Information Disclosure, Market Discipline and the Management of Bank Capital: Evidence from the Chinese Financial Sector

Is there evidence that market forces effectively discipline risk management behaviour within Chinese financial institutions? This study analyses information from a comprehensive sample of Chinese banks over the 1998-2008 period. Market discipline is captured through the impact of four sets of factors namely, market concentration, interbank deposits, information disclosure, and ownership structure. We find some evidence of a market disciplining effect in that: (i) higher (lower) levels of market concentration lead banks to operate with a lower (higher) capital buffer; (ii) joint-equity banks that disclose more information to the public maintain larger capital ratios; (iii) full state ownership reduces the sensitivity of changes in a bank's capital buffer to its level of risk;(iv) banks that release more transparent financial information hold more capital against their non-performing loans. © 2010 Springer Science+Business Media, LLC.

Deliberative Equality and the Transgovernmental Politics of the Global Financial Architecture

Revisiting the concept of transgovernmentalism, originally developed by Robert Keohane and Joseph Nye, can shed considerable light on the nature of interstate cooperation in contemporary global financial governance. Transgovernmentalism highlights how certain technocratic policy communities, composed of finance ministries, central banks, and regulators, dominate the global financial architecture. It also provides insights into the political and social basis of these actors' interactions and deliberations. Most importantly, renovating the concept of transgovernmentalism brings the participatory deficits in the current global financial architecture into sharp focus and points us in the direction of a workable reform agenda that would expand inclusion and participation. This article advocates basing future reform on efforts to achieve a closer realization of the principle of “deliberative equality.” Unfortunately, “transgovernmentalism” is incompatible with deliberative equality, meaning that it is precisely the transgovernmental characteristics of the current global financial architecture that have to be challenged and overturned if we are to arrive at anything approximating deliberative equality.

Restraing Regulatory Capture? Anglo America, Crisis Politics and Trajectories of Change in Global Financial Governance

A growing number of respected commentators now argue that regulatory capture of public agencies and public policy by leading banks was one of the main causal factors behind the financial crisis of 2007–2009, resulting in a permissive regulatory environment. This regulatory environment placed a faith in banks own internal risk models, contributed to pro-cyclical behaviour and turned a blind eye to excessive risk taking. The article argues that a form of ‘multi-level regulatory capture’ characterized the global financial architecture prior to the crisis. Simultaneously, regulatory capture fed off, but also nourished the financial boom, in a fashion that mirrored the life cycle of the boom itself. Minimizing future financial booms and crises will require continuous, conscious and explicit efforts to restrain financial regulatory capture now and into the future. The article assesses the extent to which this has been achieved in current global financial governance reform efforts and highlights some of the persistent difficulties that will continue to hamper efforts to restrain regulatory capture. The evidence concerning the extent to which regulatory capture is being effectively restrained is somewhat mixed, and where it is happening it is largely unintentional and accidental. Recent reforms have overlooked the political causes of the crisis and have failed to focus explicitly or systematically on regulatory capture.

Enforcing Member State Compliance with EU Environmental Law: A Critical Evaulation of the Use of Financial Penalties

The 1993 Treaty on European Union finally closed a legal vacuum in
EU law, by giving the Court the power to impose financial penalties to
enforce compliance with its judgments. Today, this power is found
within Article 260(2) of the Treaty on the Functioning of the
European Union. Drawing upon case law, this article examines the
role that the Court’s enforcement powers have played in relation to
EU environmental law. It argues that EU law has yet to make full use
of their potential. The article commences with the Commission and
questions whether it has sufficient resources to carry out its functions
under Article 260(2). The article also examines the ongoing problem of
Member State delay in complying with Court judgments and the
weight given to environmental considerations in the Court’s decision
making on financial penalties. The article concludes by examining the
implications of the Lisbon Treaty.

The Global Financial Crisis and UK PPPs

Purpose – This paper seeks to examine how Public Private Partnerships (PPPs) have been affected by the global financial crisis (GFC). After briefly discussing PPPs and the GFC, the paper considers whether the latter has been a contributing factor in the declining number of projects reaching financial close.

Design/methodology/approach – The paper employs document content analysis to compare the time between notification of a project in the Official Journal of the European Union and its financial close in order to assess whether this period has increased since the beginning of the GFC. Two case studies are also presented.

Findings – Apart from a very small number of projects, the time between official project notification and financial close is lengthening, with the case studies providing some possible explanations for this.

Originality/value – Whilst Burger et al. provide some general statistics on the impact of the GFC on PPPs in a number of countries, this paper examines over 600 PPPs in the UK and supplements this analysis with two case studies, in order to assess whether the GFC has led to delays in projects reaching financial close.

Influence of the Time Scale on the Construction of Financial Networks

Background: In this paper we investigate the definition and formation of financial networks. Specifically, we study the influence of the time scale on their construction.

Identifying Critical Financial Networks of the DJIA: Toward a Network-Based Index

The purpose of this article is twofold. First, we introduce a novel definition of financial networks obtained from time series data from the stock market. Second, we demonstrate that these networks can be used as an index with the property to reflect critical states of the market, respectively, crashes sufficiently. Our work aims to advocate a network-based analysis in the context of the stock market, because such a collective phenomenon can not only be economically described by networks but also analyzed as demonstrated in this article. (C) 2010 Wiley Periodicals, Inc. Complexity 16: 24-33, 2010