The recent (Volume 5, issue 3) issue of the Journal of Governance and Regulation pays attention to issues of risk management, deflation, credit ratings, islamic banking, competition supervision, audit reforms etc. More detailed issues are given below:
Nesrin Benhayoun and James Fogal show how following Islamic finance principles can offer substantive contributions to the economic and social development of the world by revealing the rational route to the vision of the highest good without the anathema of interests and debts’ dependence and to embrace the goal to advance the needs of humanity as a whole. Hilary Till discusses the practical issues involved in applying a disciplined risk management methodology to commodity futures trading. Her paper shows how to apply methodologies derived from both conventional asset management and hedge fund management to futures trading. The article also discusses some of the risk management issues that are unique to leveraged futures trading. Rui P. N. Santos studies the behavior of prices in a growing economy in which the money supply is held constant. The author shows that with increasing levels of output, it is a natural outcome that prices of economic goods will decrease over time, which it is what we define as deflation. In this context. Harit Satt defines the impact of analyst following (analyst quest) on firm’s credit rating throughout the period between 2002 and 2014. The research’ results exhibit that the level of analyst following has a positive influence on firms’ credit rating. However, this constructive influence occurs only when there is a significant degree of analyst following. Indeed, at a low analyst following, the results reveal a negative correlation between this factor and the firm’s credit rating. Ryan Jacildo, Niny Khor and Ruth Tacneng examine the effects of a mandated credit program to small and medium enterprises in the Philippines (Magna Carta Law) using a panel dataset compiled from official data published by the Bangko Sentral ng Pilipinas. The final sample of 109 financial institutions represented over 90% of total finance sector assets in the Philippines. They highlight three important findings. First, although the total lending levels to micro, small, and medium enterprises (MSMEs) grew slightly, the percentage shares of loans allocated to MSMEs declined drastically from a peak of 30% of total loans in 2002 to 16.4% in 2010. Second, following the upwards revision of the loan target (from 6% to 8%) for smaller firms in 2008, there was a sharp increase in noncompliance especially amongst universal and commercial banks. On the other hand, total loans to medium enterprises were still more than threefold larger than the targeted 2%. Third, there is an increased heterogeneity in optimal loan portfolio across banks. Most surprisingly, the absolute level of MSME lending by rural and cooperative banks declined since 2008. Michael Dobler and Oliver Knospe adopt a multi-issue/multi-period approach to provide new insights into key determinants of constituents’ formal participation in the due process of the International Accounting Standards Board. Based on an analysis of 8,825 comment letters submitted during the period 2006–2012, authors find imbalances in the representation of constituents. Multiple regressions reveal that among various economic and cultural variables equity market capitalization and the society’s level of individualism are the key drivers of the country-level of constituents’ participation, and each variable has explanatory power over the other. The level of constituents’ participation is positively associated with the number of input opportunities offered by a due process document but unrelated to the complexity of a standard-setting project. Frank Emmert discusses the differences between market economic models, socialist or planned economies, and economies controlled by monopolies or cartels, to make the case for competition supervision. Subsequently he argues for a broad approach to competition supervision - beyond a narrow view of antitrust law. H. Kubra Kandemir examines the differences between new and old forms of auditing with regard to the recent EU reforms and regulations. A critical analysis of the new EU law is provided by the author with some policy recommendations.
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We hope that you will enjoy reading the journal and in future we will receive new papers, outlining the most important issues and best practices of regulation and governance!
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