Found 403 article(s) for author 'Financial Services'

Research and Impacts of Digital Financial Services

Research and Impacts of Digital Financial Services. Rohini Pande, September 2016, Paper, “A growing body of rigorous research shows that financial services innovations can have important positive impacts on wellbeing, but also that many do not. We first describe the latest evidence on what works in financial inclusion. Second, we summarize research on key financial market failures and on products and innovations that address specific mechanisms underlying them. We conclude by highlighting open areas for future work.Link

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Have big banks gotten safer?

Have big banks gotten safer? Lawrence Summers, September 15, 2016, Paper, “Since the financial crisis, there have been major changes in the regulation of large financial institutions 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 would predict that such changes would lead to substantial declines in financial market measures of risk. For major institutions in the United States and around the world and midsized institutions in the United States, we test this proposition using information on stock price volatility, option-based estimates of future volatility, beta, credit default swaps, earnings-price ratios, and preferred stock yields.Link

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Can analysts assess fundamental risk and valuation uncertainty? An empirical analysis of scenario-based value estimates

Can analysts assess fundamental risk and valuation uncertainty? An empirical analysis of scenario-based value estimates. Suraj Srinivasan, September 2016, Paper, “We use a data set of sell-side analysts’ scenario-based equity valuation estimates to examine whether analysts can assess the state-contingent risk surrounding a firm’s fundamental value. We find that the spread in analysts’ scenario-based valuations captures the riskiness of operations and predicts the absolute magnitude of long-run valuation errors and future changes in firm fundamentals. We also show that analysts’ assessment of fundamental risk and its predictive ability systematically improved after the financial crisis, consistent with the macroeconomic shock raising analysts’ awareness of firms’ systematic risk exposures.Link

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Financial Services at Falabella

Financial Services at Falabella. C. Fritz Foley, September 2016, Case, “In 2010, the board and senior management team of Falabella, a leading retailer with operations throughout Latin America, faced choices about what to do with its financial services division. More than 4.5 million customers had CMR credit cards that could be used in Falabella stores, and Banco Falabella competed with other banks by offering personal banking services. The case covers many of the key questions the leaders of the firm faced, including whether to allow credit card holders to use their cards for purchases outside of Falabella stores, whether to develop personal banking services further, and whether to make substantial changes to the strategy or to exit the business.Link

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Does Aggregated Returns Disclosure Increase Portfolio Risk Taking?

Does Aggregated Returns Disclosure Increase Portfolio Risk Taking? David Laibson, Brigitte Madrian, August 11, 2016, Paper, “Many experiments have found that participants take more investment risk if they see returns less frequently, see portfolio-level returns (rather than each individual asset’s returns), or see long-horizon (rather than one-year) historical return distributions. In contrast, we find that such information aggregation treatments do not affect total equity investment when we make the investment environment more realistic than in prior experiments. Previously documented aggregation effects are not robust to changes in the risky asset’s return distribution or the introduction of a multi-day delay between portfolio choice and return realization.Link

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Borrowing Requirements, Credit Access, and Adverse Selection: Evidence from Kenya

Borrowing Requirements, Credit Access, and Adverse Selection: Evidence from Kenya. Michael Kremer, July 18, 2016, Paper, “We examine the potential of asset-collateralized loans in low-income country credit markets. When a Kenyan dairy cooperative exogenously replaced high down payments and joint liability requirements with loans collateralized by the asset itself – a large water tank- loan take-up increased from 2.4% to 41.9%. In contrast, substituting joint liability requirements for deposit requirements had no impact on loan take up. There were no repossessions among farmers allowed to collateralize 75% of their loans, and a 0.7% repossession rate among those offered 96% asset collateralization. A Karlan-Zinman test based on waiving borrowing requirements ex post finds evidence of adverse selection with very low deposit requirements, but not of moral hazard.Link

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ESG for All? The Impact of ESG Screening on Return, Risk, and Diversification

ESG for All? The Impact of ESG Screening on Return, Risk, and Diversification. Robert Eccles, July 11, 2016, Paper. “A large body of research has documented a positive relationship between different measures of sustainability—such as indicators of employee satisfaction and effective corporate governance—and corporate financial performance. Nevertheless, many investors still struggle to quantify the value of ESG to investment performance.  To address this issue, the authors tested the effects of using different ESG filters on an investable universe that serves as the starting point for a fund manager. In this way, they attempted to determine the extent to which ESG data can add value to any investment approach, regardless of preferences towards sustainable investing.Link

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Liquidity Transformation in Asset Management: Evidence form the Cash Holdings of Mutual Funds

Liquidity Transformation in Asset Management: Evidence form the Cash Holdings of Mutual Funds. Adi Sunderam, July 2016, Paper, “We study liquidity transformation in mutual funds using a novel data set on their cash holdings. To provide investors with claims that are more liquid than the underlying assets, funds engage in substantial liquidity management. Specifically, they hold substantial amounts of cash, which they use to accommodate inflows and outflows rather than transacting in the underlying portfolio assets. This is particularly true for funds with illiquid assets and at times of low market liquidity. We provide evidence suggesting that mutual funds’ cash holdings are not large enough to fully mitigate price impact externalities created by the liquidity transformation they engage in.Link

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No More Dizzying Earnings Adjustments

No More Dizzying Earnings Adjustments. Robert Pozen, June 21, 2016, Opinion. “Whether Microsoft’s $26.2 billion purchase of LinkedIn makes sense might depend on where you look. Glancing at LinkedIn’s press release for the full year 2015, you will see a prominent projection for “adjusted” earnings this year of $950 million. Yet if you closely read the press release and its appendix, you can figure out that the company’s projected 2016 earnings under GAAP, the generally accepted accounting principles required in securities filings, are minus $240 million.Link

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