Financial Center Research Articles

The Historical View of Banking System in Greece During the Financial Crisis

This paper explores the complex dynamics of Greece’s banking system amid the financial crisis that deeply impacted both the nation and the global economy. Anchored in two primary objectives, the research investigates the roots of the crisis that destabilized the Greek financial sector and assesses the broader implications of the eurozone crisis, which reverberated internationally. This analysis reveals a confluence of domestic and global catalysts that spurred a severe credit contraction and disruption within Greece’s banking industry. In response to the unfolding crisis, Greek banks undertook an extensive, globally-oriented examination, utilizing data from major financial centers worldwide to mitigate the crisis’s impact and foster resilience. The study also expands its scope to examine the cross-border interconnectedness of the financial system, which allowed actions in other countries to amplify the economic turmoil in Greece. This work further emphasizes the humanitarian consequences of economic crises, addressing the societal and personal hardships endured and advocating for empathy as a crucial component of economic recovery. Ultimately, this research underscores the need for a global perspective, resilience strategies, and compassionate policies to effectively manage and recover from financial crises.

Britain's Liability-Driven Investment Episode Was a Canary No One Elsewhere Bothered to Think About

Britain's liability-driven investment crisis in fall 2022 had lessons for other major financial centers that, as evidenced by the US and Swiss banking crises only a few months later, were largely ignored. They are still relevant. In this article, I first discuss what drove the British crisis before identifying lessons for the microregulation of pension funds; for financial stability policy on shadow banking and beyond; for central banking balance sheet regimes, including lending of last resort and market making of last resort; and for monetary policy when fiscal policy makers sit on their hands.

Late Medieval Administration and Bookkeeping in The Crown of Aragon: Torralba’s Company

The attempt to rebuild the socioeconomic reality of the fifteenth-century Crown of Aragon has brought us to all the companies once founded and managed by Joan de Torralba. Linking two main commercial cities of that time — Zaragoza and Barcelona with the forefront financial centres of those days - Italian cities, in particular, Venice, Pisa-Florence, and Genoa — set the company in a unique position. This paper studies two primary components of our business: corporate and financial management. This analysis intends to demonstrate the complexity of management in late medieval companies of the Crown of Aragon, alongside knowledge diffusion and the extent and significance of weaving networks. We have in mind to present how the administration was developing, giving the local colour and regional details, making much of the proper management and contacts through the Mediterranean, employing management and historical analysis. The results reveal that the companies in the Crown of Aragon benefited from their management approach. The position of merchant elites, with the example observed by Joan de Torralba as the executive, was prominent. Hence, the weight of the last centuries of the Middle Ages, considering the West Mediterranean area, was essential in the transition to build a modern-like economic space.

Artificial intelligence and the digitalization of finance in Latin America: evidence from Brazil

ABSTRACT For decades, the data-centric digital circuits of global finance have been driving financial markets toward algorithmic management. The penetration of algorithms into finance dates back to the 1980s, well before becoming a significant trend in Internet and social media companies. AI is now considered the new frontier of this process. This paper examines Brazil, the most important financial center in Latin America, as a case study to explore Machine Learning applications in capital markets, providing new evidence on the penetration of automated trading systems in the region. Grounded in a historical overview of the digitalization of capital markets in Brazil, the paper draws on the STS definition of infrastructures and the political economy of digitalized finance to analyze AI as an emerging financial infrastructure. Beyond its physical and material aspects, this approach also addresses how digitalization and AI relate to financialization and the emergence of new financial risks.

The Rise of Digital Banking in the UK Financial Sector and Its Impact on Commercial Banks

In the contemporary financial domain, the emergence of digital banks has revolutionized operational models in traditional commercial banking. This article delves into how digital banks, through advanced technology and customer-centric services, compel commercial banks to revaluate their operational and regulatory frameworks. Specifically, it focuses on the digital banking market in the UK, analyzing how digitalization and technological progress are driving the evolution of competitive dynamics within the financial sector. As one of the worlds foremost financial hubs, the UKs trends in financial market development have profound implications for the global financial system. The British government and regulatory bodies have proactively adapted to these shifts, framing policies that facilitate innovation while ensuring security and compliance within digital banking. This backdrop sets the stage for this report to explore the transformative impact of digital banks on traditional banking models in the UK, aiming to understand the regulatory adaptations and the overall influence of digital entities on the conventional banking landscape.

Earnings Quality in the IFRS Era: Evidence from Morocco

Purpose: the aim of this study is to determine whether the introduction of International Financial Reporting Standards (IFRS) by Moroccan companies listed on the Casablanca Stock Exchange will contribute to improving the quality of earnings. Methodology: This study spans six years (2015-2020) and a sample of 27 listed Moroccan groups. Furthermore, we divided earnings quality into two main dimensions: on the one hand, earnings management, measured by earnings smoothing and earnings management towards small positive amounts; on the other hand, earnings attribute quality, assessed by accruals quality, persistence and predictability of net income and operating cash flows. Findings: The results of the empirical tests can be divided into two categories: On the one hand, the results of tests of the effect of IFRS on earnings management practices as the first measure of earnings quality show that companies use earnings management in the post-IFRS period compared with the pre-IFRS period. Furthermore, the results of tests of the effect of IFRS on the quality of earnings attributes as a second measure of earnings quality show that the various measures used appear to be of better quality in the pre-IFRS period than in the post-IFRS period. This indicates that the adoption of IFRS in the Moroccan context is contributing to deterioration in the quality of information. Practical implications: The authors demonstrate that the serious and rigorous adoption of IFRS by preparers, as well as training and seminars on the interpretation and application of each standard, are important to accentuate the positive effect of IFRS on the reliability of results. In addition, the findings provide policy-makers and stakeholders in the Moroccan financial market with an insight into the quality of Moroccan standards compared with IFRS in terms of earnings quality. Originality/value: to the best of the authors' knowledge, studies on the effect of IFRS on earnings quality in the Moroccan context are rare, if not non-existent. We therefore focus on this financial center, which mirrors developing countries, in order to highlight the effects of the introduction of IFRS on this type of market.

Tax Implications of Offshore Financial Centres (OFCs): A Case-based Study

Tax Implications of Offshore Financial Centres (OFCs): A Case-based Study

Financial Shared Service Centers and Corporate Misconduct: Evidence from China

Financial Shared Service Centers and Corporate Misconduct: Evidence from China

Stochastic Control Problems with State Reflections Arising from Relaxed Benchmark Tracking

This paper studies stochastic control problems motivated by optimal consumption with wealth benchmark tracking. The benchmark process is modeled by a combination of a geometric Brownian motion and a running maximum process, indicating its increasing trend in the long run. We consider a relaxed tracking formulation such that the wealth compensated by the injected capital always dominates the benchmark process. The stochastic control problem is to maximize the expected utility of consumption deducted by the cost of the capital injection under the dynamic floor constraint. By introducing two auxiliary state processes with reflections, an equivalent auxiliary control problem is formulated and studied, which leads to the Hamilton-Jacobi-Bellman equation with two Neumann boundary conditions. We establish the existence of a unique classical solution to the dual partial differential equation using some novel probabilistic representations involving the local time of some dual processes together with a tailor-made decomposition-homogenization technique. The proof of the verification theorem on the optimal feedback control can be carried out by some stochastic flow analysis and technical estimations of the optimal control. Funding: L. Bo and Y. Huang are supported by the National Natural Science Foundation of China [Grant 12471451], the Natural Science Basic Research Program of Shaanxi [Grant 2023-JC-JQ-05], the Shaanxi Fundamental Science Research Project for Mathematics and Physics [Grant 23JSZ010], and Fundamental Research Funds for the Central Universities [Grant 20199235177]. X. Yu is supported by the Hong Kong RGC General Research Fund (GRF) [Grant 15304122] and the Research Centre for Quantitative Finance at the Hong Kong Polytechnic University [Grant P0042708].

The Diffusion of Double Entry Bookkeeping before 1800—Establishing a New Research Agenda

ABSTRACT This paper adopts a traditional critical-historical research methodology focusing on context and function to investigate and explain the factors that led to widespread adoption and diffusion of double entry bookkeeping within and beyond its Italian roots before 1800. It finds double entry facilitated use of credit in the face of shortage of coinage. Its use spread among moneychanger-bankers at regional fairs across northern Italy, and from there to merchants and into communities of that region. Migration of Italian international-merchant-bankers across Europe led to its diffusion into clearing at the major international trade and financial markets they controlled, together with the system of bills of exchange they devised to facilitate settlement of obligations. Its use became mandatory at fairs along with bills of exchange, diffusing into the permanent early modern centers of trade and finance in Amsterdam and London, while increasing availability of resources to learn the method completed the process.

Collaborative Strategies For Promoting Economic Empowerment

This article explores the role of strategic partnerships in ensuring economic empowerment, particularly within underserved communities and small businesses in the U.S. It explains the importance of collaboration among financial institutions, community organizations, and government agencies as a means to promote financial inclusion and stimulate economic development. Through the analysis of successful case studies, such as the Community Reinvestment Act (CRA) and Financial Empowerment Centers (FECs), the article identifies core components essential for building effective partnerships, including shared goals, trust, clear roles, and strong monitoring frameworks. It offers a comprehensive roadmap for developing and implementing collaborative programs that emphasize the importance of needs assessment, securing resources, and measuring impact. The article studies the indispensable nature of these partnerships in overcoming systemic barriers and driving sustainable economic empowerment. Finally, it calls for ongoing research and innovation in partnership models to adapt to evolving challenges and opportunities in the financial inclusion platform.

LEGAL REGULATION OF THE TURNOVER OF DIGITAL ASSETS IN THE REPUBLIC OF KAZAKHSTAN AND THE POSSIBILITY OF THEIR INHERITANCE

The article analyzes the state of legal regulation of the turnover of digital assets in the Republic of Kazakhstan and the possibility of their inheritance. The legislation governing digital assets classifies them as property. At the same time, digital assets are divided into secured and unsecured. The article shows that a secured digital asset certifies the right to tangible, intellectual services and assets, with the exception of money and securities, and is accordingly associated with objects already familiar to the law. In this regard, the release of a secured digital asset is possible only after checking the availability of its collateral. In addition, the person who owns the digital asset is known according to the stipulated legal requirements. The activity of a person issuing secured digital assets is subject to licensing. There are no special restrictions for persons acquiring such assets. The article notes that an unsecured digital asset is not associated with any property that exists independently of electronic and digital technologies and digital mining is required to create it. The subject of the relationship regarding an unsecured digital asset can be a miner, as well as the owner of informatization facilities. The release of unsecured digital assets is subject to licensing. The turnover of such assets is possible only on the territory of the «Astana» International Financial Center. Thus, digital assets can be alienated by their owners during their lifetime, which means they can pass to heirs after their death. Solving practical problems of licensing unsecured digital assets, centralizing the control of their turnover will streamline the issues of legal regulation of electronic digital technologies and their inheritance at the national level. Thereby, digital assets can be alienated by their owners during their lifetime, which means they can pass to heirs after their death. Solving practical problems of licensing unsecured digital assets, centralizing the control of their turnover will streamline the issues of legal regulation of electronic digital technologies and their inheritance at the republican level.

Golden Horizons: Investigating Shariah-Compliant Gold Investment Awareness Among Youth

Gold has long been regarded as a reliable medium of exchange and a store of value, owing to its inherent traits and functions associated with money. In the context of Malaysia, gold investment emerges as a lucrative and secure asset category for investors. They have the option to either physically possess and safeguard gold or opt for a more modern approach by establishing a gold investment account. Over recent years, there has been a noticeable growth in awareness among the public and seasoned gold investors in Malaysia. However, this upward trend has not been as pronounced among the younger demographic. This research aims to investigate the extent of awareness regarding Shariah-compliant gold investment among the young Muslim population in Terengganu, Malaysia. Utilizing a quantitative research methodology, data was collected through a survey administered by researchers via a Google Form, disseminated across various social media platforms. The study successfully obtained data from a sample of 120 respondents. The findings of this study reveal that, on the whole, the young Muslim generation in Terengganu exhibits a high level of awareness regarding Shariah-compliant gold investment. The significance of this research lies in shedding light on the dynamics of gold investment awareness, particularly within the context of Shariah compliance, among the youth in a specific region of Malaysia. The results provide valuable insights for financial institutions, policymakers, and educators seeking to tailor their strategies to enhance financial literacy and promote Shariah-compliant investment practices among the younger population. As Malaysia continues to evolve as a financial hub, understanding and addressing the investment preferences and awareness levels of its diverse demographic groups become crucial for fostering a robust and inclusive financial landscape. Since this study was conducted with small sample size and focusing in Terengganu only, it is strongly recommended to expand the research to other states in Malaysia.

Banking in the cloud: mapping big tech’s global digital technology networks

ABSTRACT Witnessing the inroads of big tech into finance, this paper maps the growing dependence of incumbent banks on public cloud infrastructures. Although ‘cloud interfacing’ has become crucial amid platform finance, the intersections between what we conceptualise as global digital technology networks and global financial networks have received little attention. We mobilise social network analysis to map: (1) the geographically variegated patterns of public cloud adoption in banking and their geopolitical implications; (2) the corporate networks supporting banks’ cloud migration; and (3) the urban networks of command and control undergirding cloud banking, connecting established financial centres with tech valleys old and new.

Non-arm's-length transactions, offshore financial centres, transfer pricing agreements and corporate cash holdings: Evidence from U.S. multinational corporations

This paper examines the association between non-arm's-length transactions, the existence of offshore financial centres, the existence of a transfer pricing agreement and corporate cash holdings for a large sample of U.S. multinational corporations over the 2006–2020 period. This study provides evidence that the existence of non-arm's-length transactions and of offshore financial centres increased the level of corporate cash holdings. In contrast, the existence of a transfer pricing agreement reduces the level of firm cash holdings. Overall, these results suggest that development of transfer pricing agreements with taxing authorities reduces multinational corporations' incentives and capacity to shift profits from higher- to lower-tax countries. These results remain robust to alternative specifications of cash holdings and endogeneity tests.

Does the leadership style influence the office politics in performance appraisal? Empirical study from Malaysian financial sector

Employees play a pivotal role in the Malaysian financial industry, as this sector requires individuals capable of meeting the demands of the global financial market and enhancing Malaysia's position as a leading international financial hub. Consequently, employees' behavior and practices can significantly impact the institution's reputation. Previous research has identified office politics as a detrimental factor in organizational performance, prompting this study to investigate the impact of leadership styles on organizational politics within the context of performance appraisal. A survey was conducted through the distribution of questionnaires among 274 officers and clerical staff, selected using proportionate stratified random sampling from a Malaysian government financial institution based in Kuala Lumpur. Of the distributed questionnaires, 105 were completed and deemed usable. The study identified three reliable dimensions of politics in performance appraisal: acquiring benefits, human relations, and control. In examining leadership styles, the study found that the integrative leadership style was the only reliable dimension. Correlation analysis revealed that integrative leadership style generally correlates significantly and negatively with politics in performance appraisal. Specifically, integrative leadership style had a significant negative impact on the human relations and control dimensions. Regression analysis further indicated that integrative leadership style significantly and negatively influenced only the control dimension of performance appraisal politics. The study discusses the implications of these findings for future research and practice, as well as the limitations of the current study.

Vivid London: Assessing the resilience of urban vibrancy during the COVID-19 pandemic using social media data

Since COVID-19, the focus on urban resilience has intensified, particularly on cities' ability to adapt and recover while maintaining essential functions and liveability; however, few studies have examined the resilience of urban vibrancy during such health crises. This study investigates urban vibrancy resilience in Inner London during the COVID-19 pandemic using multi-sourced social media data (geo-tagged Twitter and Flickr). We propose an analytical framework based on space-time permutation scan statistics (STPSS) to identify spatiotemporal urban areas of interest (ST-AOIs), examining their spatial, temporal, and contextual characteristics. Our findings show that central neighbourhoods with transport hubs, educational and healthcare facilities, eateries, and financial centres exhibit greater resilience. These areas adapt by shifting active periods in response to disruptions. Additionally, we assess the varying resilience capacities of different types of points of interest. This research provides actionable insights for urban planners and policymakers by demonstrating how identifying characteristics of robust urban vibrancy can contribute to the resilience of cities and communities, particularly under normal conditions after COVID-19. The findings offer concrete strategies for integrating social media data into urban planning processes, enabling more responsive and adaptive governance that meets the dynamic needs of urban populations.

Outsourcing Empire: International Monetary Power in the Age of Offshore Finance

Abstract Offshore finance allows foreign banks to create US dollars under the laws of an offshore jurisdiction. How and why does this affect international monetary power? Conceptually, I argue that offshore finance bifurcates across borders the shared power of the state and banks to create money, combining the US dollar with mostly English law. Empirically, I demonstrate that more US dollars are created offshore outside US jurisdiction than onshore within it. Offshore finance increases liquidity, at higher risk, and leads to a cross-border entanglement of issuing country, offshore financial centers, borrowers, and global banks. In short, offshore finance changes the power inherent in money. Consequently, international monetary power has become the ability to get access to offshore dollars in combination with the capacity to determine international liquidity and to set, select, or circumvent the related rules. It is constrained by the hierarchically organized social credit relations that money consists of. The international monetary power of the United States has become an instance of indirect rule with global banks having been delegated the prerogative of US dollar creation. As is common with indirect rule, it entails a difficult balancing act between geographical reach and centralization of power.

Who watches the watchdogs? Central bank board members and banking supervisors in Switzerland (1907–2008)

ABSTRACT The Swiss financial center developed spectacularly during the 20th century, becoming one of the main hubs for cross-border financial transactions. The regulatory environment that enabled this growth is still poorly understood. This contribution examines the government appointees who controlled the banking supervisory institutions (Swiss National Bank and Federal Banking Commission). The focus is on the individuals who supervised those two institutions and analyzes the evolution of their board members from their creation, in 1907 and 1935 respectively, to 2008. This prosopographical study – using indicators such as gender, age, education, career paths and political affiliation – seeks to determine: a) their typical socio-professional profile, b) their closeness to the banking industry and c) their representativeness of society, politics, and business. My findings highlight both significant changes in the last decade of the century, with an increase in the level of education and a drop in political affiliation, and a long-term stability of the socio-professional profile of the board members: middle-aged to elderly men, with a PhD in law or economics, considerable experience in the banking or business world, and often an affiliation with the governing political parties. Both institutions were supervised by individuals with close connections to the financial industry. They became arenas for elite networking, simultaneously failing to represent large segments of society.

The geography of European financial centers: 1993–2020

This paper examines the dynamics of employment in the financial sector in the European Union and the United Kingdom since the early 1990s. Using the EU Labor Force Survey at the national (NUTS0), regional (NUTS1), and subregional (NUTS2) levels, we document several stylized facts about the evolution of financial centers. Despite the global financial and sovereign debt crises, the total number of workers in the financial sector has increased from less than 5 million in 1993 to more than 6.5 million in 2020. At the same time, however, the share of employees in the financial sector has decreased from 3.5% to 2.8%. We find large regional differences in the degree of financial specialization, with Luxembourg at the top end (11% of their total workforce), followed by Ireland and the United Kingdom (4%), then France, Germany or Italy (around 3%). We also explore the dynamics of concentration. The main conclusion is that the degree of concentration depends on the scale of measurement employed. We show a contrasting concentration trend: centripetal at the national level and centrifugal at lower levels (regional or sub-regional). Furthermore, newer financial centers showed faster growth. JEL codes: E44, G2, R1