Kym Eva Brown

Romanian Financial Markets

Romania was a centrally planned economy until 1990. Over 1950 to 1975 large-scale government investments were made into heavy industry and hence productivity increased. Performance was measured against required production quotas rather than quality products that could be exported (Bacon, 2004). Compared to most other Central and Eastern European countries, Romania had little prior experimentation with market practices, so when the change occurred it was even more significant (Bacon, 2004). Romanians initially enjoyed their new economic freedoms and imported consumables previously not permitted. Inflation increased and workers sought higher wages, with consequential negative effects on output (Daianu, 2004). The government also expended large amounts, particularly foreign exchange reserves, prior to elections. Meanwhile, supranationals, such as the International Finance Corporation (IFC), World Bank, International Monetary Fund (IMF) and European Bank for Reconstruction and Development (EBRD), all funded Romanias burgeoning market economy. In 1993, a pyramid-type scheme offering huge returns for money invested for 3 years blossomed and became so large it rivalled gross domestic product (GDP) at the time. Hence the 1990s was a period of instability despite efforts to transform the economy to market practices.

Globally Systemically Important Banks and the Basel III Regulatory Announcements:International Evidence

This paper examines the impact of five distinct Basel 3 announcements had on systematic risk levels of 122 internationally active banks in 37 countries over the sample period 2007-2013 using an extension of the Wagster (1996) market model. We extend the prior literature with methodology that captures the market reaction to banks’ systematic risk both from the relevant domestic country index and the World MSCI index as well as compared the responses of globally systematic important banks (G-SIBs) with other international banks. The G-SIBs in the sample had a higher level of systematic risk than their non-G-SIB counterparts throughout the sample period. Both groups showed a decrease in systematic risk in response to the Basel Committee on Banking Supervision 2009 consultative document and also its 2013 liquidity revisions, but more so for the G-SIBs. In contrast, no change to systematic risk is found for the 2010 official Basel III release. Systematic risk increased against the country indexes for the 2011 G-SIB consultative document, more so for G-SIBs and for the official document release later in 2011 the G-SIB banks risk change with the world index. Finally, the systematic risk of the G-SIB and non G SIB banks both reduced significantly for the Basel III liquidity revision in 2013.

Evaluation of Mutual Fund Growth and Performance in Asia

We demonstrate the growth of the funds management industry in Asia and how this growth and its performance will potentially result in the Asian region becoming a leading financial hub in years to come. We find that the mature developed country markets offer a lower long-term return than Indonesia, China, and India. The progressive development toward an Asian mutual fund passport approval systems similar to Europe will allow regional enhancement to recycle savings both within the region and to offer further investment platforms around the world. Singapore, Hong Kong, and Taiwan have a majority of their funds domiciled in Luxembourg or Ireland; with an Asian regional funds passport, this is likely to change, allowing the managed funds industry in Asia to compete with developed Europe.

Comparative Financial Development in Asia-Pacific Since the Asia Crisis

Since the 1997 financial crisis many East Asian economies attempted to realign their financial systems to prevent future crises and establish financial mechanisms to better sustain long-term development. This chapter examines the financial system development of select Asia-Pacific countries from before the Asian financial crisis to the present. We highlight the growth of the Chinese financial market and especially the enabling role now undertaken by Hong Kong. In most countries financial market reform and development of stock markets undertaken following the shock of the Asian financial crisis, made these countries more resilient to the global crisis that affected world markets from 2007 onwards.

Independent Directors and Risk Taking: Evidence from Listed US Insurance Companies

This study examines the relation of independent directors and their gender diversity, busyness, and experience with risk taking for 112 listed US insurance companies over 2003-2010. Using OLS, system GMM and 3SLS, we find that board independence, females amongst independent directors and busy boards are positively related to risk taking. While board tenure is not related to risk taking, experienced boards are found to be positively related to risk taking. Our study contributes by extending the board structure literature to show that the composition of independent board members matters for monitoring. Female independent directors, rather than simply female directors, improve board monitoring but that more than two does not. A higher percentage of non-busy directors may also mitigate the adverse effect of busy directors. Furthermore, experience gained through serving on the board improves monitoring.