Search

Saudi Arabia's Public Investment Fund (PIF) has grown from marginal player to the most important economic actor in the Kingdom since 2015. Nevertheless, we know surprisingly little about the political economy of the PIF revamp. Against an unfavorable macroeconomic backdrop, I argue that shifts in PIF organization and orientation are fundamentally driven by the centralization of power within the circles of the Saudi ruling family since the rise of Mohammed bin Salman (MBS). The fund's governance framework and network of insiders forming the board of directors mirror the concentration of authority around MBS. In turn, PIF domestic activities shifted from scattered investment patterns associated with the competing influence of senior decision-makers to a highly authoritative and personalized strategy. Moreover, the PIF's response to COVID-19 further exemplifies the turn from a conservative strategy toward a short-term oriented approach to sovereign wealth management. Going beyond macro-level economic and institutional dynamics, the article introduces the role of political agency in SWF choices by stressing how political actors and the distribution of power within ruling elites shape SWFs. The article thus adds to the scholarship on domestic drivers of SWFs and contributes to debates surrounding the interplay between states and markets under processes of financialization. [ABSTRACT FROM AUTHOR]

Since the 2008 global financial crisis, many innovations have emerged in the financial sector as investors started to look for alternative methods to eliminate irrational decision-making in wealth management, and Robo-advisors is among those. Nine years after the first launching of Robo-advisors in the U.S. in 2008, the Securities Commission Malaysia has been issuing licenses to seven Robo-advisor platforms. The current COVID-19 outbreak has made this industry more in demand, increasing 763% in registration in 2020. However, much skepticism about Robo advisors' ability and reliability in providing a similar quality or better advisory service compared to human-financial advisors. Therefore, this study examines the factors influencing the acceptance of Robo-advisors in wealth management in Malaysia. Adopting some factors from various established technology acceptance models, an online survey with 122 respondents was conducted using convenience sampling. Findings show that Relative Advantage, Effort Expectancy, and Social Influence significantly positive influence the Malaysian Behavioral Intention to Accept Robo-Advisors. On the contrary, there is no significant relationship between Perceived Risk and Malaysian Behavioral Intention to Accept Robo-Advisors. The study provides a positive insight into factors influencing the acceptance of Robo-Advisors in Malaysia. [ABSTRACT FROM AUTHOR]

This article uses the banking wealth management market to illustrate how the Chinese government intervened in the banking sector involved in crisis response reform packages. It argues that the regulatory processes regarding the banking wealth management market before and after 2015 support the crisis-driven regulation hypothesis. This article finds that the Chinese government's initial response was to strengthen enforcement; it also made significant changes in legislation, including the redefinition of related products, classification of investors, and adding more mandatory disclosure rules. Finally, the Chinese government adjusted its financial supervisory architecture. It further compares the Chinese government's regulatory strategies responding to the 2015 domestic systemic risk crisis with those adopted by its counterparts in developed countries following the 2008 global financial crisis. This article argues that the Chinese government purposefully adjusted regulatory strategies to regain control over state-owned banks and promote state-led financialisation. [ABSTRACT FROM AUTHOR]

China's financial system is rapidly evolving. Both the emergence of shadow banking since 2009 and the growth of fintech since 2013 as forms of 'non-bank credit intermediation' have catalysed market-oriented institutional change beyond the banking system, with potentially far-reaching economic and political implications. In this article we assess these developments in the broader trajectory of China's financial reform and economic development. Through an analysis of two key sectors of non-bank credit intermediation – wealth management products and online lending platforms – we find that the growth of both shadow banking and fintech can be located in the same trajectory of reform and development that has animated Chinese financial policy since the early 1990s. The toleration of WMPs and promotion of internet lending constitutes the latest stage of the Chinese Communist Party's efforts to construct a more efficient and sustainable market economy whilst simultaneously preserving political supremacy and custodianship of macro-social development. The difference in policy response is commensurate with the degree to which each financial sector meets the Party's twin objectives of economic development and political control. Counterintuitively from a Western liberal perspective, the very forces behind deep and broad financial liberalisation are also consolidating the Chinese Communist Party's overall legitimacy and ruling capacity. [ABSTRACT FROM AUTHOR]

In this paper, we propose a goal-based investment model that is suitable for personalized wealth management. The model only requires a few intuitive inputs such as size of wealth, investment amount, and consumption goals from individual investors. In particular, a priority level can be assigned to each consumption goal and the model provides a holistic solution based on a sequential approach starting with the highest priority. This allows strict prioritization by maximizing the probability of achieving higher priority goals that are not affected by goals with lower priorities. Furthermore, the proposed model is formulated as a linear program that efficiently finds the optimal financial plan. With its simplicity, flexibility, and computational efficiency, the proposed goal-based investment model provides a new framework for automated investment management services. [ABSTRACT FROM AUTHOR]

These chapters include an overview of behavioral finance at the individual investor level and the behavioral biases used when incorporating investor behavior into the asset allocation process. Part five of this book describes the four Behavioral Investor Types, or BITS, and combines them in the form of a case study that shows how investors can use behavioral finance in real-world portfolio management. His most recent book "Behavioral Finance and Your Portfolio" is written from an investor's point of view and builds optimal portfolios by taking a so-called "biased investor behavior" into account. [Extracted from the article]

Inadequate regulation of spatial development is at the origin of the current global crisis and increases, in years of crisis, the unequal distribution of wealth. The importance of the related risks for democracy draw attention to the systems of spatial governance and planning, through which States regulate spatial development. In Europe, the countries most affected by the unequal effects of the crisis have spatial planning systems that are traditionally based on the preventive assignation of rights for land use and development through a plan. The systems of other countries had established beforehand that new rights for land use and for spatial development are rather assigned only after the public control of development projects and their distributional effects. Despite the evidence that some models can operate better than others in ensuring public government of spatial development, the improvement of spatial planning systems is, however, limited by their complex nature of ‘institutional technologies’. Especially in a context of crisis, planners are responsible for the increase in public awareness concerning the role of spatial governance in economic and social life. [ABSTRACT FROM AUTHOR]

In contrast to single-period mean-variance (MV) portfolio allocation, multi-period MV optimal portfolio allocation can be modified slightly to be effectively a down-side risk measure. With this in mind, we consider multi-period MV optimal portfolio allocation in the presence of periodic withdrawals. The investment portfolio can be allocated between a risk-free investment and a risky asset, the price of which is assumed to follow a jump diffusion process. We consider two wealth management applications: optimal de-accumulation rates for a defined contribution pension plan and sustainable withdrawal rates for an endowment. Several numerical illustrations are provided, with some interesting implications. In the pension de-accumulation context, Bengen (1994)’s [J. Financial Planning, 1994,7, 171–180], historical analysis indicated that a retiree could safely withdraw 4% of her initial retirement savings annually (in real terms), provided that her portfolio maintained an even balance between diversified equities and U.S. Treasury bonds. Our analysis does support 4% as a sustainable withdrawal rate in the pension de-accumulation context (and a somewhat lower rate for an endowment), but only if the investor follows an MV optimal portfolio allocation, not a fixed proportion strategy. Compared with a constant proportion strategy, the MV optimal policy achieves the same expected wealth at the end of the investment horizon, while significantly reducing the standard deviation of wealth and the probability of shortfall. We also explore the effects of suppressing jumps so as to have a pure diffusion process, but assuming a correspondingly larger volatility for the latter process. Surprisingly, it turns out that the MV optimal strategy is more effective when there are large downward jumps compared to having a high volatility diffusion process. Finally, tests based on historical data demonstrate that the MV optimal policy is quite robust to uncertainty about parameter estimates. [ABSTRACT FROM AUTHOR]

Although the recent financial crisis badly hurt the Western banking sector, commercial banks in China appear to have weathered the storm rather well. Nevertheless, the shadow banking system – a culprit of the crisis – also exists in China and recently has taken a turn for the worse. Wealth management products, one form of shadow banking, not only pose systemic risks to the banking sector but also raise concerns about consumer protection in the shadow banking sector at large. This article examines the systemic risks created by the proliferation of wealth management products and sheds light on the underlying logic of the policy responses adopted by Chinese regulatory authorities. While these regulatory tools are designed to address systemic risks surrounding wealth management products, the financial regulatory framework needs to be further improved to promote both financial safety and market liberalisation, thereby protecting consumer rights in the financial sector. [ABSTRACT FROM AUTHOR]

Sovereign wealth funds (SWFs) started making the headlines in the midst of the global financial crisis. They were welcomed neither by academics nor by politicians of Western countries. In a flurry of 2008 papers SWF were peremptorily told what they should and shouldn't do. The reasoning underlying the prescriptive norms was flawed in two respects. First it simply equated SWFs to other institutional investors. Second it advocated models of asset allocation based upon the efficient market hypothesis, while the global financial system itself was crumbling! The present paper takes a radically different view. It shows precisely how SWF balance sheets are interconnected with the balance sheets of the public sector of the nation whose wealth they transfer over time. Therefore they are, by their very nature, strategic actors. Their objectives, which shape their asset liability management, participate in the long-run policy of their nation. Their business model is framed on the integration of their asset liability management into the national political framework. Their governance cannot abstract from the broader environment, which has been upset by the transformation of the world economy. The financial crisis has invalidated the Wall Street paradigm of market finance, intermediated by global investment banks to finance long-term investment worldwide. The retrenchment of European banks in cross-border lending enhances the role of public finance in emerging market economies. Meanwhile the catching up process, which has been reaching more and more developing countries, calls for huge amounts of real investments. This is why a regime shift in finance is under way, which gives prominence to public investors. The last part of the paper shows how public private collaboration is arranged in China to finance small and medium-sized enterprises through private equity funds. [ABSTRACT FROM AUTHOR]

The college financial aid system imposes an implicit asset tax that is prevalent and substantial. Facing this tax, rational families should reduce their total assets and shelter assets in protected categories. I find that the tax induces a 7-12% reduction in total assets, a result in line with the literature. Furthermore, I find evidence that families reallocate assets into sheltered retirement accounts. The paper provides further evidence that the financial aid tax reduces asset accumulation and prompts a reconsideration of the simple 'higher tax, lower assets' story. It provides the first evidence that families may be engaging in a rational reallocation of their asset portfolio. [ABSTRACT FROM AUTHOR]

People who wish to make direct gifts to charities or other nonprofit organizations are faced with an overwhelming number of choices. There exist several types of sources of information to help potential donors choose whether, where, and how much to give. Each of these has its limitations, and at some point the size of the gift contemplated by the donor can justify the marginal cost of consulting with an advisor, particularly when the donor is already consulting with legal or financial planners for estate or other planning. Fundraisers and nonprofit organizations advocate for advisors to encourage their clients to donate. This raises the questions of the proper role of, and the duties incumbent on, those who counsel potential donors on donations (whether or not such counsel is given in connection with other professional advice). After reviewing the situation that gives rise to these issues, this article discusses answers to these questions and how philanthropy and client service can be furthered as part of the same process. [ABSTRACT FROM AUTHOR]

The article discusses how quantitative finance is transforming the field of personal wealth management by taking a random walk through the human life cycle. The primary factor driving the quantification of personal wealth and risk management has been the spiral of wealth management products and choices that can leave the most seasoned financial advisor confused. The understanding of human capital and its role in portfolio selection is provided.