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From Early Warning Systems to Asset Managers’ Behavior: Evidence for Mature and Emerging Markets

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Daniela Beckmann

Asset managers have often been considered as key drivers behind financial globalization. As they have been both praised as leaders of global financial integration and blamed as originators of financial crises, any understanding of the international financial markets – and financial crises among them – should be based on a thorough understanding of its core actors, i.e. asset managers. The contribution of this work is thus twofold: In its first part, it addresses evidence from early warning systems and the role of fundamentals in financial crises. With the help of macro-level data for 20 countries and based on a new framework to assess the variety of contributions in this young field of research, different models of early warning systems are reviewed, replicated and critically tested for practical application. The work’s second part turns the attention to financial markets from a behavioral perspective. Individual asset managers’ views, perception and behavior are analyzed in detail with the help of a unique micro-level data set, generated in an international survey project with 1,165 participating financial market professionals from six countries. In particular, the role of professional asset managers’ behavioral biases, risk taking, cultural background, and gender differences are analyzed by both selected country studies and cross-country evidence from mature and emerging markets.
Contents: Early Warning Systems and the Role of Fundamentals – Early Warning Systems: A Survey of New Approaches – Robust Lessons about Practical Early Warning Systems – Financial Markets from a Behavioral Perspective – Still Emerging - More Biased? Asset Managers’ Behavior in Thailand, Indonesia and Germany – Evidence for Italian Asset Managers on Overconfidence, Risk Taking and Gender Differences – Asset Managers’ Views and Behavior: Does Culture Matter? – Will Women be Women? Asset Managers’ Struggle between Nature and Incentives.