Financial Supervisory Authority Research Articles

Appearances can be deceiving – The Swedish Bank Act and actor influence in different regulatory regimes

In this paper, the influence over the development of the Swedish Bank Act between 1912 and 1968 is studied using preference attainment. Results show that the Financial Supervisory Authority was the most influential actor until 1933, when the Bank Act became gradually stricter. Between 1955 and 1968, the Bankers’ Association grew more influential and the Bank Act was liberalised. The regime perspective on regulatory development suggests that regulation was more liberal during the Classic regime in the early twentieth century when business interests prevailed, and stricter from around the 1930s in the State regime when government control increased. The results are thus contrary to the regime perspective. It is proposed that economic ideas that were engrained in the regulatory institution from its foundation were more important to the long-term development of that institution and of the influence exerted over it, rather than prevailing ideas embodied in regulatory regimes.

Institutional framework for the Financial Supervision Authority's control over the activities of an insurance agent

ObjectivesThe subject of consideration is the supervisory powers of the Financial Supervision Authority in terms of the control of insurance agents. Act of 15 Dec 2017 on Insurance Distribution introduced the possibility of conducting inspections of insurance agents' activities by supervisory authorities. The Financial Supervisory Authority is the body that supervises the financial market, including the supervision of activities related to the distribution and redistribution of insuranceMaterial and methodsThe article has been drawn up mainly using the formal-dogmatic method. It involves the description and systematization of legal norms, interpretation of regulations, as well as an analysis of the practice of application of the law by both state administrative bodies and courtsResultsKNF inspectors, in the course of their inspection, have the authority to demand from the inspected insurance agent access to the documents of the inspected entity and to the data and information contained in the information and communication systems. However, this entitlement is not absolute. Such a request may only concern the documents and data of the controlled entity, and moreover, it is only updated when it falls within the substantive scope of the inspectionConclusionsNotwithstanding the above, the agent also remains the disposer of information covered by the secrecy of communication . The contents of the mailboxes of insurance agents, like any correspondence, are protected by the secrecy of communication, regardless of the content (art. 49, para. 1 of the Polish Constitution). In order for the supervisory authority to effectively demand access to information contained in the correspondence of an insurance agent, it should first obtain this access through a separate procedure provided for by the law.

Research on the Coordination of Bank Capital Adequacy Ratio and Monetary Policy

Capital adequacy ratio and monetary policy are important control measures of financial supervisory authority and monetary authority, respectively. The effective coordination of the two has greatly affected the effectiveness of monetary policy. The article selects the annual data of 16 listed commercial banks in China from 2003 to 2018, and studies the impact of capital adequacy ratio on monetary policy transmission by constructor. listed commercial banks in China from 2003 to 2018, and studies the impact of capital adequacy ratio on monetary policy transmission by constructing a panel regression model. The results show that large state-owned commercial banks play a major role in bank credit channels for monetary policy, and banks with higher capital adequacy ratios are more likely to have a higher capital adequacy ratio. The results show that large state-owned commercial banks play a major role in bank credit channels for monetary policy, and banks with higher capital adequacy ratios are more vulnerable to monetary policy shocks. In addition, the external capital constraint of minimum capital adequacy will cause a multiplier effect when monetary policy is transmitted through credit channels. The multiplier effect produced by joint-stock commercial banks is much smaller than that of large state-owned banks. The multiplier effect produced by joint-stock commercial banks is much smaller than that of large state-owned banks. Therefore, financial supervisory departments must fully consider the interference caused by the capital adequacy ratio on monetary policy, strengthen policy coordination, and unblock the transmission mechanism of Therefore, financial supervision departments must fully consider the interference caused by the capital adequacy ratio on monetary policy, strengthen policy coordination, and unblock the transmission mechanism of monetary policy.

Soft Regulatory Capture and Supervisory Independence: A Case-Study on Wirecard

623The traditional view on regulatory capture focuses on capture as a distortion of public purpose through a malicious relationship, corruption and possible collusion between the regulator and the industry (hard capture). This paper argues that regulatory capture can arise from political and institutional conditions which do not allow or favour the supervisory independence of authorities from both the industry and the government (soft capture). This paper’s argument is illustrated through a case-study on the German Federal Financial Supervisory Authority’s (BaFin) handlining of the Wirecard AG case. The basis for the analysis are the findings from the Committee of Inquiry of the German Bundestag and the European Securities and Markets Authority (ESMA) Fast Track Peer Review (FTPR) through three lines of inquiry: (1) lack of balance sheet control; (2) the short selling ban; and (3) Wirecard AG’s stock trading by BaFin’s employees. This paper concludes that BaFin was not hard captured in the Wirecard AG case as de facto influence cannot be proven. Instead, its de jure dependency vis-à-vis the MoF (as implicitly endorsed by German law) might have contributed to a case of soft regulatory capture – especially in the aspect of the short selling ban. The paper then analyses the reforms enacted by Germany and promoted by Europe in post-Wirecard case.

The impact of trust in the leader as a mediating variable between the moral integrity of the leader and job engagement: A field study in public sector institutions in Sultanate of Oman

This study aims to examine the impact of trust in the leader (TIL) as a mediating variable between the moral integrity (MI) of the leader and job engagement (JE) and to identify the consequent results that benefit officials in the surveyed institutions. The study population consisted of the employees of two public institutions (The Financial Supervisory Authority in the Governorate of Dhofar and the Directorate of Municipal Affairs in the Governorate of Dhofar). Primary data was collected from a convenient sample of 145 via an electronic questionnaire due to the directives related to social distancing in light of the global health crisis (COVID 19). The data were analysed using the Statistical Package for Social Sciences (SPSS) and Smart Partial Least Squares (Smart PLS). The findings of the study reveal that there is a statistically significant impact of the MI of the leader on the levels of JE on one hand and MI of the leader on the TIL, on the other hand. Moreover, it was also found that TIL partially mediates the relationships between the MI of the leader and JE.

Investiranje u "Sondervermögen" fondove u Nemačkoj - analiza pravne strukture, regulatornih zahteva i performansi

This paper provides an analysis of "Sondervermögen fonds", or special investment funds, in Germany. These funds are structured as separate accounts, providing additional protection for investors, as their assets are legally separate from the assets of the fund manager. The Federal Financial Supervisory Authority (BaFin) regulates "Sondervermögen fonds", ensuring that they are managed responsibly and in compliance with the German Investment Code (Kapitalanlagegesetzbuch or KAGB). The KAGB sets out the legal framework for the operation of "Sondervermögen fonds" and covers various aspects, including authorization, investment restrictions, custody and administration of assets, supervision, and regulatory measures. The paper describes the legal structure, regulatory requirements, and performance of "Sondervermögen fonds", highlighting their advantages over other investment vehicles. "Sondervermögen fonds" have become a significant tool for investors in Germany and are expected to continue playing a crucial role in the country's investment landscape.

Germany

The Financial Sector Assessment Program (FSAP) conducted a focused review that primarily assessed banking regulation and supervision of Germany’s less significant institutions (LSIs).1 Germany accounts for 1,324 of about 2,400 total LSIs in the Euro Area (representing 40 percent of Germany’s banking sector assets and approximately 55 per cent of total Euro Area LSI assets). As Germany is part of the Euro Area, the regulation and supervision of banks takes place within the European Central Bank’s (ECB) Single Supervisory Mechanism (SSM). The Federal Financial Supervisory Authority (BaFin) and the Deutsche Bundesbank (BBk) are responsible, under the oversight of the ECB, for the supervision of LSIs.

What is the impact of macroprudential regulations on the Swedish housing market?

Housing shortages and urbanization have led to higher house prices and higher levels of household debt. Sweden's Financial Supervisory Authority has introduced several borrower-based, macroprudential tools to control debt growth over the last ten years. In 2010, a mortgage loan-to-value (LTV) ratio was introduced, and in 2016, the amortization of 1 percent of the loan balance was mandated by law if a mortgage's value was higher than 50 percent of the property value. Furthermore, in 2018, the amortization requirement was tightened, as all households with a mortgage valued at larger than 4.5 times their annual income were forced to be amortized by 1 percent of the loan balance. The question is whether the Financial Supervisory Authority's macroprudential tools have exerted the intended effect. We combine a hedonic regression modeling approach with a regression discontinuity design (RDD) to estimate the causal impact on house prices. The effect of these macroprudential tools is estimated on the single-family housing market and the condominium market. We are using microdata of one million housing transactions between 2008 and 2019. Our estimates indicate that the amortization requirement in 2016 resulted in a negative impact of around 7 percent on housing prices but that a slightly lower impact resulted from the 2018 amortization requirement. The 2010 LTV ratio requirement did not impact the prices of dwellings.

Cryptocurrencies as investment: benefits and risks

The cryptocurrency market has been developing dynamically in recent years. The rapid development of the market is the result of an increased interest in cryptocurrencies, both from those who consider it as a means of payment, and from investors who purchase cryptocurrencies for speculative purposes. Blockchain technology, on which cryptocurrencies are based, has gained acceptance in the financial industry, and many companies are engaged in the work on using it in their activities. On the other hand, numerous supervisory authorities, including the European Banking Authority, the European Central Bank, the National Bank of Poland and the Polish Financial Supervisory Authority, warn against investing in cryptocurrencies, pointing out the numerous risks associated with such investments. The purpose of the article is to analyze the benefits and potential risks of investing in cryptocurrencies. The object of the research is investing in cryptocurrencies. The subject of the research is cryptocurrencies as investment. The author used the methods of analysis, synthesis, generalization and deduction. As a result of the study, the advantages and potential risks of investing in cryptocurrencies were analyzed. In addition, countries that have fixed the management of the bitcoin cryptocurrency at the legislative level have been reviewed.  

"Sustainability of private administrated pension funds in Romania "

At the level of the European Union, pensions from redistributive public systems are the main source of income for the elderly. A quarter of the European Union's population is made up of retirees, and their numbers have been steadily rising in recent years. In the last decade, in Romania, the issue of sustainability of the public pension system has become more and more acute and solutions have been sought for the transfer of responsibility for the payment of pensions from the state to the individual through privately administered pensions. In the field of social policy, the constant concern has been to ensure a decent income for the elderly. The paper aims to identify the financial sustainability of private pension systems, the investment strategies used by these funds, the structure of investment portfolios, the profitability achieved by fund managers. The research method used will be statistical-mathematical. The research data are processed based on the reports and data of the Financial Supervisory Authority (ASF), the Private Pension System Supervisory Commission (CSSPP), the Romanian Association of Private Administrative Pensions (APAPR), the National Institute of Statistics (INS) and those from EUROSTAT. The results of this research consist in highlighting the problems of the current private pension management system and the economic developments of the Romanian economy in the coming decades

The impact of internet financial reporting on Egyptian company’s performance

Purpose This study aims to examine the impact of internet financial reporting (IFR) on companies’ performances as measured by three performance indicators, namely, stock price, stock returns and company value. Design/methodology/approach A sample of 139 non-financial companies listed in the Egyptian stock exchange is used and classified as 108 IFR companies and 31 non-IFR companies. To test the research hypotheses, an independent t-test and multiple linear regression analyses are used. Findings The results indicate that there are no significant differences between IFR companies and non-IFR companies for both stock price and stock return variables. Conversely, there is a significant difference between IFR companies and non-IFR companies in the company value variable. These results imply rejecting hypotheses H1 and H4 and accepting the hypothesis of H7 that the presence of IFR has an impact on company value. The multiple regression analyses results indicate a significant relation between the scope of IFR and stock price. Likewise, between the degree of IFR and company value. Both degree and scope of IFR have an insignificant impact on stock return, which infer that applying different performance measures can reveal different conclusions. Research limitations/implications This research is a snapshot of IFR limited to a cross-sectional study and could not study the longitudinal data of internet reporting. Second, Marston and Polei (2004) contend that “weights contain an element of subjectivity, which cannot be completely avoided in the composition of such a score” (p. 297) and a variation in the disclosure index can lead to a modification in the results (Kaur and Kaur, 2020). This research applied a weighted index to measure the degree of IFR, which may affect the results and may change it if other indexes are applied. Moreover, the scores of the degree and scope of information disclosure are assumed to be similar every year due to the lack of information regarding the variations in content and presentation in the companies’ websites. Finally, the absence of a complete data set and stock prices for some companies in the sample. Practical implications To enhance the quantity and quality of IFR could be implemented through setting regulations and standards to govern IFR practices companies in Egypt. Moreover, the trade-off of the requirement of the Egyptian Financial Supervisory Authority for Egyptian companies make information available online and the secrecy culture profound in the Egyptian society (Ahmed et al., 2015) involve assigning a regulatory body for monitoring the IFR practices to ensure disseminating timely and accurate information that helps investors make rational decisions. Social implications The researchers recommend the suggestion to have an external assurance conducted by external auditors to enhance the accuracy and credibility of the IFR information. Originality/value Based on prior literature, no studies in Egypt compare between IFR companies and non-IFR companies concerning stock price and company value as measured by Tobin’s Q. Moreover, few research studies in Egypt covered the degree of IFR disclosure whilst not addressing the impact on the stock price. In addition, no prior study examined the scope of IFR disclosure in Egypt. Therefore, the research findings attribute to literature.

Socio-demographic analysis of the phenomenon of population aging with implications on the Romanian pension system

The first part of the study has as it’s main objective to expose a brief socio-demographic analysis on the problem of aging population, both in Romania and in other European Union countries. The second part of the study follows the implications that the aging population phenomenon has on the Romanian state pension system. Also, the paper proposes an investigation of the risks to which the population aged 65 years and over is exposed in the context of the COVID-19 pandemic, based on specific comorbidities. To form an overview of these aspects, it will be used secondary data research, with information from public institutions such as: the National Institute of Statistics; Ministry of Internal Affairs; National House of Public Pensions; The Government of Romania; Financial Supervisory Authority; Eurostat; World Health Organization; United Nations Organization; Organization for Economic Co-operationand Development; as well as specific legislation and updated specialized literature. The last part of the study offers a series of conclusions which will result in several general solutions to the aging population problem.

Financial Supervisory Authority’s Inspection Period and Savings Banks’ Outside Directors Independence of Social and Regional Ties

저축은행 내부통제시스템 강화를 위한 감독당국의 노력이 증대되고 있으나 관련 연구는 부재한 상태이다. 이에 본 연구는 감독기구의 검사기간이 저축은행의 내부통제시스템 개선에 어떠한 영향을 미치는지 살펴보았다. 이를 위해 2007년 1월부터 2016년 12월 기간의 반기별 저축은행 자료를 사용하였으며, 사외이사의 학연 및 지연 독립성을 종속변수로 사용하였다. 연구결과는 다음과 같다. 첫째, 감독기구의 검사기간이 증가할수록 저축은행 사외이사의 학연 및 지연 독립성이 개선되었다. 둘째, 감독기구 검사기간과 사외이사 학연 독립성 사이의 관계는 저축은행의 대출시장지배력에 따라 차별화되어 나타났다. 이상의 결과는 감독기구의 검사가 저축은행 사외이사의 독립성 제고에 기여할 수 있음을 보여준다. 본 연구는 그간 관련 연구가 제한적으로 이루어졌던 저축은행을 표본으로, 감독기구 검사의 사외이사 독립성 개선효과를 확인한 초기 연구라는 점에 의미가 있다. 그럼에도 본고는 자료의 한계로 인해 감독기구 검사기간 외에 검사의 효과를 대용할 수 있는 측정치를 다양하게 사용하지 못하였다는 점에서 후속연구의 필요성을 내포한다.

The Albanian Mutual Funds during the COVID pandemic

The COVID-19 pandemic caused a lockdown of a global scale and subsequent enforcement ofit had an impact in the capital markets, and the Albanian mutual fund industry would not remainan exception. Such crisis put the industry into an unprecedented stress test. This paper usesqualitative research method to identify the challenges that were faced by the mutual fundindustry during the beginning of the pandemic. This includes the fund flow perspective,secondary debt markets, the shifts of regulations and the behavior of investors. The conclusionsthat will be drawn from this study are aimed to help capital market investors and researchers indrawing strategies in the Albanian market during crisis times. Albania is recognized as anemerging economy and during its ongoing stage of development, the COVID-19 pandemiccaused turbulences in the economic stability of the country. With many measures put in motionin order to reduce the impact of the pandemic upon the population, all the sections of theeconomy have been facing disruption. The capital market, likewise, was met with a lot ofchallenges during this period. Although, history has shown that the Mutual Fund (MF) industryhas always bounced back significantly after taking a hit. Considering the impact of the crisis, theregulator, Financial Supervisory Authority (FSA), closely supervised the liquidity to ensure themutual funds would be able to operate in stressful conditions and in the best interest of theinvestor. For this study, a Qualitative research method is applied by using Histographicalresearch approach, regarding the past and present events that are associated with the AlbanianMutual Fund Industry. Furthermore, data from regulator websites, company websites, businessnewspapers in physical and digital forms are used in the study as well as research papers.Moreover, data from financial statements of the Mutual Funds (MFs) has been sourced from thewebsites of Asset Management Companies (AMCs).

Financial stability indicator for non-banking markets

"A mixed frequency indicator is designed to incorporate and extract information from time-series data that are available at different frequencies: daily, monthly, quarterly, etc. Currently, the non-banking financial markets in Romania are supervised by the Financial Supervisory Authority and are composed of three distinct markets: the capital market, insurance, and private pension funds. Due to the mutual exposure between them, facilitated by the financial instruments held in their investment portfolios, there are common risk factors that influence their dynamics. Although a financial shock can affect all three sectors at the same time, the impact can be measured at a different frequency and with a different lag. Surveillance data for capital markets and pension funds are available every month, with a gap of one month, while for insurance the data are available quarterly, but with a gap of two months, similar to GDP data. If a sudden financial event disrupts financial markets or a change in the macroeconomic environment changes the medium-term outlook, what is the impact on non-bank financial intermediation? The stability indicator for non-banking financial markets is a monthly indicator estimated from mixed frequency data. The indicator is designed to provide a signal of financial instability in non-banking financial markets, to the extent that all three markets are disrupted at once."

Finančné pyramídy a ich regulačné perspektívy

It can be stated that there is no explicit regulation of the issue of financial pyramids in thelegal order of the Slovak Republic or on European law level. In the legislation, it is possible to distinguish case-by-case whether it is a general prevention of financial pyramids or whether it is a regulation-specific prohibition regarding activities on the financial market. The national financial market supervisory authority in particular plays an important role in the field of protection. In the article, the author identifies the essential features of the pyramid schemes in general, subsequently in the light of financial market regulation.

Denmark

COVID-19 pandemic: The Financial Sector Assessment Program (FSAP) work was conducted prior to the COVID-19 pandemic, so this Technical Note (TN) does not assess the impact of the crisis or the recent crisis-related policy measures. Nonetheless, given the FSAP’s focus on vulnerabilities and policy frameworks, the findings and recommendations of the TN remain pertinent. The Danish Financial Supervisory Authority (DFSA) has improved standards in its oversight of banking and insurance sectors since the last FSAP. Nevertheless, risks persist, both in traditional forms, and new areas, such as cyber risk, AML, and innovative market entrants. This note, selects topics to meet evolving supervisory challenges and the expectation that the international supervisory standards themselves will likewise continue to rise.

Denmark

COVID-19 pandemic: The Financial Sector Assessment Program (FSAP) work was conducted prior to the COVID-19 pandemic, so this Technical Note (TN) does not assess the impact of the crisis or the recent crisis-related policy measures. Nonetheless, given the FSAP’s focus on vulnerabilities and policy frameworks, the findings and recommendations of the TN remain pertinent. While Denmark’s institutional arrangements are uncommon, the authorities have undertaken several macroprudential measures since the last FSAP. The Minister for Industry, Business and Financial Affairs (MIBFA) has decision-making power over most macroprudential tools in Denmark, which is rare in international practice. However, the Systemic Risk Council (SRC), which includes members from the Danmarks Nationalbank (DN) and Danish Financial Supervisory Authority (DFSA) plays an advisory role and has powers to give recommendations with a comply or explain mechanism. In recent years, the authorities have taken wide-ranging macroprudential policy actions in response to growing systemic vulnerabilities, which have seemed to slow down some of the riskier trends. More recently, in response to the Covid-19 crisis, countercyclical capital buffer (CCyB) has been fully released.

Denmark

The Danish authorities’ efforts to strengthen cross-border anti-money laundering and combating the financing of terrorism (AML/CFT) supervision continue to gather momentum. Since the Fund’s publication of a Selected Issues Paper on this subject in June 20192, the Danish authorities have made significant progress, including by conducting or participating in three multinational on-site inspections of banks; developing a new institutional risk assessment model; issuing an AML/CFT on-site inspection manual; and, via Act No. 1563 (2019), amending several pieces of legislation so as to bolster the monitoring and enforcement powers of the Danish Financial Supervisory Authority (DFSA), establish additional reporting requirements for the private sector, and stiffen the penalties for violations of AML/CFT obligations.

Norway

Norway has made substantial progress in strengthening its framework for financial crisis management and bank safety nets since the 2015 FSAP. The Norwegian authorities have implemented the EU framework. The Bank Recovery and Resolution Directive (BRRD) has been transposed into the Norwegian legal framework mainly by amendments to the Financial Institutions and Financial Groups Act and accompanying regulations. Finanstilsynet (the Financial Supervisory Authority of Norway, FSA) has been designated as Norway’s resolution authority. Resolution financing options were broadened by establishing a resolution fund. While the Deposit Guarantee Scheme Directive (DGSD) has yet to be brought into the European Economic Area (EEA) agreement, Norway has, in fact, already transposed it into the Norwegian law. This provides the Norwegian authorities with a broadened and detailed regulatory framework for dealing with weak banks.