Risk Tolerance in Financial Decision Making (Palgrave Macmillan Studies in Banking and Financial Institutions)

This Book Sheds Light On The Emotional Side Of Risk Taking Behaviour Using An Innovative Cross-disciplinary Approach, Mixing Financial Competences With Psychology And Affective Neuroscience. In Doing So, It Shows The Implications For Market Participants And Regulators In Terms Of Transparency And Communication Between Intermediaries And Customers-- Cover; Title; Copyright; Contents; List Of Tables; List Of Figures; Notes On Contributors; Introduction; 1 The Role Of Risk In The Investment Decision Process: Traditional Vs Behavioural Finance; 2 Household Behaviour And Debt Demand; 3 The Traditional Approach To Risk Tolerance; 4 Risk Of Over-indebtedness And Behavioural Factors; 5 Decision Making: Psychological Perspective; 6 The Layout Of The Empirical Analysis; 7 The Indicators Of Risk; 8 Results On The Investment Side; 9 The Determinants Of Household Debt Holding: An Empirical Analysis. 10 The Implications For Market Participants And Regulatorsappendix 1; Appendix 2; References; Index. Edited By Caterina Lucarelli And Gianni Brighetti. Includes Bibliographical References And Index. An Increasing Number Of The World's Largest Banks Now Have More Activities Outside Their Home Country Than Withinches But What Do We Know About The Effects Of Internationalization, And What Is A Successful Business Model For The Future? This Book Explores The Formulation, Implementation And Evaluation Of Internationalization Strategies In Banking. The International Strategies Of The World's Leading Banks In Eight Countries Are Examined Between 1980 And 2004, Strategic Patterns Are Identified And The Effects On Profitability, Stability And Shareholder Performance Are Analysed. The Results Are Sobering. Increasing Profitability And Shareholder Return Through Internationalization Turns Out To Be Extremely Challenging. Only A Few Banks Are Able To Turn International Banking Activities Into A Success. With The Ongoing Cross-border Consolidation In The Banking Industry, This Book Is An Important Contribution To The Internationalization Debate And A Must-read For Bank Management, Regulators And Shareholders. Banking Since The 1980s: Challenges And Issues -- International Banking: A Theoretical Framework -- The World's Largest Banks -- Internationalization Patterns -- Internationalization Strategies -- Performance And Shareholder Wealth -- Competitive Future Internationalization Strategies. Alfred Slager. Includes Bibliographical References (pages 213-218) And Index. This book sheds light on the emotional side of risk taking behaviour using an innovative cross-disciplinary approach, mixing financial competences with psychology and affective neuroscience. In doing so, it shows the implications for market participants and regulators in terms of transparency and communication between intermediaries and customers. Economics, psychology, and neuroscience have converged into a single field under the label of neuroeconomics, aimed to employ recent neuroscientific methods in order to analyze economically relevant brain processes. This innovative field has repeatedly revealed deviations from the classical theory of economists by highlighting that subjects show dysfunctional behaviours which cannot be explained using traditional methods. This book focuses on the risk tolerance which influences financial decision making. It holds the results of an empirical research investigating the emotional side of risk taking behaviour. A unique experiment was run on more than 400 subjects: bank customers, bankers, asset managers and traders, using both traditional and innovative risk measures. By comparing different risk profiles, relevant implications for market participants and regulators emerge, especially if connected to the new regulations introduced by MiFID, in terms of transparency between intermediaries and customers Securities exchanges play a significant role in macroeconomics. They engage in the allocation process, which assures that savings are allocated to the most profitable investment opportunities. But what are the forces driving the supply side, namely, the services offered by exchanges? It is not just a matter of market microstructure and the rules governing the price discovery. Rather, it embraces a much wider perspective involving the balance of interests of multiple stakeholders, the competitive strategies of exchanges and other platform operators and the impact of regulation. This book provides an economic analysis of the stock exchange industry. It draws on theories from micro- and industrial economics to provide a detailed analysis of the industry structure, the strategic behaviour of key participants and a methodological framework for assessing the performance of stock exchanges ..." Front Matter....Pages i-xii Introduction....Pages 1-7 The Role of Risk in the Investment Decision Process: Traditional vs Behavioural Finance....Pages 8-66 Household Behaviour and Debt Demand....Pages 67-80 The Traditional Approach to Risk Tolerance....Pages 81-112 Risk of Over-Indebtedness and Behavioural Factors....Pages 113-132 Decision Making: Psychological Perspective....Pages 133-152 The Layout of the Empirical Analysis....Pages 153-162 The Indicators of Risk....Pages 163-180 Results on the Investment Side....Pages 181-205 The Determinants of Household Debt Holding: An Empirical Analysis....Pages 206-215 The Implications for Market Participants and Regulators....Pages 216-228 Back Matter....Pages 229-269 An account of the principal phases in the development of the English banking system, and an analysis of the financial structure of the economy of the UK. The book focuses in detail on the regulatory and supervisory aspects of the UK banking system, and the interactions between the structural aspects of the banking and supervisory system.