Financial Rules Research Articles

Determinants of portfolio equity flows to Sub-Saharan Africa

Purpose The purpose of this paper is to investigate the determinants of portfolio equity flows to the Sub-Saharan African (SSA) region over the period 1996-2010. Design/methodology/approach The study uses a sample of 14 SSA countries to estimate the baseline regression through employing the system generalized methods of moment dynamic panel estimation framework. To check the robustness of the estimation results, the study further analyses the data set using the random effects-generalized least squares (EGLS) estimator. The Random effects-generalized least squares estimator is also referred to a the Estimated Generalized least Squares (EGLS) estimator. Findings The paper finds a significant positive relationship between financial development and portfolio equity flows. Furthermore, while the study surprisingly finds trade openness to have a significant negative relationship, political stability is found to have a significant positive relationship with portfolio equity. To check for the robustness of these results, the authors further analyse the data set using the random EGLS estimator. The result of the EGLS estimator confirms that there is a robust positive relationship between financial development and portfolio equity flows to SSA. However, the results suggest that neither trade openness nor political stability is a robust determinant of portfolio equity flows to the sub-region. Practical implications Policy measures should aim at enhancing financial sector development, political stability and rule of law. A transparent judicial system that enhances rule of law and deepens democratic governance in countries in the sub-region is critical, but even more critical is deepening the financial sector, given the important role financial development plays in portfolio equity flows as suggested by the findings. A range of measures and appropriate policy responses are therefore needed for countries that have to manage macroeconomic and financial stability risks to deepen the financial sector. Originality/value Most studies on private capital flows to SSA have focussed on foreign direct investment flows with no or scanty evidence on the drivers of portfolio equity flows. This study fills this gap in the literature.

Public financial management and the campaign against extravagant position-related consumption in China

It is widely believed that public finance management is a key factor in keeping the government away from corruption and fiscal misconduct. However, rules and regulations of public finance management are embedded in the macro institutional settings, and thus are subject to broader influences impacting implementation of these rules. Employing the perspective of informal institutions, this research explores how formal financial rules interact with informal rules in position-related consumption in China. It finds that financial rules are relatively weak as compared to informal rules. In order to curb extravagant position-related consumption and to achieve good governance in China, it is imperative to take informal rules into consideration when designing the anti-extravagance policy.

Socioeconomic dynamics in mobile money services in Egypt: an empirical analysis

The recent growth of mobile money (MM) in Africa, has allowed millions of people who are otherwise disqualified from the formal financial system to perform financial transactions relatively cheaply, securely, and reliably. In Egypt, however, despite the fact that mobile penetration rate amounts to almost 100 %, MM services penetration rate is still quite low around 1 %, and more importantly with minimal impact on the Egyptian economy at large. Thus, this research paper examines the socioeconomic adoption factors of MM services in Egypt using a Nielsen syndicated survey of MM users. This survey was conducted in April 2015 on a sample of 953 mobile money users. The findings of the empirical study reveal that the profile of a mobile money user in Egypt is similar to his Kenyan counterpart; namely an affluent, university educated and male user. However, the theory of early adopters is not evident in Egypt’s case. Urbanization plays no role in the socioeconomic adoption factors controlled for in the estimated model. The empirical model also shows that, according to the survey, the perception of Islamic financial rules does not contradict with the adoption of MM services in Egypt. Finally policy recommendations are provided for the regulator and the telecom operators, drawing from other successful case studies in this domain.

SEPARATION OF MARKETS AND FINANCIAL INSTABILITY: A CLOSER LOOK TO CLASSICAL DICHOTOMY

Several financial crises occurred over the past three decades have provoked debates in the literature of liberalization and deregulation of financial markets. By surveying the theory of classical dichotomy and its critiques, the notion of “separation” between the financial and real sectors has been introduced in this paper. It argues that the existence and expansion of this separation will lead to financial crisis. In order to identify the separation “price-to-earnings ratio” index has been proposed. By applying the data of Tehran’s Stock Exchange during 2002:2-2015:1, several episodes of this separation are recognizable. Considering the factors causing the expansion of the separation, it is essential to reestablish regulations and mechanisms of financial markets in a way that reduces the separation and hence lessen financial crises. In this view, Islamic financial rules can provide an economic system with mechanisms bringing harmony between the real and the financial sectors. Keywords: financial markets, speculation, price bubble, separation, financial crisis

Scientific and practical development of financial jurisprudence rules under the light purposes of Islam

يرمي هذا البحث إلى تفعيل المقاصد في العقود والأمور المالية كي لا يقع العباد في البلوى والمشقة والضيق في معاملاتها اليومية وخاصة في عقد الإجارة؛لأن العالم الإسلامي اليوم بحاجة إلى إعادة علمية وعملية وقراءة جديدة للتطورات والمستجدات والنوازل المستحدثة,خاصة مايتعلق بالتطورات المالية وأحكامها في الفقه الإسلامي بحسب مقتضى المقاصد الشرعية والمصالح الإنسانية،والتي تظهر أهمية البحث تناوله للموضوع بالتحليل والاستقراء والمقارنة وتوصل البحث إلى مجموعة من النتائج منها:بيان الفهم المقاصدي في كيفية التعامل مع الوقائع المستجدة وتطورها في المعاملات المالية، وبناء منظومة مقاصدية تبنى على أسس وضوابط منهجية للتعامل مع تطور الواقع وخاصة العقود المصرفية،بالإضافة إلى أثر الاجتهاد المقاصدي في تطور أحكام العقود المصرفية وخاصة عقد الإجارة المنتهية بالتمليك .

Why Are Taxes Value Relevant? Cross-Country Evidence on the Proxy for Profitability Role of Tax Surprise

Despite the abundance of evidence that tax surprise contains incremental value relevant information, the literature still fails to explain why this is so, possibly struggling with identification due to the relative invariance in capital markets, financial rules, and tax systems for their US-only sample. I use an international study with cross-country variation in required book-tax conformity and tax enforcement to investigate two non-mutually exclusive hypotheses for why taxes are value relevant. First, I examine if tax surprise is more value relevant when the amount of non-earnings information it is expected to contain is greater. Second, I examine if tax surprise is more value relevant when tax enforcement is high. Using required book-tax conformity as a proxy, I find little evidence that an expected lower amount of non-earnings information in tax surprise is associated with lower value relevance. I provide evidence this may be due to an offsetting increase in non-value-relevant noise due to less conformity. To address issues related with endogeneity, I use IFRS adoption as an exogenous shock to book-tax divergence and continue to find little evidence that value relevance increases with book-tax divergence. In contrast, I find strong results that taxes are more value relevant when tax enforcement is high. Additional tests that partition on high and low quartiles of enforcement also show that value relevance increases with book-tax conformity but only for those countries with high enforcement. This study goes beyond whether taxes are value relevant to help answer why. This study is also informative to the debate on required book-tax conformity and shows that theorized increases to tax enforcement may work to ameliorate potential reductions in information content caused by increased conformity, an argument which is new to that literature.

Interest Rates and Financial Instability

Several financial crises, which have occurred in different geographical areas over the past 100 years have reinforced the notion that crises and market imbalances are inherent characteristics of capitalism. By surveying the transitions of financial markets, especially during the last three decades, it has been clarified that the existence of interest rates can be considered as a fault line in the economic system and will disrupt the harmony between the real and financial sectors. Based on quarterly information in the real and financial markets of the United States during 1993-2014, and econometric analysis of Granger causality, the result of this study shows that the presence of usury and its growth in the conventional economic system will expand the debt markets, which cause the separation between nominal values in the financial markets and their intrinsic values in the real sector of the economy. With the emergence and increase of this separation, asset price bubbles are created. The greed of economic agents to take advantage of profitable opportunities, which occur due to price bubbles, increases borrowing and, therefore, expands the debt markets. Moreover, during this process, speculation activities will inflate asset prices excessively, causing more separation between the real sector and the financial sector. Consequently, the amount of monetary resources for the real sector will be decreased and, therefore, economic growth and employment will decline. Although some macro-prudential policies have been implemented to mitigate systemic risks and reduce the incidence of financial crises, they will not remedy the inherent instabilities of financial contracts. Islamic financial rules provide the economic system with mechanisms, which bring robustness and resilience to the financial system.

Contract uncertainty causes problems for doctors seeking mortgages

Uncertainty over the junior doctor and consultant contracts is causing problems for doctors applying for mortgages. Financial rules introduced in April 2014 mean that lenders now seek hard evidence of future income before approving mortgage applications. But, with the dispute over junior doctors’ contract arrangements still ongoing, doctors in training are facing challenges providing evidence for their earnings after August 2015. The BMA has previously warned that proposed changes to the junior doctors’ contract in England could make it more difficult for doctors to pay their mortgages. Kitty Mohan, former co-chair of the BMA junior doctors …

INSTITUTIONALIZATION OF ISLAMIC FINANCE: THE INTERNATIONAL AND LEGAL ASPECTS

Global Islamic financial system is undergoing the process of active institutionalization: from simple interpretation of the Islamic norms in order to legitimate the establishment of Islamic financial institutions in terms of shari’a law to the stage of formation of international Islamic financial regulators and other elements of the financial infrastructure, to the development and implementation of international Islamic financial standards, to expanding the number and types of Islamic financial products, and o the introduction of Islamic financial rules into the law of the Western countries. The new reality requires a thorough study of the legal status of Islamic financial regulators and their financial products, a clearer shari’a identification of these financial products, and the potential of their implementation in Islamic and non-Islamic jurisdictions.

Destabilizing Effects of Fair Value Accounting During US Banking Crisis

The aim of this paper is to analyze the pros and cons of the financial accounting standards rule, known also as Mark-to-Market Rule. Enacted November 15, 2007, required that all companies to be evaluated on the basis of prices reflecting actual market situation. We have shown this pro-cyclical rule significantly worsened the U.S. Financial Crisis of 2007. The article includes a discussion of reasons why US authorities adopted this rule for already third time in history, whereas the two preceding cases are also discussed. The US government did implement the discussed rule just on the eve of the recession or the financial crisis to relatively ease the rule during the period when the US economy was due for a rebound. Based on our analysis of the definition and strong pro-cyclical effects of MTM rule we have shown that just in the aftermath of factual easing of this rule the economy and equity markets sharply rebounded (other reasons for the last rebound of March 2009 have been discussed too). Timeline of important dates and developments during the US banking crisis of 2007 has been presented and so we hope such a rule will never be adopted again, especially not ahead or just after the start of a financial crisis in any country as it happened in 2007.

واقع الحرية الأكاديمية في المستوى الجامعي في المملكة العربية السعودية

ا The Reality of Academic Freedom at the University Level in the Kingdom of Saudi Arabia Abstract: This study aimed to find out the reality of academic freedom at the university level in the Kingdom of Saudi Arabia, the study population consisted of faculty members at universities in the North in the Kingdom of Saudi Arabia, and the study sample of 296 faculty members , for the purposes of achieving the goal of the study was the development of study tool ( questionnaire ) , were distributed after the confirmation of sincerity and persistence . After collecting the data is the process of statistical analysis using the (SPSS), by calculating the degree of appreciation of faculty members of the reality of the degree of academic freedom at the university level in Saudi universities, study results showed that the reality of academic freedom at the university level in the Kingdom of Saudi Arabia came moderately . It also showed a statistically significant difference between the estimates of faculty members to exercise the degree of academic freedom, due to the variable and in favor of the female sex and the lack of differences between the estimates of faculty members to exercise the degree of academic freedom, due to the variables of experience and academic rank variable . The study recommended the need for the university to provide academic freedom for all faculty members represented in decision-making and administrative and financial situation , relevant rules and regulations and procedures that help to achieve the objectives of education and research.

The Lehman Brothers Bankruptcy E: The Effect on Lehman's U.S. Broker-Dealer

Lehman’s U.S. broker-dealer, Lehman Brothers Inc. (LBI), was excluded from the parent company’s bankruptcy filing on September 15, 2008, because it was thought that the solvent subsidiary might be able to wind down its affairs in a normal fashion. However, the force of the parent’s demise proved too strong, and within days, LBI and dozens of Lehman subsidiaries around the world were also in liquidation. As a regulated broker-dealer, LBI was required to comply with the Securities and Exchange Commission financial responsibility rules for broker-dealers, including maintaining customer assets separate. However, the corporate complexity and enterprise integration that characterized the Lehman group conflicted with this mandate. Omnibus cash accounts and wide-flung assets complicated the liquidation. It became clear in the course of the liquidation that the broker-dealer rules did not adequately address these issues or others raised by the infrastructure complexity and global reach of the companies to which they applied. This led some observers to question whether the rules should be revised and whether the broker-dealer should be excluded from all but minimal integration into the holding company’s non-regulated businesses.

Love in the Time of Cholera: Taking Procurement Reform Forward Amidst Increasing Incidence of Anti-GFR Provisions in Government Tenders

This short academic brief, prepared for procurement training of senior civil services' members in India, looks at capacity-building of its acquisition workforce amidst increasing incidence of provisions in RFPs and tender notices that are inconsistent with the overall rules and policy frameworks governing public procurement in India. It examines select provisions of some recent RFPs and tender notices issued by various government agencies, and analyses their specific inconsistency with the General Financial Rules, CVC instructions and other important public policies and frameworks.

Concept and importance of legal facts in dynamics of financial legal relations

In today’s legal reality there are new search for ways to achieve stability of legal relations. The industry of financial law is not an exception. At same time it is necessary to note that in this situation increases interest of scientists to study circumstances that give rise to emergence, change or termination of financial relations - legal facts, definition of their concept and importance of dynamics of this kind of public relations. Releavance of research topic: Indeed, legal facts in movement of all types of legal relations are very important because financial (and other) legal relations are dynamic legal phenomenon, essence of which might be revealed during its respective stages of development: emergence, change and termination. Recent research and publications analysis: Fundamentals in study of legal facts were laid by such theorists and financiers such as: S. S. Alekseyev, V. B. Isakov, S. A. Zinchenko, O. A. Krasavchikov, N. P. Kucheryavenko, A. P. Orlyuk, G. F. Shershenevich, M. D. Shargorodskiy and others. At same time, concept and value of legal facts in dynamics of financial relations is little explored. Paper objective: With this in mind, purpose of article is to analyze different points of view regarding designated topic. Paper main body: It is significant that even concept of fact is quite common, however, it is treated very ambiguous. Among jurists legal facts traditionally defined as specific circumstances of life, with onset of financial rules of law which bind emergence, change and termination of legal relations. Legal facts in financial and legal regulation have a number of characteristics: consolidation in financial rules of law; reasonableness; ability to determine legal consequences; concreteness; descriptiveness; clearance; effectiveness (the actual occurrence). The essence of financial legal relations, which are dynamic legal phenomenon might be revealed during its respective stages of development: emergence, change and termination. And particular importance here is acquire legal facts. Taking this into account, the legal consequences that follow on basis of legal facts, in most common way can be reduced to main phases of existence of legal relations - their emergence and termination, as well as change. At same time it is important to emphasize that legal facts are not only generate, change or cancel financial relations, but also correct in a certain way those rights and duties of participants of financial activities which occur within relevant legal relations; ensure implementation of rights and duties of relevant actors in their actual behavior. They advocate direct legal basis of origin of subjective rights of individuals in specific legal relations, a kind of transition means of a legal entity to appropriate subjective right, take an independent place in mechanism of legal regulation, as they provide a transition from state normative regulation of social relations to individual through prescribed in law subjective rights and corresponding duties. Conclusions of research: We believe that legal facts have following functions: emergence, change and termination of financial legal relations; legal constitutive; constructive; garantee; informative; individual regulation.

Purchase Patterns affected by Budget Spending Rules

The efficient spending of public money is a matter of social concern. In the regulations of many countries, at the end of fiscal year, the unused budget “expires” and the remaining money is returned to the treasury, with the budget for the following year possibly reduced. In response, people in their spending capacities tend to use up the remaining budget towards the end of the year, in a “use it or lose it” mentality. Here we reproduce this “end-of-year spending binge” in an experiment, where subjects tend to spend excessively towards the end of fiscal year. We show that by modifying the budget rule so that the remaining money is “carried over”, the excessive spending can be significantly curbed. Our results suggest that experiments in the laboratory can be used to study people’s budget spending behavior and identify factors that affect wasteful overspending, potentially helping design financial rules that encourage effective use of budget.

Is there any progress in the blood glucose lowering therapy of type 2 diabetes?

Principles of glycemic treatment of type 2 diabetes are well outlined for a long time, however, emphasis of therapeutic strategies and treatment guidelines are continuously changing partially due to the continuous expansion of the available antihyperglycemic drugs. This article overviews the modifications of the drug selection arising from the broadening of the pathogenetic knowledge and recent therapeutic guidelines. It presents the role of the patient-centered approach in the therapeutic choice, highlights occasional contradictions between recent international and national guidelines and financing rules in Hungary. While consideration of the different antidiabetics by the same criteria and the choice of the most appropriate drug characterize international practice, prescription of certain compounds is often restricted by financial rules in Hungary.

Comprehensive risk measure – current challenges

Purpose – This paper, based on case-studies with five universal banks from Europe and North America, aims to investigate which types of comprehensive risk measure (CRM) models are being used in the industry, the challenges being faced in implementation and how they are being currently rectified. Undoubtedly, CRM remains the most challenging and ambiguous measure applied to the correlation trading book. The turmoil surrounding the new regulatory framework boils down to the Basel Committee implementing a range of capital charges for market risk to promote “safer” banking in times of financial crisis. This report discusses current issues faced by global banks when complying with the complex set of financial rules imposed by Basel 2.5. Design/methodology/approach – The current research project is based on in-depth, semi-structured interviews with five universal banks to explore the strides major banks are taking to introduce CRM modelling while complying with the new regulatory requirements. Findings – There are three measures introduced by the Basel Committee to serve as capital charges for market risk: incremental risk charge; stressed value at risk and CRM. All of these regulatory-driven measures have met with strong criticism for their cumbersome nature and extremely high capital charges. Furthermore, with banks facing imminent implementation deadlines, all challenges surrounding CRM must be rectified. This paper provides some practical insights into how banks are finalising the new methodologies to comply with Basel 2.5. Originality/value – The introduction of CRM and regulatory approval of new internal market risk models under Basel 2.5 has exerted strong pressure on global banks. The issues and computational challenges surrounding the implementation of CRM methodologies are currently fiercely debated among the affected banks. With little guidance from regulators, it remains very unclear how to implement, calculate and validate CRM in practice. To this end, a need for a study that sheds some light on practices with developing and computing CRM emerged. On submitting this paper to the journal, we have received news that JP Morgan is to pay four regulators $920 million as a result of a CRM-related scandal.

Global Financial Regulations: An Antidote to Economic Predicament

Due to the lack of public order in the international financial arena, asset bubbles and resource misallocations persisted over a long period of time and resulted in global financial crisis in 2008. Global financial rules, which can take on a role like that of WTO in the international trade, are urgently needed for global economic recovery. They will balance the pressure of economic restructuring between large and small countries, and push forward some countries’ domestic reforms which may hardly be implemented due to domestic politics.

Much Ado about Money: Parent–Child Perceptions of Financial Disclosure

As parent–child financial communication influences children's well-being, it is important to learn what financial information children receive. Framed by Communication Privacy Management theory, this study explored 27 parent–child dyads' perceptions of financial disclosure, finding parents and children predominately reported similar financial information and disclosure rules. Dyads generally perceived parents were open about consumer and financial socialization topics and less likely to disclose personal matters. Dyads reported parents disclosed when benefits outweighed risks and concealed when information was costly. This study suggests confidants do not only co-own information, but also have an awareness of privacy rules that shape disclosure, a possible CPM extension.

Trying to Promote Network Entry: From the Chain Broadcasting Rules to the Channel Occupancy Rule and Beyond

This article traces the efforts by the U.S. Federal Communications Commission to promote the entry of new networks, starting from its regulation of radio networks under the Chain Broadcasting Rules, through its regulation of broadcast television networks under its Financial Interest and Syndication Rules and its Prime Time Access Rule, and finally to its regulation of cable television networks under its Channel Occupancy and Leased Access Rules and its National Ownership Cap. The article’s principal conclusion is that these efforts by the FCC were largely ineffectual and that only the removal of regulatory barriers to new network entry could, and indeed did, achieve the Commission’s goal.