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Italian
Equity Funds: Efficiency and Performance Persistence
-- Roberto
Casarin, Andrea Piva and Loriana Pelizzon
Have
Italian mutual funds been able to generate `extra-return'?
Were some of them able to persistently beat the competitors?
In this paper the authors address these questions and provide
a detailed and systematic performance and return persistence
analysis of the Italian equity mutual funds. The authors
show that, in general, fund managers have not been able
to score extra performances and only few managers have the
stock picking ability or market timing ability. This evidence
is consistent with the market efficiency hypothesis. Concerning
performance persistence, firstly the study reveals absence
of hot hand phenomenon on raw returns. The no persistence
effect is fairly robust to the performance measure, the
temporal lag and the different methodology employed for
testing persistence. Secondly, there is no long-run persistence
on risk-adjusted returns as the study found a weak evidence
of the reversal effect. Finally, the past performance displays
weak evidence of the hot hand effect on risk-adjusted returns
on four-month intervals using cross-section tests. However,
once the yearly intervals are analyzed, any evidence of
persistence may disappear.
©
2008 IUP . All Rights Reserved.
Financial
Development and Globalization in Nigeria
-- Mobolaji
H I and Ndako U B
This
is a time-series paper that investigates the impact of globalization
on the financial sector in Nigeria for the period 1960-2005.
The paper uses four financial development indicators and
two measures of globalization. The paper finds minimal empirical
support that globalization has an impact on the financial
sector of the country. This may largely be due to the long
history of financial repression and heavy regulatory policy
regimes in the country. Though globalization offers numerous
benefits, these benefits are not automatically conferred
on any country. A minimum threshold of development of necessary
institutions, infrastructures and enabling environment is
required before an economy can optimally reap these benefits.
The paper, however, cautions that reform efforts in the
country must be gradual and sequential, in line with McKinnon
(1991), to avoid a total financial crash and disruption
in the economic process in the country.
©
2008 IUP . All Rights Reserved.
Family
Control Business and Capital Market Development in ASEAN
-- Bany
Ariffin Amin Noordin and Siong Hook Law
This
study examines the effect of family ownership structure
on capital market development in four Association of Southeast
Asian Nations (ASEAN) countries, namely, Thailand, Malaysia,
Indonesia, and the Philippines using panel data analysis.
The results indicate that greater family influence in the
stock exchange has detrimental effect on capital market
development. The results can be considered valid as three
alternative capital market development indicators, namely
stock market capitalization, total share value traded, and
number of companies listed are used.
©
2008 IUP . All Rights Reserved.
Financial
Performance of Non-Banking Financial Institutions in India
-- Gursharan
Singh Kainth
A
robust banking and financial sector is critical for facilitating
higher economic growth. Financial intermediaries like Non-Banking
Financial Companies (NBFCs) constitute a significant element
of the financial system and have penetrated into those areas
where banks did not dare by taking both the operational
and regulatory risks. Boom-Mushroom-Doom-Zoom, four words
in a sequence tell the entire story of performance of NBFCs
during the past one and a half decade. To give industry
the much needed boost, service tax should be done away with.
Special cells within the courts be set up to dispose cases
because justice delayed is justice denied.
©
2008 IUP . All Rights Reserved.
Fear
in Financial Economics
-- Jyotirmayee
Kar
Risk
perception about uncertain events gives rise to fear. Studies
have observed that people, in general, overreact to fear
and hence they consider some events to be riskier than they
actually are. Such a perception brings about a sea change
in asset pricing in general and stock pricing in particular.
At some point of time, fear begins to outweigh hope for
some investors. With the loss of hope, the bubble suddenly
bursts for everyone, since it never had a solid economic
base. Once panic sets in, prices plunge. This panic is just
as irrational as the enthusiasm that fueled the boom, and
prices often fall below a level justified by economic reality.
However, shocks are always accompanied by opportunities
and they always improve the knowledge base, the coping capacity
in the event of a crisis and strengthen team spirit. The
kind of shock and fear an economy may face in future are
unpredictable but they are inevitable. Now the economy of
India is strong enough with an active financial sector to
handle those disturbances and respond positively to favorable
opportunities. This has improved the confidence of the business
and the investors. Now they are more willing to take risk
and explore new avenues of investment. It has improved their
faith in the system. In essence, faith and confidence underpin
the market, which can thrive and operate, and in the process
business can generate enough funds at the time of need.
©
2008 IUP . All Rights Reserved.
Microfinance
for Micro Enterprise Development: An Inquiry for a New Paradigm
-- Naveen
K Shetty
Microfinance
is relatively a recent experiment against poverty alleviation
in developing countries. Originally it started as a new
institutional strategy to fill the gap between supply and
demand for credit by the poor. The delivering of credit
services to the poor either for smoothening of consumption
or for the income generating activities, is called a `minimalist
approach' in microfinance. The major objective of this approach
is to solve the problem of unemployment in general and micro
enterprise development in particular by supplying financial
products. But, over the years it has been realized that
this approach has failed in unleashing the micro entrepreneurship
among the poor. Hence, as an alternative, the microfinance
sector should be redesigned in such a way that it delivers
both financial and non-financial services to the poor. In
this line of thought the current paper attempts to present
the new paradigm for the development of micro enterprises
through microfinance within the framework of `maximalist
approach'. The empirical study of maximalist approach shows
that microfinance will be a true lubricant for micro enterprise
development only when the finance flows with the non-financial
services, which have a greater positive impact on the livelihood
of the poor.
©
2008 IUP . All Rights reserved.
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