Andrea Paltrinieri

Islamic and Conventional Exchanges: A Performance Analysis and Governance Perspectives

Over the last two decades the securities industry has undergone a process of rapid transformation which has been accelerating over the last few years. The backbone of such a process is the demutualization and self-listing of a large part of stock exchanges around the world. Subsequently, a widespread consolidation process, which gathered speed at the beginning of the century, lead to the polarization of trading and gave rise to a very few large conglomerates operating on a transatlantic basis, with highly diversified business models, and managing vast pools of liquidity. Apart from these more dominant players, regional exchanges still exist (operating, however, with far lower levels of liquidity) and new rivals (electronic communication networks — ECNs) are prospering.

A Review of Islamic Investment Literature

This paper reviews the empirical literature on the contemporary issues of Islamic investments and highlights the future research directions. The growing literature during the last several years and the penetration of Islamic investments beyond the Muslim majority countries motivate us to review the empirical studies in the area. We therefore focus our literature review on mutual funds, sukuk and equity investments, analysing 81 articles from the most important journals dealing with the topic. The mixed findings in this area help the understanding of professionals not familiar with Islamic investment to identify the trends of the literature for important decisions. Our results have also important financial implications for asset managers willing to include Islamic financial instruments into a well‐diversified portfolio.

Life Insurance and Bancassurance After Solvency II: A Market and Management Perspective

This chapter analyses the dynamics of life insurance and bancassurance within the new Solvency 2 regime. After having assessed the general trends of life insurance market in Europe during Solvency 1, this chapter investigates the challenges and the perspectives of the new regulatory framework, with a focus on both the supply and the demand side. We assess in particular the issue of very low interest rates and their potential impact on insurance companies’ business under the new regime. Finally, given our management perspective, we will discuss the potential implications and we will provide some guidelines for European insurance companies.

Volatility Linkages and Co-movements Between International Stocks and the Sukuk Market

In this paper, we investigate the volatility behavior and the co-movements between sukuk and international stock indexes. Asymmetric multivariate GARCH models with dynamic conditional correlations (DCC) were estimated under student-t distribution. We provide evidence of lower correlations between sukuk and US and EU stock markets. We also show that volatility linkages between sukuk and regional market indexes are higher during financial crisis. We argue that investors could obtain diversification benefits including sukuk in a well-diversified portfolio, given their lower volatility compared to equity. But higher volatility linkages and dynamic correlations during financial crises show that they are hybrid instruments between bonds and equity. Our findings are relevant for institutional investors and asset managers that include Islamic bonds in a diversified portfolio.

Credit Quality, Bank Provisioning and Systematic Risk in Banking Business

Managerial behaviour and accounting policies have a huge impact on corporate earnings and their information content. Reporting of non-performing loans and loan-loss provision (LLP) practices are among the major concerns in the banking industry. Asset quality, exposure to credit risk and provisioning bear great implications in relation to earnings volatility and capital adequacy. Managers may rely on discretionary provisioning as a means of smoothing earnings. While there is a large debate in literature about the incentives to discretionary LLP, there is no doubt that such a practice might hinder the true riskiness of the bank and distort market perceptions. In the same vein, discretionary provisioning may be regarded as a tool for optimizing a bank’s capital.

Investment Strategies of Institutional Investors: An International Comparison of Sovereign Pension and Social Security Reserve Funds

In recent years Sovereign Wealth Funds (SWFs) have increased their numbers and their global importance in terms of assets under management. From the peak of the financial crisis, both the banking sector and the securities industry have suffered severe adverse effects on profitability growth and financial stability. At the same time, the number and size of SWFs soared: at year-end 2012, at least 65 investment vehicles were active with total assets under management in excess of 5 trillion USD (Sovereign Wealth Fund Institute, 2013).

Does ‘Political Bias’ Undermine the Korea Investment Corporation?

In recent years sovereign wealth funds (SWFs) have become increasingly important as institutional investors, both in numerical terms and in terms of assets under management (Aizenman and Glick, 2007; Jen, 2007; Kern, 2007, 2008). In particular, since 2007, when many banks needed to recapitalize because of the subprime financial crisis, the number of SWFs has continuously increased to reach 65 investment vehicles in December 2012, with total assets under management equal to more than

In Search of Zero Beta Assets: Evidence from the Sukuk Market

5 trillion (Sovereign Wealth Fund Institute, 2013).