The rocky road to modernity: 20 years of the Russian capital market

From a modest start almost 20 years ago, the Russian financial market has emerged as a major force in Eastern Europe and Central Asia. This article offers a retrospective account of the two decades of development of the financial sector in Russia, with an emphasis on the securities market; outlines the main stages in its development; and proposes an assessment of the capital market in comparison to other international markets. We conclude with an overview of the market's performance during the current financial crisis. © 2011 Wiley Periodicals, Inc.     

Transformation of China's sovereign wealth fund since the 2008‐2009 global crisis

China Investment Corporation (CIC) transformed its initial investment strategy of focusing mainly on the US financial sector during 2007‐2008 into a new strategy of diversified investments across geography and sectors since 2009. Massive financial losses and domestic political backlash during the global financial crisis of 2008 gave impetus to CIC's rethinking of strategy. In the midst of the crisis, CIC engineered a capacity‐building and reorganization exercise to reposition itself for a new strategy that has since allowed for more diversification of investments. A more receptive global investment climate for sovereign wealth funds has also aided CIC's efforts to present itself as a responsible global investor and facilitated its investments. Postcrisis, CIC's new strategy of diversification is characterized by continued investments in the financial sector, but with new investments increasingly directed to real sectors of energy, natural resources, and real estate in both developed and emerging economies. Notwithstanding a global recovery that is fraught with uncertainties, CIC's judicious timing in making diversified investments, and its attention to reducing risks and enhancing returns, have been rewarded by an impressive turnaround in performance since 2009. Going forward, the success and sustainability of the new strategy will be contingent on how well CIC can navigate domestic bureaucratic rivalry and the shifting climate of the international investment environment in the medium to long term. Ultimately, CIC's shareholder, the government of the People's Republic of China (PRC), holds the key to its future direction and goals. © 2012 Wiley Periodicals, Inc.     

The financial crisis and trade—key impacts,interactions, and outcomes

The international financial crisis has been felt acutely in international trade. This article looks at the extent of the fall in trade and its impacts in major world exporters and sectors of industry. The article finds that the effects of the crisis have been far from homogeneous, with certain sectors more heavily impacted than others. In particular, electronics and transport equipment have seen large falls in trade, with base metals and machinery also strongly affected. Furthermore, certain countries have seen greater impacts than others. In particular, China saw relatively lower falls in trade than the other countries covered, contributing to an increase in the emerging world's share of global trade. Finally, the article looks at two key elements hypothesized as motors of the extensive trade fall—the fragmentation of production and the contraction in trade finance. It finds evidence that both were important to the impacts of the crisis on trade, although falls in GDP were the main driver. © 2011 Wiley Periodicals, Inc.     

The Great Recession of 2008: Impact on the Bangladeshi economy and international business implications

This article examines the current global financial crisis (GFC) and its impact on Bangladesh's economy and discusses international business implications for the country within an institution‐based analytical framework. The article finds that the macroeconomy of Bangladesh has shown remarkable resilience in the face of this massive global crisis, and the impact has been minimal and limited to a moderate slowdown of the economy The country thus could be poised for taking advantage of international business opportunities as the global economy begins to recover. Further, JPMorgan's Frontier Five and Goldman Sachs's Next Eleven classification of Bangladesh indicates enormous potential for growth and development. The article suggests that the Bangladeshi diaspora could serve as a connecting hub so that “brain gain” could be achieved through labor migration and remittances. Strategic alliances among home and foreign firms are also important to the future capacity building of the country. However, strategic management in the form of further institutional, structural, and policy reforms are critical in enabling the country to develop an international‐business‐friendly environment conducive to taking advantage of evolving global opportunities and realizing its full potential. © 2011 Wiley Periodicals, Inc.     

Foreign investors in Taiwan: Their roles and government perspectives

This article describes the financial liberalization process in Taiwan and evaluates the effects of foreign institutional investors on Taiwan's stock market. Gradual liberalization allowed Taiwan to reap the benefits while reducing the harmful impacts of foreign participation during the Asian financial crisis. Overall, the liberalization policies proved to be effective as the stock market has become more stable and efficient. Foreign institutional investors contribute significant growth to the Taiwan stock market, and will continue to play a sizeable role in its future development.     

Restructuring FDI policy in emerging economies: The republic of Korea case

This article presents several frameworks for examining the effect of a national financial crisis as a stimulus for economic reform and applies them to the Korean case 1997–2001. The author lists significant dimensions of reform and restructuring, presents a schema showing macro reform measures and some possible micro ramifications regarding a country's policies toward incoming foreign direct investment, and extends the schema to the concept of a trade‐off between macro and micro determinants of a country's attractiveness to foreign direct investment. There is also a chart highlighting the extent of government allowance of foreign equity participation. The author uses all these concepts to analyze the Republic of Korea's response to the financial crisis of 1997–1999. © 2005 Wiley Periodicals, Inc.     

Managing the reputation of the banking industry after the global financial crisis: Implications of public anger,processing depth and retroactive memory interference for public recall of events

The global financial crisis of 2007/2008 devastated the reputation of the UK banking industry. This paper examines possible connections between the depth of an individual's cognitive processing of information about the banking industry's role in the onset of the crisis obtained from UK media (and elsewhere) and the subsequent extent and accuracy of the person's memory of events. Depth of processing was posited to depend on the level of an individual's feelings of anger at the banks' reported behaviour before and during the crisis and on the degree to which a person had suffered financially as a consequence of the crisis. A number of hypotheses were developed on the basis of Nabi's (1999) cognitive functional model and were tested via a survey of 413 members of the public in Greater London. It was further hypothesised that, because media coverage of the banks' involvement in the crisis was largely hostile, many members of the public attributed blame for the crisis mainly to the banks, resulting in extensive feelings of anger and hence deeper cognitive processing.     

Financial Knowledge and “Don't Know” Response

We investigate the effect of group characteristics and educational interventions on young respondents' objective financial knowledge level. We examine six questions about personal finance and covariates selected from the 2015 National Financial Capability Study. Because these questions include “Don't Know” or “Refuse” (DK/RF) responses, a simple regression model could cause researchers to reach misleading conclusions if DK/RF responses are not random. Thus, we suggest a binomial‐latent regression model to evaluate the effect of educational interventions and group differences that are hidden in DK/RF responses. The estimation result shows that rejecting financial education opportunities is disadvantageous to obtaining proper financial knowledge. In addition, both formal and informal financial education are less effective in improving objective financial knowledge in our preferred model. We also find few or no gender, income, and age differences in young adults' objective financial knowledge level after controlling for financial education interventions.     

The Complementary Nature Between Technological Progress and Capital Accumulation in India's Long‐Run Growth Transitions

This article develops a multiple‐regime, learning‐by‐doing model, in which technological progress and capital accumulation are complementary factors in long‐run growth transitions. The model accurately predicts India's long‐run growth transitions over the period 1953–2007, with the first phase (1980–2002) being ‘technology’ driven and the second phase (2003–2007) capital accumulation driven. Given the complementary nature between technological progress and capital accumulation, one of the main challenges facing Indian policy makers in the aftermath of the 2008 global financial crisis is to maintain high saving/fixed investment rates. The analysis also provides a critique of the ‘total factor productivity view’ of India's growth performance.     

Capital flows,current account deficits,and financial crises in emerging market economies

Some emerging market economies are said to face today conditions similar to those faced by Mexico in 1994 at the time of its serious financial crisis. This paper identifies a number of macroeconomic and financial indicators, constructs a profile of the Mexican economy at the time of the crisis, and then compares these with the conditions in other major emerging market economies in Latin America and Asia today in order to determine the extent to which they resemble those of Mexico at the time of the 1994 crisis. The conclusion is reached that macroeconomic and financial indicators cannot by themselves predict Mexican-style financial crises. In today's world of highly integrated capital markets, any anticipation of financial unsustainability can lead to a massive capital outflow from the nation and trigger a crisis, with the catalyst usually being a worsening political problem. The usefulness of the indicators discussed is in providing a profile of the financial condition of the nation, evaluating the potential danger of a financial crisis, anticipating the depth of the crisis if one arises, and pointing to the precautions that a nation can take in trying to avoid a crisis or reduce its severity if one does occur.     

“What is my currency risk?”

Before a company can manage the currency risks associated with doing business abroad, it must clearly identify and define the risks to be managed. This isn't as easy as it seems. There are transactional risks, but there are also hidden risks that don't show up on financial statements.     

‘Trust is good,control is better’: The 1974 Herstatt Bank Crisis and its Implications for International Regulatory Reform

With its international supervisory and regulatory implications, the failure of Bankhaus Herstatt is one of the landmarks of post-war financial history. This article offers the first comprehensive historical account of the Herstatt crisis, and contributes to the wider discussions on international supervisory and regulatory reform since the mid-1970s, including regulatory capture, markets' self-regulation and resolution of failed banks. In doing so, it first argues that contrary to a widely held view, the German authorities received early and repeated warnings about Herstatt's dealings but this involved only limited and ineffective regulatory/supervisory responses, then it turns to the actual collapse of the bank in June 1974, and finally explores the wider regulatory issues raised by the Herstatt case.     

Thailand: Opportunities and risks in a fast‐changing business environment

Thailand's business environment is changing dramatically in the wake of the worst financial crisis and economic recession in the country's recent history. Some of these changes may be ephemeral, and Thailand will return to old business practices once the crisis eases, but many of the economic and political reforms now being implemented can make trade and investment in Thailand easier, more transparent, and less affected by corruption. Some of the reforms will not deliver the expected results. Others may increase uncertainty that will be counterproductive in the short run. But some of the constitutional changes—the restructuring of family controlled conglomerates, better regulation of the financial sector, demands for stronger corporate governance, and new incentives for private investment—can have profound impacts on the country's business climate and the way American companies do business in Thailand. © 2001 John Wiley & Sons, Inc.     

Strategic elements of Eastman Kodak's successful market entry in Russia

Eastman Kodak is a global imaging company with extensive reach and capabilities. This article examines Kodak's entry strategy in Russia. It explains that Kodak was able to succeed through strong personal relations with stakeholders and decisions to invest in local production. Kodak established consumer acceptance through open and frequent communications with their customers. This, combined with a multifaceted marketing strategy, helped them survive the Russian financial crisis. We argue that Kodak's success has been greatly facilitated by a set of policies that include appropriate adaptations of Western marketing and human resources practices. © 2003 Wiley Periodicals, Inc.     

Impact of the Financial Crisis on Cross‐Border Mergers and Acquisitions and Concentration in the Global Banking Industry

The global banking industry has seen dramatic changes in the past 40 years. Most recently, the financial liberalization of emerging markets and the global financial crisis have significantly impacted the market share of banks worldwide. This article investigates the impact of the 2007–2008 financial crisis on cross‐border mergers and acquisitions (M&As) in the banking sector and emphasizes the role of emerging‐market banks in the postcrisis consolidation trend. Using M&A data and concentration data over the period 2000–2013, our analysis indicates that the financial crisis had a significant impact on worldwide M&As, especially on the direction of the transactions. Emerging‐market banks appear to be major acquirers in the postcrisis period, targeting both neighboring countries and developed economies in Europe. We also observe an increase in bank concentration in developed markets most hit by the financial crisis, especially in the United States and the United Kingdom, whereas bank concentration decreased in emerging markets. © 2015 Wiley Periodicals, Inc.     

Children's relationships with brands: “True love” or “one‐night” stand?

Group and individual interviews were conducted to examine relationships developed between children and brands in the family setting. Children's stories about brands suggest that they develop relationships with a wide range of brands and these relationships are imbedded in the social environment where children live and grow. Interpersonal relationship metaphors were utilized to describe different forms of child–brand relationships. The article concludes that children's relationships with brands serve important functions in their lives and have significant implications for marketers. © 2002 Wiley Periodicals, Inc.     

Risky business: Financial‐sector liberalization and China

China's dramatic growth in exports, its rising conflict with its trade partners over the perceived undervaluation of the renminbi, and the snail's pace of financial liberalization is pushing its bilateral trade and monetary relations to a boil. Discontent in the United States, Japan, Southeast Asia, and, most recently, Brazil, has led popular pundits and even country finance ministers to speak publicly of a “currency war” with many calling for the de‐pegging of the renminbi to the dollar and an immediate appreciation of China's currency. However, China's history of liberalization, beginning with the opening to the West in 1978, is well known as one of gradualism in trade and the financial spheres. Economic history is replete with economic crises brought on by too rapid or premature liberalization of countries' capital flows. This article presents the case both for and against capital account liberalization and highlights the risks that China in particular confronts in responding to external demands for greater openness and an appreciation of the renminbi. It clearly captures the tightrope that China must walk between responding to the demands of its trade partners and maintaining economic growth and political stability at home. © 2011 Wiley Periodicals, Inc.     

Sabotage in the financial system: Lessons from Veblen

The global financial crisis that started in the summer of 2007 has generated a wide-ranging discussion about the causes of the meltdown and the role of banking and bankers in today's economy. However, the ongoing debate rarely addresses questions of business tactics in the financial industry. Indeed, while ‘incentives,’ ‘vested interests,’ power, and—increasingly—social utility are often factored into analyses of financial regulation, the strategies and tactics of financial institutions are rarely discussed in a systematic way in academic and policy debate. Nonetheless, we believe that these two elements are key to understanding the financial system, not as a mere sector of the wider economy but as a business enterprise driven by its own logic and shaped by a variety of business tactics of its key agents. In our vision of finance as business, we draw on the concept of industrial sabotage as a business tactic (originally developed by Thorstein Veblen) to explore the roots of the financial sector's contemporary architecture. Our key premise is that the central motive driving the process often described as ‘financialization’ or financial innovation is the sabotage instinct of finance operating as business. Whereas Veblen originally understood sabotage as “conscientious withdrawal of efficiency,” today, we argue, the workings of the banking and financial sector augment the very notion of efficiency by relying on concepts, techniques, and institutions of financial innovation that are shrouded in complexity. In this article, we explore conceptual, institutional, and selected policy dimensions of this phenomenon.     

Oil,debt, banking and the world recession

The threat of a major debt crisis is presently hanging over the international financial community like Damocles' sword. Behind the crisis lies the flood of petrodollars into the financial institutions of the industrial world since the mid 1970s and the consequent large-scale lending to “doubtful customers”. A simple solution to the problem is not in sight.     

The Global Financial Crisis and Its Impact on Australian Bank Risk

This paper examines the global financial crisis (GFC) and its impact on Australian banking risk. An augmented market model is developed to identify changes in listed Australian bank systematic risk in relation to three key events: the GFC's start in August 2007, the market downturn in Australian and global share markets in January 2008, and the announcement of Australia's Deposit and Wholesale Funding Guarantee (DWFG) scheme on 12 October 2008. The study also examines changes in bank systemic risk during these event periods. The Australian market offers a unique opportunity to observe the impact of the introduction of the DWFG in that it lacked any explicit deposit insurance prior to the crisis. Initially, the crisis period had little impact on bank systematic risk while bank systemic risk increased considerably. The share market downturn caused a marked increase in both systematic and systemic risks for Australia's major internationally connected banks followed by a reduction in both systematic and systemic risks with the introduction of the guarantee scheme for all Australian banks.