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# Basel III

## weitere Buchkapitel

### Corporate Governance Disclosure in Slovak Banks

Effective corporate governance is essential for proper functioning of the banking sector and the economy as a whole. Banks play an important role in the economy by channelling savings and depositors’ funds into activities that support entrepreneurship and help drive economic growth. From this point of view, safety and reliability of banks are key to financial stability, and therefore the way they do business is crucial to economic health. We assume that the significance of the banking sector and of systemically important banks, in particular, should also be reflected in more accurate reporting on corporate governance compared to other banks. The aim of our paper is to examine the compliance of information reported under the current legislation in the Slovak Republic with the principles of the G20/OECD on corporate governance, which were accepted by the Slovak Association of Corporate Governance. Specifically, we focus on those principles that are outlined in Part V. Disclosure and Transparency. Through the research we examine accuracy of reporting in the banks on the Slovak financial market, and subsequently we determine their order. We also compare reporting in systemic and nonsystemic banks, and for the issuers of securities and banks whose securities are not issued on the regulated market in Slovakia. The research is done through Friedman test, Wilcoxon Signed Ranking Test, Kruskal–Wallis test and Kendall’s coefficient of concordance. Our findings indicate that reporting on corporate governance is more accurate in the systemic banks and issuers of securities in comparison with other banks.

Janka Grofčíková, Katarína Izáková, Dagmar Škvareninová

### Chapter 4. Financial Sector of Bangladesh

This chapter presents different indices to measure the health of the financial sector of the economy and underscores that the increasing non-performing loans and toxic assets in banking sector and the frequent scams in capital market exhibit a vicious cycle. Instead of enforcing legal remedies against the defaulters, the government is offering plethora of facilities in favour of the politically patronised resource dependent clienteles. Besides, the excessive borrowing by the government from domestic sources to finance the so-called mega-projects and repay the loans, in the backdrop of a very low tax-GDP ratio, has pushed the banking sector to a crisis of liquidity. The prevalent politically directed regulatory lax and discrepancies have caused malediction of volatility in the financial sector. The chapter also endeavours a comparative analysis with other developed and developing economies.

Rashed Al Mahmud Titumir

### Chapter 2. Private Investments for Infrastructure

The role of financial investors in infrastructure financing is key to closing the infrastructure gap and to sustaining growth since public budgets do not allow sufficient financing. This chapter reviews existing instruments for private infrastructure financing and discusses the policies that can be put in place to attract private investors. These policies include blended finance mechanisms that are intended to crowd-in money at industry/regional level, as well as more specific measures that sustain the attraction of capital at project level.

Veronica Vecchi, Francesca Casalini, Niccolò Cusumano, Velia M. Leone

### Banking Stability and Prudential Regulation Interactions in DSGE Model for Tunisia

Since the last financial crisis, the financial system has taken and continues to be on guard against these unexpected shocks. In this direction, this article focused with these decision-makers as well as his researchers on a more advanced macroeconomic modeling, based on the integration of different hazards (economic, social, cultural, environmental…), the concept of micro-foundations, of the different types of imperfect competition accompanied by some price rigidities. We are proposing a new Dynamic Stochastic General Equilibrium (DSGE) model tailored to the banking sector in Tunisia. Our model captures the role played by prudential regulations in correcting fluctuations in the business cycle and restoring macroeconomic and financial stability.

Nadia Mansour, Salha Ben Salem, Haykal Haj Salem

### Alex Preda: Framing Finance

Wenn es zutrifft, dass wir gegenwärtig im Zeitalter der Ökonomie leben und ein neues wirtschaftliches Masternarrativ das soziale Narrativ verdrängt, wie es z. B. in den Konfigurationen des konservativen oder sozialdemokratischen Wohlfahrtsstaatsmodels nach Esping-Andersen zum Ausdruck kommt, „then Finance is the master of this master narritive“ (S. 1). Mit seinem ersten Satz stellt Alex Preda die Bedeutung heraus, die er dem Finanzwesen heute zuweist: Es durchdringt zunehmend das tägliche Leben und erhebt sogar den Anspruch, selbst die soziale Sicherung im 21. Jahrhundert neu zu erfinden.

Rolf von Lüde

### 3. Rechtsgrundlagen für die Interne Revision und für die Compliance

Recht belegt Rechtssubjekte mit Regeln. Allem voran gebietet staatlich gesetztes Recht Beachtung. Unternehmen, ihre Leitungsorgane und ihre Mitarbeiter sind betroffen. In Unternehmen gibt es zudem intern geschaffene Rechtsregeln. Unternehmensleitungen trifft eine Legalitätspflicht und eine Legalitätskontrollpflicht. Sie sind selbst strikt an Recht und Gesetz gebunden und sie müssen dafür sorgen, dass sich Unternehmen und Mitarbeiter ebenfalls rechtstreu verhalten. Interne Revision und CMS sind für ihre Leitungen oft unverzichtbare Begleiter. Unternehmen, Non Profit-Organisationen, auch Behörden, haben diese Funktionen eingerichtet. Rechtlich gesehen kommt es auf den Einzelfall eines Unternehmens an, ob und wie Unternehmensleitungen diesbezüglich ihre Unternehmensinterna gestalten. Interne Revision und Compliance sind, auch rechtlich, bei der Bewältigung ihrer Aufgaben besonderen Herausforderungen ausgesetzt. Funktioniert das, ist das ein sehr effektiver Beitrag zur Haftungsvermeidung für Unternehmen, Organe und Mitarbeiter.

Jörg Berwanger, Ulrich Hahn

### 7. Fachwissen/Glossar

Lexikon der Internen Revision und Compliance – aktuelles Glossar der wichtigsten deutschen und englischen Fachbegriffe für Interne Revision und Compliance in alphabetischer Reihenfolge. Die unternehmensinterne Überwachung enwickelt sich zu einem umfassenden Governance-System. Die wichtigen Funktionen Interne Revision, aber auch die anderen Corporate Governance-Funktionen Compliance Management und Risikomanagement sind in diesem Glossar / Lexikon als Stichworte definitorisch und teils detailliert dargestellt. ### bitte hier neuer Absatz ### Internal audit and compliance management glossary. German explanation of current internal audit, compliance management, risk management and corporate governance terms (german/english).

Jörg Berwanger, Ulrich Hahn

### Chapter 6. Financial Liberalization: In Retrospect and the Way Ahead

The present investment flows fall far short of present requirements; the chapter will begin with an overview of the reasons, and in doing so, it will demonstrate that looking ahead tapping most growth opportunities will critically depend on taking a medium or long-term approach. This is in veritable contrast to what has prevailed for over two decades in the global financial system which almost encapsulated by what may be termed as short-termism. This chapter does not rehash the argument against financial liberalization, as a matter of fact it demonstrates that there exists an exigent need for a deeper and continued process of liberalization in the context or realm of long-term finance. It will then proceed with a substantiation of the criticality of stepping up the pace of financial development. This will be followed by an enumeration of the main changes in post-crisis financial regulation, and in doing so, it will demonstrate that the “existence political economy of reform” wields a discernible influence in determining the expediency, continuity and nature of reform.

Prof. Piya Mahtaney

### Chapter 2. The Saudi Banking Sector: From Saudization to Liberalization and Its Role in Economy Development

SAMA’s supervision of the Saudi banking sector is examined, as well as evolution of the Saudi banking sector in the period of globalization. The Saudi commercial banking sector’s performance in supporting the Saudi economy is assessed including financing the neglected SME sector, as well as the growing role of the Public Investment Fund in the Saudi banking sector with planned mega Saudi bank mergers. The implication of a rising sovereign and domestic foreign currency debt is analyzed, along with options to control government expenditure under Vision 2030 constraints.

### Chapter 1. Evolution of SAMA’s Role and Monetary and Macro Prudential Policies

The chapter examines SAMA’s evolution of its role from establishment to date and its monetary and macro prudential policies, as well as the challenges faced by the different SAMA governors since its establishment in 1952 and Royal approval to transform SAMA to a Central Bank in 2020. The centrality of a fixed peg currency regime is examined and current SAMA oversight of Fintech, Cybersecurity and anti-money laundering programs. SAMA’s role in managing the country’s reserves and the role of the Public Investment Fund are examined, as well as SAMA’s regulation of the growing insurance sector to ensure the growth of a Saudi insurance hub.

### Cloud Technologies in Banking

Purpose: Studying the features and prospects of using cloud technologies in world banking in recent years is of great relevance, as among banks, cloud technologies are becoming more popular, and in the field of financial services, the use of cloud-based solutions continues to expand. Design/Methodology/Approach: The transition to a digital economy is a global trend. The world has already gained some experience in using cloud technology by banks, however, the question of which cloud service models are preferred by banks, what are the features of outsourcing cloud service providers and the service models they offer, continues to be studied. Findings: To date, in international practice, there is successful experience in transferring business functions critical for the bank to the cloud infrastructure, such as accounting and operational activities, risk management and maintaining information security procedures. Originality/Value: Modern banks are increasingly becoming IT institutions. A review of current practice shows that the use of cloud technologies by banks not only saves costs, but also acts as a growth driver for the bank, allows banks to introduce innovative products and develop in the institutional aspect. In Russia, the development of cloud technologies is a factor contributing to the development of Russian regions, as it creates the infrastructure for the formation of regional financial centers, which allows to solve the problem of disproportional development of Russian regions.

Elena P. Shatalova, Rasul M. Huseynov

### Kapitel 2. Theoretische Grundlagen

Es werden zunächst zentrale Begriffe aus Theorie und Praxis wirtschaftlicher Krisen und deren Management dargestellt und abgegrenzt. Im teamsportspezifischen Teil wird anschließend der Untersuchungsgegenstand genauer beleuchtet. Dazu dient die Auseinandersetzung mit der Zielfunktion von Profisportclubs, den Produktmerkmalen und der Wertschöpfung sowie den beiden besonders relevanten Stakeholdern „Fan“ und „Ligaorganisation“. Vor allem die wichtige Rolle des Fans innerhalb der (teamsportspezifischen) Wertschöpfung ist zu betonen.

Konstantin Druker

### From Deadlocks to Breakthroughs: How We Can Complete the Banking Union and Why It Matters to All of Us

The establishment of the banking union was a crucial step for European integration and for the Economic and Monetary Union. Together with stronger capital and liquidity requirements under the European single rulebook, the introduction of the Single Supervisory Mechanism and the Single Resolution Mechanism, alongside new macroprudential tools, made the banking system more resilient and better prepared for crises. The banking union facilitated a fast, strong and coordinated response to the unfolding coronavirus (COVID-19) crisis that would have been unthinkable in the institutional setting existing in 2008. At the same time, the banking union is still incomplete and progress is needed: there is no European deposit insurance scheme, the backstop to the Single Resolution Fund has to become operational, and we need a common framework for the provision of liquidity to banks in resolution, as well as adjustments to the crisis management framework. Additionally, despite progress until 2015, financial integration within the euro area has not improved in recent years. Synergies between the banking union and other policy initiatives, such as the capital markets union, could further improve financial integration to the benefit of the European project and European citizens.

Karen Braun-Munzinger, Jacopo Carmassi, Wieger Kastelein, Claudia Lambert, Fatima Pires

### A Rule-Based Monetary Strategy for the European Central Bank: A Call for Monetary Stability

The 2020–2021 review of the ECB strategy will shape monetary policy in the Eurozone in the years to come. Crucially, it will also determine the scope and capabilities of the ECB within the ever-evolving architecture of the euro. As in the aftermath of the Global Financial Crisis and the subsequent Euro Crisis, Member States are discussing new mechanisms to enhance economic recovery and further integration which, one way or another, will involve the support of, or the coordination of fiscal policymakers with the ECB. The impact of the new ECB strategy in the current debate about the future direction of the single currency should not be overlooked. In this chapter, we offer a proposal for the reform of the ECB strategy incorporating the lessons learned in the recent crises. We discuss several options for the ECB and set up a rule-based strategy suitable to operate in an environment of persistently low inflation and near-zero interest rates. Under our proposal, monetary stability becomes the guiding principle for providing macroeconomic stability over the medium and long term, as well as for enhancing the transparency of the ECB communication policies.

Juan E. Castañeda

### A Technical Policy and Technological Analysis of a Satellite-Hosted Blockchain System for Sustaining African Development

Spaced-based services, including financial services, are proving more affordable and accessible to more people than ever before in history. Coupled with the rising acceptance of blockchain-based cryptocurrencies, satellite-hosted financial services can be delivered to people around the world, particularly for the benefit of remittance-senders and displaced persons. An accessible and secure blockchain-based financial system hosted via a satellite platform wields strong potential in promoting sustainable development in Africa. This research explores the technical policy and technological considerations that would be necessary to implement such a system. The article explores the feasibility of such a satellite-hosted financial system and its potential benefits for reducing the transaction costs of remittances sent from developed to developing countries, in addition to its benefits for assisting internationally and internally displaced person to store and access their wealth irrespective of their ultimate settlement location.

David Lindgren, Victor Hertel, Asha Coutrier

### Chapter 5. The Impact of Fintech on Existing Financial Institutions

Fintech is a colloquial term created by joining together the words “finance” and “technology.”

Kazuhiko Tajimi

### Chapter 7. The Reform of the Prudential Framework and the Single Rule Book

This chapter traces the banking industry’s role in the reform of the EU’s prudential requirements as the basis of a single European rule book for banks underpinning the Banking Union, from the Regulation and Directive on capital requirements (CRR and CRD IV), up to their recent revisions under the “Banking Package.” The European banking industry united the efforts to water down the introduction of harsher rules, framing their opposition by pointing at the supposedly consequential reduction in lending to the business sectors. Under a high political salience, the banking industry was defeated in several key demands, with significant capital and liquidity burdens in the new framework. However, cross-border banks obtained a highly harmonized framework, responding to their core interests, while managing to water down, some of the prospected stricter provisions.

Giuseppe Montalbano

### Chapter 9. DER Financing

DER requires cost-effective financing of high investment costs. For public entities, the impact of financing instruments on the balance sheet is relevant for decision-making.

Dr. Alexander Zhivov, Rüdiger Lohse

Open Access

### Bessere Steueranreize für Banken

Eigenkapital ist teuer. Daher haben die Banken einen Anreiz, beim Eigenkapital zu sparen, und finanzieren sich lieber mit Spareinlagen und anderem Fremdkapital. Mit geringeren Finanzierungskosten ist es leichter, den Kunden im Wettbewerb bessere Konditionen anbieten zu können. Die Besteuerung fördert die Verschuldung der Banken zusätzlich. Mit dem Zinsabzug wird das Fremdkapital steuerlich entlastet, das risikotragende Eigenkapital jedoch nicht. Das fördert die Verschuldung der Banken und Unternehmen und trägt zur Krisenanfälligkeit bei. Die Bankenregulierung will mit höheren Kapitalstandards die Eigenkapitalausstattung und damit die Krisenrobustheit des Bankensektors stärken. Da macht es wenig Sinn, wenn der Staat mit dem steuerlichen Schuldenanreiz das genaue Gegenteil tut.Martin-Flores, Jose und Christophe Moussu (2018), Is Bank Capital Sensitive to a Tax Allowance on Marginal Equity? Erscheint in: European Financial Management, doi: 10.1111/eufm.12163 .

Laurenz Grabher

### Chapter 7. How G20 Can Better Support Global Governance?—A Chinese Perspective

G20 will be the most important and the most representative global governance platform in today’s world and for the foreseeable future. It should enter a new phase in its institutional development, moving beyond crisis management towards robust governance including establishing a permanent secretariat in decision-making and a setting up rules, more inclusiveness, effective policy coordination and equal and just rights of participation. The recognition of the relevance of civil society and business organizations for global governance is one step forward. The importance in the world economy and the broadly representatives of developing countries both indicate that E11 has a huge space of internal cooperation. Actively promote the internal cooperation of E11 can apparently create win-win situation between developed and developing countries and improve the efficiency. In E11, China is still a new player on the international stage and not the rule maker. Given the risks and problems of the Chinese economy, China needs to adopt a series of macroeconomic measures, including fiscal, monetary, taxation, financial and industrial policies to maintain exchange rate basically stable, prevent the inflow of hot money, contain credit binge, curb inflation, expand domestic demand, stabilize external demand, promote economic restructuring and adjust income distribution. In the next decade China’s basic attitude to global governance is to minimize the loss, not maximize the benefits. How to ponder and understand the relationship between the partial and the overall, the long-term and the short-term international obligations and right, and what kind of a global governance structure is most consistent with China’s long-term development targets, are all challenging problems that China faces in future.

Yuyan Zhang, Huifang Tian

### 1. Financial Stability: Still Unsettled for the Future

The focus of this contribution is on financial stability and the extent to which proposed regulatory frameworks deal effectively to avoid financial instability. While microprudential financial stability has been in place prior to and since the Global Financial Crisis (GFC), macroprudential financial stability had been totally ignored prior to the GFC. Since then, however, relevant macroprudential policies have been proposed. We discuss them, especially whether macroprudential proposals have been properly implemented and the extent to which they can avoid future financial instability. These proposals are the US Dodd-Frank Act, the UK Vickers Report, the European Commission’s Liikanen Report, the International Monetary Fund (IMF) tax proposal and the Basel III/Basel IV package. However, although the financial sector around the world is stronger after the crisis, it is exposed to some serious problems that relate to financial stability, which need further strengthening. There is, thus, urgency to complete financial regulatory reforms along with relevant policies.

Philip Arestis

### Compulsory Optionality: International Standardizing Bodies as Transnational Actors in International Investment Law

From a traditional public international law perspective, a standard is either binding or it is not: there is no in-between. The emergence of international standards as a key component of modern international public policy, however, has proven that normativity does not have such a binary notation. The voluntary instruments described as international standards have acquired growing influence in the field of World Trade Organization law. This chapter argues that international investment law has not escaped these developments. Accordingly, the purpose of the present chapter is to identify the role of international standardization bodies as transnational actors of international investment law, by determining their influence on the interpretation and application of rights and obligations under international investment agreements.

Eleni-Amalia Giannakopoulou, Marios Tokas

### Chapter 4: Frank Knight on Risk and Uncertainty

This chapter begins with the whistleblowers of the 2008 financial crisis, who were ignored by policy makers and bankers alike. This is explained by two phenomena: regulatory capture and the dominance of the Efficient Market Hypothesis theory of finance, which ignores systematic risk, fat tails and uncertainty. The economist who introduced the important difference between risk and uncertainty was Frank Knight. His insight helps to explain the large effects of uncertainty in the economy—from financial crises to climate change. Risk can be insured, uncertainty not. The last can only be reduced by stability-enhancing institutions. The period 1933–1999 illustrates the benefits of such an institution in the US, when the Glass–Steagall Act was in place: it ensured a separation between retail banks and investment banks, which resulted in 66 years without a financial crisis.

Irene van Staveren

### Chapter 5. Risk Management Developments

Risk is a tool which makes possible the decision-maker to get knowledge about the event with destructive effects and so, the decision-maker via the analysis of risk makes the event more certain and obtaining control on it. Moreover, risk is the net negative influence of the exercise of vulnerability, regarding both the prospect and the effect of occurrence. Risk management is the procedure of identifying risk, assessing risk, and taking steps to moderate risk to a tolerable point. Furthermore, Risk sharing or risk controlling are central justifications for joining strategic alliances. Credit risk surfaces from the prospective that one participant to a financial tool is triggering a financial loss for the other participant by neglecting to discharge an obligation. Managing risk is one of the key objectives of companies operating globally and managers normally correlate risk with negative result.

Georgios I. Zekos

### Chapter 7. Translating Critique: Civil Society and the Politicisation of Financial Regulation

This chapter approaches translation from an actor-network theory (ANT) perspective drawing, in particular, on Michel Callon’s sociology of translation. It follows Callon’s notion of translation conceptualised in four analytical steps: problematisation, interessement, enrolment, and mobilisation. Translation denotes the complex process through which knowledge is identified and facts are constructed, actors are turned into stakeholders, and an actor-network is ultimately formed. The chapter deploys the case of Finance Watch, a European pro-reform interest and advocacy group founded in Brussels after the 2008/2009 financial crisis. The chapter shows how Finance Watch gradually lost capacity for critique as it adopted the routines and language of its object of critique. This followed from a process of translating which included the advocacy group’s initial problematisation of financial regulation reforms, alliance construction, and finally denoting itself as a spokesperson for a network of civil society actors.

Benjamin Wilhelm

### 4. Besonderes Wirtschaftsverwaltungsrecht

Im besonderen Wirtschaftsverwaltungsrecht (Kap. 4) werden anhand wesentlicher Referenzgebiete die Rolle und die Wirkungsweise von Eingriffs- wie von Leistungsverwaltung dargestellt. Die Vielzahl von Vorschriften und Vielfalt von Sektoren nötigt dabei im Hinblick auf die Eingriffsverwaltung zu einer Beschränkung auf Grundlagen des allgemeinen Gewerberechts sowie einige praxisrelevante Bereiche des besonderen Gewerberechts. Im Kontrast dazu stehen neuere Entwicklungen zu Deregulierung und Privatisierung, die zur Entstehung eines eigenen Rechtsgebiets, des Regulierungsrechts, führten. Den Gegensatz zur Eingriffsverwaltung bietet das Subventions- und Beihilfenrecht, das durch die Besonderheiten der Leistungsverwaltung geprägt ist. Auch bei ausgewählten Fragen der eigenwirtschaftlichen Betätigung des Staates, sei dies als „Monopolist“, sei es als spezifischer Wettbewerber privater Unternehmen, geht es darum, das Verständnis für ordnungspolitische Hintergründe des Wirtschaftsrechts zu schu len.

Cornelia Manger-Nestler, Ludwig Gramlich

### Kapitel 2. Digitalisierungstreiber und -bremsen der Finanzinstitute

‚Digitalisierung‘ ist im engeren Sinne die Umwandlung von analogen Medien in digitale Daten zur Weiterverarbeitung in IT-Systemen. Im weiteren Sinne beinhaltet sie die Durchdringung von Wirtschafts- und Gesellschaftsbereichen mit Informations- und Kommunikationstechnologien und umfasst die Transformation von Daten, Prozessen und Technologien. Ziel der Digitalisierung ist dabei die kontinuierliche Vereinfachung und Automatisierung der Geschäftssysteme durch die Implementierung digitaler Technologien in bestehende Prozesse. Somit werden effektivere und effizientere Wertschöpfungsketten geschaffen, und auch das heutige Geschäft kann an die aktuellen Ansprüche des Marktes angepasst werden.

Cordelia Friesendorf, Julian Stern

### The Vulnerabilities of the Risk Assessment Model Elaborated by the Basel Committee for Banking Supervision

We are going to present a series of limitations that exist in the methodology for determining the capital adequacy ratio at the credit institutions and investment firms level. To that effect, a series of problematic aspects that taken into account in the methodology for calculating the capital adequacy ratio will be presented, econometric demonstrations will be presented for some of the identified situations, and solutions for the remedial of such deficiencies will be proposed.

Paul Baranga, Iulian Zalinca

### Chapter 1. The Rationales of Hedge Fund Regulation

In the last decade, there have been many changes in the asset management industry, as this period represented a critical point for the hedge fund industry from the regulatory point of view. The vast literature on the issue suggests that there are three objectives that provide the rationale for financial regulation in general and for hedge fund regulation in particular. These objectives are: (a) protection of investors, (b) promotion of market integrity, but also (c) preservation of financial stability. As we shall see, the above-mentioned aims are connected and overlap, in certain aspects. Consequently, capital flows to hedge funds in various countries are influenced by the strength and the enforcement of investor protection laws in these countries. All the above-mentioned principles are being addressed in the current chapter, in relation to the apparent validity of their application to hedge funds, at a global level. Further on, the chapter makes a clear organization of the different sets of regulation applicable to hedge funds aiming to protect investors, market integrity, and financial system stability. One central idea needs to be apprehended: the hedge fund involvement in market manipulation and insider dealing is clearly unsupported. Hedge funds were not the cause, as they spread systemic risk, but they did not create it.

Ana Maria Fagetan

### Chapter 6. Regulation of Hedge Funds in the US

This chapter addresses key aspects in US securities law: the extent to which regulation drives investment increases or not for hedge funds; the extent to which it mitigates risks ensuring thus investors protection at the same time, increasing performance. In July 2010, the United States Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (hereinafter, the “DFA” or “Dodd–Frank”) as a response to the problems raised by hedge funds. Standing as a key piece of regulation, the Dodd–Frank highly impacted the hedge fund industry. Also, the present chapter addresses the premises of hedge fund reforms, particularly in terms of exemption from registration for hedge funds advisers and reporting requirements, which culminated with the enactment of the “Dodd-Frank Act.” The chapter represents a survey and research regarding the hedge funds regulation in the United States, but also a general presentation of how hedge funds together with their managers are, to a large extent, exempted from regulation. At the same time, since 2017, the Trump administration has been pursuing a largely deregulatory agenda, including a proposed repeal of some provisions of the Dodd–Frank Act. The most significant proposals affecting investment advisers are described and thoroughly analyzed in the last part of this chapter.

Ana Maria Fagetan

### A Multi-agent Methodology to Assess the Effectiveness of Systemic Risk-Adjusted Capital Requirements

We propose a multi-agent approach to compare the effectiveness of macroprudential capital requirements, where banks are embedded in an artificial macroeconomy. Capital requirements are derived from alternative systemic risk metrics that reflect both the vulnerability and impact of financial institutions. Our objective is to explore how systemic risk measures could be translated into capital requirements and test them in a comprehensive framework. Based on our counterfactual scenarios, we find that macroprudential capital requirements derived from vulnerability measures of systemic risk can improve financial stability without jeopardizing output and credit supply. Moreover, macroprudential regulation applied to systemic important banks might be counterproductive for systemic groups of banks.

Andrea Gurgone, Giulia Iori

### Chapter 17. European Union Agencies

This chapter investigates the difficulties which EU agencies face within a Union in crisis. The institutional position of autonomous EU regulators has been challenged both in European law and within the coordination demands of a broader European crisis regime. At a deeper level, however, crisis has heightened underlying concerns about the appropriate place of autonomous governance institutions within the broader scheme of democratic politics and government. Similarly, mandate overload finds its counterpart in renewed calls for the enhanced legitimation of agency operation, a phenomenon which itself is claimed to undermine agency functionality. Autonomous agencies find themselves subjects of problems of accountability overload and of reputational risk. Finally, EU agencies are also implicated within a modern epistemological crisis which pitches a technocratic arm of administration against a rising tide of politics.

Michelle Everson, Ellen Vos

### Chapter 7. Export Activity and Firms’ Financial Constraints

This chapter assesses the role of firms’ financial resources used to begin export activity. We propose a new methodology to identify a priori constrained firms, exploiting a rich dataset on Italian firms’ assets and liabilities. We provide evidence that the entry probability in the export market is affected by the level of cash stock for the constrained firms: an increase of 10% in the cash stock of constrained firms raises by an additional 0.17% the entry probability of rationed firms, compared to unconstrained ones. We also find that internal liquidity is positively correlated with the extensive margin of trade: an expansion in new destination market is associated to higher liquidity levels. In particular, liquidity is mainly used for investments in the development of new products for foreign markets.

Emanuele Forlani

### Risks and Threats Arising from the Adoption of Digital Technology in Treasury

The importance of Treasury management, within a commercial bank has increased significantly over the last couple of years. After the 2008 financial crisis the role and responsibility of a Treasury department has changed in terms of scope and strategic importance, evolving from a transactional cash manager to the guardian of the balance sheet. In order to meet this broader strategic mandate, Treasurers must therefore consider ways to become more effective and streamlined, while reducing time-consuming operational activities. Digitalisation can address many of the traditional Treasury challenges and provide a number of commercial and competitive benefits as well. However, to successfully adopt digital technologies and related digital innovations, Treasury requires a well-defined digital transformation plan. The Smart Digital Treasury Model (SDTM) was developed to provide a comprehensive roadmap to assist a Treasury’s digital transition towards a next generation ‘smart’ Treasury department. This paper explores a key building block of the SDTM, which addresses the risks and threats that can arise from the adoption of new digital technology. The reason for focusing on this aspect is that many of the digital risks have no direct reference points with conventional banking activity or security measures. The result of this research is an approach that articulates Treasury specific digital risks and threats, as well as describes a risk management process that can be deployed as part of the digital transformation. The digital landscape is evolving the whole time; therefore, digital risk management activity in Treasury can’t be seen as a once-off exercise, but needs to evolve in line with market developments.

Johan von Solms, Josef Langerman

### Chapter 5. Kooperative und agonale Theorien des Staats

Die Lehren der weltlichen Philosophen, denen sich das fünfte Kapitel widmet, begründen in hohem Maße gesellschaftliche Tiefenstrukturen, insbesondere auch innere Bindungskräfte von Sozialsystemen. Unterschieden wird zwischen kooperativen Lehren, die die menschliche Zusammenarbeit erklären und die Soziabilität des Menschen betonen, und den agonalen Lehren, die Rivalität und Kampf als unausweichlich ansehen oder sogar verherrlichen. Der betrachtete Zeitrahmen umfasst rund 2.500 Jahre. Die Ausbeutung durch Arbeit in den Entwicklungsländern und die ökonomischen Folgen des Klimawandels werden beispielhaft als Wirtschaftskriege identifiziert, bei denen agonales Verhalten als sozial akzeptabel angesehen wird.

Ulrich Blum

### Kapitel 1. Einleitung: Nachhaltigkeit und Finanzmarkt – zur soziologischen Vermessung eines Reflexionsraums

Diese Einleitung bildet den Auftakt des vorliegenden Buches und führt in die zentralen Hintergründe, Ansätze, Forschungsfragen und empirischen Ergebnisse des zugrundeliegenden Forschungsprojekts ein. Zunächst wird die Genese des Projekts rekonstruiert, die sich an der Frage entwickelt hat, wie Nachhaltigkeit und Finanzmarkt zusammenpassen und was passiert, wenn sich Nachhaltigkeit mehr und mehr auf dem Finanzmarkt ausbreitet. In einem zweiten Schritt wird mit dem Soziologischen Institutionalismus und den institutionellen Logiken der theoretische Rahmen des Projekts skizziert. Auch wird geschildert, warum das Thema Resilienz beziehungsweise Stabilität des Finanzmarkts einen relevanten Referenzpunkt darstellt. Im Anschluss daran wird der Ansatz erläutert, der alle empirischen Teilprojekte verbindet und einen gemeinsamen Untersuchungsrahmen bildet: der Reflexionsraum ‚Nachhaltigkeit und Finanzmarkt‘. Schließlich werden die zentralen empirischen Ergebnisse aus den drei wichtigsten Teilstudien präsentiert: die Analyse von institutionellen Logiken und Deutungsmustern im Bankwesen, die Analyse von Frames der Fossil-Fuel-Divestment-Bewegung und die Analyse von Narrationen im Bereich der nicht-finanziellen Berichterstattung von Unternehmen.

Stefanie Hiß

### 13. International Financial Markets

The financial crisis led to the worst depression since 1929. Only by massive economic programs could worse be prevented. Here Keynesian theory came into play. Only through globally agreed massive credit-financed government spending increases could depression be prevented. The banks had to be saved with tax money, as many banks had invested in the government bonds of weak European countries whose solvency was called into question. The sovereign debt crisis has emerged from the financial crisis. Against this background, the question arises of state regulations that limit the risk of banks. Such regulation of the financial markets has been urged by politicians and economists since the onset of the 2007 financial crisis. What has happened in the meantime? Were the right reforms implemented or could there be another financial crisis? After analyzing the causes of the crisis, the main reforms are examined below.

### Chapter 14. Model Audit and Review

This chapter examines some essentials to modeling that are actually not in the hands of the modeler, namely, the testing and model audits. Both model testing and model audits are broadly referred to as model reviews or peer reviews. Ironically, model reviews are not performed by the modeler who has created the model. They are instead the domain of an independent person or body. Although it may seem odd that I am including this chapter, I would urge anyone who is serious about modeling to give attention to it. As a modeler, you should have a basic knowledge and appreciation of how testing and auditing are conducted. Not only will it have a positive influence on how you model by allowing you to look from the external perspective of the model, it’s also quite conceivable that at some time, you may be asked to be a reviewer.

Jack Avon

### Chapter 1. The Evolving Financial Landscape in Emerging Markets and Developing Economies

Emerging MarketsEmerging markets and Developing EconomiesDeveloping economies (EMDEs) have been a significant driver of global growth in the twenty-first century. This paper analyses the changing contours of the financial sector and the challenges faced by EMDEs in recent years. In these countries, banksBanks and domestic equity markets still continue to be vital as a source of financing for the corporate sector, bond markets. Amongst developing regions, South Asia had the largest equity market capitalization as a share of GDP in 2019, and the growth of corporate bond markets has been facilitated by improved macroeconomic stability, better regulation of bond markets, and protection of retail investors. Finally, the findings relating to financial inclusionFinancial inclusion (that includes digital and traditional) suggest further promoting access to and usage of formal financial services to maximize society’s overall welfare.

Sanket Mohapatra, Aswini Kumar Mishra

### Chapter 5. Objective Functions of Islamic Bank Bangladesh: A Critique of Islamic Economics

The failure of Islamic banks in general that is exemplified by Islamic Bank Bangladesh is pointed out by their absence of any true direction of wellbeing in the Tawhidi sense of methodology of organic unity of theory and application. In the end, Islamic banks as exemplified by the case of Islamic banks Bangladesh, are shown to be capitalist shareholding banks with blind reliance on shari’ah as human concocted jurisdictional approach contrary to the Tawhidi methodological worldview. Consequently, many of the actions by IBBL under the guidance of Islamic Development Bank (IDB) and Organization of Islamic Conferences (OIC) while claiming to be Islamically legitimate are flawed. There remain much room for improvement to know the legitimate understanding in accordance with the Tawhidi law.

Masudul Alam Choudhury

### Chapter 5. Compliance

Compliance is the critical requirement for all investors and consumers in order to trust the veracity of any financial product. This chapter considers how the need to meet compliance requirements has led to financial service firms employing shari’a scholars, the role of multilateral institutions in overseeing the Islamic finance industry and how financial scandals in the early years of the industry have helped inform contemporary compliance requirements.

James Simon Watkins

### Chapter 4. Macroeconomic Policy, Price Stability and Inclusive Growth

During the past two decades, the economy of Bangladesh experienced a fairly sustained macroeconomic stability, and was able to achieve substantial growth in gross domestic product (GDP). However, there is evidence that suggests this growth has neither been inclusive, nor has it been able to bring about structural changes needed to sustain higher growth. The chapter contends that the macroeconomic policy-making would require a rethink in order to meet the above challenges. It notes that the current COVID-19 pandemic and the sharp economic downturn, requiring extraordinary stimulus measures to protect lives and livelihoods, are likely to bring the above challenges into sharper focus. The chapter reviews the current macroeconomic policy framework of Bangladesh, and underscores the need for balancing its usual emphasis on stability, with the need for structural change and social inclusion. This, in turn, would require an expansionary macroeconomic policy, albeit prudent, that focuses robustly on stepped-up investment, job growth, and reduction of inequality and vulnerability. To this end, the chapter explores the critical role of monetary, fiscal, external and financial inclusion policies, and how far these could be reoriented to address said challenges.

### Chapter 2. Coping with Liquidity Provision

LARRY TABB: This panel, Coping with Liquidity Provision, sums up, to a certain extent, what our industry is all about. That is, trying to find the other side of the trade; trying to find liquidity; trying to find how we price liquidity; and about how we interact with liquidity.

Larry Tabb, Nazli Sila Alan, Jonathan Clark, Frank Hatheway, George Hessler, Adam Inzirillo, Timothy J. Mahoney

### Chapter 1. Trading, Clearing, Custody, and the Worldwide Evolution of Exchanges as Unique Organizations

There is a singular battle among exchanges that never ends. This battle is an eternal fight for the lifeblood of any exchange—it is for liquidity and order flow! And, by the same token, institutional investors at the other end of the value chain—that is, hedge funds, mutual funds, and other big investors—are also fighting each other for the generation of order flow.

Reto Francioni

### 6. Controlling-Aspekte aus der Perspektive von Basel IV

In den Kap. 2 , 3 und 4 wurden die wesentlichen Inhalte von Basel IV einschließlich ihrer Grundlagen aus Basel II und Basel III dargestellt und daraus zu erwartende Auswirkungen auf Kreditinstitute und KMU abgeleitet. Dabei wurde deutlich, dass das Controlling – bestehend aus dem kybernetischen Kreislauf Planung, Kontrolle, Analyse und Steuerung sowie Information und Kommunikation – bei der Umsetzung und Einführung von Basel IV eine wichtige Rolle spielt. Eng mit dem Controlling verbunden sind sowohl das Risikomanagement, welches als wesentlicher Bestandteil der 2. Säule nach Basel IV (Risikobewusstsein und Risikostrategie) besonders hervorgehoben wird, als auch das betriebliche Finanzmanagement. Zu letztgenanntem bildet insbesondere das Finanzcontrolling insofern eine Schnittstelle, dass es eine Unterstützungsfunktion besitzt und sowohl Planungs- und Kontroll-, als auch Analyse- und Steuerungsaufgaben für das betriebliche Finanzmanagement wahrnimmt, indem es die relevanten Informationen erhebt und zur Entscheidungsgrundlage aufbereitet.

Bernd Zirkler, Jonathan Hofmann, Sandra Schmolz

### 7. Conclusio mit kritischer Würdigung

In diesem Buch wurde die Weiterentwicklung der Basel III Standards auf die zukünftig geltenden regulatorischen Anforderungen gemäß Basel IV überblicksartig dargestellt und damit verbundene potenzielle Auswirkungen auf das Geschäftsmodell von Kreditinstituten und die Finanzierungsmöglichkeiten von KMU untersucht. Selbiges gilt für die ratingorientierte Ausgestaltung eines betrieblichen Controllings mitsamt eines effektiven Risikomanagementsystems.

Bernd Zirkler, Jonathan Hofmann, Sandra Schmolz

### 1. Implikationen veränderter Anforderungen an Kreditinstitute für die Unternehmenssteuerung

Die beschlossenen regulatorischen Veränderungen von Basel IV haben direkte Auswirkungen auf Kreditinstitute, die in der Folge ihre Geschäftsmodelle und Geschäftspolitik entsprechend anpassen müssen. Über die aufgrund der Anpassungsreaktionen möglicherweise veränderten Finanzierungsmöglichkeiten können sich daraus indirekte Folgewirkungen für kleinere und mittlere Unternehmen ergeben.

Bernd Zirkler, Jonathan Hofmann, Sandra Schmolz

### 2. Von den Anfängen bis zur Finalisierung von Basel III

Die vom Basler Ausschuss für Bankenaufsicht entwickelten Basler Eigenkapitalvorschriften wurden seit ihrer Einführung im Jahr 1988 laufend überarbeitet, erweitert und an die Entwicklungen auf den Finanzmärkten angepasst. So wurde die dritte Basler Eigenkapitalvereinbarung noch einmal deutlich ergänzt und unter der offiziellen Bezeichnung „Basel III Finalisierung“ fertiggestellt. Aufgrund der umfassenden Anpassungen wird für diesen Stand der Basler Eigenkapitalvereinbarung in Praktikerkreisen bereits seit geraumer Zeit auch die Bezeichnung „Basel IV“ verwendet, welche auch in diesem Buch genutzt wird. Alle Versionen der Basler Eigenkapitalvereinbarungen bauen aufeinander auf und zielen vor allem auf das Eigenkapital der Kreditinstitute zur Gewährleistung der Stabilität des Finanzsystems.

Bernd Zirkler, Jonathan Hofmann, Sandra Schmolz

### 5. Typische Finanzierungsquellen von KMU und ihre Veränderungen unter Basel IV

Als mögliche Finanzierungsinstrumente für KMU kommen im Rahmen der Außenfinanzierung neben dem kurz-, mittel- oder langfristigen Bankkredit auch Lieferantenkredite, Factoring, Leasing, Anleihen und Schuldverschreibungen sowie Mezzanine, Darlehen oder Einlagen der Familie oder Gesellschafter und Beteiligungskapital in Frage. Zudem können verschiedene Instrumente der Innenfinanzierung, wie die Selbstfinanzierung aus der Thesaurierung von Gewinnen, Finanzierung aus Abschreibungen, Vermögensumschichtung oder Rückstellungen sowie konzerninterne Finanzierungen, genutzt werden.

Bernd Zirkler, Jonathan Hofmann, Sandra Schmolz

### 3. Auswirkungen der veränderten Regelungen auf die Kreditinstitute

„Die Auswirkungen der veränderten Regelungen auf die Kreditinstitute betreffen neben den Kapital- und Liquiditätsquoten auch die Leverage Ratio. Dabei sind aus den Ergebnissen der regelmäßigen Auswirkungsstudien des Basler Ausschusses teilweise deutliche Unterschiede bei den Veränderungen der Kapitalanforderungen einzelner Risikoarten (insbesondere Kredit-, Markt- und operationelle Risiken) sowie zwischen Gruppe 1 und Gruppe 2 Banken zu erkennen. Ergebnisse der im „Banking Business Models Monitor“ veröffentlichten Studien zeigen die direkten Zusammenhänge der Auswirkungen auf die RWA, die Kapitalquoten, das Asset Quality Review, Stresstests sowie Kapitaldeckungslücken mit dem jeweiligen Geschäftsmodell und der Geschäftspolitik deutlich. Insbesondere im Hinblick auf die RWA gibt es hier Unterschiede bei relevanten Risikoarten in Abhängigkeit des Geschäftsmodells.“

Bernd Zirkler, Jonathan Hofmann, Sandra Schmolz

### 4. Auswirkungen der Anforderungen durch Basel IV auf kleinere und mittlere Unternehmen

Die mit Basel IV geforderte stärkere Risikoorientierung der Kreditinstitute wirkt sich über die Kreditvergabe auf die Kreditnehmer und damit die vorrangig bankfinanzierten KMU aus. Die Regelwerke aus Basel IV betreffen bei KMU hauptsächlich folgende Bereiche:- Kapitalbeschaffung und Finanzierungsalternativen,- erweiterte Informationsanforderungen im Rahmen von Ratingprozessen sowie- die vom Rating und den gestellten Sicherheiten abhängigen Kreditkonditionen und Finanzierungskosten. Besonderswichtige Faktoren sind:- Eigenkapitalquote,- Liquidität sowie- Rentabilität. Basel IV stellt umfangreiche Anforderungen an ein Risikomanagement, welche auch für KMU von Bedeutung sind.

Bernd Zirkler, Jonathan Hofmann, Sandra Schmolz

### Chapter 3. Financing African Cities: A Fiscal Lens on Urban Governance

Understanding how African cities are governed requires a close look at how they are financed. From a fiscal and financial perspective, the chapter makes several important contributions to our understanding of urban governance in Africa. First, it shows that understanding public finance, in particular revenue, expenditures, and borrowing, is key to understanding urban governance. The design of sub-national fiscal systems, and the ways in which these systems are put into practice, shape how cities are governed, with direct implications for the daily operations and ongoing sustainability of urban areas. Second, the chapter argues that African cities require more dynamic financial tools, mobilising flexible, just and locally empowering sources of revenue. Land-based financing is a good place to begin to improve the revenue streams of city authorities, but must be accompanied by more creative expenditure models, to contend with the limitations of large-scale networked infrastructure and the potential for more hybrid approaches to service delivery.

Liza Rose Cirolia

### 5. Market Risk Measurement and Management

Qualified market risk management of asset and liability portfolios or trading activities is of key importance for banks and financial institutions. It is not only about quantitative measurement of the risks, but also about organizational and regulatory principles. Besides relatively simple market risk measures, we will define and explain various approaches to Value at Risk (VaR) and Conditional VaR estimation and backtesting. The two risk measures are used for day-to-day management as well as key regulatory capital concepts, or as tools of strategic risk management based on economic capital allocation. Market risk management, in particular in case of OTC derivatives, is also closely related to the counterparty credit risk management and measurement in terms of CVA (Credit Valuation Adjustment) that will be in detail discussed in the last section of this chapter.

Jiří Witzany

### The Gold Standard and the Euro: Conjoined Twins or Distant Relations?

I provide a structured comparison of the nineteenth-century classical gold standard and the Euro, basing my analysis heavily on recent research. Both similarities and differences are evident in the historical record. Both regimes were vaunted as engines of convergence, but in both cases convergence was incomplete. Both were seen as delivering fiscal discipline, but in both cases such discipline was erratic. But whereas the gold standard was always a contingent monetary regime, there is nothing contingent about Euro-area membership. Finally, the gold standard operated in a simpler political setting, one in which mass participation in electoral politics was the exception to the rule.

Barry Eichengreen

### 10. Schlussfolgerungen für internationale Organisationen

Dieses Kapitel befasst sich mit den wichtigsten Schlussfolgerungen für internationale Organisationen in dieser neuen Ära des US-Populismus und des Aufstiegs Chinas. Die entscheidende Rolle der internationalen Organisationen für Handel, Investitionsströme und regionalen sowie globalen Wohlstand wird hervorgehoben. Darüber hinaus wird ein Schwerpunkt auf die destabilisierenden Auswirkungen nicht nur des neuen internationalen Politikansatzes der Trump-Administration – und der Betonung des Bilateralismus – gelegt, sondern auch auf die entscheidenden Auswirkungen des britischen Brexit-Prozesses und die damit offensichtlich verbundenen Herausforderungen für die EU und Asien. Da die USA in den meisten internationalen Organisationen, die für die Globalisierung relevant sind, eine sehr große Rolle spielen, gibt es viele negative Auswirkungen, die in einer analytischen Perspektive betrachtet werden müssen.

Paul J. J. Welfens

### 82. Cultural Contradictions of Business Legitimacy

The legitimacy of business has been influenced by two parallel developments in the second half of the twentieth century. The first is the economic development of increasing welfare during the first decades after WWII. This so-called Golden Age lasted until the early 1970s and was followed by the rise of a globalized economic system. The second is the cultural development of anti-capitalist ideals during the 1960s and 1970s student movement. The students of the New Left protested against consumer society and promoted anti-capitalist intellectual ideals. These ideals have penetrated society at a cultural level, but not at the level of citizens’ practical lives.This chapter distinguishes formal from informal legitimacy as characterizing two realms of society: one of practical lives where citizens support the liberal economy and the other of culture characterized by critical attitudes toward business and consumerism. R.E. Freeman’s invention of the stakeholder concept in 1983 illustrates the attempts of business to communicate with an increasingly critical public. However, this attempt is met with resistance because the New Left has set a radical polarity between the business elites and the middle and working classes, thus undermining the possibility of dialogue across social and economic divisions. This social division has deepened owing to business taking advantage of (and occasionally abusing) the increasing freedom to operate internationally and the wages for western working and middle classes stagnating due to the increase in global labor supply. Recent political developments should serve as a warning of potential consequences of increasing social division and discourage businesspeople from misconduct in return for a wider cultural acceptance of the connection between consumer behavior and business opportunities.

Marianne Thejls Ziegler

### 1. Module eines Business-/Geschäftsplans

In diesem Kapitel werden Aufbau und Inhalt der einzelnen Module erläutert. Eine Checkliste am Ende des jeweiligen Abschnittes gibt einen kurzen Überblick über wichtige Fragestellungen eines Business-/Geschäftsplans und zeigt mögliche Fehlerquellen auf.

Anna Nagl

### 2. Fallstudie AeroLas GmbH: State of the Art

Bei dem Businessplan des Unternehmens AeroLas GmbH handelt es sich um eine bereits in der Ursprungsversion bewährte und dennoch mehrfach weiterentwickelte Version eines Business-/Geschäftsplans aus dem laufenden Geschäft heraus. Dieser Business-/Geschäftsplan wurde für unternehmensinterne und -externe Zwecke erstellt. Intern dient er als Planungsinstrument zur Festlegung und Abstimmung von Einzelaktivitäten und als Diskussionsgrundlage im erweiterten Führungskreis. Extern ist dieser Business-/Geschäftsplan das Instrument, um derzeitige und zukünftige Geschäftspartner und Kapitalgeber auch unter Basel III-Aspekten von dem Geschäftsmodell der AeroLas GmbH zu überzeugen.

Anna Nagl

### 5. Erfolgskriterien aus Sicht der Bank

Im Folgenden beschreibt Christian Kreiß, Studiendekan des Masterstudiengangs Industrial Management und Professor für Betriebswirtschaftslehre mit Schwerpunkt Investition und Finanzierung an der Hochschule Aalen, die Erfolgskriterien eines Business-/Geschäftsplans aus Sicht eines Kreditinstitutes. Christian Kreiß war knapp zehn Jahre lang überwiegend im Kreditbereich Firmenkunden von Banken tätig, zuletzt als Leiter der IPO-Stelle bei dem Bankhaus Reuschel (heute DONNER & REUSCHEL Aktiengesellschaft). Ein Schwerpunkt seiner Tätigkeit dort war die kritische Beurteilung von Business- und Geschäftsplänen hinsichtlich Kreditwürdigkeit, der Möglichkeit, Eigenkapital einzuwerben und der Beurteilung der Börsenfähigkeit. Unterstützt wurde Christian Kreiß bei diesem Kapitel von Florian Wiesbauer, Masterabsolvent und Unternehmensnachfolger der Wiesbauer GmbH & Co. KG, Bietigheim-Bissingen.

Anna Nagl

### 7. Praxisbeispiel: Unternehmensbewertung

In einem Nachfolgeprozess ist die Unternehmensbewertung das Kernstück. Dieses zentrale und sehr umfassende Thema birgt nicht selten Konfliktpotenzial, da Käufer und Verkäufer zwar das gleiche Ziel, nämlich die Weiterführung des Unternehmens – jedoch den Preis betreffend meist ganz unterschiedliche Vorstellungen – haben. Pascal Zurbuchen, potenzieller Nachfolger der Optiker Svec GmbH, Amriswil, Schweiz, geht in diesem Kapitel auf gängige Methoden einer Unternehmensbewertung und deren praktische Anwendung im Fall einer konkreten Unternehmensnachfolge ein. Im ersten Teil dieses Kapitels wird ein Augenoptikbetrieb mit der Substanzwert-Methode, der Ertragswert-Methode, der „Mittelwert-/Praktiker-Methode“, der Discounted Cashflow-Methode und der Multiplikatoren-Methode bewertet. Die Ergebnisse der unterschiedlichen Bewertungsmethoden werden miteinander verglichen und daraus Schlüsse hinsichtlich eines möglichen Transaktionspreises gezogen. Ist bei einer Unternehmensnachfolge die große Hürde der Einigung auf einen für beide Seiten akzeptablen Preis genommen, steht die Frage der Finanzierung an. Daher wird im zweiten Teil dieses Kapitels auf verschiedene gängige und auch eher unkonventionelle Finanzierungsmöglichkeiten einer Unternehmensübernahme eingegangen. Dieses Kapitel schafft also einen einfachen und praxisorientierten Einstieg in die komplexe Thematik der Unternehmensbewertung und entsprechender Finanzierungsmöglichkeiten.

Anna Nagl

### Chapter 11. Administrative Unification and Public Intervention in the Economy

Within the context of administrative unification and public intervention in the economy, the Authors analyse the effects on the Italian public administration of the shift from the aim to create a state and a national market to that of taking part in the creation of a single and super-national market. The analysis is carried out through a historical reconstruction with a view to examining a number of issues. Thus, the analysis highlights how the determination of rules of conduct does not always lead to the desired outcome due to the peculiar nature of the market, concluding with a warning that the only remedy remains the constant evolution which needs constant interventions, especially with the aim of improving those administrations that intervene in the economic area in a professional manner.

Maurizio Cafagno, Francesco Manganaro

### Chapter 4. Overcoming the Middle-Income Trap Requires Improving the Economic Governance Capability

General Secretary Xi Jinping pointed out in his report to the 19th CPC National Congress: “As socialism with Chinese characteristics has entered a new era, the principal contradiction facing Chinese society has evolved. What we now face is the contradiction between unbalanced and inadequate development and the people’s ever-growing needs for a better life.” To overcome unbalanced and inadequate development, we need to improve our economic governance capability. The modernization of the economic governance capability is an important part of the modernization of China’s system and capacity for governance. The economic governance system is understood as the institutional system whereby the government and the market regulate economic agents; the economic governance capability is defined as the ability of the government and the market to regulate economic agents.

Zhijie Zheng

### Chapter 3. Knowledge Management, Risk Management, Knowledge Risk Management: What Is Missing (or Messed) in Financial and Banking Sectors

The purpose of this chapter is to investigate the state of research on Knowledge Risk Management in banks and other financial firms. In particular, the chapter is aimed at verifying the shortage of research contributions on Knowledge Risk Management with specific reference to organizations belonging to banking and financial sectors. First, recent trends in knowledge management in banks and other financial firms has been pointed. Second, strengths and weaknesses of today’s risk management of these organizations has been considered as well. Then, a systematic review has been performed to verify the level of development of KRM research in the banking and financial sectors; to the best of the author’s knowledge, to date, a systematic review with this specific objective has not yet been conducted. Findings highlighted a substantial lack of contributions in this strand, as a clear reference to knowledge risks could not be found in most of the reviewed studies.

Maura La Torre

### Chapter 4. Does “Diversity” Make the Difference? Moving Inside the Sample

Business model based on proximity to the local community, direct relationships with customers, mutuality, cooperation, in one word “diversity”. This chapter is aimed to provide an insight into the sample of cooperative banks involved in the case study in this book proposed, namely the “Federazione delle Banche di Credito Cooperativo dell’Abruzzo e del Molise (Fedam)”. The analysis of the sample of Fedam cooperative banks is done through the testimony of the president of the board of directors of one of these banks, so as to understand their daily problems in a constantly changing context. In addition, an overview of the Italian Cooperative Credit System is also provided, and a digression on the concept of diversity in banking is presented as well, aiming to consider whether diversity could make the difference or not for Cooperative Credit Banks (CCBs) in some different situations: during and after crisis; against the risk; and in governance. Nowadays, CCBs are facing important challenges in terms of efficiency, risk control, and corporate governance, and it could be useful to investigate whether diversity could represent an advantage or an obstacle in facing these and other challenges.

Maura La Torre

### Chapter 5. Sustainability-Related Risks and Financial Stability: A Systemic View and Preliminary Conclusions

This chapter discusses the possible impact of sustainability-related factors (such as climate change, environmental degradation, social inequality, policy and technology shifts) on financial stability. To this extent, it first identifies the areas in which an evolution of the practices of financial intermediaries are necessary to better manage sustainability-related risks. This refers in particular to the existing risk-management frameworks (which may not consider sustainability-related risks) and to the timespan of the risk-taking strategies (which typically underestimate the long-term nature of sustainability-related risks). Hence, the chapter discusses a set of policy actions to both mitigate and control for sustainability-related risks. In this respect, it focuses on the need of evolving the prudential supervisory approaches and on the possibility to assign a more active role to central banks.

Marco Migliorelli, Nicola Ciampoli, Philippe Dessertine

### Chapter 1. Policies for Immediate Action and Medium-Term Policies

When the political mandate is given to implement a new economic policy, there are two levels of action: the first one has urgent direct character. The second includes policies that are being directly implemented, with the results occurring in the medium-term. This chapter focuses on the presentation of a series of policies for immediate action or for action in the medium-term for the Greek economy. More specifically, it presents issues related to the output gap and the importance of its management for the implementation of economic policy. Moreover, economic policy guidelines for the revitalization of the financial sector are presented, as well as the medium-term fiscal strategy for the Greek economy and the critical issue of the efficiency of the public property’s management and privatization.

Panagiotis E. Petrakis, Pantelis C. Kostis

### Kapitel 9. Compliance-Portfolio-Management

Unternehmen müssen heute agil und flexibel auf neue Herausforderungen des Ecosystems reagieren. Zu diesen Herausforderungen zählen u. a. gesetzliche oder regulatorische Vorgaben, die es umzusetzen gilt. Aus Compliance-Sicht müssen nicht nur diese externen Vorgaben eingehalten werden, sondern es müssen häufig auch interne Architekturvorgaben, z. B. bezogen auf die strategische Ausrichtung des Unternehmens in Form von Prinzipien, erfüllt werden. Vorgaben zur IT-Sicherheit durch bewährte Standards, wie ISO 27000 oder dem BSI-Grundschutz-Kompendium, sind konkrete Beispiele, welchen Unternehmen aktuell eine immer größere Rolle beimessen. Im Rahmen des Compliance-Portfolio-Managements hat sich in der Praxis folgende Vorgehensweise bewährt: relevante (externe und interne) Architekturvorgaben identifizieren, daraus unternehmensspezifische Compliance-Anforderungen ableiten und Geltungsbereich dieser bzgl. der aktuellen Unternehmensarchitektur festlegen, Erfüllungsgrad der Compliance-Anforderungen auf Ebene der einzelnen Unternehmens-Assets bewerten sowie Maßnahmen zur Erhöhung der Compliance identifizieren. Diese Vorgehensschritte werden in diesem Kapitel gemeinsam mit den beteiligten Rollen sowie den relevanten Ergebnistypen detailliert erläutert. Das aus den vorhergehenden Kapiteln eingeführte Beispiel wird fortgesetzt. Abschließend wird auf Abhängigkeiten zum Informationssicherheitsmanagement (ISMS), Datenschutz, Betriebskontinuitäts-Management sowie Anforderungsportfolio-Management eingegangen.

Pedram Asadi, Christian Höllwieser

### Kapitel 7. Datenportfolio-Management

Um ein modernes, datenorientiertes Unternehmen aufzubauen, müssen Datensilos abgebaut werden. Die Kenntnis der für das Unternehmen verfügbaren Daten spielt dabei eine wesentliche Rolle. Fasst man aktuelle Trends wie Big Data oder Data Analytics etwas weiter, geht es im Wesentlichen darum, Daten in der erforderlichen Qualität für das Unternehmen nutzbar zu machen. Die Grundlage hierfür bietet ein sog. Datenkatalog bzw. ein Datenportfolio. Dieses Kapitel beschreibt, wie Datenportfolio-Management effizient aufgesetzt werden kann und wie es Hilfestellung bei der Bewerkstelligung von Transformationsvorhaben geben kann. Um ein Datenportfolio effizient zu erstellen und zu managen, bedarf es mehrerer Schritte: Geschäftsobjekte identifizieren und bewerten, Verbesserungspotenziale identifizieren sowie Anforderungen und Maßnahmen ableiten. Zusätzlich zur Beschreibung der einzelnen Vorgehensschritte werden die beteiligten Rollen sowie die typischen Ergebnisse, wie z. B. eine Zugriffsmatrix (CRUD) oder ein Data Lineage-Diagramm, vorgestellt. Das im Buch durchgängig verwendete Beispiel wird aufgegriffen und es werden die Potenziale des Datenportfolio-Managements beispielhaft aufgezeigt. Schließlich werden Abhängigkeiten des Datenportfolio-Managements zu anderen Managementdisziplinen, wie z. B. zur Informationssicherheit und zum Datenschutz, erläutert.

Christoph Moser, Kai-Helmut Eckert

### Kapitel 6. Applikationsportfolio-Management

Das Applikationsportfolio ist der Dreh- und Angelpunkt für Änderungen der Applikationslandschaft des Unternehmens. Im Zentrum steht der Katalog der Applikationskomponenten des Unternehmens. Für das Management der Applikationskomponenten bzw. des gesamten Portfolios wird in diesem Kapitel eine praxiserprobte Vorgehensweise vorgestellt: Applikationskomponenten müssen zunächst erfasst und bewertet werden. Auf dieser Basis können Verbesserungspotenziale identifiziert und Maßnahmen abgeleitet werden. Die Vorgehensweise wird ergänzt durch die Beschreibung der involvierten Rollen, wie z. B. Unternehmensarchitekt oder Applikationsverantwortlicher, sowie der typischen Ergebnisse, wie bspw. Applikationslisten, Abhängigkeitsanalysen oder Gantt-Diagramme zur Visualisierung geplanter Veränderungen im Applikationsportfolio. Darüber hinaus wird auf das Zusammenspiel des Applikationsportfolio-Managements mit der TOGAF® Architecture Development Method zur Durchführung von Transformationsvorhaben eingegangen. Ein durchgängiges Beispiel, welches im gesamten Buch aufgegriffen wird, rundet die Beschreibung des Szenarios ab. Abschließend werden Abhängigkeiten zu weiteren EA-Szenarien bzw. Managementdisziplinen, wie z. B. zum Geschäftsprozess-Management, zum Compliance-, IT-Sicherheits- und IT-Risikomanagement oder zum Technologieportfolio-Management dargestellt.

Lutz Kirchner, Matthias Frenzel, Christoph Moser

### Chapter 9. Expansion and Contraction of Central Bank Balance Sheets: Implications for Commercial Banks

Reserves and institutional asset managers have to constantly monitor and assess risk-return trade-offs in the markets where they invest. Among the various tools and indicators that they employ, understanding the balance sheet strength of commercial banks is indispensable. This is because of the role of banks as credit intermediaries for financing economic activity and their important function in the payment and market infrastructures for financial transactions. As central banks have embarked on many, new unconventional monetary policy measures, it is important to ask what the impact on commercial banks is, and whether this enhances or inhibits their traditional credit intermediary role. This chapter examines these questions and considers what hidden risks might be building up as central banks accumulate assets.

Srichander Ramaswamy, Philip Turner

### Chapter 3. Larger Central Bank Balance Sheets: A New Normal for Monetary Policy?

In the “new normal” for monetary policy, central bank balance sheets are likely to be larger and used more actively than before the Global Financial Crisis. Those who manage assets for central banks should take account of the asset and liability choices of many other policy-makers—those responsible for monetary policy, Treasury debt management and financial regulators. Large, diversified and less traditional central bank balance sheets have advantages.

Srichander Ramaswamy, Philip Turner

### Chapter 22. Central Banks as Bankers to Each Other: Overview, Trends, and Future Directions in Global Official Sector Service Provision

The choice of custodial and banking relationships is an underappreciated but important consideration for reserve managers in managing their overall risk profile. The major reserve currency central banks have long served as correspondent banks, transactional agents, and custodians for the safekeeping of foreign reserves for each other and the global central banking community. The ability of central banks to provide each other with safe, confidential, and reliable banking and custody services (BCS) has provided important public benefits, aiding in central banks’ execution of foreign reserve management, monetary policy implementation, financial stability operations, and other mission-critical central bank activities. In the decade since the global financial crisis, and demonstrating the continued strong policy rationale for the inter-central bank provision of BCS, official BCS volumes have continued to grow, reflecting broader global reserve accumulation patterns, the impact of regulatory reforms, counterparty risk perceptions, correspondent bank de-risking, official cross-border financial stability initiatives, and other trends. More recently, the increasingly dangerous cyber threat to wholesale payments security has led central bank providers of BCS and their central bank clients to adapt in order to better protect foreign reserve assets from criminal actors.

Simon Potter, Matthew Nemeth, Mark Choi

### Bauwirtschaftslehre – Grundlagen

Die Bauwirtschaftslehre als spezielle Betriebswirtschaftslehre ist Grundlage des wirtschaftlichen Handelns der am Planen, Bauen und Betreiben von Bauten und Anlagen Beteiligten. Lange sehr stark auf die Technik fokussiert, werden heute professionell ausgerichtete bauwirtschaftliche Funktionen und Prozesse als entscheidende Erfolgsfaktoren in den Unternehmen akzeptiert und angenommen. Zunächst werden die Grundbegriffe der Volkswirtschaftslehre und der Betriebswirtschaftslehre erläutert. Dazu zählen Begriffe wie Markt, Angebot und Nachfrage, Kosten, Rentabilität, Konjunktur und Tarifrecht. In der Unternehmensrechnung sowie der Kosten-, Leistungs- und Ergebnisrechnung werden die Grundlagen zur Erfassung, Darstellung, Auswertung und Überwachung aller Geld- und Güterströme in (Bau-)Unternehmen vermittelt. Im Kapitel Unternehmensfinanzierung werden schließlich die Ziele und Einflussfaktoren der Finanzierung eines Unternehmens sowie alternative Finanzierungsformen dargestellt.

Claus Jürgen Diederichs, Alexander Malkwitz, Ayosha Aghazadeh

### Chapter 10. The Basel Accords and Islamic Banks

The primary cause of the colossal failure of financial institutions worldwide—banks in particular—in the wake of the 2007–2008 turmoil has been the heightened lure of leverage gains that led them to expand credit beyond what the volume and quality of their capital assets warranted. The devastation led to a major policy shift in finance at the national and international levels, with a focus on capital adequacy that financial institutions must observe for their own safety as well as for the wider social interest.

Zubair Hasan

### Chapter 11. Value at Risk

Methodology VaR (value at risk) and its modifications are usual measures of risk in practice (e.g., it is one of the best used approaches to set up capital requirements when regulating capital adequacy in so-called internal models of banks). More generally, VaR is the key instrument for financial risk management, e.g., by means of commercial systems of the type RiskMetrics. This topic is included in the presented text since some methods of VaR construction make use of the analysis of financial time series.

Tomas Cipra

### 3. Rechtlicher Hintergrund

Um die in Kapitel 2.2 beschriebenen Ziele zu erfüllen, muss die Bankenaufsicht einen ausreichenden Überblick und Einblick über/in die Struktur, die Geschäfte und die Risiko- und Ertragslage haben. Grundlage hierfür sind einerseits die in der folgenden Box 3.1 dargestellten, wichtigsten Anzeige- und Vorlagepflichten von Finanzdienstleistungsinstituten und Wertpapierhandelsbanken.

Christian Glaser

### 5. Idealtypischer Ablauf einer Sonderprüfung

Der zeitliche Ablauf einer Sonderprüfung kann je nach Prüfer, Inhalt und auch je nach Intensität abweichen. Trotzdem finden sich die einzelnen, in Abb. 5.1 dargestellten Phasen in jeder und die zeitliche Verteilung in den meisten Sonderprüfungen. Nach einer Darstellung der typischen Prozessschritte einer Sonderprüfung zu Beginn dieses Kapitels werden in den Kapiteln 5.5. bis 5.7. häufige Prüfungsschwerpunkte aus den Bereichen MaRisk, Geldwäscheprävention und IT dargestellt, ehe in Kapitel 5.8. ausgewählte MaRisk-Fokusbereiche umfassender behandelt werden.

Christian Glaser

### 11. Immobilienfinanzierung und Finanzmarktstabilität

Der Erwerb eines Eigenheims ist die finanziell anspruchsvollste und folgenreichste Entscheidung im Leben der meisten Bürgerinnen und Bürger. Der Kaufpreis einer Immobilie übersteigt das verfügbare Eigenkapital in der Regel um ein Vielfaches. Zur Finanzierung ist deshalb die Aufnahme eines Hypothekendarlehens erforderlich. Die daraus resultierenden finanziellen Verpflichtungen bestehen über einen Zeitraum von mehreren Jahrzehnten fort. Während dieser Zeit muss das Haushaltseinkommen stets hoch genug sein, um die Kreditraten bedienen zu können und trotzdem genügend Geld „zum Leben“ zu haben. Einkommen und Vermögen sind jedoch innerhalb der Marktwirtschaft ungleichmäßig verteilt, sodass nicht jeder Haushalt der finanziellen Belastung des Wohneigentumserwerbs gewachsen ist. Werden Immobilienkredite auf breiter Front zu leichtfertig vergeben, können finanzierende Banken in Schieflage geraten und die Finanzmarktstabilität gefährdet sein.

Oliver Lerbs

### 3. Zeitreihenanalyse und dynamische Modelle

Zunächst beschreibt Abschn. 3.2 Formen und Merkmale von Zeitreihendaten (Längsschnittdaten). Abschn. 3.3 analysiert, inwieweit eine einfache OLS-Schätzung auf der Basis von Daten aus mehreren Perioden durchführbar ist. Die Abschn. 3.4, 3.5 und 3.6 veranschaulichen, welche speziellen Probleme bei der Regression auf der Basis von Zeitreihen auftreten. In diesem Kontext stellt Abschn. 3.4 das Problem der Autokorrelation dar, Abschn. 3.5 diskutiert die Exogenität der unabhängigen Variablen und Abschn. 3.6 erläutert die Stationarität von Zeitreihen. Darauf aufbauend zeigt Abschn. 3.7, wie die Bestimmung der Modellspezifikation (Lags bzw. Leads) erfolgt und fasst die praktische Vorgehensweise zusammen. Da hier nur eine kurze Einführung in die Grundlagen der Untersuchung von Zeitreihen gegeben wird, enthält abschließend Abschn. 3.8 eine Reihe von weiterführenden Hinweisen zu Prognosemodellen und Variablen mit gemeinsamen Trends.

Matthias-W. Stoetzer

### 2. Abhängige Variablen mit begrenztem Wertebereich

In der Regressionsanalyse sind uns bisher nur metrisch skalierte abhängige Variablen begegnet. In vielen Anwendungsfällen besteht das Ergebnis (Outcome, Response) eines Daten generierenden Prozesses aber lediglich aus zwei oder mehr Zuständen (Kategorien). Begrenzte abhängige Variablen (Limited Dependent Variables) existieren immer dann, wenn die abhängige (endogene) Variable in einem Bereich liegt, der nur ganz bestimmte Werte annimmt. Abschn. 2.2 gibt eine Übersicht der verschiedenen Formen solcher Limited Dependent Variables. Die Untersuchung abhängiger Variablen mit lediglich zwei Ausprägungen ist in der empirischen Forschung häufig anzutreffen. Abschn. 2.3 erläutert daher diesen Fall ausführlicher anhand eines praktischen Beispiels. Anschließend geht Abschn. 2.4 kurz auf ordinale und multinomiale sowie Zählvariablen und spezielle Arten von beschränkten abhängigen Variablen ein. Abschn. 2.5 erläutert Schritt für Schritt die konkrete Durchführung einer binären logistischen Regression in SPSS und Stata.

Matthias-W. Stoetzer

### Kapitel 1. Der wissenschaftliche Kontext

Die Hotellerie ist im Allgemeinen hoch verschuldet und verfügt über eine relativ geringe Eigenkapitalquote. Der Branchen-Median liegt bei 14 % Eigenkapital. Top-Unternehmen weisen 31 % Eigenkapital auf. Das heißt, die Fremdkapitalquote liegt bei 87 % bzw. bei 69 %. Die hohe Fremdkapitalquote ergibt sich aus Investitionen in das Anlagevermögen, die überwiegend durch Fremdkapital finanziert werden.

Bernd Heesen, Christoph Walter Meusburger

### Chapter 1. Introduction

Today, the majority of managers lead companies on the basis of the Shareholder Value approach and pursues Value Based Management. Also annual business reports of large European companies contain commitments to the Shareholder Value approach. For example, Anheuser-Busch InBev describes its strategic goals as follows: “A long-term strategic mind set motivates us to continually seek – and seize upon – opportunities for future growth and shareholder value creation.”

Nils Eikelmann

### Kapitel 5. Kritischer Vergleich der Abbildung von Leasingverhältnissen aus der Sicht der abschlusserstellenden Unternehmen

Während im vorangegangenen Kapitel die Abbildung von Leasingverhältnissen aus der Perspektive der Abschlussadressaten beurteilt wurde, soll im Rahmen dieses Kapitels der Fokus auf die bilanzierenden Unternehmen als Anwender der Vorschriften gelegt werden. Dabei soll in Gliederungspunkt 2 kritisch untersucht werden, inwieweit die IFRS und die handelsrechtliche Rechnungslegung den bilanzierenden Unternehmen einen zielgerichteten Einsatz jahresabschlusspolitischer Aktionsparameter im Rahmen der Leasingbilanzierung ermöglichen.

Katrin Lazarz

### Chapter 5. Theory Y Based MCS Impact on Trust and Behavior

The goal of this chapter is to present Beyond Budgeting as an MCS that claims to be based on the Theory Y school of thought and to conclude how these changes in MCS characteristics toward Theory Y might affect trust and behavior. Based on this framework an overall causal chain and a model of hypotheses are developed.

Sven Olaf Schmitz

### Chapter 10. The Italian Minibonds Experience in Triveneto

This paper focuses on a relatively new form of corporate debt financing available to Italian SMEs called “minibonds”. Minibonds may be described as fixed-income securities with a medium–long term expiration date, issued by listed or non-listed SMEs aimed at supporting growth projects, future developments or refinancing operations. This paper focuses on the North-East area of Italy and looks at the difference between listed and non-listed issues of minibonds. This paper explores whether this choice is structurally determined and how recent normative developments may affect it and the overall demand for minibonds by investors. Moreover, we explore the literature trying to identify criteria for the determination of potential emitters and show that existing criteria likely underestimate the true potential supply and are largely ignored by firms.

Nicola Carta, Caterina Cruciani

### Chapter 5. Subordinated Debt and Banking Regulation: An Overview

The recent literature has started focusing on the evolving role of subordinated debt and its investors within the EU resolution framework. The market monitoring function employed by its investors and its crucial role in complying with the minimum amount of own funds and eligible liabilities (MREL) make the subordinated debt an interesting case of study under the Bank Recovery and Resolution Directive (BRRD). This chapter provides an overview of the literature about subordinated debt and discusses its evolution within banking regulation with a focus on the BRRD. We deepen the streams of literature able to ground both theoretically and empirically future research on the role of subordinated bondholders under recovery and resolution rules.

Giulio Velliscig, Josanco Floreani, Maurizio Polato

### A Multi-criteria Decision Analysis for the Assessment of the Real Estate Credit Risks

Following the approval of the Basel capital adequacy framework, the credit institutions had to adapt their skills to determine regulatory capital. In this regard, the methodologies defined by the Third Basel Accord [2] have some limits concerning the subjectivity of some aspects and the complexity of the valuation models, especially for the smaller credit institutions that lack suitable corporate structures capable of efficiently applying the established procedures. In order to overcome these issues, the Income Producing Real Estate Risk Index ( $$I_{IPRE,risk}$$ ) is proposed in this work to provide a synthetic index of multi-criteria derivation as a useful reference in the decision-making processes relating to restructuring and debt relief operations.

Marco Locurcio, Francesco Tajani, Pierluigi Morano, Debora Anelli

### Kapitel 1. Hotellerie und Gastronomie im Gesamtkontext

Zu Beginn dieses Buches werden wir das Hotellerieumfeld ein wenig beleuchten und Ihnen damit auch die Notwendigkeit von durchgehenden Analysen des eigenen Zahlenwerkes aus unterschiedlichen Perspektiven vor Augen führen.

Bernd Heesen, Christoph Walter Meusburger

### Does China Need the Regulatory Sandbox? A Preliminary Analysis of Its Desirability as an Appropriate Mechanism for Regulating Fintech in China

A regulatory sandbox is a safe space in which businesses can test innovative products, services, business models and delivery mechanisms without immediately incurring all the normal regulatory consequences of engaging in the activity in question. The fundamental purpose of the regulatory sandbox is to facilitate the development of fintech, especially the ‘disruptive innovation’ activities of the start-up enterprises. In this sense, the regulatory sandbox is a sub-category of the regulation of fintech. Fintech is technology-enabled financial innovation, synonymous with the term ‘internet finance’ in the Chinese context. A different but related term, the regulatory technology (regtech), in a broad sense refers to a combination of the ‘compliance technology’ by the market players with the ‘regulatory technology’ by the regulators. In nature, the regulatory sandboxRegulatory sandboxSingapore is conditional, limited, and controlled deregulation. It was primarily a reaction to the somehow overly burdensome regulatory requirements after the Global Financial Crisis (GFC)Global Financial Crisis (GFC), thus leaving a ‘lifeline’ for financial innovation and, in particular, fintech. The situation is very different in China, where the major problem for internet finance it not over-regulation but under-regulation. With a vast territory, diversified areas, and numerous institutions, China does not feature a much developed and high concentrated financial market like that of the UK, SingaporeFintechSingapore, or the HK SAR. Nor does it have an integrated financial regulatory system. And, most importantly, the existing mechanisms in China are capable of performing equivalent or even more functions than the sandbox, which, if copied in China, would be redundant. In short, the regulatory sandbox is admittedly a remarkable innovation in terms of regulatory ideas and approaches conducive to financial innovation, especially fintech. However, with its specific background, exterior conditions, and intrinsic limitations, it is by no means an inevitable choice or universal model for the regulation of fintech. Based on the actual circumstances, it’s not desirable for China to introduce the sandbox, at least for the time being.

Fan Liao

### Probability of Default and Banking Efficiency: How Does the Market Respond?

The paper attempts to analyze whether shareholders value as intangible assets the management decisions of bank production plan, in terms of cost efficiency, and risk associated to bank portfolio composition, in terms of probability of default (PoD). To test the market response to both management decisions, we employ a regression equation for bank valuation, using the panel regression model estimation procedure with country and year fixed effects, for the listed banks of 15 European countries, during the period 1997–2016. The results show that shareholders value both the efficiency of the production plan and the default risk. In particular, shareholders positively value banks’ cost efficiency and negatively value those banks with high PoD. These findings have important policy implications and show that the market value performance allows for the provision of more insights than book value into potential drivers of banks’ system stability and potential mechanisms for regulators and supervisors to maintain and control bank stability.

Claudia Curi, Ana Lozano-Vivas

Fidelio Tata

### 1. Einführung in das Reporting von Risikodaten

Die Bedeutung von Daten als wichtige unternehmerische Ressource bekommt mit Schlagworten wie „Big Data“, „Industrie 4.0“ oder „Digitale Transformation“ neuen Auftrieb. Insbesondere durch die Digitalisierung der Industrie steigt die Menge an jährlich erzeugten Daten in Unternehmen ständig weiter an (vgl. Voigt und Seidel 2016).

Uwe Rudolf Fingerlos, Guido Golla, Alexander Pastwa, Peter Gluchowski, Roland Gabriel

### Chapter 3. Current Economic and Social Challenges and Islam

An Islamic economy is a rule-based system. Allah (SWT) prescribed in the Qur’an a set of rules of behavior that could be defined as institutions for societies and individuals. These rules were explained and implemented by His Prophet (SAW) when he was both the temporal and spiritual leader in Medina.

### Kapitel 3. Organisations- und Entscheidungsstrukturen in der Sparkassen-Finanzgruppe

Die Sparkassen-Finanzgruppe als Verbund öffentlich-rechtlicher Kreditinstitute repräsentiert neben den Großbanken und der genossenschaftlichen Bankengruppe ein Element innerhalb der sog. Drei-Säulen-Struktur des deutschen Bankenwesens.

### Chapter 1. End-to-End (E2E) M&A Process Design

The long-term development of the global M&A market is characterized by a highly volatile pattern and was challenged by six merger waves. Multiple financial market assessments indicate that the global M&A market is in the midst of a new, the seventh merger wave, which is driven by business model innovations within technology as well as traditional industries. Besides, a glut of global liquidity due to ultra-loose monetary policies of multiple developed market central banks supports M&A financing potentials. Given this highly dynamic macro-view, a robust E2E M&A Process Design is mandatory to assure successful mergers and acquisitions. This M&A Process Design is built upon 5 modules, the Embedded M&A Strategy, the Transaction Management, the Integration Management, the Synergy Management and the M&A Project Management & Governance. The E2E M&A Process Design not only addresses these five modules, but also takes care of the crucial linkages within and between those modules. This mission-critical interdependencies of modules demand an E2E architecture. The M&A Process Design integrates also digital challenges and opportunities: Digital tools and processes might be used to increase the efficiency, speed, quality and robustness of M&A processes. Additionally, M&A could be used as a corporate development tool to design robust digital business models, resilient innovation strategies and to reshape corporate portfolios for the needs of the 20s.

Thorsten Feix

### Chapter 7. Making Islamic Finance a Vehicle for Social Inclusion: A Case for Revisiting the Liquidity Management Practices by Islamic Banks

Islamic finance is theoretically said to be leading to socioeconomic inclusion, balanced development of human societies and economies by the dint of its established strengths of ban on interest, avoidance from gharar, short selling and speculation, financing of certain economic sectors, and its profit and loss sharing and asset-backing principles. However, its growth is hampered by the shortage of liquidity management (LM) tools. Although liquidity shortage is a genuine concern for Islamic banks, excess liquidity has been the hallmark rendering liquidity management a case of profit maximization even where it leads to the compromise on Shariah principles and becoming a conduit for transfer of liquidity to the interest-based system. This chapter analyzes such products/practices and suggests policy changes for the evolvement of a real, stable, and sustainable Islamic system of finance—a means for achieving the SDGs with focus on fair and just distribution of benefits of sustainable growth.

### 12. An Interim Conclusion: Shadow Banking as Market-Based Financing

Nijs formulates some interim conclusions on the shadow banking sector and the segments discussed in previous chapters. More importantly he addresses the question regarding the legitimacy of the trend initiated by regulators and supervisors in 2015 to reframe shadow banking into market-based finance. The positive reformulation should help to embrace shadow banking as part of the global financial infrastructure and a complement to traditional banking, which admittedly can under distress bring an economy down. But renaming the sector changes nothing intrinsically, unless one tends to believe that the shadow banking segments are now properly regulated, which is the dominant self-serving opinion of many regulators and supervisors around the world. But a lot still needs to happen to go in a safe way from shadow banking to market-based finance. And even if we do, it will not be without implications, as the taxpayer will then underwrite the market as such rather than the shadow banking segments and their activities, a topic important enough to spill over into volume II of the handbook.

Luc Nijs

Luc Nijs

### 1. The Macroeconomic Dimensions of Shadow Banking

This chapter sheds light on the macro-economics of the shadow banking industry. It takes the reader on a journey along issues all related to the creation of private safe assets and money creation. What is the role of liquidity for the shadow banking sector and the economy overall and how is liquidity risk transmitted in the market? Can financial instability in the shadow banking industry be predicted? And how is the traditional and shadow banking market connected from a regulatory, macroprudential and monetary point of view? How does the emergence of hybrid intermediaries impact our view and assessment on these matters? Special attention is given to the role of central banks as lenders of last resort, the function of collateral and the impact of collateral re-use and the intrinsic fragility in shadow banking activities and the applied business models.

Luc Nijs

### 2. Shadow Banking Around the Globe

This is the first chapter of the section exploring shadow banking around the world. In this chapter, Nijs starts from the two drivers of shadow banking, that is, regulatory arbitrage and effective demand. Pondering about the risk of private safe asset creation, he wonders what made the 2007–2009 crisis so different and worse than the tech stock crisis in 2002–2003. While reviewing the relevant literature, he concludes that the information insensitivity of debt markets, and thus the shadow banking industry, was the key differentiator. When the fixed liability nature of debt markets is confronted with questions about valuation and quality, the debt market becomes information-sensitive and creates an unstoppable avalanche of contagion throughout markets. The next question then becomes what specific risks the shadow banking industry adds to the general risks embedded in debt markets and what it means for the properties regulation need to have to mitigate those risks. From there onward, he analyzes the structure of shadow banking industries around the world, compares them and assesses their dynamics. While doing so he also pays attention to the relationship between shadow banking and (offshore) financial centers and their role in tax avoidance/evasion.

Luc Nijs

Luc Nijs

### 3. Financial Intermediation: A Further Analysis

Securitization is most likely the most visible part of the shadow banking industry. That is mostly due to its alleged involvement of the 2007–2009 financial crisis. Born as a tool to reduce capital charges for banks, securitization became an industry in its own right. Also here a combination of regulation and demand triggered the emergence of shadow banking. The crisis learned that adjustments were needed to reduce the unanticipated consequences and unregulated business practices. Both the (inter)national regulators and supervisory bodies introduced an avalanche of changes to make the industry safer while maintaining the capital reduction benefits for banks. Risk retention, different techniques of tranching, selection at the gate (STS) and all sorts of compliance rules were introduced. After reviewing all efforts involved and despite all improvements realized, Nijs is still not convinced that it has made the industry effectively safer and many questions are still unanswered. NOTE: the chapter does not provide a full analysis related to securitization. Other chapters will delve deeper into certain securitization-related topics or resurface certain (new) features.

Luc Nijs

### 7. Future Directions

The final chapter reads like an anthology of open-ended or still-evolving issues. Is more market-based finance the solution and what is the effect of more bank capital on growth, Nijs wonders. To what degree does the growing larger-than-ever global asset management industry pose intrinsic risks, and does securitization, which essentially is a capital reduction tool for banks, really generate enhanced access to capital for small- and medium-sized enterprises? Do we really know what we are doing when juggling ex ante and ex post regulation with macroprudential and monetary policies supported by supervisory frameworks, stress-tests and ongoing data gathering efforts? Do we know how all these simultaneously implemented efforts interact? Nijs gets the impression we are not. Do we really appreciate (or understand) the limits of all these tools against the background of unseen complexity, imperfect contractual relations, limited corporate liability and unparalleled dynamic financial networks? And how much finance do we really need? Does finance crowd out economic growth once it grows too large relative to the economy it is supposed to serve? Balancing liquidity, stability and meeting demand for safe assets in a world with credit-, liquidity- and maturity transformation occurring outside the regulated banking sector might be a stretched ambition. We might collectively be suffering from the neglected risk syndrome, and transforming the shadow banking sector into market-based finance might prove to be an illusion we all will regret one day.

Luc Nijs

### 7. The Policy Train Chasing Shadow Banking

This chapter takes a step back and asks the question what happened when the dust settled after the financial crisis of 2007–2009. There was time for analysis and reflection. But then it was time to take action based on those findings and experiences. But where to start in a complex domain with many issues that require attention? And does dealing with the 2007–2009 issues solve the deeper root-cause problems? If we don’t want to go down the road of fixing the symptoms, what are then the underlying objectives? Financial stability, liquidity, risk neutralization, keep credit flowing at all times and so on. And what are the best tools to achieve those objectives? Ex ante regulation is needed but inherently insufficient; ex post regulation is to ensure that things are cleaned up as soon as possible and markets don’t stay instable longer then absolutely needed. And how does regulation relate to macroprudential and monetary policies that carry the same objective? And can supervision and stress testing contribute to those joint objectives? An analysis of what happened and the decisions made in the financial industry and the different shadow banking segments is the subject of this chapter.

Luc Nijs

### 4. Shadow Banking in the Americas

The shadow banking industries in the Americas are examined in this chapter. The focus is on the variety of characteristics, the role of the offshore Caribbean financial centers and the link of the national shadow banking segments with their national traditional banking industries. Special attention is given to Canada, which wasn’t badly hit by the 2007–2009 crisis but has since then shown signs of convergence with how other mature shadow banking industries have evolved and are evolving.

Luc Nijs

### 11. Taxing (Shadow) Banks: A Pigovian Model

This lengthy chapter brings home a critical question regarding an adequate tax model for financial institutions (FIs) and shadow banking entities. Given that leverage is a constitutive factor of the shadow banking business model, corporate tax systems have an embedded debt bias and credit-, maturity- and liquidity transformation occur outside the regulated banking sphere in the shadow banking segments, the author wonders if a Pigovian tax model, whereby the negative externalities caused would trigger tax liabilities, would be more appropriate to neutralize possible shadow banking exposures. Starting from the contemporary tax system, the older and more recent literature on Pigovian taxes, he expands his Pigovian tax model designed initially in 2015 for the financial sector and shadow banking entities, in particular using the aforementioned constitutive elements as drivers for the design of the model. But Pigovian taxes are politically a difficult topic whether it is for environmental purposes, reducing obesity (sugar tax) or reducing systemic risk in the financial markets.

Luc Nijs

### 8. From Policy to Regulation

This chapter, which builds on the insights generated in Chap. 7 , takes the discussion a couple of notches up. Starting from how shadow banking emerged, the analysis focuses on the question how regulation can help manage an industry it helped creating itself. Two concepts are central in the analysis: regulatory arbitrage (the technique through which simply put one can achieve the same economic outcome by using a different legal technique or transaction and often subject to different (i.e. lower) capital requirements) and second the creation of private safe assets. What exactly is a safe asset and can safe assets be produced privately or is that only possible by sovereigns in the current financial system? If privately created safe assets are inherently instable, the central bank and the taxpayer essentially underwrite the shadow banking industry on an ongoing basis. Contract imperfection, director liability, limited liability for corporations, bankruptcy laws and moral hazard are then topics that need to be brought into the discussion.

Luc Nijs

### 1. Introduction

Shadow banking is a house with many rooms and so we need to do some fact finding. What segments are there, how voluminous are they, do they differ per country and what do they have in common? And also what makes them problematic? Regulators and supervisors have been breaking down market segments to filter out the individual shadow banking segments to be regulated. Starting point is the overall idea that shadow banking in one way or the other is involved in traditional financial intermediary activities without being regulated as traditional banks. Different analyses and models are reviewed as well as how these models evolved over time. Experience showed that it is better to trace certain economic functions and their associated risks rather than certain legal entities or structures. Not only because a structure in itself doesn’t cause risk but also because the next crisis will be different than the previous one, we ultimately want regulation and supervision to hold some predictive value as well.

Luc Nijs

### Kapitel 8. Internationale Finanzmärkte

Die Finanzkrise führte zur schlimmsten Depression seit 1929. Nur durch massive Konjunkturprogramme konnte Schlimmeres verhindert werden. Hier kam die keynesianische Theorie zur Anwendung.

### Chapter 28. The Global Financial Crisis and the African Economy

This chapter attempts to explain the major causes of the global financial crisis and how it affected African countries. Understanding the structure of African economy will provide more insight into investigating the effect of the global crisis. This study reviewed different episodes of financial crises, the consequences of different African countries, and the theoretical literature on the crisis. Most African countries were directly affected by the 2008 global financial crisis due to multiple transmission mechanisms, namely credit expansion, trade-export, portfolio capital flow, remittances, and commodity prices. For example, countries like Kenya, Ethiopia, and South Africa were affected through weak demand engendered by the commodity boom and importation of goods stimulated by the reduction of interest rate in 2009, reducing demand for credit in these African countries. Also, there has been a drastic decline in export volumes due to low commodity prices of many goods. Existing theories on different types of crises and regulations have been able to establish some salient issues, namely that banks are fragile in nature, hence regulations are needed to stabilize the market. The literature is not clear on whether financial regulation is associated with an increase in financial instability and if more regulations usually set up more barriers to lending and reduce competition in the banking sector. Therefore, regulations need to be dynamic rather than just responding to crises in the financial sector.

Foluso Akinsola

### 13. What Now?

What is the purpose of the extreme complexity of the banking rules? It creates a smokescreen for loopholes left there for good purposes. To help banks to finance the economy and abundantly shower homeowners and government with almost free financing. The strategy works well. Banking is stable, interest low, inflation almost non-existent. However, the approach is reasonable only if we are confident that no significant systematic event would happen soon. Summarising earlier chapters, this one tries to offer ways forward in the specific EU regulatory environment. It proposes regulatory reset, not as a radical change of the rules, but through adjustment of the parameters in the existing regulation. The purpose is single-minded, an increase in the resilience of the EU financial system.

Damir Odak

### 6. How Can Supervision Prevent Financial Crises?

Supervision cannot prevent market disturbances, potentially causing a crisis. It retains its impact through long-term measures making the banking system more resilient to externals shocks. This process consists of five steps: setting standards, licencing, oversight, rectifying action and firefighting. The supervision is the application of those five steps in a coordinated manner. Performed in the correct order, they enable banks to withstand shocks without causing them. However, the regulatory requirement should be so balanced that investment in bank shares remains attractive. Otherwise, banks cannot raise the capital and meet the requirements.

Damir Odak

### 14. Glossary

This chapter contains materials needed to understand other chapters if the reader is not familiar with the theory of economics, or is interested in going deeper into the mathematics behind some subjects. This chapter is not intended for reading as single integral text, but its parts are given as the references in the other chapters.

Damir Odak

### 11. Banking Regulation in the EU

The EU banking regulation is, as the EU itself, a unique structure in the world. Two unique features of EU banking regulation are single jurisdiction with several legal frameworks and several jurisdictions sharing the same legal framework. The pile of regulation applying to banks is enormous. Such nature of the regulation emerges from the nature of the EU. It is maybe unavoidable but is it useful to apply such a complex regulation on the institutions having literary all the money in the world to pay lawyers? There are promising recent changes, but as politics initially got cold feet the term gradually in their implementation now really means it. Our children will see their full impact.

Damir Odak

### 9. Basel 1, 2, 3, 3&1/2

The Basel Accord is an international standard in banking supervision. It is an agreement between supervisors. Based on it, jurisdictions create regulation. BiS checks compliance of authorities with the standard. Basel I—first international standard in banking supervision appears in 1988, 14 years after Basel committee begins its work. That is a bold step in the right direction, enabling global standardisation of the banking industry. Basel II—announced in 2004. Introducing the three-pillar approach and dealing with the risks Basel I neglected. Besides, it introduced IRB, probably the most devastating idea in the banking regulation. Basel III—2014 and 2017—nicknamed three and a half, an attempt to undo worst part of the Basel II. Unfortunately halfhearted, as reluctance to recognise mistake remains.

Damir Odak

### 12. European Banking—Yesterday and Today

US financial market is “the market”. It tells you the price, whether you like it or not. European financial markets are different. EU and Euro-area are very much bank-centric. The bulk of the assets is here immersed in stagnant pools of “hold to maturity” and “historical cost”. In the EU, everything is slower and exposed to judgement and discretion. The reality always catches up at the end, but it takes a while before it shows up. The crisis 2008–2009 demonstrated the difference very convincingly. While American banks had two terrible years and remained profitable ever after, EU banks were profitable throughout the crisis. However, from 2012 onwards they desperately try to crawl away from the grasp of reality going after them.

Damir Odak

### 5. The Asymmetry

The growth of the financial system modestly influences the growth of the economy, while sharply increases the instability of the system. We do not live much better if the water supply pumps more water, but a failed water supply ruins our lives. During the Glass-Steagall period, structural separation keeps the asymmetry at bay. Innovative investment banking makes waves in capital markets freely, while protected by a legal wall, the dull commercial banking is what it is supposed to be, dull. The financial industry’s most devastating social impact emerges from the impact financial crises have on political stability. The failure of a large bank creates such a disruption that regulators reached a consensus that such banks should not “fail disorderly”.

Damir Odak

### 10. Bank Failure and Resolution

The perfect banking system would be too expensive. Therefore, the failure of banks is imminent, and we should be ready for it. Failing of individual weak banks is acceptable. However, only if the failure is correctly managed. The failed bank goes through resolution. It is a deliberately vague word with a lot of meanings. EU resolution framework assumes “open bank” resolution for strategic banks. It means that the bank would fail and resolve without any discontinuity in operations. Only shareholders and junior creditors of the bank are involved in the resolution. However, a lot of work needs to be done to achieve all preconditions for such a resolution. Most importantly, it would require improvement of the banks’ reputation.

Damir Odak

### Chapter 7. Liquidity Risk Related to Financial Transactions

In any financial transaction, the parties try to get the best possible result by taking into account information on the features of the operation and on the liquidity of that particular financial instrument. To that effect, the size of the package of financial instruments to be sold/purchased, the time frame for the operation to be completed, and the target price of the transaction, will all be taken into account. As regards the liquidity of the market of that particular financial instrument, the reference/market price of the financial instrument, the costs relevant to the transaction, the market depth, the volume of traded instruments, and the value of the transactions concluded during the previous period, etc. shall be taken into account. The liquidity risk can be regarded as that part of the value of a transaction that could not be obtained by an investor/a financial entity, according to his/its calculations made before concluding the operation, because the transaction was too large and was concluded within a very short time as compared to the market depth. In other words, if a large transaction does not take the market depth into account, a lower price than the targeted one will be obtained. In the following, we are going to present an assessment methodology for the liquidity risk attached to transactions, as well as various methods to keep the impact of this risk at insignificant levels. These methodologies for the assessment and reduction of the liquidity risk attached to financial transactions could be used by various financial entities involved in financial trading or financial asset portfolios administration activities. Also, these methodologies can be adapted and used by the market infrastructure entities or by the IT companies that develop trading or risk management applications for financial entities.

Laurențiu Paul Barangă

### Chapter 18. Emerging Risks: Concluding Remarks

The contributions in this book provide evidence of the intensity and variety of changes in our ecological, societal, and technological environment and their implications for the financial sector. In addition to highlighting the potential opportunities and threats emerging risks bear for financial institutions and markets, the chapters outline the role the financial system can play in positively affecting its environment. They point to the reciprocal dependency of the different systems and the need to consider these interactions. In doing so, emerging risks appear to matter more than ever.

Dieter Gramlich, Thomas Walker

### 3. Finanzcontrolling

Die Finanzlage ist von existenzieller Bedeutung für Unternehmen; Illiquidität als Extrem zieht Insolvenz und Konkurs nach sich. Daher muss im Finanzbereich statt Improvisation und Reaktion informatorisch gut unterlegtes und geplantes Handeln vorherrschen (Hahn und Hungenberg 2001, S. 616). Die finanzielle Führung von Unternehmen ist eine komplexe Gesamtaufgabe und umfasst folgende Teilaufgaben (Hahn und Hungenberg 2001, S. 616–646; Horváth et al. 2015, S. 411–415; Lachnit 2001, Sp. 887–889; Perridon et al. 2016, S. 720–765):

Stefan Müller, Sarah Müller

### 4. Risikocontrolling

Unternehmen sehen sich seit Jahren einer wachsenden Dynamik in den Rahmenbedingungen ihres Handelns ausgesetzt. Neue Technologien und die Bekämpfung des Klimawandels lassen ganze Branchen und neuartige Märkte entstehen und führen zum Verschwinden wiederum anderer Leistungsfelder. Durch die stärkere Einbindung der ehemaligen Ostblockländer sowie von Schwellenländern in die Weltwirtschaft ergeben sich eine Vielzahl neuer potenzieller Kunden und Lieferanten, aber auch Konkurrenten. Staaten verlieren vielfach ihre Position als (krisenausgleichende) Nachfrager, da die Schuldenkrise deren Handlungsmöglichkeiten stark eingeschränkt hat. Zudem ändern sich durch supranationale Organisationen viele rechtliche Grundlagen sowie (global-)gesellschaftliche Normen, einhergehend mit einer kulturell und internetunterstützt gestiegenen Macht der öffentlichen Meinung. Gleichzeitig führen extrem volatile und z. T. von hohen Spekulationsvolumina geprägte Kapitalmärkte zu starken Schwankungen von Devisenkursen, Unternehmenswerten, Zinsen und auch Warenpreisen. Und schließlich sieht sich jedes Unternehmen wirtschaftsprozesstypischen Unwägbarkeiten, wie Absatzeinbrüchen, Wettbewerberaktivitäten, technischen Fortschrittsschüben, Rechtsänderungen, Kostenschüben, Produzentenhaftung, Schadensfällen usw., ausgesetzt, da jeder unternehmerischen Tätigkeit Risiken immanent sind (Lachnit und Müller 2003, S. 565). Bei Risiken handelt es sich im weiteren Sinn zunächst allgemein um Zielverfehlungen als „Streuung des Zukunftserfolgs wirtschaftlicher Aktivitäten“ (Kromschröder und Lück 1998, S. 1573), wobei sowohl positive, i. d. R. als Chancen bezeichnete, als auch negative, als Risiken im engeren Sinne bezeichnete, Abweichungen auftreten können.

Stefan Müller, Sarah Müller

### 1. Unternehmenscontrolling: eine Gegenstandsbestimmung

Controlling als Funktion und Institution wird zunächst hauptsächlich im Zusammenhang mit erwerbswirtschaftlich orientierten Unternehmen gesehen, aber auch in der öffentlichen Verwaltung, in öffentlichen Betrieben, Krankenhäusern, Wohlfahrtsverbänden und NGOs erlangt das Controlling eine steigende Bedeutung (Blase und Müller 2009). Die Globalisierung der Unternehmenstätigkeiten, gestiegene Anforderungen der Kapitalgeber (hier vor allem auch der Banken), weitreichende Veränderungen auf den Märkten sowie eine seit der Finanzmarktkrise zu beobachtende und durch eine Nachhaltigkeitsorientierung sich verstärkende Legitimationsproblematik unternehmerischen Handelns führen dazu, dass der Stellenwert des Controllings in Unternehmen – nicht zuletzt auch bei mittelständischen Betrieben – weiter wachsen muss. Das Controlling stellt eine im Zusammenwirken von Praxis und Wissenschaft entwickelte und inzwischen auch erprobte Konzeption zur Wirkungsintensivierung von Unternehmensführung dar (Freidank 1993, S. 400; Hahn und Hungenberg 2001, S. 175–197; Hans und Warschburger 2009; Horváth et al. 2015; Koch 1980; Küpper et al. 2013; Lachnit 1992, S. 1–18; Lorson 2011, S. 270–280; Serfling 1992; Reichmann et al. 2017, S. 2–4).

Stefan Müller, Sarah Müller

### The Outsourcing of IT Governance

For the last 50 years, IT researchers have investigated IT governance; the apparatus of structure, processes, and relational capabilities needed to ensure expected benefits are generated from IT resources. This include looking at the structure of IT departments, the use of outsourcing, the role of overseers, etc. Notwithstanding accumulated knowledge, IT governance as an object of study is changing and this is challenging our understanding of governance. Recent changes in the environment have created a context where an increasingly large part of the decisions related to IT governance are now made by instances outside the firm. These changes include outsourcing, offshoring, growth of platforms, IT services evolution, as well as new regulations and standards. We argue that focusing on governance structures may lead to being concerned with only a small portion of the IT resources used by an organization. In contrast, a focus on governance processes is likely to offer a broader reach for governance purposes.

Benoit A. Aubert, Suzanne Rivard

### Country Profiles—Members

The Sultanate of Brunei (officially referred to as Negara Brunei Darussalam, i.e. the State of Brunei, Abode of Peace) or simply Brunei, is a state located on the island of Borneo, in Southeast Asia. Brunei is only, and completely, bordered by Malaysia, with the exception of the coast overlooking the South China Sea.

Lorenzo Riccardi, Giorgio Riccardi

### Chapter 5. The Impact of Income Diversification on Chinese Banks: Bank Efficiency

This chapter examines the efficiency of the Chinese banking sector in relation to banks’ diversification operations. In a two-step approach, the chapter first calculates both cost and profit efficiency scores via stochastic frontier analysis using the method of within maximum likelihood estimation (WMLE). Then, the investigation employs a dynamic Tobit model in order to shed light on the diversification-efficiency nexus in the Chinese banking market.

Zhixian Qu

### Chapter 1. Introduction

This chapter begins by giving an overview of the classification and channels of income diversification in the Chinese banking market. Then, it outlines the main motivations of the book, and the research questions to be addressed. After briefly noting the principal findings and potential contributions of this research, the chapter concludes by giving an outline of the composition and organisation of the whole book.

Zhixian Qu

### Chapter 3. The Impact of Income Diversification on Chinese Banks: Bank Performance

This chapter investigates the effects of income diversification on the performance of banks in China. By adopting the system-GMM estimation, this research finds the different diversification impacts on performance for three categories of banks. By decomposing non-interest activities into different components, it finds further significant results.

Zhixian Qu

### Chapter 7. Risk Modeling and Capital: Market Risk

Pricing is often done with the help of advanced Monte Carlo Simulations (see below). There are some alternative (traditional) methods and tools. A few examples are provided here:

Johannes Wernz

### Chapter 6. Risk Modeling and Capital: Credit Risk (Securitizations)

With Basel III an important improvement on good risk management (information requirements) was introduced (see below).

Johannes Wernz

### Chapter 1. Outline

This book is divided into the following chapters: Chapter 2 deals with all topics relevant for bank management and steering, for strategy, and especially for the risk-return management. In this chapter, business models are discussed. In Chap. 3 the economic and political situation is discussed; the regulatory framework and the development of the philosophy within the Basel Accords, specifically Basel III, are presented. Chapters 4 – 6 deal with Credit Risk (loans) and Counterparty Credit Risk (derivatives). Risk and return relevant topics such as risk-adjusted pricing and the underlying parameters are illustrated. Risk models are presented. Chapter 7 deals with Market Risk, whereas Chap. 8 deals with Operational Risk. In Chap. 9 Asset Liability Management is discussed.

Johannes Wernz

### Chapter 3. Banks and the Regulatory and Economic Environment

Banks serving as an interface between investors and borrowers are important for the economy. Banks provide loans and enable private and commercial investment and growth. Most people buying a house or a flat need a loan. Also, most companies can handle larger investments only through loans. Lending and the associated risk assessments are key tasks of the banks’ business. Money from savers, investors, and from central banks is provided to economy. Thus, it is important that the bank can borrow enough money from the central bank, from other commercial banks and from savers and that this supply is not interrupted—as it can happen in times of a crisis.

Johannes Wernz

### Chapter 8. Risk Modeling and Capital: Operational Risk

Operational Risk (OpRisk) saw quite some developments in the recent years:

Johannes Wernz

### Chapter 2. Bank Management and Steering

Appetite, risk appetite—how much of it, with what consequences, with what impact on the strategy and on the volatility of earnings? This is a fundamental question in bank management.

Johannes Wernz

### Chapter 4. Risk Modeling and Capital: Credit Risk (Loans)

All the relevant measures (expected losses and provisions, economic capital, regulatory capital, and interest for pricing) can be derived from one or two handful of parameters (discussed in the following sections).

Johannes Wernz

### Chapter 5. Risk Modeling and Capital: Counterparty Credit Risk (“EPE” and “CVA”)

Investments in derivatives bear Market Risk (e.g., option price movements due to the movements of the underlying stock) and Credit Risk (e.g., creditworthiness of the issuer (seller) of an option or the counterparty of a swap). Credit Risk in this context is usually referred to as Counterparty Credit Risk (CCR), counterparties are usually other banks. For pricing purposes different models and algorithms are used (see below). The cash flows, exposures, and the likelihood of the payments (creditworthiness of counterparties) need to be considered. Accounting (like IFRS 13) is often closely related to valuation/pricing.

Johannes Wernz

### Chapter 9. Risk Modeling: Asset Liability Management

Often the yield curve is such that long-term interest rates are higher than short-term interest rates. Before the financial crises, there were some nice gains as a result of this difference in interest rates. Nevertheless, when the financial crisis hit in 2007, the yield curve twisted, and the asset mismatch led to big losses. Some banks like Dexia (Belgium) or Depfa (Ireland, later part of HRE, Germany) had refinancing schemes that were quite risky, because there was a big asset mismatch. Loans were provided long term whereas refinancing was done short term.

Johannes Wernz

### Finanzstandort Deutschland – Berufsperspektiven in der Finanzwirtschaft

Der Finanzstandort Deutschland hat sich parallel zur Volkswirtschaft in Deutschland entwickelt. Die zyklischen Schwankungen und Strukturprobleme der Realwirtschaft finden ihren Widerhall in der Finanzwirtschaft. Die aktuell zu beobachtenden strukturellen Verwerfungen in den verschiedenen Branchen sind auch in der Finanzbranche festzustellen mit den erheblichen Auswirkungen auf die Bestimmung der Geschäftsfelder, auf die Organisation der Abläufe sowie letztendlich auf die Beschäftigung. Trotz aller aktuellen Herausforderungen hat der Finanzstandort Deutschland seine Wettbewerbsfähigkeit bewiesen und ist unter Berücksichtigung der gesamten Infrastruktur gut aufgestellt. Er eröffnet engagierten und leistungsorientierten Beschäftigten in der Finanzbranche langfristig verlässliche berufliche Perspektiven. Dies setzt jedoch eine hohe Lernbereitschaft, intellektuelle Flexibilität, praktisches Engagement und sprachliche Kompetenzen voraus.

Ernst Fahling

### Making British Banking Better

This chapter considers whether actions taken by banks and policy makers since the 2007–9 financial crisis have made British banks and banking ‘better’ through the restoration of public trust that banks serve the public good and are ‘socially useful’; and by protecting taxpayers against having to bail-out banks again in the future.With regard to the restoration of trust, Section 2 reports on the deliberations of a Panel addressing the question: ‘Have we made banking good?’ Section 3 reports on the findings of the ‘Taxing Banks Fairly’ work stream of an AHRC project completed in February 2016 that considered the balancing of the regulation and taxation of banking as a means of protecting taxpayers from bank bail-outs. Section 4 explores the question of whether the ‘regulatory’ cycle in the UK has turned, from tightening to relaxation, too soon: before banks have demonstrably improved their iberali; before competition in UK retail banking has been enhanced significantly; and before taxpayers are protected properly. Section 5 considers: whether the Banking Standards Board, established in 2015, be able to raise banking standards: and whether ‘Open Banking’ initiative, imposed from January 2018 by the UK’s Competition and Markets Authority (and conformable with the EU’s Payments Services Directive, PSD2), will deliver better financial services to the banks’ retail consumers (households and small and medium sized enterprises, SMEs). Sect. 6 concludes that a new social compact for retail banking in the UK seems to be required.

Andy (A. W.) Mullineux

### Identification of the Factors Affecting the Return Rates of the Banks Listed on the Warsaw Stock Exchange

Banks constitute a specific sector of stock-exchange-listed companies. The main factors affecting their rates of return are financial indicators. The aim of this paper is to identify these factors. Using annual data from 1998 to 2018, an unbalanced panel was created, covering 13 banks listed on the Warsaw Stock Exchange. The model proposed has been estimated for selected financial indicators. Next, factor analysis was used, by the means of which the latent factors were calculated. The results of the research allowed identification of the impact the latent factors have on the rates of return and showed that the main indicators determining the rate-of-return level were the operating profit margin, the return on equity, the equity ratio and the share of the operating expenses in the income on core operations.

Ewa Majerowska

### Kapitel 3. Der Werkzeugkoffer

Haben wir uns selbst und unsere Emotionen gut im Griff, dann brauchen wir noch die passenden Werkzeuge. Wie Lee Iacocca gesagt haben soll: “You can have brilliant ideas, but if you can't get them across, your ideas won't get you anywhere.” Also haben gute Führungskräfte mehr als ein Gesprächsrezept im Köfferchen und beherrschen die Instrumente vom Alltagsfeedback bis zum kritischen Gespräch, vom Orientierungsgespräch bis Fördergespräch. Und sie nutzen Methoden, wenn es darum geht, Probleme zu lösen und Changeprozesse zu steuern. Wenn man nicht weiß, wohin man will, kommt man nie so weit! Bereiten Sie sich also auf Gespräche vor, wählen Sie das passende Werkzeug aus. Und dann bleiben Sie flexibel: Wie beim Segeln wird im Gespräch nur der Startpunkt ins Logbuch eingetragen. Der weitere Verlauf des Törns wird von Wind, Wetter und Strömung beeinflusst – also vom Gesprächspartner und den sonstigen Rahmenbedingungen. Segeln „können“ heißt, Segel, Schoten und Pinne fachgerecht einsetzen zu können und in der Lage zu sein, auf wechselnde Gegebenheiten zu reagieren. Im Gespräch heißt das: Gesprächstechniken beherrschen und navigieren beim Driften.

Martina Boden

### Chapter 4. Cambodia’s Financial Market System: Inclusive Dynamics, Impending Crisis?

What type of exuberance defines the Cambodian financial market system? Is it rational? The past 20 years tell a compelling story of inclusive growth in the financial market system in Cambodia. Growth was enabled by policy foresight and the crowding-in of more players in the core market as well as in the support functions of the market. Label this: Exuberance based on rational behavior. This chapter discuses five factors that effect the level of exuberance in the market: proliferation of small credit providers, borrowers’ capacity to absorb more debt, interest rate caps fuel excessive borrowing, mergers and acquisitions in the microfinance market, and taxation targets.

Heather A. Clark

### Chapter 9. Banking on the Future: ACLEDA MFI Myanmar Co. Ltd. and the Evolving Financial Sector of the Republic of the Union of Myanmar

The chapter starts with a brief overview of ACLEDA MFI Myanmar's (AMM) historical importance to the ACLEDA Group, and a summary of outreach to date. The global client protection principles applied to MFIs and banks are reviewed. An overview of Myanmar's economic growth sectors and the challenges and opportunities within the financial sector follow—including regulatory barriers to advance financial inclusion. Lessons are reviewed from AMM's history and success with building the capacity of new financial sector particpants—both staff and customers.

Heather A. Clark

### Chapter 5. Fintech, Chain Transactions and Open Banking

This chapter shows that networks widely distribute both big data and fintech applications, allowing fintech firms to execute their activities all around the world. Furthermore, the unbundling of the intermediation process into chains of transactions is leading banking and financial activities outside the scope of supervision. Thus, this chapter investigates the reason fintech applications do not appear to be regulatory-neutral. It also investigates the ‘acts of fintech’ and the responsibility of individuals in developing network of operations and concludes by assessing the current need for transparency, with regard to both the circulation of financial information in the market and the mitigation of the bargaining power in bilateral transactions.

Valerio Lemma

### Chapter 3. Fintech and Market-Based Financing

This chapter considers the impact of fintech on the key economic drivers of market-based financing, taking into account the opportunity that new business models offer in the shadow banking system. It has also been shown that the efficiencies from the application of technology-enabled innovation and the proliferation of innovative market participants can contribute positively to the functioning of shadow banking. Thus, this chapter highlights the need for new forms of public supervision over fintech mechanisms in order to avoid asymmetries, reduce risks, promote financial stability and then prevent opportunistic behaviour hidden behind business analytics and software, taking into account the role of information and transparency in a market driven by automatic tools and self-executing processes.

Valerio Lemma

### Chapter 4. European Approaches to Fintech: The Role of Regulation and the Evolution of Supervision

This chapter clarifies the European approach to financial innovation. In order to outline the common features of the regulatory approach across Europe, it highlights the interventions of EU institutions. Focus on the current rules outlines that, apart from the efforts in the European Commission’s Action Plan on FinTech, a uniform legal framework applicable to fintech has not yet been established in either the European Union or the G20’s countries. Indeed, EU regulator does not approach fintech as a new industry, so the role of the European Central Bank will ensure that fintechers are properly authorized and have in place ‘risk control frameworks’. In addition, this chapter considers evidence from Switzerland, showing that an advanced democracy should enact the principles of freedom, independence and self-determination.

Valerio Lemma

### Chapter 7. Fintech and Money

This chapter shows the impact of the evolution of financial technology on the market for money, in order to understand the effect of fintech on monetary policymaking; it considers the development of private tech-fuelled instruments as an alternative to sovereign money (i.e. non-sovereign cryptocurrencies) and specific regulatory analysis of the current tolerance of non-sovereign cryptocurrencies by national governments and central banks. It moves from the hypothesis that the protection of savings invested in such cryptocurrencies refers to individual rights; therefore, the analysis investigates the convenience to set specific safeguards to guarantee the capacity of these instruments to preserve their value, along with further backstops for avoiding theft, plagiarism and fraud.

Valerio Lemma

### Chapter 6. Fintech Firms

This chapter takes into account both the fintechers that supply business analytics and high-tech services to supervised entities and the ones that unbundle banking and finance to supply alternative solutions for savers, lenders, borrowers or investors (such as the management of web-based platforms supporting individuals in trading credits or sharing financial opportunities). It highlights the fact that the policymaker has to contemplate the regulation of both. By providing a review of the risks arising from the business of fintech banks and a background for understanding the option for strengthening oversight and control over fintechers, programmers and coders considered as relevant ancillary service undertakers, this chapter concludes that supervisory authorities will require authorization from high-tech service providers for dealing with supervised entities.

Valerio Lemma

### What Do We Know About the South African Business Cycle?

A significant amount of macroeconomic research on the South African business cycle has appeared since the late 1990s, mostly with the turning point cycles identified by the South African Reserve Bank (SARB) as an empirical starting point. Following the established nomenclature of the international literature—we summarize key trends and conclusions in this literature along three lines: firstly, studies aimed at identifying and describing key properties of South African business cycles, secondly, studies concerning the forecasting of South African cycles and, thirdly, studies on the relationship between stabilization policy and the South African cycle. This thematic summary pays special attention to cyclical developments after the financial crisis and identifies key gaps in the state of knowledge.

W. H. Boshoff, S. A. du Plessis

### Kapitel 5. Strategisches Personalcontrolling

Strategisch Unterwegssein bedeutet, die richtigen Stellschrauben zu finden und einzustellen. Personalkennzahlen sollen dabei den späteren Umsetzungsprozess der Strategie kontrollieren und bewerten, so ein Plädoyer. Im Personalgeschäft richtet man den Blick sowohl nach innen, um die Systeme, Regelungen und Prozesse dahin gehend zu analysieren, was läuft gut (Stärken), oder eben nicht gut (Schwächen), als auch nach außen, um im Unternehmensumfeld Zukunftschancen oder existenzielle Risiken aufzuspüren. Chancen oder Risiken ergeben sich häufig durch neue Technologien oder Verschiebungen in den Kundenbedürfnissen. Risiken entstehen vor allem durch in der Wirtschaft und Gesellschaft latente Megatrends (z. B. Demografieentwicklung) sowie durch neue gesetzliche Regelungen mit z. B. Verboten, Geboten, verbunden mit ggf. viel bürokratischem Aufwand, und durch die laufende Rechtsprechung im Arbeitsrecht. Die Personalstrategie muss mit diesen internen und externen Herausforderungen im Einklang stehen bzw. auf sie reagieren.

Heribert Wienkamp

### Kapitel 2. Theoretische Grundlagen

Bei der Ökonomik handelt es sich keinesfalls um ein geeintes und allgemein anerkanntes Theoriegebäude, sondern um eine Reihe konkurrierender Theorien und Modelle, die auf fundamental divergierenden Weltanschauungen, zum Beispiel hinsichtlich der Aufgabe des Staates oder der Funktionsweise der ökonomischen Interaktion zwischen Menschen, fußen. Oft sind ökonomische Debatten alleine aufgrund starker Implikationen auf das gesellschaftliche Zusammenleben und damit auch auf das eigene Umfeld emotional stark aufgeladen. Eine wertneutrale Analyse der zugrunde liegenden Phänomene ist daher notwendig, um echte Erkenntnisse zu erhalten.

Janis Kesten-Kühne

### Chapter 5. Financial Sector Development and Its Contribution to Economic Development of Bangladesh

Soon after the independence of Bangladesh in 1971, scholars tended to argue that Bangladesh is a hopeless country. Now Bangladesh is considered the next Asian tiger due to the pace of its development. The economy experienced an average growth rate of 6.5 percent for the last decade. There are many factors that have contributed to the development of the economy. Among them, financial inclusion through financial sector development plays an important role. This chapter broadly covers the evolution of the banking and non-banking financial sectors of Bangladesh, focusing on the number of banks and branches, changes in the monetary and exchange rate policies, expansion of banks and bank branches over time along with structural changes, performance, and measurements of development of the banking sector. It also provides an empirical analysis of the relationship between financial system development and the economic growth of Bangladesh.

Prashanta Kumar Banerjee, Md. Abdul Kayum, Helal Uddin

### Chapter 7. Risk Measures and Capital Allocation

Risk measures are widely used in risk management, and to calculate capital requirements Capital requirement when investing or conducting banking or insurance activities. In this chapter, we study risk measures Risk measure in the context of asset allocation, and explain the notions of Value at Risk Value at risk , Expected Shortfall Expected Shortfall and Return on Risk-Adjusted Capital (RORAC Return on Risk-Adjusted Capital (RORAC) ). We provide some explicit formulas in the Gaussian framework and an example of calculation based on historical data, without any model assumptions. Euler’s formula Euler’s formula is presented, for standard homogeneous risk measures, as well as its applications for capital allocation between risky positions. We also prove that, when the capital is allocated according to Euler’s formula, each position produces the same RORAC.

Pierre Brugière

### Chapter 6. Private Sector (Funding) Liquidity

The gross measure of funding liquidity is distinguished from the net credit supply using the financial sector balance sheet. This embraces shadow banks as well as traditional high street banks. The growth of US and World shadow banking is enumerated. Cash-rich wholesale markets lie behind the recent rise of shadow banking, and these are being fed by CICPs (corporate and institutional cash pools) and explain the rise of the repo as a key financial instrument. The greater use of collateral and access to unregulated, offshore pools of money in the Eurodollar markets have reduced Central Bank control over liquidity creation, leading to a collapse in the traditional money multiplier. The alternative concept of the shadow money base is introduced.

Michael J. Howell

### 1. Einleitung

In den letzten 20 bis 30 Jahren haben sich grundlegende Dinge in der Wirtschaft gewandelt und Kostenarten wie z. B. Personalkosten, Mietkosten oder Leasingkosten haben heutzutage einen ganz anderen Anteil an den gesamten Kosten. Viele mittelständische Unternehmen, insbesondere im Handwerk, haben sich jedoch bisher nicht richtig darauf eingestellt und richten ihren Fokus weiterhin ausschließlich auf die Qualität ihrer Leistungserbringung. Controlling, also die Analyse von Daten zur Vorbereitung von Unternehmensentscheidungen, kommt dabei viel zu kurz. Dies war vor 20 bis 30 Jahren vielleicht auch nicht (unbedingt) erforderlich, aber ist heutzutage bei einer höheren Kostenbelastung, geringeren durchsetzbaren Margen und kontinuierlicher Bewertung durch die Banken (Rating) unerlässlich. Daher gilt vom Ein-Mann-Unternehmen bis zum Großkonzern: Unternehmen können wirtschaftlich nur erfolgreich sein, wenn sie ihre Zahlen kennen, ihre Kosten im Griff haben und Geschäftsentscheidungen auf Basis wirtschaftlicher Fakten getroffen werden! Dem Controlling kommt daher heutzutage bei jeder Unternehmensgröße und in allen Branchen eine gestiegene Bedeutung zu. Die Einleitung erläutert diese gestiegene Bedeutung für unterschiedliche Anwendungsbereiche (operativ oder strategisch) sowie Zielgruppen (interne oder externe) und stellt die Anforderungen an ein Controlling sowie die Notwendigkeit der unternehmensindividuellen Anpassung eines Controllingsystems dar.

Ralf Schmid-Gundram

### Wealth Transfers, Indifference Pricing, and XVA Compression Schemes

Since the 2008–2009 financial crisis, banks have introduced a family of XVA metrics to quantify the cost of counterparty risk and of its capital and funding implications: the credit/debt valuation adjustment (CVA and DVA), the costs of funding variation margin (FVA) and initial margin (MVA), and the capital valuation adjustment (KVA). We revisit from a wealth conservation and wealth transfer perspective at the incremental trade level the cost-of-capital XVA approach developed at the level of the balance sheet of the bank in [10]. Trade incremental XVAs reflect the wealth transfers triggered by the deals due to the incompleteness of counterparty risk. XVA-inclusive trading strategies achieve a given hurdle rate to shareholders in the conservative limit case that no new trades occur. XVAs represent a switch of paradigm in derivative management, from hedging to balance sheet optimization. This is illustrated by a review of possible applications of the XVA metrics.

Claudio Albanese, Marc Chataigner, Stéphane Crépey

### Chapter X: Dependence and Further Topics in Risk Management

In an abundance of settings, one will as a first modeling attempt assume independence of the r.v.s involved. This is mathematically very convenient but extremely dangerous: in many situations where a disastrous event occurred despite its risk being calculated to be so low that it could be neglected for any practical purpose, a back mirror analysis has revealed that the reason was precisely the simultaneous occurrence of events assumed to be independent when doing the risk calculation. The study of dependence and how it may be modeled is therefore crucial, and this is the topic of this chapter.

Søren Asmussen, Mogens Steffensen

### Kapitel 2. Rationale Kreditentscheidungen vor dem Hintergrund der Finanzierungstheorie

Innerhalb der Ökonomie lassen sich normative und deskriptive Strömungen unterscheiden. Der Teil der Wirtschaftswissenschaften, der sich mit dem tatsächlichen Verhalten der Wirtschaftssubjekte beschäftigt, basiert auf der deskriptiven Entscheidungstheorie und ist in erster Linie verhaltenswissenschaftlich geprägt.

Sebastian Heim

### 24. Regulation of Banks and Investment Banks: Basel I, II and III

A director of a company owes the company a duty of care and a duty of loyaty. In general, under the ‘business judgement rule’, if a board of directors exercises these duties appropriately, the members of the board will be protected from liability (to shareholders) for their actions. In effect, there is a presumption that, in making business decisions, directors act on an informed basis. However, this presumption can be overcome by showing that the board was grossly negligent in its decision-making. The directors and officers of a bank thus have the responsibility of, amongst other things, minimising the chance of their company failing due to liquidity or solvency problems which they could have anticipated. This responsibility arises from general company law. However, because of the importance of banks to the economic stability and growth of an economy, governments generally do not just rely on company law. Instead they have set up a regulatory framework which banks must follow. This framework is designed not only to minimise the risk of a bank collapsing and the cost of rescue should it collapse, but also to try to ensure that it does not act against the interests of its customers. That banks may do this, even with regulation, is emphasised in a statement by the Governor of the Bank of England in an interview in 2011: Since ‘Big Bang’ in financial services in the 1980s, Mr King goes on, too many in financial services have thought if it's possible to make money out of gullible or unsuspecting customers, particularly institutional customers, that is perfectly acceptable. Interview with Charles Moore, The Daily Telegraph, 5 March 2011.

Brian Scott-Quinn

### 8. Bank Liquidity Management

The City of Glasgow Bank collapsed in 1878, and Northern Rock would have collapsed by 2008 without government intervention. In both cases, when too many depositors came to the bank and demanded the return of their deposits, as fractional reserve banks they were unable to meet the full amount of their customer demand. It is the fractional reserve nature of banking, i.e. the small proportion of liquid assets relative to total assets, that is the principal cause of the fragility of the banking system and which consequently makes it subject to crises. Another way of putt ing this is that it is the highly leveraged nature of banks which makes them risky.

Brian Scott-Quinn

### 7. Banking: Credit Intermediation Through Depository Institutions

Commercial banks are the key type of financial intermediary in any economy. They are central to the functioning of the economic system in contrast to many other financial businesses which are of lesser centrality. Most commercial banks have a retail and a wholesale banking operation. In their retail operations as high street or main street banks, they offer deposit, lending and money transfer services (cheques, debit card, e-transfers) to households and to small and medium sized enterprises (SMEs). Included under loans would be consumer loans, mortgage loans, credit card loans and business development loans. The retail part of a commercial bank may have some thousands of branch offices. The wholesale part, on the other hand, is likely to be a single office on Wall Street (in the case of the US), in the City of London (the UK financial district), in Shanghai (in the case of mainland China) or Hong Kong. The wholesale part is likely to be involved in large scale lending, including cross-border lending, normally as part of a lending syndicate with other banks.

Brian Scott-Quinn

### 28. The Future Structure of the Industry: Implications of Re-regulation

The following quotation from Henry Kaufman, one of the best known bankers of the last 30 years (he was on the board of Salomon Brothers which is now part of Citigroup and latt erly Lehman Brothers) suggests that the conglomerate structure of the financial services industry that has developed since the 1990s has led to the creation of companies which have a risk incentive structure that is inappropriate for society's needs: Meanwhile, top managers at many financial institutions will find themselves in unfamiliar territory. Their mode of operating, their business culture, has been to pursue aggressive growth targets for profits and market share by diversifying operations into new financial domains and by swallowing up competitors. Wielding generous compensation incentives, managers of leading banks encouraged employees to take big risks. As institutions grew and diversified, their activities became too wide-ranging and complex for senior managers to oversee effectively. At the same time, risk-taking came to rely more and more on quantitative risk-modelling, which tended to marginalize qualitative investment judgment. As we now know, econometric risk-modelling failed when it was most needed. Henry Kaufman, ‘Prepare for Change on Wall Street‘, Financial Times, 2 June 2010.

Brian Scott-Quinn

### 3. Financial Intermediation: Industry Sectors, Products and Markets

An intermediary stands between the two sides in a transaction and thus creates an indirect relationship between them. In order to survive and prosper, intermediaries need to provide some service that is of sufficient value that those on either side are willing to pay for it. But before we can understand intermediation or disintermediation we need to understand the two basic types of intermediaries that we introduced in the previous chapter.

Brian Scott-Quinn

### 7. Bank Credit Risk Analysis and Bank Credit Rating

This chapter applies the criteria-based approach to the banking industry. Commercial banks are different from other enterprises in their core activities and thus the variables that determine bank failure are different. A commercial bank earns the bulk of its income from long-term loans funded by shorter-term retail deposits and wholesale borrowings—a process called maturity transformation. The chapter provides the conceptual framework to analyse a bank’s financial statements and to narrow the focus to the business environment, quality of management (including risk management) and governance, and financial strength. This last includes a comprehensive and thorough examination of asset quality, and the adequacy and quality of liquidity and capital. The chapter explains important metrics such as Basel III capital ratios, economic capital, and Value at Risk.

Terence M. Yhip, Bijan M. D. Alagheband

### 1. Credit Analysis and Credit Management

This introductory chapter outlines the processes of originating credit and managing credit. Credit origination involves loan underwriting, assessing the creditworthiness of a borrower, determining a borrower risk rating (BRR), and structuring the loan. Credit administration involves monitoring credit quality, covenants, and loan documentation, and taking actions to avoid loan loss. The chapter introduces the two-dimensional risk-rating system that separates the BRR from the facility risk rating, though they jointly determine the expected loss on a loan. The chapter reviews the traditional “Five Cs” method of credit analysis and its derivative, the criteria-based methodology to assign a BRR. Because a credit rating is essential to lending, loan pricing, and capitalisation, the chapter highlights the adverse effects on risk rating due to information asymmetry.

Terence M. Yhip, Bijan M. D. Alagheband

### Herausforderungen der europäischen Finanzindustrie

Europäische Banken befinden sich gegenwärtig in einem präzedenzlosen Struktur- und Kulturwandel mit vielfältigen Ursachen. Maßgeblich geprägt wird dieser Wandel durch den technologischen Fortschritt und die Digitalisierung sowie eine materielle Zwickmühle: In Folge der Finanzkrise haben die nationale und europäische Bankenaufsicht umfassende regulatorische Anforderungen an die Qualität und Substanz der Eigenkapitalbasis, die Liquidität und die Konzernstruktur und -kultur verabschiedet, die zu einer verbesserten Finanzstabilität beitragen sollen. Der aufsichtliche Fokus auf der Kapitalunterlegung und den SREP-Anforderungen ist für die Banken in einem für die Kapitalbeschaffung sehr komplizierten Umfeld, in dem die Ertragssituation vermehrt unter Druck steht und sich Kostenstrukturen – in höchstem Maße auch durch regulatorische Kosten geprägt – als relativ starr darstellen, eine große Herausforderung und stellt eine substanzielle Belastung für die Profitabilitätssituation dar.

Marcus Schenck

### Cui bono? Komplexe Regulierung und ihre Folgen

Aber im Gegensatz zu Schimanski benutzen Aufseher nicht ihre Fäuste, wenn das Aufsichtsgespräch mal nicht läuft.

Andreas Dombret

### Chapter 1. The Operational Risk

This chapter introduces the operational risk and the most popular approaches for its quantification. A focus is set on the Loss Distribution Approach based on the identification of a statistical distribution of losses. Loss business line and event type are defined. Finally, the DIPO consortium is presented.

Giovanni De Luca, Danilo Carità, Francesco Martinelli

### Die Rolle des Kredits im Firmenkundengeschäft – Eine empirische Analyse und Impulse für das Kreditpreismanagement

Historisch wurde das Firmenkundengeschäft der Banken nicht selten mit dem Kreditgeschäft gleichgesetzt. Auch heute noch nimmt der Kredit im Firmenkundengeschäft eine zentrale Rolle ein. Zum einen machen die Erlöse aus dem Aktivgeschäft einen signifikanten Anteil der Gesamterträge in diesem Segment aus.

### Chapter 4. The Establishment of the (European) Banking Union

This chapter focuses on the establishment of the (European) Banking Union. After briefly discussing, in the first section, its creation in response to the ongoing fiscal crisis in the euro area and the new institutional and regulatory framework set up in this respect, the subsequent three sections briefly present its three main pillars: the Single Supervisory Mechanism, which relates to the authorisation and prudential supervision of credit institutions, the Single Resolution Mechanism and the Single Resolution Fund, which relate to the resolution of credit institutions, and the (single) European Deposit Insurance Scheme, which constitutes the (still pending) third main pillar on deposit guarantee. Each section makes due reference to the legislative, delegated and implementing acts of European Union (EU) institutions which constitute the single rulebook governing substantive aspects on all the above, the relationship between the three main pillars and the single rulebook, as well as the impact of public international banking law on the shaping of EU banking law.

Christos V. Gortsos

### Chapter 7. The Basic Tasks of the European Central Bank Within the Eurosystem and Issuance of Banknotes and Coins

This chapter first examines in detail the definition of the single monetary policy, as well as its implementation, with an emphasis on the instruments used, the eligible counterparties, the assets eligible as collateral in the Eurosystem and then, in particular, the implementation of this policy following the recent (2007–2009) international financial crisis and the ongoing fiscal crisis in the euro area. The (recent) introduction of the euro short-term rate is also discussed in this section. The second section analyses the other basic tasks of the European Central Bank (ECB) within the Eurosystem: the exchange-rate policy, holding and managing foreign reserve assets, and promoting the smooth functioning of payment systems. In relation to the latter, the 2014 ECB Regulation on oversight requirements for systemically important payment systems, the Trans-European Automated Real-Time Gross Settlement Express Transfer 2 (TARGET2) payment system and the TARGET2-Securities system are discussed in more detail. Finally, the third section develops on the powers of the ECB in relation to the issuance of euro-denominated banknotes and coins.

Christos V. Gortsos

### Blockchain-Based Implementation of Smart Contract and Risk Management for Interest Rate Swap

Blockchain is a decentralized infrastructure that has attracted more and more attention from financial institutions due to its irreplaceable advantages. We implemented a blockchain solution for interest rate swap based on the Corda platform. Based on Andersen et al. [8], we derive a risk estimation model for blockchain empowered interest rate swap trading. We conjecture that most of problems in today’s derivative markets could potentially be relieved. For example, through our numerical experiment, we find that with blockchain, both the expected risk exposure and dynamic initial margin decrease significantly, which reduces the risk in interest rate swap trading and increases market liquidity. At the same time, we expect the Effective Expected Positive Exposure(EEPE) in the Basel III standard to decrease. Next, we plan to conduct more mathematical and numerical analysis and continue working on improving our blockchain based trading implementation and risk management model.

Xiaowei Ding, Hongyao Zhu

### Grundsätze ordnungsmäßiger Bilanzierung strukturierter Finanzinstrumente

Als strukturierte Finanzinstrumente werden nicht derivative Basisverträge bezeichnet, die um eingebettete Derivate ergänzt sind. Es handelt sich dabei um rechtlich verbundene und insofern einheitliche Verträge, deren Bestandteile nicht separat handelbar sind. Finanzinstrumente, die aus mehreren rechtlichen, getrennten und separat handelbaren Finanzinstrumenten bestehen, sind demnach keine strukturierten Finanzinstrumente, wie dies bei der Optionsanleihe – bestehend aus einer Anleihe und einem Optionsschein – der Fall ist.

Christoph Schober

### Banking System in the MENA Region: A Comparative Analysis Between Conventional and Islamic Banking in the UAE

This paper investigates the banking systems in the MENA region and compares the performance of conventional and Islamic banks in the UAE, using descriptive, correlation, and multiple regression analyses to analyze their efficiency and profitability. The analysis uses a sample of 352 observations from 32 banks, for 11 years (2005–2015). We find a significant difference in cost efficiency between conventional and Islamic banks in the UAE. The impact of bank-level characteristics and capital adequacy measures on a bank’s cost efficiency is strong in both types of banks. Risk-taking has a strong influence on the cost efficiency of conventional banks, but this effect is insignificant for Islamic banks. We find that profitability is not significantly different between conventional and Islamic banks. The effect of capital adequacy measures on a bank’s profitability is strongly significant only in the group of conventional banks. However, Islamic banks’ profitability is more responsive to risk-taking. We are suggesting that since Islamic and conventional banks are governed by different rules and principles, then setting up and implementation of regulations should be different for each type of bank to improve their financial performance, compliance standing, and risk assessment. We also recommend that banking systems in the MENA region should increase their ability to adapt applicable reforms and share the Islamic banking principles and instruments as they are more efficient toward the social responsibility and the risk effects.

Fiona Mrad, Miroslav Mateev

### Measurement of Financial and Asset Performance of Agricultural Farms: Operational Proposal for a New Rating Model for Agricultural Companies for a Sustainable Development of the Industry

The aim of this research paper is to suggest an operational rating model that can be immediately used to improve the finance scheme of agricultural companies. Currently, banks are employing a rating model provided by Moody’s that uses various weighted indicators and linking the probability of default mainly to general and non-specific factors. The sampling carried out by Moody’s to obtain the probability of default was based on a small sample of agricultural companies. In this study, the authors propose the use of a new model based on the Altman EM score, using the Italian RICA database (Agricultural Accounting Information Network) and other variables derived from reclassified financial statements. This approach facilitates to emphasize how the national distribution of companies by rating classes is unbalanced toward the vulnerability area, central to the classification system used, by drawing a normal Gaussian distribution with a slight negative asymmetry. Therefore, the authors find out that for the evaluation of the creditworthiness of the farms, it is recommended to include in the calculation of the rating “historical” and economic-financial quantitative data (such as financial statements, income tax return), trend data (such as Internal of the credit institutions and Central Risks Database), qualitative, and others. The above proposed rating model has been tested on many companies and applied immediately.

Fabian Capitanio, Felice Adinolfi, Rania Itani, Alessio Faccia

### Assessing the Risk Associated with Lease Certificates in the Turkish Capital Market

The risk management is an important concept due to the volatility and the market risks. Investors want to know the level of risk while they are making investment decisions. To that end, this chapter aims at assessing the risk associated with the lease certificates (Sukuk) traded in the Turkish capital market on the basis of Value at Risk (VaR) and Conditional Value at Risk (CVaR) methods. In accordance with this purpose, the research investigates the emergence and development of the Sukuk market in Turkey and the lease certificates issued by the Ministry of Treasury and Finance. Values at risk were calculated using the aforementioned methods for one million Turkish Lira investments into the Sukuk portfolio at 1–10-day horizons and at a confidence interval of 99%. Consequently, the VaR amount, the minimum expected loss, is 444.8 Turkish Lira, which is approximately 0.044% of the investment on average during the sample holding period at the 99% confidence level. At the same confidence level and for the equivalent holding period, the CVaR proves a little higher risk percentage, which is 0.051% of loss or 518.8 Turkish Lira on average.

Musa GÜN

### § 14 Finanz- und Börsenaufsicht

Als Finanz- und Börsenaufsicht wird im Folgenden die staatliche Aufsicht über Finanzunternehmen, Kapitalmärkte und Börsen bezeichnet, die von europäischen und nationalen Behörden im Verbund ausgeübt wird. Sie soll Einleger und Anleger schützen und die Funktionsfähigkeit des Finanzsystems sichern, an deren Gewährleistung angesichts der volkswirtschaftlichen Bedeutung von Finanzinstituten und -märkten ein erhebliches öffentliches Interesse besteht.

Ann-Katrin Kaufhold

### Networks Decentralizing Authority in Global Economic Governance

This chapter analyzes how governance networks contributed to decentralizing global economic governance since the 2008 financial crisis. The growing international influence of networks of private, public, intergovernmental, and civil society actors has important authority effects, especially due to their policy contestation, advocacy, and capacity to shift the global governance agenda. This was augmented by increasing engagement and integration as interlocutors and policy actors, particularly in informal global governance settings such as the Group of Twenty. Global governance networks interact through transnational professional “ecologies.” This study also analyzes linkages between governance networks and broader practice communities. The research includes evidence from participant observation, semi-structured interviews, public statements, and document analysis. It deploys analytical tools, especially from social constructivism, discourse analysis, and the sociology of professions. Governance networks contributed significantly to the diversification of global governance actors since the financial crisis, decentralizing authority in global economic governance.

Jonathan Luckhurst

### Chapter 14. Conclusion

Drawing together the themes and many incidents of absent management in banking, the conclusion is that only simplifying banks will reduce the likelihood of future absent management, bank failures and financial crisis. Regulation will be most important to achieve this. Until now banks’ lobbying appears stronger than the political will to simplify banks through regulation. There is some hope that shareholders will play a part by selling the shares of complex, unmanaged banks. Conglomerates have gone out of fashion in industry and perhaps banks will go the same way. Societies need to understand that sometimes some banks are not managed. We need to protect ourselves against unmanaged banks and their potential to cause devastating financial crisis.

Christian Dinesen

### Chapter 13. What Has Changed: How Little Has Changed in Terms of Complexity, Producer Managers and Absent Management in Banking

Regulation following the 2008 financial crisis was about more of the same. Banks should now hold so much more capital that they could not fail. Banks were not simplified due to their successful lobbying. Regulation became more complex, which made it more difficult to implement and supervise. Some regulation was so complicated that it has still not been implemented more than a decade after the crisis. Complexity favoured larger banks with the resources to understand and take advantage of the regulation. J.P.Morgan’s investment losses in London, Danske Bank’s money laundering and Goldman Sachs’ Malaysian issues bear hallmarks of absent management. No one would manage that badly.

Christian Dinesen

### Maritime Rules for Rail Carriage: China’s Initiative to Incorporate Rules from the Road to the Belt

Abhinayan Basu Bal, Trisha Rajput

### 6. Value at Risk Models

Value at risk (VaR) is one of the most widely used models in risk management. It is based on probability and statistics. VaR can be characterized as a maximum expected loss, given some time horizon and within a given confidence interval. Its utility is in providing a measure of risk that illustrates the risk inherent in a portfolio with multiple risk factors, such as portfolios held by large banks, which are diversified across many risk factors and product types. VaR is used to estimate the boundaries of risk for a portfolio over a given time period, for an assumed probability distribution of market performance. The purpose is to diagnose risk exposure.

David L. Olson, Desheng Wu

### Kapitel 8. H

Ludwig Gramlich, Peter Gluchowski, Andreas Horsch, Klaus Schäfer, Gerd Waschbusch

### Kapitel 3. C

Ludwig Gramlich, Peter Gluchowski, Andreas Horsch, Klaus Schäfer, Gerd Waschbusch

### Kapitel 2. B

Ludwig Gramlich, Peter Gluchowski, Andreas Horsch, Klaus Schäfer, Gerd Waschbusch

### Kapitel 5. E

Ludwig Gramlich, Peter Gluchowski, Andreas Horsch, Klaus Schäfer, Gerd Waschbusch

### Kapitel 1. A

Ludwig Gramlich, Peter Gluchowski, Andreas Horsch, Klaus Schäfer, Gerd Waschbusch

### Kapitel 5. O

Ludwig Gramlich, Peter Gluchowski, Andreas Horsch, Klaus Schäfer, Gerd Waschbusch

### Kapitel 1. K

Ludwig Gramlich, Peter Gluchowski, Andreas Horsch, Klaus Schäfer, Gerd Waschbusch

### Kapitel 6. P

Ludwig Gramlich, Peter Gluchowski, Andreas Horsch, Klaus Schäfer, Gerd Waschbusch

### Kapitel 8. R

Ludwig Gramlich, Peter Gluchowski, Andreas Horsch, Klaus Schäfer, Gerd Waschbusch

### Kapitel 2. L

Ludwig Gramlich, Peter Gluchowski, Andreas Horsch, Klaus Schäfer, Gerd Waschbusch

### Kapitel 4. N

Ludwig Gramlich, Peter Gluchowski, Andreas Horsch, Klaus Schäfer, Gerd Waschbusch

### Kapitel 9. S

Ludwig Gramlich, Peter Gluchowski, Andreas Horsch, Klaus Schäfer, Gerd Waschbusch

### Chapter 2. Financial (De)Globalization and Financial Market (Dis)Integration

The chapter provides the background to the study and explores the lessons from two waves of financial globalization, the transition from the gold standard to the Bretton Woods System to the liberalization and deregulation of finance and the emergence of finance-dominated capitalism. It then discusses the major transformations in capitalism and the rise of finance-led capitalism leading to increased financial instability and the Global Financial Crisis. The chapter continues with an overview and critical evaluation of regulating finance after the crisis before exploring the challenges for Inclusive Capitalism and Sustainable Finance.

Dieter Pesendorfer

### Chapter 4. Brexit and Financial (Dis)Integration: Between Cakeism, Project Fear, and Reality

The chapter starts with an introduction to the Brexit challenge for European financial integration, before exploring as a background the evolution of European financial centers and the rise of the City of London as leading global and European financial center. The chapter then discusses the British financial industry’s response to the increasing European regulation after the Global Financial Crisis and how the City used its power with fluctuating fortunes during this period of rapid regulatory change. The chapter then explores the Brexiteers’ plan for British finance after Brexit, before discussing the UK government’s difficulties to negotiate a Brexit deal that protects the interests of the City. The chapter continues with looking at what London has to lose as a Third Country outside the EU and Single Market and in particular to equivalence, mutual recognition, and euro-denominated clearing. The chapter then discusses the possible costs and relocations of financial services from the UK into the EU-27, before concluding what might be the future for European financial centers.

Dieter Pesendorfer

### Chapter 2. Getting the Basics Right

Financial sector development can occur in the context of spontaneous order. The premise of this chapter is that coherent policymaking and implementation can speed up that process, applying directly knowledge gained from relevant theory and analytical framework, historical experience, and other empirical evidence. In this light, the chapter discusses coherent financial sector development policymaking and implementation by country authorities. Important aspects of the process would be getting the fundamentals right; designing sound governance structures, including appropriate regulatory and supervisory systems and standards; and focusing directly on major areas such as money market development, payment system development, capital market development, financial inclusion, and insurance.

Omotunde E. G. Johnson

### Chapter 1. Introduction

This book addresses major challenges in financial sector policymaking and implementation that are of current relevance to African countries. It begins with a broad focus on financial sector development as a whole, highlighting major areas such as the money market, payment system, and the capital market, as well as issues such as regulatory strategy, capacity building of financial firms and service providers, and financial inclusion. Many of the African countries are struggling with decision-making related to foreign exchange market policies, for reasons including the importance, for their economic development, of the strength and convertibility of their currencies and the soundness of their approach to capital mobility. Most of the countries also prefer stability of their exchange rates. This book argues that African countries should aim for social efficiency of their foreign exchange markets, which would include soundness of their foreign exchange systems, from an economic growth perspective, and fairness from an income distributional perspective. Finally, some of the African countries would like to have financial systems that are strong enough to be international centers of high-standing. The policy implications of that ambition are also discussed in this book. A policy strategy for developing such a financial center will include conceptualizing a financial center as a cluster; finding a niche for entry at the international level, in terms of clientele, products, and appropriate service provisions; enhancing competitiveness by building capacity, structuring incentives, and improving the quality of the national governance environment; and having in place high quality financial services supervision and regulation.

Omotunde E. G. Johnson

### Kapitel 8. Digitale Geschäftsmodelle und asymmetrische Information in der Finanzierung von Unternehmen

Digitale Geschäftsmodelle zeichnen sich oft durch die spezifische Nutzung von proprietären Daten oder Algorithmen aus. Wettbewerbsvorteile von Firmen mit digitalen Geschäftsmodellen sind dann charakterisiert durch Merkmale von erfolgsrelevanter Information und Aspekten von deren Offenlegung − oder bewusst gewählter Intransparenz − die intrinsisch zu asymmetrischer Information führen. Management und Personal der Firma kennen die Erfolgsaussichten und die relevanten Risikofaktoren dann besser als mögliche Kapitalgeber.

Thomas Wenger

### Kapitel 6. Schlussbetrachtungen

Zu Beginn dieser Arbeit wurde die Bedeutung der drei wesentlichen Subjekte dieser Studie (Bankkredite, Finanzkommunikation und Vertrauen) in der bisherigen wissenschaftlichen Forschung dargestellt. Dadurch wurde der Vertrauensaufbau durch Finanzkommunikation mit dem Kreditgeber als Forschungslücke identifiziert.

Marc Hansmann
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