Financial regulation and international criminal policy: the anti-money laundering system in Brazil and Argentina

The objective of this paper is to present and compare the process and the results of the implementation of the anti-money laundering system in Brazil and Argentina. Considering that the internal transformations cannot be discussed without a clear understanding of the international apparatus, attention will be given to the description of the “international policy” designed and conducted by FATF. Therefore, its incorporation into two different national realities, the Brazilian and the Argentinean ones, will shed light not only on the transnational transformations both States underwent but also on the anti-money laundering regime itself. The paper is divided into five parts. The first one presents a brief introduction on the emergence and development of the relationship between financial regulation and criminal policy. The two following sections are designed to present an overview of the anti money laundering system in Brazil and Argentina and of the role of FATF in their implementation process. The fourth section presents two Brazilian examples of situations in which full advantage of the FATF regime was taken: the National Strategy to Combat Corruption and Money Laundering and the BacenJud, a communication channel between the financial system and the judicial power. To conclude, final comments will be presented in connection with the central questions of the project this paper is part of .

The global financial crisis and after: a new capitalism?

The 2008 global financial crisis was the consequence of the process of financialization, or the creation of massive fictitious financial wealth, that began in the 1980s, and of the hegemony of a reactionary ideology, namely, neoliberalism, based on selfregulated and efficient markets. Although capitalism is intrinsically unstable, the lessons from the stock-market crash of 1929 and the Great Depression of the 1930s were transformed into theories and institutions or regulations that led to the “30 glorious years of capitalism” (1948–77) and that could have avoided a financial crisis as profound as the present one. It did not because a coalition of rentiers and “financists” achieved hegemony and, while deregulating the existing financial operations, refused to regulate the financial innovations that made these markets even more risky. Neoclassical economics played the role of a meta-ideology as it legitimized, mathematically and “scientifically”, neoliberal ideology and deregulation. From this crisis a new capitalism will emerge, though its character is difficult to predict. It will not be financialized but the tendencies present in the 30 glorious years toward global and knowledge-based capitalism, where professionals will have more say than rentier capitalists, as well as the tendency to improve democracy by making it more social and participative, will be resumed.

Value and momentum strategies in the Brazilian stock market: the 2008 financial crisis and its aftermath

Esta dissertação analisa o desempenho de três estratégias de investimento em carteiras de custo zero (“value”, “momentum” e uma combinação 50/50 delas, que é chamada de “combo”) no mercado de ações brasileiro durante a última década. Os resultados são comparados aos encontrados por Asness, Moskowitz e Pedersen (2009) para quatro mercados: EUA, Reino Unido, Europa Continental, e Japão. Uma análise específica é feita em torno da crise financeira de 2008, comparando os resultados pré- e pós-crise. O índice de Sharpe é usado para ajustar os desempenhos por seus riscos, e para classificar as estratégias para diferentes horizontes de investimento. Os resultados mostram um ótimo desempenho da estratégia “combo” nos últimos três anos, período que inclui a crise de 2008, mas considerando todo o período analisado a estratégia “value” obteve o melhor desempenho. Esse resultado difere dos resultados encontrados para os quatro mercados de referência, onde a estratégia combo tem o melhor desempenho. A análise do horizonte de investimento mostra que a escolha do investidor pode mudar com diferentes horizontes.

Financial constraints and house prices: an international perspective

In this paper, we show substantial empirical evidence that house prices are more sensitive to shocks to percapita income, in countries where housing finance is more developed. This result is consistent with the theoretical framework developed in the paper, where we study the impact ofprogressive relaxation of financiai constraints on housing demand and equilibrium house prices. Our results are consistent with recent literature on financiai constraints and business investment, which argues that the investment of less constrained firms can be more sensitive to changes in cash flow. More broadly, our results challenge the traditional view that financiai development leads to smaller fluctuations in key economic variables. The policy implications are c1ear and important. Even iffinancial development is desirable for other reasons, the potential associated increase in volatility should be an explicit policy concern.

Financial globalization and economic growth

Capital mobility leads to a speed of convergence smaller in an open economy than in a closed economy. This is related to the presence of two capitals, produced with specific technologies, and where one of the capitals is nontradable, like infrastructures or human capital. Suppose, for example, that the economy is relatively less abundant in human capital, leading to a decrease of the remuneration of this capital during the transition. In a closed economy, the remuneration of physical capital will be increasing during the transition. In the open economy, the alternative investment yields the international interest rate, corresponding to the steady state net remuneration of physical capital in the closed economy. The nonarbitrage condition shows a larger difference in the remuneration of the two capitals in the closed economy. It leads to a higher accumulation of human capital and thus to a faster speed of convergence in the closed economy. This result stands in sharp contrast with that of the one-sector neoclassical growth model, where the speed of convergence is smaller in the closed economy.

Firm financial constraints and the impact of monetary policy: evidence from financial conglomerates

Building on recent evidence on the functioning of internal capital markets in financial conglomerates, this paper conducts a novel test of the balance sheet channel of monetary policy. It does so by comparing monetary policy responses of small banks that are affiliated with the same bank holding company, and this arguably face similar constraints in accessing internal/external sources of funds, but that operate in different geographical regions, and thus face different pools of borrowers. Because these subsidiaries typically concentrate their lending with small local businesses, we can use cross-sectional differences in state-level economic indicators at the time of changes of monetary policy to study whether or not the strength of borrowers' balance sheets influences the response of bank lending. We find evidence that the negative response of bank loan growth to a monetary contraction is significantly stronger when borrowers have 'weak balance sheets. Our evidence suggests that the monetary authority should consider the amplification effects that financial constraints play following changes in basic interest rates and the role of financial conglomerates in the transmission of monetary policy.

Deregulation and The 2007-2008 Housing/Debt Crisis Analysis of the Housing/Debt Crisis of 2007-2008 and its impact on the Financial Strength and Vulnerability of the United States and Global Economy

One looming question has persisted in the minds of economists the world over in the aftermath of the 2007-2008 American Housing and Debt Crisis: How did it begin and who is responsible for making this happen? Another two-part question is: What measures were implemented to help end the crisis and what changes are being implemented to ensure that it will never happen again? Many speculate that the major contributing factor was the repeal of the Glass-Steagall Act in 1999 that prompted a virtual feeding frenzy among the banking community when new calls from Capitol Hill encouraged home ownership in America as well as the secondary mortgage market which skyrocketed thereafter. The Glass-Steagall Act will be among many of the topics explored in this paper along with the events leading up to the 2007-2008 housing/debt crisis as well as the aftermath.

The Brazilian financial system and the green economy : alignment with sustainable development

Three studies were prepared and are presented in this document. The first, The Brazilian Financial Sector Institutional Context in the Transition to Sustainable Development looks at the legislation, regulation, and public policies aimed at socio-environmental themes related to the financial sector. The second study, Current Financing for the Green Economy in Brazil, provides an initial estimate of the financial assets already allocated to the green economy, as well as a methodological proposal for the survey and monitoring of the respective flow of assets. The third and final study looks at two important segments of the Brazilian economy and their process of transition to a greener economy: renewable energy and agriculture.

A note on financial regulation and the brazilian response to the 2008‐09 financial crisis

Brazil was frequently criticized for its interventionist and heavy financial regulation up until the 2008‐09 world financial crisis.  According to the neo‐liberal or pro‐market view that predominated in academic and financial circles during the early 2000s, economic development came together with financial deepening, which in its turn could only be achieved through financial liberalization and deregulation. The currency crises of the 1990s notwithstanding, by the mid‐2000s Brazil’s segmented financial market and its restrictive reserve and capital requirements were seen as a symbol of inefficiency and backwardness by most financial specialists.  To the luck of the Brazilian population, most of the advices of such specialists were ignored by the Brazilian authorities, so that, when the 2008 financial crisis hit the world economy, Brazil still had powerful and efficient instruments to deal with the problem.  The objective of this note is to present the mains aspects of the Brazilian financial regulation and how they helped the economy to deal with the consequences of 2008‐09 financial meltdown.

A note on Brazilian financial regulation and governance

The question posed by Theme 4 of this workshop is indeed a very broad one and would demand a thorough research on the topics involved. I am afraid I did not have the proper time to think it over and I would not be able to provide a wide ranging answer to this question. Thus, I will be selective and I will present the following issues that need to be addressed to support Brazilian development: i) competition among banks; ii) high rate of interest on liquidity; iii) approval by the Congress of a Complementary Law to regulate the financial sector as required by the 1988 Brazilian Constitution; iv) exploitation of workers through the governance of the Job Time Guarantee Fund (FGTS) and iv) state-owned versus government owned enterprises.

Inequalities for zeros of associated polynomials and derivatives of orthogonal polynomials

It is well known and easy to see that the zeros of both the associated polynomial and the derivative of an orthogonal polynomial p(n)(x) interlace with the zeros of p(n)(x) itself. The natural question of how these zeros interlace is under discussion. We give a sufficient condition for the mutual location of kth, 1 less than or equal to k less than or equal to n - 1, zeros of the associated polynomial and the derivative of an orthogonal polynomial in terms of inequalities for the corresponding Cotes numbers. Applications to the zeros of the associated polynomials and the derivatives of the classical orthogonal polynomials are provided. Various inequalities for zeros of higher order associated polynomials and higher order derivatives of orthogonal polynomials are proved. The results involve both classical and discrete orthogonal polynomials, where, in the discrete case, the differential operator is substituted by the difference operator. (C) 2001 IMACS. Published by Elsevier B.V. B.V. All rights reserved.