The role of Financial Market Infrastructures in Financial Stability

2016 ◽  
pp. 20-40
Author(s):  
Serafin Martinez-Jaramillo ◽  
Jose Luis Molina-Borboa ◽  
Bernardo Bravo-Benitez
Keyword(s):  
Risk Assessment ◽  
Financial Market ◽  
Financial Stability ◽  
Financial System ◽  
General Overview ◽  
Proper Functioning ◽  
Financial Transactions ◽  
Adequate Supervision

Financial Market Infrastructures (FMIs) are essential for the well-functioning of the financial system, as they play a central role in facilitating clearance and settlement of financial transactions such as payments, securities, and derivatives contracts. Nowadays, it is widely acknowledged that the proper functioning of systemically important FMIs is also vital to maintain financial stability; their failure for solvency reasons or operational disruptions could almost certainly lead to systemic instability. As a consequence, the adequate supervision of FMIs is inherent to the function of preserving financial stability. The aim of this chapter is to provide a general overview of the different FMIs; discuss their role in financial stability and to give an overview of the efforts made by some financial authorities towards the supervision, risk assessment and reinforcement of FMIs.

The role of Financial Market Infrastructures in Financial Stability

2018 ◽  
pp. 256-276
Author(s):  
Serafin Martinez-Jaramillo ◽  
Jose Luis Molina-Borboa ◽  
Bernardo Bravo-Benitez
Keyword(s):  
Risk Assessment ◽  
Financial Market ◽  
Financial Stability ◽  
Financial System ◽  
General Overview ◽  
Proper Functioning ◽  
Financial Transactions ◽  
Adequate Supervision

Financial Market Infrastructures (FMIs) are essential for the well-functioning of the financial system, as they play a central role in facilitating clearance and settlement of financial transactions such as payments, securities, and derivatives contracts. Nowadays, it is widely acknowledged that the proper functioning of systemically important FMIs is also vital to maintain financial stability; their failure for solvency reasons or operational disruptions could almost certainly lead to systemic instability. As a consequence, the adequate supervision of FMIs is inherent to the function of preserving financial stability. The aim of this chapter is to provide a general overview of the different FMIs; discuss their role in financial stability and to give an overview of the efforts made by some financial authorities towards the supervision, risk assessment and reinforcement of FMIs.

scholarly journals Exploring the Role of Islamic Fintech in Combating the Aftershocks of COVID-19: The Pen Social Innovation of the Islamic Financial System

2021 ◽  
Vol 7 (2) ◽  
pp. 136
Author(s):  
Mustafa Raza Rabbani ◽  
Abu Bashar ◽  
Nishad Nawaz ◽  
Sitara Karim ◽  
Mahmood Asad Mohd. Ali ◽  
...  
Keyword(s):  
Financial Services ◽  
Open Innovation ◽  
Financial Stability ◽  
Social Innovation ◽  
Global Financial Crisis ◽  
Financial System ◽  
Real Economy ◽  
Business Context ◽  
The World

The purpose of the current study is to investigate the role of the Islamic financial system in recovery post-COVID-19 and the way Fintech can be utilized to combat the economic reverberations created by COVID-19. The global financial crisis of 2008 has established the credentials of the Islamic financial system as a sustainable financial system which can save the long run interests of the average citizens around the world while adding value to the real economy. The basic ethical tenets available in the Islamic financial system make it more suited and readymade to fight the economic aftershocks of a pandemic like COVID-19. The basic principles of ethical Islamic finance have solid connections to financial stability and corporate social responsibility within the wide-reaching business context. With the emergence of Financial technology (Fintech) it has provided a missing impetus to the Islamic financial system to compete on equal ground with its conventional counterpart and prove its mettle. The study uses discourse analysis along with the content analysis to extract content and draw a conclusion. The findings of the study indicate that COVID-19 pandemic has provided the opportunity for the social and open innovation to grow and finance world have turned to open innovation to provide a speedy, timely, reliable, and sustainable solution to the world. The findings of the study provide significant implications for governments and policy makers in efficient application of Fintech and innovative Islamic financial services to fight the economic consequences of the COVID-19 pandemic.

1. Banks in the Financial System

2018 ◽  
Author(s):  
Ross Cranston ◽  
Emilios Avgouleas ◽  
Kristin van Zweiten ◽  
Theodor van Sante ◽  
Christoper Hare
Keyword(s):  
Financial Stability ◽  
Regulatory Networks ◽  
Financial System ◽  
Capital Allocation ◽  
Bank Supervision ◽  
System P ◽  
The Us ◽  
Regulatory Coordination ◽  
Definition Of

This chapter explains the economic functions and organizational structure of contemporary banking. It first discusses the role of banks in the economy, offering a brief account of the role of the financial system in capital allocation and risk management as well as key bank functions in this respect. It then details the rise and fall of the multifunctional bank in the era of globalization, and the different aspects of the too-big-to-fail bank problem and its possible causes. It explains the international nature of bank regulation and the standard-setting and regulatory coordination provided by key transnational regulatory networks such as the Basel committee on Bank Supervision and the Financial Stability Board; discusses the legal definition of the term ‘bank’ in the US and of ‘credit institution’ under EU legislation; advances a new understanding of what the term ‘bank’ means in the post-2008 era.

Impact of Crypto-Asset Trade on Financial Stability

2020 ◽  
pp. 210-232
Author(s):  
Nader Trabelsi
Keyword(s):  
Systemic Risk ◽  
Financial Stability ◽  
Financial System ◽  
System Stability ◽  
Copula Model ◽  
Copula Approach ◽  
The Stability ◽  
The Empirical Analysis ◽  
Global Financial System

The chapter attempts to test the hypothesis that cryptocurrencies are real independent financial instruments that pose no danger to global financial system stability. For the empirical analysis, the authors use data related to bitcoin and widely traded asset classes. They also utilize the copula approach as well as the CoVaR model. The results show a significant role of crypto-asset market in the stability of global markets. Precisely, they find a dependence between bitcoin and oil prices defined by a normal copula model. The empirical results regarding the systemic risk show that extreme changes in bitcoin prices may have an adverse effect on equity and gold markets. There are positive and significant effects of EUR, JPY, and WTI markets when bitcoin goes down. The authors have also shown that after 2016 the virtual market sudden changes are more likely to raise the whole regular financial system losses, except the energy market. These results are important for policymakers and investors.

THE ROLE OF FINANCIAL ANALYSIS INDICATORS IN THE PROCESS OF RISK REDUCTION IN COMMERCIAL BANKS

2021 ◽  
Vol 2 (2) ◽  
pp. 73-77
Author(s):  
AL-SAADI MOHANAD RAHIM SALIM ◽  
Keyword(s):  
Risk Assessment ◽  
Risk Management ◽  
Financial Stability ◽  
Financial Risk ◽  
Financial Analysis ◽  
Bank Risk ◽  
Credit Institution ◽  
Russian Bank

The article is devoted to the use of financial analysis for the purposes of risk management of a commer-cial bank. The paper defines the bank risk, provides a classification of banking risks, and also uses the exam-ple of the largest Russian bank, Sberbank PJSC, to calculate the main indicators used in assessing the finan-cial risks of a credit institution. In particular, the dynamics of indicators of liquidity and financial stability, indi-cators of credit risk assessment, indicators of market risk assessment are analyzed. Based on the results of the calculations, the relevant conclusions were drawn and basic recommendations for the bank’s financial risk management were developed.

scholarly journals How Islamic Finance can affect the Financial Stability?

2020 ◽  
Author(s):  
Sassi Mohamed Taher ◽  
Marius Kinski
Keyword(s):  
Empirical Evidence ◽  
Financial Stability ◽  
Financial System ◽  
Financial Sector ◽  
Islamic Finance ◽  
Theoretical Discussion ◽  
Conventional System ◽  
Future Challenges ◽  
Alternative Approaches

The subprime mortage crisis during the years 2007-2010 demonstrated the weaknesses of the conventional system of finance. The inherent speculative element of this system, which is fueled through the logic of interest additionally, brought attention to alternative approaches in order to recover control over the financial system. Islamic finance, a system relatively young in practice, contributed its part to the ongoing discussion on financial stability and has to present its own tools for this huge task. This paper wants to outline the ongoing theoretical discussion and empirical evidence concerning the question of financial stability and the role of Islamic finance in it. Main results found was Islamic finance has contributed to the overall financial stability. The survival of this financial system through the crisis of 2007-2008 has made it more and more interesting to investigate and to develop. The question of tradeoff between stability and profitability of this financial system remains under investigation as the conventional financial sector continues to be more profitable but less stable. The new avenue of the research channel in the financial sector could measure this tradeoff taking into account the future challenges.

scholarly journals Interconnectedness and Contagion Analysis

2019 ◽  
Vol 19 (220) ◽  
Author(s):  
Jana Bricco ◽  
TengTeng Xu
Keyword(s):  
Risk Assessment ◽  
Financial Stability ◽  
Financial System ◽  
Comprehensive Analysis ◽  
Policy Recommendations ◽  
Practical Advice ◽  
Assessment Program ◽  
Cross Border ◽  
Depth Analysis ◽  
Practical Guidance

The analysis of interconnectedness and contagion is an important part of the financial stability and risk assessment of a country’s financial system. This paper offers detailed and practical guidance on how to conduct a comprehensive analysis of interconnectedness and contagion for a country’s financial system under various circumstances. We survey current approaches at the IMF for analyzing interconnectedness within the interbank, cross-sector and cross-border dimensions through an overview and examples of the data and methodologies used in the Financial Sector Assessment Program. Finally, this paper offers practical advice on how to interpret results and discusses potential financial stability policy recommendations that can be drawn from this type of in-depth analysis.

scholarly journals THE ROLE OF DERIVATIVE INSTRUMENTS IN FINANCIAL STABILITY

2019 ◽  
Vol 4 (8) ◽  
pp. 130-135
Author(s):  
Lela Scholer-Iordanashvili
Keyword(s):  
Interest Rates ◽  
Financial Stability ◽  
World Economy ◽  
Foreign Currency ◽  
Financial System ◽  
Recent Decade ◽  
Negative Influence ◽  
The World ◽  
Correlation Rate

Globalization offers new challenges to the world economy, which becomes more depended on unprecedented in- crease of financial activity worldwide. Availability of information and development of technologies significantly increased capital flow in the world and role of capital and monetary markets in economy. Second half of 2007 and first half of 2008 faced import- ant events in the world economy. Among them especially no- table are US real estate crisis and global limitation of credits, devaluation of USD and strengthening of inflation processes. These global events have significant influence over financial stability. In the recent decade variability of stocks and interest rates, together with globalization of capital markets, in- creased demand on financial instruments with the purpose of distribution of risks. From this perspective, interest rate derivatives are most frequently marketed among OCT derivatives. Therefore, estimation of the role of financial derivatives instruments is very important in stability of international financial system. Purpose of research is to analyze influence of derivatives over financial crisis. Within frameworks of re- search 5 countries are studied for 1997-2010 quarterly. OLS regressive equation is used in research for empirical tests. Model includes following variables: crisis index (dependent variable), independent variables are: correlation rate of cur- rent account and GDP, correlation rate of domestic credit on private sector with GDP, correlation rate between foreign currency reserves and conditional amounts of market derivatives on the stock exchange. Empirical analysis shows us that influence of derivatives over financial stability is not unilateral and depends on characteristics of financial system of the country. Particularly, in Singapore and USA, where financial system is strong, influence of derivatives is positively reflected on financial stability, and empirical study conduct- ed on example of emerging markets, particularly, Argentina, Russia and Brazil revealed negative influence of derivatives on financial system.

scholarly journals PENGARUH FINANCIAL TECHNOLOGY (FINTECH) TERHADAP STABILITAS SISTEM KEUANGAN DI INDONESIA

2021 ◽  
pp. 921
Author(s):  
Birgitta Dian Saraswati ◽  
Ni Made Tisnawati
Keyword(s):  
Exchange Rates ◽  
Interest Rates ◽  
Financial Stability ◽  
Financial System ◽  
System Stability ◽  
Series Data ◽  
Macroeconomic Variables ◽  
P2p Lending

Financial stability is very important in the economy because financial stability will ensure smooth financial transactions in the economy.This study aims to analyze the effect of P2P lending fintech, payment fintech and macroeconomic variables (inflation, interest rates and exchange rates) on financial stability in Indonesia.This study uses time series data with the period 2018.1-2021.4. Using the Vector Error Correction Model, this research shows that Fintech P2P Lending, Fintech Payments and macroeconomic variables (inflation, interest rates and exchange rates) affect the financial stability in Indonesia only in the long term.Fintech P2P lending in the long term will lead to financial system instability, while Fintech payments in the long term have a positive effect on financial system stability in Indonesia. This has policy implications where through the role of the Financial Services Authority it is necessary to regulate and supervise P2P lending fintech. In addition, considering that payment fintech has a positive impact on financial system stability in Indonesia, through the role of Bank Indonesia, it is necessary to design policies to increase the use of non-cash payment instruments.

scholarly journals STATE REGULATION OF EXPENDITURE IN FINANCIAL ENTERPRISE

2017 ◽  
pp. 44-52
Author(s):  
Halyna Kolisnyk
Keyword(s):  
Financial Market ◽  
Financial Services ◽  
Government Regulation ◽  
Significant Risk ◽  
State Regulation ◽  
Securities Market ◽  
Entrepreneurial Activity ◽  
Financial Transactions ◽  
Negative Factors

Introduction. The emergence, formation and development of financial business are conditioned by the emergence of a new financial market for Ukraine. To meet the needs of this market, there is a need for professional participants. The experience of financial and credit business in Ukraine shows a significant risk for all participants in this type of entrepreneurial activity. Purpose. The article aims to determine the purpose, role, essence and value of government regulation of costs in a financial enterprise. Results. The structure of financial entrepreneurship has been determined by the nature of operations, where the subjects of financial enterprise are classified according to the nature of conducting financial transactions. It is revealed that the activity of financial entrepreneurship is carried out in the financial market, which includes such segments: financial services market, money market, credit market, securities market, currency market. The role of state regulation of financial entrepreneurship is considered. It is based not only on the development of the financial market, but also on the development of the economy of the entire country. The interconnection of methods of state regulation by subjects of financial enterprise is offered. It is proved that the content of state regulation of expenditures in financial entrepreneurship is to optimize their structure. The basic blocks of state regulation of expenses in financial enterprise are analysed. It is proved that the system of state regulation of expenditures in financial enterprise is represented in the form of instruments, it examines various regulatory measures. The use of instruments of state regulation of expenses in financial enterprise with the purpose of overcoming of negative factors is offered.

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