finance

Top 5 Papers on SSRN 01/06/2020 to 01/12/2020

Published by Anonymous (not verified) on Mon, 13/01/2020 - 4:43am in

Top 5 Papers, based on downloads from 01/06/2020 to 01/12/2020

#
ID
Abstract Title
Authors
Affiliations
Downloads

1
3516536
The Great Transformation: Making China a High-Income Country
Christopher Balding
Fulbright University Vietnam
1185

2
3494141
The Cross-Section of Expected Returns: A Non-Parametric Approach
Enoch Cheng, Clemens C. Struck
University of Colorado at Denver – Department of Economics University College Dublin
843

3
3247865
151 Trading Strategies
Zura Kakushadze, Juan A. Serur
Quantigic Solutions LLC University of CEMA
828

4
3512739
The Most Common Error in Valuations using WACC
Pablo Fernandez
University of Navarra – IESE Business School
750

5
3512154
Delegation at the Founding
Julian Davis Mortenson, Nicholas Bagley
University of Michigan Law School
534

 

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Heretical Finance Reading Group 2020

Published by Anonymous (not verified) on Thu, 09/01/2020 - 11:07pm in

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finance

Heretical Finance 2020 Reading List & Dates

Convened by Clea Bourne, the Heretical Finance Reading Group meets monthly to discuss texts providing alternative, multi-disciplinary, non-disciplinary, cultural and critical perspectives on finance, including fictional representations.

Open to all – academics, non-academics, students – and no registration is required.

Meetings take place at 4.30pm on Mondays (the first Monday of the month) in the basement seminar room at PERC, 41 Lewisham Way, opposite the main Goldsmiths building (how to find Goldsmiths).

 

Monday 2 March 2020

Schifferes, Steve; Knowles, Sophie & Basu, Laura (Eds) (2018) The Media and Austerity: Comparative Perspectives, Routledge

 

This edited collection examines the role of the news media in communicating and critiquing economic and social austerity measures in Europe since 2010. From an array of comparative, historical and interdisciplinary vantage points, the contributors seek to understand how and why austerity came to be perceived as the only legitimate policy response to the financial crisis a decade after it began.

 

Monday 6 April 2020

Pistor, Katharina (2019) The Code of Capital: How the Law Creates Wealth and Inequality, Princeton University Press

 

Capital is the defining feature of modern economies, yet most people have no idea where it actually comes from. What is it, exactly, that transforms mere wealth into an asset that automatically creates more wealth? The Code of Capital explains how capital is created behind closed doors in the offices of private attorneys. In this revealing book, Katharina Pistor argues that the law selectively “codes” certain assets, endowing them with the capacity to protect and produce private wealth.

 

Monday 4 May 2020

Soules, Daniel (2019) Songs of Profit, Songs of Loss: Private Equity, Wealth, and Inequality, University of Nebraska Press

 

From outsourcing to excessive debt taking, private equity investment helped normalize once-taboo business strategies while growing into an over $3 trillion industry in control of thousands of companies and millions of workers. Daniel Scott Soules opens a window into the rarefied world of private equity investing through ethnographic fieldwork on private equity financiers.

 

Monday 8 June 2020

Lee, Ching Kwan (2017) The Specter of Global China: Politics, Labor, and Foreign Investment in Africa, University of Chicago Press.

 

 

China is one of Africa’s top business partners, aggressively pursuing raw materials and establishing a mighty presence in the continent’s booming construction market. Even though Africa has become a popular destination for global foreign investment, China has stirred the most fear, hope, and controversy. Yet global debates about China in Africa have been based more on rhetoric than empirical evidence. Ching Kwan Lee’s book is the first comparative ethnographic study addressing this critical question: Is Chinese capital a different kind of capital?

The post Heretical Finance Reading Group 2020 appeared first on Political Economy Research Centre.

Capitalism: A Journal of History and Economics

Published by Anonymous (not verified) on Sat, 04/01/2020 - 1:33am in

As we are living in the present when tragedy and farce mix and make the past look oracular, a new history of Capitalism must be introduced for the sake of the future. The new year brought with it a much-needed … Continue reading →

At Last – the Missing Arrow!

Published by Anonymous (not verified) on Thu, 19/12/2019 - 10:46pm in

Seven years ago, when Prime Minister Shinzo Abe introduced his bold reflationary economic programme, he cited a medieval legend to explain how it would work. According to the tale, warlord Motonari Mori encouraged co-operation amongst his three sons by demonstrating the difficulty of snapping three arrows bound together.

Taking inspiration, Abe proposed to use the combined strength of his three policy arrows -monetary, fiscal and structural reforms – to re-energize the Japanese economy.

In reality, it was only in the first year that the three policy arrows were bundled together. The first arrow, monetary easing, was deployed on an enormous scale, as newly appointed Bank of Japan Governor Haruhiko Kuroda targeted central bank purchases of 80 trillion yen’s worth of government bonds per year and, later, included equity ETFs in his shopping basket.

The third arrow, structural reforms, produced some eye-catching results too – including rapid job growth amongst senior citizens and women, twenty million more tourists a year, an influx in foreign, mainly Asian workers and better corporate governance and dividend pay-outs.

What went missing after the initial phase of Abenomics was the second arrow, fiscal stimulus. Indeed, the government, under pressure from fiscal hawks in the Finance Ministry, hiked the consumption tax twice, in the spring of 2014 and the autumn of 2019. In both cases, there followed a severe retrenchment in consumer spending. Rather than combining the arrows, the government was using one to batter the other two.

As the chart shows, inflation expectations soared in the early phase of Abenomics, reaching 1.5%, a historically high level for Japanese inflation, then slumped as the fiscal squeeze, including various stealth taxes, strengthened its grip. Although nominal GDP returned to the growth track, there was little momentum in wages, prices and consumer confidence.

ExpectedInflation

Fortunately, change is now in the air. Having deferred to the fiscal hawks one last time, the Abe administration has unveiled a fiscal package amounting to an enormous Yen 26 trillion yen, equivalent to 5% of GDP, focused on natural disaster prevention and other public works.

Japanese fiscal packages / supplementary budgets are never as large as promised. The “real water” (actual new spending, once double-counting and pre-planned outlays are removed) is usually half or less of the headline number. Even so, 40% of Yen 26 trillion would still make a significant impact.

If this proves insufficient to lift the economy, the likelihood is that more will be added later next year. Prime Minister Abe has his legacy to think about. Leaving office in 2021 with the economy sinking back into stagnation would tarnish his achievements and compromise his ability to influence the policies of his successors.

Furthermore, there is a final, highly controversial addition to Abe’s legacy that would cement his place in the history books – revision of Japan’s U.S.-imposed pacifist constitution. The relevant bill would need to pass both of Japan’s houses of parliament by a two thirds majority and, crucially, then be approved by a public referendum, which would be the first in Japanese history. Favourable economic conditions could be vital to getting the public onside.

Japan shift to fiscal policy was prefigured in a press conference given by BoJ Governor Kuroda in early November. His comment that “extra fiscal spending would be more effective than usual because the Bank of Japan could keep interest rates low through yield curve control” harked back to Abe’s original “three arrows” concept.

Kuroda is a Finance Ministry alumnus who had previously backed the tax hikes. It is often said that you can take the man out of the Finance Ministry, but you can never take the Finance Ministry out of the man. Kuroda’s new-found predilection for fiscal stimulus constitutes a Road-to-Damascus type conversion – and an indirect acknowledgement that monetary policy has reached the end of the line. In this, he is reflecting the shifting views of mainstream economists and central bank personnel overseas.

Will it work? Logically, there must be some magnitude of combined fiscal-monetary stimulus that has a significant effect on the real economy, inflation expectations and hence bond yields. If that were not the case, zero-yielding bond markets would be a perpetual free lunch. And indeed the early phase of Abenomics attests that new money injected into the real economy does have a real effect. What was lacking was the political will to persevere long enough.

Japan was hardly alone in succumbing to misplaced fears of a debt crisis and will not be alone in tilting to fiscal stimulus in the next few years. Policy-making in the wake of the global financial crisis of 2008 has been a process of trial-and-error in which several orthodoxies have been debunked. No doubt there will be more surprises to come.

One could be the end of “secular stagnation” and negative interest rates when Motonori Mori’s parable of the arrows is taken to heart and implemented with sufficient determination.

Motonori Mori Motonori Mori

Podcast: Michele Chihara on ‘Behavioral Economic Masculinity’

Published by Anonymous (not verified) on Thu, 19/12/2019 - 8:00am in

Tags 

Blog, finance

In August of this year, Los Angeles-based scholar Michelle Chihara delivered a keynote lecture on “The Rise of Behavioral Economic Masculinity” at the University of Sydney as part of the ongoing FutureFix Asset Economy project.

With a hybrid background in journalism, creative fiction and literary theory, Chihara has played a unique role in communicating the importance of economic discourse across the boundaries of genre and audience. Based at Whittier College, Los Angeles, Chihara is section editor of the celebrated Economics and Finance pages at The Los Angeles Review of Books, which has now become required reading for anyone with a critical interest in the subject, and coeditor of the field-defining Routledge Companion to Literature & Economics (October 2018).

Chihara is
currently working on a book manuscript on behavioural economics— a genre of
economics that straddles the boundaries between academic subfield, public
policy discourse and popular journalism.

As recounted
by Chihara, “behavioral economics emerged as a specific response to debates
within the academic discipline of economics about the theories that grounded
the study of choice and human behavior in society. The (arguably) heterodox discipline
reoriented the epistemological foundations of neoclassical economics,
specifically in relation to its theory of the subject. To oversimplify the
public-facing versions of these arguments, the neoclassical model relied on
assumptions about rational economic agents coordinated by efficient markets
over time, while behavioral economics asserted that the “invisible hand” of the
market was irrational but could be nudged towards reason.”

Rather than
focusing on behavioral economics itself, Chihara’s research traces a cultural
history of the behavioral economic narrative mode as it entered popular
American discourse. “In this mode, friendly masculine explainers tell stories
about the economy, or, the behavior of characters in stories is explained as
fundamentally motivated by the same kind of decision-making that governs the
economy. This mode colonized American popular narratives in the years around
the 2008 financial crisis. The hegemonic financial explainer Michael Lewis, in
his multiple bestselling books about the world of high finance, wrote the
dominant popular narratives about the arrival of big data (Moneyball), the
financial crisis (The Big Short), and the rise of behavioral economics (The
Undoing Project
). In his work, in the movie of The Big Short based
on his book, in podcasts and in the context of this cultural production, I
analyze the epistemological consequences of the friendly explainers’
representation of the world and the narrow horizons of the behavioral economic
mode.”

A podcast of Michele’s keynote can be found here:

Set image: Amos Tversky and Daniel Kahneman, the psychologists behind behavioural economics, who are the focus of Lewis’ The Undoing Project. Credit: Penguin Random House

The post Podcast: Michele Chihara on ‘Behavioral Economic Masculinity’ appeared first on Progress in Political Economy (PPE).

Top 5 Papers November 11 to 18, 2019

Published by Anonymous (not verified) on Tue, 19/11/2019 - 4:41am in

Top 5 Papers

#
Abstract Title
Authors
Affiliations
Downloads

1
Estimation of Theory-Implied Correlation Matrices
Marcos Lopez de Prado
Cornell University – Operations Research & Industrial Engineering
1038

2
Don’t Take Their Word For It: The Misclassification of Bond Mutual Funds
Huaizhi Chen,Lauren Cohen,Umit Gurun
University of Notre Dame – Department of Finance Harvard University – Business School (HBS) University of Texas at Dallas
826

3
Summary of Social Contract Theory by Hobbes, Locke and Rousseau
Manzoor Laskar
Symbiosis International University
569

4
Pathways to Materiality: How Sustainability Issues Become Financially Material to Corporations and Their Investors
Jean Rogers,George Serafeim
Accounting Standards Board Harvard University – Harvard Business School
472

5
Anarchy, State, and Blockchain Utopia: Rule of Law Versus Lex Cryptographia
Thibault Schrepel
Harvard University (Berkman Center)
423

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Microfinance as Poverty-Shame Debt

Published by Anonymous (not verified) on Thu, 14/11/2019 - 8:00am in

Tags 

Blog, finance

Microfinance started as a development intervention in the 1970s and by the 1990s it was the next big thing in development. Dramatic claims about its benefits continue to be made, summed up by Irish rock star Bono’s parable: ‘Give a man a fish, he’ll eat for a day. Give a woman microcredit, she, her husband, her children, and her extended family will eat for a lifetime” (quoted in Bateman, 2014). There’s a lot of great political economy research demonstrating the problems of microfinance, including that of Milford Bateman, so what can we add? We argue that the relationship between microfinance and people’s psychosocial well-being needs far more attention and that the deliberate or otherwise use of shame here and in other development interventions needs to end.

The key to an argument I have just co-authored with David Pedersen and published in a journal article in Emotions and Society derives from microfinance’s group collateral mechanism. If you are already familiar with it, skip this paragraph, otherwise please read on. The standard microfinance model comes from Muhammad Yunus who in the 1970s played a key role in establishing the Grameen Bank in Bangladesh. It offers the poor a source of credit at interest rates that are considerably lower than local loan sharks but still very high – 25 per cent per annum is average. Given the lack of physical collateral, microloans are based on group collateral. Groups typically have five members ‑ generally women as they are more reliable with repayments. Initially one or two members obtain loans, usually specified for a microenterprise, and if these are repaid, other group members become eligible. If a member defaults, other group members apply peer pressure to ensure repayment. Group collateral is said to be behind the 97% repayment rate, which microfinance institutions (MFIs) use to demonstrate the success of the model.

Our new article argues that microfinance increases sentiments of shame in recipients in order to ensure repayment, which negatively impacts defaulters’ psychosocial well-being and is linked to instances of violence and self-harm.We apply contemporary shame theory to microfinance practice, which argues that shame arises from critical self-assessment brought about by a sense of negative evaluation by others. Unlike guilt, which generally results in positive reparative action, shame is about who one is, not what one has done, and thus emerges through feelings of helplessness, deficiency and withdrawal. It often leads to a range of severe and harmful psychological consequences including low self-esteem, anxiety, depression, anger and even suicide. Shame has been found to be quite universal, though local contexts and meanings shape people’s precise experiences and understandings. In collectivist cultures, pressures to conform are said to be greater, as are the consequences of shame, which suggests that the impacts of shame are more pronounced in such societies. This is important as microfinance predominates in developing, and often more collectivist, countries. Further, microfinance targets the poor where a potent poverty-shame relationship is already at play ‑ poverty is a constant source of shame that deepens experiences of poverty and further impacts psychosocial well-being (Walker 2014).

Applying shame theory to microfinance reveals several issues. Group meetings are conducted openly to reduce the risk of mismanagement and corruption, but it also increases group surveillance of borrowers. In this sense, group collateral works deliberately as an “economy of shame” (Karim 2011), as public shaming is an effective way to pressure borrowers into repaying. Public shaming of defaulters usually occurs during weekly group meetings, though in the event of an absentee, group members and MFI officials often approach the residence of the defaulter to demand payment. This personalisation of microfinance debt renders experiences of shame more potent than they would be in the case of transactions with commercial financial institutions.

Yet,
while the public nature of microfinance personalises interactions between
debtor, group and lender, repayment pressure is, at the same time, the product
of the impersonalising effect of debt, which serves to justify actions that
would otherwise be regarded as unethical or intolerable (Graeber 2014). Thus, peer groups do not just
shame people but there are all too frequent reports of defaulters suffering from
frequent verbal abuse, being locked up, having their possessions or house sold off,
or even outright violence to ensure repayment.

Shame-related
violence occurs within households too. Research demonstrates that intimate
partner violence tends to increase when microfinance is first introduced or
during times of stress. This is when men are most ashamed about the downgrading
of their traditional patriarchal position, which does not of course justify
violence!

From
a shame theory perspective, experiencing shame under conditions of extreme
poverty combined with increasing debt is very likely to be linked to poor
mental health and even suicide. Looking for shame-related clues, we searched
academic databases, media reports and grey literature to gather reports of
microfinance-related suicide and self-harm. In India, Bangladesh, Sri Lanka,
and Nigeria we found all too many reports of death by suicide with clear
shame-related clues. The severe harassment aimed at shaming defaulters into
settling debts doubtlessly influenced people’s decision to take their own lives.

Clearly,
microfinance is not the benign tool for financial inclusion and empowerment
that mainstream development organisations proclaim. Rather the practice unintentionally
(perhaps), but nevertheless actively, deploys shaming techniques to maximise
loan repayment. It does so by personalising people’s debt relations and making
them a matter for group concern. But, at the same time, money-debt’s
impersonalising nature facilitates coercive, disciplinary and intolerable actions.
The impacts of the personalisation of responsibility for repayment, combined
with the depersonalised moral obligation of repaying money-debt at any cost
have created a particularly harmful form of poverty-shame. Indeed, shame is so
entwined with microfinance that, read alongside other critical research
highlighting the structural problems of microfinance, the only conclusion can
be that a radical reconsideration of it as a development tool is required.

References

Bateman,
M. 2014. The Rise and Fall of Muhammad Yunus and the Microcredit Model,
International Development Studies Working Paper Series #001 January.

Graeber,
D. 2014. Debt: The First 5,000 Years. Melville House: Brooklyn.

Karim,
L. 2011. Microfinance and its discontents: Women in debt in Bangladesh.
University of Minnesota Press: Minneapolis.

Walker,
R. 2014. The Shame of Poverty. Oxford: Oxford University Press.

The post Microfinance as Poverty-Shame Debt appeared first on Progress in Political Economy (PPE).

‘Morality & modelling in a Wall Street trading room’ – Daniel Beunza – 11th December

Published by Anonymous (not verified) on Wed, 13/11/2019 - 10:30pm in

Morality and Modelling in a Wall Street Trading Room
Daniel Beunza in conversation with Will Davies

6-7.30pm, 11th December

RHB137a, Goldsmiths

 

In the wake of the Global Financial Crisis, policy-makers, citizens and critics demanded to know more about what went on inside financial institutions that generated such devastation. In his new book, Taking the Floor: Models, Morals and Management in a Wall Street Trading Room, Daniel Beunza (Cass Business School, London) draws on more than a decade of close ethnographic research in Wall Street, to look at how economic modelling and moral judgement interact, potentially resulting in predatory lending and systemic risk. Beunza’s book breaks new ground in cultural economy and the social studies of finance, by highlighting this interface of morality and models in markets. At this event, he will discuss the book with Will Davies, Co-Director of PERC, and explore the implications of his analysis for economic sociology, financial reform and sustainable prosperity.

This event is jointly hosted by PERC and the Centre for Understanding Sustainable Prosperity. All are welcome and no registration is required.

For details on how to find Goldsmiths and RHB137a, click here.

 

You can listen to a recording of this event on our Soundcloud here:

The post ‘Morality & modelling in a Wall Street trading room’ – Daniel Beunza – 11th December appeared first on Political Economy Research Centre.

Democratizing Finance: Reducing Inequalities of Income, Wealth and Power

Published by Anonymous (not verified) on Wed, 13/11/2019 - 2:14pm in

Politics & Society has just published a thought-provoking special issue titled “Democratizing Finance”. This interesting collection of papers resulted from a workshop organized in July 2018 by the late Erik Olin Wright as part of his inspiring Real Utopias Project. This … Continue reading →

Fresh audio product

Published by Anonymous (not verified) on Fri, 08/11/2019 - 8:18am in

Just added to my radio archive (click on date for link):

November 7, 2019 Grace Blakeley, author of Stolen, on where financialized capitalism came from and how we could get out of it • Emmanuel Saez, co-author of The Triumph of Injustice, on how the rich got richer while paying less of their income in tax than the working class (Tax Justice website here)

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