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on Corporate Finance |
| By: | Mitja Stefancic |
| Abstract: | This paper provides an outline of both the competitive advantages and challenges currently faced by Italian cooperative credit banks. These banks play an important role for the stability of the financial system at the level of regions. They provide credit to individuals and households, as well as capital to SMEs. Italian cooperative credit banks are integrated into a distinct sui generis network, which grants them an adequate level of competitiveness in the; and Visiting PhD student market. By effectively implementing democratic principles of governance and by focusing on retail banking, these banks foster responsible behaviour, which is crucial in times of crisis. This paper suggests that a better understanding of their specifics highlights their contribution to sound cooperation in economics. Finally, the paper provides policy recommendations for a qualitative supervision of cooperative credit banks to further increase the stability of the cooperative credit network and, thus, of the Italian financial system. |
| Keywords: | Italian cooperative credit network, competitive advantages; governance, challenges |
| JEL: | G21 G28 P13 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpeu:1116&r=cfn |
| By: | Álvaro Cartea (Universidad Carlos III de Madrid); José Penalva (Banco de España) |
| Abstract: | We analyze the impact of high frequency trading in financial markets based on a model with three types of traders: liquidity traders, market makers, and high frequency traders. Our four main findings are: i) The price impact of the liquidity trades is higher in the presence of the high frequency trader and is increasing with the size of the trade. In particular, we show that the high frequency trader reduces (increases) the prices that liquidity traders receive when selling (buying) their equity holdings. ii) Although market makers also lose revenue to the high frequency trader in every trade, they are compensated for these losses by a higher liquidity discount. iii) High frequency trading increases the volatility of prices. iv) The volume of trades doubles as the high frequency trader intermediates all trades between the liquidity traders and market makers. This additional volume is a consequence of trades which are carefully tailored for surplus extraction and are neither driven by fundamentals nor is it noise trading. In equilibrium, high frequency trading and traditional market making coexist as competition drives down the profits for new high frequency traders while the presence of high frequency traders does not drive out traditional market makers. |
| Keywords: | high frequency traders, high frequency trading, flash trading, liquidity traders, institutional investors, market microstructure |
| JEL: | G12 G13 G14 G28 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:1111&r=cfn |
| By: | Gunther Capelle-Blancard; Stephanie Monjon |
| Abstract: | This paper is about the financial performance of mutual funds that practice Socially Responsible Investing (SRI). First, we measure the financial performance of a sample of 116 French SRI mutual funds over the period 2004-2007. As expected, and according to previous studies, our results show that SRI funds do not outperform the market, whatever the performance measure considered. Then, we assess the financial performances within our sample of SRI funds, as suggested by Barnett and Salomon (2006). Precisely, we examine whether the financial performances of these funds are related to the features of the SRI selection process. We find evidence that a greater screening intensity reduces SRI financial performance, but the relationship runs in the opposite direction when screening gets tougher. Further, we show that only sectoral screens – such as avoiding “sin” stocks – decrease financial performance, while transversal screens – commitment to UN Global Compact Principles, ILO/Rights at Work, etc. – have no impact. Other characteristics of the screening process like shareholder activism, or the overall quality of the SRI process do not have any significant impact either. |
| Keywords: | Socially Responsible Investing (SRI); sustainable and responsible investment; ethical investment; Corporate Social Responsibility (CSR); portfolio choice; ratings |
| JEL: | G11 Q56 C32 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2011-12&r=cfn |