We examine how media reports influenced trading volumes and order imbalances on the Sydney Stock Exchange (SSX) from 1901 to 1950, focusing on wool market reports as a substitute for broader financial advice in the absence of a specialised investment press. Given wool's status as Australia's primary export and its integration with various sectors, we construct a weekly media sentiment index based on news about wool sales and auctions from the Sydney Morning Herald. Our findings reveal that positive news about the wool market correlates with increased trading volumes and reduced order imbalances on the SSX. This relationship persisted during significant events such as the UK government's wool purchase plans, the 1929 Wall Street Crash, World War II-related trading restrictions, and the short selling ban.

Stock market bubbles arise as a joint monetary and financial phenomenon. We assess the potential of monetary policy in mitigating the onset of bubbles by means of a Markov-switching Bayesian Vector Autoregression model estimated on US 1960–2019 data. Bubbles are detected and dated from the regime-specific interplay among asset prices, fundamental values, and monetary policy shocks. We rationalize the empirical evidence with an Overlapping Generations model, able to generate a bubbly scenario with shifts in monetary policy, and where agents form beliefs over transition dynamics. By matching the VAR impulse responses, we find that procyclicality and financial instability align with high equity premia and the presence of asset price bubbles. Monetary policy tightening, by increasing real rates, is ineffective in deflating bubble episodes.

Financial literacy is a dangerous illusion. The article builds on existing critiques, notably the work of Lauren Willis, to show that the discourse of financial literacy education raises fundamental epistemological issues about the nature of financial markets and financial behaviour. The difficulties of achieving financial literacy are ill conceived simply as the outcomes of market imperfections. Instead, structural inequalities, financial reform, and the nature of financial assets preclude consumers from achieving adequate levels of financial competence and the claim that they can do so diverts attention from the causes of unequal economic outcomes.

Variable annuities are products offered by pension funds and life offices that provide periodic future payments to the investor and often have ancillary benefits that guarantee survival benefits or sums insured on death. This paper extends the benchmark approach to value and hedge long-dated variable annuities using a combination of cash, bonds and equities under a variety of market models, allowing for dependence between financial and insurance markets. Under a simplified case of independence, the results show that when the discounted index is modelled as a time-transformed squared Bessel process, less-expensive valuation and reserving is achieved regardless of the short rate model or the mortality model.

Despite its importance as a financial centre, the historical literature dedicated to the Swiss financial industry remains scarce. Analyses focusing on cantons and cities of the country are even more limited in number. This is unfortunate and is, in all likelihood, linked to the reluctance of financial institutions to share information in a country where banking secrecy has been at the core of the past success of these institutions. Despite this willingness to share as little as possible, some archival funds have gradually become available, most notably after businesses went bankrupt, changed hands, or simply disappeared. The present article relies on these sources to analyse the evolution of the Geneva stock exchange during the interwar period, which saw a gradual decline of its activity. Independent brokers strived to keep their oligopoly over banks. At the same time, Swiss German banks tried to penetrate the canton-controlled marketplace by using their federal rights and strength to become unavoidable actors. They could ultimately help local bankers gain direct access to the Geneva stock exchange, obliterating the power of brokers who were left with no other choice than to appeal to the Canton of Geneva to defend their position.

A previously unknown pricing anomaly existed for a few years in the late 1840s in the British government bond market, in which the larger and more liquid of two very large bonds was underpriced. None of the published mechanisms explains this phenomenon. It may be related to another pricing anomaly that existed for much of the nineteenth century in which terminable annuities were significantly underpriced relative to so-called ‘perpetual’ annuities that dominated the government bond market. The reasons for these mispricings seem to lie in the early Victorian culture, since the basic economic incentives as well as laws and institutions were essentially the familiar modern ones. This provides new perspectives on the origins and nature of modern corporate capitalism.

British government bonds formed the deepest, most liquid and most transparent financial market of the nineteenth century. This article shows that those bonds had long periods, extending over decades, of anomalous behavior, in which Consols, the largest and best known of these instruments, were noticeably overpriced relative to equivalent securities which offered the same interest rate and the same guarantee of payment. This finding and similar ones for other comparable pairs of British gilts appear to provide the most extreme counterexamples documented so far to the Efficient Markets Hypothesis and to the Law of One Price, and point the way to further investigations on the origins and nature of the modern economy.

This paper proposes a model of network interactions in the interbank market. Our innovation is to model systemic risk in the interbank network as the propagation of incentives or strategic behavior rather than the propagation of losses after default. Transmission in our model is not based on default. Instead, we explain bank profitability based on competition incentives and the outcome of a strategic game. As competitors' lending decisions change, banks adjust their own decisions as a result: generating a “transmission” of shocks through the system. We provide a unique equilibrium characterization of a static model, and embed this model into a full dynamic model of network formation. We also determine the key bank, which is the bank that is crucial for the stability of the financial network.

This paper examines two interrelated issues in commodity markets, namely,the cyclical relationship between stocks and commodities and the function ofcommodity and agribusiness indexes in portfolios. A high negativecorrelation has existed between stock and commodity prices over the past 140years. Moreover, the two markets have alternated in price leadership with29-32-year cycles. The recent price dominance in agricultural commoditiesstarted in 2000, a result supported by the empirical results of theportfolio allocation analysis. For a risk-averse investor, irrespective ofthe period analyzed, placing funds in agribusiness and/or agriculturalcommodity indexes was sound investing.

Motivated by repeated price spikes and crashes over the last decade, weinvestigate whether the growing market shares of futures speculatorsdestabilize commodity spot prices. We approximate conditional volatility andanalyze how it is affected by speculative open interest. In this context, wesplit our sample into two equally long subperiods and document whether thespeculative impact on conditional volatility increases. With respect to sixheavily traded agricultural and energy commodities, we do not find robustevidence that this is the case. We thus conclude that the financializationof raw material markets does not make them more volatile.

Tontines and life annuities both insure against longevity risk by guaranteeing (pension) income for life. The optimal choice between these two mortality-contingent claims depends on personal preferences for consumption and risk. And, while pure tontines are unavailable in the twenty-first century, the first longevity-contingent claim (and debt) issued by the English government in the late seventeenth century offered a choice between the two. This article analyzes financial and economic aspects of King William's 1693 tontine that have not received attention in the literature. In particular, it compares the stochastic present value (SPV) of the tontine vs the life annuity and discusses characteristics of investors who selected one versus the other. Finally, the article examines the issue of whether high reported tontine survival rates should be attributed to anti-selection or fraud. In sum, this article is an empirical examination of annuitization decisions made by actual investors in the late seventeenth century.

In 1899, James Keene, a prominent bear, and Roswell Flower, a well-known bull, both attempted to manipulate the share price of Brooklyn Rapid Transit (BRT), a young commuter railway company. Flower and Keene were stock ‘operators’, who used pools of cash from like-minded investors to push share prices higher or lower. In their efforts to garner profits, BRT operators claimed insider status, planted rumors in the press, used leverage to accumulate large positions, manipulated borrowing costs and camouflaged trades. The events of 1899 can shed light on current market dynamics, and we draw parallels between the predatory trading strategies used in 1899 and those of today.

Five years after the financial crisis, the global economy remains unbalanced and many of the advanced countries are still struggling to return to robust, sustainable growth. Taking a historical perspective, I argue that this predicament reflects a failure to adjust to profound changes in the economic landscape, which have given rise to the (re-)emergence of major financial booms and busts. The economic developments that really matter now take much longer to unfold – economic time has slowed down relative to calendar time – and yet the planning horizons of economic agents have shortened. The key problems arise from the cumulative effects of past decisions on stocks, and yet these effects are treated as short-term flow issues. The risk is that instability will become entrenched in the system. Policy needs to adjust.

This study uses the numeraire portfolio to benchmark insurance stock returns as a natural measure for detecting abnormal insurance stock returns from catastrophic events. The assumptions underlying the efficient markets hypothesis using a numeraire denominated returns approach hold for catastrophic insurance events whereas other more traditional methods such as the market model and Fama-French three factor model often fail, typically due to the accumulation of estimation errors. We construct a portfolio of Australian insurance firms and observe the market reaction to major insured catastrophic events. Using the numeraire denominated returns approach we observe no particular trend in the cumulative abnormal returns of insurance securities following a catastrophic event. Using both the traditional market model and the Fama-French three factor model however, we observe significantly positive cumulative abnormal returns following an insured catastrophic event. The errors inherent in the market model and three factor model for event studies are shown to be eliminated using the numeraire denominated returns approach.

Banks within Europe have become larger and more international as Europe has moved towards a unified financial services market, but this trend has been reversed since the crisis. In order to establish the effect of these structural changes on output in Europe, we use a micro data set to investigate the impact of size (as measured by asset size) on banks' net interest margins. We show that larger banks offer lower borrowing costs for firms, which raises sustainable output. We then use NiGEM to look at the impact of banks becoming smaller and moving back into their home territory. We investigate the impacts on output according to country size, showing that the effects are generally larger in small countries, and also larger in economies that are more dependent on bank finance for their business investment decisions.

Cet article examine la décision optimale de couverture d'une firme faisant face à un double risque prix-quantité. Dans un cadre d'espérance d'utilité, nous montrons que la notion de prudence au sens de Kimball (1990) est essentielle dans la caractérisation de la position optimale de la firme sur le marché à terme. Plus surprenant, les notions d'aversion au risque et de prudence, peuvent donner lieu à des effets contraires, notamment lorsque la firme souhaite spéculer.

The species Echinococcus granulosus is made up of several genotypic strain groups, whose taxonomical classification is still undetermined. Genotypes in the cervid-wolf life-cycle are poorly known, especially in Europe. In this study, 33 Echinococcus isolates from cervids from Finland and Sweden were characterized using mitochondrial ND1 gene sequencing. In addition, phylogenetic analysis of E. granulosus strains using the mitochondrial ATP6, ND1, ND3 and CO1 genes was performed using maximum likelihood, neighbour-joining and maximum parsimony methods. The Finnish and Swedish cervid isolates were found to represent the genotype G10. In the phylogenetic analyses, the camel (G6), pig (G7), cervid (G8) and Fennoscandian cervid (G10) strains clustered in a well-supported monophyletic group. This group differed clearly from the common sheep (G1) and horse (G4, ‘E. equinus’) strains, but was closely related to the cattle strain (G5, ‘E. ortleppi’). Our results support the previous studies suggesting that the genotypes G6-10 should be separated from the species E. granulosus sensu stricto. However, additional morphological studies are needed, and the relationship to the cattle strain (‘E. ortleppi’) should be thoroughly evaluated before a final decision of the taxonomical status of the G6-10 group can be made.

Many issues concerning the taxonomy of Echinococcus have been resolved in recent years with the application of molecular tools. However, the status of Echinococcus maintained in transmission cycles involving cervid intermediate hosts remains to be determined. The recent characterization of the parasite from cervids in Finland has highlighted the paucity of data available, particularly that from North America. In this study, we have characterized a large number of Echinococcus isolates from cervids from Western Canada on the basis of morphology and molecular genetic techniques. Our results support earlier studies suggesting that Echinococcus of cervid origin is phenotypically and genetically distinct to Echinococcus maintained in domestic host assemblages, and also confirms that Echinococcus of cervid origin does not constitute a genetically homogeneous group. However, our data do not support the existence of 2 distinct genotypes (strains/subspecies) with separate geographical distributions. Our data appear to support the existence of only 1 species in cervids, but additional isolates from cervids and wolves in other endemic regions should be characterized before a final decision is made on the taxonomic status of Echinococcus in cervids.

The northern biotype of Echinococcus granulosus occurs in North America and northern Eurasia in life-cycles involving cervids. Previously, cervid isolates of E. granulosus from North America have been characterized using molecular genetic techniques as the G8 genotype. In this study, 5 isolates of E. granulosus were collected from 4 reindeer and 1 moose in north-eastern Finland. DNA sequences within regions of mitochondrial cytochrome c oxidase I (COI) and NADH dehydrogenase I (NDI) genes and the internal transcribed spacer 1 (ITS-1) fragment of the ribosomal DNA were analysed. The mitochondrial nucleotide sequences were identical in all isolates, but high sequence variation was found in the ITS-1 region. Mitochondrial and nuclear sequences of the Finnish cervid E. granulosus and the camel strain (G6) of E. granulosus resembled closely each other. According to phylogenetic analyses, the Finnish isolates have close relationships also with the pig (G7) and cattle (G5) strains. Although some similarities were found with the previously published North American cervid strain (G8), particularly in the NDI sequence and some of the ITS-1 clones, the Finnish E. granulosus form represents a distinct, previously undescribed genotype of E. granulosus. The novel genotype is hereby named as the Fennoscandian cervid strain (G10).

This paper proposes a model of industrial innovation linked to financial liberalisation where agents are characterised by heterogeneous innovative abilities. Individual researchers may either be employed by a large firm and work together on the firm’s innovative project, or they may alternatively set up an individual firm in order to commercialise their own innovation. The large firm’s hiring decisions and the individual researcher’s decision to set up his own firm depends on the researcher’s innovative ability and on the financial conditions. Financial liberalisation leading to a lower cost of setting up a small firm will affect the size of the large firm and increase the number of small technology firms. A drop in the cost of starting a small firm may increase income inequality.