Abstract: The present invention provides a system and method that enables users, such as institutional investors and financial institutions, to interactively engage in capital market transactions, including the trading of Over-the-Counter financial products, via the Internet (including the World Wide Web). The system includes a variety of servers, applications, and interfaces that enable users to interactively communicate and trade financial instruments among one another. Interactive communications supported by the system include: requesting price quotes, monitoring and reviewing quote requests, issuing price quotes, monitoring and reviewing price quotes, negotiation between users, acceptance of price quotes, reporting, portfolio management, analysis of financial information and market data, and communications among users via an automated processor. Such automated communications enable connectivity with users' internal, back-end systems to execute automated, straight-through processing, including transaction pricing, payment scheduling and journaling, derivatives trading, trade confirmation, and trade settlement.

Abstract: A dynamic market equilibrium management system is especially adapted for the sale of goods and services through an online buying group (referred to herein as a "co-op`) formed for the specific purpose of purchasing a particular product at (102) by defining a start time, end time, critical mass, any minimum number of units offered, any maximum number of units offered, starting price and product cost curve. As data is gathered from buyers, by means of their making binding purchase offers, the co-op is modified at (108) using the market equilibrium manager, so as to take into account market forces such as supply and demand for the item to be sold and their interrelationship with the purchase price for such item. When used with the online buying group, the dynamic market equilibrium management system permits dynamic, real time yield management decisions based on true market data. A graphical user interface receives user inputs for directly manipulating graphical display of data from a database on a display device and displays feedback dependent variable data on the display device, such as in the form of a changed numerical value in response to the user moving at least one data point in the graphical display.

Abstract: In recent years we have seen a growing number of banking and financial crises in emerging market countries, with great costs to their economies But we now have a much better understanding of why these crises occur and a better idea how they can be prevented Mishkin defines a financial crisis as a disruption in financial markets in which adverse selection and moral hazard problems become much worse, so that financial markets are unable to efficiently channel funds to those who have the most productive investment opportunities As financial markets become unable to function efficiently, economic activity sharply contracts Factors that promote financial crises include, mainly, a deterioration in financial sector balance sheets, increases in interest rates and in uncertainty, and deterioration in nonfinancial balance sheets because of changes in asset prices Financial policies in 12 areas could help make financial crises less likely in emerging market economies, says Mishkin He discusses: - Prudential supervision - Accounting and disclosure requirements - Legal and judicial systems - Market-based discipline - Entry of foreign banks - Capital controls - Reduction of the role of state-owned financial institutions - Restrictions on foreign-denominated debt - The elimination of too-big-to-fail practices in the corporate sector - The proper sequencing of financial liberalization - Monetary policy and price stability - Exchange rate regimes and foreign exchange reserves If the political will to adopt sound policies in these areas grows in emerging market economies, their financial systems should become healthier, with substantial gains both from greater economic growth and smaller economic fluctuations This paper - a product of the Financial Sector Strategy and Policy Department - was prepared for the NBER conference, "Economic and Financial Crises in Emerging Market Economies," Woodstock, Vermont, October 19-21, 2001 The author may be contacted at fsm3@columbiaedu

Abstract: This paper examines how a country’s financial structure affects economic growth through its impact on how corporations raise and manage funds. We define a country’s financial structure to consist of the institutions, financial technology and rules of the game that define how financial activity is organized at a point in time. We emphasize that the aspects of financial structure that encourage entrepreneurship are not the same as those that ensure the efficiency of established firms. Financial structures that permit the development of specialized capital by financial intermediaries are crucial to economic growth.

Abstract: A country's level of financial development and the legal environment in which financial intermediaries and markets operate critically influence economic development. In countries whose financial sectors are more fully developed and whose legal systems protect the rights of outside investors, economies grow faster, industries dependent on external finance expand more quickly, new firms are created more easily, firms have more access to external financing, and firms grow faster. Beck, Demirguc-Kunt, Levine, and Maksimovic explore the relationship between financial structure - the degree to which a financial system is market- or bank-based - and economic development. They use three methodologies: · The cross-country approach uses cross-country data to assess whether economies grow faster with market- or bank-based systems. · The industry approach uses a country-industry panel to assess whether industries that depend heavily on external financing grow faster in market- or bank-based financial systems and whether financial structure influences the rate at which new firms are created. · The firm-level approach uses firm-level data across a broad selection of countries to test whether firms are more likely to grow beyond the rate predicted by internal resources and short-term borrowings in market- or bank-based financial systems. The cross-country regressions, the industry panel estimations, and the firm-level analyses provide remarkably consistent conclusions: · Financial structure is not an analytically useful way to distinguish financial systems. · Financial structure does not help us understand economic growth, industrial performance, or firm expansion. · The results are inconsistent with both market-based and bank-based views. In other words, economies do not grow faster, industries dependent on external financing do not expand faster, new firms are not created more easily, firms' access to external finance is not greater, and firms do not grow faster in either market- or bank-based financial systems. The authors find overwhelming evidence that the overall level of financial development and the legal environment in which financial intermediaries and markets operate critically influence economic development. This paper is a product of Finance, Development Research Group. The study was funded by the Bank's Research Support Budget under the research project Financial Structures and Economic Development (RPO 682-41). The authors may be contacted at tbeck@worldbank.org or ademirguckunt@worldbank.org.

Abstract: Increased globalization of financial and product markets has raised the interest of both market participants and regulators in the quality of financial reporting worldwide. The rise in the volatility of stock returns across the globe in the past couple of years has also been a concern. Could greater transparency in financial statement information reduce volatility and produce more accurate stock valuations? Could more transparent financial statements of financial services firms (for example, banks) improve lending and credit evaluation decisions and contain the risks of a banking crisis? These issues are of central interest to all market participants and, in particular, to the U.S. Securities and Exchange Commission (SEC). The SEC is now considering whether to allow foreign corporations desirous of listing and raising capital in the United States to provide accounting reports prepared according to International Accounting Standards (IAS) instead of U.S. Generally Accepted Accounting Principles (GAAP). Greater openness to international accounting standards and other foreign GAAP would reduce the costs to foreign firms seeking to list their stocks on the U.S. exchanges and raise capital here. This would enhance the competitiveness of the U.S. capital market, thus enabling it to attract a greater share of the global market for financial services. The trade-off is the risk that IAS or foreign GAAP disclosures might be of low quality, which potentially could weaken the stability of U.S. financial markets. Increased risk would make the U.S. capital market less attractive to

Abstract: nologies, particularly the Internet, have profoundly changed the dynamics of financial markets. More people are trading online through the Web instead of using full-service brokerages. According to Jupiter Communications, the $415 billion online brokerage assets in 1998 will grow by more than sevenfold to $3 trillion in 2003 [4]. Investors Combining new technology with established financial market mechanisms. can now trade stocks, access real-time market information, and conduct investment research in ways they could not dream of just a decade ago. However, if we look at the overall process of trading in financial markets (see Figure 1), which includes order entry by investors, order verification and routing by brokerage firms, and, finally, execution and settlement through various markets, online trading has only replaced telephones with the Web and provided a universal interface for individual investors to participate in the financial markets. It has not necessarily improved the overall efficiency level of the market. Beginning several years ago, the U.S. financial markets have been experiencing a profound change that goes far beyond online trading. It is not an exaggerated claim to describe the ongoing development as a fundamental revolution [2]. Recently, we have witnessed the Nasdaq's acquisition of the American Stock Exchange, the phenomenal growth of the Electronic Communications Networks (ECNs), and the introduction of after-hours trading. Looking at all the changes, ECNs have been among the most significant. ECNs are electronic trading systems that can automatically match buy and sell orders without the intermedi

Abstract: A system is provided for automatically generating and displaying market analysis related to financial assets whereby the analysis is provided for substantially all financial assets. The system includes a computer, database accessible by the computer and having stored thereon historical and real time data relating to a financial asset, and software executing on the computer for generating and displaying market analysis. The market analysis may, but not necessarily, include historical and real time data, a measure of liquidity and volatility of a financial asset, a measure of a financial asset's historical performance, an analysis of a financial asset's return in relation to its risk, and computed correlation coefficients and analysis of relationships between a financial asset and its market or market sectors.

Abstract: 1. Introduction: Asymmetric Information in Financial Markets 2. Adverse Selection and the Market for Retail Financial Services 3. The Structure and Regulation of Insurance Markets 4. Capital Market Microstructure and Regulation 5. Information Revelation, Transparency, and the Regulation of Insider Dealing 6. Security Research and Regulation 7. The Equity Market and Managerial Efficiency 8. The Theory of Financial Intermediation 9. Convexity, Excessive Risk, and Regulation of Banks 10. Bank Runs, Deposit Insurance, and the Role of the Regulator 11. Bank Regulation in Practice 12. Financial Structure and Regulation

Abstract: Foreword In 1998, the Bank of England's Centre for Central Banking Studies (CCBS) under its then Director, Professor Maxwell Fry, began a programme of Academic Workshops. These workshops aim to explore a topic of relevance to central banking by inviting around 20-25 central bankers for discussions with academics, international policy makers and fellow participants over a period of a week. Following a workshop three or four of the participating central bankers stay on at CCBS to take part in a related project, usually lasting around ten weeks. In 1999 the CCBS hosted three academic workshops. The first, in January, looked at " Financial Market Data for International Financial Stability " and the second, in April, studied " Lessons for Central Bankers from Recent Financial Crises ". The final academic workshop of the year, and the one which prompted this volume, took place in September under the title " Central Bank Responsibility for Financial Stability ". It is a daunting task to do justice to such a title, given the wide range of topics that it encompasses. And financial stability is not like monetary policy – there is no single measurable indicator that the authorities can benchmark their activities against. Look at central banks around the world and you will find a spectrum of responsibilities in this area. What all central banks do have in common is an interest in financial stability as a public policy objective, as a key factor influencing macroeconomic performance and the potential for systemic disturbances. Various structural factors can affect financial stability, and public authorities have a range of tools they can use to influence these structural factors and to address crisis situations when they occur. Many of these factors and tools were discussed during the September workshop, but not all the issues raised could be followed up by the subsequent project team. Given the scope of potential topics and the short timetable, the project team had to narrow down their focus. In doing so, the team have attempted to address topical issues while trying to avoid overlap with recent and prospective work by international financial committees and working groups. The theme linking all four papers is that of the provision of safety nets (lender of last resort (LOLR) and deposit insurance) and the promotion of 2 market discipline. The papers have focused on developed countries but the issues raised are relevant to all countries in …

Abstract: Analogous to the Richter scale for earthquakes, we introduce the Scale of Market Shocks (SMS), an "event" scale to quantify the size of shocks in financial markets. It is based on price volatilities and computed by integrating volatilities over time horizons ranging from 1 hour to 42 days. The SMS is computed using quality high frequency market data and can be constructed for any market. We compute the SMS for the foreign exchange market. For two major FX rates, we study the relation between SMS peaks and major "world events". We measure also the correlation between the Scale of Market Shocks index and the size of the subsequent price movements and show a high correlation for short time intervals.

Abstract: RAPID TECHNOLOGICAL CHANGE, conglomeration, mergers, and globalization are rocking the financial industry here and abroad. In this paper we primarily address the implications of globalization for prudential regulation of firms in the financial industry. However, given the importance of the other three forces—and the extent to which they reinforce or are by-products of the trend toward globalization—we address them as well. Our bottom line is that regulators at both the national and international level will have to respond increasingly to market-driven changes. In particular, as financial institutions delve into a wider range of products and activities, policymakers almost certainly will have to decide whether they want to establish a single regulator to oversee all types of financial activity or whether they will be content with the segmented regulatory system long in place in some countries, such as the United States. We note that a trend outside the United States seems to be under way toward creation of a single national financial regulator, independent of the central bank, a development we cautiously support.

Abstract: A computer implemented method for identifying aberrant behavior of a financial instrument including: retrieving from a source of market data, closing price, volume and number of transactions conducted for the financial instrument in a selected trading session; recording in computer memory, the closing price, volume and number of transactions conducted for the financial instrument in the selected trading session; identifying a plurality of time periods of different sizes, each of said time periods terminating with the trading session of the financial instrument immediately preceding the selected trading session; obtaining and recording the average and standard deviation of the closing price, volume and number of transactions during each of the time periods; determining whether each of the closing price, volume and number of transactions differs from the average of the corresponding component during each of the time periods by a selected number of standard deviations and for each case in which such a difference is sufficiently large, recording an associated aberrant flag; counting the number of aberrant flags; and identifying and reporting behavior of the financial instrument as aberrant, or not aberrant, based on the total number of aberrant flags counted.

Abstract: A well-developed financial intermediation industry increases domestic savings, efficiently allocates investment resources to the most productive uses in the economy and increases the rate of economic growth. In the Soviet economy the banking system served as a means of collecting household savings and a means of distributing centrally determined capital grants to enterprises. Banks then audited enterprise financial activities to ensure compliance to the financial plan. After a decade the transition from the Soviet banking system to a market oriented banking system is incomplete and fraught with uncertainty. While the number of financial institutions has increased dramatically, the state sector still dominates financial sector activity, the legal and regulatory framework is incomplete, information necessary for risk management is of poor quality and policy makers and regulators have been slow to act to improve intermediation services. While significant progress has been made, the commonly recognized characteristics of a sound financial system are not yet met.

Abstract: The present invention provides a user interface to facilitate the development of a comprehensive strategy that financial system can use to determine if market data satisfy the criteria in a strategy. The user must enter information, such that a detailed strategy, associated with a transaction object, can be developed. The user interface can also be used to allow a user to specify an action associated with said strategy. The user interface receives information from the user, which include source type of information objects on the market to be ignored and limiting parameters used to limit the number of shares and may provide the user a preliminary graph which illustrates a simulation of the manner in which the user policy is implemented by use of historical data. The user interface can use the information provided by the user, to create a rule that must be transmitted to a financial system to be analyzed by using market data.

Abstract: Data on the net sources of finance for France are used to argue that the French financial system was never aneconomie d’endettement, and to question the idea that France has converged on the Anglo-Saxon model under the impact of financial innovation and deregulation since the early 1980s. These data and additional qualitative information suggest that in the French financial system firms and their managers have more autonomy and more control over the allocation of financial resources than their counterparts in the Anglo-Saxon countries or Japan, and the French system should not therefore be seen as a mere ‘halfway-house’ between these two polar types.

Abstract: This paper studies the impact of the financial and economic liberalization in Tunisia since the mid-1980s on the financial structure and behavior of the corporate sector. We analyze the effect of financing constraints, due to market imperfections as well as credit allocation policies, on the determinants of investment and indebtedness of the corporate sector. A number of firm characteristics are found to imply significantly different financing constraints: government ownership, trade orientation, and size of firm. We also investigate the impact of financial liberalization on the economic performance of firms. Our results show a strong, mostly positive, effect of financial liberalization on the economic performance, as well as on financial structure, investment and financing behavior of Tunisian firms.

Abstract: The international financial crises that have been a feature of the midto-late 1990s, like others before, have given prominence to the need for good quality and timely economic and financial data. A view has emerged that better data provision allows investors to make better informed investment decisions, as well as highlighting potential problems at an early stage so reducing the likelihood of sudden shocks and hence dislocation of capital flows with a consequential impact on the real economy.1 In 1993, new international standards for the measurement of national accounts and the balance of payments were published, followed by the development of the IMF’s data dissemination standards in the mid-1990s. However, as the 1990s come to an end, the continued explosion of capital flows, the associated growth of new instruments, and the recent international financial crises creates a new challenge for those responsible for data provision both at the national and international level.

Abstract: The study reviews the developments in the financial markets after 1996-97 economic, and financial collapse in Bulgaria, and aims at assessing financial restructuring, adjustment to a currency board environment, and its regulatory framework vis-�vis the European Union (EU), while identifying key, outstanding financial policy issues for consideration in meeting EU requirements. First, the country's financial sector is analyzed in the context of broader macroeconomic developments, such as inflation, output growth, and fiscal policy. Secondly, the study reviews the institutions, and rules of the banking sector, considerably strengthened, under a fairly, advanced privatization process. However, the study reveals that regardless of the fact that regulatory, and supervisory foundations are largely in place, capital markets are still inactive, and unregulated. But, the financial infrastructure continues to evolve in accordance with technological improvements, and, diversification of payment instruments is underway. Nonetheless, it is emphasized that the privatization of the financial services industry, needs to be complete, and focused on maintaining a stable financial system, recommending key measures to strengthen financial markets, while developing EU standard rules.

Abstract: Using long-run data and a VAR approach, the study investigates whether US and UK stock markets have experienced excessively volatile prices and excessively high returns Present value models, developed in a constant and non-constant risk CAPM framework, are used as benchmarks with which to compare market data The results show that when a time-varying risk premium is incorporated into the analysis, the view that historical prices have been consistently too volatile and their returns too high cannot be supported According to risk-adjusted present value relationships, our evidence also suggests that the recently reported overvaluation of markets is unfounded

Abstract: The high growth rates experienced in Ireland over the last 10 years has resulted in a tightening of the labour market which is reflected in the number of unfilled vacancies reported by firms. At the same time wage inequality has increased leading to greater demands being placed on the government to tackle social exclusion. In response to these issues, recent governments have proposed a range of policies involving direct intervention in the labour market. Effective implementation of these policies requires careful monitoring and evaluation of their effects. In this paper I examine the procedures currently available for evaluating labour market interventions. The results of recent evaluations of minimum wages laws, reform of the benefit system and changes in working-time conditions are used to illustrate the methodologies involved. I also describe the data requirements of these methodologies and examine the currently available Irish labour market data in this light.

Abstract: This note reviews the theories as to why financial crises spill over across national boundaries. We discuss alternative frameworks ranging from bilateral trade links to more complex financial interconnections via banks and other investors. We review the evidence on which channels of contagion mattered most in the numerous financial crises episodes of the 1990s.

Abstract: The study examines whether the nature of financial information provided at Web sites varies across firms with differences in three information clienteles: individual investors, financial analysts and the business press. Our findings are consistent with theories that link effective and persuasive information content (subjective/benefit-related versus objective/attribute-related) with the expertise level of the consumer (novice versus expert). Specifically, we find that companies with higher levels of individual ownership are more likely to provide information which is benefit-related and suitable for users with relatively low levels of financial expertise. Conversely, information emphasized by firms with greater analyst following is generally objective, attribute-related data, as expected for users with greater expertise. Companies with higher press following tend to provide information which exhibits attributes of both benefit- and attribute-related data.

Abstract: A system for automated trading of U.S. Treasury, Liquid Agency, and Zero Coupon STRIP financial instruments comprises an updatable system database; an updatable offering inventory database which receives real time price and quantity information pertaining to each financial instrument from a market data feed; and a system proprietor operative to determine a national best bid and offer price and a derived price for each financial instrument in the offering inventory. The system proprietor applies a price improvement process to a trade in the event that an offsetting trade occurs, and updates the system database and offering inventory to reflect transactions executed by the system. Advantageously, the system provides users with a mechanism to provide the best price at the time of execution. Historical data is utilized to (i) price securities that are spread off a benchmark where an active quote for a particular security is unavailable, and (ii) retrieve prices for future analysis. The global fixed income market is thereby provided with a system that can sustain long term industry needs and readily adapt to a changing environment.

Abstract: However, there is another, indirect, function of a financial system, which is crucially important in affecting the growth performance of an economy. In a modern market economy, where economic decisions are taken in a decentralized way by numerous (and heterogeneous with respect to their fields of operation and organizational structure) economic decision-making units, economic policy is conducted by sending signals to affect their behavior. Therefore the success of economic policy depends not only on the appropriateness of the decisions taken by the policy making authorities but also on the ability of the remaining economic decision-making units in processing these policy signals.