Found 424 article(s) in category 'Financial Services'

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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Precautionary Savings in Stocks and Bonds

Precautionary Savings in Stocks and Bonds. Emil Siriwardane, Adi Sunderam, November 20, 2016, Paper, “We document a strong and robust relation between the one-year real rate and precautionary savings motives, as measured by the stock market. Our novel proxy for precautionary savings, based on the difference in valuations between low- and highvolatility stocks, explains 37% of variation in the real rate. In addition, the real rate forecasts returns on the low-minus-high volatility portfolio, though it appears unrelated with measures of the quantity of risk. Our results suggest that precautionary savings motives, and thus the real rate, are driven by time-varying attitudes towards risk. We rationalize these findings in a stylized model with segmented investor clienteles and habit formation.Link

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The Rise of Risky Derivatives: Chief Risk Officers, CEOs, and Fund Managers

The Rise of Risky Derivatives: Chief Risk Officers, CEOs, and Fund Managers. Frank Dobbin, November 18, 2016, Paper, “At turn of the century, regulators introduced policies to control bank risk-taking. Many banks appointed chief risk officers (CROs), yet bank holdings of new, complex and untested financial derivatives subsequently soared. Institutionalists suggest that firms respond to regulations by appointing compliance experts, who sometimes exaggerate legal requirements. We propose a more nuanced institutional theory of expert interests, and highlight effects of other powerful groups. Rather than overstating what the law required, risk experts sought to cement their role in shareholder-value management with compliance strategies that they also marketed as maximizing risk-adjusted returns.Link

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Does Women’s Banking Matter for Women? Evidence from urban India

Does Women’s Banking Matter for Women? Evidence from Urban India. Rohini Pande, November 16, 2016, Paper, “In many developing countries, women are prevented to take full advantage of the benefits of living in an urban area. In India, while one of every two men participates in the labor market, it is the case just for one of every six women. In this context, it is thought that access to microfinance is key to bridge the gap and to introduce women into the labor force. This is the first project to rigorously evaluate the long term impact of increasing access to microcredit on female labor force participation. In this study, we exploit quasi-experimental variation in women access to microfinance generated by a unique expansion strategy adopted by the oldest Women Bank in the world. From 1999 onward, the “ Shri Mahil Self Employment Women Association Sahkari (SEWA) Bank” massively introduced the use of loan collection officers which dramatically reduced the transaction cost of getting a loan in Ahmedabad, urban India.Link

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Understanding Bank Risk through Market Measures

Understanding Bank Risk through Market Measures. Lawrence Summers, Fall 2016, Paper, “Since the financial crisis, there have been major changes in the regulation of large banks directed at reducing their risk. Measures of regulatory capital have substantially increased; leverage ratios have been reduced; and stress-testing has sought to further assure safety by raising levels of capital and reducing risk-taking. Standard financial theories predict that such changes would lead to substantial declines in financial market measures of risk.” Link

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