Financial crisis: theory and practice

In the last 50 years, we have had approximately 40 events with characteristics related to financial crisis. The most severe crisis was in 1929, when the financial markets plummet and the US gross domestic product decline in more than 30 percent. Recently some years ago, a new crisis developed in the United States, but instantly caused consequences and effects in the rest of the world.This new economic and financial crisis has increased the interest and motivation for the academic community, professors and researchers, to understand the causes and effects of the crisis, to learn from it. This is the one of the main reasons for the compilation of this book, which begins with a meeting of a group of IAFI researchers from the University of Barcelona, where researchers form Mexico and Spain, explain causes and consequences of the crisis of 2007.For that reason, we believed this set of chapters related to methodologies, applications and theories, would conveniently explained the characteristics and events of the past and future financial crisisThis book consists in 3 main sections, the first one called "State of the Art and current situation", the second named "Econometric applications to estimate crisis time periods" , and the third one "Solutions to diminish the effects of the crisis". The first section explains the current point of view of many research papers related to financial crisis, it has 2 chapters. In the first one, it describe and analyzes the models that historically have been used to explain financial crisis, furthermore, it proposes to used alternative methodologies such as Fuzzy Cognitive Maps. On the other hand , Chapter 2 , explains the characteristics and details of the 2007 crisis from the US perspective and its comparison to 1929 crisis, presenting some effects in Mexico and Latin America.The second section presents two econometric applications to estimate possible crisis periods. For this matter, Chapter 3, studies 3 Latin-American countries: Argentina, Brazil and Peru in the 1994 crisis and estimates the multifractal characteristics to identify financial and economic distress.Chapter 4 explains the crisis situations in Argentina (2001), Mexico (1994) and the recent one in the United States (2007) and its effects in other countries through a financial series methodology related to the stock market.The last section shows an alternative to prevent the effects of the crisis. The first chapter explains the financial stability effects through the financial system regulation and some globalization standards. Chapter 6, study the benefits of the Investor activism and a way to protect personal and national wealth to face the financial crisis risks.

Economic and legal analysis of mandatory non-recourse mortgages with applications to Spain

“The liquidity crisis of the Spanish banks is largely due to the lack of confidence of foreign investors and, therefore, the changes that occur in the legislation should not affect the credibility, stability, legal certainty, predictability that markets expect”.Sergio Nasarre (2011)In the current situation of economic crisis, many people have found they can no longer pay back the mortgage loans that were granted to them in order to purchase a dwelling. It is for this reason that, in light of the economic, political and social problems this poses, our paper studies the state of the Spanish real-estate system and of foreclosure, paying special attention to the solution that has been proposed recently as the best option for debtors that cannot make their mort-gage payments: non-recourse mortgaging. We analyze this proposal from legal and economic perspectives in order to fully understand the effects that this change could imply. At the same time, this paper will also examine several alternatives we believe would ameliorate the situation of mortgage-holders, among them legal reforms, mortgage insurance, and non-recourse mortgaging itself.

A Legislator under Surveillance: The Creation and Implementation of Swiss Banking Legislation 1910-1934

This paper analyses how banking regulation was introduced in Switzerland - one of the world's most prominent financial centres - which remained in place until the beginning of the twenty-first century. It shows that the law adopted on 8 November 1934 is a perfect example of capture of the regulator by the regulated. Essentially a political response in the context of the economic crisis of the 1930s, it largely reflected the interests of banking circles by limiting the intervention of the State as much as possible. The introduction of the new legislation was facilitated by the temporary weakness of Swiss banking circles, as they depended on the State to delay or prevent the collapse of many major credit institutions. They did not manage to derail the law as they had two decades earlier when they scuppered the federal bill on banks drawn up between 1914 and 1916. But this time they were better organized and more united, and intervened all the more effectively in the legislative process itself. The 1934 law is thus distinctive in that it made no structural changes to the architecture of the financial centre but merely codified its practices through flexible legislation meant to reassure the public. The law was aimed less at controlling banking activity than at keeping - thanks to skilfully calibrated political concessions - the State from having to intervene more directly in the internal management of banks or in the fixing of interest rates and the export of capital.

La crisis del segle III a l’àrea compresa entre Tarraco i Saguntum: aproximació a partir de les dades arqueològiques

The purpose of this work is to evaluate the possible impact of the so-called “crisis of the 3rd century” in the area between Tarraco (Tarragona) and Saguntum (Sagunt), currently corresponding to the southern limit of Catalonia and the north of Valencia, which during the Roman era made up the southernmost part of the conventus Tarraconensis. The processes of change experienced in rural settlements and cities between the Severan dynasty and the beginning of the tetrarchy are analyzed, and the importance of the city-country relationship is examined to explain these changes. The extent of the Frankish invasion during of the Gallic period, initially substantiated by sources and now by archaeological evidence, is discussed. The study of coin hoards (treasures and deposits) from the second half of the 3rd century, found in abundance in this area, is a very interesting aspect of this topic. In addition, a quantitative approach is used to study the population changes experienced as a result of the rural settlement of this area during the 3rd century, between the High and the Low Empires.

Reconsidering the analysis of the uses of ICTs by political parties : an application to the Catalan case

For years a literature on the uses that political parties make of information andcommunication technologies (ICTs) has been developed. It is a rapidly increasing, rich,and interesting field in the forefront of the investigation in political science. Generally,these works start from the expectation that the ICTs have a regenerative potential forliberal democracies and for the political parties as well. In developed societies, politicalparties have experienced some transformations that have leaded them to an increasingdivorce with the public. This divorce is shown by the decay of party adscription andmembership, and also by the decay of the conventional political participation. In thetheoretical discussion this situation has been described as ¿the crisis of the democracy¿(Norris, 1999). According to the more radically oriented scholars this crisis reflects theincapacities of liberal democracies. In this sense, ICTs suppose a great opportunity tosurpass the representative institutions and to institutionalize new forms of directdemocracy. More moderate scholars have considered that ICTs offer the opportunity for¿renaissance¿ for representative institutions, as they can reinforce the bonds between thepublic and its representatives.

Open Environmental Information Upon Disclosure Request in China: The Paradox of Legal Mobilization

Taking a realist view that law is one form of politics, this dissertation studies the roles of citizens and organizations in mobilizing the law to request government agencies to disclose environmental information in China, and during this process, how the socio-legal field interacts with the political-legal sphere, and what changes have been brought about during their interactions. This work takes a socio-legal approach and applies methodologies of social science and legal analysis. It aims to understand the paradox of why and how citizens and entities have been invoking the law to access environmental information despite the fact that various obstacles exist and the effectiveness of the new mechanism of environmental information disclosure still remains low. The study is largely based on the 28 cases and eight surveys of environmental information disclosure requests collected by the author. The cases and surveys analysed in this dissertation all occurred between May 2008, when the OGI Regulations and the OEI Measures came into effect, and August 2012 when the case collection was completed. The findings of this study have shown that by invoking the rules of law made by the authorities to demand government agencies disclosing environmental information, the public, including citizens, organizations, law firms, and the media, have strategically created a repercussive pressure upon the authorities to act according to the law. While it is a top-down process that has established the mechanism of open government information in China, it is indeed the bottom-up activism of the public that makes it work. Citizens and organizations’ use of legal tactics to push government agencies to disclose environmental information have formed not only an end of accessing the information but more a means of making government agencies accountable to their legal obligations. Law has thus played a pivotal role in enabling citizen participation in the political process. Against the current situation in China that political campaigns, or politicization, from general election to collective actions, especially contentious actions, are still restrained or even repressed by the government, legal mobilization, or judicialization, that citizens and organizations use legal tactics to demand their rights and push government agencies to enforce the law, become de facto an alternative of political participation. During this process, legal actions have helped to strengthen the civil society, make government agencies act according to law, push back the political boundaries, and induce changes in the relationship between the state and the public. In the field of environmental information disclosure, citizens and organizations have formed a bottom-up social activism, though limited in scope, using the language of law, creating progressive social, legal and political changes. This study emphasizes that it is partial and incomplete to understand China’s transition only from the top-down policy-making and government administration; it is also important to observe it from the bottom-up perspective that in a realistic view law can be part of politics and legal mobilization, even when utterly apolitical, can help to achieve political aims as well. This study of legal mobilization in the field of environmental information disclosure also helps us to better understand the function of law: law is not only a tool for the authorities to regulate and control, but inevitably also a weapon for the public to demand government agencies to work towards their obligations stipulated by the laws issued by themselves.

Testing Accrual-Based Model for Detecting Earnings Management: Comparison of Finland and France

The aim of this study is to test the accrual-based model suggested by Dechow et al. (1995) in order to detect and compare earnings management practices in Finnish and French companies. Also the impact of financial crisis of 2008 on earnings management behavior in these countries is tested by dividing the whole time period of 2003-2012 into two sub-periods: pre-crisis (2003-2008) and post-crisis (2009-2012). Results support the idea that companies in both countries have significant earnings management practices. During the post-crisis period companies in Finland show income inflating practices, while in France the opposite tendency is noticed (income deflating) during the same period. Results of the assumption that managers in highly concentrated companies are engaged in income enhancing practices vary in two countries. While in Finland managers are trying to show better performance for bonuses or other contractual compensation motivations, in France they avoid paying dividends or high taxes.

The Cycle Times of Working Capital: Financial Value Chain Analysis Method

Interest towards working capital management increased among practitioners and researchers because the financial crisis of 2008 caused the deterioration of the general financial situation. The importance of managing working capital effectively increased dramatically during the financial crisis. On one hand, companies highlighted the importance of working capital management as part of short-term financial management to overcome funding difficulties. On the other hand, in academia, it has been highlighted the need to analyze working capital management from a wider perspective namely from the value chain perspective. Previously, academic articles mostly discussed working capital management from a company-centered perspective. The objective of this thesis was to put working capital management in a wider and more academic perspective and present case studies of the value chains of industries as instrumental in theoretical contributions and practical contributions as complementary to theoretical contributions and conclusions. The principal assumption of this thesis is that selffinancing of value chains can be established through effective working capital management. Thus, the thesis introduces the financial value chain analysis method which is employed in the empirical studies. The effectiveness of working capital management of the value chains is studied through the cycle time of working capital. The financial value chain analysis method employed in this study is designed for considering value chain level phenomena. This method provides a holistic picture of the value chain through financial figures. It extends the value chain analysis to the industry level. Working capital management is studied by the cash conversion cycle that measures the length (days) of time a company has funds tied up in working capital, starting from the payment of purchases to the supplier and ending when remittance of sales is received from the customers. The working capital management practices employed in the automotive, pulp and paper and information and communication technology industries have been studied in this research project. Additionally, the Finnish pharmaceutical industry is studied to obtain a deeper understanding of the working capital management of the value chain. The results indicate that the cycle time of working capital is constant in the value chain context over time. The cash conversion cycle of automotive, pulp and paper, and ICT industries are on average 70, 60 and 40 days, respectively. The difference is mainly a consequence of the different cycle time of inventories. The financial crisis of 2008 affected the working capital management of the industries similarly. Both the cycle time of accounts receivable and accounts payable increased between 2008 and 2009. The results suggest that the companies of the automotive, pulp and paper and ICT value chains were not able to self-finance. Results do not indicate the improvement of value chains position in regard to working capital management either. The findings suggest that companies operating in the Finnish pharmaceutical industry are interested in developing their own working capital management, but collaboration with the value chain partners is not considered interesting. Competition no longer occurs between individual companies, but between value chains. Therefore the financial value chain analysis method introduced in this thesis has the potential to support value chains in improving their competitiveness.

Has social justice any legitimacy in Kant's theory of right? The empirical conditions of the legal state as a civil union

This paper aims at shedding light on an obscure point in Kant's theory of the state. It discusses whether Kant's rational theory of the state recognises the fact that certain exceptional social situations, such as the extreme poverty of some parts of the population, could request institutional state support in order to guarantee the attainment of a minimum threshold of civil independence. It has three aims: 1) to show that Kant's Doctrine of Right can offer solutions for the complex relation between economics and politics in our present time; 2) to demonstrate the claim that Kant embraces a pragmatic standpoint when he tackles the social concerns of the state, and so to refute the idea that he argues for an abstract conception of politics; and 3) to suggest that a non-paternalistic theory of rights is not necessarily incompatible with the basic tenets of a welfare state.

In distrust we trust : analysis of academic apocalypse

The paper concentrates on trust as a research topic that receives increasing attention from the side of different social disciplines. The author of this thesis attempts to identify the reasons of this phenomenon, as well as the decline in usage of the concepts conveying a congenial idea, such as, solidarity, cooperation, social cohesion, social capital or connectedness. The key hypotheses, such as paradigmatic change within the social sciences, emergence of risk society, proliferation of the postmodem condition, new infonnation and communication technologies and the crisis of democracy are considered through the works of the authors who now mainly responsible for the shaping of the discourse of trust. The concepts of Luhmann, Putnam, Sztompka, Fukuyama and Hardin are analyzed from an epistemological viewpoint in its ontological and political implications. The primary goal of the paper is to overview trust from the methodological viewpoint, illustrating the limitations of the concept as a research strategy as weII as it advantages in the epoch when the social sciences acquire a status of moral disciplines.

Bringing Zombies Back to Life: An Autoethnographical Exploration of Alienation and Political Dis/Engagement in Emerging Adulthood Within Late-Stage Capitalism

In this thesis, by employing an autoethnographic methodology, I am exploring why certain understandings, or assemblages, of political engagement come to have greater meaning in my life and why other assemblages may be more hidden and thus fail to contribute substantially to the meaning of political in my life. Using immanent, Marxist and post-Marxist theories, as well as a zombie narrative, the study will contextualize the movement of assemblages in my life within late-stage capitalism which is juxtaposed with the zombie apocalypse. The placement and displacement of certain understandings of the political within my life will be theorized within the crisis of constituent power that is revealed in an immanent framework. Furthermore, the crisis of the constituent in late-stage capitalism creates new forms of radical alienation which will also be examined. By exploring my own struggles in becoming political I will theorize why political disengagement in emerging adulthood appears to be increasing, as well as possibilities for new forms of political engagement in a late-stage capitalist context.

Argentina’s Worker-Recovered Factories : strategies and survival

Les usines récupérées par les ouvriers en Argentine sont devenues un mouvement social emblématique symbolisant l'un des aspects de la révolte sociale entourant la crise économique de 2001-2002. Les usines récupérées sont des entreprises abandonnées par leurs propriétaires originaux ou déclarées faillite, laissant derrières elles des salaires et des dettes impayés. Par conséquence, les ouvriers ont commencé à récupérer leurs usines; reprenant la production sans leurs anciens patrons, sous, et au profit de la gestion collective des ouvriers. Le mouvement est remarquable pour sa rémunération égalitaire et sa gestion horizontale. Ce travail examine la continuité des usines récupérées et ceci à travers l'évolution sociale, politique et économique du paysage de l'Argentine. Il évalue également l'impact du mouvement en tant que défi aux modes économiques de production hégémoniques et orientés vers le marché. En supposant que l'avenir du mouvement dépend de deux ensembles de facteurs, le rapport analyse les facteurs internes à travers le prisme de la théorie de mobilisation des ressources, ainsi que les facteurs externes à travers la perspective de la théorie de la structure de l'opportunité politique. Le travail conclut que la situation actuelle se trouve dans une impasse dans laquelle le mouvement a gagné l'acceptation institutionnelle, mais a échoué d'effectuer le changement structurel favorisant ses pratiques et garantissant la sécurité à long terme. Il argumente que le mouvement doit consolider certains aspects combatifs. Il doit consolider sa nouvelle identité en tant que mouvement social et forger des alliances stratégiques et tactiques tout en préservant son autonomie.

The Myth of Demonetarization of Gold

The aim of this paper is to discuss the crisis of the international financial system and the necessity of reforming it by new anchor or benchmark for the international currency, a money-commodity. The need for understanding the definition of a numéraire is a first necessity. Although most economists reject any connection between money and a particular commodity (gold) – because of the existence of legal tender money in every country – it will be shown that it is equivalent to reduce the real space to an abstract number (usually assumed 1) in order to postulate that money is neutral. This is sheer nonsense. It will also be shown that the concept of fiat money or state money does not preclude the existence of commodity money. This paper is divided in four sections. The first section analyses the definition and meaning of a numéraire for the international currency and the justification for a variable standard of value. In the second section, the market value of the US dollar is analysed by looking at new forms of value -the derivative products- the dollar as a safe haven, and the role of SDRs in reforming the international monetary system. In the third and fourth sections, empirical evidence concerning the most recent period of the financial crisis is presented and an econometric model is specified to fit those data. After estimating many different specifications of the model –linear stepwise regression, simultaneous regression with GMM estimator, error correction model- the main econometric result is that there is a one to one correspondence between the price of gold and the value of the US dollar. Indeed, the variance of the price of gold is mainly explained by the Euro exchange rate defined with respect to the US dollar, the inflation rate and negatively influenced by the Dow Jones index and the interest rate.