scholarly journals Financial Markets are Not Efficient: Financial Literacy as an Effective Risk Management Tool

2021 ◽  
Vol 9 (1) ◽  
pp. 65-73
Author(s):  
Costas Siriopoulos
Keyword(s):  
Risk Management ◽  
Financial Markets ◽  
Systemic Risk ◽  
Financial Literacy ◽  
Financial Crises ◽  
Efficient Market Hypothesis ◽  
Management Tool ◽  
Market Risks ◽  
Expected Benefits ◽  
Recent Financial Crisis

This paper advances the view that the deep confidence of market regulators in the assumptions and premises of the Efficient Market Hypothesis (EMH) has led to the underestimation of market risks, thus inactivating the market education of existing and future investors. Hence, they have not responded to financial illiteracy, which exacerbated the recent financial crisis. Investor education may be considered as a systemic risk management tool for future financial crises and, especially, financial literacy can drive a wedge between the regulation and the prevention of severe financial crises based on expected benefits versus losses. This also will help to regain investors’ trust in the market after the crisis and instill investors with more confidence. This approach has not yet received the attention it deserves.

scholarly journals Overcoming the hard law/soft law dichotomy in times of (financial) crises

2012 ◽  
Vol 1 (1) ◽  
pp. 8-14 ◽  
Author(s):  
Rolf Weber
Keyword(s):  
Financial Markets ◽  
Financial Crises ◽  
Dispute Settlement ◽  
Soft Law ◽  
Legal Doctrine ◽  
Organizational Issues ◽  
Hard Law ◽  
Multilateral Agreements ◽  
Recent Financial Crisis ◽  
The One

Traditional legal doctrine calls for hard law to regulate markets. Nevertheless, in financial markets, soft law has a long tradition, not at least due to the lack of multilateral agreements in this field. On the one hand, the recent financial crisis has shown that soft law does not suffice to avoid detrimental developments; on the other hand, a straight call for hard law would not be able to manage the recognized regulatory weaknesses. Therefore, emphasis should be put on the possibilities of combining hard law and soft law; specific areas allowing realizing such kind of “combination” are organizational issues, transparency requirements, and dispute settlement mechanisms.

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.

scholarly journals Knowledge About Past and Present Financial Crises in Relation to Financial Education

2021 ◽  
Vol 66 (2) ◽  
pp. 211-231
Author(s):  
Ágnes Csiszárik-Kocsir ◽  
János Varga ◽  
Mónika Garai-Fodor
Keyword(s):  
Financial Markets ◽  
Financial Literacy ◽  
Financial Crises ◽  
Financial Education ◽  
Extensive Literature ◽  
Close Attention ◽  
Additional Information ◽  
The Past ◽  
Developmental Phases ◽  
Shed Light

The crises of the past provide us aplenty of additional information to the understand the crises of the present. The crises in the past and the present have gone through very typical developmental phases in terms of their unfolding, which has already been highlighted in several studies. For this reason, it is important to know their development and operation, thus reducing the probability of future crises. It is also important to be able to distinguish the bubble from the crisis, which only occurs when the bubble bursts. However, when this happens, the effects directly or indirectly reach everyone. The level and the development of financial literacy has been a challenge not only in Hungary but also worldwide for many years. In this process, we try to understand the financial markets and to describe the tools, but how important is to discussing previous crises? In this study, we try to shed light on the knowledge of past and present crises and the related circumstances, paying a close attention on their effects in a connection of the previous financial studies with the results of a questionnaire survey conducted in 2020, basing it on extensive literature research. Our goal is to show the shortcomings of financial education, what is so important in identifying and managing crisis areas that are constantly present in the economy.

Part IX Legal and Conduct Risk Management, 30 Lawyers’ Responsibility for the Management of Legal and Conduct Risk

2018 ◽  
Author(s):  
Mccormick Roger ◽  
Stears Chris
Keyword(s):  
Risk Management ◽  
Financial Crisis ◽  
Financial Markets ◽  
Financial Institutions ◽  
Regulatory Regime ◽  
Legal Risk ◽  
Management Techniques ◽  
Recent Financial Crisis

The importance of managing legal risk effectively has increased following the recent financial crisis. As the modern regulatory regime for financial markets (global and domestic) continues to evolve, legal risk management techniques must evolve with it. The pressure to attach more importance to ethics and culture within financial institutions will also have an effect on how lawyers do their job. Rightly or wrongly, the responsibility for checking that proper governance principles are observed is bound to fall on their shoulders to some extent. This chapter discusses the role of lawyers and the legal department in legal risk management, opinions and similar documents, document retention, and clarity of lawyer roles.

scholarly journals COVID-19 in Stock Markets: A Complexity Perspective

2020 ◽  
Author(s):  
Eder Johnson de Area Leão Pereira ◽  
Paulo Ferreira ◽  
Hernane Barros de Borges Pereira
Keyword(s):  
Financial Markets ◽  
Stock Markets ◽  
Financial Crises ◽  
Financial Risk ◽  
Transport Networks ◽  
Complex Character ◽  
Epidemic Disease ◽  
Fiscal Deficits ◽  
The Public ◽  
Recent Financial Crisis

This paper aims to analyze the effects of Covid-19 on financial markets from the perspective of Complexity. The Covid-19 pandemic has caused turmoil in financial markets and is already one of the most important financial crises in history, causing a fall in several stock markets as well as great volatility. Unlike past crises, which in most cases were caused either by problems of fiscal deficits or in the financial system, this crisis has its origin in an epidemic disease, which occurred in Wuhan, China, and quickly spread across the globe affecting transport networks, commerce and finance, and will affect the public debt of many countries. This is a systemic situation in which there is a need to consider several interconnected systems, financial instability and high financial risk, something that econophysics and some complexity theorists already do. Therefore, this paper intends to show, theoretically, the systemic and complex character of the recent financial crisis caused by Covid-19.

Parameter framework - a risk management tool to improve the safety of tailings facilities

2007 ◽  
Vol 15 (2) ◽  
pp. 223-233 ◽  
Author(s):  
J. Engels ◽  
D. Dixon-Hardy ◽  
C. McDonald ◽  
K. Kreft-Burman
Keyword(s):  
Risk Management ◽  
Management Tool

MENGELOLA RESIKO DENGAN PRODUK DERIVATIF

2008 ◽  
Author(s):  
Dandes Rifa
Keyword(s):  
Risk Management ◽  
Value At Risk ◽  
Foreign Currency ◽  
Balance Sheet ◽  
Cash Flows ◽  
Market Risks ◽  
Hedging Strategies ◽  
Operational Hedging ◽  
Potential Risks ◽  
Derivative Products

The main objective of risk management is to minimize the potential for losses (risk) arising from unexpected changes in currency rates, credit, commodities and equities. One of the risks faced by companies is market risk (value at risk). This article aims to explain that risk management can be one of them by using derivative products. Derivative transactions is very useful for business people who want to hedge (hedging) against a commodity, which always experience price changes from time to time. There are three strategies that can be used to hedge the balance sheet hedging strategy, operational hedging strategies and contractual hedging strategies. Staregi contractual hedging is a form of protection that is done by forming a contractual hedging instruments in order to provide greater flexibility to managers in managing the potential risks faced by foreign currency. Most of these contractual hedging instrument in the form of derivative products. The management can enhance shareholder value by controlling risk. -Party investors and other interested parties hope that the financial manager is able to identify and manage market risks to be faced. If the value of the firm equals the present value of future cash flows, then risk management can be justified. 

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