Capital Market Development in Emerging Economies: Challenges

Comments

Transcription

Capital Market Development in Emerging Economies: Challenges
The Nineteenth Dubrovnik
Economic Conference
Organized by the Croatian National Bank
Sergio Schmukler
Capital Market Development in Emerging Economies:
Challenges Ahead
Hotel "Grand Villa Argentina",
Dubrovnik
June 12 -14, 2013
Draft version
Please do not quote
Capital Market Development
in Emerging Economies:
Challenges Ahead
Sergio Schmukler
World Bank
19th Dubrovnik Economic Conference
June 12- June 14, 2013
Dubrovnik, Croatia
Introduction
 Two important questions:
1. What are some of the challenges in financial development (FD)?
2. What is the role of institutional investors in this process and in
these challenges?
Introduction
 Only selected challenges in FD (not stability)
 Developing country/emerging market (EM) perspective
 Capital markets and institutional investors (not specifically banks)
 Bird’s eye view—wide range of issues
 Scattered evidence from different sources
 Go through the evidence first
 Discuss policy issues later
Introduction
 Over the last two decades, big push to develop financial markets
 From a bank-based model to a more complete model
 Savings through capital markets with dispersed ownership
 Widespread access to finance to all firms
 “U.S. model”
 As a consequence of all the reforms and efforts, markets have
indeed developed and integrated
 Also become significantly more complex and interconnected
Introduction
 Large institutional investors expected to play a crucial role
 Retirement (in addition to voluntary) savings
 Channeled through asset managers, particularly mutual funds and
pension funds






Invest in many companies and countries
Informed investors, able to make independent decisions
Invest long term
Take advantage of arbitrage opportunities
Absorb shocks, particularly equity investors
Help stabilize and develop the financial system
Introduction
 Despite many new developments, many challenges remain
 Large heterogeneity across regions and countries


No convergence yet – advanced economies developed even more
Many of the improvements centered in certain areas, and countries
 Many shortcomings in several important EMs






Bank credit stagnated in various countries
Firm financing from banks decreased in relative terms
Bond markets expanded, but with limitations
In banks and bonds, public sector still captures significant share
Equity markets still small, illiquid, and concentrated in large firms
Institutional investors sophisticated and large in several countries, but
with much more limited role than previously thought
Introduction
 Far away from model of dispersed ownership and participation
 Supply versus demand effects

Constraints not on lack of available funds: domestic & foreign savers

Many assets available for investment not purchased by institutional
investors or foreigners, which hold large resources

Institutional investors seem to shy away from risk

Incentives to banks to move first into relatively easy markets (consumer,
leasing, services), after big corporations left to capital markets

Incentives to asset managers and the overall functioning of financial
systems does not contribute to expectations
Introduction
 Many firms not becoming public or not accessing markets


Capital markets service only few firms, with increasing size and
concentration domestically and abroad
Substantial financing through retained earnings and banks
 Regulations do not seem to be the main obstacle
 Several challenges ahead






Growing savings
Role of financial intermediaries
Need for more risk taking paired with stability
Spillovers to all firms
Need to catch up
Complexities and interconnectedness
Outline
 Financial development: banks, bond markets, stock markets
 Institutional investors
Outline
 Financial development: banks, bond and stock markets
 Institutional investors
Size of Financial Systems Has Increased
Size of Domestic Financial System
Banks
Bonds
Equities
350%
300%
89%
250%
95%
31%
13%
128% 17%
42%
43%
97%
51%
50%
123%
Eastern
Europe (2)
2000-9
1990-9
2000-9
2000-9
1990-9
1990-9
China
20%
36%
0%
Asia (5)
32%
G7 (5)
35%
28%
20%
60%
India
52%
33%
80%
39%
44%
LAC7 (6)
105%
1990-9
84%
13%
8%
59%
62%
2000-9
56%
54%
92%
1990-9
83%
36%
2000-9
50%
36%
104%
66%
1990-9
100%
77%
2000-9
150%
85%
66%
2000-9
200%
1990-9
% of GDP
69%
Oth. Adv.
Economies
(4)
Source: IFS, BIS, and WDI. Eastern Europe: Poland, Russia, Turkey, Hungary, Czech Republic, Croatia, Lithuania
Relative Size: Bonds, Equity Have Gained
Prominence Domestically Across Regions
Size of Domestic Financial System
Banks
Bonds
Equities
100%
11%
90%
39%
7%
29%
18%
35%
27%
28%
36%
40%
32%
36%
29%
34%
35%
33%
23%
28%
23%
27%
22%
24%
82%
39%
41%
38%
2000-9
44%
37%
43%
42%
2000-9
38%
1990-9
40%
1990-9
41%
63%
2000-9
42%
2000-9
56%
1990-9
30%
2000-9
40%
20%
27%
16%
60%
50%
25%
21%
70%
1990-9
% of Total Domestic Market
80%
32%
16%
10%
Asia (5)
Source: IFS, BIS, and WDI
China
Eastern
Europe (2)
G7 (5)
India
2000-9
1990-9
1990-9
2000-9
1990-9
0%
LAC7 (6)
Oth. Adv.
Economies
(4)
Banks: Uneven Evolution
Private Bank Claims
1980-1989
1990-1999
2000-2009
140%
117%
120%
107%
100%
% of GDP
100%
80%
93%
82%
76%
71% 73%
72%
65%
58%
60%
44%
40%
40%
34%
31%
23%
24%24%
29%29%30%
20%
0%
Asia (5)
China
Eastern
Europe (3)
G7 (5)
India
LAC7 (6)
Numbers in parentheses next to region names represent the number of countries included in the graphs.
Source: IMF’s IFS
Oth. Adv.
Economies
(6)
Banks: Relative Decline in Corporate Lending
Credit Composition
Commercial
100%
90%
17% 17% 18% 18%
22% 19%
Mortgage
Personal
11% 10% 10% 14%
80%
% of Total Credit
34%
37%
51%
50%
40%
58%
14%
43% 47% 47%
9%
8%
24% 26%
19%
70%
60%
9%
14%
43% 43% 42%
49%
40%
66%
30%
20%
40%
49%
31%
10%
41%
25%
34%
62% 60%
45% 42% 43%
48% 48% 50%
China
Source: Local sources
Eastern Europe (2)
G7 (2)
LAC7 (6)
2008-09
2004-07
2000-03
2008-09
2004-07
2000-03
2008-09
2004-07
2000-03
2008-09
2004-07
2000-03
2008-09
2004-07
2000-03
0%
Oth. Adv.
Economies (3)
Banks: Foreigners Significant and Growing
Relative Size of Foreign Banks
1995-1999
2000-2008
60%
49%
50%
46%
43%
% of Total Bank Assets
40%
30%
30%
25%
20%
20%
22%
20%
17%
0.1485
16%
12%
10%
0%
Asia (4)
Source: Van Horen (2008)
China
Eastern Europe
(7)
G7 (4)
LAC7 (7)
Oth. Adv.
Economies (4)
Bond Markets Have Expanded,
But Public Sector Still Large and Growing
Composition of Bond Markets, % of GDP
Private Bonds
Public Bonds
120%
100%
65%
% of GDP
80%
52%
60%
24%
31%
40%
32%
Asia (5)
Source: BIS
China
Eastern
Europe (2)
G7 (7)
1%
2%
5%
10%
1990-9
2000-9
1990-9
2000-9
2000-9
4%
30%
15%
19%
2%
23%
33%
India
LAC7 (7)
40%
2000-9
48%
1990-9
41%
14%
2000-9
13%
1990-9
2000-9
1990-9
0%
4%
4%
2000-9
24%
1990-9
16%
40%
23%
1990-9
20%
20%
Oth. Adv.
Economies (5)
Bond Market Turnover Not on the Rise
Bond Value Trading as % of Total Bond Market Capitalization
2000-2003
200%
2004-2007
2008-2009
178%
180%
% Total Bond Market Capitalization
160%
140%
120%
110%
100%
80%84%
80%
56%
60%
40%
20%
30%
24%
18%
80%
39%39%
35%
59%57%
58%
23%
31%
15%
21%
12%12%
0%
Asia (3)
China
Eastern
Europe (3)
G7 (4)
India
LAC7 (4)
Oth. Adv.
Economies
(4)
Note: Trading data includes domestic private, domestic public and foreign bonds traded in local stock exchanges. Source: World Federation of
Exchanges (WFE)
Private Bond Issuance Is Small …
Amount of New Issues
1991-1999
5.0%
2000-2008
4.7%
4.5%
4.0%
3.4%
% of GDP
3.5%
3.0%
2.5%
2.0%
1.7%
1.6%
1.5%
1.2%
1.1%
1.0%
1.1%
0.8%
0.5%
0.0%
Asia (5)
Source: SDC
G7 (7)
LAC7 (7)
Oth. Adv. Economies (7)
Private Bonds: Few (and Fewer) Firms Use Markets
Average Number of Firms Issuing Bonds
1990-1999
500
2000-2008
462
450
400
369
Number of Firms
350
300
250
200
150
100
50
30
21
9
19
20
24
0
Asia (5)
Source: SDC
G7 (7)
LAC7 (7)
Oth. Adv. Economies (7)
Private Bonds: Few Issues Capture Significant Share
Concentration in Private Bond Markets
Amount Raised by Top 5 Issues
1991-1999
2000-2008
100%
% of Total Amount Raised
90%
80%
69%
70%
60%
60%
59%
55%
54%
50%
43%
40%
27%
30%
20%
20%
10%
0%
Asia (5)
G7 (7)
LAC7 (6)
Oth. Adv. Economies (6)
Note: Concentration is defined as the top-5 issues as a percentage of the total amount raised by firms in domestic bond markets. Numbers in the
base of the bars represent the average number of yearly issues. Source: SDC
Equity Market Capitalization
Market Capitalization as % of GDP
100%
89%
90%
80%
70%
85%
77%
69%
66%
66%
62%
60%
54%
50%
42%
40%
32%
31%
30%
20%
13%
28%
13%
10%
0%
Asia (5)
China
Eastern Europe
(2)
1990-1999
Source: SDC
G7 (7)
2000-2009
India
LAC7 (7)
Other Advanced
Economies (7)
Equity Trading: A Different Picture than Mkt. Cap.
Trading Activity – Turnover Ratio
1990-1999
200%
2000-2009
189%
180%
160%
140%
128%
Turnover Ratio
124%
120%
102%
100%
85%
80%
75%
73%
62%
61%
60%
47%
40%
25%
20%
17%
0%
Asia (5)
China
Eastern Europe
(7)
G7 (7)
LAC7 (7)
Oth. Adv.
Economies (7)
Note: Turnover ratio is defined as the total value traded per year in domestic markets over total market capitalization. Source: SDC
Partly Explained by Trading Abroad
Value Traded Abroad to Total Value Traded
2000-2003
2004-2007
2008-2009
70%
61%
58%
60%
% of Total Value Traded
54%
50%
40%
30%
27%
23%
19%
20%
11%
13%
10%
15%
12% 12% 13%
16%
12%
8%
10%
3%
5%
4% 3% 5%
0%
Asia (1)
Source: Bank of New York and Bloomberg
China
Eastern Europe
(1)
G7 (5)
India
LAC7 (4)
Oth. Adv.
Economies (5)
Trading Is Somewhat Concentrated
Concentration in Domestic Equity Markets
Share of Value Traded by Top 5 Companies
1990-1999
2000-2009
80%
73%
70%
63%
% of Total Value Traded
60%
58%
60%
57%
50%
40%
36%
39%
39%
30%
21%
20%
20%
10%
0%
Asia (5)
Source: EMDB
China
Eastern Europe (5)
India
LAC7 (6)
Breadth of Equity Markets:
Issuance Activity Small
Equity Markets – Issuance Activity
1991-1999
2000-2008
1.8%
1.6%
1.6%
1.4%
1.4%
1.4%
1.1%
% of GDP
1.2%
1.0%
1.0%
0.9%
0.8%
0.8%
0.7%
0.7%
0.7%
0.6%
0.4%
0.2%
0.3%
0.3%
0.2%
0.2%
0.0%
Asia (5)
Source: SDC
China
Eastern
Europe (7)
G7 (7)
India
LAC7 (6)
Oth. Adv.
Economies
Equity Markets: Few Firms List
Number of Listed Firms
1990-1999
2000-2009
6,000
5,207
5,000
4,441
Number of Listed Firms
4,000
3,000
2,072
2,322
2,000
1,382
1,000
828
715
425
441
225 167
224 175
385
0
Asia (5)
Source: WDI
China
Eastern
Europe (7)
G7 (7)
India
LAC7 (7)
Oth. Adv.
Economies
(7)
Equity Markets: Even Fewer Firms Raise Capital
Average Number of Firms Raising Capital
1991-1999
2000-2008
600
531
500
Number of Listed Firms
400
296
300
258
200
86
100
101
118
91
86
58
38
2
0
Asia (5)
Source: SDC
China
18
5
Eastern
Europe (7)
G7 (7)
India
5
LAC7 (6)
Oth. Adv.
Economies (7)
Equity Markets: Also with Significant Concentration
Concentration in Domestic Equity Markets
Share of Amount Raised by Top 5 Issues
1991-1999
2000-2008
100%
92%
90%
85%
85%
77%
% of Total Amount Raised
80%
68%
70%
60%
63%
61% 62%
47%
50%
54%
50%
45%
39%
40%
29%
30%
20%
10%
0%
Asia (5)
Source: SDC
China
Eastern
Europe (7)
G7 (7)
India
LAC7 (6)
Oth. Adv.
Economies
(7)
Issuing Firms Larger than Non-issuers, Grow More
Firm Size Distribution by Issuance Activity
China Equity Issues
2003 Total Assets of Non-Issuing Companies
2003 Total Assets of Issuing Companies
2010 Total Assets of Non-Issuing Companies
2010 Total Assets of Issuing Companies
Log of Total Assets
A firm is considered as issuing if it had at least one equity issue between 2003 and 2010.
Issuing Firms Larger than Non-issuers, Grow More
Firm Size Distribution by Issuance Activity
India Equity Issues
2003 Total Assets of Non-Issuing Companies
2003 Total Assets of Issuing Companies
2010 Total Assets of Non-Issuing Companies
2010 Total Assets of Issuing Companies
Log of Total Assets
A firm is considered as issuing if it had at least one equity issue between 2003 and 2010.
For Bond Issuers, the Results Are Starker …
Firm Size Distribution by Issuance Activity
China Bond Issues
2003 Total Assets of Non-Issuing Companies
2003 Total Assets of Issuing Companies
2010 Total Assets of Non-Issuing Companies
2010 Total Assets of Issuing Companies
Log of Total Assets
A firm is considered as issuing if it had at least one equity issue between 2003 and 2010.
… More So in India
Firm Size Distribution by Issuance Activity
India Bond Issues
2003 Total Assets of Non-Issuing Companies
2003 Total Assets of Issuing Companies
2010 Total Assets of Non-Issuing Companies
2010 Total Assets of Issuing Companies
Log of Total Assets
A firm is considered as issuing if it had at least one equity issue between 2003 and 2010.
Outline
 Financial development: banks, bond and stock markets
 Institutional investors
Organization of the Evidence
 Hard to have a unified framework to analyze the evidence
 Findings from different papers using data from Chile, the U.S.,
and the world financial centers
 Findings on different aspects of institutional investor behavior, in
particular their asset allocation
 Emphasis on regulated investors (mutual funds & pension funds)
 Food for thought

Role of institutional investors

Incentives at the manager and investor level

Public policy
Evidence on Institutional Investors
 Overview

Size of pension funds and mutual funds

Asset allocation
 Pension funds in Chile

Trading and herding

Long-term investors?
 International evidence

Diversification

Pro-cyclicality

Benchmark effect
Evidence on Institutional Investors
 Overview

Size of pension funds and mutual funds

Asset allocation
 Pension funds in Chile

Trading and herding

Long-term investors?
 International evidence

Diversification

Pro-cyclicality

Benchmark effect
Pension Funds Gaining Ground
Pension Fund Assets
2000-2004
2005-2009
40%
34%
35%
33%
30%
30%
26%
% of GDP
25%
19%
20%
15%
16% 15%
15%
10%
5%
5%
5%
0%
0%
6%
2%
0%
Asia (4)
Source: AIOS
China
Eastern
Europe (7)
G7 (7)
India
LAC7 (7)
Oth. Adv.
Economies (6)
Mutual Funds Growing Too
Mutual Fund Assets
2000-2004
2005-2009
40%
36.7%
34%
35%
30%
23.7%
% of GDP
25%
20%
15%
19%
17.1%
12%
10.0%
10%
7.9%
7.4%
4.3%
5%
2%
7%
4%
2%
0%
Asia (4)
Source: ICI
China
Eastern
Europe (7)
G7 (7)
India
LAC7 (7)
Oth. Adv.
Economies (6)
… However, Portfolios Are Concentrated in
Deposits and Public Bonds
Composition of Pension Fund Investments in Latin America
100%
90%
Govt. Securities
Fin. Inst. Sec/Deposits
Private Bonds
Equities
Mutual Funds
Other Investments
2%
Foreign Securities
2%
3%
11%
14%
6%
80%
% of Total Portfolio
9%
12%
70%
60%
21%
8%
16%
50%
40%
30%
51%
20%
45%
10%
0%
1999-2004
Source: OECD, ABRAPP, AIOSFP, FIAP, and local sources
2005-2008
… However, Portfolios Are Concentrated in
Deposits and Public Bonds
Pension Fund Holdings
Cash and Deposits
100%
Public Bonds
Private Bonds
Loans
2%
10%
90%
10%
% of Total
5%
1%
70%
16%
Mutual Funds
4%
40%
19%
34%
10%
25%
20%
37%
20%
16%
1%
1%
19%
20%
6%
30%
40%
11%
20%
10%
10%
22%
60%
50%
Others
18%
7%
80%
Equity
32%
24%
0%
Asia (2)
26%
16%
5%
3%
2%
Eastern Europe (4)
G7 (5)
LAC7 (5)
Source: OECD – Latest available information. Data for most countries are from 2009.
7%
Other Advanced
Economies (6)
Mutual Fund Assets Also Concentrated in Bonds
and MM Instruments
Mutual Funds - Portfolio Holdings
Deposit Certificates
% of Total Assets
100%
Brazil
Government Bonds
Private Bonds
Fixed Inc. Sec. Backed by Gov. Debt
Equity
Others
4%
90%
11%
80%
2%
5%
5%
17%
70%
15%
60%
4%
50%
40%
73%
48%
30%
20%
10%
0%
6%
2003-4
Source: IMF’s IFS, FGV-Rio, Conasev, Superfinanciera, Andimia, and Banxico
11%
2005-9
Mutual Fund Assets Also Concentrated in Bonds
and MM Instruments
Mutual Funds - Portfolio Holdings
Chile
Deposits
Private Bonds
Domestic Equity
100%
% of Total Assets
90%
14%
Foreign Equity
6%
8%
80%
2%
4%
9%
70%
17%
13%
63%
63%
2000-4
2005-9
60%
50%
40%
30%
20%
10%
0%
Source: IMF’s IFS, FGV-Rio, Conasev, Superfinanciera, Andimia, and Banxico
Public Bonds
Evidence on Institutional Investors
 Overview

Size of pension funds and mutual funds

Asset allocation
 Pension funds in Chile

Trading and herding

Long-term investors?
 International evidence

Diversification

Pro-cyclicality

Benchmark effect
Along with MFs, They Tend to Invest Short Term
Maturity Structure of Chilean Domestic Mutual Funds and PFAs
vs. Insurance Companies
100%
90%
Share of portfolio
80%
70%
60%
50%
40%
30%
Chilean PFAs
20%
Chilean Domestic Mutual Funds
10%
Chilean Insurance Companies
0%
1
2
3
4
5
6
7
8
9
10
Years to maturity
Avg. Maturity
(1) Chilean Insurance Companies
10.32
(2) Chilean Domestic Mutual Funds
3.88
(3) Chilean PFAs
3.16
Note: This figure compares the maturity structure of Chilean insurance companies to that of Chilean domestic mutual funds and PFAs. Only medium- and
long-term bond mutual funds are taken into account. Source: Opazo, Raddatz, Schmukler (2013)
Outline
 Overview

Size of pension funds and mutual funds

Asset allocation
 Pension funds in Chile

Trading and herding

Long-term investors?
 International evidence

Diversification

Pro-cyclicality

Benchmark effect
Similar Number of Holdings Across Fund Types and
Relatively Constant over Time
Median Number of Holdings by Fund Type
160
Foreign Funds
Emerging Market Funds
140
120
100
80
60
World Funds
40
Regional Funds
World Funds
Ex-US Assets
20
Source: Didier, Rigobon, and Schmukler (2013)
160
Specialized Funds
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
0
Similar Number of Holdings Across Fund Types and
Relatively Constant over Time
Median Number of Holdings by Fund Type
160
140
Asia Funds
120
Europe Funds
100
80
60
40
Country Funds
20
Latin America
Funds
Source: Didier, Rigobon, and Schmukler (2013)
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
0
Having Managers in Common Increases Entropy
Entropy Measures across All Holdings
1.00
Entropy
0.90
No Common Manager
0.80
At least 1 Common Manager
0.70
More than 3 Common
Managers
0.60
0.50
0.40
0.30
0.20
0.10
0.00
1997
Holdings in Developing Countries Only
1998
Source: Didier, Rigobon, and Schmukler (2013)
1999
2000
2001
2002
2003
2004
2005
Equity Mutual Funds AppearTruly
toActive
Follow their Benchmarks
to a Great Extent
Market Index to Developed Market Index
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Global Funds and MSCI World Index
Explicit Indexing
in %
in %
in %
4.5
4
3.5
3
2.5
Israel’s Upgrade from
the Emerging
2
1.5
Global Emerging Funds and MSCI
EM Index
1
0.5
Explicit Indexing
0
5
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
Mean Weight Israel
Benchmark Weight (MSCI EM)
Truly Active
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
1.6
1.4
1.2
1
in %
in %
Truly Active
0.8
0.6
0.4
0.2
0
Concluding Remarks: Bottom Line
 In terms of financial development, substantially different and
better than before, even when “insurmountable”

Deeper systems, in domestic and international fronts

More saving and more resources available in the economy

Less crowding out by governments, but governments still large

According to some measures, consumers appear to be better served

Financial system more complex, somewhat more diversified
• Not that much bank-based
• Bonds and equity play bigger role, corporate bonds emerging
• Institutional investors much more prominent

Nature of financing is also changing
Concluding Remarks: Bottom Line
 But no finance for all!

Financial development through capital markets not spread to all firms
 Constraints not on the supply side of funds
 Constraints not on the availability of investable assets
 Constraints likely not on specific regulatory issues

These get much attention at country level, but this is a cross-country issue
 Financial intermediation process more difficult than thought





First expands to areas relatively easy to finance
Incentives might play crucial role for more risk taking
Might not yield socially optimal outcome
Financial intermediaries brain of the economy,
… but works differently than expected
Concluding Remarks: Bottom Line
 Not clear how to proceed in many areas


Institutional investors are emblematic
Similarly with banks, capital markets, and financial integration
 Nor what to expect of capital market financing
 Plus lack of obvious paradigm at international level


Collapse of role models: no roadmap after the crisis
E.g. what to make of securitization and mortgage financing?
 Eventually, need to catch up, grow, and take risk without
undermining stability: strong trade-off



Macro-prudential policies might not help
Hard to distinguish spurious boom from leapfrog
Especially for lagging areas and countries
Some of the General Policy Challenges
 Generate healthy competition among financial intermediaries
without perverse incentives
 Promote market discipline through standardization
 Foster benchmarking without boosting short-termism, herding,
and volatility
 Foster long-term risk while being able to monitor managers
 Contrarian behavior and long-term arbitrage opportunities
without generating backlash due to negative outcomes
 Take advantage of useful international diversification
Going Long and Riskier
 Asset managers, including pension funds

Large chunk of domestic savings intermediated by asset managers

Spend significant part of fees in marketing – perhaps could be diverted
to asset management?

Avoid risk taking, forgoing good long-term returns for investors …

… and risk capital for corporations

But at the same time shield them from volatility

Herd to be close to the pack
 Difficult task to change investment model

Without “excessive” risk taking

Without alienating investors

Generating proper incentives
Problems Are Widespread
 U.S. and developed countries’ institutional investors too present
some odd investment patterns
 Invest in few stocks
 Do not share information within companies
 Are pro-cyclical even when investing in equities and even when
shocks have already hit them




Are subject to shocks from investors
Follow benchmarks, which adds to pro-cyclicality
Organizational problems seem to pervade the industry
No clear alternative model
Thank you!

Similar documents