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Loan tranching allows banks to manage risk and facilitate firm financing, which may be essential for firms that cannot access investors from stock markets. We analyze the determinants and benefits of loan tranching by pooling the tranches of individual loans to create the largest cross-country sample of syndicated loans, covering more than 150,000 loans from multinational and domestic firms. We find that, in addition to market, deal, and borrower characteristics, legal and institutional differences impact loan tranching. Strong creditor protection and efficient debt collection increase the probability of tranching and reduce tranche spreads, ultimately promoting firms’ access to debt. We also find evidence that tranching facilitates the financing of multinational firms abroad due to the transfer of legal and cultural institutions to foreign subsidiaries. Overall, our results suggest that tranching plays an important role in reducing a country’s financial development gap and promotes firms’ access to debt.

This paper analyzes a family of multivariate point process models of correlated event timing whose arrival intensity is driven by an affine jump diffusion. The components of an affine point process are self- and cross-exciting and facilitate the description of complex event dependence structures. ODEs characterize the transform of an affine point process and the probability distribution of an integer-valued affine point process. The moments of an affine point process take a closed form. This guarantees a high degree of computational tractability in applications. We illustrate this in the context of portfolio credit risk, where the correlation of corporate defaults is the main issue. We consider the valuation of securities exposed to correlated default risk and demonstrate the significance of our results through market calibration experiments. We show that a simple model variant can capture the default clustering implied by index and tranche market prices during September 2008, a month that witnessed significant volatility. [PUBLICATION ABSTRACT]

Let V be a sums of independent nonnegative integer-valued random variables and hz be a call function defined by hz(v)=(v-z)+ for v≥0,z≥0 where (v-z)+=max{v-z,0}. In this paper, we give bounds of Poisson approximation for E[hz(V)]. These bounds improve the results of Jiao and Karoui (Finance Stoch 13(2):151–180, 2009). The technique used is Stein–Chen method with the zero bias transformation. One example of applications for a call function in finance is the standard collateralized debt obligation (CDO) tranche pricing. The CDO is a security backed by a diversified pool of debt obligation such as bounds, loans and credit default swaps.

Abstract Parasitic isopods have negative effects on several commercially important fishes and crustaceans. However, studies on these parasites, especially on their morphology, are limited. In the present study, scanning electron microscopy and simultaneous histological analysis were carried out to examine the external structure and composition of the internal organs of Tachaea chinensis (Isopoda, Corallanidae). Seven pairs of pereopods are sharp and hook-like, which are used for attaching to the host. Four pairs of the paddle-shaped pleopods indicate that it has the ability to swim freely. Analysis of the mouth appendages revealed that T. chinensis mainly feeds on the host’s blood. Moreover, we found numerous glands, including the salivary glands and hepatopancreas, in the coelom; loose connective tissue was also found in the ventral body cavity, which appeared to be a vestigial gonad. In addition, the description of the gland also provides valuable empirical data for future research.

The complex relationship between democracy and development has been extensively discussed in academic literature. However, we do not have much knowledge of how this translates into donor practices. How does the European Commission (ec) deal with tensions arising from promoting democracy and development? To answer this question, this article operationalises the distinction between 'democracy promoters' and 'developmental donors', focusing specifically on budget support and governance incentive tranches. Empirically we examine the implementation of the ec's budget support and Governance Incentive Tranche in Ethiopia (2005-10), a case where the dilemma between democracy promotion and development cooperation is particularly strong. Investigating the position of the ec along the democracy promoter versus developmental donor continuum, we conclude that the ec's position lies between these extremes. However, in the case of budget support, a shift has been made away from the Commission being a democracy promoter and towards the role of developmental donor.

Foreign direct investment and private capital flows are highly concentrated geographically, with almost half of them reaching five top destinations. These flows tend to evade many high-risk countries. Regulatory and contractual risks, particularly in infrastructure, have inhibited investments in many parts of the developing world. A core objective of the World Bank Group (WBG) has been to support the flow of private investment for development; guarantees and insurance have been among the instruments that the WBG has used to pursue this objective. This study examines three main questions: • Should the WBG be in the guarantee business? • Have guarantee instruments in the three WBG institutions been used to their potential as reflected in WBG expectations and perceived demand? • Is the WBG appropriately organized to deliver its range of guarantee products in an effective and efficient manner?

Purpose This paper aims to explore the ways in which the international standards in the field of anti-money laundering (AML) and counter-terrorist financing (CTF) have reshaped regulatory regimes in a globalised world. Design/methodology/approach This paper deconstructs the origins and development of international standards in the field of AML and CTF dealing with longstanding legal professional privilege. This paper adopts both qualitative and quantitative research methodologies. The qualitative aspect comprises a literature review of sources, including scholarly works, Financial Action Task Force (FATF) recommendations, reports and domestic laws. The quantitative aspect analyses a unique and comprehensive table reproduced below, that indicates Australia’s compliance with all the FATF recommendations over more than a decade with full alternation to FATF’s revisions of its recommendations. Findings This paper demonstrates that an understanding of the influence of the FATF norms can shed light on the departure from regular lawmaking processes and emerging forms of international governance. The conclusion suggests that tranche II is coming and Australia will amend it in domestic regime to comply with the international standard, applying the AML/CTF regime to the legal profession and thus interfering with legal professional privilege. The question is not if but when. Originality/value This paper fills the gaps in the existing literature by contemplating the future of legal professional privilege globally and in Australia, which provides a case study of a regime that does not yet comply fully with AML and CTF international standard. This approach differs significantly from that of other literature in the field, which deals comprehensively with the theoretical foundations of legal professional privilege, as well as its practicalities and limitations, without considering the influence of the international non-binding norms.

The financial crisis that began in 2007 in the United States swept the world, producing substantial bank failures and forcing unprecedented state aid for the crippled global financial system. Bringing together three leading financial economists to provide an international perspective,Balancing the Banksdraws critical lessons from the causes of the crisis and proposes important regulatory reforms, including sound guidelines for the ways in which distressed banks might be dealt with in the future. While some recent policy moves go in the right direction, others, the book argues, are not sufficient to prevent another crisis. The authors show the necessity of anadaptiveprudential regulatory system that can better address financial innovation. Stressing the numerous and complex challenges faced by politicians, finance professionals, and regulators, and calling for reinforced international coordination (for example, in the treatment of distressed banks), the authors put forth a number of principles to deal with issues regarding the economic incentives of financial institutions, the impact of economic shocks, and the role of political constraints. Offering a global perspective,Balancing the Banksshould be read by anyone concerned with solving the current crisis and preventing another such calamity in the future.

The reasons for the strong rise in the securitization phenomenon up until the start of the “subprime crisis” need to be analysed. According to many authors, they mainly stem from its offering the possibility of generating fixed yield securities with the highest rating and a low risk premium, thanks to the issues being structured in differentiated bond series, so that certain series absorb most of the risk, thus facilitating the safer or “senior” tranches having a higher rating. Accordingly, this paper reviews the literature on the factors underlying the generation of differentiated tranches in this type of issues and regarding the determining factors ofthe yield offered by securitization issues. It concludes thatthe search for more complete markets, along with the reducing of problems associated to the moral hazard, are the main reasons for the multi-tranche structuring. And given the strong influence of the number of tranches on the yield offered by the issues, the paper likewise concludes that the multitranche structures has been an efficient tool to place securitization issues with more competitive yields. El fuerte desarrollo experimentado por la titulización hasta la “crisis subprime” y su empleo en la actualidad, requiere analizar sus causas. Y estas residen en la posibilidad de generar títulos de renta fija con la máxima calificación y una baja prima de riesgo, gracias a la estructuración de las emisiones en series diferenciadas de bonos, de forma que ciertas series absorben la mayoría del riesgo, facilitando que los tramos más seguros tengan una alta calificación. Se realiza una revisión de la literatura sobre los factores subyacentes a la generación de tramos y sobre los factores explicativos de la rentabilidad ofrecida por los bonos de titulización. Se concluye que la búsqueda de mercados más completos y la reducción de problemas asociados al riesgo moral, son los motivos principales para la estructuración multitramo. Dada la fuerte influencia del número de tramos sobre la rentabilidad ofrecida por las emisiones, se concluye que las estructuras multitramo han sido una herramienta eficaz para la colocación de bonos con rentabilidades muy competitivas.