Abstract: Microfinance institutions have proved the possibility of providing reliable banking services to poor customers. Their second aim is to do so in a commercially-viable way. This paper analyzes the tensions and opportunities of microfinance as it embraces the market, drawing on a data set that includes 346 of the world's leading microfinance institutions and covers nearly 18 million active borrowers. The data show remarkable successes in maintaining high rates of loan repayment, but the data also suggest that profit-maximizing investors would have limited interest in most of the institutions that are focusing on the poorest customers and women. Those institutions, as a group, charge their customers the highest fees in the sample but also face particularly high transaction costs, in part due to small transaction sizes. Innovations to overcome the well-known problems of asymmetric information in financial markets were a triumph, but further innovation is needed to overcome the challenges of high costs.

Abstract: Capitalizing on recent improvements in the availability of cross-country financial sector data, this paper proposes a standard methodology for benchmarking the policy component of financial development. Systematic controls are introduced to isolate main structural country characteristics and a principal components analysis is used to help identify a parsimonious set of ten "core" outcome indicators from a broader set of twenty seven potential indicators covering different dimensions of development in both financial institutions and financial markets. Such a broad-based approach helps reveal important determinants and regularities of the process of financial development. The paper also identifies some of the main data gaps that will need to be filled to allow further progress in financial benchmarking looking forward.

Abstract: The single most important policy-induced innovation in the international financial system since the collapse of the Bretton-Woods regime is the institution of the European Monetary Union. This paper provides an account of how the process of financial integration has promoted financial development in the euro area. It starts by defining financial integration and how to measure it, analyzes the barriers that can prevent it and the effects of their removal on financial markets, and assesses whether the euro area has actually become more integrated. It then explores to which extent these changes in financial markets have influenced the performance of the euro-area economy, that is, its growth and investment, as well as its ability to adjust to shocks and to allow risk-sharing. The paper concludes analyzing further steps that are required to consolidate financial integration and enhance the future stability of financial markets.

Abstract: For market discipline to be effective, market factors such as changes in firm equity and debt values and returns, must influence firm decision making. In banking, this can occur directly via bank management or indirectly though supervisory examinations and oversight influencing bank management. In this study, we investigate whether equity market variables can provide timely information and add value to accounting models that predict changes in bank holding company (BOPEC) risk ratings over the 1988–2000 period. Using a variety of equity market indicators, the findings suggest that one-quarter lagged market data adds forecast value to lagged financial statement data and prior supervisory information in the logistic regressions. Furthermore, using extensive out-of-sample testing for the years 2001–2003, we find: (1) that multiple models estimated over different phases of the business and banking cycles are superior to a single model for forecasting BOPEC rating changes; (2) that equity data adds economically significant power in forecasting BOPEC rating upgrades and performs well for identifying no changes; (3) that for downgrades, the accounting model forecasts the best; (4) that modeling the three possible risk ratings categories simultaneously (downgrade, no change and upgrade) minimizes both Type I and Type II classification errors; and (5) that using multiple models to forecast risk ratings enhances the overall percentage of correct classifications.

Abstract: Systems and methods are disclosed for monitoring consumer financial data Clients such as financial institutions or debt buyers identify one or more consumers for which monitoring is desired Historical financial data, such as credit data, is periodically compared with current financial data according to a number of logical rules or financial triggers The financial triggers correspond to improvements in a financial position of a consumer When a financial improvement is determined according to the logical rules, an alert is generated and sent to the client, allowing the client to adjust a collection strategy

Abstract: In this paper we have proposed a stock market analysis system that analyzes financial news items to identify and characterize major events that impact the market. The events have been identified using latent Dirichlet allocation (LDA) based topic extraction mechanism. These topics have been thereafter analyzed in conjunction with actual market data to understand their impact on the market. A prediction system has been proposed which can predict whether the stock market will fall or rise, based on news items.

Abstract: Stable macroeconomic condition is the prerequisite for sound and healthy performance of the financial sector in the country The study explores the impact of macroeconomic environment on financial sector’s performance in Pakistan In doing so, it employs the Fully Modified Ordinary Least Square (FMOLS) approach for cointegration (long-run association) and error correction method for short-run relation Also Ng-Perron test is used to find out the integrating order of the running variables The present paper reveals that previous policies of financial institutions and economic growth have improved the level of financial development Increases in both government spending as well as foreign remittances push the performance of the financial sector upwards Contrarily, the efficiency of financial markets deteriorates on account of rising inflation due to its damaging impact, while literacy rate has a negative influence on the banking sector in Pakistan Trade openness along with improved capital inflows open new directions to improve the development of financial markets in the country Further, performance of the financial sector is attached to qualified institutions The high savings rate declines the efficiency of banking sector and political instability retards the performance of financial markets

Abstract: We assess the impact of the euro on financial integration. We document how the single currency has re-shaped financial markets and international investment patterns. We address the macroeconomic implications of enhanced financial integration, with a particular focus on the shift in net capital flows and the extent of international risk sharing. Finally, we outline the challenges posed by increased financial integration for the ECB and other European policymakers.

Abstract: In recent years, people have begun to pay more and more attention to the effect of news on financial instrument markets (i.e., the markets for trading financial instruments). Researchers in the financial domain have conducted many studies demonstrating the effect of different types of news on trade activities in financial instrument markets such as volatility in trade price, trade volume, trading frequency, and so on. In this paper, an ontology for knowledge about news regarding financial instruments is provided. The ontology contains two parts: the first part presents a hierarchy framework for the domain knowledge that primarily includes classes of news, classes of financial instrument markets participants, classes of financial instruments, and primary relations between these classes. In the second part, a causal map is used to demonstrate how classes of news are causally related with classes of financial instruments. Finally, a case concerning the ''9/11 American terror attack'' is analyzed. On the basis of the ontology, it is first comprehensive to understand the knowledge about news in financial instrument markets; second, it helps building trading models based on news in the financial instrument markets; third, systems (e.g., systems for prediction of stock price based on news, systems for supporting financial market participants to search relevant news) design and development in this domain are facilitated and supported by this ontology.

Abstract: This paper reviews the literature on one of the most meaningful concepts in modern behavioural finance, the overconfidence phenomenon. Overconfidence is presented as a well-developed psychological theory, with main facets comprising miscalibration, betterthan- average effect, illusion of control and unrealistic optimism. The primary applications of overconfidence in contemporary finance are analysed, from the perspective of financial markets and corporate behaviour. Experimental studies, formal models and analyses of market data demonstrate that overconfidence at least partially solves some financial market puzzles that cannot be accounted for by standard economic theory. Overconfidence in the corporate context may affect not only a company’s internal financing structure, but also its interactions with other market participants through merger and acquisition activity.

Abstract: In November 2007, the Markets in Financial Instruments Directive (MiFID) came into full effect. MiFID is the most significant European Union legislation for investment intermediaries and financial markets ever introduced. In general terms, MiFID is designed to provide a common, harmonized set of rules for the provision of investment services in each of the EU member states. A key feature of this legislation is the concept of a passport by which firms (e.g. investment banks, broker dealers, stock exchanges and alternative trading systems) are regulated primarily by their home state but can operate in other EU host states. MiFID also removes the so-called concentration rule, allowing greater competition for order flow across trading venues. This paper shows how new requirements concerning best execution, client classification, systematic internalisers, pre- and post-trade transparency, and the ownership of market data have created enormous new business opportunities. This paper argues that MiFID has already succeeded in its goal of introducing greater competition, as already made clearly evident by the early success of new trading venues such as Instinet Chi-X and new market data providers such as Markit BOAT. Further exchange consolidation, more sophisticated smart order routing, and new entrants such as BATS Europe, Nasdaq OMX Europe, and Project Turquoise suggest that European financial markets are on the cusp of further major (and unpredictable) changes. In addition to exploring developments in Europe, the paper explores the impact of international exchange linkages, such as NYSE Euronext, and contrasts the principles-based approach of MiFID with the rules-based approach of the SEC's RegNMS.

Abstract: Despite its importance as an investment destination and major exporting country, china is considerably less integrated into the global financial system than might be expected. The lack of integration stems in part from China's focus on its domestic goals of balancing growth and stability while it transforms and modernizes its economy. Substantially more financial integration can be expected in coming decades, however, as China invests more abroad, develops its domestic financial system, makes its exchange rate more flexible, and further relaxes its capital controls.

Abstract: Financial markets are markets for information. As such, they are directly influenced by advances in information dissemination, storage, and processing associated with the commercial development of the Internet. On the other hand, given the long-standing centrality of information in financial markets, the consequences of the Internet for financial markets can be understood as evolutionary rather than revolutionary. This article provides a framework for understanding how the historical interplay between information technology and human capital has influenced financial market structure. In doing so, it sheds light on the recent reorganization of financial markets. The daring reader might infer implications for reorganization of product markets where the impact of the Internet is more abrupt.

Abstract: Longitudinal Analysis of Labor Market Data presents a set of papers by leading scholars on methods for analysing the longitudinal data that is available on numerous topics of interest to social scientists. Because many sources of longitudinal data record labour market phenomena such as unemployment, labour supply, earnings mobility, job turnover and participation in training programmes, all of the papers collected in this volume focus on models of the labour market. The main methodological points, however, are more general and apply to such diverse areas as demography, life science analysis and training evaluation, to name only a few, potential avenues of application. The book contains important methodological contributions to the emerging field of longitudinal analysis and is of interest to a wide range of social scientists.

Abstract: Innovation in financial markets, spurred to a significant extent by developments in finance theory and financial econometrics, has played a critical role in spurring economic growth. However, the current turmoil in financial markets raises fundamental questions about the nature of financial innovation and the role of policymakers in maintaining financial stability. This paper explores these questions, focusing on the complexities of modeling financial risk and the potential trade-off between policies aimed at combating short-run financial instability on the one hand and the potential financial market distortions and moral hazard that can result from such policies on the other. Copyright The Author 2008. Published by Oxford University Press. All rights reserved. For permissions, please e-mail: journals.permissions@oxfordjournals.org., Oxford University Press.

Abstract: Decentralization can complement market liberalization by strengthening incentives of agents to respond to market signals. However, in China banks centralized lending authority following financial reforms in the mid-1990s. We present a new theory of financial decentralization in which centralization provides a credible commitment not to refinance bad projects by reducing available information. Using data from Chinese rural financial institutions, we empirically assess the determinants of decentralization and the likelihood of collateral seizure, strongly confirming the predictions of the refinancing model. We conclude that weak institutional environments may limit the efficiency of financial intermediation despite financial market liberalization.

Abstract: In this paper, we analyze the relationship between international financial integration and macroeconomic volatility. Looking at a panel of 90 countries over the period 1960-2000, we find that domestic financial conditions matter when assessing the impact of financial integration on consumption growth volatility. More specifically, consumption growth volatility is found to increase with the degree of financial integration in countries with low level of financial development and to decrease in countries with high level of financial development. When measuring domestic financial conditions by the share of private credits to GDP, the threshold level of financial development above which financial integration yields consumption smoothing benefits is estimated to be around 60%-70% GDP.

Abstract: Stock traders consider several factors in making decisions. They also differ in the importance they attach to each of these objectives. This requires a tool that can provide an optimal tradeoff among different objectives, a problem aptly solved by a multiobjective optimization (MOO) system. However, the application of MOO to stock trading is very limited when compared with its existing applications in the fields of stock modeling and prediction, portfolio selection and portfolio optimization. Similarly, only a few real life applications have been proposed for multiobjective particle swarm optimization(MOPSO), an MOO algorithm based on particle swarm optimization which has experienced an increased popularity in recent years. In this paper, we present an application of MOO, specifically, of MOPSO, to stock trading. The system, using historical end-of-day market data, utilizes the trading signals from a set of financial technical indicators in order to develop a trading rule which is optimized for two objective functions, namely, Sharpe ratio and percent profit. The performance of the system was compared to the performance of the technical indicators and the market itself. The results show that the system performed well against the 5 technical indicators under study, outperforming them in terms of both objective functions in 3 training and testing periods. The system also performed competitively against the market. The system provided a diversity of solutions for the two objective functions and is found to be robust and fast. These results show the potential of the system as a tool for making stock trading decisions.

Abstract: Over recent years the global market for sustainable commercial property has been growing in importance, with rapid growth occurring overseas that has led to substantial changes in the property markets. The New Zealand property industry has been recently introduced to the concept of sustainability, and although still at an early stage is already noticing the accelerating uptake of sustainability in the industry. Although certain measures have been taken by the New Zealand Green Building Council and government mandates, there remains still a common assumption that there is considerable hesitation and skeptism in the market from both an investor’s and a building owner’s perspective. The research presented in this paper reports on the results of an investigation into the market perception toward sustainable buildings from the investment community in New Zealand. Property developers and investors from New Zealand were surveyed about their perception of sustainable buildings in New Zealand and their actions with regards to their own commercial portfolios, as well as the impact sustainability is having upon investment decisions. This paper presents the results of research conducted into the relationship between the elements of sustainability and the market value of an office building. The paper provides an insight into the rapidly evolving area of sustainability and office buildings, with the emphasis placed on the valuation process that seeks to assess a hypothetical purchaser’s perspective of this relationship. [Note: The lead authors’ doctoral thesis is focused on investigating the relationship between market value and the impact of sustainable attributes in commercial office buildings. A three-pronged approach is being used to investigate this relationship, investor surveys, valuer surveys and examination of market data. This paper provides the initial findings from the investor surveys in New Zealand.]

Abstract: This paper studies the decision-making in a stylized supply chain where a supplier sells a single product to a news-vender retailer,who is budget-constrained and can get financial service from the competitive financial market.In such a setting,we study how the competition in the financial market,where each financial institution is supposed to be risk-neutral affects the operation and financial decisions in supply chain when the budget-constrain- ed retailer receives financial service from the competitive financial market.Our results show that financial service would create value in the supply chain where parties have small-medium budget constraints,and the competition of financing service would affect the decisions of the supplier,retailer,and financial institution.In this paper,we also provide some insights for the practice in the supply chain where parties are budget-constrained.

Abstract: What is the output of financial institutions? And how can we measure their nominal and, more importantly, real value, especially since many financial services are provided without explicit charges? This paper summarizes the theoretical result that, to correctly impute the nominal value of implicit financial service output, the "user cost of money" framework needs to be extended to take account of the systematic risk in financial instruments. This extension is easy to implement in principle: One can continue using the current imputation procedure, and the only change needed is to adjust the reference rates of interest for risk. The paper clarifies why the risk-related income is not part of the output - or equivalently, why risk bearing is not a service - of financial institutions. The paper next argues that, to measure real output, one must first explicitly specify and define the economic services produced by financial firms, a step that is absent from the "user cost of money" theory. Once it is established that only financial services, and not instruments, should be counted as the value added of financial firms, it follows that the quantity of services provided by these institutions is not necessarily in fixed proportion to the volume of instruments. The corollary is that the implicit price of financial services bears no definitive relationship with any reference rate. Instead, price deflators for financial services should be constructed using methods similar to those used for other services.

Abstract: This study employs a recent national survey of over 1100 British financial firms to ascertain the determinants of financial innovation and their sales success using Logit and generalised Tobit models. We find the likelihood of financial innovation rises with the size of financial firms, employee education, greater expenditure on research and development, the availability of finance, and the extent to which firms cooperate with each other. R&D, cooperation, and appropriability are the main variables driving the success of financial innovation, measured by the percentage share of innovations sold. Firms in London/the south have a significantly greater tendency to innovate, though Scotland also does well. Stock broking, fund management and related activities are more innovative than firms in the financial intermediation and pension/insurance sectors.

Abstract: We study the effects of financial structure and financial development on banking fragility. We develop our study by using fixed-effects panel-data regressions and by controlling the effects of certain banking indicators. We use individual and principal-components indicators of the activity, size and efficiency of intermediaries and markets. The indicators include data for 211 countries between 1990 and 2003. Our main findings suggest that banking stability is enhanced in market-based financial systems. Financial development reduces it. However this fragility-enhancing effect can be unveiled only when we account for financial structure. Thus, financial structure and development jointly matter to assess banking fragility.

Abstract: A method and system for monitoring market data are disclosed. The method includes collecting real time data that is related to conditions of a trading market. Collection occurs at an edge server associated with a liquidity destination trading at least one financial article of trade. In addition, the real time data that is collected is also normalized into a standard form. A user defined criteria is received from a centralized hub. The user defined criteria defines a particular event in the condition. It is then determined when a condition in the trading market matches the event. A response is generated providing notification of the occurrence of the event. The response is sent to the centralized hub for distribution to a user associated with the user defined criteria.

Abstract: A web based financial management system, allowing access to personal financial data through a web browser to server based software. The system supports access of data from the web from financial institutions such as credit cards, lenders, banks, and service providers, such as utilities. An important feature is a cash flow management system that allows for detailed future projections based on both historical, and both recurring and non-recurring future known and estimated transactions. A unique discussion element allows for focused discussed of specific elements of the financial schedule with collaborators.

Abstract: John R. Freeman, University of Minnesota The direction of global economic change in this century is relatively clear. Stateowned enterprises are being privatized and new capital markets are emerging in many countries. These and existing markets are becoming increasingly liberalized and interconnected. A truly global financial system is emerging, one in which huge sums of money and capital are continuously and rapidly transferred from one location to another. This system is composed, in part, of large, privately-owned financial institutions. These institutions construct and rapidly adjust portfolios composed of assets from many locations with the aim of maximizing a world-wide rate of return. They and the intermediaries through which they deal constantly are inventing new financial products and services as well as new technologies with which to process their transactions. The information revolution contributes to these developments. We care about privatization and economic globalization because of the widespread belief that markets enhance the welfare of people throughout the world. We attribute to markets the tremendous rise in the standards of living of many of the world’s inhabitants in the last two hundred years (see Figure 1). In the minds of people who are