P2P (peer-to-peer) lending is the biggest and most developed form of alternative finance. But does it have any enduring value to add in the financial system? * P2P lending platforms have sprung up in many countries since the global financial crisis, particularly in China, where they are now in crisis. According to research from the Cambridge… Continue Reading
Tag Archives: banks
Key concepts in finance: liquidity
What exactly is liquidity? The word liquidity is used in many different ways, often confusingly. It’s important to keep clear the centrally important concept of what liquidity is: the ability to turn assets into money quickly and at low cost. * It’s common to read in the financial press that central banks are keeping up… Continue Reading
Still debating the causes of the world financial crisis
Major world historical events such as the financial crisis that swept much of the world in 2007-09 typically have multiple causes. In 2014 there was an outpouring of new books about the causes of the First World War which started a century before. Historians continue to disagree about why the nations of Europe went to… Continue Reading
How can we tell if a bank is strong?
This week it was reported (*) that the European Commission was investigating some southern EU nations to see if they had unfairly and illegally allowed banks to count deferred tax assets towards their capital. What does this mean and what does it tell us about bank financial strength? We can assess bank strength by asking… Continue Reading
The central importance of housing to the British financial system
In Britain we seem to have a love affair with the property market. Home ownership is 69%, not especially high, but average house prices are a constant topic of discussion, mainly because property in the prosperous south east of the UK (including Cambridge) is very expensive. The latest Bank of England Financial Stability Report shows… Continue Reading
How to bankrupt a bank
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 in this account but it’s important to remember that the most important reasons for bank… Continue Reading
Even now, banks are still not safely capitalised
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 the the Vice Chairman of the Federal Deposit Insurance Commission (FDIC), Thomas Hoenig, suggests our… Continue Reading