scholarly journals ETHICAL FINANCE AS A SYSTEMIC CHALLENGE: RISK, CULTURE, AND STRUCTURE

2018 ◽  
Author(s):  
Saule T. Omarova
Keyword(s):  
Financial Markets ◽  
Financial Institutions ◽  
Financial Regulation ◽  
Global Financial Crisis ◽  
Critical Role ◽  
Well Being ◽  
Structural Factors ◽  
Ethical Finance ◽  
Risk Culture

Cornell Journal of Law and Public Policy, Vol. 27, No. 3, p. 797, 2018In recent years, there has been no shortage of scandals involving fraudulent, predatory, and otherwise ethically unacceptable behavior on the part of large U.S. and non-U.S. financial institutions. Reverse redlining and targeting of racial minorities and other vulnerable segments of the population for subprime mortgages, collusive price-fixing in the world’s most important interbank lending and trading markets, and fraudulent creation of client accounts by bank employees pressured to generate fees for the bank are only some of the recent examples of such blatantly unethical behavior. Much of this behavior was also directly implicated in the generation of unsustainable levels of risk in the financial system, which led to the global financial crisis of 2008-2009.Not surprisingly, industry regulators and scholars of financial markets have been increasingly vocal in their criticisms of the financial industry’s systematic failure to maintain high ethical standards of business conduct. Much of the regulators’ and academics’ attention in this area is focused on individual financial institutions’ apparent inability to foster a strong internal culture of pursuing market objectives through ethical and socially responsible means. Accordingly, the potential remedy for this problem is often seen as a matter of improving the firms’ culture of risk-taking, so that they develop a genuine commitment to seek private gains without creating systemically destabilizing risks or otherwise endangering the well-being of their clients, creditors, and the rest of the society. In effect, this recent “ethics turn” in financial regulation recasts firms’ “risk culture” as a crucial determinant of success, or failure, of the post-crisis search for systemic financial stability.This Article analyzes the principal themes in the newly reinvigorated public debate on the role of ethical norms and cultural factors in financial markets and identifies its key conceptual and normative limitations. It argues that the principal flaw in that debate is that it tends to ignore the critical role of systemic, structural factors in shaping individual firms’ internal cultural norms and attitudes toward legitimate business conduct. Reversing the causality assumption underlying the current academic and policy discourse on institutional culture, the Article discusses how broader reform measures seeking to alter the fundamental structure and dynamics of the financial market--on a macro- rather than micro-level--would profoundly, and far more effectively, alter individuals’ and firms’ normative choices and attitudes. The key to making finance ethically sound, therefore, is to make it structurally sound – and to do so on a systemic level.

Transparency Regulation in Financial Markets – Moving into the Surveillance Age?

2011 ◽  
Vol 2 (3) ◽  
pp. 305-321
Author(s):  
Iris H-Y Chiu
Keyword(s):  
Financial Crisis ◽  
Financial Markets ◽  
Financial Regulation ◽  
Global Financial Crisis ◽  
Financial Sector ◽  
Regulatory Control ◽  
Legal Reforms ◽  
The Global Financial Crisis ◽  
Risk Oversight

In the wake of the global financial crisis, the trajectory of legal reforms is likely to turn towards more transparency regulation. This article argues that transparency regulation will take on a new role of surveillance as intelligence and data mining expand in the wholesale financial sector, supporting the creation of designated systemic risk oversight regulators.The role of market discipline, which has been acknowledged to be weak leading up to the financial crisis, is likely to be eclipsed by a more technocratic governance in the financial sector. In this article, however, concerns are raised about the expansion of technocratic surveillance and whether financial sector participants would internalise the discipline of regulatory control. Certain endemic features of the financial sector will pose challenges for financial regulation even in the surveillance age.

Financial Structure and Incentives

2012 ◽  
Vol 221 ◽  
pp. R23-R30
Author(s):  
Martin Čihák ◽  
Asli Demirgüç-Kunt
Keyword(s):  
Financial Markets ◽  
Financial Institutions ◽  
Risk Taking ◽  
Global Financial Crisis ◽  
Financial Sector ◽  
Financial Systems ◽  
Regulatory Approach ◽  
Private Incentives ◽  
The Global Financial Crisis

The article connects two streams of recent research on the financial sector. The first is the regulation literature, which emphasises the central role of incentives in the financial sector. It points out that the challenge of financial sector regulation, highlighted by the global financial crisis, is to align private incentives with public interest without taxing or subsidising private risk-taking. The second stream of research relates to financial structures and examines the mix of financial institutions and financial markets in an economy. It finds that, as economies develop, services provided by financial markets become comparatively more important than those provided by banks. The article brings these two streams together, pointing out that — as financial systems develop from bank-based to market-based — a traditional regulatory approach that relies on banking ratios becomes less effective. There is thus a greater need for properly monitoring and addressing the underlying incentive weaknesses in market-based systems.

Transparency of Financial Regulation

2014 ◽  
pp. 257-285
Author(s):  
James R. Barth ◽  
Apanard (Penny) Prabha ◽  
Clas Wihlborg
Keyword(s):  
Financial Institutions ◽  
Financial Regulation ◽  
Global Financial Crisis ◽  
Capital Adequacy ◽  
Regulatory Environment ◽  
Basel Iii ◽  
The Public ◽  
Market Participants ◽  
The Global Financial Crisis

This chapter explores the concept of transparency in financial regulation from the perspective of the public. It looks at the role of risk assessment in transparency and the regulatory environment as well as the importance of pluralism in competition in the financial sector. The chapter first considers the meaning of “transparency of financial regulation” and its relation to simplicity. It then traces the progression of the Basel capital adequacy framework from Basel I to Basel III, along with the sources of lack of transparency in the framework. It also presents data showing the lack of transparency in the Basel Capital Accord and countries’ regulatory responses to the global financial crisis. Differences in the implementation of regulation regarding systemically important financial institutions are outlined. Finally, it discusses recent proposals for the separation or separability of financial activities with the goal of enhancing the transparency of banks’ activities for both market participants and resolution authorities.

scholarly journals Banking Regulations and Country’s Innovative Development: the Mediating Role of Financial Development

2020 ◽  
pp. 168-180
Author(s):  
Muslum Mursalov
Keyword(s):  
Financial Markets ◽  
Financial Institutions ◽  
Financial Regulation ◽  
High Technology ◽  
Innovative Development ◽  
Innovation Development ◽  
Mediating Role ◽  
Banking Regulations ◽  
Global Innovation

Promoting innovation requires efficient financial regulations ensuring well-functioning financial markets that play critical roles in reducing financing costs, allocating scarce resources, evaluating innovative projects, and managing risks. The author indicated that rigorous empirical studies that link financial regulation and innovation development are sparse. Thus, this study aims to provide some empirical evidence on linking government interventions, particularly by banking regulations and supervision, and a country’s innovative growth from the perspective of the mediating role of financial development. Specifically, this paper demonstrates that the development of financial markets and financial institutions mediates the path between financial regulation and innovation development in Azerbaijan. The structural equation modeling technique using the statistical package PATH additionally to confirmatory factor analysis in STATISTICA was applied to analyze the data. Contrary to expectations, this study did not find a significant direct impact of changes in regulatory benchmarks related to total CAR and FX loans to total loans on Azerbaijan’s rank in the Global Innovation Index and the volumes of high-technology exports. One of the more significant findings to emerge from this study is that the government regulatory and supervisory interventions in the banking sphere are changing the imprudent financial institutions’ and markets’ behavior. Thereby it contributes to establishing a better developed and sound financial system in terms of their access, depth, and efficiency. Meanwhile, financial institutions’ and markets’ development contributes to the country’s innovative development. This combination of findings provides some support for the conceptual premise that reduction or elimination of government power in the financial markets and institutions leads to exacerbating systemic risk and destabilization of the financial system that could not build extensive innovation capacities to foster growth. Keywords: banking regulation and supervision, Global Innovation Index (GII), high-technology exports, financial institutions development, financial markets development.

Bridging the Gap between Ethical Climate and Nurses’ Service Behaviors: the Critical Role of Professional Well-Being

2018 ◽  
Vol 20 (3) ◽  
pp. 99-110
Author(s):  
Na Zhang ◽  
Jingjing Li ◽  
Xing Bu ◽  
Zhenxing Gong ◽  
Gilal Faheem Gul
Keyword(s):  
Ethical Climate ◽  
Critical Role ◽  
Well Being

scholarly journals Debt and Sacrifice: The Role of Scapegoats in the Economic Crises

Religions ◽  
2021 ◽  
Vol 12 (2) ◽  
pp. 128
Author(s):  
Luis Enrique Alonso ◽  
Carlos J. Fernández Rodríguez
Keyword(s):  
Financial Markets ◽  
Social Relations ◽  
Critical Role ◽  
Social Groups ◽  
Symbolic Violence ◽  
Personal Bankruptcy ◽  
Economic Relations ◽  
Modern Economy ◽  
Standards Of Living

Despite the process of secularization and modernization, in contemporary societies, the role of sacrifice is still relevant. One of the spaces where sacrifice actually performs a critical role is the realm of modern economy, particularly in the event of a financial crisis. Such crises represent situations defined by an outrageous symbolic violence in which social and economic relations experience drastic transformations, and their victims end up suffering personal bankruptcy, indebtedness, lower standards of living or poverty. Crises show the flagrant domination present in social relations: this is proven in the way crises evolve, when more and more social groups marred by a growing vulnerability are sacrificed to appease financial markets. Inspired by the theoretical framework of the French anthropologist René Girard, our intention is to explore how the hegemonic narrative about the crisis has been developed, highlighting its sacrificial aspects.

COVID -19 and Indian Financial Markets: A Review

2020 ◽  
Vol 16 (02) ◽  
pp. 1-8
Author(s):  
Kamaldeep Kaur Sarna
Keyword(s):  
Financial Markets ◽  
Financial Institutions ◽  
Financial Services ◽  
Stock Markets ◽  
Global Economy ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Negative Impact ◽  
Management Strategies ◽  
The Impact

COVID-19 is aptly stated as a Black Swan event that has stifled the global economy. As coronavirus wreaked havoc, Gross Domestic Product (GDP) contracted globally, unemployment rate soared high, and economic recovery still seems a far-fetched dream. Most importantly, the pandemic has set up turbulence in the global financial markets and resulted in heightened risk elements (market risk, credit risk, bank runs etc.) across the globe. Such uncertainty and volatility has not been witnessed since the Global Financial Crisis of 2008. The spread of COVID-19 has largely eroded investors’ confidence as the stock markets neared lifetimes lows, bad loans spiked and investment values degraded. Due to this, many turned their backs on the risk-reward trade off and carted their money towards traditionally safer investments like gold. While the banking sector remains particularly vulnerable, central banks have provided extensive loan moratoriums and interest waivers. Overall, COVID-19 resulted in a short term negative impact on the financial markets in India, though it is making a way towards V-shaped recovery. In this context, the present paper attempts to identify and evaluate the impact of the pandemic on the financial markets in India. Relying on rich literature and live illustrations, the influence of COVID-19 is studied on the stock markets, banking and financial institutions, private equities, and debt funds. The paper covers several recommendations so as to bring stability in the financial markets. The suggestions include, but are not limited to, methods to regularly monitor results, establishing a robust mechanism for risk management, strategies to reduce Non-Performing Assets, continuous assessment of stress and crisis readiness of the financial institutions etc. The paper also emphasizes on enhancing the role of technology (Artificial Intelligence and Virtual/Augmented Reality) in the financial services sector to optimize the outcomes and set the path towards recovery.

How perceived information transparency and psychological attitude impact on the financial well-being: mediating role of financial self-efficacy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muhammad Zia-ur-Rehman ◽  
Khalid Latif ◽  
Muhammad Mohsin ◽  
Zahid Hussain ◽  
Sajjad Ahmad Baig ◽  
...  
Keyword(s):  
Financial Institutions ◽  
Self Efficacy ◽  
Well Being ◽  
The Body ◽  
Main Concern ◽  
Productivity Level ◽  
Content Type ◽  
Information Transparency ◽  
Psychological Attitude

PurposeThe basic intention of this research is to investigate the role of information transparency of financial institutions and psychological attitude of the individuals toward their attention to saving and borrowing. This study also tries to know how an individual's psychological factor affects a person's attitude to motivate them to save or borrow and contribute to well-being by giving them confidence that they can face financial challenges. So, the main concern of this study is to explore different factors that ultimately contribute to the financial well-being (FWB) of individual.Design/methodology/approachA survey was conducted by using a well-structured questionnaire to collect data and test the developed hypotheses by using SmartPLS. Data were collected from 120 customers of seven different commercial banks in Pakistan.FindingsThe findings of this study show that perceived information transparency positively affects FWB. It is also because transparent shared information creates positive change in individuals' perceived self-efficacy and leads to FWB. Furthermore, an individual's psychological attitude toward borrowing and saving did not contribute to the FWB of people who belong to Pakistan.Research limitations/implicationsThe research area is limited to one city of Pakistan and analysis is done with small numbers of sample, it can be increased and more areas can be explored.Practical implicationsThis research provides significant implications for people and economists by providing awareness about the antecedents of FWB. The policymakers or managers who work in financial institutions should provide more transparent information and create less risky opportunities to improve the individual's well-being. If person, manager and financial institution can properly utilize the information of this study, then they are able to improve their FWB. By providing more transparent services and favorable experience with your dealings, it could help to obtain and retain more loyal internal (employees) and external customers. The loyal customers and sincere employees can increase the productivity level of organization. The more productive organizations in countries means better society and progress in the economy.Originality/valueThis research contributes to the body of knowledge that how perceived information transparency and psychological attitude of borrowing create improvement and upward changes in the FWB of a person.

Discrepancy Regarding Self, Family, and Country and Well-Being: The Critical Role of Self and Cultural Orientation

2018 ◽  
Vol 20 (7) ◽  
pp. 2189-2209
Author(s):  
Yuri Kwon ◽  
Eunsoo Choi ◽  
Jongan Choi ◽  
Incheol Choi
Keyword(s):  
Critical Role ◽  
Well Being ◽  
Cultural Orientation

scholarly journals Dealing With the Pandemic of COVID-19 in Portugal: On the Important Role of Positivity, Experiential Avoidance, and Coping Strategies

2021 ◽  
Vol 12 ◽  
Author(s):  
Maria José Ferreira ◽  
Rui Sofia ◽  
David F. Carreno ◽  
Nikolett Eisenbeck ◽  
Inês Jongenelen ◽  
...  
Keyword(s):  
Psychological Distress ◽  
Coping Strategies ◽  
Experiential Avoidance ◽  
Online Survey ◽  
Critical Role ◽  
Well Being ◽  
Coping With Stress ◽  
Self Blame ◽  
And Coping

The global COVID-19 pandemic crisis has caused an unprecedented impact on most areas of people’s lives. Thus, framed within the scope of Existential Positive Psychology (PP2.0), this study aimed at assessing the psychological distress of adults living in Portugal during the first national lockdown, how they are coping with stress, as well to contribute to a deeper understanding about the role that positivity, experiential avoidance, and coping strategies have in psychological distress and well-being. For this purpose, 586 Portuguese adults (73% females) ranging between 18 and 78 years old (M = 38.96, SD = 12.20) completed an online survey during the initial phase of the pandemic crisis in Portugal. Findings suggest that experiential avoidance was the strongest predictor of a negative response (depression, anxiety, stress, loneliness, and negative emotions), whereas positivity was a better predictor of psychological well-being and lower levels of depression. Additionally, self-blame, behavioral disengagement, and emotional venting were strong risk factors for psychological distress, whereas positive reframing, planning, and acceptance were associated with more positive outcomes. These findings highlight the critical role of experiential avoidance on individuals’ psychological distress and the essential contribution of positive life orientation in promoting flourishing. By offering a better understanding of the complex navigation through the dialectics between positive and negative life features, this study provides important and useful cues for psychological interventions directed at promoting a more positive and adaptive human functioning even through such potential adverse and painful life events.

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