This paper briefly discusses the impact of regulation on the financial industry, and more specifically the development and expectations of Basel III guidelines. Elements of the recent global financial crisis provide the background for such discussion, and the evolution of the work conducted by...

The banking industry has gone through turbulent times in the last 30 years. From the Asian crisis of the 90s, through the inception of sophisticated financial instruments such as derivatives, the genesis of shadow banking, and culminating with the subprime disaster, market players and...

This paper explains the events that culminated with Lehman Brothers filing for bankruptcy on September 15, 2008. This traditional investment bank, distinguished among the industry for its strategic aggressiveness, and arrogant, self-centered corporate culture, enjoyed major prosperity during the...

Referring to the role credit-rating agencies played in the most recent global financial crisis, the Financial Crisis Inquiry Commission – FCIC concluded that “… the failures of credit rating agencies were essential cogs in the wheel of financial destruction.” The reasons for such...

The financial crisis of 2008 was preceded by smaller crises that also produced substantial levels of systemic risk. In addition to their impact on global markets, these lesser events shared several symptoms with the ones that later caused the Great Recession. If regulators and supervisors of the...

Stock options have been traded in the United States from the late 1700s, and they are based on underlying common stock issues. Options and futures on corporate securities can be evaluated using the firm's common stock price and its volatility rate because this exercise takes in consideration...

Currency derivatives are an important tool to manage foreign exchange risk, hedging. Organizations transacting, investing, or operating in other nations appreciate the possibility of managing currency risk. Investors, financial institutions, and businesses use currency derivatives to complement...

Forwards, futures, and swaps are contractual agreements that establish transactions to be executed at a future date. Advantages of these contracts (derivatives) over owning the underlying asset include substantively lower transaction costs, and the possibility of circumventing trading...

At the end of fiscal year 2013, the level of investment held by U.S.- based businesses and individuals in assets abroad was US$ 21.9 trillion, and the position held by foreign-based counterparties in the U.S. $ 26.5 trillion (B.E.A., 2014). With volumes that exceed 30% of the world GDP (World...

This paper analyzes the risks that contemporary banks experience. In particular, the trends that the financial sector has undergone during the last few decades with the introduction of derivatives, universalization of the United States banking industry, and globalization of several operations...