{"title":"Manipulation and Information Acquisition","authors":"António M.R.G. Barbosa","doi":"10.2139/ssrn.1918069","DOIUrl":"https://doi.org/10.2139/ssrn.1918069","url":null,"abstract":"Abstract This paper studies information-based manipulation in a setting where sophisticated investors have access to an independent source of information. It is shown that investors' access to independent information is crucial to support truthful announcements by the manipulator. However, even manipulated announcements provide useful information to investors, contributing to improved price efficiency and a smaller risk premium. This is true even though investors substitute some costly independent information by the costless announcement. Therefore, manipulation is not bad per se: it is just not as good as truth-telling. Policymakers aiming for improved price efficiency should entice the manipulator to announce truthfully more often, and not to silence him. To achieve it, policymakers can: (i) increase scrutiny and penalties for real (not apparent) manipulation; (ii) promote investors' access to high quality independent sources of information; (iii) eliminate short sales restrictions. Any of these measures help the manipulator to commit to more truthful announcements and work to his benefit since manipulation is actually a bad deal for the manipulator. Manipulation exists only because the manipulator cannot credibly commit to announce truthfully.","PeriodicalId":352017,"journal":{"name":"Financial Institutions & Services","volume":"42 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-08-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128107106","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"How Do Capital Buffers Respond to Basel? An Empirical Analysis of the Brazilian Banking System","authors":"J. Pereira, Richard Saito","doi":"10.2139/ssrn.1928791","DOIUrl":"https://doi.org/10.2139/ssrn.1928791","url":null,"abstract":"We empirically examine the main determinants of the capital buffer management (capital exceeding the minimum required by regulation) for the Brazilian banking industry, in order to test whether banks respond to the previous and new fundamentals of capital regulation. We find evidence that regulatory capital requirements may influence banks behavior, since those with more volatile earnings and higher adjustments costs may decide to hold higher capital buffers. We also find that banks may follow a pecking order when deciding their capital levels, and larger banks present lower levels of capital ratios, which may be related to too-big-to-fail issues. Moreover, we provide evidence that: (i) Central Bank supervision exerts positive pressure on bank’s decision; (ii) market discipline may play a minor role in driving capital ratios; and (iii) the business cycle has a negative impact on bank’s capital cushion, suggesting a pro-cyclical capital management. The results contribute to the discussion of the implementation in Brazil of the macro-prudential regulatory policies discussed in the Basel Committee.","PeriodicalId":352017,"journal":{"name":"Financial Institutions & Services","volume":"399 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-04-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116845502","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}