Monthly Archives: January 2020

Addressing Systemic Risks from the Procyclicality of Collateral Requirements in Derivatives Markets and SFTs

By | January 31, 2020

Courtesy of Mete Feridun  Disclaimer: The views and opinions expressed in this blog are those of the author and do not necessarily reflect the official views and opinions of PwC.  Post-crisis regulatory reforms have resulted in the majority of derivatives being cleared through central counterparties (CCPs) or subject to bilateral collateral requirements, such as the… Read More »

A Closer Look at CECL: What Can We Learn from the European Implementation of IFRS 9?

By | January 29, 2020

Courtesy of Arndt-Gerrit Kund and Daniel Rugilo Introduction The sub-prime crisis of 2008 drew attention to the fundamental drawbacks of the incurred loss accounting model, which determined the loan loss provisions for troubled exposures. The subsequent financial crisis revealed in particular that the recognition of impairments was not only too late, but also incomplete. As… Read More »

Reversing the Fortunes of Active Funds

By | January 27, 2020

Courtesy of Adi Libson and Gideon Parchomovsky Recent years have witnessed a considerable growth of passive funds at the expense of active funds. This trend picked up in 2019, a year that saw passive funds surpass active funds in terms of total assets under management. The continuous decline of active funds is a cause for… Read More »

The Rise of Rent-a-Charter: Examining New Risks Behind Bank-Fintech Partnerships

By | January 23, 2020

Courtesy of Joseph Caputo and Lee Reiners The emergence of fintech lending – also called marketplace lending or peer-to-peer lending – and its interplay with the United States’ fragmented financial regulatory system, has given rise to a niche market of mid-size banks that cater to nonbank fintech lenders. While these banks may provide their fintech… Read More »

Political Attitudes, Partisanship, and Polarization: Effects on Mergers and Acquisitions

By | January 22, 2020

Courtesy of Ran Duchin, Jarrard Harford, Abed el Karim Farroukh, and Tarun Patel Anecdotal evidence, academic research, and articles in the popular press show that political views can influence a wide array of personal decisions, including the choice of marital (or cohabiting) partners and brand consumption. In our recent paper, we investigate the effects of… Read More »

Ethical Considerations of Blockchain: Do We Need a Blockchain Code of Conduct?

By | January 21, 2020

Courtesy of Michele Benedetto Neitz  Blockchain technology is not as decentralized as we think. From the outset, the original innovators of blockchain viewed the technology as an opportunity to solve the “problem” of government oversight over economic activities. A truly decentralized, immutable ledger, would remove the potential for human shortcomings and state control, impacting everything… Read More »

Restructuring the Personal-Public Gain Relationship: A Solution to the Battle Between Personal and Societal Interests

By | January 17, 2020

Courtesy of Kanksha Mahadevia Ghimire The United Nations Environment Programme issued a bulletin in 2013 highlighting the prevalent existence of corruption (fraud, bribery, abuses of power, etc.) in emissions trading, specifically the European Union’s Emissions Trading Scheme (EU ETS). Corruption undermines the emissions trading mechanism and weakens its chances to act as an effective incentive… Read More »

Smart Contracts for Securities Transactions on the DLT Network: Legal Obstacles and Regulatory Challenges

By | January 16, 2020

Courtesy of Joseph Lee Fintech developers and financial institutions[1] have presented the benefits of using smart contracts to facilitate securities/interests transfers (trading) on distributed ledger technology (DLT) platforms. The benefits are DLT’s technological ability to bring about decentralization and disintermediation which are the main characteristics of peer-to-peer (P2P) trading platforms and reduction of transaction costs… Read More »

Summarization in Financial Disclosures: Determinants and Effects of Prospectus Summaries

By | January 14, 2020

Courtesy of Daniel Blaseg and Christina Bannier Issuers of financial securities must disclose vast amounts of information to capital markets. The increasing length and complexity of security prospectuses is an unambiguous sign of this development. To raise the comprehensibility of these documents, financial regulators around the world have started to require that issuers release an… Read More »

A Tale of Two Agencies: The Travails of the CFPB and FHFA

By | January 9, 2020

Courtesy of Joseph A. Smith, Jr. The Federal Housing Finance Agency (FHFA) and Consumer Financial Protection Bureau (CFPB) were established to address distinct aspects of the Global Financial Crisis. The Home Ownership and Economic Recovery Act of 2008 (HERA)[1] created the FHFA to provide for enhanced and rigorous supervision of Fannie Mae and Freddie Mac.… Read More »