Found 409 article(s) in category 'Financial Services'

The Country Chronologies to Exchange Rate Arrangements into the 21st Century: Will the Anchor Currency Hold?

The Country Chronologies to Exchange Rate Arrangements into the 21st Century: Will the Anchor Currency Hold? Carmen Reinhart, Kenneth Rogoff, February 2017, Paper, “Detailed country-by-country chronologies are an informative companion piece to our paper “Exchange Arrangements Entering the 21st Century: Which Anchor Will Hold?,” which provides a comprehensive history of anchor or reference currencies, exchange rate arrangements, and a new measure of foreign exchange restrictions for 194 countries and territories over 1946-2016. The individual country chronologies are also a central component of our approach to classifying regimes. These country histories date dual or multiple exchange rate episodes, as well as to differentiate between pre-announced pegs, crawling pegs, and bands from their de facto counterparts. We think it is important to distinguish between say, de facto pegs or bands from announced pegs or bands, because their properties are potentially different. The chronologies also flag the dates for important turning points, such as when the exchange rate first floated, or when the anchor currency was changed. We extend our chronologies as far back as possible, even though we only classify regimes from 1946 onwards.Link

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Gita Gopinath’s Advice To RBI: ‘Be More Transparent’

Gita Gopinath’s Advice To RBI: ‘Be More Transparent’. Gita Gopinath, January 6, 2017, Video, “On NDTV’s Walk The Talk, Economics Professor at Harvard University and Financial Advisor to the Kerala Chief Minister Gita Gopinath says she’s a bit puzzled about why an institution like the RBI which is driven by data was giving out data post demonetisation. She adds RBI should have been more transparent about data. She says she feels that notes ban was a great move by the government and will benefit India in the long run, however she feels the implementation could have been better planned and gradual. She says “getting rid of 86% of the currency in circulation is unprecedented, not just in practice but also in theory”.Link

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Transportation Cost and the Geography of Foreign Investment

Transportation Cost and the Geography of Foreign Investment. Laura Alfaro, January 6, 2017, Paper, “Falling transportation costs and rapid technological progress in recent decades have precipitated an explosion of cross-border flows in goods, services, investments, and ideas led by multinational firms. Extensive research has sought to understand the geographic patterns of foreign direct investment (FDI). This chapter reviews existing theories and evidence specifically addressing questions including: How is FDI distributed across space? Why does the law of gravity apply? How do the costs of transporting goods, tasks, and technologies influence firms’ decisions to separate tasks geographically and locate relative to one another? We discuss a variety of theoretical mechanisms through which transport cost and other geographic friction influence FDI and present the key empirical studies and findings.Link

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The Persistent Effect of Initial Success: Evidence from Venture Capital

The Persistent Effect of Initial Success: Evidence from Venture Capital. Ramana Nanda, 2017, Paper, “We used data on individual investments in the portfolios of venture capital firms to study persistence in their performance. Each additional IPO among a VC’s first five investments predicted a 13% higher IPO rate for its subsequent 50 investments. Roughly half of this performance persistence stemmed from investment “styles”?investing in particular regions and industries. We found no evidence of performance persistence stemming from a differential ability to select or govern portfolio companies. Rather, our results suggest that early success in venture investing yields better deal ow in subsequent investments, thereby perpetuating differences in the outcomes of initial investments.Link

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Rainy Day Stocks

Rainy Day Stocks, Robin Greenwood, January 2017, Paper, “We study the good- and bad-times performance of equity portfolios formed on characteristics. Many characteristics associated with good performance during bad times – value, profitability, small size, safety, and total volatility – also perform well during good times. Stocks with characteristics signifying high liquidity, such as high turnover and low bid ask spreads, perform well during bad times but otherwise underperform. We develop a simple but flexible procedure to recover a “risk neutral alpha” that recognizes a 1% return experienced during bad times as being more valuable than a 1% return generated during good times. We also show how an investor can build a “rainy day” portfolio that minimizes underperformance during bad times.Link

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Vox Capital: Pioneering Impact Investing in Brazil

Vox Capital: Pioneering Impact Investing in Brazil. Julie Battilana, January 2017, Case, “Vox Capital was the first certified impact investing fund in Brazil. Founded in 2009, it provides early-stage capital for companies offering innovative and scalable solutions to enhance the lives of low-income Brazilians, while aiming to simultaneously generate attractive market-rate financial returns for investors. This case examines the evolution of Vox Capital, across understanding the landscape, launching, raising funds, selecting investees, structuring deals, building investee capacities, tracking performance, developing internal systems, and advancing the field of impact investing.Link

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Italy Has Faced a Long, Difficult Time

Italy Has Faced a Long, Difficult Time. Kenneth Rogoff, December 1, 2016, Video, “In today’s “Morning Must Read,” Bloomberg’s Tom Keene and Francine Lacqua highlight comments on this weekend’s Italian referendum. They speak with Harvard University Professor of Economics Kenneth Rogoff on “Bloomberg Surveillance.”Link

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Private Banking and Crony Capitalism in Egypt

Private Banking and Crony Capitalism in Egypt. Ishac Diwan, 2016, Paper, “In Egypt, the bulk of bank loans during 2003-2010 went to politically connected firms. At the same time, the banking sector was liberalized increasingly operated around competitive and profit-maximizing principles. A key puzzle that the paper tries to answer is why private banks may lend in preferential ways to politically connected firms (PCFs) in such an environment. Using a rich corporate dataset, we find that politically connected firms did not have higher profitability compared to non-politically connected firms. This suggests that PCFs were perceived to have lower risk. Indeed, we find evidence that this was the case, and that lower risk reflected higher access to bailout guarantees (implicit or explicit), as happened in earlier periods, and/or higher perceived growth opportunities.Link

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The Cross Section of Bank Value

The Cross Section of Bank Value. Adi Sunderam, November 2016, Paper, “We study the determinants of value creation within U.S. commercial banks. We focus on three theoretically-motivated drivers of bank value: screening and monitoring, “safe” deposit production, and synergies between deposit-taking and lending. To assess the relative contributions of each, we develop novel measures of banks’ deposit productivity and asset productivity and use these measures to evaluate the cross-section of bank value. We find that variation in deposit productivity explains the majority of variation in bank value, consistent with theories emphasizing safe-asset production. We also find evidence of meaningful value creation from synergies between deposit-taking and lending. Overall, our findings suggest that banks are primarily “special” due to their unique liability structure rather than their ability to screen and monitor borrowers.Link

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