Bank Runs and the Accounting for Illiquid Assets in Financial Institutions

Abstract

Financial services are an increasingly important sector in modern economies, yet many accounting and auditing texts focus on manufacturing and retailing. This teaching note describes the role of financial institutions in transforming long-term, difficult-to-sell assets into short-term bank accounts. This is referred to as liquidity transformation. The social benefits and risks of liquidity transformation are described. The social benefit occurs due to the increased liquidity provided by the bank to depositors. The risk comes in the form of a bank run, wherein difficult-to-sell assets cannot be redeemed in time to cover the rapid and unexpected withdrawals of depositors. The financial statements of a financial institution are presented and the issue of valuation is discussed. Finally, practical relevance for accounting students is enhanced by including discussions of historical precedents and of implications for financial reporting and auditing.     

Multinational banking and the international transmission of financial shocks: Evidence from foreign bank subsidiaries

Using bank-level data on 368 foreign subsidiaries of 68 multinational banks in 47 emerging economies during 1994–2008, we present consistent evidence that internal capital markets in multinational banking contribute to the transmission of financial shocks from parent banks to foreign subsidiaries. We find that internal capital markets transmit favorable and adverse shocks by affecting subsidiaries’ reliance on their own internal funds for lending. We also find that the transmission of financial shocks varies across types of shocks; is strongest among subsidiaries in Central and Eastern Europe, followed by Asia and Latin America; is global rather than regional; and becomes more conspicuous in recent years. We also explore various conditions under which the international transmission of financial shocks via internal capital markets in multinational banking is stronger, including the subsidiaries’ reliance on funds from their parent bank, the subsidiaries’ entry mode, and the capital account openness and banking market structure in host countries.     

A revisit to the dependence structure between the stock and foreign exchange markets: A dependence-switching copula approach

This paper develops a dependence-switching copula model to examine dependence and tail dependence for four different market statuses, namely, rising-stocks/appreciating-currency, falling-stocks/depreciating-currency, rising-stocks/depreciating-currency, and falling-stocks/appreciating-currency. The model is then applied to daily stock returns and exchange rate changes for six major industrial countries over the 1990–2010 period. The dependence and tail dependence among the above four market statuses are asymmetric for most countries in the negative correlation regime, but symmetric in the positive correlation regime. These results enrich the findings in the existing literature and suggest that analyzing cross-market linkages within a time-invariant copula framework may not be appropriate.     

创业板上市公司经营绩效评价研究——基于层次分析法和综合评价模型

创业板市场为高新技术企业和高成长型中小企业上市融资提供了便利。本文选取Tso家创业板上市公司作为研究样本,采取层次分析法和综合评价模型相结合的方法,构建创业板上市公司经营业绩评价体系,对创业板上市公司经营绩效进行定量评价。实证结果发现：现金流是影响财务状况的主要因素,创新能力是影响非财务状况的主要因素。     

Operational risk quantified with spectral risk measures: a refined closed-form approximation

The quantification of operational risk has become an important issue as a result of the new capital charges required by the Basel Capital Accord (Basel II) to cover the potential losses of this type of risk. In this paper, we investigate second-order approximation of operational risk quantified with spectral risk measures (OpSRMs) within the theory of second-order regular variation (2RV) and second-order subexponentiality. The result shows that asymptotically two cases (the fast convergence case and the slow convergence) arise depending on the range of the second-order parameter. We also show that the second-order approximation under 2RV is asymptotically equivalent to the slow convergence case. A number of Monte Carlo simulations for a range of empirically relevant frequency and severity distributions are employed to illustrate the performance of our second-order results. The simulation results indicate that our second-order approximations tend to reduce the estimation errors to a great degree, especially for the fast convergence case, and are able to capture the sub-extremal behavior of OpSRMs better than the first-order approximation. Our asymptotic results have implications for the regulation of financial institutions, and may provide further insights into the measurement and management of operational risk.     

关于金融支持新型城镇化建设的思考——以吉林省通化市为例

党的十八大报告提出,要协调城乡区域发展,走中国特色新型城镇化道路。城镇化是我国现代化建设的历史任务,对国民经济发展意义重大。城镇化是现代工业文明发展到一定程度的产物,是世界各国工业化进程中必经的历史阶段,是支持我国经济未来发展的重要动力源泉。城镇化是我国现代化建设的历史任务,也是扩大内需的最大潜力所在,金融机构要围绕提高城镇化质量,因势利导、趋利避害,积极支持城镇化健康发展。     

Input Substitution and Pollution Control under Uncertainty and Firm Heterogeneity

Much research has focused on emission-based instruments for pollution control, but indirect approaches that control input use or production technologies are often used. This article derives a simple rule for evaluating the relative efficiency of input-use taxes and standards in the presence of input substitution, firm heterogeneity, and uncertainty. The importance of input substitution is demonstrated and the key parameters that determine the relative efficiency are identified.     

机构运动的可靠性设计

将可靠性概念引入机构设计，讨论了机构运动可靠性的数学模型及其求解方法。在综合过程中同时考虑综合方法本身带来的方法误差和构件尺寸制造误差及装配误差对机构输出构件运动精度的影响，使综合结果满足预定的运动可靠度要求，并给出了计算实例。     

绿色和谐管理的哲学意蕴

21世纪是生态时代,绿色则是生态时代的根本特征。这一时代特征要求企业用新的管理理论来经营管理企业,绿色和谐管理理论则正好顺应了这一时代要求。本文从哲学层面对绿色和谐理念进行剖析,并在此基础上揭示出绿色和谐管理的本质,以便为我国企业推行绿色和谐管理理论提供参考。     

Competition and Competition Policy: Implications of Hong Kong's Reversion to China

The paper explores how Hong Kong's new status as China's Special Administrative Region (SAR) may affect the competitiveness of the industries and the relative position of companies owned by non-Hong Kong investors. The conclusion is that mainland Chinese firms will play an increasingly more important role in Hong Kong's economy and British firms will lose their dominance further. This does not, however, indicate a return to unequal competition in favor of firms from the sovereign country, but the beginning of a period of greater competition by all firms in Hong Kong, whether they be local or non-local. There is a risk that governmental and semi‐governmental corporations of the SAR and other Chinese governments may use their official and semi-official status to tilt the playing field in their favor, but appropriate competition law can address this concern.