Pub Date : 2022-04-20DOI: 10.1108/jfrc-11-2021-0099
Natalya Schenck, Lan Shi
Purpose
The purpose of this study is to examine the impact of supervisory Leveraged Lending Guidance (LLG) (2013–2014) on risk and structure of syndicated loans arranged by the largest US banks with participation of nonbank lenders.
Design/methodology/approach
This study uses supervisory shared national credit loan-level data from 2010 to 2015 and DealScan loan origination data and use linear regressions with clustered standard errors.
Findings
This study finds that the impact of the LLG was mixed. Incidence and risk of leveraged lending declined following the Guidance, as reflected in lower nonbank syndicate participation. However, the covenant protections weakened and loan spreads at origination declined. This study also provides evidence that some risky lending originations shifted to nonbank entities outside of the banking regulatory environment.
Originality/value
This study contributes and expands literature on the impact of regulatory guidance on loan risk, terms and structure, focusing on nonbank participation in syndicated commercial loans.
{"title":"Impact of Leveraged Lending Guidance: evidence from nonbank participation in syndicated loans","authors":"Natalya Schenck, Lan Shi","doi":"10.1108/jfrc-11-2021-0099","DOIUrl":"https://doi.org/10.1108/jfrc-11-2021-0099","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>The purpose of this study is to examine the impact of supervisory Leveraged Lending Guidance (LLG) (2013–2014) on risk and structure of syndicated loans arranged by the largest US banks with participation of nonbank lenders.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>This study uses supervisory shared national credit loan-level data from 2010 to 2015 and DealScan loan origination data and use linear regressions with clustered standard errors.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>This study finds that the impact of the LLG was mixed. Incidence and risk of leveraged lending declined following the Guidance, as reflected in lower nonbank syndicate participation. However, the covenant protections weakened and loan spreads at origination declined. This study also provides evidence that some risky lending originations shifted to nonbank entities outside of the banking regulatory environment.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>This study contributes and expands literature on the impact of regulatory guidance on loan risk, terms and structure, focusing on nonbank participation in syndicated commercial loans.</p><!--/ Abstract__block -->","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":"1 4","pages":""},"PeriodicalIF":0.9,"publicationDate":"2022-04-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138496808","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-04-18DOI: 10.1108/jfrc-09-2021-0079
F. Ajide, T. Ojeyinka
Purpose One of the main obstacles to the flourishment of African entrepreneurship is financial constraint. Existing studies on the nexus between entrepreneurship and financial development are inconclusive, while the position of African economies remains unknown. The purpose of this paper is to empirically study the impact of financial development on entrepreneurship in Africa. Design/methodology/approach This study utilizes data of 20 selected countries in Africa over a period of 2006–2017. International Monetary Fund (IMF) data on broad-based financial development were combined with World Bank Entrepreneurship database. This study uses system generalized methods of moments (system GMM) technique and the recently developed dynamic panel threshold based on dynamic panel GMM. Findings The following findings emerged: financial development does not spur entrepreneurship in Africa; there is a threshold at which financial development improves the level of African entrepreneurship; and the tendency of financial development to improve the level of entrepreneurship is conditioned on conducive business regulation and strong institutional quality at a specific threshold value. Originality/value This is one of the few studies that examines the impact of financial development on entrepreneurship in Africa. This study shows that the financial development relies on the effectiveness of regulatory environment to extend loan and other financial services to new firm entrants. In addition, the results of this study reveal that the assumption of linearity in the nexus between finance and entrepreneurship is not tenable for the case of Africa. Therefore, policymakers should keep on developing African financial system to accelerate the pace of entrepreneurship development.
{"title":"Financial development and entrepreneurship: insights from Africa","authors":"F. Ajide, T. Ojeyinka","doi":"10.1108/jfrc-09-2021-0079","DOIUrl":"https://doi.org/10.1108/jfrc-09-2021-0079","url":null,"abstract":"\u0000Purpose\u0000One of the main obstacles to the flourishment of African entrepreneurship is financial constraint. Existing studies on the nexus between entrepreneurship and financial development are inconclusive, while the position of African economies remains unknown. The purpose of this paper is to empirically study the impact of financial development on entrepreneurship in Africa.\u0000\u0000\u0000Design/methodology/approach\u0000This study utilizes data of 20 selected countries in Africa over a period of 2006–2017. International Monetary Fund (IMF) data on broad-based financial development were combined with World Bank Entrepreneurship database. This study uses system generalized methods of moments (system GMM) technique and the recently developed dynamic panel threshold based on dynamic panel GMM.\u0000\u0000\u0000Findings\u0000The following findings emerged: financial development does not spur entrepreneurship in Africa; there is a threshold at which financial development improves the level of African entrepreneurship; and the tendency of financial development to improve the level of entrepreneurship is conditioned on conducive business regulation and strong institutional quality at a specific threshold value.\u0000\u0000\u0000Originality/value\u0000This is one of the few studies that examines the impact of financial development on entrepreneurship in Africa. This study shows that the financial development relies on the effectiveness of regulatory environment to extend loan and other financial services to new firm entrants. In addition, the results of this study reveal that the assumption of linearity in the nexus between finance and entrepreneurship is not tenable for the case of Africa. Therefore, policymakers should keep on developing African financial system to accelerate the pace of entrepreneurship development.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":" ","pages":""},"PeriodicalIF":0.9,"publicationDate":"2022-04-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47396957","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-04-11DOI: 10.1108/jfrc-10-2021-0087
Tom Loonen, Ronald Janssen
Purpose With the introduction of the Markets in Financial Instruments Directive (MiFID), financial institutions are faced with many investor protection provisions; this has a major impact on the day-to-day operations of private banks, which provide investment services to predominately retail or non-professional investors. The purpose of this paper is to determine how MiFID provisions regarding investor protection with respect to suitability are complied with in practice by private banks. Design/methodology/approach Based on interviews with 25 representatives of private banks from 10 different European Union (EU) member states, the researchers have determined how these provisions are fulfilled and associated risks mitigated. Mapping out the suitability requirements of MiFID and comparing them with how these have been operationalised, we arrive at the question of whether this leads to a level playing field and investor protection by different private banks. Findings Although MiFID is trying to achieve a level playing field between the EU member states, this study shows that this has not been achieved in all areas. Investor protection requirements from MiFID are interpreted and operationalised differently. Although these differences are sometimes small, sometimes they are larger and affect the way the investor is served and suitability determined. Originality/value This research provides a unique insight into the way private banks in Europe have implemented the MiFID II requirements and gives insight into best practices. For the future, this research can serve as a prelude to in-depth follow-up research on the implementation of EU provisions.
{"title":"Implementation of MiFID II investor protection provisions by private banks within the European Union","authors":"Tom Loonen, Ronald Janssen","doi":"10.1108/jfrc-10-2021-0087","DOIUrl":"https://doi.org/10.1108/jfrc-10-2021-0087","url":null,"abstract":"\u0000Purpose\u0000With the introduction of the Markets in Financial Instruments Directive (MiFID), financial institutions are faced with many investor protection provisions; this has a major impact on the day-to-day operations of private banks, which provide investment services to predominately retail or non-professional investors. The purpose of this paper is to determine how MiFID provisions regarding investor protection with respect to suitability are complied with in practice by private banks.\u0000\u0000\u0000Design/methodology/approach\u0000Based on interviews with 25 representatives of private banks from 10 different European Union (EU) member states, the researchers have determined how these provisions are fulfilled and associated risks mitigated. Mapping out the suitability requirements of MiFID and comparing them with how these have been operationalised, we arrive at the question of whether this leads to a level playing field and investor protection by different private banks.\u0000\u0000\u0000Findings\u0000Although MiFID is trying to achieve a level playing field between the EU member states, this study shows that this has not been achieved in all areas. Investor protection requirements from MiFID are interpreted and operationalised differently. Although these differences are sometimes small, sometimes they are larger and affect the way the investor is served and suitability determined.\u0000\u0000\u0000Originality/value\u0000This research provides a unique insight into the way private banks in Europe have implemented the MiFID II requirements and gives insight into best practices. For the future, this research can serve as a prelude to in-depth follow-up research on the implementation of EU provisions.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":" ","pages":""},"PeriodicalIF":0.9,"publicationDate":"2022-04-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47232759","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-04-11DOI: 10.1108/jfrc-12-2021-0118
F. Teichmann, Chiara Wittmann
Purpose This paper aims to enlighten the shortcomings of the EU Whistleblowing Directive 2019/1973, which could interfere negatively with its successful national implementation. In focus is the tension between companies potentially attempting to hide misconduct and disgruntled employees taking advantage of generous protection under the directive. Design/methodology/approach With an extensive literary basis, this paper explores articles of the EU Whistleblowing Directive 2019/1973 under five areas of the so-called “weakness.” With view to Germany and Austria, the difficulty of implementing the directive is highlighted and likewise with view to Switzerland, a potential solution is presented. Findings The Whistleblowing Directive 2019/1973 overshoots its target by protecting whistleblowers without considering the wider public interest. There are specific points of arbitrary definition which demand resolution to ensure a successful national implementation. Originality/value This is a multifaceted discussion of a highly contentious ethical debate. Through an exploration of specific points of the Directive, it is possible to present why there are points of contention in the first place, and also the difficulty of implementing the principle of proportionality. The issue at the heart of the matter is balancing the protection of trade secrets with the fundamental necessity of whistleblowing as a means of last resort.
{"title":"Whistleblowing: procedural and dogmatic problems in the implementation of directive (EU) 2019/1937","authors":"F. Teichmann, Chiara Wittmann","doi":"10.1108/jfrc-12-2021-0118","DOIUrl":"https://doi.org/10.1108/jfrc-12-2021-0118","url":null,"abstract":"\u0000Purpose\u0000This paper aims to enlighten the shortcomings of the EU Whistleblowing Directive 2019/1973, which could interfere negatively with its successful national implementation. In focus is the tension between companies potentially attempting to hide misconduct and disgruntled employees taking advantage of generous protection under the directive.\u0000\u0000\u0000Design/methodology/approach\u0000With an extensive literary basis, this paper explores articles of the EU Whistleblowing Directive 2019/1973 under five areas of the so-called “weakness.” With view to Germany and Austria, the difficulty of implementing the directive is highlighted and likewise with view to Switzerland, a potential solution is presented.\u0000\u0000\u0000Findings\u0000The Whistleblowing Directive 2019/1973 overshoots its target by protecting whistleblowers without considering the wider public interest. There are specific points of arbitrary definition which demand resolution to ensure a successful national implementation.\u0000\u0000\u0000Originality/value\u0000This is a multifaceted discussion of a highly contentious ethical debate. Through an exploration of specific points of the Directive, it is possible to present why there are points of contention in the first place, and also the difficulty of implementing the principle of proportionality. The issue at the heart of the matter is balancing the protection of trade secrets with the fundamental necessity of whistleblowing as a means of last resort.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":" ","pages":""},"PeriodicalIF":0.9,"publicationDate":"2022-04-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45735918","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-04-08DOI: 10.1108/jfrc-11-2021-0102
Botond Benedek, Cristina Ciumaș, Bálint Zsolt Nagy
Purpose The purpose of this paper is to survey the automobile insurance fraud detection literature in the past 31 years (1990–2021) and present a research agenda that addresses the challenges and opportunities artificial intelligence and machine learning bring to car insurance fraud detection. Design/methodology/approach Content analysis methodology is used to analyze 46 peer-reviewed academic papers from 31 journals plus eight conference proceedings to identify their research themes and detect trends and changes in the automobile insurance fraud detection literature according to content characteristics. Findings This study found that automobile insurance fraud detection is going through a transformation, where traditional statistics-based detection methods are replaced by data mining- and artificial intelligence-based approaches. In this study, it was also noticed that cost-sensitive and hybrid approaches are the up-and-coming avenues for further research. Practical implications This paper’s findings not only highlight the rise and benefits of data mining- and artificial intelligence-based automobile insurance fraud detection but also highlight the deficiencies observable in this field such as the lack of cost-sensitive approaches or the absence of reliable data sets. Originality/value This paper offers greater insight into how artificial intelligence and data mining challenges traditional automobile insurance fraud detection models and addresses the need to develop new cost-sensitive fraud detection methods that identify new real-world data sets.
{"title":"Automobile insurance fraud detection in the age of big data – a systematic and comprehensive literature review","authors":"Botond Benedek, Cristina Ciumaș, Bálint Zsolt Nagy","doi":"10.1108/jfrc-11-2021-0102","DOIUrl":"https://doi.org/10.1108/jfrc-11-2021-0102","url":null,"abstract":"\u0000Purpose\u0000The purpose of this paper is to survey the automobile insurance fraud detection literature in the past 31 years (1990–2021) and present a research agenda that addresses the challenges and opportunities artificial intelligence and machine learning bring to car insurance fraud detection.\u0000\u0000\u0000Design/methodology/approach\u0000Content analysis methodology is used to analyze 46 peer-reviewed academic papers from 31 journals plus eight conference proceedings to identify their research themes and detect trends and changes in the automobile insurance fraud detection literature according to content characteristics.\u0000\u0000\u0000Findings\u0000This study found that automobile insurance fraud detection is going through a transformation, where traditional statistics-based detection methods are replaced by data mining- and artificial intelligence-based approaches. In this study, it was also noticed that cost-sensitive and hybrid approaches are the up-and-coming avenues for further research.\u0000\u0000\u0000Practical implications\u0000This paper’s findings not only highlight the rise and benefits of data mining- and artificial intelligence-based automobile insurance fraud detection but also highlight the deficiencies observable in this field such as the lack of cost-sensitive approaches or the absence of reliable data sets.\u0000\u0000\u0000Originality/value\u0000This paper offers greater insight into how artificial intelligence and data mining challenges traditional automobile insurance fraud detection models and addresses the need to develop new cost-sensitive fraud detection methods that identify new real-world data sets.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":" ","pages":""},"PeriodicalIF":0.9,"publicationDate":"2022-04-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43540503","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-03-18DOI: 10.1108/jfrc-06-2021-0048
Kumbirai Mabwe, K. Jaffar
Purpose This paper aims to present an analysis of the UK bank loans and deposits in tandem, linking the loan-to-deposit (LTD) ratio to macroprudential policy and funding restrictions. LTD ratio is used by micro and macroprudential authorities to address both structural (long-term) and cyclical (short-term) liquidity risks. It is an outcome of several political and economic factors and should be evaluated against this background. Design/methodology/approach The authors use trend analysis and panel regression to investigate LTD ratio of Major British Banking Groups from 1945 to 2012 in the midst of changing the UK Government policies. Findings The results show that wholesale funding, government intervention and repression were the major forces behind LTD trends. Originality/value The authors recommend the use of LTD as a complement to other liquidity ratios in micro and macro-prudential regulation, particularly in the context of current reforms to banking capital requirements.
{"title":"UK Government controls and loan-to-deposit ratio","authors":"Kumbirai Mabwe, K. Jaffar","doi":"10.1108/jfrc-06-2021-0048","DOIUrl":"https://doi.org/10.1108/jfrc-06-2021-0048","url":null,"abstract":"\u0000Purpose\u0000This paper aims to present an analysis of the UK bank loans and deposits in tandem, linking the loan-to-deposit (LTD) ratio to macroprudential policy and funding restrictions. LTD ratio is used by micro and macroprudential authorities to address both structural (long-term) and cyclical (short-term) liquidity risks. It is an outcome of several political and economic factors and should be evaluated against this background.\u0000\u0000\u0000Design/methodology/approach\u0000The authors use trend analysis and panel regression to investigate LTD ratio of Major British Banking Groups from 1945 to 2012 in the midst of changing the UK Government policies.\u0000\u0000\u0000Findings\u0000The results show that wholesale funding, government intervention and repression were the major forces behind LTD trends.\u0000\u0000\u0000Originality/value\u0000The authors recommend the use of LTD as a complement to other liquidity ratios in micro and macro-prudential regulation, particularly in the context of current reforms to banking capital requirements.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":" ","pages":""},"PeriodicalIF":0.9,"publicationDate":"2022-03-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45517241","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-03-17DOI: 10.1108/jfrc-09-2021-0080
B. Abdallah, Francisco Rodríguez Fernández
Purpose This paper aims to study the impact of (regulatory and nonregulatory) liquidity on contingent convertible (CoCo) issuance and the relationship between CoCos and asset quality. Design/methodology/approach The analysis of this study comprises two stages. In the first stage, the authors used a logit model to test whether banks with riskier assets as well as lower solvency and (regulatory and nonregulatory) liquidity are more likely to issue CoCos. In the second stage, the authors used univariate analysis and fixed effects regression to measure the impact of Additional Tier 1 (AT1) CoCos on the quality of the issuer’s assets. Findings The study shows that regulatory liquidity ratios are negatively related to CoCo issuance. This study also finds that the likelihood to issue CoCo is higher when banks have lower regulatory capital or are less risky. Asset quality is found to not change significantly after the issuance. All in all, these results suggest that while solvency regulation is primarily regarded as the main motivation for CoCo issuance, liquidity regulation also matters. Research limitations/implications Despite the fact that CoCos have been emerging as an alternative way to help banks meet regulatory capital requirements, the paper argues that the relation between liquidity regulation and CoCos should be taken into account. Originality/value This study presents an empirical analysis on the CoCos instrument, focusing on the relationship between AT1 CoCos and liquidity regulation. Therefore, it serves to fill a gap in the literature on the underlying forces behind CoCo issuance. Moreover, this study measures the impact of AT1 CoCos issuance on bank risk, particularly on the quality of the issuer’s assets.
{"title":"Determinants of CoCo issuance: liquidity and risk incentives","authors":"B. Abdallah, Francisco Rodríguez Fernández","doi":"10.1108/jfrc-09-2021-0080","DOIUrl":"https://doi.org/10.1108/jfrc-09-2021-0080","url":null,"abstract":"\u0000Purpose\u0000This paper aims to study the impact of (regulatory and nonregulatory) liquidity on contingent convertible (CoCo) issuance and the relationship between CoCos and asset quality.\u0000\u0000\u0000Design/methodology/approach\u0000The analysis of this study comprises two stages. In the first stage, the authors used a logit model to test whether banks with riskier assets as well as lower solvency and (regulatory and nonregulatory) liquidity are more likely to issue CoCos. In the second stage, the authors used univariate analysis and fixed effects regression to measure the impact of Additional Tier 1 (AT1) CoCos on the quality of the issuer’s assets.\u0000\u0000\u0000Findings\u0000The study shows that regulatory liquidity ratios are negatively related to CoCo issuance. This study also finds that the likelihood to issue CoCo is higher when banks have lower regulatory capital or are less risky. Asset quality is found to not change significantly after the issuance. All in all, these results suggest that while solvency regulation is primarily regarded as the main motivation for CoCo issuance, liquidity regulation also matters.\u0000\u0000\u0000Research limitations/implications\u0000Despite the fact that CoCos have been emerging as an alternative way to help banks meet regulatory capital requirements, the paper argues that the relation between liquidity regulation and CoCos should be taken into account.\u0000\u0000\u0000Originality/value\u0000This study presents an empirical analysis on the CoCos instrument, focusing on the relationship between AT1 CoCos and liquidity regulation. Therefore, it serves to fill a gap in the literature on the underlying forces behind CoCo issuance. Moreover, this study measures the impact of AT1 CoCos issuance on bank risk, particularly on the quality of the issuer’s assets.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":" ","pages":""},"PeriodicalIF":0.9,"publicationDate":"2022-03-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45408142","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-03-16DOI: 10.1108/jfrc-09-2021-0077
Bojan Srbinoski, Klime Poposki, Patricia Born, Karel Van Hulle
Purpose
Solvency and market conduct regulations play a crucial role in supporting life insurance development by boosting consumer confidence and securing a stable environment for insurers to write business. The regulation encapsulates not only the legal framework but also its enforcement. This study aims to focus on the latter and investigate the impact of solvency and market conduct examinations on life insurance development within a homogenous legal environment in the USA.
Design/methodology/approach
To test the relationship between the regulatory examinations and life insurance development, this study uses annual data for 51 US states over the period 2013–2018 and uses fixed and random effects panel regressions controlling for the possible omitted variables bias and serial correlation. This study constructs two groups of indicators to measure the robustness and ability of regulators to prevent insolvencies and opportunistic market practices and estimate their effects on market development.
Findings
The results show that more stringent regulators with respect to solvency examinations deter life insurers from their markets and channel to those markets with lenient examiners, hurting the development of life insurance in the stringent states. Additionally, regulators boost consumer confidence by providing robust market conduct practices, which results in higher life insurance demand.
Originality/value
This study contributes to the debates about the pros and cons of the current state-led regulation in the USA and the general benefits/costs of regulation for insurance market development.
{"title":"Regulatory examinations and life insurance development","authors":"Bojan Srbinoski, Klime Poposki, Patricia Born, Karel Van Hulle","doi":"10.1108/jfrc-09-2021-0077","DOIUrl":"https://doi.org/10.1108/jfrc-09-2021-0077","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>Solvency and market conduct regulations play a crucial role in supporting life insurance development by boosting consumer confidence and securing a stable environment for insurers to write business. The regulation encapsulates not only the legal framework but also its enforcement. This study aims to focus on the latter and investigate the impact of solvency and market conduct examinations on life insurance development within a homogenous legal environment in the USA.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>To test the relationship between the regulatory examinations and life insurance development, this study uses annual data for 51 US states over the period 2013–2018 and uses fixed and random effects panel regressions controlling for the possible omitted variables bias and serial correlation. This study constructs two groups of indicators to measure the robustness and ability of regulators to prevent insolvencies and opportunistic market practices and estimate their effects on market development.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The results show that more stringent regulators with respect to solvency examinations deter life insurers from their markets and channel to those markets with lenient examiners, hurting the development of life insurance in the stringent states. Additionally, regulators boost consumer confidence by providing robust market conduct practices, which results in higher life insurance demand.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>This study contributes to the debates about the pros and cons of the current state-led regulation in the USA and the general benefits/costs of regulation for insurance market development.</p><!--/ Abstract__block -->","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":"3 3‐4","pages":""},"PeriodicalIF":0.9,"publicationDate":"2022-03-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138496807","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-03-04DOI: 10.1108/jfrc-11-2021-0092
Faisal Aziz, S. Sheikh, Ijaz Hussain Shah
Purpose This paper aims to address the issues of Asian countries toward why females are discouraged and more likely to be removed from the formal financial system than males. Further, whether there is any connection between religion and women’s financial inclusion is also addressed. Design/methodology/approach This paper explores gender disparities in the use of structured financial services through multilevel models tailored to the individual. The data from 2004 to 2017 have been used for eight South Asian countries, including Bangladesh, India, Pakistan, Sri Lanka, Afghanistan, Maldives, Nepal and Bhutan. We used a multilevel modeling methodology to estimate the impact of the socio-economic climate on women’s financial inclusion while controlling for individual-level features, with all control variables included, the two-level logistic regression model used for this study. Findings The results of this study demonstrate that sex appears to be strongly correlated with the usage of financial services. The study also found that in nations where religious restrictions limit women’s willingness to work for a living, they are less likely than males to own a bank account. However, through legislation and regulations, countries that encourage gender equality in the labor market and have effective regulatory mechanisms to maintain these initiatives appear to have more financially active women. Practical implications This research advises that government authorities strengthen women’s empowerment in South Asian countries. Originality/value To the best of the authors’ knowledge, this is the first paper that explains the linkage between financial inclusion and women empowerment and will contribute to existing knowledge.
{"title":"Financial inclusion for women empowerment in South Asian countries","authors":"Faisal Aziz, S. Sheikh, Ijaz Hussain Shah","doi":"10.1108/jfrc-11-2021-0092","DOIUrl":"https://doi.org/10.1108/jfrc-11-2021-0092","url":null,"abstract":"\u0000Purpose\u0000This paper aims to address the issues of Asian countries toward why females are discouraged and more likely to be removed from the formal financial system than males. Further, whether there is any connection between religion and women’s financial inclusion is also addressed.\u0000\u0000\u0000Design/methodology/approach\u0000This paper explores gender disparities in the use of structured financial services through multilevel models tailored to the individual. The data from 2004 to 2017 have been used for eight South Asian countries, including Bangladesh, India, Pakistan, Sri Lanka, Afghanistan, Maldives, Nepal and Bhutan. We used a multilevel modeling methodology to estimate the impact of the socio-economic climate on women’s financial inclusion while controlling for individual-level features, with all control variables included, the two-level logistic regression model used for this study.\u0000\u0000\u0000Findings\u0000The results of this study demonstrate that sex appears to be strongly correlated with the usage of financial services. The study also found that in nations where religious restrictions limit women’s willingness to work for a living, they are less likely than males to own a bank account. However, through legislation and regulations, countries that encourage gender equality in the labor market and have effective regulatory mechanisms to maintain these initiatives appear to have more financially active women.\u0000\u0000\u0000Practical implications\u0000This research advises that government authorities strengthen women’s empowerment in South Asian countries.\u0000\u0000\u0000Originality/value\u0000To the best of the authors’ knowledge, this is the first paper that explains the linkage between financial inclusion and women empowerment and will contribute to existing knowledge.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":" ","pages":""},"PeriodicalIF":0.9,"publicationDate":"2022-03-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43498994","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-02-23DOI: 10.1108/jfrc-09-2021-0074
Randy Priem
Purpose This study aims to discuss the European Commission’s proposal for a pilot regime for market infrastructures to experiment with the distributed ledger technology (DLT). In this respect, the study comments on the purpose, scope, requirements and attention points for market operators, investment firms and central securities depositories (CSDs) that are considering using this technology. Design/methodology/approach This paper focuses on the proposed rules surrounding the DLT pilot regime. The study is based on an analysis of the proposal, compares it with existing literature and presents the purpose and scope of the regime, followed by a detailed analysis of the proposed requirements. Findings The proposed requirements aim to provide legal certainty, ensure investor protection, support innovation and protect financial stability. The European Commission attempts to reach these goals by establishing uniform requirements for the DLT market infrastructures by means of a European sandbox approach. This study stresses that a level playing field between the various market participants using the technology should be warranted and provides arguments for why the proposal is incomplete in this respect. Originality/value To the best of the author’s knowledge, there are no other articles that provide a holistic overview of the proposed regulation and describe the choices that legislators have made so far. This paper will be of interest to all market operators, investment firms and CSDs that have interest in DLT. The study is also of value to their stakeholders, such as their regulators, market participants and their clients, as well as to other linked financial market infrastructures.
{"title":"A European distributed ledger technology pilot regime for market infrastructures: finding a balance between innovation, investor protection and financial stability","authors":"Randy Priem","doi":"10.1108/jfrc-09-2021-0074","DOIUrl":"https://doi.org/10.1108/jfrc-09-2021-0074","url":null,"abstract":"\u0000Purpose\u0000This study aims to discuss the European Commission’s proposal for a pilot regime for market infrastructures to experiment with the distributed ledger technology (DLT). In this respect, the study comments on the purpose, scope, requirements and attention points for market operators, investment firms and central securities depositories (CSDs) that are considering using this technology.\u0000\u0000\u0000Design/methodology/approach\u0000This paper focuses on the proposed rules surrounding the DLT pilot regime. The study is based on an analysis of the proposal, compares it with existing literature and presents the purpose and scope of the regime, followed by a detailed analysis of the proposed requirements.\u0000\u0000\u0000Findings\u0000The proposed requirements aim to provide legal certainty, ensure investor protection, support innovation and protect financial stability. The European Commission attempts to reach these goals by establishing uniform requirements for the DLT market infrastructures by means of a European sandbox approach. This study stresses that a level playing field between the various market participants using the technology should be warranted and provides arguments for why the proposal is incomplete in this respect.\u0000\u0000\u0000Originality/value\u0000To the best of the author’s knowledge, there are no other articles that provide a holistic overview of the proposed regulation and describe the choices that legislators have made so far. This paper will be of interest to all market operators, investment firms and CSDs that have interest in DLT. The study is also of value to their stakeholders, such as their regulators, market participants and their clients, as well as to other linked financial market infrastructures.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":" ","pages":""},"PeriodicalIF":0.9,"publicationDate":"2022-02-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44318076","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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