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Book part
Publication date: 20 August 2018

FriÐrik Már Baldursson and Richard Portes

During the banking crisis of October 2008, Iceland became the first developed country in decades to seek the assistance of the International Monetary Fund (IMF). Iceland’s…

Abstract

During the banking crisis of October 2008, Iceland became the first developed country in decades to seek the assistance of the International Monetary Fund (IMF). Iceland’s IMF programme provided a measure of stability at a time of intense turbulence. The IMF’s credibility was helpful during this period of collapse not just of the banks but also of the public trust towards almost all Icelandic institutions. Importantly, the IMF implicitly supported Iceland’s policy of letting institutional creditors of the banks rather than Icelandic taxpayers bear the costs of their collapse; this provided credibility for the policy and limited repercussions. In a reversal of previous IMF policy, capital controls were imposed. The controls helped stabilise the exchange rate, and inflation subsided. The controls also helped recovery after the crisis by shielding the economy from international financial shocks. The direct fiscal cost of the Icelandic crisis was very high, but the considerable and painful fiscal tightening that was a part of the programme was needed to avoid a sovereign debt crisis. This helped in regaining trust from international markets. Mistakes were made in the design and implementation of the IMF programme, but overall, we judge that its contribution was positive. The programme provided one of the elements for restoring trust in Iceland when it was most needed, both domestically and internationally, during the depth of the crisis in 2009–2010.

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The Return of Trust? Institutions and the Public after the Icelandic Financial Crisis
Type: Book
ISBN: 978-1-78743-348-9

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Book part
Publication date: 2 March 2011

Carlo Gola and Francesco Spadafora

The global financial crisis has magnified the role of Financial Sector Surveillance (FSS) in the International Monetary Fund's activities. This chapter surveys the various…

Abstract

The global financial crisis has magnified the role of Financial Sector Surveillance (FSS) in the International Monetary Fund's activities. This chapter surveys the various steps and initiatives through which the Fund has increasingly deepened its involvement in FSS. Overall, this process can be characterised by a preliminary stage and two main phases. The preliminary stage dates back to the 1980s and early 1990s, and was mainly related to the Fund's research and technical assistance activities within the process of monetary and financial deregulation embraced by several member countries. The first ‘official’ phase of the Fund's involvement in FSS started in the aftermath of the Mexican crisis, and relates to the international call to include financial sector issues among the core areas of Fund surveillance. The second phase focuses on the objectives of bringing the coverage of financial sector issues ‘up-to-par’ with the coverage of other traditional core areas of surveillance, and of integrating financial analysis into the Fund's analytical macroeconomic framework. By urging the Fund to give greater attention to its member countries' financial systems, the international community's response to the global crisis may mark the beginning of a new phase of FSS. The Fund's financial sector surveillance, particularly on advanced economies, is of paramount importance for emerging market and developing countries, as they are vulnerable to spillover effects from crises originated in advanced economies. Emerging market and developing economies, which constitute the majority of the Fund's 187 members, are currently the recipients of over 50 programmes of financial support from the Fund (including those of a precautionary nature), totalling over $250 billion.

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The Impact of the Global Financial Crisis on Emerging Financial Markets
Type: Book
ISBN: 978-0-85724-754-4

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Book part
Publication date: 10 February 2015

Cornel Ban

Soon after the Lehman crisis, the International Monetary Fund (IMF) surprised its critics with a reconsideration of its research and advice on fiscal policy. The paper…

Abstract

Soon after the Lehman crisis, the International Monetary Fund (IMF) surprised its critics with a reconsideration of its research and advice on fiscal policy. The paper traces the influence that the Fund’s senior management and research elite has had on the recalibration of the IMF’s doctrine on fiscal policy. The findings suggest that overall there has been some selective incorporation of unorthodox ideas in the Fund’s fiscal doctrine, while the strong thesis that austerity has expansionary effects has been rejected. Indeed, the Fund’s new orthodoxy is concerned with the recessionary effects of fiscal consolidation and, more recently, endorses calls for a more progressive adjustment of the costs of fiscal sustainability. These changes notwithstanding, the IMF’s adaptive incremental transformation on fiscal policy issues falls short of a paradigm shift and is best conceived of as an important recalibration of the precrisis status quo.

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Elites on Trial
Type: Book
ISBN: 978-1-78441-680-5

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Book part
Publication date: 19 December 2016

Fadillah Mansor and M. Ishaq Bhatti

This chapter compares the returns performance of the Islamic mutual funds (IMFs) with that of conventional mutual fund (CMF). It covers both pre- and post-ASEAN financial…

Abstract

Purpose

This chapter compares the returns performance of the Islamic mutual funds (IMFs) with that of conventional mutual fund (CMF). It covers both pre- and post-ASEAN financial crisis and global financial crisis data for an overall sample of 128 IMFs and 350 CMFs. It also covers two market cycles from January 1995 to December 1998 and from January 2005 to December 2008.

Methodology/approach

The net raw returns of all expenses and market risk-adjusted return performance measurements are employed to examine the portfolios’ performance, and to capture the difference movement of the funds based on the particular market trend.

Findings

We observed that on average both portfolios outperform the market return. In general, average returns performance of IMFs is not better than the CMFs during bullish and bearish market trend periods. However, the empirical results based on time-series regression model reveal that the IMFs portfolio slightly outperform the conventional counterparts.

Practical implications

The study would benefit the investors and market players to consider IMFs in their portfolio selection, if in future such an expected event may occur.

Originality/value

The study provides insights to regulators and market players who plan to access investment plan in an emerging market, particularly in Malaysia.

Details

Advances in Islamic Finance, Marketing, and Management
Type: Book
ISBN: 978-1-78635-899-8

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Book part
Publication date: 23 December 2005

Justin W. Iu

The Asian Monetary Fund, proposed during the 1997–1998 Asian Financial Crisis, was an attempt by East Asian nations to develop collective policy responses to financial…

Abstract

The Asian Monetary Fund, proposed during the 1997–1998 Asian Financial Crisis, was an attempt by East Asian nations to develop collective policy responses to financial crises and provide rapid distribution of emergency funding. It was envisaged that policy prescriptions would exhibit greater regional sensitivity and prevent contagion. The proposal was rejected because of the perceived perpetuation of moral hazard, duplication and conflict with the International Monetary Fund and belief that historical disunity would prevent successful collaboration. This paper advocates, in the context of international financial architecture reform, enhanced East Asian regionalism is crucial to prevent and manage future financial crises.

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Asia Pacific Financial Markets in Comparative Perspective: Issues and Implications for the 21st Century
Type: Book
ISBN: 978-0-76231-258-0

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Article
Publication date: 22 September 2020

Yanhui Chen, Bin Liu and Tianzi Wang

This paper applied grey wave forecasting in a decomposition–ensemble forecasting method for modelling the complex and non-linear features in time series data. This…

Abstract

Purpose

This paper applied grey wave forecasting in a decomposition–ensemble forecasting method for modelling the complex and non-linear features in time series data. This application aims to test the advantages of grey wave forecasting method in predicting time series with periodic fluctuations.

Design/methodology/approach

The decomposition–ensemble method combines empirical mode decomposition (EMD), component reconstruction technology and grey wave forecasting. More specifically, EMD is used to decompose time series data into different intrinsic mode function (IMF) components in the first step. Permutation entropy and the average of each IMF are checked for component reconstruction. Then the grey wave forecasting model or ARMA is used to predict each IMF according to the characters of each IMF.

Findings

In the empirical analysis, the China container freight index (CCFI) is applied in checking prediction performance. Using two different time periods, the results show that the proposed method performs better than random walk and ARMA in multi-step-ahead prediction.

Originality/value

The decomposition–ensemble method based on EMD and grey wave forecasting model expands the application area of the grey system theory and graphic forecasting method. Grey wave forecasting performs better for data set with periodic fluctuations. Forecasting CCFI assists practitioners in the shipping industry in decision-making.

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Grey Systems: Theory and Application, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2043-9377

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Article
Publication date: 5 August 2019

Fadillah Mansor, Naseem Al Rahahleh and M. Ishaq Bhatti

The purpose of this paper is to compare the return performance and persistence of ethical and conventional mutual funds during two extreme events, the Asian and the global…

Abstract

Purpose

The purpose of this paper is to compare the return performance and persistence of ethical and conventional mutual funds during two extreme events, the Asian and the global financial crises under Shariah constraints.

Design/methodology/approach

The overall sample comprises of 129 Islamic mutual funds (IMFs) and 350 conventional mutual funds (CMFs) in Malaysia, and the average monthly data cover two periods of market cycles, before and during a financial crisis. The net of all expenses data is obtained from the Morningstar Database. This study employs various market risk-adjusted performance measures (ratios) to estimate the funds’ overall performance during the crises, and then it uses CAPM model to estimate the parameters via panel data approach. Moreover, paper employs the two persistence performance measures on IMFs and CMFs through contingency tables. It tests for the performance persistence effects for IMFs, CMFs using repeat winner and the cross-product ratio (CPR) tests proposed by Malkiel (1995) and Brown and Goetzmann (1995), respectively.

Findings

The main findings of the paper are: on average, both funds IMF and the CMF outperform the market return during the entire sample period; none of the funds is better than the “others” during the financial crises and the pre-crisis periods; the ethical fund – IMF outperforms the CMF over the study period. This outcome also indicates that ethical funds are more persistent especially during and the pre-crisis AFC and the GFC periods.

Research limitations/implications

The finding of this study is limited to only Malaysian data because the objective was to guideline investors and market players in Malaysia to prefer investing in Islamic ethical funds to diversify their investment portfolio.

Practical implications

Cautions to use existing ratio measures and CAPM model rather persistence measures may be used with existing methodologies in light of extreme events which influenced investor decision making for better returns at lower risks.

Social implications

A class of ethical funds consists of religious sustainable, socially responsible and impact-investing (SRI) funds but Shariah implications of halal investment must be observed to avoid prohibited practices within the class of SRI funds.

Originality/value

The work done in this paper are original in the sense that the authors employed various ratios to measure fund performance in conjunction with CAPM model and then tested for two persistence performance measures; the repeat winner and CPR tests.

Details

International Journal of Managerial Finance, vol. 15 no. 4
Type: Research Article
ISSN: 1743-9132

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Article
Publication date: 3 October 2016

Norman Mugarura

The purpose of this paper is to articulate the mandate of the International Monetary Fund (IMF) not least in promoting a sound legal regulatory environment for markets to…

Abstract

Purpose

The purpose of this paper is to articulate the mandate of the International Monetary Fund (IMF) not least in promoting a sound legal regulatory environment for markets to operate globally and its inherent challenges. While acknowledging the plausible work done by the IMF in supporting countries to achieve their macro-economic stability, the paper articulates some of its shortcomings as a global institution. It is evident that the post-war climate in which the World Bank and IMF were created has drastically changed – which presupposes that these institutions now need to reposition themselves to reflect on contemporary global challenges accordingly. The author has argued in the past that a robust regulatory system should be devised taking into account the dynamic challenges in the market environment but also to prevent them from happening again.

Design/methodology/approach

The paper has utilized empirical evidence to evaluate the mandate of the IMF in addressing its dynamic challenges such as the global financial and debt crises in Europe and the USA and prevention of financial sector abuse globally. The IMF is one of the Bretton Woods Institutions charged with the oversight responsibility to enforce policies and enable countries to manage their macro-economic challenges efficiently.

Findings

The findings demonstrate that the IMF is as relevant and important as it was when it was created in 1945. However, there is a need for intrinsic and structural changes within this institution to continue discharging its mandate in a changed global regulatory landscape. The IMF is still crucial in fostering a fundamental stabilization function to fragile global economies in areas of financial and technical assistance, and developing requisite legal and supervisory infrastructure within fledging member countries.

Research limitations/implications

The paper was written by analysis of both theoretical and empirical data largely based on secondary data sources. It would have been better to first present the findings in an international conference to solicit wide views and internalize them accordingly.

Practical implications

While acknowledging the plausible work done by the IMF and its counterpart the World Bank in facilitating global financial markets regulation and prevention of financial sector abuse, as oversight institutions, they need to constantly review their mandate to respond robustly to their dynamic challenges such as the global and debt crises and financial sector abuse. Oversight institutions need to constantly review and adapt their mandate accordingly, if they are to discharge their varied responsibilities efficiently. They cannot stand still in the face of challenges because they will be superseded and kept at a back foot.

Social implications

Markets and states are embedded in each other, and the way they are regulated is of a significant importance to varied stakeholders and people.

Originality/value

This paper is one of its kind, is unique in its character and evaluates embedded issues using empirical evidence in a way not done in its context before. Secondary data sources have been evaluated to achieve a thoughtful analysis of the objectives of the paper.

Details

Journal of Financial Crime, vol. 23 no. 4
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 14 June 2013

Dawood Ashraf

This paper seeks to review and extend previous research on the performance of Islamic mutual funds (IMFs) by evaluating the relative performance of IMFs and conventional…

Abstract

Purpose

This paper seeks to review and extend previous research on the performance of Islamic mutual funds (IMFs) by evaluating the relative performance of IMFs and conventional funds during the global economic crisis in the context of the Saudi Arabian capital market.

Design/methodology/approach

This paper compares the market timing and stock selection abilities of 159 mutual funds listed on the Saudi Arabian stock market from 2007 to 2011 by using the CAPM regression and Treynor and Mazuy models. The paper addresses the benchmark problem from which most prior IMFs studies suffered by using appropriate regional benchmarks. As a robustness check, coefficients of IMFs and conventional funds are compared by using the differences in mean and standard deviation analysis obtained from the standard CAPM model on individual funds.

Findings

The empirical results show evidence of better performance of IMFs relative to conventional funds during periods of economic crisis. In addition, although there is no evidence of relative superiority in market timing ability, managers of IMFs appear to have better stock selection ability during times of economic crisis.

Research limitations/implications

The combination of superior stock selection ability of IMFs and the negative market timing ability of conventional funds suggest that IMFs offer better hedging opportunities for investors during periods of economic downturn.

Practical implications

The findings of this paper suggest that IMFs can provide hedging benefits during adverse economic conditions – an issue of great importance due to the current and forecast insecurity surrounding the global capital markets. By holding a portion of their investment portfolio in IMFs, investors can experience a higher degree of confidence in terms of investment security, growth and returns. Similarly, managers of conventional funds can improve risk adjusted performance by following similar screening criteria as IMFs during economic slowdowns.

Originality/value

This paper represents the first comprehensive study on the comparative performance of Islamic and conventional mutual funds during the current financial crisis by including all fund managers listed on the Saudi Arabian stock market. The paper extends the knowledge of the emerging literature of Islamic finance and mutual fund performance.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 6 no. 2
Type: Research Article
ISSN: 1753-8394

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Article
Publication date: 4 February 2019

Nadia Nurnajihah M. Nasir, Salvinder Singh, Shahrum Abdullah and Sallehuddin Mohamed Haris

The purpose of this paper is to present the application of Hilbert–Huang transform (HHT) for fatigue damage feature characterisation in the time–frequency domain based on…

Abstract

Purpose

The purpose of this paper is to present the application of Hilbert–Huang transform (HHT) for fatigue damage feature characterisation in the time–frequency domain based on strain signals obtained from the automotive coil springs.

Design/methodology/approach

HHT was employed to detect the temporary changes in frequency characteristics of the vibration response of the signals. The extraction successfully reduced the length of the original signal to 40 per cent, whereas the fatigue damage was retained. The analysis process for this work is divided into three stages: signal characterisation with the application of fatigue data editing (FDE) for fatigue life assessment, empirical mode decomposition with Hilbert transform, an energy–time–frequency distribution analysis of each intrinsic mode function (IMF).

Findings

The edited signal had a time length of 72.5 s, which was 40 per cent lower than the original signal. Both signals were retained statistically with close mean, root-mean-square and kurtosis value. FDE improved the fatigue life, and the extraction did not affect the content and behaviour of the original signal because the editing technique only removed the minimal fatigue damage potential. HHT helped to remove unnecessary noise in the recorded signals. EMD produced sets of IMFs that indicated the differences between the original signal and mean of the signal to produce new components. The low-frequency energy was expected to cause large damage, whereas the high-frequency energy will cause small damage.

Originality/value

HHT and EMD can be used in the strain data signal analysis of the automotive component of a suspension system. This is to improve the fatigue life, where the extraction did not affect the content and behaviour of the original signal because the editing technique only removed the minimal fatigue damage potential.

Details

International Journal of Structural Integrity, vol. 10 no. 1
Type: Research Article
ISSN: 1757-9864

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