Another 'Bad Bank', this Time in Italy

Reports indicating that Italy is close to establishing a bad bank prompted one wag to ask if Italy does not already have enough.  The country may be better served by setting up a good bank.

The sharp sell-off in shares of Italian banks this year is an important driver of G7-leading 12.4% slide in the local bourse this year. 

Beware of Crowds Bearing Funding

Crowdfunding has rapidly emerged as an alternative source of financing for start-ups and new ventures. From artistic endeavours such as Marina Abramovic’s Institute project to new tech like the Oculus Rift virtual reality headset and the Pebble smartwatch, crowdfunding has become increasingly mainstream.

New Pieces Added to Europe's Banking Union Puzzle

The knock-on effects of the meltdown in Chinese shares and the tension among major Middle East rivals are dominating the re-opening of the global capital markets after the New Year holiday.  The US dollar has recouped its earlier losses against the euro, sterling and the Swiss franc, and remains broadly higher against the Antipodean currencies. 

A Subprime Mortgage By Any Other Name

The subprime mortgage market brought the world to its knees, so what, on earth are we doing inviting it back to the party?  It was the packaging and reselling of this low-rated debt from US homeowners that sparked the global financial crisis. Now there is increasing evidence that such products are becoming popular again both, in the UK and the US. How scared we should be?

Not too Big to Fail, but Nothing Learned

Do you remember the 2007-08 banking crash? In the build up to it, UK bankers made vast profits and their executives collected big bonuses. After the crash, taxpayers bailed them out, which led to increased government borrowing. We have all been suffering a never-ending programme of austerity ever since.

Shadow Banking's Global Reach

In August, the Financial Times reported that 11 Chinese shadow banks had written an open letter to the top party official in Hebei (河北) province asking for a bailout. Soon afterwards, Foreign Policy magazine ran a story headlined, “Shadow banking is killing China’s stock markets.” In addition, just days ago, the Wall Street Journal reported that Chinese banks are “looking to shadow banking for growth,” which is contributing to new risks.

The Australian Government Tackles Superannuation

The government has today accepted virtually all of the recommendations of the expert panel behind last year’s Financial System Inquiry. Clearly, we can argue about some, and people would prefer to pick and choose depending on their predilections, but rather than allow the reform process to be unpicked by stealth, the government has opted to support its experts. That is a welcome change.

Commercial Bank Reform would help SMEs and ASEAN

Concerns about moderating economic growth and rising income inequality in ASEAN economies have brought small and medium-sized enterprises (SMEs) into the policy limelight. Arguing that SMEs have significant potential for creating jobs, some commentators are suggesting a host of industrial policies such as financial subsidies and local content rules to promote SMEs. However, this risks heavy-handed state intervention in SMEs. One possible alternative is to reform access to finance for SMEs — particularly from commercial banks — in ASEAN economies.

Do You Have the Right Personality for a Loan?

Lending money is a risky business. Since 2010, Bank of England figures reveal that lenders have written off an average of £13.2 billion a year in bad loans. You can never be 100% sure that you will ever get your money back.  One way of mitigating that risk is to know as much as possible about the person to which you are lending. Indeed, some financial managers reportedly are now considering the use of personality tests to assess the suitability of borrowers seeking loans or credit agreements.

Banking System Access Eludes Women Globally

Around the world, women in developing economies enjoy less access than men do to the banking system.

Bank account opening procedures, especially requirements to produce identity documents, are a major barrier for undocumented women in developing countries. These requirements aim at meeting anti-money laundering and counter terrorist financing (AML/CTF) obligations. But the barriers may be set unnecessarily high for women given their crime risk profile.