Financial Markets (2011) (ECON 252) In the beginning of the lecture, Professor Shiller reviews the probability theory concepts from the last class and extends these concepts by the central limit theorem. Afterwards, he turns his attention toward the role of financial technology and financial invention within society, in particular with regard to the management of big and important risks. He proceeds along the lines of a "framing" theme, referring to the context and the associations of inventions, and along the lines of a "device" theme, emphasizing the creation of complicated structures set up for a certain purpose, which require learning over time to be improved. His coverage of financial inventions spans limited liability for corporations and the framework of Township and Village Enterprises in China, as well as inflation indexation from its inception around the turn of the 19th century to its applications in Chile and Mexico in the 20th century. Professor Shiller concludes the lecture elaborating on swap contracts as financial inventions, and on the subsequent development of credit default swaps. 00:00 - Chapter 1. Introduction 02:38 - Chapter 2. Review of Probability Theory and the Central Limit Theorem 14:21 - Chapter 3. The Role of Finance in Society 28:52 - Chapter 4. A Selection of Modern Inventions 39:14 - Chapter 5. Corporations and Limited Liability 51:33 - Chapter 6. Inflation Indexation 01:07:42 - Chapter 7. Swap Contracts Complete course materials are available at the Yale Online website: online.yale.edu This course was recorded in Spring 2011.
Views: 115957 YaleCourses
At the TiE LeapFrog, Nandan Nilekani spoke about disruption in financial services citing the example of Whatsapp’s innovation in the messaging space. “Just as WhatsApp disrupted the messaging space from 2009 onwards, digital innovation is changing the payment and banking space in India,” he said. He gave a live demonstration of the iris scanning capabilities with Aadhar. More about TiE LeapFrog - http://bit.ly/1JO5Cnw
Views: 354847 TiE Bangalore
Panel discussion at 13th Annual Finance Conference hosted by the Boston College Carroll School of Management on June 7, 2018 at Boston College. Panelists: Alfred L. Browne, III, Partner, Cooley LLP Jakub Duda, Vice President, Strategic Asset Allocation, Goldman Sachs & Co. Daniel Matuszewski, Head of Trading, Circle (Moderator)
Views: 103 Boston College Carroll School of Management
Current innovations in financial technology center around reaching markets not served by traditional financial services, the rise of more advanced payments personalisation, and how the arrival of mobile phones to the masses has ushered in complete financial mobility. Watch the full video for complete insights.
Views: 2436 Euromonitor International
The history of capitalism is about growth, but the rude awakening of the Global Financial Crisis was a moment of reckoning that highlighted the flaws in our understanding of financial markets. Unbearable accumulated costs hidden by efficiently inefficient price mechanisms caused the collapse and may do so again. Meanwhile, environmental externalities caused by expectations of continuous growth are exceeding planetary limits. Solutions based on self-serving industry supplied forecasts don’t reconcile with economic reality and increase global instability. Only transparency creates a consequentialist ethic that changes our behaviour and reconciles short-term personal needs with long-term development goals to solve these problems. FMT’s breakthrough is in recognising homo sapiens as both rational and irrational while facing uncertainty. This biological approach overcomes both restrictive neoclassical hypothesis of rationality and behavioural finance’s incomplete attempts to nudge investors. FMT proposes novel micro foundations that describe the biological nature of financial markets to increase antifragility. Readers of new book "Financial Market Transparency" will make better decisions under uncertainty that profit us all.
Views: 68 Paolo Sironi
Bitcoin, cryptocurrency, blockchain. These may be terms you hear and read about but don't fully understand. Rebecca Lewis explains the fundamentals of blockchain--the technology behind bitcoin. Read some of her recent research on the topic: https://www.chicagofed.org/publications/economic-perspectives/2017/7
Views: 114 Federal Reserve Bank of Chicago
2018.09.11_CDI International Seminar_ Financial Market Infrastructures to Support Financial Innovation
Views: 10 International Seminar
Nobel laureate and MIT Sloan Distinguished Professor of Finance Robert Merton discusses the role of financial innovation and his current research on retirement planning with Andrew Lo. Robert Merton faculty profile: https://mitsloan.mit.edu/faculty/detail.php?in_spseqno=41690 MIT Sloan Finance group: http://mitsloan.mit.edu/group/finance/
Views: 5725 MITSloan
Ashley's Lending Innovation team is working to develop the products consumers really want and manage the projects to deliver them to market. As part of the Chase Associate Program, she rotates through three jobs at JPMorgan Chase to broaden her skillset and learn about different lines of business. SUBSCRIBE: http://jpm.com/x/i/NFPWfK0 About J.P. Morgan: J.P. Morgan is a leader in financial services, offering solutions to clients in more than 100 countries with one of the most comprehensive global product platforms available. We have been helping our clients to do business and manage their wealth for more than 200 years. Our business has been built upon our core principle of putting our clients' interests first. Connect with J.P. Morgan Online: Visit the J.P. Morgan Website: https://www.jpmorgan.com/ Follow @jpmorgan on Twitter: https://twitter.com/jpmorgan Visit our J.P. Morgan Facebook page: http://facebook.com/jpmorgan Follow J.P. Morgan on LinkedIn: https://linkedin.com/company/j-p-morgan/ Follow @jpmorgan on Instagram: https://instagram.com/jpmorgan/ #jpmorgan #jpmorgancareers Innovation in Consumer Financial Products | What We Do | J.P. Morgan
Views: 596 jpmorgan
Highlights video on key topics, format, outcomes and industry stakeholder groups for Data Innovations Sep 2018 Pre-cursor to zoom-in videos on impact of tech, highest potential, panellist point of views.
Views: 142 Leading Point FM
From AI, blockchain, big data to identity, our new innovation series examines the forces that are disrupting the role, structure and competitive environment for financial institutions and the markets and societies in which they operate. For more informations: https://www.swift.com/news-events/news/innovation-in-the-financial-industry
Views: 339 PlanetSWIFT
From AI, Blockchain, big data to identity, our innovation series examines the forces that are disrupting the role, structure and competitive environment for financial institutions and the markets in which they operate.
Views: 1050 PlanetSWIFT
In too many organizations today, business acumen is a missing competency. Employees / Managers without business acumen lack an in-depth understanding of how their actions impact the company's business; they struggle to articulate and execute on strategy. They feel their work is monotonous / less important because they don't see the 'Big Picture'. Leaders / managers with business acumen are able to break down organizational silos, bridge communication gaps, and engage the employees they manage, so the entire workforce can understand how the company operates and how each person can contribute to the company's success. Financial Markets Business Acumen 'FMBA' is one such 'Investment' philosophy driven training program which delivers long lasting conceptual and contextual knowledge about financial markets. Participants understand the "Why" of Global Economics, Global Financial Markets, Global Investors, and Global Products / Processes / Players. The End Result of FMBA -- Motivated Employees with Business Acumen will be able to see the Big Picture and Connect the Dots enabling every employee to become an SME. Organizations will be able to deliver Conceptual & Contextual training to their teams and use Knowledge as a USP in this competitive industry. Business Services will be able to Move Up the value chain and Deliver One Firm to the clients.
Views: 254 Kamlesh Jain
Why do investors make stupid mistakes? Why do individuals consistently underperform the very funds they invest in? Are there strategies investors can follow to avoid self-destructive behavior? Those are some of the weighty questions Financial Thought Leader Andrew Lo is trying to answer from two vantage points, one as a professor of Finance at MIT and Director of its Laboratory for Financial Engineering, the other as strategist and fund manager at his firm AlphaSimplex Group. This week's conversation will start with his most recent research project at MIT, titled "Artificial Stupidity"! WEALTHTRACK #1045. Broadcast on May 02, 2014
Views: 9317 WealthTrack
Taking the lead from other industries, the banking industry is closing the gap between its institutions and the customer, impacting financial business around the world. Enabled by technology, the new mobile-first paradigm is driven by customer behavior, and is increasing disruption in financial entities, propelling change. The largest foreign financial startups are impacting business all over the globe, and challenging traditional banking institutions to step up to today’s customer expectations. This interactive session addresses a changing paradigm: banking anytime, anywhere, as the new reality, lending some banking systems a competitive edge. Moderator: Patrick Young, Executive Director, DV Advisors Participants: Jiang Jianqing, Chairman of the Board of Directors, Executive Director, ICBC Rupert Keeley, Senior Vice-President and GM, PayPal Europe, Middle East and Africa Andrei Lukianov, Head of Centre of Excellence, Strategic Industries, SAP Victor Orlovsky, Senior Vice-President - Digital, Sberbank Alexander Pogudin, Member of the Board of Directors, CFT (Center of Financial Technologies) Experts: Dmitry Aksenov, Chief Executive Officer, FinGenius Nailya Zamashkina, Commercial Director, MOBI.money http://www.forinnovations.org/forum/program/96/
Views: 200 Open Innovations
On this second day of the Asian Financial Forum 2010, speakers expressed their views on the balance between financial innovation and regulation. The environment was also one of the major focus of discussions. Richard Sandor, Chairman and founder of Chicago Climate Exchange, believes that China can become the preeminent market for trading carbon emissions. Jing Ulrich, Managing Director and Chairman of Chinese Equities and Commodities, JP Morgan, said that huge infrastructure projects in China will be more open to private and foreign investors, and serve as a catalyst for China to develop more sophisticated financial instruments for both domestic and foreign investors. Visit http://www.asianfinancialforum.com for more information about AFF 2010.
Views: 2727 HKTDC
While FinTech is revolutionizing the banking industry and giving millions of people access to financial services for the first time, new banking models are emerging with FinTech start-ups and tech firms potentially disrupting the status quo. But business schools and universities are not preparing future bankers for these changes, says FinTech thought leader Henri Arslanian. How can designers, programmers and creative thinkers help? Henri Arslanian started his career as a financial markets and funds lawyer in Canada and Hong Kong, after which he spent many years with UBS Investment Bank in Hong Kong. In recent years, he has been teaching graduate courses on Entrepreneurship in Finance at Hong Kong University as an Adjunct Associate Professor, and currently leads the first FinTech course in Asia. His latest book on Entrepreneurship in Finance will be published in late 2016 by Palgrave Macmillan. A member of the Milken Institute’s Young Leaders Circle, Henri is a regular keynote speaker globally on the topic of FinTech and hedge funds and currently sits on a number of finance, academic, civil society and FinTech related boards and advisory boards. Henri is fluent in English, French, Armenian, Spanish and conversational in Mandarin Chinese and has been awarded many academic and industry awards over the years, including the Governor General of Canada Gold Medal for Academic Excellence. This talk was given at a TEDx event using the TED conference format but independently organized by a local community. Learn more at http://ted.com/tedx
Views: 319929 TEDx Talks
A deep dive into the opportunity created by the drivers of Next Generation Internet - cloud computing, mobile, IoT, Machine Learning, Big Data, Analytics, and Blockchain
Views: 38523 Singularity University Summits
On September 7, 2012 the Sanford C. Bernstein & Co. Center for Leadership and Ethics at Columbia Business School filmed "Financial Innovation: A Risky Business?" The event brought together individuals with a breadth of experiences and viewpoints to explore questions around the promise and risks of innovation in financial services and the potential of financial innovations to advance the public good and goals. This project was completed in conjunction with the Fred Friendly Seminars. The speakers included David Abrams, Caroline Baum, Ed Conard, Wilson Ervin, Representative Barney Frank, Gary Gensler, Linda Gibbs, Robert Solow, Alicia Glen, Bruce Greenwald, Blythe Masters, Andrew Ross Sorkin, and Peter Stringham Moderated by Professor Robert Jackson of Columbia Law School. For more detail, visit: http://ow.ly/g6oog or http://ow.ly/g6owZ This discussion is part of the Individual, Business, and Society curriculum that uses a series of discussions to foster a community dialogue on tradeoffs, choices, and accountability related to values-based leadership, corporate governance, and corporate social responsibility. To learn more, please visit http://www.gsb.columbia.edu/leadership/finnovation
Views: 36290 Columbia Business School
From AI, Blockchain, big data to identity, our innovation series examines the forces that are disrupting the role, structure and competitive environment for financial institutions and the markets in which they operate. For more informations: https://www.swift.com/news-events/news/innovation-series_collaboration-and-disruption
Views: 180 PlanetSWIFT
http://www.techgig.com/expert-speak/Innovation-in-Financial-Technology-138 Innovate or perish. That is the only way forward for enterprises. Innovation has become an essential ingredient for modern business and this is particularly true for the Banking, Financial Services and Insurance industry sectors. Banking has led the way in the past through online banking, ATMs, international money transfers and more recently mobile banking facilities. In this webinar, these points will be discussed: What to buy, build and outsource? How to Leverage technology within and outside the enterprise? How to Use architecture as a tool to ensure that IT delivers business outcomes? How to Leverage technology within and outside the enterprise? In response to fresh market demands and many other drivers, IT (Information and Communication Technologies) organisations in every other sector are continuing to innovate. In Financial Services, multi-channel support, legacy reuse and process automation, event detection and processing, end-to-end integration with low latency are the areas in which the IT organisations must focus their innovation efforts to successfully meet business demands. This webinar discusses the top-of-mind concerns shaping innovations in the IT operations of financial services organisations. It highlights the necessity of innovation for survival.
Views: 1391 TechGig
In the last two years, the percentage of investment in fintech has grown 5X, making it one of the hottest sectors for venture investing. Advancements in technology have changed the way consumers—especially millennials—bank online and demand an engaging, digital user experience. Join Bruce Wallace and Reetika Grewal of Silicon Valley Bank to discuss how these advancements are “unbundling banks” and forcing fintech companies to meet individual consumer and small business needs directly. From initial engagement to onboarding, their best practices for online user experience make it easier and less expensive to start a new venture and compete in today’s marketplace. Learn how to: •How the VC landscape in Silicon Valley sets industry standards •Innovative models for customer experience, delivery and service •New approaches to bringing new products to market Presented by the Stanford Innovation and Entrepreneurship Certificate Program (http://create.stanford.edu)
Views: 20488 stanfordonline
Financial Markets Course Yale University lesson 5 2 Salon Innovation
Views: 2 RodStock Investments
Richard Sandor and M. Todd Henderson discuss Sandor's new book, "Good Derivatives: A Story of Financial and Environmental Innovation." Sandor gives insight into markets' roles in environmental and public policy. Sandor is CEO of Environmental Financial Products, LLC and Lecturer in Law and Economics at the University of Chicago Law School. Henderson is Professor of Law at the Law School. This event was sponsored by the Law School and Chicago Booth School of Business. April 17, 2012 ➡ Subscribe: http://bit.ly/UCHICAGOytSubscribe About #UChicago: A destination for inquiry, research, and education, the University of Chicago empowers scholars to challenge conventional thinking. Our diverse community of creative thinkers celebrates ideas, and is celebrated for them. #UChicago on the Web: Home: http://bit.ly/UCHICAGO-home News: http://bit.ly/UCHICAGO-news Facebook: http://bit.ly/UCHICAGO-FB Twitter: http://bit.ly/UCHICAGO-TW Instagram: http://bit.ly/UCHICAGO-IG University of Chicago on YouTube: https://www.youtube.com/uchicago *** ACCESSIBILITY: If you experience any technical difficulties with this video or would like to make an accessibility-related request, please email [email protected]
Views: 838 The University of Chicago
A well-functioning financial system is a key ingredient in a well-functioning economy. Whether an existing company wants to bring a new product to market or a new company wants to compete with an existing company, access to funding is essential. Financial regulation can encourage or inhibit financial markets’ ability to provide the financial products and services necessary to support a vigorous, dynamic economy. A well-designed regulatory system enables the financial system to work efficiently, effectively, and creatively to support economic prosperity. Panelists in this conference discussed how well the financial system is serving entrepreneurs, businesses, and the American people. Panelists: James Brown, Iowa Bankers Faculty Fellowship Associate Professor of Finance, Iowa State University Raymond J. Keating, Chief Economist, Small Business and Entrepreneurship Council Brian Knight, Associate Director, Financial Policy, Center for Financial Markets, Milken Institute Thomas W. Miller, Jr., Jack R. Lee Chair of Finance Institutions and Consumer Finance, Mississippi State University, and Visiting Scholar, Mercatus Center Moderator: Stephen Matteo Miller, Senior Research Fellow, Mercatus Center http://www.mercatus.org Stay Connected Facebook: http://www.facebook.com/mercatuscenter/ Twitter: http://www.twitter.com/mercatus Email: http://www.mercatus.org/newsletters
Views: 272 Mercatus Center
Nobel Laureate in Economic Sciences Professor Robert C Merton speaks at NUS Business School on "Finance Science, Technology and Financial Innovation, and their Impact on the Economy"
Views: 540 NUS Business School
http://www.numerix.com/numerix-blog | In this video, financial markets expert Kevin McPartland explains why as he examines three key activities taking place in the space: the pursuit of the fast and digital movement of money through banking apps and cryptocurrencies; mergers of major markets makers in the electronic trading space; and the benefits that competition from fintech startups brings to the market.
Views: 217 numerixanalytics
Robert C. Merton School of Management Distinguished Professor of Finance, MIT Sloan School of Management University Professor Emeritus, Harvard University
Views: 1260 MIT2016: Celebrating a Century In Cambridge
http://blog.numerix.com | Will wearable technology like Google Glass change the way capital markets participants visualize and engage in the markets? David Easthope of Celent joins Numerix CMO Jim Jockle to discuss Google Glass, Technology Innovation and Financial Services in this Numerix video blog.
Views: 503 numerixanalytics
Financial Markets (ECON 252) Technology and innovation underlie finance. In order to manage risks successfully, particularly long-term, we must pool large amounts of risk among many, diverse people and overcome barriers such as moral hazard and erroneous framing. Inventions such as insurance contracts and social security, and information technology all the way from such simple things as paper, and the postal service to modern computers have helped to manage risks and to encourage financial systems to address issues pertaining to risk. The tax and welfare system is one of the most important risk management systems. 00:00 - Chapter 1. Introduction 05:22 - Chapter 2. Introduction to the History of Risk Management 12:31 - Chapter 3. Long-Term Risk, Risk-Pooling, and Moral Hazard 26:51 - Chapter 4. Inequality and Communism from the View of Risk 35:53 - Chapter 5. Framing: Its Influence on Consumer Perception 47:59 - Chapter 6. The Development of Insurance and other Unobvious Financial Inventions 01:01:00 - Chapter 7. From the Paper Machine to the Present: Information Technology and Its Impact on Postal Service and Social Security Complete course materials are available at the Open Yale Courses website: http://open.yale.edu/courses This course was recorded in Spring 2008.
Views: 59799 YaleCourses
From AI, blockchain, big data to identity, our new innovation series examines the forces that are disrupting the role, structure and competitive environment for financial institutions and the markets and societies in which they operate.
Views: 197 PlanetSWIFT
In this seminar, three leading FinTech experts will discuss their views of the impact of FinTech and particularly the potentially disruptive role of Blockchain, on financial markets and institutions. Paul Schulte, Founder and CEO of Schulte Research International, author of “The Next Revolution in our Credit-Driven Economy: The Advent of Financial Technology”; Alex Medana, CEO WIP Solutions and William Ross, Partner, NEST.vc, will share their insights in a panel discussion moderated by Prof. Veronique Lafon-Vinais, MSGF Project Director and Associate Professor of Business Education, HKUST. Moderator: Prof. Veronique Lafon-Vinais Panelist: Paul Schulte, CEO and Founder, Schulte Research Alex Medana, CEO, WIP Solutions Will Ross, Partner, NEST.vc
Views: 666 HKUST-NYU Stern MS in Global Finance
At the Blockchain Innovation Conference we will discuss blockchain in production, ecosystems & consortia, blockchain for good and the future of Blockchain together with Big Data & Artificial Intelligence! I talk you through together with Conny Dorrestijn on what you can expect. Think of cases regarding the Chinese government, North Sea oil, the first German STO, Dutch Central Bank & Authority Financial Markets and a lot more! https://www.linkedin.com/in/conny-dorrestijn-74b365/
Views: 106 Vincent Everts
FinTechs and financial institutions are becoming friends. IBM experts discuss how FinTechs are helping banks navigate today's two-speed economy. Subscribe to the IBM Banking YouTube Channel: https://www.youtube.com/subscription_center?add_user=IBMBanking Learn More about IBM: https://www.ibm.com/banking https://console.bluemix.net/developer/finance/dashboard https://www.linkedin.com/groups/1946782 https://twitter.com/IBMFinTech Connect with the IBMers featured in this video: ►Sarah Diamond - Global MD, Banking & Financial Markets https://www.linkedin.com/in/sarah-diamond-044a99 ►Likhit Wagle - Global Industry GM, Banking & Financial Markets https://uk.linkedin.com/in/likhit-wagle-8a3a2416 ►Ian Hurst - Global MD, Banking & Financial Markets https://www.linkedin.com/in/ian-hurst-ba143084
Views: 389 IBM FinTech
The financial markets are such a big part of how the world operates today. But, once upon a time, they didn't exist! So how did the financial markets get started? What was the first stock exchange and what securities were traded? Let's find out... ★ Free Course: Introduction to Trading the Duomo Method: http://bit.ly/2Ul2oWx ===== ★ ★ Check out our online financial school for a range of courses about the financial markets, economics and more: http://bit.ly/DuomoSchoolTrading ★ ★ ===== ★ Market Selection Service (free to join): http://bit.ly/MarketSelection ===== ★ Subscribe to our channel for more financial education: https://bit.ly/DuomoYouTube ===== ★ Full online trading course: http://bit.ly/DuomoCourse ===== SOCIAL MEDIA LINKS • Website: https://www.duomoinitiative.com • Members Forum: https://forum.duomoinitiative.com/ • Facebook: https://www.facebook.com/duomoinitiative • Twitter: https://twitter.com/duomoinitiative • Instagram: https://instagram.com/duomoinitiative • Nicholas Puri Twitter: https://twitter.com/nikipuri • Nicholas Puri Instagram: https://instagram.com/nikipuri • Nicholas Puri YouTube: https://www.youtube.com/channel/UCQnFR_qKeu2dgEDpTE24
Views: 3238 The Duomo Initiative - Financial Education
primary stock market, best efforts, firm commitment, underwriting, gross proceeds, net proceeds, underwriter's spread, underwriting risk, placement, private placement, public placement, public offering, initial public offering, qualified investors, general investor, seasoned offering, lead bank, lead house, originating house, participating bank, underwriting syndicate, preemptive right, rights offering, regulator application, regulatory approval, registration statement, red-herring prospectus, official prospectus, shelf registration, regulatory innovation, financial innovation,
Views: 1529 Krassimir Petrov
Traditional banks in China have shifted gear when it comes to tech innovation, competing with technology firms that are also vying for a chunk of lucrative financial markets. That's the latest trend CCTVNEWS noticed at the ongoing 2016 Beijing International Finance Expo. Banks have showcased their latest tech achievements in the Virtual Reality gold market, smart banking terminals and even retina-scan payment systems. Subscribe to us on Youtube: https://goo.gl/lP12gA Download for IOS: https://itunes.apple.com/us/app/cctvnews-app/id922456579?l=zh&ls=1&mt=8 Download for Android: https://play.google.com/store/apps/details?id=com.imib.cctv Follow us on: Facebook: https://www.facebook.com/cctvnewschina Twitter: https://twitter.com/CCTVNEWS Google+: https://plus.google.com/+CCTVNEWSbeijing Tumblr: http://cctvnews.tumblr.com/ Weibo: http://weibo.com/cctvnewsbeijing
Views: 375 CGTN
The Mission Finance video series looks at the levers of change that can help to mainstream climate in financial markets and foster bankable green assets. In this video we ask Andrew McDowell, Vice-President of the European Investment Bank, how we can scale up sustainable finance innovations. For more information visit http://www.climate-kic.org/missionfinance
Views: 49 Climate-KIC
Discover the how ASX's application of distributed ledger technology will have a transformational impact on efficiency, collaboration and innovation in financial markets... Speak to ASX about distributed ledger technology opportunities for your business https://www.asx.com.au/dlt
Views: 607 ASX
Advances in information technology are profoundly impacting financial markets. The advent of Bitcoin is eroding the concept of physical currency, and innovations in payment systems and financial services threaten the status quo. At the same time, electronic and online platforms are decentralizing and democratizing investment opportunities and access to capital. Data science, too, increasingly challenges traditional strategies and approaches to risk assessment. We'll convene leading investors in financial technology to preview its likely disruptive impact over the next five years. How much of a threat does FinTech pose to traditional financial intermediaries? What are the most valuable benefits and salient risks that come with this innovation, and how would regulators respond? What are the key barriers to adoption, and how might they be overcome?
Views: 13533 Milken Institute
The objective of our research group is to study several aspects related to firm management, financial markets, innovation, financing and valuing innovative firms, governance style in innovative firms…
Views: 549 Grenoble Ecole de Management
At the March 30, 2015 New York Chapter Meeting, Jeremy Josse presented on Value, Financial Innovation and Regulation – An Unholy Trinity? Financial instruments are, at their core, representative fictions or tokens reflecting the underlying economy. It seems they can often, or periodically, trade at valuations that might be dislocated from fundamental value. This itself creates risk and instability in the markets. Financial instruments have also become increasingly complex over recent years. Has that increased these curious valuation anomalies? What really is financial innovation and what are its hidden, yet intrinsic, vulnerabilities? How can regulation mitigate some of these risks or is regulation just exacerbating the problem? Jeremy Josse’s presentation will look at the quandaries this cycle exposes and provide insight on systemic, market and conduct risk. Learn more about GARP Chapters: http://bit.ly/1l7ZOO8 Visit http://bit.ly/1l7ZUVW for more GARP Chapter Meeting presentations.
Views: 257 GARPvideo
Critics such as economist Paul Krugman and U.S. Treasury Secretary Timothy Geithner have argued that the regulatory framework did not keep pace with financial innovation, such as the increasing importance of the shadow banking system, derivatives and off-balance sheet financing. A recent OECD study suggest that bank regulation based on the Basel accords encourage unconventional business practices and contributed to or even reinforced the financial crisis. In other cases, laws were changed or enforcement weakened in parts of the financial system. Key examples include: Jimmy Carter's Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) phased out a number of restrictions on banks' financial practices, broadened their lending powers, allowed credit unions and savings and loans to offer checkable deposits, and raised the deposit insurance limit from $40,000 to $100,000 (thereby potentially lessening depositor scrutiny of lenders' risk management policies.) In October 1982, U.S. President Ronald Reagan signed into law the Garn--St. Germain Depository Institutions Act, which provided for adjustable-rate mortgage loans, began the process of banking deregulation, and contributed to the savings and loan crisis of the late 1980s/early 1990s. In November 1999, U.S. President Bill Clinton signed into law the Gramm--Leach--Bliley Act, which repealed part of the Glass--Steagall Act of 1933. This repeal has been criticized for reducing the separation between commercial banks (which traditionally had fiscally conservative policies) and investment banks (which had a more risk-taking culture). However, the vast majority of failures were at institutions that were created by Glass-Steagall. In 2004, the U.S. Securities and Exchange Commission relaxed the net capital rule, which enabled investment banks to substantially increase the level of debt they were taking on, fueling the growth in mortgage-backed securities supporting subprime mortgages. The SEC has conceded that self-regulation of investment banks contributed to the crisis. Financial institutions in the shadow banking system are not subject to the same regulation as depository banks, allowing them to assume additional debt obligations relative to their financial cushion or capital base. This was the case despite the Long-Term Capital Management debacle in 1998, where a highly leveraged shadow institution failed with systemic implications. Regulators and accounting standard-setters allowed depository banks such as Citigroup to move significant amounts of assets and liabilities off-balance sheet into complex legal entities called structured investment vehicles, masking the weakness of the capital base of the firm or degree of leverage or risk taken. One news agency estimated that the top four U.S. banks will have to return between $500 billion and $1 trillion to their balance sheets during 2009. This increased uncertainty during the crisis regarding the financial position of the major banks. Off-balance sheet entities were also used by Enron as part of the scandal that brought down that company in 2001. As early as 1997, Federal Reserve chairman Alan Greenspan fought to keep the derivatives market unregulated. With the advice of the President's Working Group on Financial Markets, the U.S. Congress and President allowed the self-regulation of the over-the-counter derivatives market when they enacted the Commodity Futures Modernization Act of 2000. Derivatives such as credit default swaps (CDS) can be used to hedge or speculate against particular credit risks. The volume of CDS outstanding increased 100-fold from 1998 to 2008, with estimates of the debt covered by CDS contracts, as of November 2008, ranging from US$33 to $47 trillion. Total over-the-counter (OTC) derivative notional value rose to $683 trillion by June 2008. Warren Buffett famously referred to derivatives as "financial weapons of mass destruction" in early 2003. http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308
Views: 1843 The Film Archives