Journal Detail

Journal 32: Applied Finance

August 2011

This issue of the Capco Journal is dedicated to applied finance and focuses on the complexity of finance from a practical, and more importantly, managerial perspective. We at the Journal of Financial Transformation firmly believe that there is still quite a large gap between the research undertaken at leading finance academies, some of which has permeated into the real world, and what investors and borrowers need and apply. We believe that future research in finance should focus on what actually happens in the markets rather than what should.


Journal Articles
Systemic Risk, an Empirical Approach
Gonzalo de Cadenas-Santiago, Lara de Mesa
A General Structural Approach For Credit Modeling Under Stochastic Volatility
Marcos Escobar, Tim Friederich, Luis Seco, Rudi Zagst
The Organization of Lending and the Use of Credit Scoring Techniques in Italian Banks
Giorgio Albareto, Michele Benvenuti, Sauro Mocetti, Marcello Pagnini, Paola Rossi

Over the last ten years we have been proud to share with you the finance perspectives of both academics and practitioners, many of which have been provocative and heavily debated in light of the stress scenario we experienced in the 2008 financial crisis. Even now the markets remain challenged by the weight of sovereign debt and the potential for default.

Applied finance is more than just impressive models. In recent years many had started to believe that finance was relatively simple, even though the underpinning methodologies and mathematical models had become increasingly more complicated. However, the recent crisis proved that finance is significantly more complex than the models that support it.

Many of our Journals have focused on the complex models and finance theories that have become the tools of our trade. More recently we have been highlighting the operational and technology complexities that make these theories and models more vulnerable. These elements simply compound the complexity of the systemic risk within our world economies. The simple click of a button, to trade a single share, sets in motion an extremely complicated process in which there are still far too many human interventions. As the complexity of the instruments increase, so do the levels of risk and the complexity of the processes that follow the initiation of the trade. Consequently, for us at Capco, the complexities of finance are as much about the processes that are involved in managing the industry and its many different participants as about simply price and managing complex instruments.

As always we welcome your candor and healthy debate. By so doing we continue to strive with you to form the future of finance.

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