The image that media portrays today is that everyone has to go to China. Swedish companies go on a pilgrimage to China filled with dreams and new ideas (Askman, 2005). Abstract The interest in China today is enormous, and media talk about successful firms and entrepreneurs that engage in business with China. This positive image [...]
Informed Trading, Short Sales Constraints and Futures’ Pricing
The purpose of this paper is to provide an explanation for relative pricing of futures contracts with respect to underlying stocks using a model incorporating short sales constraints and informational lags between the two markets. In this model stocks and futures are perfect substitutes, except for the fact that short sales are only allowed in [...]
Monitoring and Market Power in Loan Markets
Whether or not banks are engaged in ex ante monitoring of customers may have important consequences for the whole economy. We approach this question via a model in which banks can invest in either information acquisition or market power (product differentiation). The two alternatives generate different predictions, which are tested using panel data on local [...]
Surveys on Electronic Money
This paper investigates the views of electronic money operators and innovators on the possibilities and implications of e-money, especially with respect to replacing central bank money as well as technical issues regarding e-money, its implications for the financial industry and central banking. This has been done using surveys of major e-money innovators and operators, based [...]
The History of Exchange Control in Finland
Finland has followed overall trends in Europe and dismantled exchange controls at roughly the same pace as Sweden and Norway. The paper discusses both the extent and legal aspects of exchange control in different decades (1920s–1980s)in Finland. Introduction: An exchange control system was operated in Finland in the period 1917-1920 because of imbalances in foreign [...]
The Finnish Banking Crisis and Its Handling
The paper gives a brief description of the evolution of the Finnish banking crisis and its handling. In the first section, the salient features of the Finnish banking system are described. We then briefly discuss the liberalization process, macroeconomic and regulatory policies, and the subsequent credit boom and its development into a recession of unprecedented [...]
Banks’ loan portfolio diversification
Credit Risk management within banking is continually developing. Advances in credit-scoring models have allowed banks to improve their avoidance of non credit-worthy firms. Through meticulous credit evaluation, banks attempt to minimize credit-specific risk to their ideal cost of capital. However, this practice may not sufficiently reduce the total loan portfolio risk; systematic risk. To minimize [...]
Assessing the Forecasting Performance of a Macroeconomic Model
This paper contains a description of a small quarterly forecasting model for the Finnish economy. We evaluate the forecasting properties of the model by means of stochastic simulation involving both the endogenous and exogenous variables of the model. The simulations allow us to identify and quantify the main sources of forecasting uncertainty. We are also [...]
The demand for money market mutual funds
This paper presents a model on the demand for money market funds (MMFs). These funds are a very close substitute for M1 deposits, except that MMFs do not satisfy immediate transaction requirements. The demand for MMFs strengthens when the intended volume of transactions is low. A high interest rate level makes it expensive to hold [...]
Measuring potential market risk
The difference between market risk and potential market risk is emphasized and a measure of the latter risk is proposed. Specifically, it is argued that the spectrum of smooth Lyapunov exponents can be utilized in what we call (l, s2)-analysis, which is a method to monitor the aforementioned risk measures. The reason is that these [...]