Europe Institute


Outcome of Year 1


Progress Report on Year One


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Progress report on Year One.
Here is a downloadable file that describes Year One project. (131.8 kB, PDF)

PhD Seminar on Contemporary Issues in Finance


This page provides links to the documents that have been produced as part of a research project entitled ‘The Future of Monetary and Financial Integration in the EU’, which was funded by the EU as part of its grant to the EU Centres Network in New Zealand.

The contemporary issues in finance that were discussed, in a meeting held on October 25, 2015, covered two main topics:

1. The ability of the new tools that are being implemented actually to perform their task in absorbing financial shocks; and

2. Examination of the more likely sources of shocks that might next affect the world economy.

The first topic focused on Contingent Convertibles.

Questions that were discussed are:

  • What are Contingent Convertibles (CoCos)?
  • Why were they introduced?
  • What are the characteristics of CoCos?
  • What are the problems associated with those financial instruments?
  • What solutions have been proposed?
  • Will CoCos prevent a systemic financial crisis?

The difference between a bail-in as a statutory resolution tool and CoCos was also analysed and, lastly, the possibility of using CoCos in Islamic banking was reviewed. The general conclusion was that CoCos are a very useful addition to banks’ ability to absorb adverse shocks but that they were not, to quote the Shadow Financial Regulatory Committee, a panacea. A systemic bank which got into so much trouble that it triggered CoCos would be viewed very unfavourably by the market and indeed depositors. Indeed, unless the problems were very clearly in that bank alone it is quite likely that their triggering would lead to a broader crisis, quite probably requiring the explicit intervention of the state, however much the BRRD and other legislation would like to avoid it. Such a switch in sentiment seems especially likely as the low price for CoCos in some markets implies that the risk is under-rated by the purchasers.

The second topic related to China and the consequences of any further slowing down in its rate of growth.

This was divided into three parts.

1.     The shadow banking in China.

  • The questions that were discussed are:
  • What does shadow banking in China include?
  • The rationale of shadow banking in China; How big is shadow banking China?
  • Is it a threat to the economy and financial stability?
  • How do the authorities regulate shadow banking?

2.     The financial asset management companies and non-performing assets in China from the perspective of corporate law and governance.

It provided a brief introduction to the financial asset management companies and the non-performing assets in China and then compared and contrasted the current regulation on financial asset management companies. Lastly, it covered the legal impediments to better performance management.

3.     Some insights into the correlation between the Chinese stock market movements and policy reforms and announcements. Additionally, the potential impact of the problems in the Chinese economy on New Zealand and Europe were discussed.

In general, it was concluded that some financial problems in the Chinese economy had been covered up, especially those related to non-performing loans. However, while there might be some vulnerability in shadow banking through loans to the property market, some of the rapid rises and falls in stock market might be more explicable in terms of changes in government policy rather than a clear downward revision to views about the economic prospects for Chinese companies. In so far as there was a threat to New Zealand it would tend to come through the real economy with a change in the demand for New Zealand products rather than through contagion from problems in the Chinese financial system.

The presentations and contributions to the seminar can be downloaded as below:

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“Contingent Convertibles”
by David G. Mayes (Professor of Banking and Financial Institutions, The University of Auckland) and Giannoula Karamichailidou (Research Fellow in the Europe Institute, The University of Auckland) (303.5 kB, PDF)
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“Islamic banking and shock absorbers”
by Faisal Alqahtani (PhD Candidate, The University of Auckland) (255.3 kB, PDF)
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“Shadow Banking in China and its potential risk”
by Aria Zhang (PhD Candidate, The University of Auckland) (1.5 MB, PDF)
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“Non-performing assets in China: What next?”
by Wei Feng (PhD Candidate, The University of Auckland) (333.3 kB, PDF)
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“Chinese stock market & policy announcements”
by Chris Zhang (PhD Candidate, The University of Auckland) (720.5 kB, PDF)
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Teaching Module - Banking Union in the UK


This section provides links to all the components of a teaching module on Banking Union that has been put together by David Mayes and Giannoula Karamichailidou at the University of Auckland.

This module was produced as part of a research project entitled ‘The Future of Monetary and Financial Integration in the EU’, which was funded by the EU as part of its grant to the EU Centres Network in New Zealand. We are grateful to Lyn Collie from the Innovative Learning Team at the University of Auckland Business School for help in putting the videos together.

The module is aimed at students who are studying banking and wish to know more about what is happening in the EU and at students who are studying European integration and wish to know more about banking. While it is pitched at a level suitable for 3rd year students, it does not assume any special background in either finance or EU studies. It would therefore also be suitable for anyone interested outside a higher education institution as well.

The module consists of:

 

1. Five short videos:

[clicking each title will take you to videos]

Introduction

Video 1

Video 2

Video 3

Video 4

NOTE: A set of slides “European Banking Union (lecture slides).pptx” accompanies the videos.

 

2. Transcripts of the videos:

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Transcript for video 1
(21.1 kB, PDF)
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Transcript for video 2
(21.0 kB, PDF)
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Transcript for video 3
(27.6 kB, PDF)
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Transcript for video 4
(33.6 kB, PDF)

 

3. A set of slides to accompany the videos:

 

4. A bibliography:

  • Links to the EU legislation which embodies Banking Union
  • Links to a wide range of articles and other references that have been published in the last few years relating to Banking Union

Reading should be undertaken before watching the videos.

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Bibliography
(116.7 kB, PDF)

 

5. Questions for discussion – shown in both the videos and the slides

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Questions for discussion
(105.6 kB, PDF)

 

6. Teaching aids:

  • Side presentation to help class discussion of the questions
  • Points that might be made in the discussions
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Tutorial slides
(656.8 kB, PDF)
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Joint Conference and Meeting of the Australia and New Zealand Shadow Financial Regulatory Committee


Attached is the statement produced:

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The Mutual Lessons that Can be Learned from the Experience in Financial Integration in the EU and in Australia and New Zealand


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All these materials are available without charge for personal use and for use in teaching provided no fee is levied.

David G. Mayes and Giannoula Karamichailidou assert their copyright over all these materials, which may not be copied or otherwise made available without permission.

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