Harnessing the Power of Financial Markets for the Public Good




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Special Policy Report 14

Report on Chile's Derivatives Markets: Stabilizing or Speculative Impact [pdf]

Randall Dodd and Stephany Griffith-Jones, August 2006

The report, sponsored by CEPAL/ECLAC, focuses on Chile, and to a lesser extent on Brazil, to provide an analytical description of the derivatives markets and their role in those developing countries.  This includes a discussion of the various derivatives instruments, the different market participants and the manner in which prices are determined in these markets.  It also includes a descriptive analysis of Chile’s regulatory framework for derivatives and how they have shaped the growth of those markets.  The report includes an economic analysis of what derivatives markets mean for the cost and risk of foreign borrowing, the stability of international capital flows, pro-cyclical linkages to exchange rate movements, the use of derivatives in certain hedge fund investment strategies, and the potential risks to the stability of Chile’s financial markets. 


Special Policy Report 13

Industrial Loan Banks: Regulatory Loopholes As Big As A Wal-Mart [htm]  [pdf]

Randall Dodd December, March 2006

The report provides a policy analysis of industrial loan banks and their differential treatment under federal banking regulation.  This includes an economic analysis of the public interest in these depository institutions as well as a brief history of their evolution from "Morris Plan Banks."  This is designed to better inform the public debate over the application by Wal-Mart to outflank Glass-Steagall principals and obtain a federally insured depository institutions with virtually the same powers as a bank.

          Testimony before the Federal Deposit Insurance Corporation, April 11, 2006 [pdf]

          Commentary to New York Times Online, March 15, 2006 [pdf]


Special Policy Report 12

The Economic Rationale for Financial Market Regulation [htm]  [pdf]

Randall Dodd December, 2002 (* out of chronological sequence)

An economic analysis of imperfections and failures in financial markets, including externalities of risk and information, non-competitive markets, destructive competition and the national security concerns. These short-coming form the foundation of prudential regulation of financial markets as means to improve market efficiency and to make financial activities more safe and sound.


Special Policy Report 11

The Virtues of Prudential Regulation

Randall Dodd, January, 2005

Forthcoming in Stiglitz and Ocampo (editors), Capital Markets Liberalization and Macroeconomics Overview Book, Oxford University Press, 2005.

An economic policy analysis of how prudential regulations can improve the performance and stability of financial markets -- especially those in developing countries.  This includes a discussion of registration requirements, reporting requirements, capital requirements, collateral requirements and a set of measured called Orderly Market Rules.

(IPD Working Paper 7, Capital Market Liberalization,  http://www0.gsb.columbia.edu/ipd/pub/DoddPrudentialRegulation3_8_04.pdf)


Special Policy Report 10

The Consequences of Liberalizing Derivatives Markets

Randall Dodd, January, 2005

Forthcoming in Stiglitz and Ocampo (editors), Capital Markets Liberalization and Macroeconomics Overview Book, Oxford University Press, 2005.

An analysis of how derivatives markets impact emerging market and other developing economies through interaction with capital markets and in undermining existing financial market regulations.

(IPD Working Paper 8, Capital Market Liberalization, http://www0.gsb.columbia.edu/ipd/pub/DoddDerivatives.pdf)


 Special Policy Report 9

Up From Sin: A Portfolio Approach To Financial Salvation

Randall Dodd and Shari Spiegel, January, 2005

This study develops a proposal that has the potential to greatly improve the ability of developing countries to reduce their exposure to other countries' interest rate and exchange rate volatility and to lower their cost of raising capital abroad by borrowing in their own local currency.  (Published as a G-24 Discussion Paper, January 2005 and as Chapter 5 in "The IMF and World Bank at Sixty, edited by Ariel Buira on Anthem Press, London.)


Special Policy Report 8

Derivatives Markets: Sources of Vulnerability in U.S. Financial Markets

Randall Dodd, May 10, 2004

Presentation of paper (in PowerPoint)

A financial economic analysis of the ways in which derivatives markets pose several types of public interest concerns to the US economy by creating new and greater sources of vulnerability.

(Forthcoming in a volume of policy studies from the Political Economy Research Institute entitled Financialization and the World Economy and published by Edward Elgar Publishers and The ICFAI Journal of Derivatives Markets.)


Special Policy Report 7

Lessons For Tobin Tax Advocates: The Politics of Policy and the Economics of Market Micro-structure

Randall Dodd, January 6, 2003, revised August 8, 2003

A financial economic analysis of the policy proposal to impose a small tax on foreign exchange transactions, and potentially all financial transactions, and its likely impact on market liquidity, volatility and the overall economy. (Chapter 3 in Debating the Tobin Tax – a New Rules for Global Finance publication of conference proceedings)


Special Policy Report 6

Credit Rating Agencies: Their Impact on Capital Flows to Developing Countries

Gautam Setty and Randall Dodd, April 7, 2003

Forthcoming in 2005 in Sharath Jutur (editor) on ICFAI University Press, India.

The report examines the three major credit rating agencies, their rating methods and several related public policy concerns.  It examines the regulatory background and competitive structure of the credit rating industry, the historical performance of the major agencies and the impact of ratings on economies and capital flows.  Recommendations are made to create more accurate ratings and to reduce the unwanted side-effects of the rating process.


Special Policy Report 5

Less Than A Bubble, More Than A Burst

Randall Dodd, September 2002

Macroeconomic analysis of the role of financial markets in the current U.S. economic business cycle. (Attention: this file opens in Power Point.  Use right arrow key to page forward)


Special Policy Report 4

Bridging The Gap: International Risk Management

Jason Hoody.  Masters Thesis, School of International Service, American University. 2002

Exploring the use of International Risk Management Techniques to bridge the gap between rich and developing countries in the hope of smoothing international market volatility in an era of globalization, growth and poverty.


Special Policy Report 3

Emerging Market Debt and Vulture Hedge Funds: Free-Riders, Legal and Market Remedies

John Nolan. 2001. 


Special Policy Report 2

Derivatives, the Shape of International Capital Flows,and the Virtue of Prudential Regulation

Randall Dodd, paper presented to WIDER/UN

August 15, 2001 (Revised April 19, 2002)

Published in From Capital Surges to Drought, edited by Ricardo Ffrench-Davis and Stephany Griffity-Jones, Palgrave Macmillan Publishers, New York, 2003.


Special Policy Report 1

The Role of Derivatives in the East Asian Financial Crisis

Randall Dodd, in John Eatwell and Lance Taylor (editors),

International Capital Markets: Systems in Transition. Oxford

University Press (2002).  It also appears in The Financier, Vol. 6, 1999.

(A WORD version of the report, or an older HTM version of the report)




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Last updated: February 2, 2011