Dionisis Philippas

Influence of Financial Innovation to the Validation of Operational Risk

Purpose - The purpose of this paper is to show how the influence of the diffusion speed of a financial innovation (FI) increases the operational risk (OR) in any business line with different rate. Design/methodology/approach - A stochastic model is considered presenting the influence of diffusion speed of FIs in order to validate the OR, without taking into consideration any external factors that create OR. Under specific hypotheses, the model presents the variance and the fluctuation of total OR in time and internal business lines of a financial institute because of the influence of an FI with a random degree of access (r). Findings - FIs and OR and, their role in various financial organizations, are examined. The model suggests that an FI is more likely to occur and spread in production lines that have a great cross-correlation with an increasing OR, without taking into consideration the external environment. Originality/value - The originality of the paper is the stochastic relation between FIs and OR and the way that OR increases in any business line because of the influence of the diffusion speed of an FI.

The effects of sector reforms on the productivity of Greek banks: a step-by-step analysis of the pre-Euro era

The paper analyses the effects on the productivity of Greek commercial banks of sector regulatory reforms in the pre-Euro era, using the Global Malmquist Index. In a bootstrap Data Envelopment Analysis framework, we propose an alternative to smoothing that utilises the Pearson system random number generator, offering greater flexibility in the choice of the fitting distribution. In the context of a step-by-step approach, we demonstrate the contribution of deregulatory commercial freedoms to greater productivity and the negative effect of prudential controls. Our findings offer insights into the current state of the Greek banking sector, suggesting that the imposition of additional prudential controls may have a detrimental impact on the productivity of Greek banks, given the adverse business conditions.

Money factors and EMU government bond markets' convergence

Purpose - – The authors aim to investigate the cointegrating relationship of the government bond yields, driven by the common money factors in European Monetary Union (EMU). Design/methodology/approach - – By adopting a dynamic ARDL transformation, the paper provides short-/long-term estimates of bond yields convergence before the burst of the current debt crisis. It also investigates how the degree of convergence between bond yields, driven by money factors, is affected in short/long runs. Findings - – The findings indicate that the introduction of the common currency has not a uniform effect on the bond yields, and there is a nominal convergence between EMU bond yields based on money market determinants. Originality/value - – The current financial crisis indicates that the EMU bond market convergence was temporary and it can be highly affected by an exogenous shocks and the sentiment of international investors. The findings imply the necessity for a common monetary and fiscal policy in Euro zone countries.

Is the Progress of Financial Innovation a Continuous Spiral Process

We herein examine the progress of financial innovations over the past 30 years, beginning with how they have influenced the financial system. We adopt a framework of classification that provides an overview of previous findings to examine the continuity of financial innovations. We find that the progress of financial innovations is discontinuous and is characterized by isolation and limited research studies. Finally, we highlight the main reasons why the previous literature in this area is limited and how financial innovations have not yet reached the point of diminishing returns.