CIBF - Financial Globalisation and Development

Which of the following is INCORRECT

• Economic development is typically achieved through industrialisation

• Industrialisation requires investment in productive capacity

• Investment requires short-term affordable financing

• Developmental state allocate credit to selected industries or firms

Which of the following is NOT correct about Developmental state?

• Government coordinates and controls over industrial and financial policy

• Financial policy aims to achieve economic development via industrialisation

• Government coordinates through public banks and traditional banking system

• Examples of Developmental states include Middle East economies

Which of the following is INCORRECT?

• Market-based-finance is a system of money and capital markets

• Local currency bond markets allowed borrowing from foreign investors

• Corporations in Developing Countries mostly still borrow in foreign currency

• The outflows from bond markets cause appreciation of local currencies

Which of the following is INCORRECT?

• The outflows from bond markets cause higher bond spread

• Shadow banking is more relevant in developing than advanced economies

• Higher bond spread & currency depreciation may amplify each other

• There is large variation in shadow banking activities across countries

Which of the following is INCORRECT about shadow banking in developing economies

• Financing through securitisation and tradable securities

• Provide credit to private firms with less access to formal bank credit

• Has the potential to amplify systemic risks

• Is a long-term credit intermediation

Which of the following is not correct about China's shadow banking?

• includes the issuance of wealth management products,entrusted loans,etc.

• provide credit to firms neglected by the Chinese developmental strategy

• Some shadow banking instruments are used to conform with regulations

• Big Banks use wealth management products to refinance local government loans

According to Hofmann, B. et al. (2020), which of the following is incorrect?

• Borrowing through domestic currency bonds helped prevent emerging market economies

  from the financial shock initiated by Covid-19

• When Covid-19 financial shock happens, portfolio investors in emerging market economies face amplified losses as local currency spreads and exchange rates move in

  tandem

• Emerging market economies with monetary policy frameworks that are equipped to address the feedback loop

  between exchange rate depreciation and capital outflows is more resilient against

  the financial fallout from the Covid-19 pandemic

• To deal with problems in domestic bond markets, emerging market economies' central banks may need to

  take on a “dealer of last resort” role

• The revised portfolio allocations of emerging market economies' investors strengthen the correlation between local currency spreads and exchange rates in times of financial shock

According to Ehlers, T. et al (2018), which of the following is correct about shadow banking in China? (more than 1 correct answer)

• Commercial banks are at the centre of shadow banking in China

• Shadow banking plays the important role of providing alternative savings instruments and credit

  to underserved sectors

• Shadow banking generates tight financial system interlinkages

• Shadow banking in China involves more

  entity types and steps of credit intermediation than in developed countries

• Shadow banking instruments

  in China are backed by implicit and explicit guarantees

According to Ehlers, T. et al (2018), which of the following is NOT correct about shadow banking in China?

• Each of the three main stages of shadow credit intermediation in China features adistinct set of instruments

• At the ultimate creditor stage, shadow banking is directly and primarily funded by depositors, who purchase bank-issued wealth management products or trust products

• Shadow credit intermediation require collateralisation or securitisation

• Shadow banking in China is characterised as a bank like credit intermediation process, with deposits being collected through higher-yield wealth management products or trust products.

• Shadow bank funding ingeneral relies on wealth management products and trust products

According to Ehlers, T. et al (2018), which of the following is correct about the development of shadow banking in China? (more than 1 correct answer)

• Shadow banking in China changed rapidly in recent years

• The main area of growth has shifted from shadow credit provision to private firms with less privileged access to formal bank credit

• New and complex structured shadow credit intermediation has emerged and quickly reached a large scale

• Internet-based credit intermediation, such as bitcoin,have been expanding at an extraordinary pace

• Securitisation and market-based instruments play

  the most important role.