Offshore financial centres: the political economy of regulation

This paper claims that the regulation profile of the Offshore Financial Centres (OFCs) with respect to the international standards defined to prevent potentially harmful phenomena—such as aggressive taxation, financial instability, money laundering and terrorism finance—depends on their specific structural features. In the designing of the regulatory framework the OFCs policymakers define the optimal degree of compliance maximizing a political cost benefit function. A simple model shows that the policymaker convenience to establish an OFC jurisdiction can depend on peculiar country endowments, consistently with a path-dependency approach. The model is empirically tested using a 222 countries’ sample, using different classifications of OFCs. On the one hand we find that the probability to be an OFC is greater with higher political stability, lower crime level, lower voice in international organizations, and if the country is characterized by a Common Law juridical system. Furthermore a low resource endowment seems to have a slightly influence on the choices to be an OFC. On the other hand it seems not to be crucial to use English as official language, to be a former colony, and also the geographical position it is not fundamental. The results are used for an overall assessment of the adequacy of the international policy aimed to fill the regulation gap, raising doubts on the persistency of the name and shame approach.

Study on the financial supervision and anti-monopoly regulation of integration of industry and finance �� in view of confronting global financial crisis and mitigating domestic financial risks

With governmental loose control in the major global economies since 1980s, the integration of industry-finance capital generates group companies. The integration of industry and finance (hereinafter as the “IIF”) is on the way to gradually become the mainstream of the world. It is needed to reconsider the IIF in light of the current global financial crisis. The IIF expands economic scale and increases efficiency, bringing two challenges in practice: financial risk overlay and anti-competition of the market power. What is more, the formation and abuse of market power will amplify the effect of risk overlay. To mitigate financial risks and protect market competition and to improve the regulation of the IIF, it is needed to improve both financial supervision and anti-monopoly regulation, as both are crucial.     

Beyond financial regulation of crypto-asset wallet software: In search of secondary liability

Since Bitcoin, the blockchain space considerably evolved. One crucial piece of software to interact with blockchains and hold private-public key pairs to distinct crypto-assets and securities are wallets. Wallet software can be offered by liable third-parties (‘custodians’) who hold certain rights over assets and transactions. As parties subject to financial regulation, they are to uphold Anti-money Laundering and Combating the Financing of Terrorist (AML/CFT) standards by undertaking Know-Your-Customer (KYC) checks on users of their services.In juxtaposition, wallet software can also be issued without the involvement of a liable third-party. As no KYC is performed and users have full ‘freedom to act’, such ‘non-custodial’ wallet software is popular in criminal undertakings. They are required to interact with peer-to-peer applications and organisations running on blockchains whose benefits are not the subject of this paper. To date, financial regulation fails to adequately address such wallet software because it presumes the existence of a registered, liable entity offering said software. As illustrated in the case of Tornado Cash, financial regulation fails to trace chains of secondary liability. Alas, the considered solution is a systematic surveillance of all transactions.Against this backdrop, this paper sets forth an alternative approach rooted in copyright law. Concepts that pertain to secondary liability prove of value to develop a flexible, principles-based approach to the regulation of non-custodial wallet software that accounts for both, infringing and non-infringing uses.     

The relationship between corporate governance characteristics and credit risk exposure in banks: implications for financial regulation

This article analyses board structures in listed Danish banks in the years prior to the financial crisis by exploring the relationship between corporate governance characteristics and credit risk exposure. The article presents a novel approach as it relies on a newly developed risk metric entitled the “Supervision Diamond” introduced by the Danish FSA, which “external” board directors must address. It contains five thresholds for measuring a bank’s exposure to credit risks i.e. the proportion of large customers, lending growth, the ratio of lending/deposits, liquidity buffer and the proportion of real estate loans. By employing quantitative governance variables the article finds that increased executive director remuneration is associated with increased credit risk posed by the bank’s borrowers. On the other hand, increasing the number of executive/“inside” directors is associated with a lower credit risk exposure. It is argued that more “inside” directors on the executive board constitutes a stronger “checks and balance” system. The article also documents that the probability of obtaining state capital from the Danish credit bailout package is negatively related to larger boards as well as higher executive director remuneration. The policy implication is that financial authorities should be increasingly aware of insufficient corporate governance characteristics in order to prevent excessive credit risk exposure. Moreover, the article provides important insights on which corporate governance variables have a significant impact on a bank’s credit risk exposure. This knowledge is valuable for financial authorities/policy makers considering future regulatory initiatives and how they should administer bank monitoring.     

Internal dealing regulation and insiders’ trades in the Italian financial market

We analyze insiders’ trades in the Italian financial market. Insiders buy undervalued stocks, but they also act as positive feedback traders. They exploit short term market movements with abnormal returns around trades: they purchase (sell) stocks after a price decline (increase) and trades are followed by a partial reversal. They time the market mainly through purchases immediately communicated to the market and sales (and in part purchases) communicated quarterly to the market. It seems that insiders do not manipulate the market but strategically choose the size of trades, while they are interested to disclose immediately purchases of the assets of the company they prefer not to do it in case of sales. JEL Classification: G14, G15     

Simple rules for a complex regulatory world: the case of financial regulation

European Journal of Law and Economics - Twenty-five years ago Richard Epstein published Simple Rules for a Complex World, which would go on to become one of Epstein’s most influential works....     

Global financial governance and the informal: limits to the regulation of money

The list of predicate crimes for the Recommendations of the Financial Action Task Force (FATF) has evolved and grown over its twenty-five year existence. The evolution of this list reflects shifting concerns among the central actors in the organisation, as well as representing a response to any ‘displacement’ activity undertaken by those seeking to avoid these forms of governance. When the scope for cooperation and compliance with the FATF Forty Recommendations was extended beyond the organisation’s membership this governance regime encountered business sectors and financial practices not readily amenable to its objectives. This paper considers the causes and consequences for the situation, as developing economy states attempt to comply with the global governance expectations of the FATF when a significant portion of the domestic economy operates ‘informally’. A frame of reference is provided, with a definition for the informal economy and the concept of displacement as used in research on criminal activity. The focus here is with the nature of the cash economy operating beyond the scope of financial surveillance with implications for the comprehensive effectiveness of the global financial governance regime. The context of informal financial practice and its separation from the regulatory structures of the state leads to a conclusion that global financial governance is limited in practice to the domain of the formal economy.     

The financial competition,concentration and structure of financial performance nexus in the financial sector of Oman

Economic Change and Restructuring - This study aimed to measure the impact of financial competition, as measured by the Lerner index (LRI) and the Panzar-Rosse model (PRM), and concentration, as...     

Bank regulation and supervision in bank-dominated financial systems: a comparison between Japan and Germany

This paper compares bank regulation and supervision in Japan and Germany. We consider these countries because they both have bank-dominated financial systems and their banking systems are often lumped together as one model, yet, bank stability differs significantly. We show that Japan and Germany have chosen different approaches to bank regulation and supervision and ask why they made their choices. We argue that bank regulation and supervision were less efficient in Japan than in Germany and that these differences were decisive for bank behavior.

The US financial regulatory reform, causes of financial crisis and its enlightenment on China

Deficiency of the US financial regulation has stimulated the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The fundamental causes of the regulatory deficiency can be categorized as follows: excessively indebted consumption culture in a long term, permanently abolishing the regulation on financial derivatives by the US Commodity Futures Trading Commission, and the regulations before the reform not fitting for the fictitious economy. The operation of financial products is like to fly a kite. The financial product is the kite, governmental adjustment is the string, market regulation is the wind, national culture and legislature and judicature are the environment. Those coordinated elements can guarantee a healthy financial market. To construct an effective financial regulatory system in China, it is needed to make culture with Chinese characteristics, advance the coordinated development of governmental and market regulation, and promote financial legislations and related implementation.     

The financial benefits of persistently high forward citations

The Journal of Technology Transfer - We explored the balance between societal benefits that negatively affect firms’ financial performance by eroding their competitive advantage and positive...     

Exploring the offshore interface

The connections between economic development, corruption, and the increasingly globalised financial system are not yet fully understood. This article examines the offshore interface — tax havens and offshore finance centres — that lies between the developed countries and Less Developed Countries (LDCs), part of the international financial system where legitimacy meets corruption. The central argument is that the existence of the offshore interface facilitates and can even encourage onshore corruption. New technology, in combination with strict bank secrecy in the private banking offshore networks of major banks, allows rapid international flows of funds, illustrating an increasing synergy between the offshore interface, globalisation and onshore corruption.An earlier version of this paper was read at the Development Studies Annual Conference in Dublin, 7–9 September 1995.     

船舶融资租赁的风险及防范

金融危机为中国船舶融资租赁业提供了发展机遇。一是在金融危机情况下,银行惜贷和企业融资难度加大扩大了航运企业与金融租赁公司合作的机遇;二是中国政府推出的四万亿经济刺激计划为金融租赁业带来了历史性的发展机遇。可见,巨大的市场潜力和潜在需求为船舶融资租赁业发展带来了良好机遇,但与此同时,也应清楚认识船舶融资租赁中的种种风险。首先简单介绍船舶融资租赁的概念,通过一个图标详细列举船舶融资租赁涉及的各方当事人;其次对船舶融资租赁中的可能遇到的种种风险逐一分析,然后在此基础上提出防范上述风险的具体对策,并对中国立法提出相关建议。     

论国际金融衍生交易的法律监管

在目前的国际金融市场上,既能规避风险又能导致风险的金融衍生工具,本身是一把“双刃剑”。尽管没有一种金融业务像衍生工具那样自出生就招致如此多的麻烦,但仍阻挡不了全球金融业对它的向往。因为衍生交易创造了空前繁荣和膨胀的金融市场,并且在很大程度上改变了传统银行体系的经营范畴和交易规则。目前,对一些大型银行来说,衍生交易业务规模大有取代传统存贷业务规模之势,而成为商业银行、投资银行和信托投资公司的主导业务。但是,面对着国际