The Regulation of Financial and Other Futures Markets

My assignment is to speak about the regulation of financial futures markets, but in this respect the differences between financial futures and the traditional commodity futures are comparatively minor. Most of what I have to say, therefore, will apply to the regulation of futures markets in general. Towards the end of my remarks I shall say something about the problems that are particular to financial futures.     

Financial Markets Trends and Studies of Singapore Futures Markets

In this paper we explore some recent trends in the financial market and also report some studies of the Singapore futures markets. A characterization of trends shows that national securities markets are much closer than before. This means the linkages between securities and their derivatives and amongst themselves have be come much stronger. Secondly, the advent of sophisticated risk products and instruments and the knowledge to use them effectively would become a common theme together with the idea of value enhancements. Thirdly, computerizations and the internet will play an increasingly important role. So will empirical financial research become increasingly microscopic. The discussion will be supported by the experiences of the Singapore futures markets and various empirical research evidences. The paper also provides a detailed study of causality-in-variance test of information transmission between SIMEX and Osaka Stock Exchange on the Nikkei 225 stock index futures trading prior to, during, and immediately after the announcement of the collapse of Barings. The results are indicative of very strong international market linkages and a portent of things to come.     

Going-Public and the Influence of Disclosure Environments

This paper analyzes how differences in disclosure environments affect the firms choice between private and public capital. Disclosure requirements prescribe to what extent the firm has to release private information that may lead to the firm incurring proprietary costs. We examine which firm types go public in equilibrium, and how the equilibrium outcomes change with changes in the disclosure environments. Our findings show that in a partial financing equilibrium, should such an equilibrium exist, good firms finance privately. This result is robust to changes in the disclosure environment.JEL Classification: G32, M49     

Development, Present Status and Some Prospects of the Financial Markets in Korea

This paper describes the historical background and the present structure of Korea's financial markets to provide the basic understanding of issues facing the Korean financial system. The financial system in Korea has been introduced and developed to serve specific political or economic purposes, putting the financial markets in a tight control of government. As a result of the government-controlled financial policies market mechanism has oftentimes been ignored or distorted, making the Korean financial market inefficient and not competitive. To increase the efficiency of the financial system the Korean government plans to launch a Big Bang style financial reform. Attention is paid to the ongoing efforts of the Korean government for financial reforms. As the financial reform takes effect in the near future there will be far fewer regulations and government interventions in financial sector.     

国际金融中心建设视角下金融市场业务发展的思考

上海国际金融中心建设现已上升到国家战略层面。建设国际金融中心,从外延来看,上海要成为金融机构集聚的中心;从内涵来看,是上海各类金融市场广度和深度的不断延伸。商业银行在国际金融中心建设和金融市场发展过程中理应发挥着主导作用。国际金融中心建设,给在沪商业银行特别是上海本地法人银行金融市场业务发展带来了难得的历史机遇。本文从上海国际金融中心建设的视角,结合银行金融市场业务发展实际情况,从政策制定、机构建设市场发展和产品创新等多层面,对国际金融中心建设给商业银行金融市场业务发展带来的机遇和商业银行所面临的挑战进行了分析,同时就如何抓住国际金融中心建设契机,不断提升银行金融市场业务竞争力,加快金融市场业务发展提出了一些初步建议。     

Financial Markets and Economic Growth

The current economic problems in Southeast Asia can be attributed not to too much reliance on financial markets, but to too little . Like the U.S. economy a century ago, the emerging Asian economies do not have welldeveloped capital markets and so remain heavily dependent on their banking systems to finance growth.
For all its benefits, banking is not only basically 19th-century technology, but disaster-prone technology. The extreme maturity (and, in some cases, currency) mismatch on banks' balance sheets plus the first-come, first-served nature of the deposit obligations mean that banks are inherently vulnerable to massive runs by depositors—and that their economies are subjected to periodic credit crunches. And, as the author says, in the summer of 1997 a banking-driven disaster struck in East Asia, just as it had struck so many times before in U.S. history.
In this century, In this century, the U.S. economy has steadily reduced its dependence on banks by developing dispersed and decentralized financial markets. In so doing, it has increased the efficiency of the U.S. capital allocation process and reduced its susceptibility to the credit crunches that have occurred throughout U.S. history. By contrast, Japan has not reduced its economy's dependence on banks, and its efforts to deal with its banking problems have served only to destabilize itself as well as its neighbors. Developing countries in Southeast Asia and elsewhere are urged not to follow the Japanese example, but to take measures aimed at developing financial markets and institutions that will either substitute for or complement bank products and services.     

Financial Reforms and Emerging Markets

In this discussion chapter, the author summarizes the main features of recent financial developments in emerging markets, including market development, governance and regulatory issues. In light of the financial crises that have taken place in those markets, emphasis is made on the actual path of reforms, main policy lessons and issues of concern from the country cases presented in the panel.     

Monetary Policy and Financial Markets

Monetary policy and financial markets are intrinsically linked. Central banks conduct monetary policy by influencing financial market prices. Financial market prices reflect the expectations of market participants about future economic and monetary developments. Monetary policy works primarily through expectations. Transparency and credibility render monetary policy more effective. However, they are no substitutes for action. If a credible central bank uses words with the explicit aim of substituting them for action, it will risk losing credibility. To avoid what has been described as “the dog chasing its tail” problem, central banks must exercise caution in basing their monetary policy decisions on financial market information. The information about expected future developments reflected in market prices must be continuously cross-checked against economic and monetary indicators in what amounts to a “checks and balances” approach to monetary policy.     

应对复杂形势,推进金融市场业务稳健发展——记“中国银行业‘十二五’金融市场业务高峰论坛”

2011年是"十二五"规划的开局之年,面对"加快发展债券市场,提高直接融资比重"、"国内流动性收紧、信贷增长放慢、利率市场化提速"和"国际油价不断走高,全球通胀不断升温"的复杂形势,刚刚经历近几年高速发展的中国银行业金融市场业务面临的发展不确定性更加突出,如何积极应对随之而来的一系列新的挑战和机遇,成为"十二五"期间中国银行业稳健发展的重大课题。在此背景下,2011年4月26日至27日,《银行家》杂志与负责全行金融市场业务,业已形成涵盖代客理财、直接债务融资、债券、外汇、贵金属及相应衍生品投资等金融市场业务交易平台的中国民生银行金融市场部,在杭州共同举办了"中国银行业‘十二五’金融市场业务高峰论坛"。邀请国内金融市场业务的著名专家学者、监管机构负责人和股份制银行、城商行、农信社、村镇银行、外资银行、证券公司、信托公司等条线同仁500余人,围绕"理财、外汇与贵金属"、"债券承销发行与投资"等主题,就未来金融市场业务发展面临的形势、难点、创新机理和监管变动等进行了深入探讨与交流,以期为促进银行业金融市场业务在"十二五"期间的快速、稳健发展提供参考借鉴。本文选取其中的精彩发言与观点(按论坛流程和嘉宾发言顺序),呈现其文,以飨读者。     

Financial Markets and Investment Externalities

This address explores the link between financial market shocks, investment choices, and various externalities that can arise from these choices. My analysis, which emphasizes differences between shocks to debt and equity markets, provides insights about some stylized facts from the macro finance literature. These insights are illustrated with a discussion of the technology boom and bust in the late 1990s and early 2000s, and the housing boom and bust in the mid‐2000s.     

Adaptive Traders and the Design of Financial Markets

This paper studies a financial market populated by adaptive traders. Learning is modeled following Camerer and Ho (1999) . A call market and a Walrasian tatonnement are compared in an environment in which both institutions have the same Nash and competitive equilibrium outcomes. When traders learn via a belief‐based model, equilibrium is discovered in both types of markets. In contrast, when traders learn via a reinforcement‐based model, convergence to equilibrium is achieved in the Walrasian tatonnement but not in the call market. This paper suggests that market mechanisms can be designed to foster traders' learning of equilibrium strategies.     

Trust in Financial Markets

This paper examines contemporaneous and historical evidence on the structure of ownership and control of corporate sectors in developed countries to draw lessons for development of financial markets. It records the critical role that equity markets played in the ownership and financing of corporations at the beginning of the 20th century. It notes that this occurred in the absence of formal systems of regulation and that equity markets functioned on the basis of informal relationships of trust. These were sustained through local stock markets in the UK, banks in Germany, and business coordinators and family firms in Japan. The paper explores the concept of trust that is required to promote the development of financial markets.     

The Causal Impact of Media in Financial Markets

Disentangling the causal impact of media reporting from the impact of the events being reported is challenging. We solve this problem by comparing the behaviors of investors with access to different media coverage of the same information event. We use zip codes to identify 19 mutually exclusive trading regions corresponding with large U.S. cities. For all earnings announcements of S&P 500 Index firms, we find that local media coverage strongly predicts local trading, after controlling for earnings, investor, and newspaper characteristics. Moreover, local trading is strongly related to the timing of local reporting, a particular challenge to nonmedia explanations.     

Taxation and Integrated Financial Markets: The Challenges of Derivatives and Other Financial Innovations

The past decade has witnessed the explosive growth of a multiplicity of new instruments which have altered the financial landscape. These transactions have highlighted many of the inconsistencies, asymmetries and shortcomings of current tax practices and challenged some basic tax principles. The ensuing uncertainties could over the long term place considerable strain on the tax system by increasing the opportunities for abuse and raising overall compliance costs. At the same time derivatives have provided a better understanding of the operation tax laws and from this standpoint have provided a positive input into policy design. This paper has three objectives: (a) to illustrate some of the weaknesses of the current tax system by focusing on several types of novel transaction; (b) to assess the validity of various types of adjustment proposed to tax code; (c) to draw out the implications of these developments for the ongoing debate over fundamental tax reforms and over source versus residence based taxes.     

Institutional Markets,Financial Marketing,and Financial Innovation

Firms and institutions are monitored and controlled through a complex set of implicit and explicit contractual relations. Because of these agency theoretic relations, institutional behavior in financial markets is not a simple reflection of the preference structures of individuals. Institutional preferences give rise to a demand for new financial instruments and innovations, even when the returns on these instruments are “spanned” in the sense of complete pricing. The innovations can be thought of as solving moral hazard problems. An agency theoretic example serves to illustrate the demand, supply, and financial marketing of stripped securities. In short, institutions matter.     

Financial Markets and Economic Growth*

In this reprinting of the Nobel Prize‐winning financial economist's classic statement about the origins of financial crises, the Southeast Asian crisis of the late 1990s is attributed “not to too much reliance on financial markets, but to too little.” Like the U.S. economy a century ago, the emerging Asian economies did not then—and do not now—have well‐developed capital markets and remain heavily dependent on their banking systems to finance growth. But for all its benefits, banking is not only basically 19th‐century technology, but disaster‐prone technology. And in the summer of 1997, a banking‐driven disaster struck in East Asia, just as it had struck so many times before in U.S. history. During the 20th century, the author argues, the U.S. economy reduced its dependence on banks by developing “dispersed and decentralized” financial markets. In so doing, it increased the efficiency of the capital allocation process and reduced the economy's vulnerability to the credit crunches that have recurred throughout U.S. history. By contrast, Japan has not reduced its economy's dependence on banks, and its efforts to deal with its banking problems during the crisis of the late'90s served only to destabilize itself as well as its neighbors. Developing countries in Asia and elsewhere are urged not to follow the Japanese example, but to take measures aimed at developing financial markets and institutions that will either substitute for or, in some cases, complement bank products and services.     

金融市场现代化背景下金融发展影响文化产业的实证分析

运用中国1995-2012年的时间序列数据,实证检验金融发展对文化产业的影响。结果显示,金融发展对文化产业规模有显著的正向影响,城镇居民可支配收入对文化产业规模有显著的负向影响,农村居民家庭人均纯收入对文化产业规模有显著的正向的影响,城镇居民恩格尔系数对文化产业规模有显著的正向影响。     

Costless Signalling in Financial Markets

A costless, fully revealing signalling equilibrium is derived from two easily understandable conditions. The outsider-rationality condition states that the outsiders relate the price that they offer to pay for a security inversely to the supply of this security, which they interpret as a quality signal. The no-arbitrage condition requires that the marginal exchange rate for two securities be the same in both primary and secondary markets. These conditions restrict the firm's financing policy and have strong implications for the valuation of securities and of the total firm. A costless signalling equilibrium is obtained.