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1 – 10 of over 19000Malik Shahzad Shabbir and Awais Rehman
This paper aims to identify some important misconceptions about Islamic banks, which impact investor’s portfolio in term of threats, challenges and opportunities. This paper is…
Abstract
Purpose
This paper aims to identify some important misconceptions about Islamic banks, which impact investor’s portfolio in term of threats, challenges and opportunities. This paper is trying to attempt to present five different layers of misconceptions regarding investor portfolio.
Design/methodology/approach
This paper distributed 132 questionnaires among investors of Islamic financial institutions and multiple regression of least significant difference (LSD) method implied for data analysis.
Findings
The results of this paper show that two variables, such as opportunity and challenge, out of three are positively significant and the remaining one variable, threat, is insignificant regarding investor portfolio.
Originality/value
This paper is the first ever attempt in its nature to identify the different misconceptions about Islamic banking system and its impact on investor portfolio.
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Mohsin Ali, Omair Haroon, Syed Aun R. Rizvi and Wajahat Azmi
This paper aims to examine whether competition from Islamic banks add to the financial stability and profitability of financial sector and to assess the sources of such…
Abstract
Purpose
This paper aims to examine whether competition from Islamic banks add to the financial stability and profitability of financial sector and to assess the sources of such (in)stability.
Design/methodology/approach
Using Herfindahl–Hirschman Index as a measure of competition and Z-score as a measure of stability, the authors run panel GMM regressions to assess their association with data from 84 banks in Indonesia and Malaysia over a period from 2005 to 2018.
Findings
Increasing competition from Islamic banks in East Asian banking industry adds to the stability of the system while it does not affect profitability. This stability is derived from both asset and liability side.
Research limitations/implications
While adding to the literature on banking and Islamic finance, this paper suggests to the policy makers that policies promoting Islamic banking will tend to assist in enhancing financial sector stability.
Practical implications
Growth in alternative financial instruments brings steadiness within the financial structure. Such growth and competition should be encouraged.
Originality/value
The paper exploits an interesting setting of dual-banking industry in two large Muslim-majority developing country for testing two competing theories: competition-fragility and competition-stability. Such a setting also allowed us to examine whether increasing stability of financial sector is driven by demand or supply.
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The investment strategies which pension funds need to put into place are complex and, in recent years, have been changing rapidly. The author looks at how change is affecting the…
Abstract
The investment strategies which pension funds need to put into place are complex and, in recent years, have been changing rapidly. The author looks at how change is affecting the landscape and at what risk strategies need to be put into place as well.
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New Zealand’s 1993 Companies Act defines reckless trading as when a director/manager induces a “substantial risk of serious loss to the company’s creditors”. The definition…
Abstract
New Zealand’s 1993 Companies Act defines reckless trading as when a director/manager induces a “substantial risk of serious loss to the company’s creditors”. The definition contrasts with international common and statutory law that holds managers personally liable only under circumstances of moral failing. It also allows for managers to be found liable for bad investments during the continued existence of a firm. Replacing the standard of moral failing with a standard of objective risk evaluation and allowing culpability beyond bankruptcy proceedings extends liability in a way that indirectly taxes corporations. This extension of liability stands contrary to the evolutionary development of the corporation as based on an efficient redistribution of property rights. It biases investment towards lower risk, lower yield ventures, and is expected to decrease New Zealand’s innovation‐driven economic growth
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The question is whether debt market investors see through managers' attempts to hide their pension obligations. The authors establish a robust relation between understated pension…
Abstract
Purpose
The question is whether debt market investors see through managers' attempts to hide their pension obligations. The authors establish a robust relation between understated pension liabilities and corporate bond yield spreads after controlling for factors that have been previously identified as having a significant impact on firms' cost of borrowing. The results support the idea that bond market investors are not being misled by the use of high pension liability discount rates by some companies to lower their reported pension obligations. For a small fraction of debt issuers, the reported pension liabilities are larger than the pension liabilities valued at the stipulated interest rate benchmarks. For these issuers with overstated pension liabilities, bond investors adjust their borrowing costs downward.
Design/methodology/approach
The authors investigate the relation between corporate bond yield spreads and understated pension liabilities relative to long-term Treasury and high-grade corporate bond yields. They aim to answer two questions. First, what are the sizes of over or understated pension liabilities relative to guideline benchmarks? Second, do debt market investors see through the potential management manipulation of pension discount rates? The authors find that firms with large understated pension liabilities face higher marginal borrowing costs after taking into account issue-specific features, firm characteristics, macroeconomic conditions and other pension information such as funded status and mandatory contributions.
Findings
The average understated projected benefit obligations (PBOs) are understated by $394.3 and $335.6, equivalent to 3.5 and 3.0% of the beginning of the fiscal year market value, respectively. The average understated accumulated benefit obligations (ABOs) are understated by $359.3 and $305.3 million, equivalent to 3.1 and 2.6%, of the beginning of the fiscal year market value, respectively. Relative to AA-grade corporate bond yields, the average difference between firm pension discount rates and benchmark yields becomes much smaller; the percentage of firm pension discount rates higher than benchmark yields is also much smaller. As a result, understated pension liabilities become negligible. The authors establish a robust relation between corporate bond yield spreads and measures of understated pension liabilities after controlling for issue-specific features, firm characteristics, other pension information (funded status and mandatory contributions), macroeconomic conditions, calendar effects and industry effects.
Originality/value
S&P Rating Services recognizes the issue that there is considerably more variability in discount rate assumptions among companies than in workforce demographics or the interest rate environment in which firms operate (Standard and Poor's, 2006). S&P also indicates that it would be desirable to normalize different discount rate assumptions but acknowledges that it is difficult to do so. In practice, S&P Rating Services conducts periodic surveys to see whether firms' assumed discount rates conform to the normal standard. The paper makes an initial attempt to quantify the size of understated pension liabilities and their impact on corporate bond yield spreads. This approach can be extended to study firms' costs of equity capital, the pricing of seasoned equity offerings and the pricing of merger and acquisition transaction deals, among other questions.
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Agnieszka Nowinska and Marte C.W. Solheim
The purposes of this paper are to delve into the “liability of foreignness” among immigrants and to explore factors that may enhance or moderate such liability while obtaining…
Abstract
Purpose
The purposes of this paper are to delve into the “liability of foreignness” among immigrants and to explore factors that may enhance or moderate such liability while obtaining jobs in host countries. We explore the competition for jobs in a host country among foreign-born individuals from various backgrounds and local residents, by examining such factors as their human capital, as well as, for the foreign-born, their duration of residence in the host country.
Design/methodology/approach
Applying configurational theorizing, we propose that the presence of specific human capital can help reduce the challenges associated with the “liability of foreignness” for migrants who have shorter durations of stay in the host country, and, to a lesser extent, for female migrants. Our study draws upon extensive career data spanning several decades and involving 249 employees within a Danish multinational enterprise.
Findings
We find that specific human capital helps established immigrants in general, although female immigrants are more vulnerable. We furthermore find a strong “gender liability” in the industry even for local females, including returnees in the host countries. Our findings suggest that for immigrants, including returnees, career building requires a mix of right human capital and tenure in the host country, and that career building is especially challenging for female immigrants.
Originality/value
While the concept of “liability of foreignness” – focussing on discrimination faced by immigrants in the labour market – has been brought to the fore, a notable gap exists in empirical research pertaining to studies aiming at disentangling potential means to overcome such liability, as well as in studies seeking to explore this issue from a stance of gendered experience.
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The Bank of England (BoE) judged this a material risk to financial stability and stabilised the market by buying gilts. This prevented wider crisis but the gilt market spike has…
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DOI: 10.1108/OXAN-DB274645
ISSN: 2633-304X
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Geographic
Topical
This paper aims to discuss the money creation mechanisms in emerging markets with special focus on external transactions and outlines the implications for monetary policy and…
Abstract
Purpose
This paper aims to discuss the money creation mechanisms in emerging markets with special focus on external transactions and outlines the implications for monetary policy and financial stability issues.
Design/methodology/approach
To make the argument, the authors analyze a historical episode of flows of funds in Korea and Russia and conduct a canonical correlation analysis for a cross-section of emerging market economies.
Findings
The authors show that changes in the net foreign assets of the banking system are associated with (or cause) deposits fluctuations. In emerging markets, however, the scope of such fluctuations is limited unless driven by changes in the foreign reserves of a central bank.
Originality/value
Some preliminary implications for financial stability implementation may be drawn from this analysis. Introducing the net stable funding ratio requirement is unlikely to have any significant destabilizing effect on credit creation in emerging markets (in this regard, it is similar to the restriction on banks’ foreign currency position, which is a common prudential measure). Instead, it is likely to trigger a balance of payment adjustment that is similar to that experienced by an economy during its transition from fixed to flexible exchange rate regime.
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Ilaria Galavotti, Donatella Depperu and Daniele Cerrato
The purpose of this paper is to analyze corporate scope decisions in acquisitions with a focus on the relationship between target country unfamiliarity and acquirer-to-target…
Abstract
Purpose
The purpose of this paper is to analyze corporate scope decisions in acquisitions with a focus on the relationship between target country unfamiliarity and acquirer-to-target relatedness and on the moderating effects played by product diversification and international experience.
Design/methodology/approach
Using a dataset of 689 acquisitions completed in the period 2007-2013 by acquirers located in 60 countries, this paper utilizes an ordered logistic regression analysis.
Findings
With greater target country unfamiliarity, acquirers are encouraged to pursue greater acquirer-to-target relatedness. This finding suggests that acquirers tend to seek a balance between product and international diversification to reduce the sources of uncertainty in their acquisition moves. While past international experience strengthens this relationship, diversification experience has a negative moderating effect and hence encourages acquirers to reduce relatedness at increasing market unfamiliarity.
Originality/value
The originality of this paper is twofold. First, the authors extend the traditional internationalization-diversification framework to an unfamiliarity-relatedness relationship in the context of acquisitions. Second, the authors propose a construct of target country unfamiliarity in acquisitions that goes beyond the traditional domestic vs cross-border dichotomy by including previous experience in the target country.
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Alan I. Blankley, Philip G. Cottell and Richard H. McClure
Pension rate estimates are important because they provide information to the market, and because they are useful in estimating future cash flows or for other analytical purposes…
Abstract
Pension rate estimates are important because they provide information to the market, and because they are useful in estimating future cash flows or for other analytical purposes. This is especially true now, because the economic environment has deteriorated to a point that many investors perceive increased uncertainty with respect to pension plans and the effect they have on future income. In fact, several authors in the popular financial press have speculated on the impact of such fundamental changes in pension assets, liabilities, and estimates. Often, however, these articles are sensational, and do not appear to appreciate fully the complexities of pension accounting. In order to model the economic impact of pension rate declines, we develop a two‐period analytical model of pension cost, which allows us to simulate future pension expense and its associated earnings impact using a triangular distribution of rate estimates. In addition, we model the incremental cash contributions required under these estimates in order to maintain the ratio of pension assets to liabilities at 100 percent. Our results indicate that while the pension expense effect is large in both periods across firms with small, mid‐sized and large pension plans, firms with large plans show the greatest increase in pension expense. Interestingly, however, the earnings impact is the smallest for firms with large plans in both periods. In addition, all firms face significantly increased cash funding requirements in order to prevent funding ratios (plan assets scaled by pension liabilities) from deteriorating. These results suggest not only future earnings reductions from pension rate declines, but also a potentially significant cash flow impact as well.
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