In the wake of the financial crisis, which showed the surprisingly fragile state of conventional western banks, people have looked for alternative ways of delivering financial services, especially credit. The IMF recently compared two types of banking that may offer … Continued
The Chinese government is in the process of deregulating interest rates. It took the first step in July 2013 when the People’s Bank of China (PBOC) freed the banks to set the rate charged to borrowers, other than some mortgage-related … Continued
The Bank for International Settlements (BIS) produced its triennial detailed review of foreign exchange (FX) markets on 5 September 2013. What we learn from this is that the FX market is vast, growing and still dominated by dollar trading in … Continued
The fall in the Indian rupee in the last few weeks is a result of three things: i) a current account deficit that made the country vulnerable to a sudden exit of funds; ii) the inherent volatility and instability of … Continued
It is widely agreed, including by the Chinese government, that the Chinese economy needs to be rebalanced if economic growth is to continue in the long term, without severe tensions or a full blown crisis. The heart of the problem … Continued
Long term interest rates, as captured by the yield on long term US Treasury Bonds, have recently swung upwards after falling for three decades. It’s still too soon to say that the long bull market in bonds has ended, because … Continued
Investing in commodities (oil, gas, metals etc.) has gone from being a niche activity to a mainstream portfolio choice in the last fifteen years. This was driven by the long period of fast growth of commodity prices, which made a … Continued
The aftermath of the global financial crisis left many people with an impression of modern finance as extraordinarily complex, a web of multi-layered securities financed through strange off-balance sheet vehicles and held together by impenetrable mathematical formulas. There is something … Continued
A lot of hedge fund managers seem to believe that the Fed and other central banks that have been using unconventional monetary policy, specifically “quantitative easing” (see note 1), are dooming us to much higher inflation in future. Some believe … Continued
In natural (real) science you can do experiments where you can measure the influence of A on B while holding other things constant. No matter how good a theory is, it’s only taken seriously if there is an experiment that … Continued
A recent speaker on the MFin mentioned, almost in passing, that he didn’t think the Basel III regulatory system would actually be implemented, so flawed was its approach. I thought this sounded a little exaggerated but a recent speech from … Continued
The economics blogosphere and now the mainstream financial press are full of discussion about the flaws in widely cited research done by Professors Ken Rogoff and Carmen Reinhart. These authors produced an excellent and path-breaking book This Time Is Different which … Continued
The Cambridge MFin careers report came out a few weeks ago. It showed that for the class of 2011/12, 11% were without jobs as of January 2013, four months after the end of the degree programme. Actually the figure should … Continued
The latest data on China’s foreign exchange reserves, showing a rise of $130 billion to $3.4 trillion, suggest that capital is flowing into China again after an apparent outflow ahead of the change of government in late 2012. There is also … Continued
A New York Times article recently reported data from Rosenblatt Securities showing that the percentage of total US stock trading done “off-exchange” has risen from about 15% in 2008 to over 35% in 2013 and occasionally as high as 40%. What … Continued