System ◽  
Policy Makers ◽  
Large Aggregate ◽  
The Past ◽  
Markets And Institutions ◽  
Aggregate System

AbstractThe current banking crisis has reminded us of how risks materialising in one part of the financial system can have a widespread impact, affecting other financial markets and institutions and the broader economy. This paper, prepared on behalf of the Actuarial Profession, examines how such events have an impact on the entire financial system and explores whether such disturbances may arise within the insurance and pensions sectors as well as within banking. The paper seeks to provide an overview of a number of banking and other financial crises which have occurred in the past, illustrated by four case studies. It discusses what constitutes asystemicevent and what distinguishes it from a large aggregate system wide shock. Finally, it discusses how policy-makers can respond to the risk of such systemic financial failures.

Funny Money or Legitimate Finance? Shadow Banking and Policy Impacts in China

2021 ◽  
pp. 000276422110200
Author(s):  
Sara Hsu ◽  
Xun Han
Keyword(s):  
Banking Sector ◽  
Banking System ◽  
Financial System ◽  
Financial Sector ◽  
Banking Regulation ◽  
Shadow Banking ◽  
Data Set ◽  
Money Flows ◽  
Shadow Banking System ◽  
The Impact

Government officials in China have taken different views regarding shadow banking. Some have seen the industry as overly risky, potentially undermining the formal financial system, while others have asserted that it is an increasingly important part of the financial system, filling a gap in finance provision to particular sectors and smaller firms. Do their views matter? Regulators have striven to crack down on the riskiest practices in shadow banking, but are the policies effective? In this article, we analyze the impact of government attitudes and actions on the shadow banking sector. Using a unique data set based on information collected from various sources in a difference-in-difference model, we find that shadow banking regulation plays a strong role in China’s financial sector, while contradictory government views (in the form of commentary in the People’s Daily) on shadow banking do not. This reveals that shadow banking is strongly affected by political authority when it is codified into regulation. Only some aspects of shadow banking can be legitimized through regulation, while the remainder of China’s financial system remains constrained due to state dominance over the financial sector. This underscores the “funny” nature of shadow banking’s money flows. This article is one of the first to study the effects of government views and regulations on the shadow banking system.

scholarly journals THE IMPACT OF CYBER THREATS ON THE FINANCIAL SYSTEM ON THE EXAMPLE OF EU COUNTRIES

2021 ◽  
Vol 2021 (2) ◽  
Author(s):  
V. Bozhenko ◽  
V. Koibichuk ◽  
M. Gabenko
Keyword(s):  
European Union ◽  
Bibliometric Analysis ◽  
Financial Institutions ◽  
Financial System ◽  
Financial Sector ◽  
The European Union ◽  
Market Strategy ◽  
Cyber Threats ◽  
Study Results ◽  
The Impact

Exponential growth in the number of cyber frauds in the financial sector and their intellectualization leads to large-scale negative consequences of both financial (loss of funds by financial institutions and their customers, the bankruptcy of financial institutions, lack of tax revenues) and public (theft of personal data of consumers of financial services, reduction the level of business reputation of financial institutions, loss of public confidence in the security and reliability of financial transactions). The study used methods of systematization, comparison, structural analysis, logical generalization, bibliometric analysis (using VOSviewer 1.6.15) and methods of vertical, horizontal, financial, and trend analysis of the data set to assess the dynamics and trends of cybercrime in the financial system of the European Union. To determine the most relevant publications on this issue, the authors conducted a bibliometric analysis of scientific papers indexed by the Scopus database from 2015 to 2021. According to the study results, the expediency of separating 6 clusters by the results of scientific research, the authors of which are represented from 34 countries. The article analyzes the dynamics and trends of cybercrime in the financial sector of the European Union. Cybersecurity measures are summarized in terms of state security agencies, financial monitoring services, the Directorate General of Informatics. Cybersecurity features high on the list of the priorities of the European Commission: trust and security are at the core of the Digital Single Market Strategy, while the fight against cybercrime is one of the three pillars of the European Agenda on Security. The authors of the article emphasize that the development of digital technologies leads to an increase in the scale of cyber threats, which require prompt and timely detection, assessment, and development of appropriate measures to prevent them or minimize the possible consequences. The practical value of the study lies in the use of state regulation, supervision, and control in the development of a system of counteraction to information risks that threaten the public interest.

scholarly journals Evaluation of derivatives impact to early systemic risk of Euro area

2020 ◽  
Vol 4 (1) ◽  
pp. 62-71
Author(s):  
Rima Žitkienė ◽  
Valdas Grigonis ◽  
Pavlo Burak
Keyword(s):  
Regression Analysis ◽  
Euro Area ◽  
Systemic Risk ◽  
Linear Regression Analysis ◽  
Financial System ◽  
Financial Derivatives ◽  
Size Factor ◽  
Financial Instruments ◽  
Systemic Crisis ◽  
The Impact

Introduction. Evaluation of systemic risk is very complicated, as it is difficult to accurately predict the extent of the links between various institutions, and the possible spread and scale of the country's systemic risk. In addition, the country's systemic crisis is affected by many factors, many elements of the financial system. Financial derivatives are one of many elements of financial system, and the market of financial derivatives is huge compared to other financial instruments. The impact of financial derivatives to economies of various countries has been widely studied, however, the research on their impact to countries‘ early systemic risk remains under-researched. For this reason, assessment of the impact of derivative financial instruments on the early systemic risk is very relevant. Aim and tasks. The purpose of the article is to assess the impact of financial derivatives on the country's early systemic risk in the Euro area region. Results. It is shown that correlation fluctuates between weak-strong level, when analyzing relationship between various factors of financial derivatives and early systemic risk in the Euro area. Results of linear regression analysis prove that the group of financial derivatives independent variables (interconnection, size, liquidity, complexity, stability, leverage) can be used to reliably estimate the dependent variable (early systemic risk). Logistic regression analysis also provides similar results to the linear regression analysis. Additionally, it is shown, that logistic regression is more suitable to analyze impact on early systemic risk. Analysis of impact of individual financial derivatives factors to early systemic risk demonstrate, that three financial derivatives factors – size, complexity, and leverage – may be the best predictors of an impending systemic crisis. Among these factors, the size factor has the largest impact on early systemic risk of the Euro area, and complexity factor shows improved statistical parameters, which indicates, that this parameter is more suitable to be used in early warning system models. Conclusions. The use of financial derivatives has strong impact on early systemic risk in the Euro area. The size factor of financial derivatives indicates the highest probability of an impending systemic crisis. Nevertheless, complexity factor of financial derivatives is the only statistically significant factor, that has an impact on early systemic risk. The results suggest that the inclusion of these factors in the systemic risk assessment models, which are developed by researchers, could increase the accuracy of the models. It is noted, that country’s systemic risk may not necessarily arise in financial derivatives, because there are many different financial products in the financial system. As a result, other financial instruments could also be the subject to further research by scientists. The inclusion of factors of various financial instruments could help to better identify the risks of impeding systemic crisis in systemic risk assessment models.

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