Wednesday, July 3, 2013

Book Review. "China's Superbank," The Special Role of the China Development Bank

Author: David Schwartz

CSFME's executive director, Ed Blount, has written a new book review for the ABA Banking Journal.  Mr. Blount reviews "China's Super Bank" by Henry Sanderson and Michael Forsythe, in which the authors present what Blount calls a worthy history of the role of the China Development Bank in less than three decades of urbanization. Using bond prospectuses for over 500 local government financing vehicles, the authors, two Bloomberg journalists, describe the restructuring of the Chinese state balance sheet, and how the unique nature of the hybrid public/private Chinese Development Bank has helped to move the sprawling country from rural to semi-urban in the span of 15 years.

But their focus is not entirely financial.  The authors also add vignettes about the fallout experienced by ordinary Chinese as a result of this meteoric economic expansion, from the displacement of farmers to the creation of marked inequalities in the distribution of wealth and opportunity.  This narrative approach has produced what Mr. Blount calls, "a slim and highly readable volume" which is more "a collection of essays tinted with prospectus statistics than the kind of analysis produced by the IMF or World Bank."  

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Tuesday, April 23, 2013

With Power Comes Responsibility. Institutional Investors' Role In Corporate Governance.

Author: David Schwartz
Over the past sixty years, as more and more people in the US have begun to participate in the capital market through retirement plans, mutual funds, ETFs and other pooled investment vehicles, institutional investors have grown from bit players in the markets, owning about 5% of US equities prior to 1945, to being major players today, owning greater than 67% of US equities. This growth in the proportion of assets managed by institutional investors has also been accompanied by a dramatic growth over the same period in the market capitalization of US listed companies.  As a result, institutional investors now own a larger percentage of a much larger market. This massive increase in US equity ownership by institutional investors brings with it great proxy voting power as well.    Given their outsized level of ownership, institutional investors are now faced with new pressures to exercise a real and abiding role in corporate governance.
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