International Financial Community Research Articles

OFAC, Famine, and the Sanctioning of Afghanistan: A Catastrophic Policy Success

On August 15, 2021, American military forces withdrew from Kabul, and the sanctioning of Afghanistan began. Marred by the usual problems—ineffective, counterproductive, unwieldy—these sanctions revealed three additional puzzles. First, although grounded in targeted sanctions, they transformed into de facto comprehensive sanctions. Secondly, that transformation was instantaneous and unprompted. Thirdly, a near-famine followed within weeks. I make nested analytical, functional, and explanatory arguments. The analytical argument is that targeted sanctions are best understood not as tools of international coercion but primarily as domestic regulations. The functional argument is that the Office of Foreign Asset Control (OFAC) uses tactical and strategic ambiguity to maximize its regulatory reach over financial intuitions, humanitarian aid organizations, and money transfer organizations. The explanatory argument returns to the puzzles. I argue that, without any signal from OFAC, which was the signal, and reflecting OFAC’s regulatory domination, when the Taliban took Kabul, the international financial community, humanitarian aid organizations, and remittance providers all dissociated from Afghanistan with immediate effect and particularly acute consequences on food entitlements.

Case of Indonesia: government bond issuer investor relations strategy

<span lang="EN-US">This study elaborates Indonesia's investor relations activities in building and maintaining positive perceptions of the Indonesian economy as a debt issuer in international financial markets. The study begins with several theories in investor relations, communication strategies, and investor relations current practices in Indonesia. By referring to various theories related to investor relations, an assessment is carried out that focuses on strengthening efforts in preparing the framework for the communication strategy of investor relations in the Republic of Indonesia. In addition, this study also aims to produce a communication strategy framework that can be applied in preparing sharper, focused, and goal-oriented work programs and communication strategies. This study resulted in a framework for strengthening investor relations strategies in Indonesia which have taken into account factors according to investor relations theory and the strategic environment that has become the concern of the international financial community.</span>

Relevance of SEA to a Global Financial Centre Under One Country Two Systems: Engaging Stakeholders for Sustainability and Climate Change

ABSTRACT As the world calls for actions in response to the adverse impacts on the natural environment associated with climate change, the international capital market increasingly recognises the pertinent investment risks imposed on assets around the globe demanding more pertinent disclosures. Hong Kong, a special administrative region and the global financial centre of the most populous nation and second largest economy of the world, has strategised to synchronise with the international financial community. Under one country two systems, it reinforces financial regulatory measures on ESG disclosures by listed companies with the ambition to become a hub of green finance. However, a recent survey reveals sluggishness of these companies in complying with the disclosure guidelines pertinent to social and environmental sustainability. Furthermore, engagement with their stakeholders appears to remain insufficient despite its significance to facilitating a social and environmental accounting (SEA) process. Meanwhile, the city’s recent social movement and turmoil generates grave concerns over its underlying social sustainability and even public health. This commentary suggests that a gap exists between: (a) the policy desire to position Hong Kong systemically as an international green finance hub that hinges upon harmonisation among local, international and governing stakeholders and (b) Hong Kong’s apparent un-sustainability status. This dilemma is yet to be harmonised owing to inability to reach consensus among intergenerational stakeholders recurrently diverged over ideologies. Such relevance and implications for the international SEAJ community are articulated.

Comments on “Economic Reforms in the Aftermath of Regime Change in Malaysia”

Comments on “Economic Reforms in the Aftermath of Regime Change in Malaysia”

Addiction to debt forgiveness in developing countries: Consequences and who gets picked?

AbstractWe explore whether the expectation of debt forgiveness discourages developing countries from attaining sustainable fiscal independence through improving their tax effort. While the international financial community advises poor countries to improve revenue mobilization, the same international community routinely bails out poor countries that fail to meet their loan repayment obligations, among other reasons as a result of the low tax effort they exercise. The act of bailing out creates an expectation about receiving debt forgiveness time and again in the future. The key prediction of our theoretical framework is that in the presence of debt forgiveness, countries’ tax efforts will decline and more so the higher the intensity of the bailouts. We test this proposition using data for 55 countries from 1995 to 2015. We find that debt forgiveness is significant in lowering tax effort. In addressing the potential of reverse causality, we also find that the international financial community has been more forgiving to countries that exert lower tax effort. These results, which are robust to various specifications, have significant policy implications for donor and recipient countries.

Sovereign commercial bank restructuring agreements: should bond innovations or other modifications be adopted?

... As the 1980s gave way to the 1990s, there was a tectonic shift in sovereign debt restructuring. The 1980s were dominated by commercial bank restructurings as many sovereigns’ debt profiles were weighted heavily toward commercial bank cross-border loans. This shifted to arrangements related to tradable bonds as a result of the Brady initiative and other stimuli. And the shift intensified as pricing became highly attractive and execution could be lightning quick, enabling sovereigns to take advantage of favourable market windows. This shift, while broadening the investor base and facilitating diversification of risk also ‘pose[d] coordination and collective action problems in cases in which a sovereign’s scheduled debt service exceeds its payments capacity’.1 As a result, the dialogue in the international financial community tended away from sovereign commercial bank restructurings and toward the development of techniques and strategies to bring about better restructuring results for bonds and to curb the disruptions of non-consenting bondholders.

A Discussion of Mark Blyth's Austerity: The History of a Dangerous Idea

The ongoing Eurozone crisis has brought to the fore the discourse of “austerity.” A number of countries, most dramatically Greece, have been called upon to institute policies of fiscal austerity as a condition of further support from the international financial community. The situation has generated some serious disagreements among economists, policymakers, and indeed important financial institutions such as the International Monetary Fund and the European Central Bank. Mark Blyth’s Austerity: The History of a Dangerous Idea speaks directly to these ongoing current debates. We have invited a range of political scientists working on related issues to comment on the book’s arguments and their relevance to the work that they do.

A Discussion of Mark Blyth's Austerity: The History of a Dangerous Idea

The ongoing Eurozone crisis has brought to the fore the discourse of “austerity.” A number of countries, most dramatically Greece, have been called upon to institute policies of fiscal austerity as a condition of further support from the international financial community. The situation has generated some serious disagreements among economists, policymakers, and indeed important financial institutions such as the International Monetary Fund and the European Central Bank. Mark Blyth’s Austerity: The History of a Dangerous Idea speaks directly to these ongoing current debates. We have invited a range of political scientists working on related issues to comment on the book’s arguments and their relevance to the work that they do.

A Discussion of Mark Blyth's Austerity: The History of a Dangerous Idea

The ongoing Eurozone crisis has brought to the fore the discourse of “austerity.” A number of countries, most dramatically Greece, have been called upon to institute policies of fiscal austerity as a condition of further support from the international financial community. The situation has generated some serious disagreements among economists, policymakers, and indeed important financial institutions such as the International Monetary Fund and the European Central Bank. Mark Blyth’s Austerity: The History of a Dangerous Idea speaks directly to these ongoing current debates. We have invited a range of political scientists working on related issues to comment on the book’s arguments and their relevance to the work that they do.

The almost sure convergence rate of the estimator of optimized certainty equivalent risk measure under α-mixing sequences

ABSTRACTConditional value-at-risk (CVaR) model is a kind of financial risk measure that is extensively supported and accepted by international financial community. Its optimized form can be regarded as an optimized certainty equivalent (OCE) risk measurement. In this paper, we mainly discuss and analyze the strong laws of large numbers and the convergence rate of OCE's estimator under α-mixing sequences. The result shows that the almost sure convergence rate of CVaR estimator is given by the results of OCE estimator. Its convergence rate is inversely proportional to the square root of the sample size under certain conditions. Its effectiveness is verified by simulation experiments for two classical α-mixing sequences.

CVaR度量在极值理论中的应用

近半个世纪以来，随着经济的全球化和多元化，金融风险的度量逐渐受到金融界以及经济学者的关注。90年代后，新型风险管理工具VaR(在险价值)测量方法逐步发展起来，以它能够科学、准确、综合的度量风险值而倍受国际金融界的青睐。但在极端事件发生期，VaR的度量准确性不如CVaR(条件在险价值)。本文意在研究CVaR度量在极值理论上的应用。 Since the last half a century, with the globalization and diversification of economy, the financial risk measurement has gradually been concerned by the financial and economic scholars. After the 1990s, the new risk management tool, VaR (value at risk) measurement method has been devel-oped gradually, which can measure risk value scientifically, accurately and comprehensively, and it is welcomed in the international financial community, but in extreme event, the accuracy of VaR is less than that of CVaR (conditional value at risk). This paper is intended to study the application of CVaR measure in extreme value theory.

Time to look again at accrual budgeting

A large number of countries are implementing accrual reporting to provide better accountability for the stewardship of public finances to their citizens. Far fewer nations have moved to an accrual basis for their government budgetary decisionmaking. Those few countries that have made the move do not regret doing so, having achieved significant benefits from that reform. This paper looks again at the benefits of accrual budgeting, at some of the major arguments that have impeded its international implementation, and how those issues have been addressed in the countries that have successfully adopted accrual budgeting. It suggests that the international public financial management community should revisit accrual budgeting, and that efforts to implement it should be redoubled, not because it is a panacea for all budgeting and fiscal problems, but rather because it provides a stable foundation for improving fiscal and budgetary decision-making and for providing fairer and more complete budgetary information to citizens. JEL Classification: H10, H11, H61, H83 Key words: Accrual budget, accrual report, fiscal management, fiscal performance, public finance, accountability

South Africa's post-apartheid microcredit experiment: moving from state-enforced to market-enforced exploitation

The international donor community arrived in post-apartheid South Africa in the early 1990s to restructure the economy along neoliberal lines. One of the most important of the interventions it promoted was microcredit, which was widely seen as one of the principal self-help solutions to the exceptionally high levels of unemployment and poverty that prevailed in the Black South African community. In spite of an early ‘boom-to-bust’ episode in the early 2000s and worrying evidence it was actually further impoverishing far more Black South African's than it was actually helping escape from poverty and unemployment, the microcredit model did not lose its international support: if anything, this support was expanded as the international development community desperately sought to ensure the survival of the microcredit model and therefore also the centrality of self-help and individual entrepreneurship as the only way out of poverty for the poor. This article shows how and why the microcredit model was supported so strongly by the international development community and South African financial community in spite of its manifestly calamitous impact on Black South African community. Overall, I conclude, microcredit can be viewed as South Africa's own sub-prime-style disaster which, like the original US version, has mainly served to benefit a tiny financial elite working within and around the microcredit sector, whilst simultaneously destroying many of the most important pillars of the economy and society.

How Far Can Renminbi Internationalization Go?

Since the formal launch of the renminbi trade settlement scheme in 2009, renminbi internationalization has made impressive inroads. The progress in renminbi trade settlement is especially impressive. However, Hong Kong, China’s offshore renminbi deposits failed to make significant progress as expected. The question of how far renminbi internationalization can go has become a common concern in the international financial community. This paper argues that the sheer size of the People’s Republic of China’s (PRC) trade and the convenience of using the renminbi for transaction settlements is one contributing factor, but that exchange rate arbitrage and interest rate arbitrage matter also. As well, a fundamental constraint for renminbi internationalization is the PRC’s capital controls. Before fully opening up its capital account and making the renminbi freely convertible, however, the PRC needs first to put its own house in order, most importantly making the renminbi exchange rate flexible. While the renminbi can and will become a major international currency eventually, the road to internationalization is bound to be long and bumpy.

The Application of VaR Methods in Financial Risk Management Research

With the development of financial markets, financial products innovation and global competition intensifies, the risk of financial market in China will be more complex and varied. How to deal with these risks and effective management has become the crucial problem of the financial institutions and regulators. VaR model as a tool to measure market risk, is increasingly becoming the current international financial mainstream risk management and financial supervision method, wide support and recognition by the international financial community. This paper introduces the background and meaning of the VaR method and studied the VaR method in the application of all kinds of financial risk management.

Managing and transforming policy stigmas in international finance: Emerging markets and controlling capital inflows after the crisis

ABSTRACTThe past three decades have shown the increasing importance of the efforts of the international financial community to socialize emerging markets to accept norms of financial governance. Social sanctions often have been used to mark non-compliant states and their policies as deviant. Yet, we know little about how deviant states strategically manage such policy stigmas in international finance and how this management shapes the international normative order. Recent scholarship in international relations suggests that stigma management strategies tend to either reinforce or fracture the international normative order. This article, by contrast, contends that such strategies also have the potential to transform the international normative order so that it resembles more closely the preferences of the deviant. This argument is illustrated using evidence drawn from Brazil and South Korea's management of the policy stigma associated with controls on capital inflows.

Estilos Políticos y Orientación Tecnocrática bajo los Gobiernos de Lagos y Bachelet

This article explores the ways in which Presidents Lagos and Bachelet have dealt with the technocratic phenomenon within their respective governments. For this purpose, special attention is given to the political styles characterizing both presidents and the manner in which these styles have facilitated or obstructed the functioning of technocratic groups within governmental circles. As it is argued, the attitude adopted by both leaders vis-à-vis the presence of technocratic groups within their governments is largely conditioned by the type of relation established between the presidents and the supporting political parties. In addition to this, a sordid clash between politicians and technocrats for power and influence can be observed. President Lagos always distrusted the technocracy. He only made strategic use of it in order to lehis cgitimate onduction of the country's economy towards entrepreneurial groups and the international financial community. On the other hand, President Bachelet will be forced to seek support from the 'Expansiva' technocrats due to her problematic relation vis-à-vis the leaders of the Concertación's political parties.

Enacting the rules of global finance: sovereign wealth funds and the promotion of corporate governance reform

In the wake of the financial crises of the last two decades, the promotion of corporate governance reform has emerged as a priority concern of the international financial community. This paper draws attention to the role played by Sovereign Wealth Funds (SWFs) in this process. It shows that SWFs’ enactment of a common set of shareholder-oriented corporate governance reforms has not solely been driven from the ‘outside in’—i.e. conforming to prevailing global financial norms and pressures. Indeed, various SWFs are in fact attempting to change financial best practice from the ‘inside out’ by promoting a transformative shareholder-value model of corporate governance throughout the companies they hold in their investment portfolios. To better elucidate the dynamics of this process, this paper looks at the experience of two SWFs in Asia and Europe. More specifically, it will explore the corporate governance agendas of Norway’s Government Pension Fund-Global and Malaysia’s Khazanah Nasional Berhad.

Dilemmas of Financial Reporting as the Reliable Information Source of an Entity Performance Results

The objective of the hereby paper is to indicate, on the one hand, the need for transformations in financial reporting as the basic source of information about the financial situation of an economic entity indispensable in the decision making process by its users, and on the other to provide the analysis of the adopted reporting reconstruction directions validity, as suggested by international financial community. On the basis of comments and reservations presented by practitioners and the analysis of research conducted by scientific circles the thesis is put forward by the Author that the suggested extension of information scope to be disclosed in obligatory financial reports proposed by the authorities responsible for the preparation of international accounting standards will not increase the usefulness of information they include and will not influence higher security of business transactions. The paper is divided into there interrelated parts. The first presents the overview of critical opinions expressed by financial circles regarding accounting as the system generating information about the achievements of entities operating at the global market. The second refers to an entity stakeholders and their information needs. Irrespectively of opinions about the primacy of investors and their rights in making investment decisions it is of great importance to meet the needs of the remaining interest groups by means of providing both reliable and useful information in financial statements. The final part of the paper presents an outline of undertaken and suggested restructuring directions in financial reporting proposed by IASB and FASB, as the institutions responsible for preparing international accounting standards. This part also discusses the selected suggestions by Polish researchers regarding the form and content of particular components included in a financial statement.

An approach to understanding the professionalism of financial planners

The aim of this research is to investigate how key stakeholder groups involved with the certification of financial planners experience the phenomenon of the „professionalism of financial planners‟. The study is to be carried out to provide insight to the international financial planning community in establishing relevant and superior professional standards for Certified Financial Planner (CFP) professionals. This will be a qualitative study using phenomenography as a research methodology to describe the qualitatively different ways in which certified financial planners, lecturers of the CFP curriculum and association managers understand or experience the phenomenon of „professionalism‟. Research participants will be interviewed from the United States, Australia and Hong Kong and these interviews analysed to reveal the variations in the conceptions of „professionalism‟ and the attributes that can be identified from the phenomenographic outcome space to inform financial planners, academics and professional associations of what is required to be a CFP professional.