Financial and Economic Systems: Transformations and New Challenges

Contents
Preface
Author the Editors
About the Contributors
Introduction
Part I: The Changes in the Real Sphere
Chapter 1. Macroprudential Policy in the EU — Policy Reflections on Institutional Contexts and Governance Arrangements
1.1 Introduction: The Ascent of Macroprudential Policy
1.2 The International Policy Debate on Macroprudential Policy
1.2.1 Inaction bias and macroprudential policy
1.2.2 Private interest and macroprudential policy
1.2.3 Macroprudential set-up
1.2.3.1 Institutional set-up
1.2.3.2 Governance arrangements
1.3 Macroprudential Policy in the EU
1.4 Determinants of Macroprudential Policy Stances
1.5 Policy Conclusions and Discussion
References
Chapter 2. The Effect of Austerity Measures Under Sovereign Risk and Financial Frictions
2.1 Introduction
2.2 Model
2.2.1 Households
2.2.2 Bankers
2.2.3 Banks
2.2.3.1 Savings banks
2.2.3.2 Borrowing banks
2.2.4 Entrepreneurs
2.2.5 Final good producers
2.2.6 Governments
2.2.7 Sovereign default risk
2.2.8 Equilibrium
2.2.9 Shock processes
2.3 Calibration
2.4 Simulations
2.4.1 Effects of a rise on the consumption tax
2.4.2 Effects of a rise on the pay-roll tax
2.4.3 Effects of a rise on the capital-income tax
2.5 Conclusion
References
Chapter 3. How Do Financial Markets Listen to the Economic Policy Uncertainty?
3.1 Introduction
3.2 Measuring EPU: The Baker Bloom and Davis (BBD) Index
3.3 The Stock Market Behavior Under EPU
3.4 Foreign EPU Spillovers: The Role of the US
3.5 Risk Premium Under Uncertainty
3.6 Financial Market Interconnection Under Uncertainty
3.7 Conclusion
References
Chapter 4. Regulation, Ethics, and Economic Stability Evidence from Eastern European Countries
4.1 Introduction
4.2 Theoretical Background
4.2.1 Corporate ethics evolution and application
4.2.1.1 The ethical business conducts definition
4.2.1.2 Corporate framework and ethical business application
4.2.2 The relationship between macroeconomic governance and the corporate ethical tools
4.2.2.1 Unethical business a key driver of financial fragility
4.2.2.2 The influence of governance policies on corporate ethical tools
4.3 Empirical Investigation
4.3.1 Methodology and model
4.3.1.1 The dependent variables: Financial system stability
4.3.1.2 The independent variables: Regulation
4.3.1.3 The mediating variables
4.3.1.4 The controls
4.3.2 Methodology
4.3.3 Model
4.3.4 Sample and data
4.3.5 Empirical results
4.4 Conclusion
References
Part II: Financial Markets: Post-crisis Challenges
Chapter 5. Beyond the Myths: Questions for Post Modern Finance
5.1 Introduction
5.2 Markets Exist
5.3 Markets Are Pure and Perfect
5.4 Markets Are Liquid
5.5 Markets Are Efficient
5.6 Individuals Are Rational
5.7 Only Risks Are Priced
5.8 Market Prices Follow Random Walks
5.9 One Cannot Beat the Market
5.10 In Conclusion
References
Chapter 6. Contagion Effect Between Financial Markets and Collectibles Markets: A Review of Empirical Research
6.1 Introduction
6.2 Methodology: Identification of Papers and Selection Process
6.3 Art
6.3.1 Returns of art
6.3.2 Return on art in relation to other assets
6.3.3 Relationship between art market and financial markets
6.3.4 Art and portfolio diversification
6.4 Wine
6.4.1 What is a fine wine?
6.4.2 Databases and methodologies to analyze the fine wine returns
6.4.3 Wine returns in within-wine asset class portfolio
6.4.4 Wine returns in a mixed-asset portfolio
6.4.5 Diversification effects in a mixed-asset portfolio
6.4.6 Analysis of cointegration and contagion effect with the financial markets and macroeconomic variables
6.5 Stamps
6.6 Other Collectibles
6.6.1 Antique furniture
6.6.2 Classic cars (Collectible automobile)
6.6.3 Diamonds
6.6.4 LEGO
6.6.5 Rare books
6.6.6 Rare coins
6.6.7 Violins
6.6.8 Whisky
6.7 Conclusion
References
Chapter 7. Machine Learning, Computational Techniques, and Reporting Processes: Risk Exposure in GCC Markets in the Wake of the 2007–2009 Global Financial Meltdown
7.1 Introduction
7.2 Computation of Liquidity Adjusted Value-at-Risk (LVaR) with a Closed-Form Parametric Process Using Al Janabi Model
7.3 Computation and Controlling of Market and Liquidity Risk Exposures — A Practical and Real-World Trading Case Study of Multiple-Assets Portfolios
7.3.1 Stochastic properties of the returns series and testing for non-normality forms
7.3.2 Computation of the maximum LVaR limit for a typical financial trading entity
7.4 Concluding Remarks and Recommendations
References
Chapter 8. On the Performances of Dynamic Conditional Correlation Models in the Sovereign CDS Market and the Corresponding Bond Market
8.1 Introduction
8.2 Literature Review
8.3 Methodology
8.3.1 Marginal volatility processes: Univariate ARCH-type models
8.3.2 Joint volatility processes: Multivariate ARCH-type models
8.4 Data
8.5 Empirical Results
8.6 Conclusion
References
Chapter 9. Development of Socially Responsible Investing (SRI) — Evidence from the Mutual Funds Industry
9.1 Introduction: A Short History of SRI and Its Development Globally
9.2 Comparisons with Conventional Funds: Performance and Investor Behavior
9.3 Movements Towards Facilitating Socially Responsible Investing
9.4 Concluding Remarks
References
Part III: CSR, Sustainability, and Ethical Finance: New Trends
Chapter 10. The Relationship Between CSR Disclosure and CSR Performance: A Western European Sample
10.1 Introduction
10.2 Literature Review and Hypotheses Development
10.2.1 Corporate social responsibility disclosure
10.2.2 CSR performance — Concept and measurement
10.2.3 Relationship between CSR disclosure and CSR performance
10.3 Sample, Variables, and Models
10.3.1 Sample and data
10.3.2 Variables
10.3.2.1 Corporate social responsibility performance (CSP)
10.3.2.2 CSR disclosure
10.3.2.3 Control variables
10.3.3 Models
10.4 Results
10.4.1 Summary statistics
10.4.2 Univariate test results
10.4.3 Empirical results
10.5 Conclusion
Appendix A: Description of Variables
Appendix B: Environmental and Social Issues with Bloomberg Fields
References
Chapter 11. Corporate Social Responsibility and Corporate Governance: A Cognitive Approach
11.1 Introduction
11.2 Corporate Social Responsibility: Could Ethics Rebuild Financial Performance?
11.2.1 On the confounded link between social performance and financial performance
11.2.2 Strategic CSR versus responsive CSR
11.3 Corporate Governance and CSR
11.3.1 Board diversities: Diversity in boards and diversity of boards
11.3.1.1 Diversity of boards
11.3.1.2 Diversity in boards
11.3.2 CSR performance and CSR committees
11.3.2.1 Structural characteristics of CSRC
11.3.2.2 Demographic characteristics
11.4 Discussion
11.5 Conclusion
References
Chapter 12. ESG Performance and ESG Rating: A Critical Review of the Screening Methodologies and the Way Forward
12.1 Introduction
12.2 The Performance in the Financial Sector
12.2.1 New paradigm for performance: From ECR to ESG performance
12.3 The Rise of ESG Investment and Worldwide Evolution
12.3.1 Defining ESG components?
12.3.2 State-of-the-art: Where do we stand?
12.4 Sustainable Performance and Financial Performance: Antecedents and Recent Developments
12.5 Qualitative ESG Screening Methodologies by Main Rating Providers
12.5.1 ESG ratings screening: Comparison of the main criteria’s
12.5.2 Shortcomings and limits of current individual ratings methodologies
12.6 Conclusion
Appendices
Appendix A: Examples of ESG performance issues.
Appendix B: Islamic finance principles versus SDGs.
Appendix C: E, S and G categories and their relation to CFP.
References
Chapter 13. Corporate Social Responsibility and Firm Risk: Evidence from France
13.1 Introduction
13.2 Literature Review and Hypothesis Development
13.3 Research Methodology
13.3.1 Sample and data
13.3.2 Variables’ description
13.3.3 Model
13.4 Results and Discussion
13.5 Conclusion
References
Chapter 14. Does Board Structure Matter for Innovation?
14.1 Introduction
14.2 Do Directors’ Attributes in Boards Influence Innovation?
14.2.1 Board diversity: Theoretical perspectives
14.2.2 Board composition and innovation
14.2.2.1 Presence of outside directors on board and innovation: Independent, foreign directors
14.2.2.2 How does directors’ education influence innovation?
14.2.3 Gender diversity on board
14.2.4 Directors’ age
14.3 Does Diversity in Board Committees Favor Innovation?
14.3.1 Role of board committees and innovation
14.3.2 Committee composition and innovation
14.3.2.1 What do women bring to committees?
14.3.2.2 Why should more independent directors be appointed to committees?
14.3.3 Committees size
14.3.4 Committees functioning and innovation
14.4 Board Quota: Gender Quota Laws
14.5 Discussion and Conclusion
References
Part IV: Transformations, Digitalization, Blockchain, FinTech
Chapter 15. Blockchain Technology: Beyond Cryptocurrencies
15.1 Introduction
15.2 The Characteristics of Blockchain Technology
15.2.1 Origin of Blockchain technology
15.2.2 The functioning of Blockchain technology
15.2.3 The different types of Blockchain
15.3 The New Applications of Blockchain Technology
15.3.1 Factors that render Blockchain attractive
15.3.2 The impact of Blockchain to financial markets
15.3.3 The non-financial uses of Blockchain
15.4 Conclusion
Appendix A
Glossary
References
Chapter 16. FinTech Development, Digital Infrastructure and Institutions in the SSA Zone
16.1 FinTech in Africa: Evolution of the Mobile Phone
16.2 The Mobile Phone Journey in Kenya
16.3 Evolution of FinTech: The M-PESA Experiment and Its Success Factors
16.3.1 Evolution of M-PESA in Kenya
16.3.2 Blurring the boundaries: The fusion of telecom and financial services provision
16.3.3 Economic impact of M-PESA
16.3.4 M-PESA from P2P to C2B and B2B
16.4 Mobile Money in East Africa and Around the World
16.4.1 Challenges affecting M-PESA adoption
16.5 Consumer and Data Protection
16.6 Evolution of RegTech
16.6.1 The Sandbox in Kenya
16.6.2 RegTech solutions: Input approach vs pull approach
16.7 Conclusions
16.7.1 Recommendations for further research
References
Chapter 17. Fintech Development, Digital Infrastructure and Institutions in the MENA Zone
17.1 Introduction
17.2 Theoretical Framework
17.3 Data Description and Study Methodology
17.3.1 Scope and aim of the study
17.3.2 Data and methodology
17.3.3 Study findings and discussion
17.3.3.1 Impact of investment freedom on Fintech
17.3.3.2 Impact of inflation on Fintech
17.3.3.3 Impact of institutional indicators on Fintech
17.4 Conclusion
References
Chapter 18. Banks vs FinTech in the French Market
18.1 Introduction
18.2 Literature Review
18.3 Fintechs Tackle Banking Sector with New Technology
18.3.1 Innovative technologies in the financial sector
18.3.1.1 From robotization to algorithms thanks to data production
18.3.1.2 Large-scale cloud storage and data processing
18.3.1.3 Blockchain
18.3.2 Fintech’s business lines
18.3.2.1 Payment or how to guarantee healthy competition
18.3.2.2 Crowdlending or how to get around the banking monopoly
18.3.2.3 Insurtech or how to attack yet another banking annuity
18.3.2.4 Compliance and risk management (Regtech)
18.4 Banks, Between Innovation and Regulation Constraints, Confronted to Fintech’s Boom
18.4.1 Online banks’ attempt at digitalization
18.4.2 Regulation as a restriction to institutional innovation
18.5 Banks and Fintechs in France: Cooperation, Competition, or Coopetition?
18.5.1 Fintechs in France
18.5.2 Reactions of French banks to the development of Fintechs
18.5.2.1 Collaboration between banks and Fintechs
18.5.2.2 Bank’s investment in Fintechs
18.5.2.3 Confrontation
18.6 Conclusion
References
Chapter 19. Impact of Fintech on the Level of Competition in the EU Banking Sector
19.1 Introduction
19.2 Literature Review
19.2.1 Fintech
19.2.2 Competition in the banking sector
19.3 Data and Models Specification
19.4 Conclusion
Appendix
References
Legal Acts
Index