Financial Regulations of Financial Institutions

We mentioned in the previous learning outcome statement that financial institutions’ systemic importance results in heavy regulation of their activities. Financial regulation is a form of supervision, subjecting financial institutions to specific requirements, restrictions, and guidelines in an attempt to…

More Details
How Financial Institutions Differ from Other Companies

A financial institution is an intermediary between providers and recipients of capital or debt that provides banking, insurance, and investment services. There are various types of financial institutions consisting of banks (deposit-taking, loan-making institutions), investment banks, clearinghouses, credit card companies,…

More Details
Analyzing the Impact of Foreign Currency Fluctuations on Financial Results

So far, we have mostly analyzed a multinational parent company with only one subsidiary. It made the analysis easier as we were able to relate the effect of the translation method chosen to the consolidated financial statements for the specific…

More Details
Impact of Changes in the Components of Sales on Sales Growth Sustainability

Changes in volume and prices primarily propel sales growth for a multinational corporation. Besides that, exchange rate changes between the reporting currency and the currency in which sales are made also drive sales growth. Reasonably, growth in sales that comes…

More Details
Impact of Multinational Operations on a Company’s Effective Tax Rate

Accounting standards require companies to explain the relationship between tax expense and accounting profit. This explanation is presented as a reconciliation between the average effective tax rate and the applicable statutory rate. The effective tax rate is computed as the…

More Details
Subsidiaries Operating in Hyperinflationary Economies

In a hyperinflationary environment, the local currency rapidly depreciates against the parent’s presentation currency. This is as a result of a deterioration of purchasing power. In this case, using the current rate to translate all of the balance sheet accounts…

More Details
Financial Crime in Times of COVID-19 – AML and Cyber Resilience Measures

After completing this reading, you should be able to: Explain the increase of cyber threats faced by financial institutions because of the Covid-19 crisis. Explain the cyber resilience measures taken by international and national financial authorities in response to the…

More Details
Global Financial Stability Report: Markets in the Time of COVID-19

After completing this reading, you should be able to: Describe the developments in financial and commodity markets during March-April 2020.  Discuss the global financial vulnerabilities intensified by the slowdown in economic activity and tightened financial conditions following the COVID-19 outbreak. …

More Details
When Selling Becomes Viral: Disruptions in Debt Markets in the COVID-19 Crisis and the Fed’s Response

By the end of this reading, you should be able to: Describe the evolution of bond and CDS prices during March-April 2020.  Compare the developments in debt markets during the Great Financial Crisis of 2008-2009 and the COVID-19 crisis.  Explain…

More Details
The Green Swan – Central Banking and Financial Stability in the Age of Climate Change

After completing this reading, you should be able to: Describe the concept of “green swan,” how it differs from “black swan,” and why climate change is considered a ”green swan” event.  Explain why climate change is a threat to price…

More Details