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Too Connected To Fail
The "too connected to fail" (TCTF) concept refers to a financial institution which is so connected to other institutions that its failure would probably lead to a huge turnover in the whole system. Contrary to the " too big to fail" theory, this approach takes into consideration the highly connected network feature of the financial system rather than the absolute size of one particular institution. Relevance of TCTF: systemic risk The 2007/2008 financial crisis highlighted that a small turmoil can cause a big fallback in the financial system – mainly because financial institutions form a highly interconnected network. From a network science point of view, this means that some nodes (institutions) have very high degree, i.e. they are linked to many other nodes. As a consequence, they play a central role in the system, which can be highly important in the case of disturbances. Recognition of this effect led to the revival of macroprudential regulation. Measuring TCTF Deter ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Financial Institution
Financial institutions, sometimes called banking institutions, are business entities that provide services as intermediaries for different types of financial monetary transactions. Broadly speaking, there are three major types of financial institutions: # Depository institutions – deposit-taking institutions that accept and manage deposits and make loans, including banks, building societies, credit unions, trust companies, and mortgage loan companies; # Contractual institutions – insurance companies and pension funds # Investment institutions – investment banks, underwriters, and other different types of financial entities managing investments. Financial institutions can be distinguished broadly into two categories according to ownership structure: * Commercial banks * Cooperative banks Some experts see a trend toward homogenisation of financial institutions, meaning a tendency to invest in similar areas and have similar business strategies. A consequence of this might ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Systemic Risk
In finance, systemic risk is the risk of collapse of an entire financial system or entire market, as opposed to the risk associated with any one individual entity, group or component of a system, that can be contained therein without harming the entire system.Banking and currency crises and systemic risk George G. Kaufman (World Bank), It can be defined as "financial ''system'' instability, potentially catastrophic, caused or exacerbated by idiosyncratic events or conditions in financial intermediaries". It refers to the risks imposed by ''interlinkage ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Institutional Economics
Institutional economics focuses on understanding the role of the Sociocultural evolution, evolutionary process and the role of institutions in shaping Economy, economic Human behavior, behavior. Its original focus lay in Thorstein Veblen's instinct-oriented dichotomy between technology on the one side and the "ceremonial" sphere of society on the other. Its name and core elements trace back to a 1919 ''American Economic Review'' article by Walton H. Hamilton. Institutional economics emphasizes a broader study of institutions and views markets as a result of the complex interaction of these various institutions (e.g. individuals, firms, states, social norms). The earlier tradition continues today as a leading Heterodox economics, heterodox approach to economics.Warren J. Samuels ([1987] 2008). "institutional economics," ''The New Palgrave: A Dictionary of Economics''Abstract. "Traditional" institutionalism rejects the ''reduction'' of institutions to simply tastes, technology, and ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Financial Services
Financial services are the Service (economics), economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, accountancy companies, consumer finance, consumer-finance companies, brokerage firm, stock brokerages, investment management, investment funds, individual asset managers, and some government-sponsored enterprises. History The term "financial services" became more prevalent in the United States partly as a result of the Gramm-Leach-Bliley Act, GrammLeachBliley Act of the late 1990s, which enabled different types of companies operating in the U.S. financial services industry at that time to merge. Companies usually have two distinct approaches to this new type of business. One approach would be a bank that simply buys an insurance company or an investment bank, keeps the original brands of the acquired firm, and adds the Takeover, acquisit ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Accountable Autonomy
Accountable autonomy is an institutional design of administrative and democratic organization that tries to maximize civic participation and deliberation. Political scientist Archon Fung coined the term. Accountable autonomy addresses the defects of decentralization and localism, such as group-think, inequality, and parochialism, through hybrid arrangements that allocate political power, function and responsibility between central authorities and local bodies. The terms “accountable” and “autonomy” might seem at odds. Autonomy means independence from central power and the capacity to accomplish its ends. The second sense is what Fung stresses: ‘a conception of centralized action that counter-intuitively bolsters local capability without improperly and destructively encroaching upon it.’ Two examples of this agency structure are Chicago's Alternative Policing Strategy and Local School Councils. Design The design of accountable autonomy exists in prescriptions for th ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Sovereignty
Sovereignty is the defining authority within individual consciousness, social construct, or territory. Sovereignty entails hierarchy within the state, as well as external autonomy for states. In any state, sovereignty is assigned to the person, body, or institution that has the ultimate authority over other people in order to establish a law or change an existing law. In political theory, sovereignty is a substantive term designating supreme legitimate authority over some polity. In international law, sovereignty is the exercise of power by a state. ''De jure'' sovereignty refers to the legal right to do so; ''de facto'' sovereignty refers to the factual ability to do so. This can become an issue of special concern upon the failure of the usual expectation that ''de jure'' and ''de facto'' sovereignty exist at the place and time of concern, and reside within the same organization. Etymology The term arises from the unattested Vulgar Latin's ''*superanus'', (itself derived ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Local Economic Development
Local Economic Development (LED) is an approach to economic development, of note in the developing world that, as its name implies, places importance on activities in and by cities, districts and regions. Local economic development combines economic development activities, urban planning, infrastructure development and social development activities to improve local conditions. LED encompasses a range of disciplines including physical planning, economics and marketing, all with the goal of building up the economic capacity of a local area to improve its economic future and the quality of life for all. Definitions for Local Economic Development There are several definitions for Local Economic Development (LED). In one of the early concept notes on LED, the World Bank in 2002 defined LED as: LED is the process by which public, business and non-governmental sector partners work collectively to create better conditions for economic growth and employment generation. The aim is to impro ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Localism (politics)
Localism describes a range of political philosophies which prioritize the local. Generally, localism supports local production and consumption of goods, local control of government, and promotion of local history, local culture and local identity. Localism can be contrasted with regionalism and centralized government, with its opposite being found in the unitary state. Localism can also refer to a systematic approach to organizing a central government so that local autonomy is retained rather than following the usual pattern of government and political power becoming centralized over time. On a conceptual level, there are important affinities between localism and deliberative democracy. This concerns mainly the democratic goal of engaging citizens in decisions that affect them. Consequently, localism will encourage stronger democratic and political participatory forums and widening public sphere connectivity. History Localists assert that throughout the world's history, mo ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Systemically Important Financial Institution
A systemically important financial institution (SIFI) is a bank, insurance company, or other financial institution whose failure might trigger a financial crisis. They are colloquially referred to as "too big to fail". As the financial crisis of 2007–2008 unfolded, the international community moved to protect the global financial system through preventing the failure of SIFIs, or, if one does fail, limiting the adverse effects of its failure. In November 2011, the Financial Stability Board (FSB) published a list of global systemically important financial institutions (G-SIFIs). Also in November 2010, the Basel Committee on Banking Supervision (BCBS) introduced new guidance (known as Basel III) that also specifically target SIFIs. The main focus of the Basel III guidance is to increase bank capital requirements and to introduce capital surcharges for G-SIFIs. However, some economists warned in 2012 that the tighter Basel III capital regulation, which is primarily based on risk ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Too Big To Fail
"Too big to fail" (TBTF) and "too big to jail" is a theory in banking and finance that asserts that certain corporations, particularly financial institutions, are so large and so interconnected that their failure would be disastrous to the greater economic system, and that they therefore must be supported by governments when they face potential failure. The colloquial term "too big to fail" was popularized by U.S. Congressman Stewart McKinney in a 1984 Congressional hearing, discussing the Federal Deposit Insurance Corporation's intervention with Continental Illinois. The term had previously been used occasionally in the press, and similar thinking had motivated earlier bank bailouts. The term emerged as prominent in public discourse following the global financial crisis of 2007–2008. Critics see the policy as counterproductive and that large banks or other institutions should be left to fail if their risk management is not effective. Some critics, such as economist Alan G ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Centrality
In graph theory and network analysis, indicators of centrality assign numbers or rankings to nodes within a graph corresponding to their network position. Applications include identifying the most influential person(s) in a social network, key infrastructure nodes in the Internet or urban networks, super-spreaders of disease, and brain networks. Centrality concepts were first developed in social network analysis, and many of the terms used to measure centrality reflect their sociological origin.Newman, M.E.J. 2010. ''Networks: An Introduction.'' Oxford, UK: Oxford University Press. Definition and characterization of centrality indices Centrality indices are answers to the question "What characterizes an important vertex?" The answer is given in terms of a real-valued function on the vertices of a graph, where the values produced are expected to provide a ranking which identifies the most important nodes. The word "importance" has a wide number of meanings, leading to many diffe ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Eigendecomposition Of A Matrix
In linear algebra, eigendecomposition is the Matrix factorization, factorization of a matrix (mathematics), matrix into a canonical form, whereby the matrix is represented in terms of its eigenvalues and eigenvectors. Only diagonalizable matrix, diagonalizable matrices can be factorized in this way. When the matrix being factorized is a normal matrix, normal or real symmetric matrix, the decomposition is called "spectral decomposition", derived from the spectral theorem. Fundamental theory of matrix eigenvectors and eigenvalues A (nonzero) vector of dimension is an eigenvector of a square matrix if it satisfies a linear equation of the form :\mathbf \mathbf = \lambda \mathbf for some scalar . Then is called the eigenvalue corresponding to . Geometrically speaking, the eigenvectors of are the vectors that merely elongates or shrinks, and the amount that they elongate/shrink by is the eigenvalue. The above equation is called the eigenvalue equation or the eigenvalue probl ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
