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Handbook of Key Global Financial Markets, Institutions, and Infrastructure

Book Description

Understanding twenty-first century global financial integration requires a two-part background.  The Handbook of Key Global Financial Markets, Institutions, and Infrastructure begins its description of how we created a financially-intergrated world by first examining the history of financial globalization, from Roman practices and Ottoman finance to Chinese standards, the beginnings of corporate practices, and the advent of efforts to safeguard financial stability.  It then describes the architecture itself by analyzing its parts, such as markets, institutions, and infrastructure.  The contributions of sovereign funds, auditing regulation, loan markets, property rights, compensation practices, Islamic finance, and others to the global architecture are closely examined.  For those seeking substantial, authoritative descriptions and summaries, this volume will replace books, journals, and other information sources with a single, easy-to-use reference work.

  • Substantial articles by top scholars sets this volume apart from other information sources
  • Diverse international perspectives result in new opportunities for analysis and research
  • Rapidly developing subjects will interest readers well into the future

Table of Contents

  1. Cover image
  2. Title page
  3. Table of Contents
  4. Copyright
  5. Volume 1
  6. Section Editors for this volume
  7. Preface
  8. Contributors
  9. I: Globalization of Finance: An Historical View
    1. Chapter 1. History of Financial Globalization, Overview
      1. References
    2. Chapter 2. Banking Fragility, United States, 1790–2009
      1. Introduction
      2. Banking Fragility in Theory and in Historical Reality
      3. US Banking Crises: 1790–1933
      4. A Worldwide Tale of Two Banking Eras: 1875–1913 and 1978–2009
      5. Glossary
      6. References
      7. Further Reading
    3. Chapter 3. Bretton Woods and Monetary Regimes
      1. Introduction
      2. Types and Examples of Monetary Regimes
      3. The Classical Gold Standard
      4. The Interwar Years, the Gold-Exchange Standard, and the Great Depression
      5. Bretton Woods and the Anglo-American Compromise
      6. Conclusion
      7. Further Reading
    4. Chapter 4. British Corporate Finance, 1500–1860
      1. World in 1500
      2. Impact of the Voyages of Discovery
      3. Emergence of the Joint-Stock Company
      4. Rise of the Secondary Market in Shares
      5. War Financing – State and Capital Markets
      6. Into the Nineteenth Century
      7. References
    5. Chapter 5. Chinese Finance, 1348–1700
      1. Public and Private Finance in China, 1000–1700
      2. The Monetary System
      3. Public Finance
      4. Credit and Private Finance
      5. Summary
      6. Glossary
      7. Further Readings
    6. Chapter 6. Chinese Money and Monetary System, 1800–2000, Overview
      1. A Conceptual Framework
      2. 1800–50
      3. 1850–1911
      4. 1911–30
      5. 1930–49
      6. Acknowledgments
      7. Glossary
      8. References
    7. Chapter 7. Dutch Bank Finance, 1600–1800
      1. An Exchange Bank
      2. The First Five Decades
      3. Fiat Money
      4. Monetary Policy
      5. Eighteenth Century
      6. Conclusion
      7. Further Reading
    8. Chapter 8. Dutch Corporate Finance, 1602–1850
      1. Introduction
      2. From Partnerships to Chartered Public Companies, 1602–1680
      3. Branching Out, 1680–1795
      4. New Challenges, 1795–1850
      5. Conclusion
      6. Further Reading
      7. Relevant Websites
    9. Chapter 9. The Financial Revolution in England
      1. Introduction
      2. The Origins of the Financial Revolution in England
      3. The Development of the Instruments of State Debt
      4. Controlling the Costs of Debt
      5. The Question of Credibility
      6. The Consequences of England's Financial Revolution
      7. Glossary
      8. Further Reading
    10. Chapter 10. Commercial Finance in Europe, 1700–1815
      1. Introduction
      2. The Instrument: Bills of Exchange
      3. Sources
      4. Mapping Commercial Finance
      5. The Cost of Commercial Finance: Searching for Interest Rate
      6. Conclusion
      7. See also
      8. References
    11. Chapter 11. Exchanges, Rules Governing
      1. France
      2. Germany
      3. Great Britain
      4. Owners Versus Operators
      5. United States
      6. Further Reading
    12. Chapter 12. French Corporate Finance, 1500–1900
      1. Glossary
      2. References
    13. Chapter 13. Genoese Finance, 1348–1700
      1. Introduction
      2. The Origins of the Genoese Public Debt (Twelfth–Twenty-fourth Centuries)
      3. The Birth of the Officium Comperarum Sancti Georgii
      4. The Governance of the Office of Saint George
      5. The Birth of the Republic of Genoa
      6. The Banking Activity of the House of Saint George
      7. The Genoese Exchange Fairs
      8. The New Debt of the Republic: The Creation of the Monti
      9. Conclusion
      10. See also
      11. Glossary
      12. Further Readings
      13. Relevant Websites
    14. Chapter 14. The Political Economy of Global Financial Liberalization in Historical Perspective
      1. Introduction
      2. What Is There to Explain?
      3. Theory
      4. History
      5. Conclusion
      6. Acknowledgments
      7. References
    15. Chapter 15. Alexander Hamilton
      1. Introduction
      2. Hamilton's Origins
      3. War and Finance
      4. The Confederation Interim
      5. Secretary of the Treasury
      6. Conclusion: The US Financial Revolution and Economic Growth
      7. Further Reading
    16. Chapter 16. Hanseatic Merchants and Credit, 1300–1700
      1. Introduction
      2. Origins of Banking in Northern Germany
      3. Credit Instruments in the Fifteenth and Sixteenth Centuries
      4. Immigration and Innovation
      5. The Adaptation of Western Credit Instruments in the Baltic Trade
      6. Conclusion
      7. References
    17. Chapter 17. John Law and his Experiment with France, 1715–1726
      1. The Beginnings
      2. The Pinnacle
      3. The Debacle
      4. The Impact
      5. See also
      6. Further Reading
    18. Chapter 18. Low Countries Finance, 1348–1700
      1. Introduction
      2. Common Origins
      3. Going Separate Ways: The Dutch Revolt
      4. Holland's Exceptionalism
      5. Entering a Vicious Debt Circle
      6. Constrained by Local Particularism: The Austrian Netherlands
      7. Conclusion
      8. Further Reading
    19. Chapter 19. Milanese Finance, 1348–1700
      1. The Viscontis and the Emergence of a Tax State (Mid-Fourteenth Century to 1447)
      2. The Consolidation of the Government Financing System Between the Ambrosiana Republic and the Sforzas (1447–1535)
      3. The Rise of a Fiscal State Under the Habsburgs (1535–1706)
      4. See also
      5. References
    20. Chapter 20. Finance in the Ottoman Empire, 1453–1854
      1. Introduction
      2. Money, Credit, and Islam
      3. Business Partnerships
      4. Flexibility in the Monetary System
      5. Fiscal Institutions and Public Finance
      6. Linkages with Western European Capital Markets?
      7. From Debasements to Bimetallism
      8. Financing the State: The Galata Bankers
      9. Conclusion
      10. See also
      11. Further Reading
    21. Chapter 21. Papal Finance, 1348–1848
      1. The Making of the Papal States
      2. The Role of Public Debt
      3. The Growth of Financial Structures
      4. The Times of Decline
      5. See also
      6. Glossary
      7. Further Reading
      8. Relevant Websites
    22. Chapter 22. Precious Metals and Moneys, 1200–1800
      1. Islamic Market Unification; Chinese Silver Exports During the Mongol Period
      2. Intensification of Chinese Silverization from the Mid-Fifteenth Century
      3. The First Global Cycle of Silver (1540–1640): Bimetallic Ratios and the Silver-for-Gold Trade
      4. The First Global Cycle of Silver (1540–1640): The Role of Japan
      5. The First Global Cycle of Silver (1540–1640): Spanish-American Silver
      6. Globalization's Sixteenth-Century Birth and Subsequent Ramifications
      7. The Mexican Cycle of Silver (1700–1750) and American Crops and Seeds
      8. Conclusions
      9. References
    23. Chapter 23. Rentes and the European ‘Financial Revolution’
      1. Chief Features of the Modern Financial Revolution
      2. The Geographic Origins of the ‘Financial Revolution’: Public Finances in the Low Countries and France
      3. The Historical Origins of the Rente Contracts: In Private Agricultural Finance
      4. The Usury Doctrine and the Revival of the Anti-Usury Campaign
      5. The Relationship Between Franco-Flemish Urban Rentes and the Anti-Usury Campaign in the Thirteenth Century
      6. The Ecclesiastical Debate About the Usurious or Licit Nature of Rentes
      7. Payments to Rentiers in Later-Medieval Flemish Towns
      8. The Development of a Permanent Funded National Debt in Early-Modern France
      9. The Development of Permanent Funded National Debts in Spain (Castile)
      10. The Public Finances of the Later Medieval Italian City States: Forced Loans
      11. Protestant England and the Usury Question
      12. The Beginnings of the English Financial Revolution, from 1693
      13. Excise Taxes in Funding the English National Debt
      14. The Three Sisters and the English National Debt
      15. The Role of Annuities in the English National Debt (to 1719–20)
      16. The Aftermath of the South Sea Bubble and Pelham's Conversion: 1721–57
      17. Economic Contributions of the Financial Revolution
      18. See also
      19. Glossary
      20. Appendix Yields on Perpetual Rents, Life Rents, and Loans
      21. References
    24. Chapter 24. Ancient Roman Finance
      1. References
    25. Chapter 25. Spanish Finance, 1348–1700
      1. Introduction
      2. Political Organization
      3. Revenues
      4. Debt
      5. See also
      6. Glossary
      7. Further Reading
    26. Chapter 26. The Financial Revolution in Sweden, 1650–1900
      1. Introduction
      2. The Swedish Financial Revolution
      3. Conclusions
      4. See also
      5. References
    27. Chapter 27. Global Financial Brands and the Underwriting of Foreign Government Debt since 1815
      1. Introduction
      2. Focus, Figures, and Facts
      3. Prospecting
      4. Planning
      5. Placing
      6. Post-Issue Support and Performance
      7. Conclusion: The Global Financial System as a Structured Product
      8. Acknowledgments
      9. References
      10. Relevant Websites
    28. Chapter 28. Venetian Finance, 1400–1797
      1. Revenues
      2. Taxation
      3. Taxpayers
      4. Financial Needs
      5. Public Debt
      6. The Floating Debt
      7. See also
      8. Glossary
      9. Further Reading
    29. Chapter 29. Wars and the International Trading System, 1900–2000
      1. See also
      2. Further Reading
  10. II: Key Market, Institutions, and Infrastructure In Global Finance
    1. Chapter 30. Development of Accounting Standards
      1. United States
      2. United Kingdom, Canada, Australia, France, Germany, and Japan
      3. International Accounting Standards Board
      4. See also
      5. Conclusion
      6. Acknowledgment
      7. Glossary
      8. References
    2. Chapter 31. Contemporary Audit Regulation – Going Global!
      1. Introduction: Audit Regulation
      2. Key Players in the Audit Regulatory Arena
      3. The Global Regulatory Involvement of Audit Firms
      4. The Global Regulatory Involvement of National Professional Accounting Bodies
      5. Audit Regulation and Audit Quality
      6. Regulatory Compliance and Enforcement
      7. Conclusion: Maintaining Public Interest in Global Regulation
      8. See also
      9. Appendix Abbreviations
      10. Further Reading
      11. Relevant Websites
    3. Chapter 32. Justifications for Audits of Financial Statements
      1. Introduction
      2. Justifications for Financial Statement Audits
      3. The Justification for Government Intervention into Auditing
      4. The Implementation of External Audits
      5. Auditing After the Securities Acts
      6. The Structure and Growth of the Industry
      7. Competition Rules Change in the 1970s
      8. Modern Firm Structure
      9. Competing Incentives for Firms in the 1990s
      10. Sarbanes–Oxley Act of 2002
      11. The Future of Auditing
      12. References
    4. Chapter 33. Global Banks and Financial Intermediaries
      1. Introduction
      2. The Standard Model of Banking
      3. Banking in the Postwar Period
      4. The Emergence of a New Banking System
      5. Distinctive Features of Modern Banking
      6. Conclusion
      7. References
    5. Chapter 34. Corporate Governance
      1. Basic Concepts
      2. Corporate Governance as a System
      3. Internal Institutions
      4. External Institutions
      5. References
    6. Chapter 35. Credit Ratings and Credit Rating Agencies
      1. Introduction
      2. Objects of Credit Ratings
      3. Business Models of Credit Rating Agencies
      4. Functions of Credit Ratings and Credit Rating Agencies
      5. Market Structure and Competition
      6. Regulation of Credit Rating Agencies
      7. See also
      8. Further Reading
    7. Chapter 36. Earnings Quality
      1. A Case in Point
      2. What Exactly Is Earnings Quality?
      3. Who Cares About Earnings Quality?
      4. What Affects Earnings Quality?
      5. Can Investors See Through the Quality Veil?
      6. Are Things Getting Better?
      7. And Earnings Quality Around the World?
      8. From Descriptive to Prescriptive: How to Assess Earnings Quality?
      9. Conclusion
      10. Acknowledgments
      11. Further Reading
    8. Chapter 37. Exchanges
      1. Exchanges and Their Evolution
      2. Exchange-Traded Instruments
      3. Organization and Governance of Exchanges
      4. Regulation of Exchanges
      5. Best Execution and the National Market System
      6. Globalization and Transnational Exchanges
    9. Chapter 38. Equity Markets
      1. Definition, Structure, and Functions of Equity Markets
      2. Evolution of Equity Markets
      3. Equity Markets Around the World
      4. Globalization and Localization
      5. The Future of Equity Markets
      6. Glossary
      7. See also
      8. Further Reading
      9. Relevant Websites
    10. Chapter 39. Fair Value and Accounting
      1. Introduction
      2. The Purpose of the Balance Sheet
      3. Fair Value Measurement Standards
      4. Fair Value and Historical Cost Accounting
      5. Assets That Generate Cash Directly
      6. Fair Value and the Financial Crisis
      7. Fair Value and Financial Instruments After the Crisis
      8. Full Fair Value Financial Statements
      9. Conclusion
      10. Glossary
      11. Further Reading
    11. Chapter 40. Fair Value Accounting, Disclosure and Financial Stability
      1. Introduction
      2. The Role of Accounting Standards
      3. How Might FVA Have Exacerbated the Financial Crisis?
      4. See also
      5. References
    12. Chapter 41. Investment Banks
      1. Introduction
      2. Concepts
      3. Origins
      4. Functions and Objectives
      5. Investment Banks and Commercial Banks
      6. Business Streams
      7. Markets in Information and Reputational Capital
      8. Questions, Concerns, and Post-crisis Outcomes
      9. See also
      10. Glossary
      11. Further Reading
      12. Relevant Websites
    13. Chapter 42. Overview of Islamic Finance
      1. What Is Forbidden (Ḥarām): Gharar (Uncertainty)
      2. What Is Forbidden (Ḥarām): Ribā (Interest)
      3. Legal Devices (Ḥiyal) to Circumvent the Proscriptions on Gharar and Ribā
      4. Islamic Bonds (Ṣukuk) and Securitization
      5. Insurance (Takaful) and Transfers (Ḥawālah)
      6. New Islamic Products: Sharī‘a Compliant Investment Funds
      7. Further Reading
    14. Chapter 43. Loan Markets
      1. Overview
      2. Advantages of Loan Markets to Borrowers
      3. Key National and Regional Loan Markets
      4. Leading Industry Associations
      5. Evolution of the Loan Asset
      6. The Financial Institutions Involved in the Loan Markets
      7. Two Stages of the Loan Cycle: Primary and Secondary
      8. Law, Regulation, and Litigation
      9. The Global Financial Crisis and its Impact on Loan Markets
      10. The Future
      11. See also
      12. Further Reading
      13. Relevant Websites
    15. Chapter 44. Microfinance: Costs, Lending Rates, and Profitability
      1. Introduction
      2. Introduction to Microfinance
      3. High Profitability?
      4. Outreach: The MFI's Social Mission
      5. Conclusions
      6. References
      7. Further Reading
      8. Relevant Websites
    16. Chapter 45. OTC – Derivative Market
      1. The Over-the-Counter Derivatives Market
      2. Understanding the CDS Market and the Use of CDS Data
      3. Glossary
      4. Appendix: Typical OTC Derivative Position from an SIFI's Financial Statement
      5. References
      6. Further Reading
    17. Chapter 46. Global Payment and Settlement Systems
      1. Introduction
      2. Foreign Exchange Transactions
      3. Payment System Risk
      4. The Failure to Complete Settlement on Participant's Default
      5. Conclusion
      6. Further Reading
    18. Chapter 47. Pension Funds
      1. Introduction
      2. What are Pension Plans, Funds, and Firms?
      3. Key Policy Issues with Pension Funds
      4. References
    19. Chapter 48. Project and Asset Finance
      1. Introduction
      2. Project and Asset Finance and Economics
      3. Project Finance
      4. Major Asset Financing: Ships and Aircraft
      5. Endnote
      6. See also
      7. Glossary
      8. Further Reading
      9. Relevant Websites
    20. Chapter 49. Property Rights in an Era of Global Finance
      1. Introduction
      2. The Nature of Property Rights
      3. The Local Origins of Property
      4. Supranational Property Instruments: A General Survey
      5. The Challenge of Globalization: Resource-Specific Comments
      6. Conclusion
      7. References
    21. Chapter 50. Securities Settlement Systems
      1. Definition
      2. The Legal Requirements for Transferring Securities
      3. The Creation of the Contemporary Depository Model
      4. The Legal Characteristics of Settlement in the Currently Dominant, Depository Model
      5. Disadvantages of the Depository Model
      6. Ameliorating the Disadvantages of the Depository Model
      7. The Future of Securities Settlement
      8. Glossary
      9. Further Reading
      10. Relevant Websites
    22. Chapter 51. Securitization and Structured Finance
      1. Overview of Securitization
      2. The Economics of Securitization
      3. Potential Abuses of Securitization
      4. The Future of Securitization
      5. See also
      6. Further Reading
    23. Chapter 52. Sovereign Funds
      1. Overview: Definition, Type, Size, and Number
      2. Background and Context: Global Imbalances
      3. Investment Strategies and Performance of SWFs
      4. Issues and Concerns Over SWFs
      5. Regulatory Response to the Rise of SWFs
      6. Implications of SWFs for the Global Financial System
      7. Further Reading
      8. Relevant Websites
    24. Chapter 53. Finance
      1. Introduction
      2. Cash in Advance
      3. Documentary Sale with Confirmed Letter of Credit
      4. Open Account
      5. Commercially Based Working Capital Financing
      6. Export Credit Insurance and Financing
      7. Factoring and Forfaiting
      8. Additional Points
      9. Further Reading
  11. Index