scholarly journals The role of cost of capital in regulatory capital discrepancies among developing countries

2015 ◽  
Vol 18 (1) ◽  
pp. 84-104
Author(s):  
Johann Jacobs ◽  
Gary Van Vuuren
Keyword(s):  
Developing Countries ◽  
Financial Institutions ◽  
Cost Of Capital ◽  
Capital Requirements ◽  
Regulatory Capital ◽  
Geographical Regions

Capital as a regulatory instrument has been shown to contribute to competitiveness distortions between developed and developing countries. There is a dearth of literature that analyses the possibility of further competitiveness discrepancies to which capital requirements may contribute among developing countries.This article explores whether regulatory capital requirements lead to unequal competitive conditions between developing countries based on their costs of capital. It also attempts to identify drivers of such discrepancies. Data of 52 financial institutions from 20 countries spread across 4 geographical regions are used for the analysis. 

scholarly journals Is regulatory capital a legitimate, comparable and objective global standard? Evidence from 51 institutions across 17 countries

2014 ◽  
Vol 17 (3) ◽  
pp. 266-283 ◽  
Author(s):  
Johann Jacobs ◽  
Gary Van Vuuren
Keyword(s):  
Financial Institutions ◽  
Financial Stability ◽  
Financial Regulation ◽  
Cost Of Capital ◽  
Weighted Average ◽  
Capital Requirements ◽  
Regulatory Capital ◽  
Financial Regulations ◽  
The Cost ◽  
Playing Fields

Capital as an instrument for financial regulation has come under scrutiny since the financial crisis of 2007 to 2010 highlighted some deficiencies in the ability of capital to absorb unexpected losses and the procyclical nature of capital. This scrutiny arises mainly from the perspective that one of the principal objectives of capital requirements is to promote and contribute to financial stability. However, the literature on the topic is scarce almost to the point of non-existence regarding capital’s validity as tool to level the playing fields between financial institutions. The objective of this article is therefore to investigate financial regulations based on capital requirements from the perspective of its goal of providing equal competitive conditions for financial institutions, the attainment of which is based on the assumption that the cost of capital between institutions (and countries) is the same, which might not necessarily be the case. The cost of capital for 51 financial institutions across 17 countries (three institutions per country) is accordingly calculated in this article using original weighted average cost of capital and capital asset pricing models, as well as modified versions of these to include more country-specific factors. The objective of the article is sought firstly by determining whether the cost of capital is the same among countries and secondly, based on the results, ascertaining whether financial regulations based on capital requirements can therefore realistically achieve this objective of providing equal competitive conditions for financial institutions.

The Role of Mobile Money in Moderating Financial Exclusion: A Tanzanian Experience

2020 ◽  
Vol 2 ◽  
pp. 1-24 ◽  
Author(s):  
Deogratius Joseph Mhella
Keyword(s):  
Developing Countries ◽  
Financial Institutions ◽  
Banking Sector ◽  
Research Question ◽  
Microfinance Institutions ◽  
Mobile Money ◽  
Access To Credit ◽  
Financial Exclusion

Prior to the advent of mobile money, the banking sector in most of the developing countries excluded certain segments of the population. The excluded populations were deemed as a risk to the banking sector. The banking sector did not work with cash stripped and the financially disenfranchised people. Financial exclusion persisted to incredibly higher levels. Those excluded did not have: bank accounts, savings in financial institutions, access to credit, loan and insurance services. The advent of mobile money moderated the very factors of financial exclusion that the banks failed to resolve. This paper explains how mobile money moderates the factors of financial exclusion that the banks and microfinance institutions have always failed to moderate. The paper seeks to answer the following research question: 'How has mobile money moderated the factors of financial exclusion that other financial institutions failed to resolve between 1960 and 2008? Tanzania has been chosen as a case study to show how mobile has succeeded in moderating financial exclusion in the period after 2008.

The role of quality seed use for world crop production with special reference to the developing countries

1975 ◽  
Vol 8 (5) ◽  
pp. 268-270 ◽  
Author(s):  
W P Feistritzer
Keyword(s):  
Developing Countries ◽  
Special Reference ◽  
Crop Production ◽  
Stages Of Development ◽  
Short Article ◽  
Geographical Regions ◽  
The World ◽  
The Future ◽  
Pasture Plants

In this short article the author indicates the present stages of development of variety evaluation, testing, certification, production and marketing of quality seed—of cereals, industrial crops, pasture plants and vegetables—in major geographical regions of the world and draws attention to some of the underlying problems which must be faced in the future if further progress is to be made.

Cause and consequence in law and development

2005 ◽  
Vol 43 (1) ◽  
pp. 119-138 ◽  
Author(s):  
Ambreena Manji
Keyword(s):  
Developing Countries ◽  
Financial Institutions ◽  
Land Reform ◽  
International Financial Institutions ◽  
Land Law ◽  
The West ◽  
Law And Development ◽  
The Law

Patrick McAuslan, Bringing the Law Back In: essays in land, law and development (Aldershot: Ashgate. 2003)The title of the book sums up my overall stance: there is an important role for law in development generally and in land reform in particular and it is, in my view, wholly beneficial that after almost three decades of virtually ignoring the role of law in development … international financial institutions, aid agencies and scholars in the West are beginning to appreciate and reaffirm both its centrality to development in practice and its centrality to understanding the process of development and change in societies in developing countries. (McAuslan 2003: vii)He who is able to translate others' interests into his own language carries the day. (Latour 1983: 144)

Risk Measures: Robustness, Elicitability, and Backtesting

2021 ◽  
Vol 9 (1) ◽  
Author(s):  
Xue Dong He ◽  
Steven Kou ◽  
Xianhua Peng
Keyword(s):  
Risk Management ◽  
Financial Institutions ◽  
Risk Measures ◽  
Risk Measure ◽  
Capital Requirements ◽  
Annual Review ◽  
Publication Date ◽  
Regulatory Capital ◽  
Basel Accord ◽  
Economic Considerations

Risk measures are used not only for financial institutions’ internal risk management but also for external regulation (e.g., in the Basel Accord for calculating the regulatory capital requirements for financial institutions). Though fundamental in risk management, how to select a good risk measure is a controversial issue. We review the literature on risk measures, particularly on issues such as subadditivity, robustness, elicitability, and backtesting. We also aim to clarify some misconceptions and confusions in the literature. In particular, we argue that, despite lacking some mathematical convenience, the median shortfall—that is, the median of the tail loss distribution—is a better option than the expected shortfall for setting the Basel Accords capital requirements due to statistical and economic considerations such as capturing tail risk, robustness, elicitability, backtesting, and surplus invariance. Expected final online publication date for the Annual Review of Statistics, Volume 9 is March 2022. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

scholarly journals ESTIMATION OF COMPARATIVE ADVANTAGES OF TRADE OF THE EAEU MEMBER STATES WITH REGIONAL MEGASTRUCTURES

2018 ◽  
pp. 67-84 ◽  
Author(s):  
Ashot Kh. Markosyan
Keyword(s):  
Developing Countries ◽  
Foreign Trade ◽  
Financial Institutions ◽  
Regional Integration ◽  
Raw Materials ◽  
Global Leadership ◽  
World Markets ◽  
Comparative Advantages ◽  
Regional Leaders

The constantly growing competition in world markets is accompanied not only by the strengthening of the economic influence of certain countries – regional leaders, but also by the frequent clash of those countries that are struggling to gain regional or global leadership in foreign trade. Developing countries, meanwhile, are becoming the epicenter of competition, but due to inadequate economic development, underdevelopment of financial institutions, global dependence on raw materials, technological backwardness, they try to resist the competition of world powers through integration with large regional countries. Despite the fact that attempts to regional economic integration of developing countries do not lead to significant success, however this does not affect the creation of new and expansion of existing integration associations. Understanding the importance of this task, especially the role of individual regional integration groupings in geopolitical and geoeconomic relations, in the aspect of determining priorities and areas of cooperation, the article analyzes the comparative advantages of foreign trade of a number of integration groupings and assesses the ways and opportunities for developing their relations with the EAEU countries. 

scholarly journals Investors’ expectations around quantitative easing: does liquidity injection affect European banks equally?

2021 ◽  
Author(s):  
Sara Longo ◽  
Antonio Parbonetti ◽  
Amedeo Pugliese
Keyword(s):  
Financial Stability ◽  
Global Financial Crisis ◽  
Capital Requirements ◽  
Quantitative Easing ◽  
Regulatory Capital ◽  
Fine Grained ◽  
Asset Portfolio ◽  
European Banks ◽  
The Global Financial Crisis

AbstractThe role of liquidity in the banking industry is increasingly under the spotlight since the Global Financial Crisis (GFC) in 2007. Prior evidence offers contrasting findings on the role played by liquidity in banks: whilst it ensures systemic financial stability, at the same time it raises agency costs. Notwithstanding this, European banks benefited from a generous liquidity injection following the launch of the Quantitative Easing (QE) programme by the European Central Bank (ECB) in 2015–2016. We leverage on the release of the QE and investigate whether investors’ reactions to the announcements of new liquidity injections vary according to bank-level characteristics of the European banks: namely, their financial soundness, asset portfolio quality and the level of transparency. Our findings document an overall negative market reaction to the QE announcements; at a more fine-grained level of analysis we highlight that banks falling short of the regulatory requirements are not expected to benefit from additional liquidity. This study contributes to the literature on the role of liquidity in banks by showing important boundary conditions to the beneficial role of liquidity in banks, that is—because of the regulatory capital requirements—liquidity is only valuable to investors if it can be reinvested once constraints are overcome.

DOES THE APPLICATION OF INNOVATIVE INTERNAL MODELS DIMINISH REGULATORY CAPITAL?

2006 ◽  
Vol 09 (02) ◽  
pp. 217-226 ◽  
Author(s):  
LAMPROS KALYVAS ◽  
ATHANASIOS SFETSOS
Keyword(s):  
Financial Institutions ◽  
Value At Risk ◽  
Capital Requirements ◽  
Evaluation Framework ◽  
Regulatory Capital ◽  
Risk Quantification ◽  
Basel Committee ◽  
Financial Products ◽  
Market Risks ◽  
Traditional Approaches

The broad spectrum and the increased complexity of financial products that compose modern portfolios have forced credit and financial institutions to focus on innovative and more effective ways of estimating market risks. These new approaches, very often, prove to be more conservative compared to traditional approaches in terms of market risk quantification. On the other hand, according to the Basel Committee evaluation framework, this conservatism is rewarded with lower multiplication factors when calculations of capital requirements take place. The present study elaborates on the comparison of several Value-at-Risk (VaR) methodologies based on the capital requirements they provide according to the Basel Committee regulatory framework.

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