The Financial Services Regime in International Economic Law: on the Difficult Relationship between Trade Liberalization and Prudential Measures

The PhD thesis analyses the financial services regime in international economic law from the perspective of the difficult relationship between trade liberalisation and prudential measures. Financial stability plays a fundamental role for the well-being and well-functioning of the global economy, but, it is at the same time a complex sector to regulate and supervise and, especially after the 2007-08 economic crisis, States have tightened up their regulation of financial services, introducing more severe and protectionist prudential measures. However, in an increasingly interconnected global economy, the harmonization of prudential regulation at the international level is an essential step to guarantee integrity, fairness and stability of financial markets and trade. The research analyses the tools at disposition to achieve this aim, the related problematic issues and the perspectives and possible solutions for the future, starting from the World Trade Organization (WTO) legal framework and its General Agreement on Trade in Services (GATS), devoted to discipline trade in services among the WTO Members. Then, the research moves to a second legal instrument, the Free Trade Agreements (FTAs), which has witnessed a remarkable spread in the last decades. Finally, the research addresses the international standards, developed by supranational entities and implemented by an increasing number of States, as they offer rules and guidelines adequate to update the international financial scenario. Nevertheless, the international standards alone cannot be the solution because, first, they are not mandatory, as governments decide voluntarily to apply them and, second, their decision-making process do not respect the requirements of transparency and representative membership. In light of this analysis, the thesis aims at providing an answer to its research question: how to give more certainty to States and economic operators in the planning of the domestic disciplines and business activities in order to provide a sound and stable international financial system.

Distributed ledger technologies between anonymity and transparency: AML/CFT regulation of cryptocurrency ecosystems in the EU

The advent of Bitcoin suggested a disintermediated economy in which Internet users can take part directly. The conceptual disruption brought about by this Internet of Money (IoM) mirrors the cross-industry impacts of blockchain and distributed ledger technologies (DLTs). While related instances of non-centralisation thwart regulatory efforts to establish accountability, in the financial domain further challenges arise from the presence in the IoM of two seemingly opposing traits: anonymity and transparency. Indeed, DLTs are often described as architecturally transparent, but the perceived level of anonymity of cryptocurrency transfers fuels fears of illicit exploitation. This is a primary concern for the framework to prevent money laundering and the financing of terrorism and proliferation (AML/CFT/CPF), and a top priority both globally and at the EU level. Nevertheless, the anonymous and transparent features of the IoM are far from clear-cut, and the same is true for its levels of disintermediation and non-centralisation. Almost fifteen years after the first Bitcoin transaction, the IoM today comprises a diverse set of socio-technical ecosystems. Building on an analysis of their phenomenology, this dissertation shows how there is more to their traits of anonymity and transparency than it may seem, and how these features range across a spectrum of combinations and degrees. In this context, trade-offs can be evaluated by referring to techno-legal benchmarks, established through socio-technical assessments grounded on teleological interpretation. Against this backdrop, this work provides framework-level recommendations for the EU to respond to the twofold nature of the IoM legitimately and effectively. The methodology cherishes the mutual interaction between regulation and technology when drafting regulation whose compliance can be eased by design. This approach mitigates the risk of overfitting in a fast-changing environment, while acknowledging specificities in compliance with the risk-based approach that sits at the core of the AML/CFT/CPF regime.

Financial distress, financial constraint and investment decision: Evidence from Brazil

This paper analyses the presence of financial constraint in the investment decisions of 367 Brazilian firms from 1997 to 2004, using a Bayesian econometric model with group-varying parameters. The motivation for this paper is the use of clustering techniques to group firms in a totally endogenous form. In order to classify the firms we used a hybrid clustering method, that is, hierarchical and non-hierarchical clustering techniques jointly. To estimate the parameters a Bayesian approach was considered. Prior distributions were assumed for the parameters, classifying the model in random or fixed effects. Ordinate predictive density criterion was used to select the model providing a better prediction. We tested thirty models and the better prediction considers the presence of 2 groups in the sample, assuming the fixed effect model with a Student t distribution with 20 degrees of freedom for the error. The results indicate robustness in the identification of financial constraint when the firms are classified by the clustering techniques. (C) 2010 Elsevier B.V. All rights reserved.

Sampled Control for Mean-Variance Hedging in a Jump Diffusion Financial Market

In this technical note we consider the mean-variance hedging problem of a jump diffusion continuous state space financial model with the re-balancing strategies for the hedging portfolio taken at discrete times, a situation that more closely reflects real market conditions. A direct expression based on some change of measures, not depending on any recursions, is derived for the optimal hedging strategy as well as for the ""fair hedging price"" considering any given payoff. For the case of a European call option these expressions can be evaluated in a closed form.

Squeezing-induced complete transparency in two-level systems

The modification of the statistical properties of vacuum fluctuations, via quadrature squeezing, can dramatically reduce the absorptive and dispersive properties of two-level atoms. We show that for some range of parameter values the system exhibits zero absorption accompanied by zero dispersion of the probe field. This complete transparency is attributed to the coherent population oscillations induced by the squeezed vacuum.

Multicollinearity and financial constraint in investment decisions: a Bayesian generalized ridge regression

This paper addresses the investment decisions considering the presence of financial constraints of 373 large Brazilian firms from 1997 to 2004, using panel data. A Bayesian econometric model was used considering ridge regression for multicollinearity problems among the variables in the model. Prior distributions are assumed for the parameters, classifying the model into random or fixed effects. We used a Bayesian approach to estimate the parameters, considering normal and Student t distributions for the error and assumed that the initial values for the lagged dependent variable are not fixed, but generated by a random process. The recursive predictive density criterion was used for model comparisons. Twenty models were tested and the results indicated that multicollinearity does influence the value of the estimated parameters. Controlling for capital intensity, financial constraints are found to be more important for capital-intensive firms, probably due to their lower profitability indexes, higher fixed costs and higher degree of property diversification.

The Controllership Relevance or Risk Management in non-Financial Companies: a study of risk managers` and controllers` perceptions

The purpose of this study is to analyze the Controllership relevance as support risk management in non-financial companies. Risk management is a widely discussed and disseminated subject amongst financial institutions. It is obvious that economic uncertainties and, consequently, prevention and. control must also exist in non-financial companies. To enable managers to take safe-decisions, it is essential for them to be able to count on instrumental support that provides timely and adequate information, to ensure lower levels of mistakes and risk exposure. However, discussion concerning risk management in non-financial companies is still in its early stages in Brazil. Considering this gap, this study aims at assessing how Controllership has been acting in? companies under the insight of risk and how it can contribute to risk management in non-financial companies. To achieve the proposed goal, a field research was. carried-out with non-financial companies that are located in the city Sao Paulo and listed in the Sao Paulo Stock Exchange (Bovespa). The research was carried out using questionnaires, which were sent do Risk Officers and Controllers of those companies with the purpose of evaluating their perception on the subject. The results,of the research allow us to conclude that Controllership offers support to risk management, through information that contributes to the mitigation of the risks in non-financial companies.

Diagnosis of Organizational Soft Problems in a Peruvian Financial Institution by Systemic Thinking

Managing financial institutions in an underdeveloped economic context has become a real challenge nowadays. In order to reach the organization`s planned goals, they have to deal with structural, behavioral and informational problems. From the systemic point of view, this situation gets even worse when the company does not present organizational boundaries and a cohesive identification for their stakeholders. Thus, European countries have some special financial lines in order to help the development of micro credit in Latin communities in an attempt to help the local economy. However, institutions like Caixa dos Andes in Peru present management problems when dealing with this complexity. Based on this, how can the systemic eye help in the diagnosis of soft problems of a Peruvian financial company? This study aims to diagnose soft problems of a Peruvian financial company based on soft variables like identity, communication and autonomy and also intends to identify possible ways to redesign its basic framework. The (VSM--Viable System Model) method from Beer (1967), applied in this diagnostic study, was used in a practical way as a management tool for organizations` analysis and planning. By describing the VSM`s five systems, the creation of a systemic vision or a total vision is possible, showing the organization`s complexity from the inside. Some company`s soft problems like double control, inefficient use of physical and human resources, low information flows, slowness, etc. The VSM presented an organizational diagnosis indicating effective solutions that do integrate its five systems.

Financial leverage and tangibility of assets of Brazilian companies of agribusiness in the post-real plan period

This paper aims to study the relationship between the debt level and the asset structure of Brazilian companies of the agribusiness sector, since it is considered a current and relevant discussion: to evaluate the mechanisms for fund-raising and guarantees. The methodology of Granger`s Causality test and Autoregressive Vectors was used to conduct a comparative analysis, applied to a financial database of companies with open capital of Brazilian agribusiness, in particular the agricultural sector and Fisheries and Food and Beverages in a period of 10 years (1997-2007) from quarterly series available in the database of Economatica(R). The results demonstrated that changes in leverage generate variations in the tangibility of the companies, a fact that can be explained by the large search of funding secured by fiduciary transfer of fixed assets, which facilitates access to credit by business of the Agribusiness sector, increasing the payment time and lowering interest rates.