Top articles

  • The CAPM

    20 octobre 2009

    The Capital Asset Pricing Model (CAPM) (in French : « MEDAF », Modèle d’Évaluation des Actifs Financiers) The capital asset pricing model is a mathematical tool, which estimates the market risk of an asset. This is a universal model used in the financial...

  • Why is the yield curve a leading indicator of the economy?

    27 octobre 2009

    Bonds with the same characteristics (risk, liquidity, tax) have different interest rates depending on their maturities. A yield curve is the graphic representation of the spread between short and long term interest rates for particular types of bonds...

  • The Yield Curve - a brief summary of the main theories

    28 octobre 2009

    The yield curve is the graphic representation of the term structure of interest rates. In other words, it shows a link between the maturity and the yield of debt securities and a relation is highlighted between short-term and long-term interest rates....

  • Understanding Credit Ratings

    09 novembre 2009

    A credit rating is an opinion on a borrower’s creditworthiness, i.e. on its ability and willingness to repay its debt. Credit ratings can be assigned to corporations, non-profit organizations, public institutions or countries and apply to the borrower...

  • Controversial Hedge Funds

    17 novembre 2009

    What is a hedge fund? Defining a « hedge fund » is quite difficult because of the diversity of the funds lying behind this concept. Above all, there is no legal definition to help. According to Vernimmen : « A hedge fund is a speculative fund seeking...

  • Blame it on the bonus culture?

    26 novembre 2009

    Before the financial crisis, few were concerned about how big traders’ bonuses were. They were part of the « Bonus culture ». In the aftermath of the recent crisis, the situation has changed. Suspicions have fallen on the bonus culture that reigns over...

  • The Financing of the “Crédit Foncier”

    03 décembre 2009

    Crédit Foncier was created in 1852 by the French government in order to organise mortgage credit in France. At the beginning Credit Foncier had the same status as that of the Banque de France; it was one of the most important partner of the government...

  • Financial markets in China

    04 décembre 2009

    The year 2009 has been distinguished by the celebration of the Chinese popular republic’s 60th anniversary. In the last year the Chinese government implement many reforms which accelerate the economic development and the opening to international trade....

  • The Tobin Tax

    04 décembre 2009

    For years we’ve been hearing that the vagaries of the global financial market need to be regulated. Every time a financial crisis occurs, every time markets have failed and destroyed economic activity, the debate over Tobin Tax is brought to the front...

  • The food crisis of 2008 - fundamentals vs speculation

    09 décembre 2009

    Between 2007 and 2008, prices on food commodity markets increased sharply causing riots in many countries such as Egypt, Morocco, Indonesia, Haiti, or some African countries, where millions faced hunger. Financial speculation on commodities was often...

  • What is a market economist?

    10 décembre 2009

    Where should a company set its production plans and what are the main market risks associated to this project? Will the economy experience a recovery in 2010? Etc. Economists try to answer this kind of questions by studying statistics, testing models...

  • The market financing of small and medium-sized enterprises in France

    11 décembre 2009

    In 2007, before the crisis, the financing of French corporations through financial markets amounted to €5 billion whereas their financing through bank loans reached €40 billion. In 2009, the financing through bank loans stands at €35 billion (after a...

  • The Asian crisis & financial liberalization: the case of Thailand

    11 décembre 2009

    In this paper, we examine a question raised at the beginning of the Southeast Asian crisis (notably in Thailand, Hong Kong, Indonesia, Malaysia, Philippines): Is the crisis “a hazard or a necessity?” (D.Cohen, 1999). Two opposing theories on the subject...

  • The French financial system since the reforms of the 80's

    14 décembre 2009

    Economists usually make the difference between two types of economies: * The bank-based economy, where the capital market is underdeveloped and only a small portion of corporate financing needs are met through the issuance of securities, whereas bank...

  • The FOREX market

    15 décembre 2009

    Overview The Foreign Exchange Market, also known as FOREX or FX market, is the largest of all financial markets. In 2007, the average daily volume of transactions on this market was equivalent to $3200 billion (BIS, 2007), three times the volume of all...

  • Credit Default Swaps and Systemic Risk

    15 décembre 2009

    The credit default swaps (CDS) market has grown very substantially since the late 1990s. It was presented as the new instrument for banks to manage their risk more properly, thus contributing to financial stability. However, the CDS market has been blamed...

  • The Equity Risk Premium

    17 décembre 2009

    The equity risk premium (ERP) is defined by Goetzmann and Ibbotson (2006) as “the extra return needed to induce investors to risk their money in the stock market”. Thus, it is the difference between stock returns and returns on a risk free investment....

  • CDS spreads as a measure of risk

    17 décembre 2009

    The definition of CDS A CDS is known in the financial world as a credit default swap . Because it has a simple structure and flexible conditions, banks and investors use it in order to hedge their exposure to credit risk. It can be considered as a sort...

  • Has Warren Buffet been hit by geographical storms...?

    27 décembre 2009

    Lunch with Warren Buffet is auctioned on eBay every year. In 2008 a Chinese fund manager paid a record $2.1 million to have a chance to talk to the world’s most famous financial guru about his preferable investment strategies. Isn’t it too pricy? As the...

  • The process of financial liberalisation in India

    27 décembre 2009

    Over the past twenty-five years, India’s economy has undergone a gradual yet consistent liberalization process. Having witnessed acceleration in annual GDP growth at around 4-5% per cent per annum during the 1980s and 1990s, the Indian economy has continued...

  • Financial liberalization in developing countries: the theoretical foundations

    10 décembre 2009

    Economic and financial sector developments are interdependent but determining a causal relationship between the two is controversial. In this paper we would take for granted that the existence of a financial sector is a necessary condition for an economic...