NEWSLETTER of October 18, 2024

The following content has been added at finexpert:

BCG
GLOBAL PAYMENTS REPORT 2024
Once characterized by rapid growth, the payments industry is maturing. Investors, regulators, and customers are no longer just demanding continued expansion; they are seeking profitable growth built on sustainable business models. This shift reflects broader market trends, including evolving customer expectations, technological advances, and heightened regulatory scrutiny. To thrive, the industry must adapt swiftly and decisively. >more

World Economic Forum
CHIEF RISK OFFICERS OUTLOOK: OCTOBER 2024
This second edition of the Chief Risk Officers Outlook launches against a backdrop of domestic political uncertainty in the United States and ongoing major conflicts in the Middle East, Ukraine and Russia, and Sudan. The report aims to provide a pulse check from the perspective of on-the-ground risk practitioners, conducted through a new survey of the World Economic Forum’s community of chief risk officers. >more

McKinsey & Company
EUROPEAN DEEP TECH: OPPORTUNITIES AND DISCOVERIES
Nanorobotics, quantum computing or green hydrogen: Europe's share of global deep tech financing has risen to 19% - Financing has been more profitable than investments in consumer-related digital technologies for several years - Deep tech start-ups are more likely to achieve unicorn status than digital tech start-ups - However, around 60% of the top acquisitions are made by non-European companies. >more

McKinsey & Company
WACHSTUMSWENDE DEUTSCHLAND: ALLE FÜR AUFSTIEG UND AUFSTIEG FÜR ALLE
Germany can increase its economic output by almost 50 percent by 2035 - and use this growth to mobilize higher investments in social security systems, education, healthcare, climate change and infrastructure expansion. Sustainable growth benefits everyone. The value of the German economy would grow from EUR 12 trillion to EUR 24 trillion, which would mean EUR 31,000 more annual income for households. To make this possible, Germany must once again become more attractive for investment - the growth turnaround requires additional investment of EUR 330 billion per year - 8% of GDP - and a dual strategy: a stronger focus on dynamic future fields (“shift”) and higher productivity in all industries and value chains (“lift”). >more

LIQUIDITY TRANSFORMATION AND FRAGILITY IN THE US BANKING SECTOR
Qi Chen, Itay Goldstein, Zeqiong Huang, and Rahul Vashishtha
2024
A key role of banks is liquidity transformation, which is also thought to create fragility, as uninsured depositors face an incentive to withdraw money before others (a so-called panic run). Despite much theoretical work, there has not been much empirical evidence establishing this mechanism. In this paper, we provide the first large-scale evidence of this mechanism. Banks that perform more liquidity transformation exhibit higher fragility, manifested by stronger sensitivities of uninsured deposit flows to bank performance and greater levels of uninsured deposit outflows when performance is poor. We also explore the effects of deposit insurance and systemic risk. >more

RE(VISITING) LARGE LANGUAGE MODELS IN FINANCE
Eghbal Rahimikia, and Felix Drinkall
2024
This study introduces a novel suite of historical large language models (LLMs) pre-trained specifically for accounting and finance, utilising a diverse set of major textual resources. The models are unique in that they are year-specific, spanning from 2007 to 2023, effectively eliminating look-ahead bias, a limitation present in other LLMs. Empirical analysis reveals that, in trading, these specialised models outperform much larger models, including the state-of-the-art LLaMA 1, 2, and 3, which are approximately 50 times their size. The findings are further validated through a range of robustness checks, confirming the superior performance of these LLMs. >more