Simona Mihai Yiannaki

ETFs performance Europe- a good start or not?

Abstract Under the premises that the U.S. Exchange Traded Funds (ETFs) hold over 70% of the ETFs’ World market, it seems that the European ones have been either under-researched or less demanded. This study provides some insights into the performance of two ETFs hubs, holding over 80% of the European ETFs activity, namely those operating in Luxembourg and Ireland, due also to their tax similarities. Following an updated literature review on the topic, the paper compares these two ETFs hubs by using secondary data publicly available, interpreted under a framework of previously identified performance methods: Tracking Error, Jensens alpha and Modigliani- M 2 measure of performance. This methodology completes the descriptive statistics analysis, while aiming at answering two hypotheses. The first hypothesis states that the Tracking Error of ETFs compared to their benchmark or market indexes equals zero, which is confirmed by the study. The second hypothesis suggests that these particular ETFs do not present significant alphas, which is partially confirmed. Moreover, the second hypothesis is tested not only against various features of these funds ‘benchmarks, but also from risk measurement perspectives, while employing correlation significance between the two countries ETFs. Overall, it appears that from the risk adjusted performance perspective, the ETFs domiciled in Luxembourg outperform the Irish ones, leading also to potential M&As in this industry.

E.U. Fiscal Pressure on Bank Employment During the Euro Crisis

December 2011 was a critical month for the Euro currency credibility within the Euro Zone. This is because for the latest 5 years of economic and financial crisis ardent economic and political debates are still trying to sort out the sequels of this recession. Within this context, this paper produced detailed analysis on a strong link: the money thread, the link between both people’s and governments’ needs during financial crisis. Thus, both search for more money and both try to show how important their role is in the global economy, despite strong interlinks. Altogether, this paper tries to show how nowadays fiscal policy can impact on the bank employment in European Union, not neglecting the regulatory bank environment and the connection with the monetary policy and other economic and financial theories. The paper’s first dilemma is whether to tax the banks’ profits thus affecting the pricing of their products as well as their economic growth. The second dilemma consist in either taxing the banks indirectly by asking to hold higher capital adequacy ratios or in taxing their borrowing and then bail them out and then recover the money from the taxpayers, including making profit thereafter from the resale of the bailed out bank to the private sector. The E.U. existing non-harmonized fiscal policy seems to leave the fiscal federalism concept nowadays in times of deep recession, modifying also the E.U. banking system’s regulatory environment, while moving towards a fiscal union as a fast response in tackling the current economic recession.

Where To? – The European Unemployment Post Crisis

Purpose: When the scales try to balance between 6.5% and 25% unemployment rates in the European Union, performance indicators seem to become difficult to interpret and forecast, let alone the unemployment trend itself. In other comparative terms as to the post financial crisis that hit the World in 2007-2010, Europe’s performance looks unfavorable compared to the one of the U.S. One of the reason presented resides in the E.U.’s four-folded modular pattern in social and political policies compared to a relatively unitary one across the Ocean. Design: The study uses literature review, secondary and tertiary published data to analyse the construct of the underlined concept from three perspectives: the New Classical Macroeconomics theory related to unemployment, a new approach of relationship with exchange rates and hence a financial perspective and from legal aspects of a social policy as drawn by the latest Lisbon Treaty. Findings: Despite strong evidence support of similar reactions with the post crisis situation of 1973, the answer to a certain degree of inability to understand the fundamental causes of the problem, at economic, social or political represents just a failure to find the advanced applied social policies that may solve it. This has challenge the author to present several recommendations in this respect and readjust the optimistic E.U. unemployment rate for 2010 from an average of 11% to 13%. Originality: This paper offers three previously not correlated angles to look at the unemployment dynamics after the adoption of the Lisbon Treaty in the E.U. and, at the same time after the most recently experienced world financial crisis.