Insurance Protection Funds in the European Union—Quo Vadis?

Contrary to the development in other major insurance markets in the world only 13 out of 27 EU member states have introduced until now some type of insurance protection funds (IPF). As a result around a third of the market is without any collective protection. There is also a continuous debate since 2001 among the member states on the need for such a system at the community level. The experiences of the latest financial crisis have raised new arguments for reorganizing the existing system to avoid regulatory arbitrage and to strengthen consumer security. Even the prospective implementation of provisions strengthening supervisory bodies, and the new solvency directive (so‐called Solvency II) are not fail‐safe solutions. This article is an attempt to review the current situation as regards IPF in the EU and to discuss possible development scenarios.     

Mean-Variance Optimal Reinsurance Arrangements

Reinsurance reduces the risk but it also reduces the potential profit. The aim of the paper is to derive optimal, from the cedent's point of view, reinsurance arrangements balancing the risk measured by variance and expected profits under various mean-variance premium principles of the reinsurer. We find that quota share, excess of loss or combinations of excess of loss with quota share are the optimal rules according to a fixed expected gain of the cedent     

THE EARLY EXERCISE PREMIUM REPRESENTATION OF FOREIGN MARKET AMERICAN OPTIONS1

The note deals with the pricing of American options related to foreign market equities. the form of the early exercise premium representation of the American option's price in a stochastic interest rate economy is established. Subsequently, the American fixed exchange rate foreign equity option and the American equity-linked foreign exchange option are studied in detail.     

Towards a New Eastern Enlargement of the EU and Beyond

Intereconomics - It is not the first time in EU history that the enlargement perspective is confronted with the need for integration deepening.     

Arbitrage-free pricing of multi-person game claims in discrete time

We introduce a class of financial contracts involving several parties by extending the notion of a two-person game option to a contract in which an arbitrary number of parties is involved and each of them is allowed to make a wide array of decisions at any time, not restricted to simply exercising the option. The collection of decisions by all parties then determines the contract’s termination date as well as the terminal payoff for each party. We provide sufficient conditions under which a discrete-time multi-person game option has a unique arbitrage-free price, which is additive with respect to any partition of the contract. Our results are illustrated by the detailed study of a particular multi-person contract with puttable tranches.     

ARE FINANCIAL AND SOCIAL EFFICIENCY MUTUALLY EXCLUSIVE? A CASE STUDY OF VIETNAMESE MICROFINANCE INSTITUTIONS

A major debate in microfinance focuses on the existence of a trade‐off between the financial sustainability of microfinance institutions (MFIs) and their outreach to poor clients. This paper adds to this debate by analyzing whether financial and social efficiency are mutually exclusive in a context of implicit subsidies by the state and international donors. We use data from a sample of 28 Vietnamese MFIs and apply Data Envelopment Analysis (DEA) to identify the existence of a trade‐off. Our analysis shows that for Vietnamese MFIs financial and social efficiency are not related. We interpret this as evidence for the fact that there is no support to believe that there is such a trade‐off. Subsidies, based on which most Vietnamese MFIs currently operate, helps them to show high financial efficiency, while at the same time being able to attain their social goals. Nevertheless, this model may not be sustainable in the long‐term.     

Regulatory Risk and Market Reactions — Empirical Evidence from Germany

In this article we measure the effects of events on risk and return and analyze the persistence of the influencing variables on German energy companies. Therefore, we refer to event-study methods by means of the Capital Asset Pricing Model, GARCH-Modeling and Kalman filters. We find that the discussed events do not affect all companies in an equal manner. Moreover, we show that the impact on risk and returns is not persistent and does not lead to an increase in the overall systematic risk for the considered utility operators in Germany.     

African Perspectives on China–Africa: Modelling Popular Perceptions and their Economic and Political Determinants

China's recent political and economic inroads into Africa have generated much interest in the current literature, with scholars and policymakers endeavouring to assess the merits and risks implicit in this renewed engagement. Absent from the literature, however, are systematic analyses of African perceptions of these rapidly growing China–Africa links, and what determines these perceptions. This article fills this void by examining not only African attitudes towards China's African presence, but also investigating the considerations that inform these views. Using multi-level modelling techniques, this article estimates the effects of Chinese foreign direct investment (FDI), Sino-African trade and notions of democracy and human rights on African attitudes towards “China-in-Africa”. The results suggest that Africans' views of China are nearly equivalent to those that they hold vis-à-vis Western countries. The perceived impact of imports from China has a negative effect. However, this effect is counter-balanced by perceptions of China's impact on poverty alleviation—in line with its greater focus on economic, social and cultural, as opposed to civic and political human rights—in particular through FDI. Among those who value civic and political human rights, in contrast, attitudes towards China are less favourable. This finding is echoed with respect to democratic governance, though the effect is less stable. The results are derived from Afrobarometer data covering 20 African countries.     

Toward an ontology‐driven blockchain design for supply‐chain provenance

An interesting research problem in our age of Big Data is that of determining provenance. Granular evaluation of provenance of physical goods (e.g., tracking ingredients of a pharmaceutical or demonstrating authenticity of luxury goods) has often not been possible with today's items that are produced and transported in complex, interorganizational, often internationally spanning supply chains. Recent adoptions of the Internet of Things and blockchain technologies give promise at better supply‐chain provenance. We are particularly interested in the blockchain, as many favored use cases of blockchain are for provenance tracking. We are also interested in applying ontologies, as there has been some work done on knowledge provenance, traceability, and food provenance using ontologies. In this paper, we make a case for why ontologies can contribute to blockchain design. To support this case, we analyze a traceability ontology and translate some of its representations to smart contracts that execute a provenance trace and enforce traceability constraints on the Ethereum blockchain platform.