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A major theme in the literature on bank regulation is that greater reliance on market forces can mitigate the moral hazard problem inherent in government sponsored deposit insurance. Specific proposals to impose greater market discipline on banks include minimum requirements on (1) uninsured subordinated debt financing (either fixed-term or with option-type features), and (2) private coinsurance on deposits. Both proposals amount to delegating the responsibility for bank regulation to various private sector claimholders. The results suggest that such delegation (with or without claims that include option-type features) may be ineffective in lowering bank risk, at least within the present regulatory and institutional framework. Alternative mechanisms exist that can mitigate the moral hazard problem; however, it may be necessary for the regulator/deposit insurer to be an integral part of the solution.

As maternal mortality increases in the United States, birth providers and policymakers are seeking new solutions to address what scholars have called the “C-section epidemic.” Hospital cesarean rates vary tremendously, from 7 to 70 percent of all births. Based on in-depth, semi-structured interviews with 47 obstetricians and family physicians in the United States, I explore one reason for this variation: differences in how physicians perceive and manage risk in American obstetrics. While the dominant model of risk management encourages high levels of intervention and monitoring, I argue that a significant portion of physicians are concerned about high intervention rates in childbirth and are working to reduce cesarean rates and/or the use of monitoring technologies like continuous fetal heart rate monitors. Unlike prior theories of biomedicalization, which suggest that health risks are managed through increased monitoring and intervention, I find that many physicians are resisting this model of risk management by ordering fewer interventions and collecting less information about their patients. These providers acknowledge that interventions designed to mitigate risks may only provide an illusion of control, rather than an actual mastery of risks. By limiting interventions, providers may lose this illusion of control but also mitigate the iatrogenic effects of intervention and continuous monitoring. This alternative approach to risk management is growing in many medical fields and deserves more attention from medical sociologists.

Business groups often contain banks or near banks that can protect group firms from economic shocks. A group bank subordinate to other group firms can become an “organ bank” that selflessly bails out distressed group firms and anticipates a government bailout. A group bank subordinating other group firms can extend loans to suppress their risk taking to default risk, preserving risk-averse low-productivity zombie firms. Actual business groups can fall between these polar cases. Subordinated group banks magnify risk taking; subordinating group banks suppress risk taking; yet both distortions promote business group firms’ survival. Limiting intragroup income and risk shifting, severing banks from business groups, articulating Business Group Law, or dismantling business groups may mitigate both distortions but also limits business groups’ internal markets, which are thought to be important where external markets work poorly.

I survey applications of Markov switching models to the asset pricing and portfolio choice literatures. In particular, I discuss the potential that Markov switching models have to fit financial time series and at the same time provide powerful tools to test hypotheses formulated in the light of financial theories, and to generate positive economic value, as measured by risk-adjusted performances, in dynamic asset allocation applications. The chapter also reviews the role of Markov switching dynamics in modern asset pricing models in which the no-arbitrage principle is used to characterize the properties of the fundamental pricing measure in the presence of regimes.

A decade after 2008 crisis, scholars in mainstream field of finance are yet to proffer lasting solutions to the menace that target the root cause of the crisis. Islamic finance offers a simple message for the whole episode and others similar to it: introduction of God consciousness, removal of interest from the system, and its replacement with profit and loss sharing together with establishment of an ethic base corporate governance structure. Absence of ethical considerations is the main factor for financial crisis in the past hundred years. Models utilized by Islamic finance industry for financing and sharing of risk are musharakah and mudarabah. This chapter provides an overview of risk management and governance in both Islamic and conventional finance in the process outlining similarities and differences between the systems. It dissected through developments in the two fields and highlighted recent controversial topics affecting the field of finance in the modern world.

Purpose – We discuss the microeconomic pros and cons of bankloan-backed securities and credit default swaps, that is, the passing on of bank loans or their default risk from originator to the general investor. By ‘micro’ we mean that our focus is on comparative advantages for banks versus other holders of the loans or risks, not the macro pros and cons of higher credit volumes.

Methodology/approach – We apply standard ideas from the corporate finance literature on the choice between loans versus public debt, related to information asymmetries and signaling at the time of origination. We also add new arguments related the possibly unhappy end of the loan.

Findings – Quite apart of the by now familiar quality-preservation incentive issue we think that securitization and CDS destroy value because they move loans and risks away from the party best informed about the risk and best placed to deal with default toward worse-placed parties.

Limitations – The analysis takes the volume of loans as given.

Practical/social implications – ABS and CDS should be confined to the highest-quality type of chapter where no information asymmetries exist, like in Europe where the traditional MBS have not caused problems for centuries.

Originality/value of the paper – To the best of our knowledge, the literature on bank loans versus public debt has not been applied to ABS/CDS before, whereas the issue of who is best placed to bear the risks has not even been raised elsewhere.

Organizational scholars studying compensation often place an emphasis on certain employee groups (e.g., executives). Missing from this discussion is research on the compensation systems for low-wage jobs. In this review, the authors argue that workers in low-wage jobs represent a unique employment group in their understanding of rent allocation in organizations. The authors address the design of compensation strategies in organizations that lead to different outcomes for workers in low-wage jobs versus other workers. Drawing on and integrating human resource management (HRM), inequality, and worker literatures with compensation literature, the authors describe and explain compensation systems for low-wage work. The authors start by examining workers in low-wage work to identify aspects of these workers’ jobs and lives that can influence their health, performance, and other organizationally relevant outcomes. Next, the authors explore the compensation systems common for this type of work, building on the compensation literature, by identifying the low-wage work compensation designs, proposing the likely explanations for why organizations craft these designs, and describing the worker and organizational outcomes of these designs. The authors conclude with suggestions for future research in this growing field and explore how organizations may benefit by rethinking their approach to compensation for low-wage work. In sum, the authors hope that this review will be a foundational work for those interested in investigating organizational compensation issues at the intersection of inequality and worker and organizational outcomes.