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Showing posts from July, 2015

Belfast's FinTech Industry

I recently was a panel member on a BBC radio show called Inside Business. The topic for discussion was Belfast's booming FinTech industry. You can listen to the show's podcast here.

Farewell Widener - Here Comes the Summer!

I must apologise to all readers of my Blog for my relative blogging inactivity over the past year. The principal reason for this inactivity has been my role as acting Head of Queen's Management School. I've just signed up to do another year so my blogging activity won't improve any time soon!
The best part of the job has been working with my colleagues to develop the School's unique research, education and engagement agenda. The chief downside to the job is that I have less direct contact with students in the classroom. In addition, my research and blogging have taken a huge hit. I've been attempting to remedy the former over the past couple of weeks by working at Harvard University. I've met up with old friends, a PhD student, and a co-author, but most of my time has been spent in the fantastic Widener Library, which is celebrating its 100 year anniversary.  Today is my last day in the library before my summer holiday.
There is a very close connection between…

Anniversary of Banking in Crisis

This very day last year, my book Banking in Crisis was published by Cambridge University Press. Since its publication, I have given talks about it at the Bank of England, Schroders, the Library of Mistakes in Edinburgh, University College Dublin, and Lund University. I also enjoyed launching the book back in September at Queen's Management School.
It was great seeing my book go into the top 10,000 books in Amazon and I enjoyed getting my first royalty cheque - nowhere near a 'living wage' could be obtained from authoring academic books in case you are wondering! The year ahead will bring academic reviews in scholarly journals - I'm interested to see what my academic peers will have to say about my book. It has already been reviewed favourably on a few book websites (Goodreads and the Page 99 test).

Unfortunately, the aftermath of the 2008 crisis is still with us - witness Greece, near-zero interest rates, QE, low economic growth etc.. Unstable banking has a huge econo…

Northern Ireland's Finance Sector

I've just recorded a BBC Inside Business broadcast on Northern Ireland's fintech sector. Just before the interview, I came across this intersting infographic by TheCityUK on the importance of N. Ireland's financial sector. 

How Valuable Are Connections?

Daron Acemoglu, Simon Johnson, Amir Kermani, James Kwak and Todd Mitton have written a paper on whether firms connected to Timothy Geithner benefited from these connections. They do so by looking at how stocks of these firms reacted to the announcement that he was a nominee for Treasury Secretary in November 2008. They find that there were large abnormal returns for connected firms.
Below is the paper's abstract and the full paper is available here.
The announcement of Timothy Geithner as nominee for Treasury Secretary in November 2008 produced a cumulative abnormal return for financial firms with which he had a connection. This return was about 6% after the first full day of trading and about 12% after ten trading days. There were subsequently abnormal negative returns for connected firms when news broke that Geithner's confirmation might be derailed by tax issues. Excess returns for connected firms may reflect the perceived impact of relying on the advice of a small network…

The Failure of Herstatt Bank

As an undergraduate, I was taught about the failure of Herstatt Bank in 1974 and Herstatt risk. This bank was only the 35th largest bank in Germany at the time so why would anyone be interested in studying its failure? Herstatt failed because of its involvement in risky foreign exchange business. When it closed its doors on 26 June 1974, counterparty banks (mainly in New York) had not received dollars due to them because of time-zone differences - this is known as settlement risk. The cross-jurisdictional implications of its failure resulted in the Bank for International Settlements setting up the Basel Committee on Banking Supervision and Herstatt's failure was a key reason for the establishment of real-time gross settlements systems, which ensures that payments between two banks are executed in real time.
The Bank of England's Ben Norman has an interesting post on Herstatt over at the Bank's new blog (Bank Underground). As well as giving an excellent overview of the Her…

Does Democracy Cause Growth?

A month ago I met an alumnus in Shenzhen who told me that the problem with N. Ireland's economy was, and I quote, "too much democracy"! Is too much democracy bad for growth? A few years ago, Wenwen Zhan I published a paper (click here) which looked at the extension of the electoral franchise in the UK in 1867. We found that investors reacted negatively to the passage of this legislation because of fears about the protection of property rights. In other words, there might well be a non-linear relationship inverted U-shaped relationship between democracy and growth - there can be too much democracy!
However,Daron Acemoglu and co-authors have recently published a paper entitled Democracy Does Cause Growth. In this paper, they argue that democracy causes growth and it does so by encouraging investment, increasing schooling, inducing reforms, reducing social unrest, and improving the provision of public goods. Here is the paper's abstract: We provide evidence that democr…

Greek Voters - Choice between Scylla and Charybdis

Greece is in a mess. Who is blame? The Troika or Greece's politicians?  I don't blame either. For me, the blame rests squarely on the shoulders of the political architects of the euro (monetary union) project. The European Union was established to promote peace and democracy in Europe and bind European states together. Mutual trading ties and the free movement of good and services helped to achieve this. However, the European political (and oftentimes unelected) elite wanted ever closer union between member states and thought that monetary union would be the way to achieve this. The problem with this idea is that it put the cart before the horse - political (and therefore fiscal and banking) union is a precondition for monetary union.

Any deal or extended bailout package agreed over the next few days simply postpones the inevitable (and creditor nations may want to do this to give their banks more time to repair their balance sheets). A YES vote in the referendum means more a…