Do depositors care about enforcement actions?

This study develops a multi-period structural model to value bank subordinated debt (subdebt) under different regulatory policies. The model provides a complete framework for analyzing how various factors, such as credit and interest rate risks, bank characteristics, and regulatory policies, affect subdebt prices and yield spreads. It finds that the implementation of Prompt Corrective Action (PCA) will raise subdebt prices and lower subdebt spreads, while capital forbearance will have the opposite effects. Also, subdebt spreads are less sensitive to bank risk when PCA is imposed than when capital forbearance occurs. The results of the paper suggest that enhancing market discipline through giving subdebt investors more rights to force timely reorganization of weak banks will reduce the subdebt spreads required by investors.

The leading indicator ability of yield spread for future output growth and inflation is tested for India. Using the yields on securities with maturities ten years and three months to construct yield spread, we study the predictive power of yield spread for output growth and inflation. Our results based on regression of future inflation and output on yield spreads indicate that there is no information in the yield spread about future economic activity and inflation in India. Further, the predictive power of yield spread is analyzed over different quantiles of inflation and output growth using quantile regression; we find that there is again no evidence of predictive information in the yield spreads. Using multiscale wavelet based regression, predictive power is however unveiled at higher time scales for output growth only.

The Syrian civil war has caused heartbreaking human suffering. Proponents of decisive action to end this suffering have tended to frame their case in terms of liberal values such as democracy, human rights and the rule of law. In framing the humanitarian issue in this way, advocates of UN Security Council involvement have emphasized the illiberality of the ‘Assad regime’ in order to promote the acceptability of coercive enforcement action under Chapter VII of the UN Charter. I argue that this rationale is counterproductive as it guarantees that the Russian Federation will veto any proposal for Chapter VII measures. Russia favours an inclusive Syrian-led political solution to the Syrian civil war and fears that any invocation of Chapter VII will provide Western powers with carte blanche for regime change, effectively repeating – in Russia’s eyes – NATO’s action in Libya in 2011. This article offers an alternative way of framing arguments for humanitarian enforcement action that is intended to side-step Russia’s objections. This strategic re-framing replaces the logic of illiberality with the logic of incorrigibility. This strategy takes its inspiration from Michel Foucault’s work on disciplinary power, making an admittedly unorthodox use of Foucauldian analytics to do so. The incorrigibility strategy seeks to bypass Russian fears about regime change by adopting a threshold for Chapter VII action based on a measured phenomenon – the repeated failure by the parties to correct their behaviour in line with UNSC prescriptions. Apart from providing a threshold for enforcement action, the logic of incorrigibility also shapes the eventual Chapter VII measures taken because it focuses on correcting the parties’ behaviour and because it yields highly specified and relatively controllable mandates for coercive action which limit states’ interpretation of what is required of them to carry out the UNSC’s decisions.

Insider Abuse and Fraud Prediction for U.S. Banks: A Comparison of Machine Learning Approaches

A Model of Asset Pricing under Country Risk

A Guide to Russian Bank Data: Breaking Down the Sample of Banks

Liberalization, privatization, globalisation and information highways have been responsible to do business at ease but they also created suspicion about long term sustainability of successful businesses. Though, the foundation of sustainability rests on compliance behaviour of any company, it has been observed that compliance behaviour with the latest mandates from regulators, cannot guarantee the future sustainability. Therefore, this study tries to emphasize on various aspects of sustainability reporting for the NIFTY-FIFTY companies especially the banking sector. The paper explores comparison between sustainability reporting guidelines of GRI, UNGC and BRR, Basel III disclosure made by sample banks, principle-wise information disseminated by banks, various financial ratios and financial data reported in annual reports. After due comparison of various reporting and information in public domain the paper concludes that adopting all the mandatory and non-mandatory reporting guidelines go in vain if the basic pillar of NPA is not strengthened in banking sector.

The Importance of Taking Privacy Seriously

Recent events have highlighted the potential importance of nonlinear efiects of flscal variables (notably debt and deflcits) on interest rates: While in times when government solvency is not a concern the standard crowding-out efiects are of moderate magnitude, in times when default risk becomes an issue the interest rate efiects can become very large. This paper provides new evidence on the magnitude of these efiects. For the case when default risk is not a concern, it uses an arbitrage-free term structure model to estimate the dynamic efiects of flscal policy shocks on interest rates along the entire maturity spectrum. For the case when default risk becomes a concern (thereby violating a central assumption of the term structure model), I present evidence based on EMU government bond spread regressions on time-varying efiects of national flscal policies on spreads as well as the time-varying sensitivity of yield spreads to international risk aversion as a function of the state of flscal policy. JEL classiflcation: E6, H6.

Studies have shown that potential whistleblowers are reluctant to report misconduct because they fear retaliation. In Australia, fear of retaliation is exacerbated for private-sector employees where the lack of prescriptive legislation aggravates vulnerability in all but exceptional circumstances. Through examining the codes of conduct of Australia's 100 largest listed companies (‘Codes’) this article argues that while Codes have the potential to provide an important regulatory function through facilitating whistleblowing, the breadth of confidentiality undertakings contained therein may instead be chilling potential whistleblowers from speaking up. While companies have legitimate interests in protecting confidential information, it is well-established that employees may disclose their employer's unlawful conduct to the government, even if such disclosure is in violation of the company's confidentiality policy. To affirm this right, in the United States (US), federal regulators have recently taken ‘pretaliatory’ enforcement action against companies for requiring employees to execute confidentiality agreements that stifle the reporting of possible violations of federal laws. Such regulation by enforcement has successfully effected cultural change through facilitating widespread amendments to US corporate confidentiality agreements. Accordingly, this article argues that any future Australian legislation should include an ‘anti-confidentiality provision’ similar to the US and Canadian frameworks to affirm an employee's right to communicate with a regulator directly, despite any purported agreement or corporate policy to the contrary.

Stylized facts and regime changes: Are prices procyclical?

Information security has become a critical issue. The risks of computer hackers, computer viruses ana worms, identity theft, denial of service attacks, theft, terrorist attacks, sabotage, surveillance and intrusion by competitors and malicious acts by disgruntled employees, among other vulnerabilities, are increasing at an alarming exponential rate. Managing the risks from these unprecedented threats to the enterprise has become a vital risk management concern for the company's board of directors and top management, with the result that effective security programs have become a necessity. Prudent risk management and due care with respect to security programs are necessary to avoid potential liability. Information security is a risk management process to protect the confidentiality, integrity and availability of systems and content. The federal Information Security Act of 2002 (44 U.S.C. § 3542) defines Security as ... protecting and systems from unauthorized access, use, disclosure, disruption, modification, or destruction in order to provide - (A) integrity, which means guarding against improper modification or destruction and includes ensuring nonrepudiation and authenticity; (B) confidentiality, which means preserving authorized restrictions on access and disclosure, including means for protecting personal privacy and proprietary information; and (C) availability, which means ensuring timely and reliable access to and use of information. This article examines the evolving standard in the United States to provide reasonable security requiring a risk-based process to develop and maintain a comprehensive security program. This process is based upon recent Federal Trade Commission (FTC) consent orders relating to security. The FTC has significantly broadened the scope of its enforcement actions by asserting that a failure to provide appropriate security was, itself, an unfair trade practice in violation of Section 5 of the FTC Act. These information security FTC cases are very instructive in defining the scope and extent of a company's legal obligation to implement security measures. These cases point to the emergence of a standard respecting security. They demonstrate that security is no longer just good business practice. Information security has become a obligation.

The fast-paced advances of technology, including artificial intelligence (AI) and machine learning (ML), continue to create new opportunities for banks and other financial institutions. This study reveals the barriers to trust in AI by prudential banking supervisors (compliance with regulations). We conducted a qualitative study on the drivers for adoption of explainability technologies that increase transparency and understanding of complex algorithms (some of the underpinning legal principles in the proposed EU AI Act). By using human-centred and ethics-by-design methods coupled with interviews of the key stakeholders from Eastern European private and public banks and IT AI/ML developers, this research has identified the key challenges concerning the employment of AI algorithms. The results indicate a conflicting view of AI barriers whilst revealing the importance of AI/ML systems in banks, the growing willingness of banks to use such systems more widely, and the problematic aspects of implementing AI/ML systems related to their cost and economic efficiency. Keeping up with the complex regulation requirements comes at a significant cost to banks and financial firms. The focus of the empirical study, stakeholders in Ukraine, Estonia and Poland, was chosen because of the fact that there has been a sharp increase in the adoption of AI/ML models in this jurisdiction in the context of its war with Russia and the ensuing sanctions regime. While the “leapfrogging” AI/ML paths in each bank surveyed had its own drivers and challenges, these insights provide lessons for banks in other European jurisdictions. The analysis of four criminal cases brought against top banks and conclusions of the study indicate that the increase in predicate crimes for money laundering, constantly evolving sanctions regime along with the enhanced scrutiny and enforcement action against banks are hindering technology innovation and legal implications of using AI driven tools for compliance.

Wilde’s Evenings

The Human Rights Act has had an obvious impact on the law of breach of confidence as it applies to private information. Its influence on the law of confidence as it applies to commercial information has been subtle, but nevertheless significant. Confidentiality is a relative rather than an absolute concept. Whether information is in the public domain or retains the necessary quality of confidence is a question of degree which depends on the circumstances of the case, and in particular the nature of the information. A compilation of information may be confidential even if the individual elements are in the public domain. It is a defence to a claim for breach of confidence that disclosure of the information would be in the public interest whether the clam is based on an express contractual, an implied contractual or an equitable obligation. The balance of authority favours the view that an express contractual obligation carries greater weight when balancing parties’ Convention rights than an implied contractual or equitable obligation, but it is difficult to see why this should be so. The real difference between contractual and equitable obligations is that it is possible by contract to prevent the disclosure of information that is not confidential. The law continues to evolve. As matters stand parties are well advised to seek contractual protection for their confidential information.