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Ebook How Have Local Currency Bond Markets In EMEs Weathered The Financial Crisis?

Submitted by puput on Tue, 07/20/2010 - 04:11

There is an optimistic and a pessimistic reading from the recent crisis on how far local currency bond markets can immunise emerging markets from international financial crises. The optimistic view goes like this. One of the great reforms in Latin America and in developing Asia during the past decade has been the diminished reliance on foreign currency and increased borrowing by governments in local currency and at long maturities. The development of domestic currency bond markets has in many ways been the foundation stone of this progress.

As a BIS report a few years ago argued, balance sheet weaknesses due to currency mismatches had played a key role in virtually every major financial crisis affecting the emerging market economies (EMEs) since the early 1980s. A heavy dependence on foreign currency debt made it impossible to use macroeconomic policies as countercyclical tools. As government interest payments on foreign currency debt rose when the exchange rate fell, governments were forced to raise taxes (or cut other spending) in the face of recession. And monetary policy had to focus not on stabilising the economy but on propping up the exchange rate.

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PDF Ebook Internal Versus External Capital Market in The Insurance Industry

Submitted by antoq on Mon, 02/08/2010 - 08:23

This study compares internal and external sources of capital in the insurance industry by analyzing reinsurance activity between affiliated and unaffiliated insurers. Tests are performed using data from a large sample of property liability insurers that are affiliated with at least one other property liability insurer. Results indicate that while demands for internal and external reinsurance have some factors in common, there are also cost-based differences in internal and external capital, as well as structural differences in demand for internal and external reinsurance. Results are consistent with previous theories related to internal versus external capital markets.

Reinsurance is a critically important part of the insurance industry. In 1997, insurers paid $198 billion in reinsurance premiums. Many reinsurance transactions take place between insurers and unaffiliated reinsurers, but the bulk of reinsurance transactions actually occur between affiliated insurers. Insurance firms are often affiliated as members of an insurance group. In 1997, 1724 out of 2740 U.S. property casualty insurance companies were affiliated with insurance groups. These 1724 group members accounted for ninety-one percent of industry direct written premiums in that year. Reinsurance activity within insurance groups is a common practice. In 1997, almost $157 billion were ceded within property casualty insurance groups as reinsurance premiums. Roughly eighty percent of reinsurance activity (by premium volume) occurs within groups rather than between insurers and unaffiliated external reinsurers. The use of reinsurance contracts among affiliated insurers may represent an extremely active internal capital market.

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Ebook Payment instrument choice: The case of prepaid cards

Submitted by puput on Sat, 09/05/2009 - 07:18

Technological advances continue to allow more and more individuals and businesses to shift toward the electronic delivery of information instead of the exchange of paper-based documents. Examples of this migration include the use of email instead of traditional mail service, the delivery of real-time news via the Internet instead of a physical newspaper, and the payment of bills using online transfers instead of mailing checks. While electronic delivery is faster, often less costly, and often more reliable and secure, the older paper-based systems have not disappeared. Some users of the older technology prefer it to the newer technology, given the incentives they face today. In this article, we will explore the replacement of paper-based payment instruments by prepaid payment cards—an electronic alternative.

The adoption of electronic payment instruments that are able to access sophisticated and extensive networks to authorize, process, and settle payments with relative ease continues to increase. Today, the total number of electronic transactions made in the United States, which accounts for around 55 percent of noncash transactions, has surpassed the number of check payments, which accounts for around 45 percent of noncash transactions (Federal Reserve System, 2004). U.S. consumers used checks for 11 percent of their in-store purchases and used payment cards for 56 percent of their in-store purchases in 2005 (American Bankers Association and Dove Consulting, 2005). This shift to electronic payments suggests that payment participants generally prefer electronic payments to checks.

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