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on Regulation |
| By: | Brophy Haney, A.; Pollitt, M.G. |
| Abstract: | In this paper we use a best practice index constructed from the survey responses of regulators in 40 countries to explore the determinants of outcomes in electricity network regulation. We construct a model of explained behaviour where we are particularly interested in understanding the impact of industry setting, political, and economic environments on the degree of best practice regulation. Our results suggest that political and economic institutions as well as the behaviour of regulators in neighbouring countries/states may be important determinants of outcomes; this also leads us to question whether one “best practice” model is in fact applicable to countries with very different political and economic contexts. |
| Keywords: | Network regulation; Electricity; Efficiency analysis; Institutions |
| Date: | 2010–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1020&r=reg |
| By: | Philip Z. Maymin; Zakhar G. Maymin |
| Abstract: | We show that any objective risk measurement algorithm mandated by central banks for regulated financial entities will result in more risk being taken on by those financial entities than would otherwise be the case. Furthermore, the risks taken on by the regulated financial entities are far more systemically concentrated than they would have been otherwise, making the entire financial system more fragile. This result leaves three directions for the future of financial regulation: continue regulating by enforcing risk measurement algorithms at the cost of occasional severe crises, regulate more severely and subjectively by fully nationalizing all financial entities, or abolish all central banking regulations including deposit insurance to let risk be determined by the entities themselves and, ultimately, by their depositors through voluntary market transactions rather than by the taxpayers through enforced government participation. |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1004.1670&r=reg |
| By: | Ojo, Marianne |
| Abstract: | This paper consolidates the work of its predecessor, “International Framework for Liquidity Risk Measurement, Standards and Monitoring: Corporate Governance and Internal Controls”, by considering monitoring tools which are considered to be essential if risks,(and in particular liquidity risks which are attributed to a bank), are to be managed and measured effectively by its management. It also considers developments which have triggered the need for particular monitoring tools – not only in relation to liquidity risks, but also to the rise of conglomerates and consolidated undertakings. It highlights weaknesses in financial supervision – weaknesses which were revealed following the collapses of Barings and Lehman Brothers. As well as attempting to draw comparisons between the recommendations which were made by the Board of Banking Supervision (BoBS) following Barings’ collapse, and the application issues raised by the Basel Committee in its 2009 Consultative Document, International Framework for Liquidity Risk Measurement, Standards and Monitoring, it highlights the links and relevance between both recommendations. In drawing attention to the significance of corporate governance, audit committees, and supervisory boards, the importance of effective communication between management at all levels, to ensure transmission and communication of timely, accurate and complete information, is also highlighted. Through a comparative analysis of two contrasting corporate governance systems, namely, Germany and the UK, it analyses and evaluates how the design of corporate governance systems could influence transparency, disclosure, as well as higher levels of monitoring and accountability. Whilst highlighting the need for, and the growing importance of formal risk assessment models, the paper also emphasises the dangers inherent in formalism – as illustrated by a rules based approach to regulation. It will however, demonstrate that detailed rules could still operate within a system of principles based regulation – whilst enabling a consideration of the substance of the transactions which are involved. In addressing the issues raised by principles based regulation, the extent to which such issues can be resolved, to a large extent, depends on adequate compliance with Basel Core Principle 17 (for effective banking supervision) – and particularly on the implementation, design and compliance with “clear arrangements for delegating authority and responsibility.” |
| Keywords: | liquidity; principles based regulation; risks; corporate governance; audit; creative compliance |
| JEL: | K2 G3 M42 G21 |
| Date: | 2010–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:22125&r=reg |
| By: | Digdowiseiso, Kumba |
| Abstract: | Trade liberalization and worldwide economic integration have brought not only an increase in wealth but also in transnational threats. Environmental devastation caused by commercial activities of multinational corporations (MNCs) is one of such threats. While almost all countries have environmental laws designed from pollution, the rules differ per country. Yet, only in the context of legally binding regulatory measures should multinationals be compelled to conduct business in an environmentally friendly manner |
| Keywords: | Deforestation; MNCs; Regulation; Countries |
| JEL: | Q23 Q28 O50 |
| Date: | 2010–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:22093&r=reg |
| By: | Svetlana Andrianova; Panicos Demetriades; Anja Shortland |
| Abstract: | We show that previous results suggesting that government ownership of banks is associated with lower long run growth rates are not robust to adding more 'fundamental' determinants of economic growth. We also present new cross-country evidence for 1995-2007 which suggests that, if anything, government ownership of banks has been robustly associated with higher long run growth rates. While acknowledging that cross-country results need not imply causality, we nevertheless provide a conceptual framework, drawing on the global financial crisis of 2008-09, which explains why under certain circumstances government owned banks could be more conducive to economic growth than privately-owned banks. |
| Keywords: | Public banks, economic growth, quality of governance, regulation, political institutions |
| JEL: | O16 G18 G28 K42 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp987&r=reg |
| By: | Amélie Charles (Audencia Nantes, School of Management - Audencia, School of Management); Olivier Darné (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272); Jessica Fouilloux (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes I - Université de Caen) |
| Abstract: | This study examines the martingale difference hypothesis (MDH) for the market of carbon emission allowances within the European Union Emission Trading Scheme (EU ETS) during the Phase I and the Phase II, using both daily and weekly data over the period 2005--2009. The weak-form efficient market hypothesis for spot prices negotiated on BlueNext, European Energy Exchange and NordPool is tested with new variance ratio tests developed by Kim (2009). For the Phase I, the results show that these three markets of the European Union allowances seems to be efficiency, except after the European Commission announcements of stricter Phase II allocation in October 2006. Finally, we find that the CO2 spot prices seem to be weak-form efficiency during the Phase II since the MDH is failed to reject from both daily and weekly data. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00473727_v1&r=reg |
| By: | Pustovalova, Tatiana A. |
| Abstract: | Over the past decade, commercial banks have devoted many resources to developing internal models to better quantify their financial risks and assign economic capital. These efforts have been recognized and encouraged by bank regulators. Recently, banks have extended these efforts into the field of credit risk modeling. The Basel Committee on Banking Supervision proposes a capital adequacy framework that allows banks to calculate capital requirement for their banking books using internal assessments of key risk drivers. Hence the need for systems to assess credit risk. In this work, we describe the case of successful application of VAR methodology for credit risk estimation. Executive summary is available at pp. 32. |
| Keywords: | banking, credit risk, default, Basel 2, value of risk, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:sps:wpaper:104&r=reg |
| By: | Guszt v Nemes (Institute of Economics - Hungarian Academy of Sciences) |
| Abstract: | The Rural Development Regulation (RDR) within the Common Agricultural Policy (CAP), as an exemplary manifestation of the New Rural Development Paradigm, has achieved significant results. Nevertheless, it has increasingly become liable to institutional complexity and central control in an emerging system - discussed as 'the project state' or 'projectified world' in recent literature. The intersection of different institutional realities (European, domestic, regional, local, sectoral, spatial, etc.) and the resulting institutional bricolage is inevitably contested. The dispute is even more apparent in CEE countries, where multi-level governance is problematic and the New Paradigm has good possibilities, but little tradition. This case study of the implementation of the Hungarian Agri-Environmental Programme (HAEP) intends to illustrate how a disfunctioning project state (clientalism, insufficient bureaucracy, direct political influence) can distort the implementation of rural development policies. We found that the design and the implementation of the programme (HAEP) was subjected to ongoing political influence and the power struggle of three main mindsets, representing different lobbies: the agriculturalists, the green-minded and the accountability-minded actors. As a consequence, the main emphasis remains on the distribution of financial resources, thus original objectives (environmental protection and effective social learning) are not fulfilled. The case study is part of my ongoing research "Local Development Policies in a European Project State - A Systemic Analysis of Institutional Bricolage" supported by an NFM-OTKA grant. |
| Keywords: | social learning, environmental governance, agri-environmental policies, CAP, EU policies, environmental protection, project state, evaluation |
| JEL: | D73 D74 D78 H83 J18 Q00 Q01 Q18 Q19 Q51 Q56 Q58 Y80 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:1008&r=reg |
| By: | Sergey Chernenko; C. Fritz Foley; Robin Greenwood |
| Abstract: | Standard theories of corporate ownership assume that because markets are efficient, insiders ultimately bear agency costs and therefore have a strong incentive to minimize conflicts of interest with outside investors. We show that if equity is overvalued, however, mispricing offsets agency costs and can induce a controlling shareholder to list equity. Higher valuations support listings associated with greater agency costs. We test the predictions that follow from this idea on a sample of publicly listed corporate subsidiaries in Japan. When there is greater scope for expropriation by the parent firm, minority shareholders fare poorly after listing. Parent firms often repurchase subsidiaries at large discounts to valuations at the time of listing and experience positive abnormal returns when repurchases are announced. |
| JEL: | G14 G3 G32 K22 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15910&r=reg |