This paper provides a taxonomy of market imperfections built around the economic forces underlying them. Market imperfections affect virtually every transaction in some way, generating costs which interfere with trades that rational individuals make, or would make in the absence of the...

In this fifth article in the Economists’ Hubris series, we investigate the practical applications of eight papers that won best-article awards in 2008 and 2009 from the Journal of Finance or the Journal of Financial Economics, the two leading journals in finance. We find that these articles...

Alan Greenspan’s paper (March 2010) presents his retrospective view of the crisis. His theme has several parts. First, the housing price bubble, its subsequent collapse, and the financial crisis were not predicted either by the market, the Fed, the IMF, or the regulators in the years leading...

In this, the fourth article in the economists’ hubris paper series, we look at the contributions of academic thought to the field of asset management. We find that while the theoretical aspects of the modern portfolio theory are valuable, they offer little insight into how the asset management...

Open-economy macroeconomists regularly invoke the policy trilemma that states that governments cannot simultaneously maintain an open capital account, a fixed exchange rate, and a domestically-oriented monetary policy. My thesis is that jurisdictions with substantial offshore activities find...

This paper makes a study of payment systems in the countries of the enlargement of the European Union for the period 1996-2003 and its comparison with the members of the European and Monetary Union. The general tendency is of a movement from cash to alternative instruments of payment. However,...

The relationship between financial development and growth has been the subject of intense scrutiny. Economists debate whether finance causes growth [Hicks (1969), Schumpeter (1934)], or whether it is growth that triggers the development of financial markets [Robinson (1952)]. This paper proposes...

In this opinion piece, Dr. Anthony Kirby provides a snapshot view of the current business-to-business (B2B) landscape. He outlines how first-mover advantage has become first-prover achievement and explains why so many B2B exchanges are diversifying their range of services to build customer and...

The success of online stockbrokers has led many to believe that almost all aspects of the financial services industry can be disintermediated. I propose that those who make such predictions overlook the heterogeneity of this industry, and suggests that the fixed income market already possesses...

In today’s highly competitive environment, financial institutions will be hard-pressed to fund capital investments, system upgrades, new projects, state-of-the art infrastructures, and ultimately new products and services. They will, however, be expected to grow their businesses in the double...