First externalities risk due to the size of the companies or the principle that large companies are also at risk of bankruptcy (too big to fail) are examined. The problem is illustrated by a case in which extreme risks with negative consequences for savers and investors are taken. If we...

Credit risk has been a worrying type of risk for financial managers. Fortunately, a recent market development –credit derivatives- has made the credit risk more manageable. The loan portfolio management has become more practicable than it used to be in the past. However, credit derivatives are...

The paper investigates formation of a charity bank based on the notion of Wagf (physical and financial assets endowment). The basic idea here is to manage and invest these endowments, and use its net earnings for zero interest loans and for food and shelter donation to the destitutes in the...

This study investigates the relationship between mutual fund performance and fund manager’s characteristics by using quarterly data of 14 open end equity mutual funds during 2005(8) to 2008(8). Data were collected from the database of Mutual Funds Association of Pakistan (MUFAP) keeping age,...

In this paper, we address the mathematical analysis and numerical solution of a model for pricing a defined benefit pension plan. More precisely, the benefits received by the member of the plan depend on the average salary and early retirement is allowed. Thus, the mathematical model is posed as...

We investigate incentive effects of a typical hedge-fund contract for a manager with power utility. With a one-year horizon, she displays risk-taking that varies dramatically with fund value. We extend the model to multiple yearly evaluation periods and find her risk-taking is rapidly moderated...

As the largest Muslim community in the world, Indonesia is optimist on implementing Islamic economy as one of the system. The previous global financial turmoil has made the attention turn on the Islamic financial model, and in particular the Islamic banking system. This model offers a...

About 21 years after establishment of the first Islamic banks in Indonesia, the share of Islamic banks is still small. About 86 percent Indonesian are Muslim, yet the asset share of Indonesian Islamic banks is only about 4 percent. Since Islamic scholars unanimously argue that bank interests are...

In this paper, using network tools, I analyse systemic impacts of liquidity shocks in interbank market in case of endogenous haircuts. Gai, Haldane and Kapadia (2011) introduce a benchmark for liquidity crisis following haircut shocks, and Gorton and Metrick (2010) reveal the evidence from...

This paper investigates the effect of capital market development on severity of economic contraction, and probability of economic downturn. The major finding is that countries with deeper capital market would face less severe business cycle output contraction, and lower chance of an economic...