Modern Financial Markets

'Modern Financial Markets and Institutions' provides a comprehensive and authoritative introduction to the workings of modern financial systems, the efficiency of money markets and the role of investment bankers, illustrating how they impact our everyday lives.

Throughout this concise, accessible book, readers will quickly learn the fundamental concepts of managerial finance while discovering how things really work. The material is explained using an intuitive theoretical context, providing them with a richer understanding of the material and better insights into solving problems. Finance concepts are covered in a common sense manner and the use of mathematical jargon is minimized. The unifying theme for the book is the concept of valuation since it is the most fundamental concept in finance. The authors define and discuss value in terms of net present value (NPV).

This comprehensive source of information about financial fraud delivers a mature approach to fraud detection and prevention. It brings together all important aspect of analytics used in investigating modern crime in financial markets and uses R for its statistical examples. It focuses on crime in financial markets as opposed to the financial industry, and it highlights technical aspects of crime detection and prevention as opposed to their qualitative aspects. For those with strong analytic skills, this book unleashes the usefulness of powerful predictive and prescriptive analytics in predicting and preventing modern crime in financial markets. Interviews and case studies provide context and depth to examples Case studies use R, the powerful statistical freeware tool Useful in classroom and professional contexts

A valuable guide to the essential elements of modern financial systems This book offers you a unified theory of modern financial system activity. In it, author Edwin Neave distills a large body of literature on financial systems, the institutions that comprise the systems, and the economic impacts of the systems' operation. Through non-technical summaries, Neave provides you with a primer on how financial systems work, as well as how the many parts of any financial system relate to each other. He does so in a straightforward manner, with an emphasis on economic principles and the relationship between various aspects of financial system activity. Discusses financial governance and explains how financial markets and institutions complement each other Identifies the economic forces at work within financial systems and explores how they determine system organization and change Offers a theoretical survey of financial activity and its application to numerous practical situations Explains both static financial system organization and the dynamics of financial system evolution Following a non-technical approach, this book skillfully explores how financial systems work, as well as how the many parts of any financial system relate to each other.

The traditional role of a bank was to transfer funds from savers to investors, engaging in maturity transformation, screening for borrower risk and monitoring for borrower effort in doing so. A typical loan contract was set up along six simple dimensions: the amount, the interest rate, the expected credit risk (determining both the probability of default for the loan and the expected loss given default), the required collateral, the currency, and the lending technology. However, the modern banking industry today has a broad scope, offering a range of sophisticated financial products, a wider geography -- including exposure to countries with various currencies, regulation and monetary policy regimes -- and an increased reliance on financial innovation and technology. These new bank business models have had repercussions on the loan contract. In particular, the main components and risks of a loan contract can now be hedged on the market, by means of interest rate swaps, foreign exchange transactions, credit default swaps and securitization. Securitized loans can often be pledged as collateral, thus facilitating new lending. And the lending technology is evolving from one-to-one meetings between a loan officer and a borrower, at a bank branch, towards potentially disruptive technologies such as peer-to-peer lending, crowd funding or digital wallet services. This book studies the interaction between traditional and modern banking and the economic benefits and costs of this new financial ecosystem, by relying on recent empirical research in banking and finance and exploring the effects of increased financial sophistication on a particular dimension of the loan contract.

Introduction to the Theories and Varieties of Modern Crime in Financial Markets explores statistical methods and data mining techniques that, if used correctly, can help with crime detection and prevention. The three sections of the book present the methods, techniques, and approaches for recognizing, analyzing, and ultimately detecting and preventing financial frauds, especially complex and sophisticated crimes that characterize modern financial markets. The first two sections appeal to readers with technical backgrounds, describing data analysis and ways to manipulate markets and commit crimes. The third section gives life to the information through a series of interviews with bankers, regulators, lawyers, investigators, rogue traders, and others. The book is sharply focused on analyzing the origin of a crime from an economic perspective, showing Big Data in action, noting both the pros and cons of this approach. Provides an analytical/empirical approach to financial crime investigation, including data sources, data manipulation, and conclusions that data can provide Emphasizes case studies, primarily with experts, traders, and investigators worldwide Uses R for statistical examples

The book is motivated by the disruptions introduced by the financial crisis and the many attempts that have followed to propose new ideas and remedies. Assembling contributions by authors from a variety of backgrounds, this collection illustrates the potentials resulting from the marriage of financial economics, complexity theory and an out-of-equilibrium view of the economic world. Challenging the traditional hypotheses that lie behind financial market functioning, new evidence is provided about the hidden factors fuelling bubbles, the impact of agents’ heterogeneity, the importance of endogeneity in the information transmission mechanism, the dynamics of herding, the sources of volatility, the portfolio optimization techniques, the financial innovation and the trend identification in a nonlinear time-series framework. Presenting the advances made in financial market analysis, and putting emphasis on nonlinear dynamics, this book suggests interdisciplinary methodologies for the study of well-known stylised facts and financial abnormalities. This book was originally published as a special issue of The European Journal of Finance.

Since the Global Financial Crisis, the structure of financial markets has undergone a dramatic shift. Modern markets have been “zombified” by a combination of Central Bank policy, disintermediation of commercial banks through regulation, and the growth of passive products such as ETFs. Increasingly, risk builds up beneath the surface, through a combination of excessive leverage and crowded exposure to specific asset classes and strategies. In many cases, historical volatility understates prospective risk. This book provides a practical and wide ranging framework for dealing with the credit, positioning and liquidity risk that investors face in the modern age. The authors introduce concrete techniques for adjusting traditional risk measures such as volatility during this era of unprecedented balance sheet expansion. When certain agents in the financial network behave differently or in larger scale than they have in the past, traditional portfolio theory breaks down. It can no longer account for toxic feedback effects within the network. Our feedback-based risk adjustments allow investors to size their positions sensibly in dangerous set ups, where volatility is not providing an accurate barometer of true risk. The authors have drawn from the fields of statistical physics and game theory to simplify and quantify the impact of very large agents on the distribution of forward returns, and to offer techniques for dealing with situations where markets are structurally risky yet realized volatility is low. The concepts discussed here should be of practical interest to portfolio managers, asset allocators, and risk professionals, as well as of academic interest to scholars and theorists.