Short Term Effectiveness of Chinese Stock Connect Program — a Study of the Pricing Dynamics of Cross-listed Stocks
by Kaiyu Ren
Abstract
This thesis examines the pricing dynamics of cross-listed stocks in the Chinese A-share and Hong Kong H-share markets. By identifying an announcement-implementation window, I offer a fresh perspective on the short-term price adjustment of cross-listed stocks around the launch of the first Stock Connect program. My findings reveal a significant increase of the A-H price ratio, but this price discrepancy appears to have been mitigated by the implementation of the Stock Connect program.Additionally, my observations suggest the existence of market inefficiencies, particularly among the groups of A-share stocks that are excluded from the Stock Connect program.
Professor Ronald Leven, Faculty Advisor
JEL Codes: G14; G18
An Economic Approach to Evaluating the Impact of AML/CFT Regulations
By Caitlin McGough
This paper addresses the unintended consequences of AML/CFT regulations, seeking to provide an economic analysis of the drivers of de–risking and the broader consequences for the goal of financial integrity. Looking at qualitative data, this paper (1) concludes the problem of de–risking warrants a reconsideration of the enforcement approach and (2) recommends reorienting the banks’ payoff matrix by reducing the cost of compliance and regulatory risk associated with providing financial services to high–risk, low–profit customers. This paper culminates with the recommendation to consider tolerating “honest mistakes” on the part of financial institutions in order to achieve the goals of integrity and inclusion in the international financial system.
Advisor: Connel Fullenkamp | JEL Codes: G18 | Tagged: De-Risking, Financial Inclusion, Money Laundering, Terrorism Financing
Where Did The Liquidity Go? The Cost of Financial Regulation to Foreign Exchange Markets
By James Stevenson
In financial markets, the terms “bull” and “bear” markets are used to describe the cyclicality of asset prices. Similar to asset price cycles, there are cycles in regulatory scrutiny. Beginning in the 1980’s, regulatory scrutiny diminished, cumulating in the repeal of the Glass-Steagall Act in 1999, allowing commercial banks and securities firms to be housed under the same roof for the first time since the 1930’s. In the aftermath of the global financial crisis in 2008 and 2009, the tides have reversed on financial regulation. With the Dodd-Frank reforms in the United States, and similar regulation being signed into law around the world, it is unknown how new regulation will affect financial markets. Legislators wrote the new rules in hopes that they would create safer financial institutions, but at what cost?
Advisor: Connel Fullenkamp | JEL Codes: G1, G12, G18 | Tagged: Dodd-Frank, Financial Regulation, Foreign Exchange, Market Liquidity, Volcker Rule
