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We analyze why firms use nonintermediated short-term debt by studying the commercial paper (CP) market. Using a comprehensive database of CP issuers and issuance activity, we show that firms use CP to provide start-up financing for capital investment. Firms� CP issuance is driven by a desire to minimize transaction costs associated with raising capital for new investment. We show that firms with high rollover risk are less likely to enter the CP market, borrow less CP, and borrow more from bank credit lines. Further, CP is often refinanced with long-term bond issuance to reduce rollover risk.

This study examines stock market gambling using a comprehensive set of investor characteristics and past portfolio performance measures. We find that retail investors overinvest in ‘lottery stocks’, stocks with gambling-like properties. Significant portfolio underperformance is the result of gambling through lottery stocks. Investors are more likely to gamble following recent portfolio paper gains, regardless of realised performance, providing new evidence that paper gains trigger a house money effect. Investors trading greater values or holding more stocks, and older and female investors, are less likely to invest in lottery stocks.

We evaluate the manner in which sponsors of highly leveraged asset-backed commercial paper (ABCP) conduits responded to Financial Accounting Standards Board Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities an Interpretation of ARB No. 51, and its Canadian counterpart Accounting Standards Board of Accounting Guideline 15 (AcG-15), Consolidation of Variable Interest Entities. By matching commercial paper investors with corporations seeking liquidity, ABCP sponsors facilitate a significant amount of short-term, securitized financing in the United States. FIN 46 and AcG-15 require sponsors to consolidate their ABCP conduits with their financial statements. We demonstrate that the volume of ABCP began to decline when FIN 46 was first proposed, and that this decline is primarily attributable to a reduction in North American banks' sponsorship of ABCP. We also demonstrate that North American banks entered into costly restructuring arrangements to avoid having to consolidate their conduits per the new accounting standards. Our results suggest that, in certain settings, accounting standards appear to have real effects on investment activity and product-market competition.

Much of the discussion surrounding the publication of the NHS White Paper ‘Working for Patients’ has centred on proposals for an ‘Internal Market’. However, the term ‘Internal Market’ embraces two quite distinct concepts, both of which are found within the White Paper. These two types of Internal Market have very different implications for cost, equity, priorities and the planning and delivery of health care. The pattern of health and health care will be strongly influenced by the relative strengths of the two types of Internal Market in the future NHS.

In this study I provide evidence that there is an economically significant relation between a firm’s environmental performance and its bond yields. Firms that have poor environmental performance will face future environmental liabilities related to compliance and clean-up costs due to increasingly strict environmental laws and regulations. These liabilities are large enough to drive polluting firms into bankruptcy and can leave bondholders’ claims subordinate to environmental liabilities. I also find evidence that the relation between environmental performance and bond yields fades as bond quality increases, which is consistent with the non-linear pay-off structure of bonds. This study focuses on two of the most polluting industries in the U.S., chemical and pulp and paper. The paper’s findings support ongoing calls for greater cooperation between the Securities and Exchange Commission (SEC) and the U.S. Environmental Protection Agency (EPA), which would allow for the reporting of quantifiable environmental information in firms’ disclosures. It also provides evidence of environmental performance as a determinant of bankruptcy risk. Bankruptcy due to a history of poor environmental performance often leaves the related environmental liabilities underfunded. Many regulators are required to ensure adequate funds are available for remediation to match ongoing environmental degradation. Thus, the interplay between a firm’s bankruptcy risk and its environmental performance has broad implications.

Research on environmental reporting within individual sectors and industries is limited. Generic studies have typically focused on the reporting practices of the world's largest corporates. Some industries and sectors are under-represented within these studies, limiting the potential for industry- or sector-specific analysis. Forest and paper is one industry frequently under-represented. This study examines environmental reporting amongst the top 100 forest and paper companies. The scale of environmental report publication is investigated, and the breadth and depth of reporting on the key industry issues of forest management and fibre procurement examined. The results show reporting is more prevalent amongst larger corporates but marked regional variations are evident. Most noticeably, Scandinavian companies are reporting more extensively, both in terms of the number of levels at which they report and the depth of information included on forest management and fibre procurement. Reasons for the marked regional variations in reporting are considered and markets for forest products and preferences within those markets for specific certification schemes identified as potential influencing factors. Copyright © 2003 John Wiley & Sons, Ltd and ERP Environment.

One hesitates to write history as it happens, or to draw policy lessons from current events. The conference took place in May 2008 - after the government-assisted takeover of Bear Stearns but before a capital market downturn fueled a system-wide liquidity crisis, with successive insolvencies at IndyMac, Fannie Mae, Freddie Mac, Lehman, AIG, WaMu, and, as I write, Citigroup. But it would be odd to comment on capital market regulation without mentioning the events of the last three months. I am first to acknowledge that anything I might have written in May would not have foreseen the crisis or linked capital market regulation to financial institutions, which in the US have been conventionally treated as discrete in discourse and institutions (e.g., U.S. Treasury 2008; Leuz and Wysocki 2008).

Determinants of the abandonment of previously announced capacity expansions are analyzed in eleven industries within the North American pulp and paper sector. Given the investor's initial confidence, extent of precommitment of resources, and post-announcement fresh news, abandonment's likelihood increases with unanticipated projects subsequently announced by rivals. The process suggests a continual auction with the winning projects and firms having certain systematic properties. Unexpected announcements by rivals promote abandonment only in less concentrated industries; elsewhere completion is actually encouraged. Short-run price competition is found highly sensitive to capacity utilization, and the market's geographic scope is tested.

Using an international sample of 2,113 initial coin offerings (ICOs), we explore the role of disclosure and information intermediaries in the unregulated crypto-tokens market. First, we document substantial cross-sectional variation in the voluntary disclosure practices of ventures seeking to raise capital through ICOs, such as the extent of information released in a prospectus-type document called a white paper; releasing the technical source code; and communicating through social media platforms. Second, we find that, even with limited disclosure verifiability, ventures with higher levels of disclosure have a greater ability to raise capital. Finally, we find that this association is stronger in the presence of mechanisms that lend credibility to ventures’ voluntary disclosures, such as internal governance practices or external scrutiny from information intermediaries. Overall, our results suggest that voluntary disclosure and information intermediaries facilitate the functioning of ICOs as an alternative capital market.

THE AMOUNT of commercial paper outstanding has more than doubled over the past three years, rising to $20.5 billion at the end of 1968 from $9.0 billion at the end of 1965.1 This rapid growth has generated widespread interest in the commercial paper market, and a number of articles dealing with the market have appeared recently.2 However, there has been no attempt to analyze the market in terms of statistically derived demand and supply functions. This paper represents an exploratory venture in this area. The first section briefly describes the relevant characteristics of the market for commercial paper. The second section outlines the theoretical and statistical approach used in the analysis. The third section presents and discusses the estimated demand and supply equations. In the final section, the model is evaluated and some of its broader implications are discussed.

This paper identifies seasonal firms and their peak seasons to provide empirical evidence of the approach these firms take to finance seasonal operations. The seasonal use of funds, which builds before seasonal revenue, is largely financed with transitory sources of credit, such as credit lines, trade credit, and commercial paper. Permanent financing is used only moderately to meet seasonal needs. However, both weak credit market conditions and firm‐level financial constraints limit the ability of seasonal firms to use debt as transitory financing. These frictions result in a partial shift to permanent financing but reduce the seasonal use of funds overall.

We study the characteristics of all published papers in the top three finance journals (JF, JFE and RFS), and how these paper characteristics affect the number of citations in Google Scholar and the Web of Science database. First, we find the characteristics in the universalist perspective remain constant while the characteristics in the constructivist and presentation perspectives increase over time. Second, some characteristics are significantly different between the high-impact and the low-impact papers. Third, paper quality, research method, journal placement and paper age are the most important drivers. Last, different drivers play different roles in different journals.

In August 1763, northern Europe experienced a financial crisis with numerous parallels to the 2008 Lehman Brothers episode. The 1763 crisis was sparked by the failure of a major provider of acceptance loans, a form of securitized credit resembling modern asset-backed commercial paper. The central bank at the hub of the crisis, the Bank of Amsterdam, responded by broadening the range of acceptable collateral for its repo transactions. Analysis of archival data shows that this emergency source of liquidity helped to contain the effects of the crisis, by preventing the collapse of at least two other major securitizers. While the underlying themes seem to have changed little in 250 years, the modest scope of the 1763 liquidity intervention, together with the lightly regulated nature of the eighteenth century financial landscape, provide some informative contrasts with events of late 2008.

This short paper applies the pitch template developed by Faff (2015a), for a proposed accounting research project on financial reporting of European banks and the global financial crisis. I begin by giving a brief background to writing the pitch. I then give a brief commentary on my pitch, followed by a few key personal reflections on the pitch exercise itself.

We consider the liquidity shock banks experienced following the collapse of the asset-backed commercial paper (ABCP) market in the fall of 2007 to investigate whether banks' liquidity conditions affect their ability to provide liquidity to corporations. We find that banks that borrowed more from the Federal Home Loan Bank system or the Federal Reserve's discount window following that liquidity shock passed a larger portion of their borrowing costs onto corporations seeking access to liquidity when compared to the precrisis period. This increase is larger among banks with a bigger exposure to the ABCP market, credit lines that pose more liquidity risk to banks, and borrowers that are likely dependent on the credit-line provider. Our findings show that the crisis that affected the banking system had a negative effect not only on the price of credit to corporations, but also on the price corporations pay to guarantee access to liquidity.

This paper examines liquidity and how it affects the behavior of portfolio managers, who account for a significant portion of trading in many assets. We define an asset to be perfectly liquid if a portfolio manager can trade the quantity she desires when she desires at a price not worse than the uninformed expected value. A portfolio manager is limited by both what she needs to attain and the ease with which she can attain it, making her sensitive to three dimensions of liquidity: price, timing, and quantity. Deviations from perfect liquidity in any of these dimensions impose shadow costs on the portfolio manager. By focusing on the trade-off between sacrificing on price and quantity instead of the canonical price-time trade-off, the model yields several novel empirical implications. Understanding a portfolio manager’s liquidity considerations provides important insights into the liquidity of many assets and asset classes. This paper examines liquidity and how it affects investor behavior, focusing on the considerations of a mutual fund portfolio manager. US mutual funds are the largest investor in US commercial paper with 47%, and they hold 35% of US tax-exempt debt, 27% of US equities, and about 10% of US corporate, Treasury, and agency debt (Investment Company Institute, 2008). Total mutual fund holdings worldwide equaled $26 trillion at year-end 2007. An understanding of the liquidity considerations of a portfolio manager therefore provides important insights into the liquidity of many assets and asset classes. A portfolio manager seeks to optimize the performance of her portfolio relative to her performance benchmarks. In this pursuit, she is limited by both what she needs to attain and the ease with which she can attain it. This makes her sensitive to three dimensions of liquidity: price, timing, and quantity. Deviations from perfect liquidity in any of these dimensions impose shadow costs on the portfolio manager, making them key considerations in her portfolio decisions. Wedefineanassettobeperfectlyliquidifaportfoliomanagercantradethequantityshedesires when she desires at a price not worse than the uninformed expected value. A few examples serve to motivate the three dimensions of liquidity and their shadow costs. Quantity may be the most importantconsiderationforpassiveportfoliomanagers,suchasthosewhoareboundbyprospectus

U.S. money market yields up to one month have shown changes consistent with year-end liquidity preferences. I find that three- and six-month negotiable certificate of deposit (CD), Eurodollar deposit (ED), and banker's acceptance (BA) yields are also affected by year-end liquidity preferences. Two- and three-month financial commercial paper (CP) yield changes are less pronounced. Banks—CD, ED, and BA issuers—have increased year-end liquidity needs, unlike finance companies—predominant CP issuers. The year-end effect disappears after the 2007–2008 crisis as depositories' cash holdings increase. CD, ED, and CP yields diverge postcrisis, suggesting that investors no longer consider them close substitutes.

Consistent with theories of financial frictions, this study finds that higher corporate risk premia and flight-to-quality events contributed to the increased use of a collateralized form of business lending (bankers acceptances) in real levels and relative to that of noncollateralized commercial paper (which plunged) during the Great Depression. These short-lived instruments are more timely measures of credit availability than are bank/business failures and bank loan outstandings. These shifts in the composition of external finance were large, supporting the view that financial frictions rose and credit availability fell during the Great Depression.

This article proposes a key principle and related concepts for reasoning about accounting estimates. The reasoning is consistent with a principles-based professional judgment framework proposed by Ross Skinner and the Institute of Chartered Accountants of Scotland. The principle deals with reasonable ranges and related risk assessments in the audit of accounting estimates. It does so by using concepts first introduced by Boritz and Skinner and updates them for the requirements of CAS/ISA No. 540 and International Financial Reporting Standards. The article identifies the conditions for the existence of the benchmark ranges proposed by Smieliauskas in identifying fairly presented estimates. The need for a professional judgment framework and related guidance has been recognized recently by the International Federation of Accountants, a 2010 EU Green Paper, and the Public Company Accounting Oversight Board as a result of challenges auditors have been facing in the current reporting environment. This recognition echoes calls first made by Ross Skinner in his pioneering 1995 article, and reinforced by the FASB/IASB 2006 proposal for principles-based accounting standards.

As of 1987, commercial banks in the United States were allowed to establish Section 20 subsidiaries to conduct investment-banking activities. A concern of regulators was that these activities would result in a decrease in performance of commercial banks relative to the risk being undertaken. This paper examines the performance of commercial banks around the establishment of a Section 20 subsidiary. We find that Section 20 activities undertaken by banks result in increased industryadjusted operating cash f low return on assets, due mainly to revenues from noncommercial-banking activities. Further, risk measures for the sample banks do not change significantly. REGULATORY BARRIERS AND RESTRICTIONS governing the operations of the U.S. financial system have often inhibited a depository institution’s ability to operate in one area of the financial services industry and expand its product set into other areas. Specifically, the 1933 Banking Act ~the Glass‐Steagall Act! sought to impose a rigid separation between commercial banking and investment banking. Particularly, regulators noted concerns about the possible increase in riskiness and decrease in profitability that may arise when commercial banking and investment banking activities are affiliated in one organization. For most of the 1933 through 1963 period, commercial banks and investment banks generally appeared to be willing to abide by the letter and spirit of the Glass‐Steagall Act. Between 1963 and 1987, however, banks challenged restrictions on their ability to underwrite securities such as municipal revenue bonds, commercial paper, and mortgage-backed securities. In most cases, the courts eventually permitted these activities for commercial banks. With this de facto erosion of the Glass‐Steagall Act by legal interpretation, the Federal Reserve Board in April 1987 allowed commercial bank holding companies ~BHCs!—such as First Union Corporation, the parent of First * Cornett and Ors are from Southern Illinois University at Carbondale and Tehranian is from Boston College. The authors wish to thank Pierluigi Balduzzi, Alan Marcus, Rene Stulz, and an anonymous referee for their comments. We are also grateful to Elijah Brewer, III, and Susan Yuska for assistance in obtaining Y-9 data and to Karen Rowland, who prepared the manuscript.

Employing a comprehensive database on transactions of commercial paper issued by domestic U.S. nonfinancial corporations, we study the determinants of very short-term corporate yield spreads. We find that liquidity plays a role in the determination of spreads but, somewhat surprisingly, credit quality is the more important determinant of spreads, even at horizons of less than 1 month. These results are robust across a variety of proxies for liquidity and credit risk, and have important implications for the literature on the modeling of corporate bond prices.

Commercial paper sells at an extra discount if it matures in the next calendar year but Treasury bills do not. The discount is apparent in downward price shifts before the year-end, and upward price shifts at the turn of the year that are significantly correlated with the simultaneous returns to small stocks, and that cannot reflect tax-loss selling. Cross-sectional and time-series tests on prices, as well as flow of funds evidence on trades by institutional investors, indicate that both the debt and equity patterns reflect agency problems related to portfolio disclosures. FINANCIAL RESEARCH HAS BROUGHT considerable analysis to bear on the turn of the year in the equity market, but not the money market. Extant literature, starting with Keim and Stambaugh (1986), reports similarities between equity-market and money-market price shifts in January, but has not examined time series and cross sections of money market prices at the high resolution common in studies of the equity market. Repeating tests from the equity literature on money market prices, this article finds a more precise and robust characterization of the price shifts. This characterization, combined with observations of year-end shifts in money market holdings, supports the view that intermediaries move prices with strategic responses to portfolio disclosures. The main empirical result is that commercial paper pays a higher yield if it matures across the end of the year. That is, it imputes a forward premium for the holding period from the last trading day of one year to the first trading day of the next. This premium is even higher for issues with more default risk and longer maturity (as measured at the end of the year), and has a substantial impact on yield spreads. I argue that the forward premium reflects an abnormally high market price for bearing risk across the year-end, and that this high price reflects the disutility to intermediaries of showing risky portfolios to claimholders or regulators. The connection between portfolio disclosures and price shifts was proposed by Haugen and Lakonishok (HL) (1988) as an explanation of the equity-market January Effect. As originally documented by Keim (1983) with monthly data

Towards the end of 1992 and throughout 1993, companies in the United Kingdom associated with press and broadcasting activities campaigned for changes to the media ownership and control rules. In particular, many of the media companies wanted to see a relaxation of the rules preventing mergers between those Channel 3 licensees which operated in the larger regions. One of the reasons for the advocacy of change was the fear that media companies from other European Community countries, such as Italian Berlusconi's Fininvest and German Bertelsmann, unhindered by UK ownership and control restrictions, would be able to step in and bid for these companies.2 At the same time, pressure was also being felt from the newspaper companies for a relaxation of the cross-media ownership rules.3 The outcome of this campaigning was that on 1 January 1994 the Broadcasting (Restrictions on the Holding of Licences) (Amendment) Order 1993 came into force.4 This order allowed licensees in the larger regions to hold licences in the other larger regions.5 However, the rule that a company holding a regional Channel 3 licence is restricted to one other regional Channel 3 licence was not amended despite suggestions that it should be liberalised.6 In addition, the National Heritage Secretary, Peter Brooke, announced a review of the rules relating to cross-media ownership. Curiously, although much of the impetus for the pressure being applied to the Government was the result of anticipation of what other European media companies might do in the UK market, public discussion and debate was conducted entirely without reference to a recent European Commission assessment of the need for Community regulation in this area.7 At the end of 1992 the European Commission published a Green Paper, Pluralism and Media Concentration in the Internal Market: An Assessment of the Need for Community Action.8 The purpose of the Green Paper was to analyse the issue of concentration in the media (television, radio and press) and the need for action, and to suggest possible courses of action. Since the publication of the Green Paper, the Commission has instigated a wide consultation process. Initial responses have

We present a novel analysis of arterial pulse wave propagation that combines traditional wave intensity analysis with identification of Windkessel pressures to account for the effect on the pressure waveform of peripheral wave reflections. Using haemodynamic data measured in vivo in the rabbit or generated numerically in models of human compliant vessels, we show that traditional wave intensity analysis identifies the timing, direction and magnitude of the predominant waves that shape aortic pressure and flow waveforms in systole, but fails to identify the effect of peripheral reflections. These reflections persist for several cardiac cycles and make up most of the pressure waveform, especially in diastole and early systole. Ignoring peripheral reflections leads to an erroneous indication of a reflection‐free period in early systole and additional error in the estimates of (i) pulse wave velocity at the ascending aorta given by the PU–loop method (9.5% error) and (ii) transit time to a dominant reflection site calculated from the wave intensity profile (27% error). These errors decreased to 1.3% and 10%, respectively, when accounting for peripheral reflections. Using our new analysis, we investigate the effect of vessel compliance and peripheral resistance on wave intensity, peripheral reflections and reflections originating in previous cardiac cycles. © 2013 The Authors. International Journal for Numerical Methods in Biomedical Engineering published by John Wiley & Sons, Ltd.

This paper examines the information content of bank loan agreements. We differentiate borrowers according to financial analysts' percentage earnings forecast errors and most recent forecast revisions. The empirical results suggest that banks rely on other indicators as initial screening devices to determine where to best deploy their evaluation and monitoring efforts. If these other indicators are reliable and signalimproving prospects, banks do little further investigation. However, if the indicators are noisy and signal-declining prospects, banks have incentives to expend resources to investigate the borrowers, resulting in the production of valuable information. RECENT THEORIES OF FINANCIAL intermediation concentrate on the role of banks in reducing informational asymmetry. Leland and Pyle (1977) suggest that informational asymmetries may be the primary reason that intermediaries exist. Campbell and Kracaw (1980) demonstrate that an important function of financial intermediation is the production of information. Diamond (1984) develops a model which shows that financial intermediaries can exist simply because they provide an efficient means of evaluating and monitoring borrowers. These information transmission theories argue that banks provide unique information production services in an imperfect capital market. They suggest that banks know more about the prospects of the firms they lend to than do others. Thus, bank loan agreements should convey useful information to the market. A number of researchers empirically examine the uniqueness of bank loans. Fama (1985) approaches the issue by examining the rates on certificates of deposit and other high-grade commercial papers. He concludes that since bank borrowers bear the cost of reserve requirements, there must be something special about bank loans. James (1987) conducts an event study around the announcement of bank credit agreements and reports a significantly positive two-day announcement return. His results provide evidence support

Barring any very unexpected developments, next month’s Budget Speech by the Chancellor of the Exchequer will be the last such speech to occur in March for the foreseeable future (and perhaps for ever) in the UK. As part of last year’s budget package, the Government published a White Paper on budgetary reform (HMSO, 1992) which announced that in future, Budget Speeches would be made in December of each year rather than in March as at present. However, the tax year will continue to begin in April, so that the lead time between the announcement of tax proposals in the Budget and the coming into force of most of them will be extended from about three weeks to about 16. In this article we examine the White Paper proposals, and explore some of their likely effects on fiscal policy and practice.

In 1990, the Conservative Government published a White Paper on the environment, This Common Inheritance (HMSO, 1990). It summarised the achievements of the past, and advanced the concept of integrated pollution control (IPC). In place of the separate regulation of air, land and water pollution, the new approach would take account of the impact of emissions on all aspects of the environment. The inevitable trade-off required an integrated solution-termed the Best Practical Environmental Option (BPEO). The White Paper went further. It suggested how this integrated pollution control was to be applied. Regulators would calculate the Best Available calculation, set an authorisation or consent, a maximum level of emissions.

Although the Severn bridge has been financed as a vote-funded service, the Severn Bridge Tolls Act 1965 required the publication of commercial-style ‘White Paper accounts’. The existence of this consistent source makes it possible to review the financial history to date of the Severn bridge, an interesting example of a case of government deciding that a capital-intensive infrastructural facility should break-even over its life. Two principal factors explain the everaccumulating deficiencies on the bridge account: the failure of successive governments to maintain the bridge toll in real terms; and the exceptional capital repairs required during the 1980s because of design faults and greater than expected loads. There are implications for the design of reporting systems for civil-service executive agencies and for the privatized ‘concession’-style financing packages for transport infrastructure which the present Government has now adopted.

The Treasury Management Association (TMA) conducted a survey early in 1998 to identify the barriers to, benefits of, and incentives for converting corporate paper check payments to electronic forms (ACH and EDI). The results reveal federal and state mandates (e.g., for tax payments) to be the most common incentives for organizations to adopt electronic payments. The biggest barriers to further expansion is lack of vendor (trading-partner) capability to receive electronic payment accompanied by remittance information, lack of systems integration, and costs of additional technology. The most important benefits are lower costs, certainty of payment date, and improved cash-flow projections.

ORGANIZED FUTURES MARKETS in financial securities were first established in the U.S. on October 20, 1975 when the Chicago Board of Trade opened a futures market in Government National Mortgage Association 8% Pass-Through Certificates. This was followed in January, 1976 by a 90 day Treasury Bill futures market on the International Monetary Market of the Chicago Mercantile Exchange. In terms of trading volume both have been clear commercial successes and this has led to the establishment, in 1977, of futures markets in Long Term Government Bonds and 90-day Commercial Paper and, in 1978, of a market in One-Year Treasury notes and new GNMA markets. The classic economic rationale for futures markets is, of course, that they facilitate hedging-that they allow those who deal in a commodity to transfer the risk of price changes in that commodity to speculators more willing to bear such risks. The primary purpose of the present paper is to evaluate the GNMA and TBill futures markets as instruments for such hedging. Obviously it is possible to hedge by entering into forward contracts outside a futures market, but, as Telser and Higinbotham [19] point out, an organized futures market facilitates such transactions by providing a standardized contract and by substituting the trustworthiness of the exchange for that of the individual trader. In the futures market, price change risk can be eliminated entirely by making or taking delivery on futures sold or bought, but few hedges are concluded in this manner.' The major problem with making or taking delivery is that there are only four delivery periods per year for financial security futures so it is often

DI uring the last 15 years, commercial banking, long the "sleeping giant" of the financial world, has discarded its conservatism. Banks now compete aggressively to purchase deposit and nondeposit funds. They have expanded into new lines of business at a prodigious rate; extended activities beyond former geographic markets in this country and even, in some instances, to foreign countries; and have adopted in ever increasing numbers earnings performance and asset growth goals. Martin Mayer [28, p. 49] refers to these developments as a revolution that ". .. occurred without publicity in the apparently solid structure of what was considered our most thoroughly conservative institution." During 1974, public attention focused on banking when Franklin National Bank, once the twentieth largest bank in the United States, collapsed. The more pessimistic prognosticators pointed to Franklin's failure as proof that the banking revolution had seriously weakened the ability of the nation's financial system to withstand severe shocks. Throughout 1974, a number of factors the energy crisis and the quadrupling of world oil prices, the failure of Bankhaus I.D. Herstatt and other foreign banks, double-digit inflation, a prime loan rate of 12% and a federal funds rate exceeding 14%, staggering loan demand in the face of a diminishing supply of funds, the collapse of certain parts of the commercial paper market and the call for banks to finance weak borrowers, and soaring loan losses affected banking drastically. Still, the liquidity squeeze of 1974 and the recession of 1974 and 1975 resulted in very few bank failures. Some see this as proof of bank resiliency in the face of stress; others feel that many banks might have failed if they had been exposed to more stress. Indeed, some believe poorly managed institutions may not survive the next boom-and-bust cycle. It is reported that Tilford Gaines, senior vice president and economist at Manufacturers Hanover Trust Company, believes there is a "better than even chance" that double-digit inflation will recur in the next two years leading to a recession late in 1977 characterized by "a massive wave of business and banking failures . . ." [16]. Ample evidence shows that events in 1974 seared many bank managers. Catch phrases such as "the great banking retreat," "the new conservatism" and "quality" are replacing "go-go banking" and "growth" in the bankers' lexicon. There is a growing sense of the importance of fundamental financial management principles and an appreciation of the fact that success and survival depend on understand

considerable uncertainty about just what the final cost of debt will be. Until recently, about the only recourse available to a borrower was to rush the flotation procedure along and to maintain adequate financial flexibility so it would be possible to postpone the debt issue should rates become too high. Recent developments in the commodities markets have opened up an alternative strategy. Since October of 1975, futures contracts on Government National Mortgage Association pass-through certificates (GNMAs) have been traded on the Chicago Board of Trade. More recently, futures contracts have become available in other debt instruments, specifically Treasury bills, Treasury bonds, and commercial paper. In principle, a firm can cross-hedge (hedge a position in one commodity with an offsetting position in a different but presumably related commodity) its constructive long position in its own soon-to-be-issued bonds by going short in a related interest rate futures contract. Such cross-hedging against corporate debt securities has been seriously advanced as a potential use of GNMA futures contracts [1].

existence as currency futures began trading on the International Monetary Market of the Chicago Mercantile Exchange. By 1975, the definition of financial futures was greatly expanded when interest rate futures on GNMA certificates were initiated on the Chicago Board of Trade. By early 1976, the Chicago Mercantile Exchange quickly countered with interest rate futures on 90-day U.S. Treasury bills. A number of other products rapidly followed. Futures contracts were introduced for Treasury bonds, Treasury notes, commercial paper, certificates of deposit, and other interest-related instruments. The enthusiasm eventually spread to the equity markets in the early 1980s with the introduction of stock index futures on the Value Line Index by the Kansas City Board of Trade. The Chicago Mercantile Exchange quickly came into the equity picture with the Standard and Poor's 500 Index futures contract as did the New York S ock Exchange with the NYSE Composite Index futures.

This article is an introduction to this Special Issue on Rethinking in Regional Integration in Africa which is based on a collaborative research project, implemented by African Economic Research Consortium (AERC), the leading economic capacity building institution in Africa, and funded by the African Development Bank (AfDB). This project is very timely given the establishment of the African Continental Free Trade Area (AfCFTA) which came into force on 01 January 2021. In this introduction, we first provide a brief background on regional integration in Africa. We next describe the AERC project and the process of selection of the papers and then provide a quick summary of the ten published papers and their contributions.

Many regulated health insurance markets include risk adjustment (aka risk equalization) to mitigate selection incentives for insurers. Empirical studies on the design and evaluation of risk-adjustment algorithms typically focus on mandatory health insurance schemes. This paper considers risk adjustment in the context of voluntary health insurance, as found in Chile, Ireland, and Australia. In addition to the challenge of mitigating selection by insurers, regulators of these voluntary schemes have to deal with selection by consumers in and out of the market. A strategy for mitigating selection by consumers is to apply some form of risk rating. Our paper shows how risk adjustment and risk rating interact: (1) risk rating reduces the need for risk adjustment and (2) risk adjustment reduces premium variation across rating factors, thereby increasing incentives for consumers to select in and out of the market.