Finance

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    Cyber risk governance should take centre stage in financial services

Cyber risk governance should take centre stage in financial services

It feels as though cyber risk has crept up on us without warning and with great intensity.

We have come a long way from the days when our palm pilots had to be hot-sync’d through a docking station and the occasional hazard was from viruses transmitted as email attachments. Over the years, we have embraced extreme connectivity combined with extreme […]

December 4th, 2019|Finance, IDEAS, LSE Authors|0 Comments|
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    How to change the paradigm in finance to incorporate a changing environment

How to change the paradigm in finance to incorporate a changing environment

Climate change poses existential threats to global prosperity, but political and economic systems are unprepared for responding to that risk. Governance, incentives and thinking are still misaligned. The financial and corporate sectors could play an important role in turning the tide by truly managing for long-term value creation, i.e. by managing for positive financial, social and environmental returns in […]

December 2nd, 2019|Environment, Finance|0 Comments|

Do tweets from CEOs matter to investors?

Social media provides today’s CEOs a quicker and more direct way to communicate with investors. The Securities and Exchange Commission cleared public companies to use social media to disclose information as long as investors know which social media sites will be used.

Despite the growth in CEOs’ social media use, we know little about how such use affects investors, and […]

November 29th, 2019|Finance|0 Comments|
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    Do six per cent of financial transactions sent via the Swift system really fail?

Do six per cent of financial transactions sent via the Swift system really fail?

In May 2019, Brad Garlinghouse, CEO of a San Francisco based (but Delaware registered) fintech firm called Ripple Labs gave a presentation to the 9th High-Level Conference on the International Monetary System. The small audience included Christine Lagarde (then chairman of the IMF) and the heads of several central banks. He described a problem in the world financial system […]

What’s wrong with bank culture?

Each year I give an undergraduate lecture on student loans. It is a thoroughly depressing two-hour slot. But each year it also reminds me how the student experience has changed since I began my undergraduate degree in 1997. One memory stands out in particular. It is the memory of visiting four large UK retail banks in my local village […]

October 9th, 2019|Finance|1 Comment|

What’s slowing down the European Banking Union?

Many observers believe that implicit bank bailout guarantees were an important driver of the global financial crisis. They also blame national supervisory authorities as another key factor. As a consequence, the formation of the European Banking Union (EBU) was presumably the single-most important institutional response of the European Union (EU) to ensure that taxpayers’ money is not used again for […]

October 8th, 2019|Finance, LSE alumni|0 Comments|
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    Bitcoin, ethereum and ripple: a fractal and wavelet analysis

Bitcoin, ethereum and ripple: a fractal and wavelet analysis

In recent years, repeated boom-bust cycles in cryptocurrencies valuations have generated waves of media and public attention, helping to attract a growing number of retail and professional investors to this new asset class. Regulatory environment and markets research, however, lag these developments.

In general, there is no consensus in the markets and amongst regulatory authorities as to the preferred classification […]

October 7th, 2019|Finance|0 Comments|

The efficiency of the IPO market: homo economicus lives

In the initial public offering (IPO) market, sophisticated issuers with considerable sums at stake acquire underwriting services from a large number of capable and highly competitive investment banks. Neoclassical economics implies that such a market will (well, really, must) reach an efficient equilibrium. Yet, in practice, the IPO market has a number of highly unusual features that has led […]

Bitcoin: from currency to investment

While attending the 2019 American Sociological Association annual conference in New York, I came across an advertisement that nicely captures the competing visions within the bitcoin community. The ad (Figure 1) depicts a scene from the American Revolution, illustrated in pointillist style to evoke American paper currency. A slogan, “The revolution needs rules,” overlays a throng of white men, each […]

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    Why investors should not attach too much meaning to daily changes in the stock market

Why investors should not attach too much meaning to daily changes in the stock market

The stock market moves a lot on a day-to-day basis. Today the S&P 500 index may be up 1 per cent, and tomorrow it may be down 1 per cent. And although news commentators may be forced to relate it to some news about the economy, it is rare to come across news that may add or destroy the […]

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    Crises in the financial markets tend to bring liberalisation to a temporary halt

Crises in the financial markets tend to bring liberalisation to a temporary halt

Large economic and political turbulence occurs in the aftermath of financial crises. What starts as panic in a single financial market or institution usually propagates rapidly to other agents of the economy and might necessitate an urgent and decisive reaction from policymakers. However, it is difficult to predict, a priori, whether the reaction of policymakers to the crisis would […]

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    Market incentives are stacked against companies that try to care about climate change

Market incentives are stacked against companies that try to care about climate change

When the conservative government insists that traded corporations and investment funds should be left to self-regulate around the climate emergency they should recognise that the only arguments supporting them are the theories that gave us the global financial crisis. But if the crisis taught us anything it was that unregulated financial markets are not, in fact, rational in the […]

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    A global research network to help green the financial system

A global research network to help green the financial system

Back in 2015, when the Paris Agreement was signed, just a handful of regulators were engaged with climate change risk, notably the Bank of England and the People’s Bank of China.

But now momentum is growing. March 2019 alone saw three important steps forward. First, the Bank of England’s Mark Carney, one of the first central bankers to take action […]

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    ‘Human plus artificial’ intelligence: the future of work in the investment industry

‘Human plus artificial’ intelligence: the future of work in the investment industry

What is the future of work in the investment industry? How do we, as providers of human capital prepare for the evolution of this profession? What does it mean for employers seeking to engage and motivate staff over the long term?

It is widely accepted that, like most other industries, the financial services industry is in a state of flux. […]

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    European integration and TARGET2 imbalances: fixing the design flaw

European integration and TARGET2 imbalances: fixing the design flaw

Starting at the second half of the 20th century, the economic and political integration of Europe is the largest and longest integration project in human history. It is still a work in process. The integration at this scale undoubtedly comes with profound difficulties and it would be fair to be sympathetic with architects and builders of this project. The difficulties […]

April 25th, 2019|Finance|4 Comments|
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    Should the European Central Bank issue its own digital currency?

Should the European Central Bank issue its own digital currency?

Cryptocurrencies and their potential impact on central banking have sparked a policy debate on addressing their potential risks to the banking and monetary systems. By highlighting the functional similarities between bitcoin and central bank money (CeBM) and investigating the challenges that the potential wider adoption of cryptocurrencies can pose to central banks, my working paper discusses issuing central bank […]

March 21st, 2019|Finance|0 Comments|
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    The UK’s departure could lead to a fragmentation of EU capital markets

The UK’s departure could lead to a fragmentation of EU capital markets

In preparation for Brexit, banks and other financial firms have been setting up offices in various EU cities and moving staff to them. In the case of ‘no deal’, we can expect more staff and functions to be moved. As a matter of prudence, the banks have anyway been required by their supervisors to prepare for a ‘no deal’ […]

February 23rd, 2019|Finance|0 Comments|
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    Sustainable finance in troubling times: five actions to prevent a crisis

Sustainable finance in troubling times: five actions to prevent a crisis

Sustainable finance ended 2018 on a high. Never before has so much capital been committed to integrating environmental, social and governance (ESG) factors. But financial markets also entered an unnerving cycle. If we are not careful, growing financial turbulence could divert attention away from the urgent need to scale up investment in climate action and sustainable development. Instead of […]

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    What happens with cross-border financial services after Brexit?

What happens with cross-border financial services after Brexit?

As we approach the date for leaving the EU, the government has been publishing a series of statutory instruments (U.K. secondary legislation), on-shoring and amending EU regulations ahead of Brexit. This is being done under the European Union (Withdrawal) Act 2018. During the past weeks risks in this sector linked to a no deal scenario have increased significantly. However, despite […]

January 18th, 2019|Finance, LSE alumni|0 Comments|
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    The trouble in judging a country’s financial health by the size of its debt

The trouble in judging a country’s financial health by the size of its debt

In the second quarter of 2018 global debt reached a new peak, climbing to 260 trillion dollars ($260,000 billion). At the same time, the global debt to GDP ratio crossed the 320 per cent threshold for the first time. Of that total, 61 per cent (160 trillion) is private debt of the non-financial sector, while only 23 per cent […]

November 30th, 2018|Finance|0 Comments|