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While China is currently moving toward the full development of its own financial derivatives markets, to date, China's experience with these has been a negative one. This paper examines the importance to China of developing a fully integrated financial derivatives market from both the economic and financial market perspectives. It examines the best way forward for derivative trading, both market based and over-the-counter, and the types of products best suited to both, given the current state of the Chinese financial markets. Consideration is given to market structure, regulation, trading and settlement systems and international cooperation.

The purpose of this paper is to develop an explicitly macroprudential supervisory framework designed to identify threats to financial stability use existing mechanisms to reduce the risk of these threats and to provide information to the authorities to more efficiently mitigate any instability that does arise.

This paper begins with an analysis of the limitations of microprudential regulation. It then develops a macroprudential surveillance framework focused on those financial markets that have the potential to undermine financial stability. It concludes with a discussion of how the surveillance results may be used to enhance financial stability.

The current supervisory focus on microprudential supervision of systemically important institutions is insufficient; an explicitly macroprudential focus is required.

Although this paper’s conceptual framework is applicable to all advanced financial systems the discussion of specific regulatory structures focuses on the USA.

An explicit supervisory focus on the threats posed by major financial markets is feasible and desirable.

The probability of a financial crisis and the economic damage caused by a crisis can be significantly reduced by redirecting some regulatory efforts toward in-depth analysis of major financial markets.

The paper emphasizes that macroprudential supervision must include both quantitative and detailed analysis of the qualitative aspects of key markets.

The purpose of this paper is to discuss implications of the global crisis for economic and financial research and policy.

The paper reviews many recent studies on the crisis and offers the author's views on some of the most important lessons to be drawn from the crisis

The review counters views that the crisis reflected a basic failure of economics, but agrees that it undercuts some particular theories and approaches to economics. More attention needs to be given to imperfections in the operation of both markets and governments, drawing on insights from behavioral and neuro economics and finance and political economy analysis and recognizing the importance of limited information and uncertainty about correct models. The creation of perverse incentive structures explain a large part of the financial excesses that led to the crisis. Financial considerations need to be integrated much more closely with macroeconomic analysis and financial risk analysis needs to pay more attention to economic considerations. Useful insights can be drawn from many different theories and approaches and we should not expect any one theory to have all the answers. The excesses observed in the advanced economies do not imply that there are not enormous benefits to be gained from further financial liberalization in emerging market economies, but they do show that great care must be taken in establishing strong supervision of such liberalizations and highlight many of the dangers to look out for.

The paper offers a guide to the literature for those interested in learning more about the causes and effects of the crisis and policy responses and offers a number of suggestions for fruitful research topics and policy strategies.

Financial derivatives markets are a relatively new development globally. In the USA, the first commodity derivatives trading began in Chicago at the Chicago Board of Trade in 1849. However, the first financial derivatives trading did not begin until 1972, when the Chicago Mercantile Exchange began trading futures contracts on seven foreign currencies. These were the world's first official financial futures contracts. In Europe, the oldest financial derivatives market was the London International Financial Futures Exchange, or LIFFE, which began trading financial futures in 1982.

The paper seeks to draw lessons for effective policy and regulatory responses to protect financial systems in the face of terrorist attacks.

The paper presents data on the reaction of financial markets to the terrorist attacks in New York (2001) and Madrid (2004). It describes the authorities' crisis management responses and analyses their effectiveness. The paper describes the subsequent regulatory responses to protect the financial systems from abuse by terrorists.

Diversified, liquid, and sound financial markets were efficient in absorbing the shocks of terrorist attacks when supported by well organized crisis management responses.

The paper is limited in its coverage to the reaction of the financial markets to the 11 September 2001, terrorist attacks in New York, and 11 March 2004, attacks in Madrid.

The paper highlights the importance of effective contingency planning by the authorities and financial firms in mitigating the risks of disruption from terrorist attacks.

This paper provides an overview of the issues, challenges and responses in dealing with the risks posed by terrorism to financial systems. It combines empirical evidence with an institutional perspective, and notes some of the regulatory challenges in combating terrorist finance.

In the wake of substantial losses suffered by derivatives dealers and end users in recent years, questions are being raised about the type of regulatory structure needed to monitor and control the use of derivatives. Financial institutions believe that the issue can be resolved by tighter internal controls, whereas regulators believe there is a need for more direct oversight. The conventional view is that derivatives are highly useful instruments which simply need to be handled with care. In this paper, it is argued that this belief is misplaced and, although useful for hedging, derivatives are a high risk technology which pose inherent difficulties for regulation and control. As suggested by Perrow, where the environment of such technologies is both complex and tightly coupled, such that any significant failure cannot be contained, the potential for catastrophe is significant. The foregoing analysis shows that derivatives operate in a complex and tightly coupled environment, posing a significant threat to the financial system. Regulatory reform would require much greater cooperation between regulators and a proactive approach to regulation rather than a reactive one.

The purpose of this paper is to identify and understand the obstacles and drivers of financial investors while deciding upon investment opportunities in emerging markets.

Relevant factors for financial investors in emerging markets were identified through a literature review and a series of expert interviews. Identified factors were broadly grouped into three categories, namely, microeconomic aspects, macroeconomic aspects, and aspects of the functionality of the local banking system. Finally, an expert panel (Delphi) technique is used to validate the findings in cocoa industry in Ivory Coast.

A decision-making framework that enables the evaluation of the attractiveness of an industry in emerging market from a financial investor perspective is developed and its application is demonstrated on the cocoa industry in Ivory Coast. Probability and consensus of the projections for the individual decision elements are tabulated along with the insights into both encouraging and discouraging aspects.

Current study is a timely contribution to the call for papers in the research literature to develop frameworks that are contextualized in emerging markets. Similar to any other qualitative study, this study lacks the generalizability of results. But, the framework developed can act as a starting point toward the generalizability of the findings in future.

Decision elements identified in this study can act as a checklist for financial investors and top management to choose the elements that are relevant to the investment problem being dealt by them. Also, the study can act as a handy demonstration to practitioners for applying the framework using expert panel.

A major challenge of the investment environment in emerging market is the non-availability of quality information on the potential investment opportunities. In this study, the authors suggest a framework to overcome this information asymmetry challenge and expect it to promote financial investments in emerging economies which in turn will improve the quality of life of people in these economies.

First study to present an approach to help financial investors to conduct profound evaluation and gain more in-depth insights into the future investment opportunity attractiveness of a particular industry in an emerging market.

After the Global Financial Crisis in 2008, the impact of expanded liquidity in the financial market has drawn attention. The purpose of this paper is to examine the relationship between liquidity in financial markets and office markets across Asian countries. In particular, the research not only examines the effect of normal liquidity on real estate markets, but also the effects of excess liquidity are specifically highlighted.

This paper uses panel estimation utilizing quarterly data from the first quarter of 2007 to the fourth quarter of 2015. Taking both time and location dimensions into account allows for a more precise estimate of the relationship between liquidity and office market’s yields.

Per the empirical outcome, an increasing excess liquidity tends to decelerate the value of office yields in six major Asian office market centers due to the positive effect on commercial real estate value. This effect is also identified by comparing the difference between the level of fitted yields and actual yields.

The results enhance the understanding of commercial real estate yield determinants. Furthermore, the results can be used to assess the impacts of liquidity on major office markets in Asia.

This paper attempts to uncover the impact of liquidity in financial markets on the office market yields. To better understand the relationship, the concept of excess liquidity is adopted and further exploration of each office market is conducted by comparing the fitted yields, which is computed considering the effects of excess liquidity on yield levels and actual yields.

The purpose of this paper is to examine in which ways hedge funds contribute to financialization.

Two already identified conduits through which financialization operates are applied to hedge funds.

The paper finds that hedge funds drive the phenomenon of financialization in two major ways, i.e. the financialization of corporations, and the financialization of markets. Hence, hedge funds can be conceived as agents of change for financialization.

There are indications that hedge funds possess disciplinary power. Future research should address this pivotal point, even though such power will be difficult to prove empirically.

Hedge funds have been found to potentially increase market volatility. In times of crisis, stricter regulation of these investors that take excessive risks seems prudent.

Through linking “hedge funds” with “financialization” this paper closes a research gap. In addition, the so far rather structural debate about financialization benefits from the actor-centered approach of this paper.

Purpose – Study the potential implications of sovereign wealth funds (SWFs) on financial stability.

Methodology/approach – By assessing whether and how stock markets react to the announcements of investments and divestments to firms by SWFs, this chapter takes advantage of a hand-collected database on investments and divestments by major SWFs to evaluate the short-term financial impact of SWFs on selected public equity markets in which they invest.

Findings – Results show that there was no significant destabilizing effect of SWFs on equity markets, which is consistent with anecdotal evidence.

Social implications – SWFs could promote financial stability and should be given more development space.

Originality/value of the chapter – This study contributes to the emerging academic literature that seeks to analyze the behavior of SWFs in financial markets.