This study proposes a structured product (SP) for hedging defined contribution pension fund members against capital market risk. Using Monte Carlo simulations on three different guaranteed returns to test the investment strategy of the SP against a balanced investment portfolio, we measure their...

The emergence of FinTech lending companies can be attributed to the convergence of factors such as the widespread use of the internet, advancements in machine learning, and a decline in trust towards traditional banking systems following the financial crisis of 2006-08. These companies have...

Diversification practices by banks affect their own risk of failing and the risk of the banking system as a whole (systemic risk). A seminal theoretical work has shown that linear diversification can reduce the risk of a bank failing, but at the cost of increasing systemic risk. Later, a...

In numerous Central and Eastern European (CEE) countries, the global financial crisis as well as the unpegging of the foreign exchange rate of the Swiss franc (CHF) against the euro amplified the repayment troubles of households with the outstanding CHF-linked debt. In Croatia, the CHF loans...

In this paper, we reexamine a bias revealed by Kunz et al. (2017) regarding structured financial products known as barrier reverse convertibles (BRCs) with worst-of payout characteristics. Namely, using a nonincentivized survey of investor risk perceptions, Kunz et al. (2017) found that when...

In this paper, we establish a comparison between one of the most traded financial derivatives in the markets, the so-called catastrophe bonds (abbreviated as cat bonds) and the corporate bonds. In the first section, we start from a brief definition as well as some basic concepts. In section two,...

Recent complex financial products sold to households contradict the basic premise of canonical innovation theories: financial innovation benefits its adopters. In my 2006–2015 sample of over 28,000 yield enhancement products (YEP) the securities offer attractive yields but negative returns....

We examine the factors that influence nonfinancial firms' choice of issuing standard corporate bonds vis-à-vis contracting structured finance, in the form of project finance or asset securitization arrangements. Using a data set of deals closed by 4,700 European borrowers between 2000 and 2016,...

This study aims to investigate the remarkable rise and fall of structured finance by emphasising the role of complexity. This study first examines how structured finance become more complicated over the last two decades. Complexity in structured finance arises from the pooling of assets, the...

This paper examines the pricing of structured finance (SF) – asset-backed securities (ABS), mortgage-backed securities (MBS), and collateralized debt obligations (CDO) – and straight debt finance transactions. Using a cross-section of 24,525 European bonds issued by financial and...

The aim of this paper is to develop an approach to extract information about cyber risks from structured financial products. We consider decision makers that are interested in extracting information about the uncertainty of Cyber risks. The value of information can be evaluated using recently...

This Article takes stock of post-financial crisis regulatory developments to tell a tale of two markets within a political economy of financial regulation. The financial crisis stemmed from excessive risk-taking and dodgy practices in the subprime home mortgage market, a market that owed its...

The securitization of various financial assets provides liquidity, facilitates the transfer of risk, and presents unique risk-return opportunities to buyers of such securities. These products can also provide financing in ways that cannot be normally obtained through conventional loans. Here, we...

This paper presents a study and a framework to assess the fair economic value of Structured Products pledged as collateral in a Lombard Loan. In particular, it discusses how the value of Barrier Reverse Convertibles in the market can be used to determine the Loan-to-Value by applying the concept...

We conduct a choice-based conjoint analysis to evaluate the preferences of private investors with regard to the investment in structured products, especially discount certificates. Investors consider the costs and the product structure to be most important, whereas the product's issuer and...

In today's world structured financing has become a very important and popular tool in trade, capital market and project financing. When more than one entity is involved in the financing process then it is known as structured financing. Though few projects in Bangladesh has been funded by this...

"Financial Markets in Practice: From Post-Crisis Intermediation to FinTechs delivers an overview of risk transformations operated by the financial industries from the perspective of quantitative finance. It gives a pedagogical and comprehensive understanding of the structure of the financial...

The poor performance of credit ratings of structured finance products in the financial crisis has prompted investigation into the role of credit rating agencies (CRAs) in designing and marketing these products. We analyze a two-period reputation model in which a CRA both designs and rates...

The paper aims to reconstruct the empirical premia of the structured products with two underlying assets. We apply various models that differ in probability distributions of the underlying price processes.Pricing techniques, currently worldwide accepted, are based on the Black-Scholes model...

The poor performance of credit ratings of structured finance products in the financial crisis has prompted investigation into the role of credit rating agencies (CRAs) in designing and marketing these products. We analyze a two-period reputation model in which a CRA both designs and rates...

This paper examines the effects of underwriter networks in the market of securitized products. The complexity and opacity of securitized products increase the value of information gathered and disseminated to the market by central underwriters. However, securitized deals have long performance...

"Structured Finance is a textbook focusing on non-recourse financial techniques and asset-based lending. It explains the main structured finance techniques used today (LBO, project finance, asset finance and securitization) and how they compare. The book also outlines the reasons why these...

Asset-backed securities (ABSs) and covered bonds (CBs) are structured finance instruments that require a range of key services, which may be provided by many firms. However, despite the prevalence of structured finance instruments in Europe, the network between issuers and service providers has...

In this paper, we examine the nature of structured products, why they are used, and by whom. We consider the size of the industry and some of its most popular products in the context of Asian capital markets. Finally, we identify a variety of risks for each of the parties involved: issuers,...

Financing is an important component in any project. Without finance, it is impossible to run any project as it is considered the lifeblood of the business. But due to the presence of predetermined rate of interest, economists have provided alternative approach for financing the project. In this...