OECD Journal: Financial Market Trends

English
Frequency :
Semiannual
ISSN :
1995-2872 (online)
ISSN :
1995-2864 (print)
DOI :
10.1787/19952872
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The twice-yearly journal from OECD providing timely analyses and statistics on financial matters of topical interest and longer-term developments in specific financial sectors. Each issue provides a brief update of trends and prospects in the international and major domestic financial markets along with articles covering such topics as structural and regulatory developments in OECD financial systems, trends in foreign direct investment, trends in privatization, and financial sector statistics covering areas such as bank profitability, insurance, and institutional investors.

Periodically, a small number of articles within one field of financial sector developments – constituting the so-called special focus for the particular issue – may be included.

Now published as part of the OECD Journal package.

 

Latest Articles Hide / Show all Abstracts

Mark Number Date Article Volume and Issue Click to Access
  03 Feb 2016 Opportunities and limitations of public equity markets for SMEs
Iota Kaousar Nassr, Gert Wehinger

This article on public equity financing for small and medium-sized enterprises (SMEs) complements earlier OECD work on market-based finance for SMEs. The development of this market segment could promote investment in SMEs and, together with securitisation and other non-bank debt financing instruments, encourage an enhanced allocation of risk and risk taking, and thus support growth. Despite the benefits of public SME equity, its share is small and an equity gap exists for risk financing more generally. A number of important impediments to the wider use of public equities for SMEs are identified, such as admission cost and listing requirements, lack of liquidity, educational gaps, limited ecosystems, and tax treatment, all of which require attention by regulators and policy makers alike.

Volume 2015 Issue 1 Click to Access: 
    http://oecd.metastore.ingenta.com/content/2715011ec003.pdf
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  • http://www.keepeek.com/Digital-Asset-Management/oecd/finance-and-investment/opportunities-and-limitations-of-public-equity-markets-for-smes_fmt-2015-5jrs051fvnjk
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  03 Feb 2016 Financial instruments for managing disaster risks related to climate change
Leigh Wolfrom, Mamiko Yokoi-Arai

This article provides an overview of the potential implications of climate change for the financial management of disaster risks. It outlines the contribution of insurance to reducing the economic disruption of disaster events and policy approaches to supporting the penetration of disaster insurance coverage and the capacity of insurance markets to absorb disaster risks, including through the use of capital markets instruments and international co-operation in risk pooling. It concludes with a number of recommendations for improving the financial management of disaster risks in the context of climate change and some areas of further work.

JEL classification: G22, G23, H84, Q54
Keywords: Climate change, natural disasters, extreme events, insurance, reinsurance, catastrophe bonds

Volume 2015 Issue 1 Click to Access: 
    http://oecd.metastore.ingenta.com/content/2715011ec002.pdf
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  • http://www.keepeek.com/Digital-Asset-Management/oecd/finance-and-investment/financial-instruments-for-managing-disaster-risks-related-to-climate-change_fmt-2015-5jrqdkpxk5d5
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  03 Feb 2016 Finance and climate
Jean Boissinot, Doryane Huber, Gildas Lame

Climate change is a major political and economic challenge. This paper sketches out its relevance for the financial sector. Necessary low-carbon investments imply a significant yet manageable financing gap. However, we argue that beyond capital mobilisation that has attracted most attention until now, the main challenge is ensuring a transition-consistent capital reallocation. The financial sector has a key role to play in that respect, complementary to appropriately designed climate policies. To help the financial system fulfil its role, the understanding of the economics of climate change should be deepened and a sector-wide businessoriented appropriation of these issues should be promoted.

JEL classification: Q54, E10, E44, G12, G14, G21, G22, G23, G28.
Keywords: Climate change, low carbon, climate finance, green finance, investment, capital allocation, financial system, risks

Volume 2015 Issue 1 Click to Access: 
    http://oecd.metastore.ingenta.com/content/2715011ec001.pdf
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  • http://www.keepeek.com/Digital-Asset-Management/oecd/finance-and-investment/finance-and-climate_fmt-2015-5jrrz76d5td5
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  22 Apr 2015 Why implicit bank debt guarantees matter
Oliver Denk, Sebastian Schich, Boris Cournède

What are the economic effects of implicit bank debt guarantees and who ultimately benefits from them? This paper finds that "financial excesses" – situations where bank credit reaches levels that reduce economic growth – have been stronger in OECD countries characterised by larger values of implicit guarantees and where bank creditors have not incurred losses in bank failure resolution cases. Also, implicit bank debt guarantees benefit financial sector employees and other high-income earners in two ways, increasing income inequality. First, implicit guarantees are likely to raise financial sector pay. This is consistent with the observation of "financial sector wage premia", or financial sector employees earning in excess of their profile in terms of age, education and other characteristics. Second, implicit guarantees are likely to result in more and cheaper bank lending. If so, well-off people tend to benefit relatively more since household credit is more unequally distributed than income.

JEL classification: D63, E43, G21, G28, O47
Keywords: Bank funding costs, implicit guarantees for bank debt, bank failure resolution, finance and growth, finance and income inequality

Volume 2014 Issue 2 Click to Access: 
    http://oecd.metastore.ingenta.com/content/2714021ec004.pdf
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  • http://www.keepeek.com/Digital-Asset-Management/oecd/finance-and-investment/why-implicit-bank-debt-guarantees-matter_fmt-2014-5js3bfznx6vj
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  22 Apr 2015 Unlocking SME finance through market-based debt
Iota Kaousar Nassr, Gert Wehinger

Small and medium-sized enterprises (SMEs) are key contributors to economic growth and job creation. The current economic and financial crisis has reduced bank lending and has affected SMEs in particular. Capital markets will have to play a bigger role in financing SMEs in order to make them more resilient to financial shocks. This article reviews the spectrum of alternative market-based debt instruments for SME financing. It focuses on securitisation and covered bonds and also addresses issues regarding small/mid-cap bonds and private placements. It reviews the current state of the market for these instruments and identifies associated risks; analyses the barriers for issuers and investors alike; and provides best practices and high level recommendations to help alleviate barriers without hampering the overall stability of the system.

JEL classification: G1, G2, G23, G28
Keywords: SME finance, SME securitisation, non-bank finance, (high-quality) securitisation, asset-backed securities (ABS), SME CLO (collateralised loan obligation), (covered) bonds, private placements, financial regulation, European DataWarehouse, Prime Collateralised Securities (PCS) initiative

Volume 2014 Issue 2 Click to Access: 
    http://oecd.metastore.ingenta.com/content/2714021ec003.pdf
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  • http://www.keepeek.com/Digital-Asset-Management/oecd/finance-and-investment/unlocking-sme-finance-through-market-based-debt_fmt-2014-5js3bg1g53ln
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  22 Apr 2015 Tracing the origins of the financial crisis
Paul Ramskogler

More than half a decade has passed since the most significant economic crisis of our lifetimes and a plethora of different interpretations has been offered about its origins. This paper consolidates the stylised facts put forward so far into a concise and coherent meta-narrative. The paper connects the dots between the arguments developed in the literature on macroeconomics and those laid out in the literature on financial economics. It focuses, in particular, on the interaction of monetary policy, international capital flows and the decisive impact of the rise of the shadow banking industry.

JEL classification: A10, F30, G01
Keywords: Financial crisis, international capital flows, shadow banking

Volume 2014 Issue 2 Click to Access: 
    http://oecd.metastore.ingenta.com/content/2714021ec002.pdf
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  • http://www.keepeek.com/Digital-Asset-Management/oecd/finance-and-investment/tracing-the-origins-of-the-financial-crisis_fmt-2014-5js3dqmsl4br
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  22 Apr 2015 Infrastructure versus other investments in the global economy and stagnation hypotheses
Adrian Blundell-Wignall, Caroline Roulet

This paper uses data drawn from 10 000 global companies in 75 advanced and emerging countries to look at trends in infrastructure and other non-financial industries in light of the talk of stagnation. There appears to be a twin paradox in the global economy: some companies and industries are possibly over-investing, driving down returns on equity (ROEs) versus the cost of capital and creating margin pressure globally, while others carry out too little long-term investment in favour of buybacks and the accumulation of cash. This pattern is associated with a shift in the centre of gravity of world economic activity towards emerging markets. Most of the over-investment appears to be occurring in the extremely strong growth of emerging market sales and investment in non-infrastructure companies, much of which is being financed from rapidly growing debt since the financial crisis. Global value chains, emerging market policies of financial repression, low interest rates, taxation incentives, natural resource endowments and other factors determine where investment is stronger and where it is restrained. Potential problems of debt-financed over-investment in non-infrastructure industries in emerging markets and the incentives for buybacks are identified as major policy issues that need to be addressed if sustainable growth is to be achieved. Evidence on the role of causal factors (sales, GDP, the return on equity, the cost of equity and debt and a measure of financial openness) on corporate capital spending is presented. Finally some policy recommendations are made.

JEL classification: F21, G15, G18, G23
Keywords: Global economy, infrastructure, investment, listed companies

Volume 2014 Issue 2 Click to Access: 
    http://oecd.metastore.ingenta.com/content/2714021ec001.pdf
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  • http://www.keepeek.com/Digital-Asset-Management/oecd/finance-and-investment/infrastructure-versus-other-investments-in-the-global-economy-and-stagnation-hypotheses_fmt-2014-5js4sbd025d6
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  14 Oct 2014 Non-bank debt financing for SMEs
Iota Kaousar Nassr, Gert Wehinger

Reducing bank dependence in financing small-and medium-sized enterprises (SMEs) that are key contributors to economic growth and job creation should help making them more resilient to financial shocks. Various non-bank debt financing alternatives are available and were the focus of a Roundtable discussion that this article draws on. Revitalising securitisation, tarnished during the crisis, is important, by making it safer, simpler and more transparent, and perhaps also by offering some (initial) government and regulatory support. Similarly, covered bonds can be attractive instruments for SME finance. For mid-sized companies, bond issuance and private placements may also provide useful alternatives. All these instruments can and should be tailored to fit the investors’ needs. There is no "silver bullet" for SME finance which is exceptionally complex due to the diversity of SMEs themselves. Data transparency, standardisation, regulatory support and raising awareness about available financing options should be among the issues to be addressed.

JEL classification: G1, G2, G23, G28

Keywords: SME finance, non-bank finance, (high-quality) securitisation, asset-backed securities (ABS), SME CLO (collateralised loan obligation), (covered) bonds, private placements, European DataWarehouse, Prime Collateralised Securities (PCS) initiative.

Volume 2014 Issue 1 Click to Access: 
    http://oecd.metastore.ingenta.com/content/2714011ec005.pdf
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  • http://www.keepeek.com/Digital-Asset-Management/oecd/finance-and-investment/non-bank-debt-financing-for-smes_fmt-2014-5jxx05svvw34
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  14 Oct 2014 Financing infrastructure – International trends
Raffaele Della Croce, Stefano Gatti

The infrastructure financing market has gone through a process of radical transformation starting from the mid-2000s. Different reasons – including a changed macroeconomic environment, more stringent regulations on financial intermediaries, and a modified appetite for long-term asset investments – have led to a reallocation of flows from the banking sector to the institutional investors sector. This article provides an overview of international trends in infrastructure finance. It proposes a map of the different investment channels that private investors can use to access the infrastructure investment on the equity and debt side, highlighting the historical evolution of these segments in the past few years. Recently designed financial structures, such as different forms of partnership between banks and institutional investors, securitisation models and debt/credit fund vehicles, are also taken into consideration.

JEL classification: E2, G1, G11, G2, G3, H44, H54, H81
Keywords: infrastructure financing, long-term investment, institutional investors, public-private partnerships, bank institutional investors partnerships, syndicated loans, project bonds, securitisation, debt/credit fund vehicles, financial market regulation

Volume 2014 Issue 1 Click to Access: 
    http://oecd.metastore.ingenta.com/content/2714011ec006.pdf
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  • http://www.keepeek.com/Digital-Asset-Management/oecd/finance-and-investment/financing-infrastructure-international-trends_fmt-2014-5jxvpb4jfrf1
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  14 Oct 2014 Problems in the international financial system
Adrian Blundell-Wignall, Caroline Roulet

Since the 1980s OECD investment-saving correlations – as an inverse measure of economic openness – indicate a very wide disparity of openness between the OECD and emerging market economies (EMEs) with an absence of open markets in the latter. Given the increasing weight of EMEs in the world economy this pattern of growth with disparity of openness is ultimately unsustainable. This approach to development is not in the interests of EMEs in the post-crisis global environment. Various studies show how the absence of capital mobility inhibits development though private sector capital expenditure at the firm level. This paper generalises those findings in a panel study, showing that in the period since 2008 the increased presence of capital controls is associated with highly significant negative effects on business investment. It suggests that the world economy could be entering a more dangerous phase of potential instability that is not in the interests of either the advanced or the emerging world. There is scope for better policies to encourage more openness; the OECD Codes of Liberalisation could be an effective tool for managing the reform process.

Volume 2014 Issue 1 Click to Access: 
    http://oecd.metastore.ingenta.com/content/2714011ec004.pdf
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  • http://www.keepeek.com/Digital-Asset-Management/oecd/finance-and-investment/problems-in-the-international-financial-system_fmt-2014-5jxzmkg91s0t
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