Role Of Financial Regulation Research Articles

Sci-tech Finance and Technological Innovation of AI Computing Power Enterprises: Based on the Perspective of Financial Regulation

As the new round of technological revolution continues to evolve, computing power is progressively emerging as the "new qualitative productive force" in the era of digital economy; AI computing power, being the core component of computing power, has consequently garnered extensive attention. This study examines the impact of sci-tech finance on the technological innovation of AI computing power enterprises, the mechanism of action, and the role of financial regulation, using data from Chinese A-share listed AI computing power enterprises from 2014 to 2022. The findings are as follows: Firstly, the development of sci-tech finance significantly enhances the technological innovation capacity of AI computing power enterprises. Secondly, the alleviation of financing constraints partially mediates this effect. Thirdly, overall financial regulation exerts a negative regulatory effect on the relationship between sci-tech finance and technological innovation; specifically, financial regulation in the eastern region has a negative regulatory role, whereas in the non-eastern regions, it exhibits a positive regulatory role. These research conclusions hold certain implications and reference value for enhancing the sci-tech finance system, fostering the development of the computing power industry, and reforming the regulatory system.

ISLAMIC FINANCIAL PLANNING: KONSEP LITERASI KEUANGAN SYARIAH SEBAGAI ALTERNATIF PERENCANAAN FINANSIAL BAGI MAHASISWA

In this modern era, financial literacy is one of the most important substance. Financial literacy is an alternative strategy to building economic growth and financial stability to survive and face the diversity of services available. The concept of Islamic finance is managing finances better, and being smart for choosing halal and profitable investments. The role of students regarding the level of sharia literacy is needed to disseminate it to the community which will ultimately be implemented by the community itself. Improving financial literacy must be a program at every university for all students because the role of financial regulation, according to sharia is very important for a good level financial literacy. This study uses a qualitative research method with a descriptive approach. The technique used to collect data in this research is a questionnaire. The population of this research is Indonesian Muslim's students by using purposive sampling technique. The results show that most Indonesian Muslim students have some problems in managing finances. This happens because of the lack of socialization related to Islamic Financial Planning so that students find it difficult to apply it in everyday life. There needs to be long-term socialization so that students can understand it well.
 Keywords; Islamic Financial Literacy; Islamic Financial Planning; Student Finance

The Role of Financial Regulators in the Governance of Algorithmic Credit Scoring

The Role of Financial Regulators in the Governance of Algorithmic Credit Scoring

A Review of the Recent Developments of Green Banking in Bangladesh

This paper aims to explore the emergence of ‘Green Banking’ in Bangladesh, with a focus on the role of financial regulation and regulators in greening the financial sector. It also examines the contribution and involvement of banks and non-bank financial institutions in promoting green economic transition. The study is based on the review of secondary data collected from various sources, such as quarterly reports, annual reports, websites of the central bank of Bangladesh, and other commercial banks and non-bank financial institutions as well as various articles, and newspapers reports on green banking in Bangladesh. The collected data is reviewed using descriptive statistics. The research results reveal that the central bank of Bangladesh played a major role in greening the financial system of the country by implementing various green policies and regulatory measures. Although Bangladesh is still far behind the developed countries in terms of environmental performance, the country has made a remarkable progress in initiating and expanding green banking practices, infrastructure development, and accelerating green growth in recent years.

Climate Actions and Stranded Assets: The Role of Financial Regulation and Monetary Policy

Limiting global warming to well below 20 C may result in the stranding of carbon-sensitive assets. This could pose substantial threats to financial and macroeconomic stability. We use a dynamic stochastic general equilibrium model with financial frictions and climate policy to study the risks a low-carbon transition poses to financial stability and the different instruments central banks could use to manage these risks. We show that, even for very ambitious climate targets, transition risks are limited for a credible, exponentially growing carbon price, although temporary “green paradoxes” phenomena may materialize. Financial regulation encouraging the decarbonization of the banks’ balance sheets via tax-subsidy schemes significantly reduces output losses and inflationary pressures but it may enhance financial fragility, making this approach a risky tool. A green credit policy as a response to a financial crisis originated in the fossil sector can potentially provide an effective stimulus without compromising the objective of price stability. Our results suggest that the involvement of central banks in climate actions must be carefully designed in compliance with their mandate to avoid unintended consequences.

Transition towards green banking: role of financial regulators and financial institutions

This paper provides an overview of green banking as an emerging area of creating competitive advantages and new business opportunities for private sector banks and expanding the mandate of central banks and supervisors to protect the financial system and manage risks of individual financial institutions. Climate change is expected to accelerate and is no longer considered only as an environmental threat because it affects all economic sectors. Furthermore, climate-related risks are causing physical and transitional risks for the financial sector. To mitigate the negative impacts, central banks, supervisors and policymakers started undertaking various green banking initiatives, although the approach taken so far is slightly different between developed and developing countries. In parallel, both private and public financial institutions, individually and collectively, are trying to address the issues on the horizon especially from a risk management perspective. Particularly, private sector banks have developed climate strategies and rolled out diverse green financial instruments to seize the business opportunities. This paper uses the theory of change conceptual framework at the sectoral, institutional and combined level as a tool to identify barriers in green banking and analyze activities that are needed to mitigate those barriers and to reach desired results and impacts.

Climate Actions and Stranded Assets: The Role of Financial Regulation and Monetary Policy

Limiting global warming to well below 20C may result in the stranding of carbon-sensitive assets. This could pose substantial threats to financial and macroeconomic stability. We use a dynamic stochastic general equilibrium model with financial frictions and climate policy to study the risks a low-carbon transition poses to financial stability and the different instruments central banks could use to manage these risks. We show that, even for very ambitious climate targets, transition risks are limited for a credible, exponentially growing carbon price, although temporary “green paradoxes” phenomena may materialize. Financial regulation encouraging the decarbonization of the banks’ balance sheets via tax-subsidy schemes significantly reduces output losses and inflationary pressures but it may enhance financial fragility, making this approach a risky tool. A green credit policy as a response to a financial crisis originated in the fossil sector can potentially provide an effective stimulus without compromising the objective of price stability. Our results suggest that the involvement of central banks in climate actions must be carefully designed in compliance with their mandate to avoid unintended consequences.

Value-at-risk estimation by LS-SVR and FS-LS-SVR based on GAS model

ABSTRACTConditional risk measuring plays an important role in financial regulation and depends on volatility estimation. A new class of parameter models called Generalized Autoregressive Score (GAS) model has been successfully applied for different error's densities and for different problems of time series prediction in particular for volatility modeling and VaR estimation. To improve the estimating accuracy of the GAS model, this study proposed a semi-parametric method, LS-SVR and FS-LS-SVR applied to the GAS model to estimate the conditional VaR. In particular, we fit the GAS(1,1) model to the return series using three different distributions. Then, LS-SVR and FS-LS-SVR approximate the GAS(1,1) model. An empirical research was performed to illustrate the effectiveness of the proposed method. More precisely, the experimental results from four stock indexes returns suggest that using hybrid models, GAS-LS-SVR and GAS-FS-LS-SVR provides improved performances in the VaR estimation.

Regulating Risk Culture in Banks

The paper analyzes the role of financial regulation in facilitating the development of organizational norms to enhance risk culture in banking institutions. Specifically, it examines the regulatory responses and industry-led initiatives taken since the financial crisis of 2007-08 to address weaknesses in bank risk culture. The paper suggests that shortcomings in risk culture — particularly as understood through the lens of human agency theory — in large financial institutions are the result of collective agency problems. The paper argues that regulation has a role to play in addressing collective agency problems but that regulators should be selective in what tools they use to enhance risk culture in banks with consideration given to the regulation of remuneration and trusted financial products. It further suggests that to address collective agency problems in large financial institutions policymakers should consider the utility of senior managers’ liability regime to incentivize senior officers and directors to be more proactive and aware of misconduct and other behavior that results in agency costs for the firm and society. The paper concludes, however, that financial institutions themselves are best placed to channel the collective actions of individuals to improve governance and operations in a way that benefits overall firm performance and which mitigates socially costly behavior.

Competition Policy and Sector-Specific Regulation in the Financial Sector

Reforms of financial regulation after the crisis of 2007-2009 raise the question of what is the relation between financial regulators and competition authorities. Should competition authorities play a role in financial regulation? Should they co-operate with financial regulators? Or should they keep at a distance? The paper gives an overview over some of the issues that are involved in the discussion. Drawing on the experience of the network industries, the first part of the paper discusses the relation between competition authorities and sector-specific regulators more generally. Whereas competition policy involves the application of legal norms involving prohibitions that are formulated in abstract terms, sector-specific regulation involves authorities actually prescribing desired modes of behavior. The ongoing nature of relations makes regulators more prone to capture than competition authorities. In the financial sector, the potential for capture is particularly great because everyone is tempted by the idea that banks should fund their pet projects. Following an overview over the evolution of regulation and competition in the financial industry, the paper discusses various issues that are relevant for competition policy: Technological and regulatory barriers to entry, distortions of competition by explicit or implicit government guarantees, distortions of competition by bailouts making for artificial barriers to exit. Guarantees and bailouts in particular pose special challenges for merger control and for state aid control.

Financial Regulation and Supervision in Corporate Governance of Banks

This Essay discusses and analyzes the role of financial regulation and the state’s interference through financial supervision with corporate governance of banks from economic and political perspectives. It suggests that the limits of corporate law and financial regulation cause the state to use financial supervision as the effective tool for such interference. This Essay also argues that the stakeholder model cannot legitimize the state’s intrusion into the corporate governance of private banks through such non-legal measures as financial supervision. It looks into the alternative mechanisms in corporate law and financial regulation for the enhancement of corporate governance of banks from a comparative perspective.

The OIRA Model for Institutionalizing CBA of Financial Regulation

This Essay is a brief response to the stimulating essays on cost-benefit analysis of financial regulation by Professors Coates and Cox in this volume. Both Coates and Cox largely agree that we want policy decisions about financial regulation to be made using what Coates refers to as “conceptual cost-benefit analysis (CBA).” However, both express some skepticism about quantified CBA in financial regulation. Coates observes that he has yet to find a single example of a “reliable, precise quantified CBA of a significant financial regulation,” despite significant efforts to identify one. This stands in stark contrast to many other regulatory domains in which highly sophisticated, quantitative CBA plays a central role, including environmental, health, safety, and antitrust regulation. Why is financial regulation such an outlier with relatively little CBA? Coates’s explanation is that CBA of financial regulation is “an order of magnitude more difficult than its advocates seem to believe.” But CBA plays little role in financial regulation not because CBA of financial regulation is especially challenging but rather because we have not created institutional structures that produce incentives for financial regulators to develop and employ CBA. Centralized regulatory review within the executive branch — the OIRA model that has been so successful in other regulatory domains — should be applied to spur the institutionalization of CBA of financial regulation.

Role of financial regulation and innovation in the financial crisis

Using the financial and macroeconomic dataset of 132 countries, this study empirically analyzes the effects of financial regulations and innovations on the global financial crisis. It shows that regulatory measures such as restrictions on bank activities and entry requirements have decreased the likelihood of a banking crisis, while capital regulation and government ownership of banks have increased the likelihood of a currency crisis. Financial innovation has contributed to the banking crisis but contained the currency crisis. This study also shows that judicious implementation of regulatory measures is critical to financial stability because some regulations, if implemented simultaneously, can further aggravate or alleviate a crisis.

Affirmatively Furthering Fair Housing -- The Role of Financial Regulators

This paper reviews the statutory and regulatory duty of financial regulators to Affirmatively Further Fair Housing. The paper analyzes existing statutory and regulatory tools available to assist the regulators in meeting their duty to affirmatively further fair housing purposes. The paper recommends affirmative steps to affirmatively further fair housing utilizing specific provisions of Regulations A, B and BB. Finally, the paper concludes that financial regulators have sufficient authority to carry out their duty to affirmatively further the purposes of the Fair Housing Act.

EUROPE - HOW CAN THINGS GET BETTER?

In the 2010 Wincott Lecture, the author – a former European Commissioner – explains how the process of policy-making within the European Union can be improved. In order to gain the full benefits of an open and integrated single market, the EU must stop interfering in areas that should properly be the responsibility of member states. However, in the context of the current economic crisis, the EU should take a greater role in financial regulation and in ensuring fiscal responsibility among members of the eurozone.

Financial regulation and oversight: Lessons from the crisis for Latin America and the Caribbean

The analysis of the financial crisis that broke out in the United States in mid-2008 gave rise to a vigorous debate about the role of financial regulation and oversight. The present article briefly analyses the crisis with a particular emphasis on these subjects, with the goal of suggesting some lessons that can be drawn from it for Latin America and the Caribbean. Accordingly, it describes the economic conditions and major changes that occurred in the financial system of the United States during the 1990s and the current decade, identifying the contribution of these factors to the crisis. The initial lessons drawn from this analysis are the need to: (i) consider macroprudential risk in the regulatory framework, (ii) reduce the procyclical bias of the system, (iii) widen the scope of regulation and (iv) deal with the conflicts of interest that prevent prompt and reliable disclosure of the risk taken on by financial institutions.

Macro-prudential supervision – a panacea for the global financial crisis?

This article assesses the role of macro-prudential supervision as an effective policy tool in the global financial crisis. The article analyses the role of financial regulation in the current global crisis and the roots of regulatory weakness in contributing to the vulnerabilities in the financial system. It examines the role of a macro-prudential approach to supervision in promoting effective governance of the international financial markets and its potential for enhancing global financial stability and the issues of implementing this approach for national governments.

In Search of Reasonable Executive Compensation

This article makes several observations on the extent of executive compensation and the forms it takes, relating these to the recent literature. I argue that the magnitude of executive compensation seems excessive in light of a wide range of academic studies. I then propose specific regulatory measures that make compensation transparent and predictable for shareholders. Next, a simple taxation of executive compensation above a certain threshold is proposed; I argue that it is a much more efficient way to deal with the issue, than the current legislation in the United States. Turning to the ‘pay for performance’ paradigm, I argue that it must be applied with great care, as, along with the incentives to exert effort it also provides powerful perverse incentives, which are not immediately obvious, may vary dramatically across firms, and may not be well understood by the compensation committees and academics. I outline the design of several generic contracts appropriate for different environments. Finally, I stipulate that the downside of providing too much ‘pay for performance’ is especially evident in financial industry, which is opaque and subject to contagion, thus compensation contract should play a more important role in financial regulation. (JEL codes: G30, K22, M50)

CAT Standards and Stakeholders: Their Role in Financial Regulation

As well as creating a new single regulator, the Financial Services Authority, the current government has been very active in introducing and championing other regulatory measures. This paper looks in particular at the arguments for the different types of product regulation and benchmarking associated with the introduction of Stakeholder Pensions and with CAT standards for mortgages and for ISA's. At first sight these initiatives appear to sit uneasily with the goverment's reliance on makeing markets work better through promoting competition and consumer information. This strategy it appears to be following in other industries and thourhg othe intiatives in the financial services sector. The core argument of the paper is that both better consumer understanding and government are likely to be needed in the financial services sector. Too many actual and potential consumers of financial services have too much difficulty understanding the complexities of the products on offer for education and disclosure requirements to be effective on their own. Low levels of genereal numeracy add to the problem. The difficulties of aligning the incentives of advisers with those of their clients are also severe. Moreover this is an increasing problem as more and more people are expected to rely on their own pensions and other savings as the state withdraws from provision. Benchmark product standards provide an extra element of safety, especially for those with lower incomes and lower levels of financial understanding. Consumer education and disclosure are likely to benefit the more financially sophisticated most directly, but importantly will also be needed to make the new product standards work. There remains a real problem for government in how it should promote the benchmark products. Without promotion from some quarter they may not be widely understood and used. Yet it is very risky for government to promote equity based products in a generic way.